1 Seed Money Grant Project Proposal
Climate Perception and Adaptation Strategies in the Food Supply Chain Abstract
Climate change and the impacts of extreme weather events represent a major threat to company operations and supply chains. However, there are few studies regarding climate change risks to firms and their adaptation responses. This study proposes the investigation of the determinants of climate risk perception and adaptation strategies in the food supply chain in Brazil. More specifically, we focus on the soya supply chain, considering its economic importance and its vulnerability to climatic events. The study is divided in two phases: in the first phase we develop a quantitative study to test a model of climate risk perception and adaptation, and in the second phase we discuss the findings and implications in four workshops held with relevant stakeholders. Results are expected to be of academic and managerial relevance. In terms of contribution to the business literature, this study bridges the gap between climate risk perception and adaptation strategies and analyzes perspectives at different nodes of the supply chain. The results also bring light into the influence of social context on the adaptation to climate change. As managerial contribution, this study aims to foster risk awareness and develop climate communication strategy via recommendations for firms as well as for public policies. The project represents a continuation of the partnership of the Centro Latinoamericano-Suizo at the University of St. Gallen (CLS-HSG) together with the Centre of Excellence in Logistic and Supply Chain (GVcelog) at Fundação Getulio Vargas-EAESP. Under this collaboration, there has been qualitative investigations of the impacts of natural disasters and climate change on supply chains. Through this Seed Money Grant proposal, we hope to further strengthen this partnership, to scale the knowledge already built, and to broaden the project into a larger quantitative study.
Summary
This study proposes the investigation of the determinants of climate risk perception and adaptation strategies in the food supply chain. Disasters caused by extreme weather events and climate change have steadily increased in the last decades (George, Schillebeeckx, & Liak, 2015). As organizations are interconnected in supply chain networks, their interdependence can magnify the consequences of climatic events and thereby disrupt business continuity (van der Vegt, Essens, Wahlstrom, & George, 2015). Firms need to therefore analyze the vulnerability of their operations and supply chains to develop an adaption strategy.
However, studies demonstrate that despite the vulnerability of firms and supply chains to climate events, risk management activities are still widely neglected in developing countries such as Brazil (Gutiérrez, Engle, De Nys, Molejón, & Martins, 2014). Particularly in the food supply chain, firms are not aware of the risks posed by climate change and the cumulative effects of slow onset events such as droughts. The objective of this study is to investigate how firms perceive climate risk and what their adaptation responses to those threats are. Using a quantitative research approach, we test the antecedents of climate risk perception, and how risk perception determines the adaptation strategy at firms.
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We selected the soya supply chain in Brazil, considering its economic importance and its vulnerability to climatic events. Brazil is one of the major food producers and exporters (Earth Security Group, 2015), and climate change scenarios are expected to increase water scarcity and climate risk of soya production in the central-south regions (Brazil, 2015; Monteiro, Pellegrino, Assad, Nakai, & Oliveira, 2015). However, adaptation measures are still underused in Brazilian agriculture and only 5% of the soya production is irrigated (GV Agro, 2016; Monteiro et al., 2015). Therefore, there is a need to study the level of risk awareness and preparedness in the soya supply chain. This project is divided into two phases: the first phase consists of the development and test of a model of climate risk perception and adaptation, using a cross-sectional survey. In the second phase, we seek to develop four workshops for the discussion of the findings in view of developing recommendations for private adaptation as well as for public policies.
This proposal represents a continuation of the research partnership between the University of St. Gallen and Fundação Getulio Vargas-EAESP in the investigation of the impacts of climate and natural disasters on the supply chain. Previous studies were fully financed by Fundação Getulio Vargas-EAESP, and for the present proposal we search for the support of a Seed Money Grant from the State Secretariat for Education, Research and Innovation to consolidate this partnership. The expected results are of relevance for science and practice. In terms of academic contribution, this project combines the literature of climate risk perception and adaptation in a measurement model and tests the causal relationship between the constructs. Moreover, we contribute to the discussion of supply chain resilience and the need of coordination among organizations. In terms of managerial contribution, this study brings light into the companies’ perception of climate risk and their level of preparedness for future extreme events. Considering that adaptation measures and innovation need a proper context to be developed and assimilated (Nelson & Winter, 2002), the results of this project will help identify the necessary movements to increase awareness and adaptation. These aspects include public policies and climate change communication strategy.
