From the Memo to the CEO Harvard Business series comes Andrew J. Hoffman and John G. Woody latest release, Climate Change: What’s Your Business Strategy? Written to persuade even the “non-believer,” this book packs a powerful message: True or not, climate change as a business issue could make or break your business. Hoffman and Woody deliver three no-nonsense steps for creating a strategy that will prepare companies for action in a shifting market in light of climate change.
The first step that every business must take is to learn its current measure of greenhouse gas (GHG) emissions. Do not make assumptions about where the greatest impacts exist, as the results of these analyses may be surprising. In order to fully understand its degree of vulnerability to climate change regulations and the resulting market shifts, a business must identify the following: a) the sources, types, and magnitude of GHG emissions it produces; b) the vulnerability of its business lines to constraints on those emissions; c) whether it would be a “buyer” or “seller” in carbon markets; and finally, d) how its vulnerability compares against others in its industry.
Step two of a business’s climate change strategy is to actually take action to reduce its carbon footprint and to assess what business opportunities it may have in this changing market. Involving leadership is of critical importance, and may require making new upper-level positions and developing teams to tackle this step. Businesses must set goals, develop strategies to reach them, and be sure to get employees on board; their success depends on it! Taking action also requires learning about carbon trading as to determine which transactions are applicable and best suit offsetting needs. They may reach out to an unlikely partner- NGOs- for guidance and assistance, and finally, determine which GHG activities to take public, and when and how to do so.
The third and final step of the climate change strategy is to influence the policy-development process. To complete this step, organizations need to determine how pending policies could affect business processes, and work to earn a seat at the table in order to have a hand in the development of GHG emissions regulations. As an Oklahoma adage states, “If you’re not at the table, you’re on the menu.” In other words, influencing policy development can be a huge strategic benefit, but sitting back and merely watching could make a business a loser in this market.
In the end, whether an organization must adapt out of operational necessity, or to prepare for future vulnerabilities, or to take advantage of new business opportunities, it is clear that climate change is happening now, and very much affecting the business world. As Hoffman and Woody put it, “If businesses spend money on it, then it must be true.” Regardless of which side of the climate change debate a business finds itself on, ensuring the safety and growth of the economic bottom line is something we can all agree on.