Addressing climate change is critical for businesses. According to a survey by the BMO Climate Institute, the share of U.S. companies with climate mitigation plans rose to 38 percent in 2023—up from 28 percent the previous year.
“Throughout modern history, business firms have been amazing engines for societal change,” says Harvard Business School Professor Mike Toffel, who co-teaches the online course Business and Climate Change with HBS Professor Forest Reinhardt. “They regularly develop technological innovations to produce goods and services that make people’s lives better. And now, climate change is one of the world’s biggest societal challenges.”
If you want to help address this growing issue, here’s an overview of climate change mitigation and adaptation and why they’re vital to your business strategy.
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DOWNLOAD NOWWhat Is Climate Change Mitigation?
Climate change mitigation comprises efforts to reduce or prevent greenhouse gas emissions. According to the Center for Climate and Energy Solutions, nearly 30 percent of U.S. greenhouse gas emissions come from business operations, such as:
- Burning fossil fuels to generate electricity
- Expanding landfills
- Transporting people and goods via cars, trucks, planes, trains, and ships
- Clearing land for agriculture
Companies can help counteract these practices’ negative effects by transitioning to renewable energy sources, implementing energy-efficient measures, adopting sustainable transportation solutions, and reducing waste. While these strategies can be highly intensive, they can have large impacts.
For example, Amazon joined a climate change pledge in 2019 to address growing concerns about carbon emissions caused by online shopping. Since then, the company has not only expanded its use of low-carbon fuels but also scaled electric vehicles to decarbonize transportation across its operations by 2040.
Related: 5 Steps to Creating a Climate Mitigation Strategy
What Is Climate Change Adaptation?
Climate change adaptation is how companies respond to, prepare for, and build resilience against climate change.
In Business and Climate Change, former U.S. Environmental Protection Agency Administrator Carol Browner shares why businesses can’t ignore climate change adaptation.
“Scientists are telling us we’ve gotten to a point where storms are getting worse, that the weather patterns are going to change, agricultural patterns are going to change, and the fires are going to be more intense,” Browner says. “So we have to start to think about how we adapt to this.”
Your company can adapt to climate change by:
- Investing in flood barriers and drainage systems to protect against storms
- Upgrading heating and cooling systems to prepare for extreme temperatures
- Implementing backup power solutions in the event of outages
For example, global beverage company Coca-Cola has faced operational challenges due to the rising scarcity of water, a critical ingredient in its products. According to a recent sustainability report, the company has successfully reduced its water use with tools like the Water Efficiency Catalogue, which assesses operational factors such as online flow monitoring, water collection, and reuse capabilities, along with water efficiency training and communication.
Coca-Cola has also invested in water access and sanitation projects to ensure other businesses and underserved areas can adapt to rising water scarcity.
Related: How Climate Change Affects Business Strategy
Climate Change Adaptation vs. Mitigation: 3 Differences
Although climate change mitigation and adaptation are similar, understanding their differences is essential to developing a comprehensive approach to business sustainability.
Timeline
For one, climate change mitigation and adaptation have different timelines.
Climate change mitigation focuses on the future by:
- Improving energy efficiency
- Adopting renewable energy sources like wind and solar power
- Enhancing carbon detoxification mechanisms like forests
These initiatives often take time and may not immediately impact daily operations.
Conversely, adaptation focuses on immediately adjusting practices to minimize environmental challenges—often expediting implementation.
Rapid action is particularly important since the World Meteorological Organization predicts a 66 percent chance of passing the 1.5-degree Celsius global warming threshold by 2027—making adaptation tactics essential to building resilience to today’s climate-related hazards.
Cost
The costs associated with climate change mitigation and adaptation can vary and involve changing your business’s infrastructure.
In Business and Climate Change, craft beer maker New Belgium Brewing’s Chief Environmental, Social, and Governance Officer Katie Wallace discusses the company’s transition to renewable energy as a mitigation strategy after discovering that coal-powered electricity was its main source of greenhouse gas emissions.
“[Our utilities] weren't planning to choose that because they didn't think ratepayers would pay the price,” Wallace says. “All of our employee-owners at the time came together and unanimously voted to give up their profit sharing that year so they could help bring wind power to our community.”
In addition to wind power, New Belgium Brewing has invested in biogas from its water treatment plant and solar panels on its buildings.
Adaptation, meanwhile, requires immediate, typically smaller investments that modify existing systems and practices to cope with climate challenges.
For example, coastal businesses might invest in drainage systems to prevent flooding from rising sea levels and intense storms. According to an Environmental Defense Fund study, the estimated annual cost of flooding and storm damage will be between $2.9 to $9.8 billion by 2050. While adaptation efforts can be expensive, they can lead to significant savings.
Consumer Impact
Consumers play a huge role in determining which strategy is right for your business.
According to a report by management consulting firm McKinsey, products claiming to be environmentally friendly average 28 percent cumulative growth over five years versus 20 percent for those that don’t.
To capitalize on consumer preferences, your business can make carbon-neutral pledges, set corporate social responsibility milestones, and invest in eco-friendly initiatives. These actions can also enhance your brand’s reputation and long-term growth.
Learn more about corporate social responsibility in the video below, and be sure to subscribe to our YouTube channel for more explainer content.
One example of corporate social responsibility is Starbucks’ Coffee and Farmer Equity (C.A.F.E.) Practices program. Through it, Starbucks has invested in climate-resilient coffee plants, provided sustainable farming training, and supported local infrastructure development to improve water management.
These measures help consumers guarantee their favorite coffee products’ supply chain continuity despite climate-related obstacles.
Make a Difference in Business
Making a difference in business doesn’t mean choosing between adaptation or mitigation. Often, combining these strategies achieves the best results.
Understanding how to implement both can be challenging. If you’re ready to tackle climate change, enrolling in a course like Business and Climate Change can provide valuable insights and tools from business leaders who’ve tackled climate change's implications in their careers.
Do you want to learn more about adapting to and mitigating climate change? Explore Business and Climate Change—one of our online business in society courses—and download our free e-book on becoming a purpose-driven, global business professional.
