Making the climate change issue “real” for managers

Abstract

Purpose Although businesses face various types of risks because of climate change, the level of concern among managers seem to lag behind the institutional pressure to deal with the climate change issue. This paper aims to bridge this gap in perceptions by presenting a framework to assist business leaders in translating the climate change issue into a format that managers can appreciate. Design/methodology/approach Drawing from the supply chain literature, this paper presents a model that shows how climate change-related policy and resource risks affect a firm’s supply, operations and demand domains and the risk management approaches appropriate for each type of risk. Excerpts from 10-K annual reports filed by US automotive and food retailers are used to show how the model works. Findings Although majority of companies examined do not report climate change-related risks, the evidence from those that do affirm the framework’s ability to translate these risks into manager-friendly supply chain terminology. Originality/value Managers can participate in sustainability actions by focusing on the risks and effects of climate change. Business leaders, researchers and policymakers can adopt supply chain risk management terminology to connect with otherwise indifferent managers.

The effect of air pollution on cash holdings and financial leverage

“…However, the empirical literature regarding this area is still in the infancy stage, especially that related to climate issues such as climate change and air pollution. Policy and resource risks associated with climate change can exacerbate supply risk, demand risk and operational risk (Pineda, 2016). In this vein, air pollution, which results in climate change, can affect the liquidity needs of a firm through decreasing the employee productivity, increasing the operations uncertainty and environmental protection costs (Li et al, 2021) and increasing the financial constraints (Tan et al, 2021a).…”