Relevance, objectives and justification
Climate change represents a major challenge for society and for businesses. Besides the pressure to reduce emissions of greenhouse gases (GHG), firms face the threat of increasing occurrence of extreme weather events (IPCC, 2012). A report from MunichRe (2014) estimates that the consequences of large natural disasters will amount in up to 4% of global GDP in the near future. The impacts of extreme weather events are unevenly distributed across firms, and industries that are more dependent on natural resources present higher vulnerability, such as in the case of energy, transportation, tourism and agriculture (IPCC, 2012; Winn, Kirchgeorg, Griffiths, Linnenluecke, & Gunther, 2011). Particularly in developing countries, agricultural activities are expected to double by 2050 (UNESCO, 2015); thus, the challenge for countries such as Brazil to address the necessary adaptation and to increase the resource efficiency.
Private adaptation is defined as the ability of firms and individuals to react to the impacts of weather events or to proactively anticipate the necessary measures to overcome long-term climate variability (IPCC, 2012). The extant literature suggests that adaptation is subject to a myriad of factors that act at different levels and influence a firm’s responses. For some firms, the uncertainty
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perceived in extreme weather events may not encourage to take immediate actions, so they assume a “wait and see” strategy (Berkhout, Hertin, & Gann, 2006). In fact, firms’ responses to climate risks vary broadly from proactive and innovative initiatives to reluctance and inaction (Galbreath, Charles, & Klass, 2014; Hoffmann, Sprengel, Ziegler, Kolb, & Abegg, 2009).
Firms’ adaptation responses depend on the level of perceived risk. The perception of climate risk is influenced by previous experience, cognitive as well as socio-cultural factors (van der Linden, 2015; Wachinger et al., 2010; Zaalberg, Midden, Meijnders, & McCalley, 2009). Faced with extreme events, firms may react with short-term defensive capabilities, using slack resources, flexibility and improvisation to overcome the event (Linnenluecke et al., 2012). However, adaptation to climate change goes beyond an immediate crisis management and firms need to plan long-term adaptive responses (Dai, Kesternich, Loschel, & Ziegler, 2015; Leiserowitz, 2006). To date, there are few studies regarding business adaptation to climate change. Based on the literature gaps, we propose that experience and social context are the antecedents of climate risk perception, and that the level of climate risk perception determines the adaptation strategy. The two research objectives are: (i) the analysis of differences in risk perception as a function of previous climate experiences, industry norms and social-cultural context (values, beliefs); and (ii) the analysis of the mediating process of risk perception in explaining the adaptation responses. The academic contributions of this study are three-fold. First, it bridges a literature gap with a conceptual and measurement model of how climate risk perception affects adaptation strategy. Second, the study contributes to the supply chain literature in investigating the perspectives at different nodes and within different industries in the supply chain. Third, this study examines the influence of social context in promoting a firm’s awareness and adaptation to environmental changes. Particularly in the case of Brazil, where the reliance and use of natural resources is more intense, the subject achieves greater relevance (Berrang-Ford, Ford, & Paterson, 2011).
Research plan and timeframe
This study involves two phases that are consecutive and complementary. The first phase consists of a quantitative study, with the development of measurement scales that integrate climate risk perception and adaptation. The scales will be pre-tested and discussed with practitioners and researchers to verify the content validity of the survey instrument. We will then conduct a survey with producers and processors of soya in the central-south regions of Brazil. Firms will be selected out of the existing database of APROSOJA (Associação dos Produtores de Soja) and will be accessed by email and telephone. We expect that most of the interviews will be conducted by telephone and such process is estimated to take three months. Meanwhile, we will also collect secondary data with the associations and governmental agencies to avoid common method bias (Podsakoff, MacKenzie, Lee, & Podsakoff, 2003).
In the second phase, we will develop four participatory workshops where the main research results will be presented for discussion with relevant stakeholders, interested experts and government agencies. The objective of this phase is to explore possible actions in terms of public policies, engagement campaigns and risk management initiatives to reduce climate vulnerability. The workshops are also expected to bring light to the demands and/or opportunities of innovation in
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terms of climate adaptation. The planned locations for the workshops are São Paulo, Curitiba, Porto Alegre, and Brasília. Table 1 brings the estimated timeframe and milestones for the project that is expected to start on November 2017.
