The risk of corporate lock-in to future physical climate risks: the case of flood risk in England and Wales
Shilpita Mathews,
Swenja Surminski and
Viktor Roezer
LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library
Abstract:
There has been a big shift in corporate awareness of climate risks in recent years. While external pressure from investors and regulators to disclose and mitigate exposure of businesses to climate risks is increasing, many projected impacts are still hardly understood. This includes the risk of lock-ins in the face of increasing physical risks from climate change. Using the example of flood risk in England and Wales, the study looks at both the evidence and drivers of business lock-ins to physical risks from climate change. The paper adopts a multi-methods approach consisting of a summary of the empirical evidence of lock-ins in the literature, a case study analysis of current and future flood risk of recently completed business premises in England and Wales and the results of a survey among business owners in the UK. The findings show that business decisions made today, such as site selection or operational choices, can lock businesses to future risk trajectories that may be difficult and costly to change. Gaps between flood risk awareness and exposure in sectors such as manufacturing and finance were identified and attributed to low business capacity to understand site-level risk exposure and poor internal alignment between organisational actors. The results demonstrate that there is a business case for corporate risk assessment, disclosure and adaptation investments.
Keywords: lock-in; SME; flooding; climate change; risk disclosure; risk assessment (search for similar items in EconPapers)
JEL-codes: J01 R14 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2021-11-22
New Economics Papers: this item is included in nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:112807
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