Are we ready for climate risk? Assessing the bottom-up climate maturity

ABSTRACT

Nationally Determined Contribution in UN members focuses on the readiness for national mitigation and adaptation. There still remains a need for firm climate data relevant to measuring the climate situation. Many studies have concluded that the successful path of climate risk adaptation and mitigation should work together between top-down (national) climate policy and bottom-up (firm) climate policy. To address this concern, this study empirically assessed climate maturity, measured by the firm’s ability to mitigate and adapt to physical and transition risks. Furthermore, the authors analysed the influential factors enhancing climate maturity using the Task Force on Climate-related Financial Disclosures framework with multiple discriminant analysis (MDA). This research gathered empirical data from listed companies in Thailand and conducted in-depth interviews using two case studies. Our quantitative model using clustering displayed the low maturity of the Thai firms relating to climate risk, except for the energy sector. Large companies perform better in terms of climate risk. After analysing stepwise MDA, two significant factors were found to enhance climate mitigation and adaptation: climate strategy and climate metrics. Finally, a climate policy to increase climate maturity will be proposed.

KEYWORDS:

• Climate change risk
• climate mitigation
• climate adaptation
• firm climate risk maturity
• sustainability

Public interest statement

Thailand is proposing plan to become carbon neutral and the net-zero emission target by 2050 and 2065 respectively. This goal will be realistic if firms are ready to cope with the climate risk. This study then empirical assessed the readiness of Thailand listed companies relating to climate adaptation and mitigation. The result showed that most of the companies aware of climate crisis but they are not ready yet to achieve carbon neutral and net-zero target. The ability to cope with climate crisis depends on size, sector. Our work suggested that company should start from understanding how to report the three scope of carbon accurately.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

The data that support the findings of this study are available from the corresponding author upon request.

Additional information

Funding

This research is operated under ASAHI Glass foundation scholarship.

Notes on contributors

Varanya Tilokavichai

Varanya Tilokavichai (Ph.D.) is an Assistant Professor in Graduate School of Management and Innovation (GMI), King Mong-kut’s University of Technology Thonburi. (KMUTT), Thailand. Her researches focus on social enterprise and climate change. She has conducted extensive studies on the role of social enterprises in addressing environmental challenges, emphasizing sustainable business models and community engagement. Her work delved into the impact of climate change on populations and the potential for social enterprises to facilitate climate risk adaptation and mitigation. Given her expertise, in this paper, she contributed in-depth analysis to inquire existing strategies and challenges in combating climate risks from two case-studies. Apart from academic life, she consults companies relating to adaptability toward net-zero.

Patipan Sae-Lim

Patipan Sae-Lim, (Ph.D.) is an Assistant Professor in Graduate School of Management and Innovation (GMI), King Mongkut’s University of Technology Thonburi. (KMUTT), Thailand. He also certifies with three global certifications: 1) Sustainability and Climate Risk (SCR)-Global Association of Risk Professionals (GARP.), 2) COSO Enterprise Risk Management (ERM)-The Institute of Internal Audit (IIA.), 3) ISO 22301 Lead Implementer- Business Continuity Management- PECB. His research areas cover sustainability and climate risk, enterprise risk management, crisis management. Also, he received research fund from KMUTT and ASAHI Glass foundation in 2022. Before turning to the academic world, he worked across various industries for a decade, including in banking and telecommunications, as well as the school of medicine.