Home Uncategorized article reflection

Uncategorized

article reflection

500-750words article reflection only wiht my listed material.

https://centers.fuqua.duke.edu/edge/wp-content/uploads/sites/11/2019/10/MBA-EDGE-Climate-Change-and-Business

https://www.youtube.com/watch?v=1-RnnEFWUM4&feature=youtu.be

A Case Study of H&M’s Strategy
and Practices of Corporate
Environmental Sustainability

Danny C. K. Ho

Abstract This study aims to examine the degree to which a large international
fashion company—H&M—has improved corporate environmental sustainability
using the principle of eco-efficiency and eco-effectiveness. Case study method is
employed and data are collected from its corporate annual reports and websites.
The strategy and practices relating to product design, purchasing, manufacturing,
transportation, retail operation, and product usage and recycling are examined.
Based on the data, the study examines the extent to which cradle to cradle
approach has been applied to design and manage H&M’s operations. This study
also explores the possibility of integrating eco-efficiency and eco-effectiveness in
improving corporate environmental sustainability.

Keywords Corporate environmental sustainability � Fashion supply chain �
Eco-efficiency � Eco-effectiveness

1 Introduction

The pursuit of corporate environmental sustainability is vital to the apparel
industry in general and fast fashion retailers in particular for their future devel-
opment. According to Sull and Turconi:

Fast fashion describes the retail strategy of adapting merchandise assortments to current
and emerging trends as quickly and effectively as possible. Fast fashion retailers have
replaced the traditional designer-push model—in which a designer dictates what is ‘‘in’’—
with an opportunity pull approach, in which retailers respond to shifts in the market within
just a few weeks, versus an industry average of six months (Sull and Turconi 2008 p. 5).

D. C. K. Ho (&)
Department of Supply Chain Management, Hang Seng Management College,
Hang Shin Link, Siu Lek Yuen, Shatin, NT, Hong Kong
e-mail: dannyho@hsmc.edu.hk

P. Golinska (ed.), Logistics Operations, Supply Chain Management
and Sustainability, EcoProduction, DOI: 10.1007/978-3-319-07287-6_16,
� Springer International Publishing Switzerland 2014

241

The business of fast fashion has been competitive yet profitable and growing
rapidly. For example, sales of the Inditex Group (parent company of Zara)
increased by 53.2 % from €10,407 million in 2008 to €15,946 million in 2012,
while its net profit rose by 87.6 % from €1,262 million in 2008 to €2,367 million
in 2012. During the same period, H&M achieved 35.5 % increase in sales, up from
SEK1,04,041 to SEK1,40,948 million, while its net profit increased by 10.3 %
from SEK15,294 to SEK16,867 million.

The fast fashion trend promoted by retailers such as Zara, TopShop and H&M
has brought the trend of disposable fashion that encourages more frequent impulse
purchase of cheap, in-season and non-durable garments and the tendency to keep
these products for a shorter time than their real useable life (Birtwistle and Moore
2007). In addition, these garments are expected to be used less than ten times
(McAfee et al. 2004), and are likely to end up as harmful, non-biodegradable
wastes at landfills when they become outdated.

This study seeks to examine the strategy and practices applied by H&M to
improve its corporate environmental sustainability in the areas of product design,
purchasing, manufacturing, transportation, retail operation, and product usage and
recycling. These strategy and practices will be analyzed against the principles of
eco-efficiency and eco-effectiveness. The possibilities for integrating eco-effi-
ciency and eco-effectiveness in improving corporate environmental sustainability
will also be discussed.

2 Literature Review

According to the United States Environmental Protection Agency (2014), an
estimated 13.1 million tons of textile wastes were generated in 2011, or 5.2 % of
total municipal solid waste generation in the US. In the United Kingdom, an
estimated £238 million-worth of textiles was threw out for waste collection and
sent to landfill in 2010, according to The Waste and Resources Action Pro-
gramme (2012). In 2008 around 14 million tonnes of textile waste were generated
in Europe of which only 5 million tonnes were recovered (European Commission
2011). The dumping of textile waste is increasingly becoming a huge urban waste
problem in developed countries. This serious environmental threat may stem partly
from the unsustainable patterns of consumption and production.

2.1 Unsustainable Patterns of Clothing Consumption
and Production

Past studies have shown that some young fashion-hungry consumers, who are the
main targets of fast fashion retailers, have inadequate awareness and knowledge of
sustainable production and consumption of clothing. For example, young female

242 D. C. K. Ho

consumers in the UK agreed that ‘‘there is a general lack of knowledge of how and
where clothing is disposed of, or even how it is made, such as the environmental
consequences of artificial fibres and intensive cotton production’’ (Morgan and
Birtwistle 2009 p. 196). Hill and Lee (2012) reported the lack of knowledge of the
holistic principle of sustainability and specific adverse effects of the apparel
industry in their study of US college students. In their study, about one-third of the
respondents listed ‘‘garments made of organic materials’’ as a least important
sustainable practice. Besides, 30 % of those surveyed considered ‘‘garments made
of biodegradable materials’’ as a most important sustainable practice, whereas
28.9 % regarded the same practice as a least important sustainable practice in the
apparel industry. Such conflicting perceptions were also reported for practices like
‘‘fiber growth without pesticides’’ (Hill and Lee 2012). These findings highlight the
barrier of lacking awareness and knowledge (Bonini and Oppenheim 2008) that
companies must remove before consumers will consider eco-friendly clothing.

Regarding the post-sale clothing disposal, despite the recent growing engage-
ment of consumers in reuse and recycling clothes, such remedial actions should
not be readily considered as an effective means to address the environmental threat
of textile waste. Bianchi and Birtwistle (2010 p. 366) in a study of Scotland and
Australia female consumers’ disposal behavior of used clothes reported that ‘‘the
environmental consequences of production and disposal of fashion textiles were
poorly understood concerns among respondents’’. Nevertheless, respondents
considered that donating used clothing to charities and giving used clothing to
family members or friends made them ‘‘feel good’’ about helping other people in
need. Worth noting is that Ha-Brookshire and Hodges (2009) in a study of used
clothing donation found that,

social consciousness had little, if any, impact on used clothing donation decision-making
for the participants in this study. Instead, used clothing donation was just one part of the
entire clothing consumption process, one that created space for future clothing purchases.
Indeed, without disposal of used clothing items, new clothing items could not be pur-
chased, and, therefore, the consumption cycle could not continue.

