How does digitalisation support firms' strategies for climate change mitigation and adaptation

Fotios Kalantzis, Effie Kesidou, Anastasia Ri and Stephen Roper

No 2025/04, EIB Working Papers from European Investment Bank (EIB)

Abstract: This paper investigates how firms navigate the dual challenges of digitalisation and climate change. Our comprehensive approach considers climate change strategies, distinguishing adaptation-only, mitigation-only and 'dual' adaptation and mitigation strategies. Drawing on theoretical insights from the literature on digital affordances, we argue that digitalisation enables firms to recognise better the opportunities and risks associated with climate change. These affordances significantly influence strategic decisions regarding adaptation, mitigation, or a combination of both, ultimately impacting the intensity of their implementation efforts. To empirically examine these dynamics, we analyse data from the 2022 and 2023 European Investment Bank Investment Survey waves. Our sample includes over 24,000 firms, spanning small and medium-sized enterprises (SMEs) and large businesses across 27 EU Member States and the USA. Our results reveal that firms with higher digitalisation are more likely to adopt a 'dual' strategy that combines mitigation and adaptation efforts rather than pursuing a single climate strategy or no climate response. Furthermore, we find a positive relationship between digitalisation and climate action intensity across mitigation and adaptation measures. Importantly, these patterns hold consistently across different sectors and firm sizes. Overall, our study sheds light on the critical role of digital technologies in shaping firms' climate responses, emphasising the need for organisations to leverage their technological strengths to address environmental challenges effectively.

Keywords: Business; Strategic management; Digitalization; Climate change; Climate protection; Environmental management; EU countries; USA (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:eibwps:319607

DOI: 10.2867/1306278

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