Seminar – Physical climate risk and firms’ adaptation strategy

Ms Xia Li, Questrom School of Business, Boston University, USA

How do firms adapt to the risks posed by climate change? Many studies have considered business adaptation to short-term shocks and business cycles, but few have investigated risks that resemble those posed by climate change: long-term, systemic, and irreversible. In this paper, Xia Li builds a novel dataset that compiles information on the adaptation strategies of publicly traded companies across the globe and merge it with climate science data. Using this data, she examines whether, how, and under which conditions firms adapt to physical climate risk. She has found that firms take a targeted approach to adaptation – responding more to those aspects of climate risk that are likely to affect them directly. She shows that firms with better environmental and social performance ratings are more responsive to varying climate risks. She then reports evidence that perception and capabilities may provide the mechanism for different adaptation rates.

Speaker bio

Xia Li is a PhD candidate in the Strategy and Innovation Department at Boston University’s Questrom School of Business. Xia’s research sits at the intersection of strategic management, corporate sustainability, and innovation. Her research has been published in both top-tier management (Strategic Management Journal) and natural science (Nature Communications) journals and has received several research awards. In particular, her research has been recognised with the Best PhD Paper Award 2022 by the UN PRI (Principles for Responsible Investment), the Global China Initiative Research Fellowship (2020-2022), the Questrom Award for Outstanding Doctoral Research 2021, and the Runner-up for the Ivey/ARCS Ph.D. Sustainability Academy Best Paper Award 2021. Xia holds a Master of Public Administration from the School of International and Public Affairs, Columbia University in New York City, United States; and received bachelor’s degrees (BA, BS, and Economics) from Peking University in Beijing, China. Prior to her doctoral studies, Xia worked as a Regional Associate Director at Aon and a Consultant at Environmental Resources Management in Hong Kong.