Ironically engagement in recycling of used clothing makes consumers feel good
to sustain their unsustainable consumption patterns—increasing impulse pur-
chasing of low-quality trendy fashion and donation of outdated clothing to
someone in need before the end of the intended product lifetime—because this
recycling practice involves a small change from consumers and manufacturers
(Fletcher 2008). Unfortunately such unsustainable consumption patterns will drive
further growth of unsustainable production patterns. To break this vicious cycle, a
major change of consumers’ and producers’ mindset is needed from the pursuit of
eco-efficiency to eco-effectiveness and from cradle-to-grave to cradle-to-cradle
approach to improve sustainability in consumption and production.

A Case Study of H&M’s Strategy and Practices 243

2.2 Eco-efficiency Versus Eco-effectiveness

Eco-efficiency has become an important concept guiding companies to develop
their businesses in a sustainable manner. This concept was introduced by the
World Business Council for Sustainable Development (WBCSD) in its 1992
publication, Changing Course. According to WBCSD (1992):

Eco-efficiency is achieved by the delivery of competitively priced goods and services that
satisfy human needs and bring quality of life, while progressively reducing ecological
impacts and resource intensity throughout the life-cycle to a level at least in line with the
Earth’s estimated carrying capacity.

Simply put, eco-efficiency means creating more value with less impact. Cus-
tomer requirements should be satisfied with less resource depletion and pollution
on a product or value basis. Companies are considered to have achieved sustain-
able development if they have used materials and natural resources in production
more efficiently and reduced outputs of toxic substances to the environment.

Reduction of negative environmental impacts, which is a key principle of eco-
efficiency, represents an initial response of most companies to address sustain-
ability. However, eco-efficiency has been criticized as an inadequate approach to
sustainability in the long run because eco-efficiency is about being ‘less bad’ and
‘sustainable’ companies can still keep depleting scarce and valuable resources and
polluting the environment albeit in smaller increments (McDonough and Braun-
gart 2002). Given that eco-efficiency can only bring relative improvements (i.e.
reduced energy or resource usage per value added), it should be treated as one part
of the corporate sustainability criteria, instead of as the whole (Dyllick and
Hockerts 2002). Young and Tilley (2006 p. 404) summarize the flaws in the
thinking behind eco-efficiency as:

a linear, one-way, cradle-to-grave manufacturing system in which products are made and
eventually discarded into a hole in the ground or a furnace is not only wasteful; it can be
poisonous. Neither waste nor poisons are particularly efficient, productive or good for the
environment. Making a destructive system less destructive only serves to let industry
continue to destroy ecosystems and to contaminate and deplete nature more slowly. Under
the influence of eco-efficiency a dystopian future lies ahead; destruction is the end game;
the only choice remaining is the rate of destruction.

McDonough and Braungart (2002) argued that companies need to pursue eco-
effectiveness and change the current system that caused the problem in the first
place. They proposed that,

Eco-effectiveness means working on the right things—on the right products and services
and systems—instead of making the wrong things less bad. Reduction, re-use and recy-
cling slow down the rates of contamination and depletion but do not stop these processes.
The key is not to make human industries and systems smaller, as efficiency advocates
propound, but to design them to get bigger and better in a way that replenishes, restores
and nourishes the rest of the world (McDonough and Braungart 2002 p. 76).

244 D. C. K. Ho

2.3 Cradle-to-Cradle Approach to Corporate Sustainability

As a viable alternative to the traditional cradle-to-grave manufacturing model,
McDonough and Braungart’s (2002) cradle-to-cradle approach to improve eco-
effectiveness and sustainability rests on three tenets including:

1. waste equals food,
2. usage of current solar income,
3. celebrating diversity.

The first tenet challenges the taken-for-granted conception of waste that there is no
such a thing called ‘waste’ in nature, as ‘‘one organism’s waste is food for another and
nutrients flow indefinitely in cycles of birth, decay, and rebirth’’ (McDonough et al.
2003 p. 436A). As such, materials should be designed as nutrients that flow through
biological metabolism and/or technical metabolism in a closed-loop system in which
man-made and natural resources circulate in cycles of production, use, recovery and
remanufacture. The second tenet emphasizes that both energy (e.g. solar energy and
wind power) and material inputs should be renewable rather than depleting. The third
tenet celebrates nature’s diversity and stresses that design of products, processes and
systems should be integrated and interconnected with available energy and material
flows in the local natural systems (McDonough et al. 2003).

In sharp contrast to the eco-efficient cradle-to-grave goal, which stresses con-
tinuous reduction in the human footprint of a product and finally achieves ‘zero’
negative impacts, the eco-effective cradle-to-cradle goal combines the progressive
reduction of ‘bad’ with the increase in ‘good’, enhancing positive footprint
(McDonough and Braungart 2002).

3 Methodology

Data were collected mainly from H&M’s recent sustainability reports during 2010
and 2012, as well as from its corporate website. H&M’s vision and strategy of
sustainability were examined first, followed by practices in five main aspects of
environmental sustainability in the fashion supply chain (Fulton and Lee 2013)
covering product design, process design and supply chain design (Ellram et al.
2008). The practices include:

• Fibers

– No pesticides used in fiber growth,
– Garments made of organic, recycled, biodegradable or recyclable materials.

• Manufacturing

– Water usage,
– Environmentally friendly dyes,
– Fabric waste.

A Case Study of H&M’s Strategy and Practices 245

• Distribution and logistics

– Environmental-friendly shipping containers,
– Alternative fuels.

• Store/warehouse building efficiency

– Building energy/efficiency,
– Product packaging.

• Post-consumer and beyond

– Customer sustainability program,
– Laundering and care.

The social and economic aspects such as company donations and philanthropies
as well as fair trade and human rights issues were not studied.

4 Findings

4.1 H&M’s Mindset of Sustainability

H&M’s business operations aim to be run in a way that is economically, socially and
environmentally sustainable. By sustainable, we mean that the needs of both present and
future generations must be fulfilled. H&M’s business concept is to offer fashion and
quality at the best price. Quality includes ensuring that products are manufactured in a way
that is environmentally and socially sustainable. We apply the precautionary principle in
our environmental work and have adopted a preventative approach with the substitution of
hazardous chemicals. We strive to use resources as efficiently as possible and to minimize
waste. By adopting new technologies and methods, we can work preventatively to
minimize our environmental footprint through improved production processes and our
choice of materials. We must continuously review the company’s goals and strategies to
reduce the company’s climate impact.

