Center for Sustainable Enterprise and Regional Competitiveness

College of Management

Climate Change

Climate change is forcing a dramatic transition toward a low-carbon economy, and business faces considerable challenges in developing viable response strategies. Considerable uncertainties exist concerning the extent and pace of climate change, the regulatory response, and the potential impact on markets and technologies. Different countries are adopting diverse approaches to addressing climate change that have significant business implications. The center collaborates with overseas universities in order to undertake wider international and comparative research on these topics.

Current Research Collaborations

Organizational Paths to Carbon Neutrality

David Levy is part of a research collaboration with the University of Canterbury, New Zealand, to examine organizational paths toward carbon neutrality. The project is funded by a NZD $824,000, three-year Marsden research grant.

Business strategic responses to climate change

Companies vary considerably in their perspectives and strategies regarding climate change. Some focus on technological innovation, some on carbon trading, some on financial risk mitigation, some on green market positioning, while some do very little at all. Understanding the drivers of business strategies is crucial, because an adequate response to climate change requires mobilization of the financial, technological, and organizational resources that business possesses.

David Levy has a long-standing collaboration with Prof. Ans Kolk and colleagues at the University of Amsterdam, The Netherlands. Their work has examined the oil industry’s response to climate change in Europe and the United States and, more recently, the emergence of carbon disclosure as a form of corporate governance.

David Levy and Nardia Haigh are also part of a new initiative to study corporate carbon strategies in the context of global carbon governance systems, in collaboration with Oxford University’s Smith School of Enterprise and Environment and the University of Western Sydney.

Nardia Haigh and Paul Case are undertaking a cross-industry project using scenario planning to identify which industrial sectors are best prepared for climate change adaptation and those that may be surprised by the impacts of climate change.

New governance systems for a low-carbon economy

New forms of societal governance are emerging in an effort to navigate this transition, including: international agreements, such as the Kyoto Protocol; mandatory carbon trading systems; voluntary, business-led carbon reduction initiatives; and initiatives from non-governmental organizations (NGOs), frequently in partnership with business, such as the Carbon Disclosure Project. NGOs are pressing for carbon disclosure, and investors are taking note of the implications for cost of capital and asset valuations. There is a need for research on the role of business and carbon information systems in these new forms of governance, in terms of their capacity, responsiveness, effectiveness, and accountability. David Levy is part of a network of 19 universities in Europe and North America with a research focus on the comparative analysis of climate governance systems, including states, markets, and NGOs.

Other research directions:

The emerging carbon trading regime

Carbon trading is at the heart of the emerging response to climate change. Businesses are beginning to prepare for a carbon-constrained environment in which they may buy carbon credits or have the opportunity to profit from selling them. Carbon trading is evolving in a fragmented manner, that is both private and public, across regions and countries. The Regional Greenhouse Gas Initiative (RGGI) will create a formal, mandatory, but market-based and flexible system of tradable allowances within ten participating northeastern US states. There is an urgent need for research that compares RGGI to other mechanisms, such as the European Trading System and voluntary markets, in terms of effectiveness and impact on regional competitiveness.

Growth of clean energy clusters

Climate change is reconfiguring the industrial landscape and competitiveness of countries, regions, and cities. Industries heavily reliant on fossil-fuels are in decline, while new technologies and financial services related to an emerging “clean energy” sector are growing rapidly. There is a critical need to understand the uneven geographic impact of these trends and the policy tools available to policy makers to encourage economic development, investment, and employment.

Massachusetts is home to an emerging cluster of clean energy companies and related university expertise, and possesses substantial corporate expertise and labor skills in related software and electronics. Financial service firms are also adjusting to the new environment. The relevant local business sectors are part of global value chains, so local competitiveness needs to be analyzed in this international context.

David Levy, David Terkla, and Charles Jones have undertaken a substantial study of the regional clean energy cluster in a project funded by the Massachusetts Renewable Energy Trust.