Climate change has in recent years gathered traction on the business, political and social agenda. From the business perspective, research has shown that climate change impacts on company value are uncertain, signifi cant and strategically important. The challenge therefore is for the business community to apply fi nancial valuation models that support the incorporation of the climate change impacts in strategic planning. However, the commonly used discounted cash fl ow techniques in capital budgeting are seen as failing to address the high levels of uncertainties inherent in climate change impacts. Real options thinking has been touted as having the potential to enhance understanding of these impacts via its direct handling of uncertainty, although not much research has been done to demonstrate this. Using an illustrative case study, this research presents an argument for introducing the real options approach, a new method for valuing options of future strategic action by companies in a setting that exhibits climate change impacts. The objective of this research is to contribute to the literature on strategic tools for addressing climate change and ultimately offer some management insights that can narrow the gap between fi nance theory and business practice.

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This research employed an explanatory case study to compare supplier production capabilities for enhancing productivity gains between Uganda commercial forestry and sugarcane sector value chains. Key study results indicated that only 18% of the sugarcane farmers achieved the desired industry productivity output of at least 100 t/ha from their fields, with majority (82%) of the cane growers producing below expected industry productivity output. In the forestry sector, 41.3% of the farmers achieved the desired industry performance targets, with 58.7% of the growers performing below expected performance targets. The major buyers' supplier development behaviour as seen in the diffusion of knowledge, skills and appropriate technology along vertical and horizontal collaborative value chain relationships, explains this paradox. Millers in the sugarcane sector used contractors to diffuse knowledge and skills, which weakened the supplier production capabilities. In the forestry sector, with the support of development partner agencies, productivity was higher due to effective diffusion of knowledge, skills and appropriate technology to primary producers. This finding strongly points to the need to implement deliberate supplier development strategies by the development partner agencies and governments, if productivity gains are to be improved within the agri-business value chains in developing countries.

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