H&M has adopted the popularized approach to sustainability developed by The
World Commission on Environment and Development (1987 p. 43) that refers
sustainable development as ‘‘development that meets the needs of the present
without compromising the ability of future generations to meet their own needs’’.
On paper, H&M recognizes the interdependent nature of economy, society and
environment and stresses that the pursuit of sustainability is not a balancing act or
a playing of one issue against the other. H&M’s approach to sustainability also
reflects the precautionary principle of the Rio Declaration on Environment and
Development, i.e., ‘‘where there are threats of serious or irreversible damage, lack
of full scientific certainty shall not be used as a reason for postponing cost-effective
measures to prevent environmental degradation’’ (United Nations General
Assembly 1992).

Most importantly, central to the mindset of H&M’s approach to sustainability is
the eco-efficient cradle-to-grave philosophy that permeates its vision and policy, as

246 D. C. K. Ho

revealed by its repeated emphasis on improving resource utilization, minimizing
waste and reducing ecological footprint. To grow its business in a sustainable
manner, in 2011 H&M together with several leading brands developed a roadmap
to continuously eliminate the use of all hazardous chemicals and hence achieve
zero discharge in all production procedures associated with the making and using
of H&M products, at the latest by 2020.

4.2 H&M’s Practices of Sustainability

4.2.1 Fibers

H&M has started to reduce the use of traditionally-grown cotton which involves
intense use of water and pesticides, and at the same time to increase the use of
organic cotton, the Better Cotton (with significantly reduction in the use of
chemical fertilizer or pesticides through the program provided by the Better Cotton
Initiative) and recycled cotton, aiming to reduce their environmental impact.
Importantly, H&M has set a target to use only cotton coming from these sources
by 2020 at the latest.

It appears that H&M is on the right track in using more sustainable cotton, as
organic cotton accounted for 7.6 and 7.8 % of its total cotton use in 2011 and
2012, respectively. Such a practice has made H&M to be the number one user of
organic cotton in the world, despite the slight increase in its annual use. Besides,
stated in 2012, Better Cotton was used and accounted for 3.6 % of its total cotton
use. The use of cotton from these two sources led to a reduced use of over
140,000 kg pesticides. H&M also used 1,450 tonnes of recycled wool and recycled
polyester (equivalent to 7.9 million PET bottles) in 2012.

However, there is no data showing that recycled cotton is used currently, nor is
there any specific target set for its use in the future. It is obvious that H&M’s
current policy on cotton use rests largely on reducing environmental footprint,
instead of on closing the textile loop. The same applies to other natural and man-
made fibers.

4.2.2 Manufacturing

Water Usage

H&M has developed new production processes that can save about 30 % of the
water used to produce denim, and introduced a water-efficient-denim program to
its suppliers to cut water use in washing processes in 2009. These new practices
saved about 50, 300 and 450 million liters of water compared to traditional pro-
duction processes in 2010, 2011 and 2012, respectively. Currently, about 50 % of
H&M’s denim is made with these techniques.

A Case Study of H&M’s Strategy and Practices 247

Environmentally Friendly Dyes and Fabric Waste

Given that H&M has no direct business relations with fabric mills who are only
second-tier suppliers, it lacks direct control of water and chemicals use in the
production of fabrics. Nevertheless, H&M encourages fabric mills to engage in its
Mill Development Program voluntarily to follow good practices to improve their
environmental performance. In 2012, H&M conducted a total of 58 audits on some
selected mills. Currently, H&M requires all its first-tier suppliers to submit
information on the fabric mill for each order. Since 2009 H&M demanded all
suppliers to prove that the dyes and other chemicals they use do not contain any
APEs (Alkylphenol ethoxylates) which are harmful to the environment. However,
through regular tests of its products, H&M still found that some dyes and similar
chemicals did actually contain APEs, even though the dyes and chemicals were
certified by their producers to be APE-free. Regarding the fabric waste, H&M has
not reported any action or target of improvement.

4.2.3 Distribution and Logistics

H&M uses reusable transport boxes instead of cartons to ship garments from its
distribution centers to stores, making savings of more than 400,000 trees each year
compared with using traditionally made cardboard boxes. By 2011, H&M man-
aged to minimize the use of single garment packaging to almost zero when
transporting products from its suppliers to distribution centers.

Since H&M does not own any transport facilities, it has to rely on third-party
transport companies to minimize its transport-related climate impact. In 2012,
around 90 % of H&M goods were transported by sea or rail from the production
country to its distribution centers. H&M reported that emissions of carbon dioxide
equivalent resulting from transport grew from 195,948 tonnes in 2010 to 203,294
tonnes in 2012, or by 3.7 %, while sales increased by 11 % during that period.
There is no specific plan or target H&M developed concerning the use of alter-
native fuels for transport of its products.

4.2.4 Store/Warehouse Building Efficiency

Building Energy/Efficiency

H&M has set a target reducing carbon emissions by 5 % relative to sales each year
covering 2010 to 2012, and uplifted the goal to absolute reductions in its opera-
tions’ total emissions by 2015. Past records show that H&M by and large achieved
this 5 % drop in emissions annually from 3.33 tonnes/million SEK sales in 2010 to
3 tonnes/million SEK sales in 2012. Despite the achievement of this annual target,
its absolute total emissions increased from 497,264 tonnes in 2010 to 574,611
tonnes in 2012, or by 15.6 %.

248 D. C. K. Ho

Given that electricity use in H&M’s stores accounted for the biggest share of its
absolute emissions (e.g. 50 % in 2012), H&M has established a target to improve
energy efficiency by reducing electricity use per square meter in its stores by 20 %,
as compared to a 2007 baseline, by 2020. To achieve this new target, H&M has
been implementing energy saving practices and installing energy monitoring
devices in all stores. In 2012, H&M generated 784,200 kWh of solar energy
through its own solar photovoltaic panels. In the long run, H&M seeks to source all
electricity from renewable sources, although no specific target has been set.

H&M has also applied water-saving techniques such as low-flow taps to reduce
water use in its stores, offices and distribution centers, and harvested about 3
million liters of rainwater for reuse through rainwater-harvesting facilities installed
in its distribution centers in Europe and a store in the UK.

Product Packaging

In 2010 H&M developed Environmental Guidelines for Packaging that aims to use
fewer resources and cause less waste by using recycled materials, materials from
certified sources, such as Forest Stewardship Council (FSC)-certified paper and
board, and single materials, which avoid mixing materials such as stickers or
laminates to improve recyclability, as well as designing packaging to optimize
space-use making it more efficient to transport and making packaging easy to
separate for higher recyclability.

In 2011, H&M reported that 90 % of the paper used for making its mail order
packages was recycled cardboard. All of H&M’s standard plastic consumer bags
are made of recycled material (50 % post-consumer and 50 % pre-consumer
recycled polyethylene) and consumer paper bags are made of paper originated
from well-managed forests certified by FSC. Thus, all of H&M’s bags are recy-
clable. Almost all hangers are reused in stores. When they become unusable, they
are sent for recycling. H&M achieved 85 % recycling rate in 2010, up from 79 %
in 2009.