Table 1 – Project Timeframe and Milestones
Months
Activities 1 2 3 4 5 6 7 8 9 10 11 12 Milestones
First Phase - Survey
-Scale Development -Consultation to experts
-Pre-test Tested Scales- Survey
-Contact managers - 1st call
-Search/correct contact details
-Contact managers - 2st call Sufficient Valid Responses
-Data Analysis Results Report
Second Phase - Workshops
-Send invitations
-Workshops (4) Workshop Realization
-Workshops feedback analysis Workshop Report
Elaboration of Final Report Final Report
Expected impact and follow-up activities
The research results, workshops and reports produced under this project are expected to have academic and managerial impacts. In terms of academic impact, we plan one publication for an international peer-reviewed journal and one technical article to be submitted to specialized forums. The target peer-reviewed journals are Business Strategy and Environment and Journal of Cleaner
Production. Furthermore, results will be presented at local and international conferences.
Together with the second phase consisting of workshops, we expect to promote the communication of the findings with relevant stakeholders that are involved with public policies and with research projects. Thus, generating an action plan for the sector and fostering further research in business management. Moreover, the lessons learned will also be discussed at MBA courses dedicated to supply chain and agribusiness at Fundação Getulio Vargas, as well as in workshops under the scope of Latin American studies in Switzerland. Finally, a broader audience is expected to be reached through a newspaper article (in Brazil) and social networks (such as LinkedIn blog posts).
The continuation of this project is expected to be an international comparative study of the food supply chain to identify the influence of institutional context in the variables and to promote the exchange of knowledge. The project proposal will be also submitted to FAPESP’s (São Paulo Research Foundation) special call for proposals on “Research Program in Global Climate Change” (http://www.fapesp.br/en/11069).
Research collaboration
The project will be developed in a partnership between the Centro Latinoamericano-Suizo at the University of St. Gallen (CLS-HSG) together with the Centre of Excellence in Logistic and Supply Chain (GVcelog) at Fundação Getulio Vargas -EAESP. The project is a continuation of a series of research studies on the impacts of natural disasters on the supply chains. The first study, “Impacts of Natural Disasters on Supply Chains” (2015), was followed by the investigation of “Climate
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Change and Natural Disasters: Risk Management in Food Supply Chain” (2016 to present). Under the scope of the second study, two specific investigations were developed to analyze the resilience of the food supply chains affected by extreme weather events and perceived risk of climate events. Results of previous studies have been presented in four conference articles (Academy of Management Meetings in 2016 and 2017, POMS Conference 2015 and EUROMA 2015), one article published at a business magazine (GVexecutivo), and two manuscripts submitted to international journals (International Journal of Operations Management and Natural Resources
Forum). Additionally, the findings were also disseminated in an article published in a newspaper
of major circulation in Brazil (Estado de São Paulo). The field research also contributed to the development of two PhD theses.
Experience of the applicants
The research group is composed of one Postdoc Researcher at the CLS-HSG (Principal Researcher) and two Professors of Fundação Getulio Vargas-EAESP as Brazilian counterparts, among them the Coordinator of GVcelog. The three researchers have been working together since 2015 in the studies described above and are co-authors in the above mentioned publications. The Principal Researcher has a thorough research record, including academic and applied publications, in the fields of business strategy and sustainability, with special emphasis on supply chain implications. As assistant professor she has coordinated the development of research projects with systematic methodical approach to data analysis and interpretation. These competences are complementary to the knowledge and research experience in the field of logistic and supply chain management of the Brazilian counterparts. The GVcelog Coordinator has had success in managing PhD students and researchers in the previous studies. Moreover, Fundação Getulio Vargas has a strong reputation in Brazil and the local presence is key in accessing firms and relevant stakeholders as well as in engaging researchers in the study. The previous studies have been fully financed by Fundação Getulio Vargas (GV Pesquisa), for this proposal we search for the support of the Seed Money Grant from SERI to strengthen our partnership.
Promotion of female and young researchers
This project is headed by three female scientists at the level of professorship, but in different career development stages. The Principal Researcher is currently fully dedicated to her postdoctoral researcher. The first Brazilian counterpart is a professor, Coordinator of GVcelog, and is involved in academic and applied research as well as teaching activities. The second Brazilian counterpart is also a professor and the Head of Operations Department at Fundação Getulio Vargas-EAESP. The three researchers are members of editorial commissions of journals and academic conferences in the field. Apart from the main researchers, two PhD students and one researcher will also be involved in the development and field work of the project. Therefore, the project will also contribute to the development of two PhD theses.
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