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

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.