H&M reported that in 2012, 92 % of the wastes handled in its distribution
centers were recycled, while the target of recycling rate was uplifted to be 95 % in
2013.

4.2.5 Post-consumer and Beyond

H&M claims itself as the first fashion company in the world to provide customers
with the chance to bring unwanted clothes to its stores in all 48 markets for reuse
as second hand clothes or recycling as cleaning cloth or insulation material, for
example. However, there is no figure reported by H&M about the amount of used
clothes collected and recycled.

In 2011, H&M started discussions with Ginetex, which is the owner of the
current global standard care labeling system, aiming to develop a globally-

A Case Study of H&M’s Strategy and Practices 249

applicable care label that promotes conscious garment wash and care instructions,
reducing water and energy use in the ‘user phase’ of the product lifecycle. H&M
planned to launch the new care label in summer 2013.

5 Discussion

The above findings show that the central principle guiding H&M’s approach to
sustainability is the eco-efficient cradle-to-grave philosophy. Based on this
mindset, H&M’s sustainability vision is to send zero waste from its operations to
landfill. The long-term goal set by H&M toward sustainability is the pursuit of
zero discharge of hazardous chemicals by 2020. In fact, this goal applies not only
to H&M but also to other leading brands in the apparel industry that have joined
the initiative of Roadmap to Zero.

It is clear that eco-effective cradle-to-cradle philosophy does not form the core
of H&M’s current sustainability policy, despite its commitment to becoming cli-
mate smart, aiming for zero waste to landfill, and using natural resources
responsibly. Most of H&M’s operations do not reflect the three tenets of the
cradle-to-cradle philosophy.

5.1 Waste Equals Food

To turn sustainability vision into reality, H&M has started to replace traditionally-
grown cotton largely by organic cotton and to a lesser extent by the Better Cotton
gradually. Although this choice of materials has resulted in significantly less use of
chemical fertilizer or pesticides, there is little sign that the principle ‘waste equals
food’ has been applied. As McDonough et al. (2003 p.437A) put, ‘‘a material
should not only be nonhazardous but also provide nourishment for something after
its useful life—either ‘‘food’’ for biological systems or high-quality materials for
subsequent generations of high-tech products’’. For H&M, it is about closing the
textile loop by using recycled materials, be they natural or man-made fibers, as
main inputs of its production system. However, no measurable target or specific
plan has been established by H&M in this regard.

H&M has recently started to collect used clothes through its retail stores and
then reuse and recycle them. Although this practice may help to create awareness
of recycling among its customers, the recycling process H&M has engaged is
down-cycling in nature because the used clothes are transformed into products of
lesser value, such as cleaning cloth, which will likely be dumped to landfill finally.
This recycling system is the cradle-to-grave approach to sustainability and will
only prolong the life of used clothes before they become waste. H&M has not
engaged in up-cycling process aggressively. Despite its efforts in using recycled

250 D. C. K. Ho

polyester to produce clothes, it has not transformed the used clothes into higher
quality materials, serving as inputs of the production of higher value products.

Due to the lack of information disclosure about H&M’s program of recycling
used clothes, consumers may have created a misconception that all used clothes
are either donated to someone in need or used as materials for production of new
garments. This may make consumers feel good and justify their unsustainable
consumption patterns because consumers have now found an easy and proper way
to deal with their unwanted clothes. However, the recycled clothes will likely
become waste in landfills and not food for producing higher quality products.

5.2 Use Current Solar Income and Celebrate Diversity

H&M is on the right track in sourcing 100 % of electricity from renewable sources
such as solar energy so as to reduce its scope 2 carbon emissions. The increasing
use of solar energy is feasible and expected when H&M will invest in the nec-
essary installations in new building projects or refurbishment projects of its current
facilities such as distribution centers. However, H&M has not set specific deadline
for achieving the target of using only renewable energy.

Regarding the tenet ‘celebrating diversity’, H&M has taken an initial step to
harvest rainwater through its facilities, addressing the need to design its facilities
that integrate with the local natural systems, using available energy and material
flows in a closed loop. Despite these efforts, there is lack of evidence showing this
principle has been applied in fabric and garment production by H&M and its
suppliers.

The case findings also show that H&M faces major challenges in improving the
sustainability performance of its second-tier suppliers. Harmful materials can still
be found through H&M’s regular testing of its products, despite the suppliers have
provided H&M with evidence certified by an independent third party that the
materials are not hazardous. Second-tier suppliers are encouraged to participate in
sustainability improvement program by H&M mostly on a voluntary basis. It is
unknown to what extent good practices will be adopted by these suppliers under
the current arrangement.

6 Conclusion

Based on the information disclosed by H&M in its recent sustainability reports and
corporate website, this study found that H&M has framed corporate environmental
sustainability as reduction of negative impact through improving resource utili-
zation, minimizing waste and reducing ecological footprint. Thus, it is plausible
for H&M to develop the target of achieving zero discharge of hazardous sub-
stances in its supply chain at the latest by 2020.

A Case Study of H&M’s Strategy and Practices 251

To improve its environmental performance, H&M has started to:

1. use environmental-friendly materials that have less soil pollution and water
consumption,

2. introduce innovative wet production processes that save water and energy use
to its first-tier suppliers,

3. demand its first-tier suppliers to submit information on the fabric mill for each
order,

4. use reusable transport boxes,
5. implement energy saving practices and installing energy monitoring devices in

all stores,
6. source electricity from renewable sources,
7. apply water-saving techniques to reduce water use in its stores, offices and

distribution centers, and harvest rainwater for reuse,
8. reuse packaging materials,
9. collect used clothes from customers for reuse or recycling,

10. develop care label that promotes reduced water and energy use in the ‘user
phase’ of the product lifecycle.

Despite these efforts, H&M remains silent on:

1. setting a target for usage of recycled cotton as well as other natural and man-
made fibers,

2. reducing fabric waste at its suppliers’ factories,
3. using alternative fuels for transport of its products,
4. setting a target for sourcing all electricity from renewable sources,
5. disclosing the amount of used clothes it collected and recycled.

It is likely that H&M will reduce its negative environmental impact in the areas
of reusable containers for transport, building energy efficiency and product
packaging, if it further strengthens its internal environmental management prac-
tices. However, the real challenges H&M facing come mainly from its immediate
suppliers and multi-tier suppliers. How to ensure that its suppliers, in particular
those connected loosely to H&M, will comply with higher environmental
requirements and follow good environmental practices closely in their operations
is a pressing issue to be addressed by H&M, if it has to build a sustainable fashion
supply chain.

