Adaptation Measures of Energy and Utility Companies to Cope with Water Scarcity Induced by Climate Change

Resource-intensive business plays a fundamental role in causing climate change through the
emission of large amounts of GHGs (greenhouse gases), and, in turn, climate-induced physical
changes affect companies. The IPCC (Intergovernmental Panel on Climate Change) reports an
increase in the frequency and severity of extreme weather and climate events. Droughts represent
a major challenge for energy and water businesses, in terms of both exacerbation of dry climates
and increase in the number of territories that experience water shortage. On the basis of an
analysis of the energy and utility companies operating in different continents, the objective of this
empirical research is twofold: on the one hand, it examines how these companies perceive the
changes in water availability induced by climate change (as well as the potential impacts on
business); on the other hand, it analyses the corresponding measures that these companies
adopt to cope with changes in hydrology and water resources driven by climate change.Data from
the Carbon Disclosure Project (CDP) provide valuable information about business climate-related
responses of several of the world’s largest firms. Our results show that, in the energy and water
sectors, some adaptive measures are starting to be implemented to deal not only with the risks
but also with the opportunities related to climate-induced physical changes, thus leading to interesting
innovation. The paper concludes that anticipated positive effects could drive energy and
utility companies towards a proactive stance to achieve a competitive advantage and trigger innovative
trajectories.