A Framework for Understanding Adaptation by Manufacturing Industries

Introduction

While adaptation is not a new concept, adaptation to climate change is certainly more rapid and complex in current situations. The IPCC has defined adaptation as, “any adjustment in natural or human systems in response to actual or expected climate stimuli or their effects, which moderates harm or exploits beneficial opportunities”.¹ As discussed in West and Brereton (2013), while the boundaries of mitigation are clearly defined and there is a clear metric for assessing the effectiveness of such measures, in the case of adaptation, the boundaries are more ambiguous; also, there are no widely accepted benchmarks for assessing the effectiveness of adaptation. It is in this context, that the adaptive capacity of firms needs to be understood especially in developing countries.

The effect of climate change varies across business structures so adaptation can take many forms. Adaptation is complex and a firm’s response will be determined by whether the impact, is in the short or long term. It is therefore essential to understand what constitutes adaptation responses by firms in face of climate change. Four components are integral to a firm’s adaptation activities: assessment of risk, understanding of vulnerability, understanding the regulatory barriers to overcome the vulnerability, and, finally, adoption of policies to overcome the vulnerability. While it is easy to understand these components separately, the overall picture is more complicated, since there are interdependencies between these components. Also complicating the issue is the fact that the majority of small and medium firms do not have the capacity and resources to predict the impact of climate changes on their operations and hence quickly make the adjustments necessary to overcome these challenges.

This chapter will discuss the changes that firms need to make or, are making, in the context of climate change and situate it in the organizational structure of a firm. For that, it is necessary first to understand what adaptation means at the level of a firm. As adaptation in a firm relates to business strategy, it is important to understand adaptation in that context, since governments and international organizations might think of the issue differently (Nitkin et al. 2010).