As neither unsustainable production nor consumption of clothing will end in
short run, H&M and other fashion companies need to rethink the viability of
current cradle-to-grave, fast fashion model as a truly sustainable business model.
The pursuit of eco-efficiency is inadequate to build a sustainable business. Instead,
fast fashion companies should base their management philosophy upon eco-
effectiveness, and influence and collaborate with supply chain partners and other
stakeholders to build cradle-to-cradle, closed loop supply chain systems, leaving
positive impacts to nature. As a full-scale change from eco-efficient to eco-
effective operations throughout a supply chain will not happen overnight, fashion
companies can start conducting pilot projects testing the applicability of cradle-to-

252 D. C. K. Ho

cradle concept and practices on new product lines. The successful cases can then
serve as role models for others to follow.

Further study is expected to examine how other leading fashion companies have
framed corporate environmental sustainability and to what degree they have
implemented environmental management practices in their supply chains to
improve sustainability from the eco-effective perspective.

Acknowledgments The author thanks Hang Seng Management College for the funding sup-
porting the attendance of The 9th International Congress on Logistics and SCM Systems ICLS
2014.

References

Bianchi C, Birtwistle G (2010) Sell, give away, or donate: an exploratory study of fashion
clothing disposal behaviour in two countries. Int Rev Retail, Distrib Consum Res
20(3):353–368

Birtwistle G, Moore CM (2007) Fashion clothing–where does it all end up? Int J Retail & Distrib
Manage 35(3):210–216

Bonini SM, Oppenheim JM (2008) Helping ‘green’ products grow, The McKinsey quarterly. 1–8
Oct

Dyllick T, Hockerts K (2002) Beyond the business case for corporate sustainability. Bus Strategy
Environ 11(2):130–141

Ellram LM, Tate WL, Carter CR (2008) Applying 3DCE to environmentally responsible
manufacturing practices. J Clean Prod 16(15):1620–1631

European Commission (2011) Green public procurement textiles technical background report.
http://ec.europa.eu/environment/gpp/pdf/tbr/textiles_tbr . Accessed 28 Jan 2014

Fletcher K (2008) Sustainable fashion and textiles: design journeys. Earthscan, London
Fulton K, Lee SE (2013) Assessing sustainable initiatives of apparel retailers on the Internet.

JFMM 17(3):353–366
Ha-Brookshire J, Hodges Nancy N (2009) Socially responsible consumer behavior? Exploring

used clothing donation behavior. Cloth Text Res J 27(3):179–196
Hill J, Lee H-H (2012) Young generation Y consumers’ perceptions of sustainability in the

apparel industry. JFMM 16(4):477–491
McAfee A, Dessain V, Sjoeman A (2004) Zara: IT for fast fashion. Harvard Business School

Publishing, Cambridge
McDonough W, Braungart M (2002) From cradle to cradle. North Point Press, New York
McDonough W, Braungart M, Anastas PT, Zimmerman JB (2003) Applying the principles of

green engineering to cradle-to-cradle design. Environ Sci Technol 37(23):434A–441A
Morgan LR, Birtwistle G (2009) An investigation of young fashion consumers’ disposal habits.

Int J Consum Stud 33:190–198
Sull D, Turconi S (2008) Fast fashion lessons. Bus Strategy Rev 19(2):4–11
United Nations General Assembly (1992) Report of the United Nations conference on

environment and development. http://www.un.org/documents/ga/conf151/aconf15126-1anne
x1.htm. Assessed 28 Jan 2014

United States Environmental Protection Agency (2014), Wastes—resource conservation—
common wastes & materials. http://www.epa.gov/osw/conserve/materials/textiles.htm.
Accessed 28 Jan 2014

Waste and Resources Action Programme (2012) Time to unlock the value of household textile
waste, says WRAP. http://www.wrap.org.uk/content/time-unlock-value-household-textile-
waste-says-wrap. Accessed 28 Jan 2014

A Case Study of H&M’s Strategy and Practices 253

http://ec.europa.eu/environment/gpp/pdf/tbr/textiles_tbr

http://www.un.org/documents/ga/conf151/aconf15126-1annex1.htm

http://www.epa.gov/osw/conserve/materials/textiles.htm

http://www.wrap.org.uk/content/time-unlock-value-household-textile-waste-says-wrap

World Business Council for Sustainable Development (1992) Eco-efficiency learning module.
http://www.wbcsd.org/pages/EDocument/EDocumentDetails.aspx?ID=
13593&NoSearchContextKey=true. Accessed 28 Jan 2014

World Commission on Environment and Development (1987) Our common future. Oxford
University Press, Oxford

Young W, Tilley F (2006) Can businesses move beyond efficiency? The shift toward
effectiveness and equity in the corporate sustainability debate. Bus Strategy Environ
15(6):402–415

254 D. C. K. Ho

http://www.wbcsd.org/pages/EDocument/EDocumentDetails.aspx?ID=13593&NoSearchContextKey=true

16 A Case Study of H&M’s Strategy and Practices of Corporate Environmental Sustainability

Abstract
1…Introduction
2…Literature Review
2.1 Unsustainable Patterns of Clothing Consumption and Production
2.2 Eco-efficiency Versus Eco-effectiveness
2.3 Cradle-to-Cradle Approach to Corporate Sustainability
3…Methodology
4…Findings
4.1 H&M’s Mindset of Sustainability
4.2 H&M’s Practices of Sustainability
4.2.1 Fibers
4.2.2 Manufacturing
Water Usage
Environmentally Friendly Dyes and Fabric Waste
4.2.3 Distribution and Logistics
4.2.4 Store/Warehouse Building Efficiency
Building Energy/Efficiency
Product Packaging
4.2.5 Post-consumer and Beyond

5…Discussion
5.1 Waste Equals Food
5.2 Use Current Solar Income and Celebrate Diversity
6…Conclusion
Acknowledgments
References

MBAEDGETM

Lead Author: Katie Kross, MBA, Managing Director, Center for Energy, Development, and the Global Environment (EDGE), Duke University.

Climate Change & Business:

What Every MBA Needs to Know

Executive Summary

Climate change presents one of the biggest challenges to economies in the 21st century. The impacts of
climate change will affect where new offices and manufacturing facilities are sited, how leaders plan for and
respond to crises, how investors think about the cost of capital, how customers perceive the brands they buy,
where and how raw materials are sourced, and even, potentially, what materials are available for new
products in the future. Because of the widespread nature of impacts, these risks are relevant to MBAs in
functions including finance, strategy, procurement, product
development, marketing, real estate, operations/supply chain
management, and human relations.

