'Difficult Political Work': Strategic Responses to Climate Risk by Carbon-intensive Corporations

38 Pages Posted: 29 Jun 2021

See all articles by Marcel Metzner

Marcel Metzner

University of Oxford - Smith School of Enterprise and the Environment

Anette Mikes

Harvard Business School

Date Written: June 16, 2021

Abstract

Governments, investors, and consumers have stepped up pressure on publicly listed companies to face up to climate risks and to reduce carbon emissions. At the same time, the pressure to deliver financial results remains strong. Based on research on 19 European carbon-intensive corporations in the chemical, steel, and utility industries, we explore how companies frame and reconcile their climate-risk-related objectives with their financial commitments, and enact a variety of response strategies. Overall, we find that corporations in heavy industries deploy four generic climate-response strategies: (1) Purposeful Green Strategies, (2) Engagement Strategies, (3) Green Differentiation, and (4) Defensive Strategies. We show that the organizational enactment of these strategic responses is conditioned by (1) corporations’ framing of climate risk as a threat or opportunity, (2) the perceived compatibility of decarbonization demands with existing commitments, and (3) their internal representations of feasible decarbonization-goals and responses. Our study highlights the importance of accounting and control tools and processes in mediating and bringing about institutional work, some of which may drive transformative innovation and impactful decarbonization strategies. Our evidence points at the rising importance of institutional work as an organizational capability in corporate responses to the climate change problem.

Keywords: climate risk, climate change, corporate strategy, accounting, risk management

JEL Classification: L1, L2, M4, Q5

Suggested Citation

Metzner, Marcel and Mikes, Anette, 'Difficult Political Work': Strategic Responses to Climate Risk by Carbon-intensive Corporations (June 16, 2021). Available at SSRN: https://ssrn.com/abstract=3868564 or http://dx.doi.org/10.2139/ssrn.3868564

Marcel Metzner (Contact Author)

University of Oxford - Smith School of Enterprise and the Environment ( email )

United Kingdom

Anette Mikes

Harvard Business School ( email )

Soldiers Field
Boston, MA 02163
United States

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