Hard-Nosed Business Look At Climate Change

Oct 15: The latest October 2007, Harvard Business Review's Forethought is a Special Report entitled, Climate Business: Business Climate. In the introduction to the issue, the Editors note, "We don’t know precisely how climate change will alter the planet, but two things are certain: Its complex environmental impact will directly affect business, society, and ecosystems; and governments will seek to mitigate its effects with far-reaching regulations. Until recently, companies have for the most part freely emitted carbon, but they will increasingly find that those emissions have a steep price, both monetary and social. As a result, businesses that continue to sit on the sidelines will be badly handicapped relative to those that are now devising strategies to reduce risk and find competitive advantage in a warming, carbon-constrained world.

"In this month’s Forethought, we’ve invited leading thinkers from business and academia to help our readers address climate issues by framing strategy, strengthening security, shaping policy, protecting reputation, and engaging customers, employees, and markets. This special section provides a hard-nosed look at a tough new environment. There will be winners and losers. Companies that get their strategy right will find vast opportunities to both profit and create social good on a global scale."

Articles in the issue include: Grist: A Strategic Approach to Climate; Risk: Investing in Global Security; Forecast: How Will a Warmer World Look?; Transparency: What Stakeholders Demand; Conversation: Global Reporting Initiative’s; Regulation: If You’re Not at the Table, You’re on the Menu; Reputation: When Being Green Backfires; Balance Sheet: Accounting for Climate Change: A Window on the Future; Markets: Investors Hunger for Clean Energy; Business to Business: Leading Change in Latin America; Leadership: Walking the Talk at Swiss Re; and Opinion: Place Your Bets on the Future You Want.

The opinion piece at the end by Forest L. Reinhardt, Professor of Business Administration at Harvard Business School in Boston, summarizes with some thoughts on: "Which firms will gain and which will lose as governments and businesses begin to take climate change seriously?... Ultimately, though, success in a carbon constrained world will be determined not by short-term balance sheet effects or efficiency initiatives but by innovation, management acumen, and leadership... Business leaders must be courageous in betting on the long-term future that will benefit their companies the most -- that is, on a future where governments constrain, in transparent and reasonable ways, the human impact on the climate... Strong business leaders should want a transparent system that prices the right to generate carbon emissions as though it were any other scarce resource and lets firms get on with the business of competing."

Access the complete 18-page report (click here). [*Climate]