Managers who understand the risks can also envision business
opportunities. Companies that act now to mitigate risks in their
supply chains, properties, and investment portfolios can gain
competitive advantage over industry peers. Acting on climate
also minimizes companies’ reputation risk with customers,
employees, and policy-makers. Finally, there are a host of
multi-billion-dollar growth-market opportunities that
entrepreneurs and investors can capitalize on. Every MBA
thinking about the future of business should understand the
risks—and opportunities—facing their industry from climate
change.

The Issue

The climate is changing as carbon dioxide (CO2) and other greenhouse gases emitted by industrial activity
interfere with the earth’s natural climate system. Heat-trapping gases concentrated in the atmosphere are
producing an overall rise in average global temperature (“global warming”), but also disrupting the
atmosphere’s typical patterns, producing complicated changes that are interrelated but not uniform.

Effects
The effects of climate change are already visible,
and accelerating. The extent and pace of change
will depend on how fast policy and business
mitigation strategies take effect. Climate change
effects include:

 Rising global temperatures. At the crux of

climate change is a rise in the average global
temperature. 2018 was the fourth hottest year
on record, with temperatures 0.79ºC (1.42ºF)
higher than average globally. Four of the five
hottest years on record have occurred between
2014-2018. i (Note that this warming does not
necessarily eliminate extreme cold events. As
climate change disrupts the flows of air and
water around the earth, there can be times of

“Climate change presents
significant risks to many

companies, by threatening
their assets and supply

chains. The more they
know about those risks, the

faster they can act to
address them.”

– Michael Bloomberg, CEO,

Bloomberg L.P.

Bloomberg 2016 Impact Report

Source: Climate Action Tracker 2018. 2100 warming projections
(Dec. 2018 update).
© 2018 by Climate Analytics, Ecofys and NewClimate Institute. All rights reserved. Available
at: https://climateactiontracker.org/global/temperatures/.

MBAEDGETM
Climate Change & Business: What Every MBA Needs to Know

extreme cold—for instance, when warm air displaces Arctic air over the U.S., causing a “polar vortex.”)

 Extreme heat. In the U.S., up to 26% of U.S. metropolitan areas could see more than 100 days a year of 95°F
heat by 2060–2080, versus only 1% today.ii Extreme heat intensifies the potential for drought and wildfires,
raises energy bills, presents health risks to populations, and decreases worker productivity in industries
like agriculture and construction.

 More extreme weather events in more locations. Climate change affects how much moisture the air can

hold, meaning that hurricanes (cyclones), rain storms, and snow storms all increase in intensity. Some
regions may experience extreme rainfall and flooding, even as others are experiencing water shortages
and wildfires (such as 2018’s Hurricanes Florence and Michael on the East Coast and wildfires in California).

 Sea level rise. As land ice in the Arctic melts and warming ocean water expands, sea levels are rising,

causing coastlines to move inland and increasing the destructiveness of storm surges. Even in the
absence of storms, “sunny day flooding” (or “nuisance flooding”) caused by sea level rise increasingly
interrupts business and damages properties in some coastal cities like Miami, FL. In the U.S. 40% of the
population (126 million people) live in coastal countiesiii that could be affected by rising sea levels.

 Agricultural growing region shifts.

With a warming climate, growing
regions for crops are shifting. For
example, the growing regions for
wheat in the U.S., Europe, and Russia
are creeping further north each year.
Heat, drought, and storms also
affect crop yields generally. Some
crops that have limited or
specialized growing regions—like
coffee, cocoa, peaches, almonds,
vanilla—are particularly vulnerable.

 Population displacement. Sea level

rise will force migration of people
from coastal areas and island nations
to higher ground. Other large
population shifts will occur as events
like prolonged drought and natural
disasters displace inhabitants.

As climate impacts worsen, there are
likely to be compounded impacts.
Population displacement, drought, and
food shortages may threaten local or
regional political stability. Extreme heat
and expanded ranges for water- and
mosquito-borne diseases will bring new
public health issues.

Causes
The changes to the climate are due to an increase in CO2, methane, and other greenhouse gases due to
industrial activity as well as deforestation (the removal of trees which naturally absorb CO2 from the
atmosphere). The most significant contributors to climate change include:

 The burning of coal, oil, and gas in the production of electricity, which emits CO2
 The burning of gasoline and diesel in transportation (cars, trucks, airplanes), which emits CO2
 Deforestation to clear land for agriculture, timber harvesting, and development
 Agricultural and industrial activities which release methane and nitrous oxide into the atmosphere

Regions of Greatest Potential Climate-Related Risk Exposure in the U.S.

Source: “Assessing Exposure to Climate Change in U.S. Munis,” Four Twenty Seven,
May 2018.
© 2018 Four Twenty Seven. http://427mt.com/2018/05/22/assessing-exposure-to-climate-change-in-us-
munis/

MBAEDGETM
Climate Change & Business: What Every MBA Needs to Know

Business Risks

In KPMG’s 2019 Global CEO Outlook, CEOs from across sectors
listed environmental/climate change risk as the number one
threat to growth—ahead of disruptive technology risk, cyber
security, and operational risk. iv Climate change impacts present
tangible and intangible risks to businesses—some of which
might be surprising.

Physical asset risks
In the immediate term, extreme weather events intensified by
climate change directly threaten real property assets. When
Hurricane Harvey hit Houston, TX in 2017, hundreds of corporate
campuses, manufacturing facilities, and refineries were flooded.
Businesses lost buildings, vehicles, and equipment. Twenty-five percent of the region’s oil and gas production
shut downv and corporate productivity was reduced by 10%. vi Munich Re estimates that natural disasters
globally caused $160 billion in damages in 2018 and notes that these disasters, particularly wildfires, are
worsened by climate change. vii Blackrock estimates that extreme weather events also pose growing risks for
the credit worthiness of state and local issuers in the $3.8 trillion U.S. municipal bond market.viii More intense
rain and snow events, wildfires, and droughts all have the potential to affect physical assets.

Supply chain disruptions
In a world of global supply chains, a company’s operations
can be interrupted even when its own facilities are not
directly affected by natural disasters. In 2011, when the
country of Thailand was crippled by extreme flooding,
Toyota had to suspend production at plants in North
America because Thai-made components were
unavailable.ix In another example, a record heat wave in
Australia in early 2019 affected the consumer goods
manufacturing company Mars. ”One of our facilities in
Australia had to shut down for a couple of days because the
temperature spiked, the price of electricity spiked at the
same time, and it was just no longer financially viable for us
to have that facility open and running and producing the
things that it it produces for our consumers in Australia,” said
Lisa Manley, Mars’ Senior Director of Sustainability
Engagement & Partnerships. She added: “I think that we’ve
got very real business risks as a result of climate change.”x

Raw material supply & price volatility risks
The growing regions and yields for many agricultural
products are shifting because of climate change. For
instance, in Brazil and Central America, 80% of the land
currently used to grow Arabica coffee will become
unsuitable by 2050 xi—a scenario likely to reduce coffee
supply and drive up prices globally. Companies that source
agricultural inputs need to take a good look at the
vulnerability of their suppliers under different climate
scenarios. Does their supply chain have redundancy? Are
there alternative growing regions for their products? Are
there ways to mitigate exposure or adapt? Starbucks, for
instance, is working directly with coffee farmers to adapt
growing practices and test new plant strains for a warming
world.

Companies with the biggest climate risk
exposure in 2019

Research firm Four Twenty Seven examined
climate risk for a 2019 Barron’s cover story. Their
list of companies with biggest risk exposure
might surprise you:

1. Norwegian Cruise Line Holdings (Consumer

Services)
2. Western Digital (Technology Hardware &

Equipment)
3. NextEra Energy (Utilities)
4. Micron Technology (Semiconductors &

Semiconductor Equipment)
5. Eastman Chemical (Materials)
6. Consolidated Edison (Utilities)
7. Seagate Technology (Technology Hardware

& Equipment)
8. Merck (Pharmaceuticals, Biotech & Life

Sciences)
9. Applied Materials (Semiconductors &

Semiconductor Equipment)
10. Public Service Enterprise Group (Utilities)
11. Dominion Energy (Utilities)
12. Royal Caribbean Cruises (Consumer Services)
13. Incyte (Pharmaceuticals, Biotech & Life

Sciences)
14. T. Rowe Price Group (Diversified Financials)
15. Bristol-Myers Squibb (Pharmaceuticals,

Biotech & Life Sciences)

Source: “An Exclusive Look at the Companies Most Exposed to Climate
Change Risk — and What They’re Doing About It”, Barron’s, Jan. 25, 2019.

“Over three-quarters of
CEOs (76 percent) say that

their organization’s growth
will depend on their ability

to navigate the shift to a
low-carbon, clean-

technology economy.”

– KPMG 2019 Global CEO Outlook

https://www.barrons.com/articles/climate-change-could-hit-norwegian-merck-and-these-companies-hardest-51548455187?tesla=y&mod=article_inline

MBAEDGETM
Climate Change & Business: What Every MBA Needs to Know

Policy risk
When policies (federal, state, or local) are enacted to restrict, penalize, or tax carbon emissions, companies
with high emissions face significant business risk. Though the U.S. has failed to adopt a federal climate change
policy or a carbon tax in the past, the possibility of new policy exists with every election. Energy companies
like electric utilities and oil & gas companies are
particularly exposed to policy risk. Companies may find
themselves with “stranded assets” if carbon taxes make
it too costly to operate carbon-intensive facilities.

Energy cost risk
Commercial energy costs are expected to rise in most
U.S. metro areas as temperatures go up and the need
for cooling increases (though facilities in some northern
cities might actually see costs go down as they reduce
their need for heating). Electric utilities with
infrastructure vulnerable to flooding, hurricanes, or
wildfires are seeing the costs to manage these risks go
up, and those with relatively high fossil fuel-based
generating assets will also face higher exposure to
carbon policy risk—costs which they will pass on to
customers. Energy-intensive industries are particularly
at risk of rising energy costs.

Reputation risk
In the age of social media, consumers increasingly hold
companies accountable for social and environmental
positions and are quick to support or abandon brands
based on values. Consumer-facing brands that fail to
address climate change issues face potential public outcry and even boycotts from some consumer
segments. Failure to address climate can also hurt a company’s image with employees. In May 2019, for
example, 7,700 Amazon employees made news as they formed a group called Amazon Employees for
Climate Justice and spoke at the company’s shareholder meeting to call for stronger climate action.

Access to capital
All of the above risks have the potential to affect a company’s cost of capital. Investors are beginning to
require greater disclosure of climate-related financial impacts. The Task Force on Climate-related Financial

Disclosures, chaired by Michael Bloomberg, has put forward
recommendations for companies to disclose a wide range of risks.
Insurance companies are also taking note. “We are very focused on carbon
transition risks and how those risks are affecting all kinds of sectors
globally,” Jim Hempstead, managing director of the ESG Group at Moody’s,
said in an interview in May 2019. xii

Business Opportunities

Companies and entrepreneurs who get ahead of climate risk stand to
realize tremendous value. Many companies have corporate sustainability
departments that are setting climate goals, assessing risks, and
communicating with investors. Corporations that adapt their supply chains,
operations, and infrastructure can gain first-mover advantages over industry
peers and capture new business opportunities. In a June 2019 survey by the
nonprofit CDP, 225 of the world’s 500 biggest companies estimated that
climate-related opportunities represent potential financial impacts totaling
over $2.1 trillion.xiii

“The implications for investors
go beyond coastal real estate.

Think of agriculture (crop
yields), insurance (property and

casualty premiums) and electric
utilities (risks to plants; peak

electricity demand). The
damage from storms, floods and

heat waves can also disrupt
corporate supply chains — and

pressure public finances, posing
risks to municipal and sovereign

bond holders.”

– BlackRock

“Getting Physical: Scenario Analysis for Assessing Climate-Related Risks,” 2019

Business Advocacy on Climate

CEO Climate Dialogue
CEOs from Citi, DuPont, Unilever,
Shell, Ford, and other companies are
advocating for U.S. federal policy
action on climate.

We Mean Business
We Mean Business tracks 900+
companies’ corporate climate action
commitments like renewable energy,
land use, and emissions targets.

Climate Leadership Council
Founded with member companies
including Johnson & Johnson, GM,
Microsoft, and Pepsico, this institute
advocates policy action including a
carbon tax & dividend policy.

https://www.fsb-tcfd.org/

https://www.ceoclimatedialogue.org/

https://www.wemeanbusinesscoalition.org/companies/

https://www.clcouncil.org/founding-members/

MBAEDGETM
Climate Change & Business: What Every MBA Needs to Know

Resilient real estate & physical infrastructure
There is a tremendous amount of innovation happening in the world’s
major cities as they think about resilience strategies (see 100 Resilient
Cities and C40 Cities). Companies with real estate assets can identify and
fortify buildings that are at risk of flooding (moving electrical and
heating/cooling equipment to higher floors, for instance). They might also
install onsite solar, wind, and battery storage systems to provide
emergency power to facilities in areas where electric power could fail, or
might consider relocating altogether. Real estate developers and
investors should use climate scenarios and sea level rise projections
when thinking about siting new developments. Entrepreneurs with
energy-efficient and climate-resilient building technologies will also see
new growth opportunities.

Resilient & redundant supply chains
Many companies are examining their supply chains for potential climate-
related risks—especially for sites vulnerable to extreme weather events—
and developing contingency plans. For example, General Motors (GM)
developed supplier mapping to help provide visibility into vulnerable
suppliers and developed an active crisis center that monitors the weather
and begins contacting suppliers when extreme weather events are
forecast. xiv

Low-carbon energy & energy storage
One of the biggest shifts in response to climate change will be a transition
from fossil fuel-based power generation to low-carbon energy (solar,
wind, hydropower, nuclear). Bloomberg New Energy Finance projects that
of $11.5 trillion being invested globally in new power generation capacity

between 2018 and 2050, $8.4 trillion will go to wind and solar and a further $1.5 trillion to other zero-carbon
technologies such as hydro and nuclear. xv Energy storage (batteries) and related grid infrastructure are also
key to this transition. The Bill Gates-backed fund, Breakthrough Energy Ventures, plans to invest $1 billion in
energy storage, liquid fuels, off-grid microgrids, low-carbon building materials and geothermal energy
technologies.

Corporations thinking about their climate impacts have to think about where their energy comes from.
Through the RE100 initiative, 175+ corporations have committed to achieve 100% renewable status, while some
companies like Apple and Google announced in 2018 that they are already meeting that goal through a
combination of direct-owned and grid-purchased renewable energy. In many markets, the economics of wind
and solar are now at price parity with fossil fuel-generated power, so companies making a switch to
renewables can realize cost savings while also maximizing goodwill with customers and employees.

Low-carbon transportation
The transportation sector is likely to undergo a dramatic
transformation in a short period of time. McKinsey & Co.
predicts that by 2021, more than 50 percent of vehicles
sold could have electric power trains (versus 5 percent of
vehicles sold in 2016). xvi Experts foresee the rapid adoption
of electric and hydrogen-powered buses, light-duty trucks,
tractor trailers, ships, and airplanes in addition to cars.
Companies developing batteries, charging infrastructure,
and alternative fuels technologies will all see market
opportunities. Corporations in many sectors are converting
their corporate fleets and shifting their shipping and
transportation footprint to low-carbon options.

Growth market opportunities

Carbon removal & sequestration

technologies (carbontech)
Climate-resilient real estate & building

systems
Adaptation infrastructure (sea walls, flood

defense systems, raised roadbeds)
Renewable & low-carbon energy
Energy efficiency technologies
Batteries, energy storage, “smart grid”

technologies
Electric vehicles & charging infrastructure
Alternative fuels
Biotech / climate-resilient agriculture

(agtech)
Meat-alternative proteins
Transportation/shipping through Arctic

routes
Cooling/air conditioning
“Last-chance” tourism
ESG (environment-social-governance)

investing
Climate bonds & insurance products
Climate predictive analytics & risk

management

Source: Axios, June 2019. Data: IHS Markit H1 Sales-Based
Powertrain Forecast; Chart: Andrew Witherspoon/Axios.

https://www.100resilientcities.org/

C40 is a global network of mayors of the world’s leading cities that are united in action to confront the climate crisis.

http://there100.org/

MBAEDGETM
Climate Change & Business: What Every MBA Needs to Know

Agriculture products
Beef and dairy farming is one of the biggest emitters of the greenhouse gas methane. For that reason, there’s
a new push for plant-based proteins (like Impossible Burger), lab-grown meat (Memphis Meats), and
alternative proteins (like Exo’s cricket protein). Barclay’s predicts the alternative meat market could be worth
$140 billion by 2029. xvii Biotech crops that are heat-tolerant and drought-resistant, as well as climate-adaptive
agtech innovations will also be big. Companies like McDonald’s and Nestlé are moving to risk-proof their ag
supply chains, and other companies are realizing opportunities to address this market. IBM, for instance, is
developing AI technologies to help farmers improve yields integrating weather data with “smart” irrigation
systems as well as blockchain technologies to make food supply chains more sustainable.

Climate finance, insurance & risk management
Insurance companies (particularly re-insurers) and investors are beginning to price climate risk into their
portfolios. ESG (environmental-social-governance) investing markets are growing, including funds which seek
to exclude highly exposed companies and/or include climate leaders. Blackrock’s Global Head of Sustainable
Investing, Brian Deese, has said, “The combination of advances in data sciences, including geolocation data
and climate modeling, have allowed us to more precisely assess the investment implications of climate-
related risks.” HSBC and the Climate Bonds Initiative assess the market for climate-aligned bonds at $1.45
trillion.xviii Startups like Jupiter see opportunities in using predictive analytics to forecast climate risks for
companies and investors.

Carbon solutions
Technologies to remove carbon from the atmosphere (carbon capture and sequestration) are still frontier
technologies but they are poised to be huge moneymakers if the technologies pan out. Carbon Engineering, a
startup with a system that pulls CO2 out of the air (“direct air capture”), has raised $100 million in VC funding.
Other companies, like LanzaTech and NET Power, want to capture and reuse CO2 at the point of emission. The
accelerator Y Combinator announced a call in 2018 for entrepreneurs with carbon removal technologies. And,
if other solutions fail, some investors are banking on a host of far-out “geoengineering” strategies, like Ice911,
which attempt to cool the planet through large systems-level environmental innovations.

Takeaways for MBAs

1. Climate change will affect businesses and supply chains in many ways, some of which are foreseen,
some of which will be surprising. Companies may face direct physical risks to their assets, supply
chain disruptions, policy and reputation risks, and access to capital risks.

2. As with any global challenge, there are business opportunities for savvy entrepreneurs, investors, and
corporate actors. Companies stand to gain first-mover advantages in mitigating climate risk exposure
now. There are also multi-billion-dollar markets available to entrepreneurs in clean energy, low-
carbon transportation, resilient agriculture and real estate, climate finance, and carbon technologies.

3. Every MBA graduating today should be thinking about how climate change and its related effects will
impact their industry, supply chains, and consumers in the future.

Calculate the price of your order

Type of paper needed:

Pages:

You will get a personal manager and a discount.

Academic level:

We'll send you the first draft for approval by at

Total price:

$0.00

Power up Your Academic Success with the
Team of Professionals. We’ve Got Your Back.

Power up Your Study Success with Experts We’ve Got Your Back.

Order Now Order Now