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BASXXX10.1177/0007650315578450Business & SocietyBackman et al.

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DOI: 10.1177/0007650315578450
Change Strategies and bas.sagepub.com

Public Policy: A New

Resource-Based View Perspective

Charles A. Backman1, Alain Verbeke1,2,

and Robert A. Schulz1

Abstract
Effective public policy to mitigate climate change footprints should build
on data-driven analysis of firm-level strategies. This article’s conceptual
approach augments the resource-based view (RBV) of the firm and identifies
investments in four firm-level resource domains (Governance, Information
management, Systems, and Technology [GISTe]) to develop capabilities
in climate change impact mitigation. The authors denote the resulting
framework as the GISTe model, which frames their analysis and public policy
recommendations. This research uses the 2008 Carbon Disclosure Project
(CDP) database, with high-quality information on firm-level climate change
strategies for 552 companies from North America and Europe. In contrast
to the widely accepted myth that European firms are performing better
than North American ones, the authors find a different result. Many firms,
whether European or North American, do not just “talk” about climate
change impact mitigation, but actually do “walk the talk.” European firms
appear to be better than their North American counterparts in “walk I,”
denoting attention to governance, information management, and systems.

1University of Calgary, Alberta, Canada

2SolvayBusiness School, University of Brussels, Belgium, and Henley Business School, Reading
University, UK

Corresponding Author:
Alain Verbeke, McCaig Chair in International Business, Haskayne School of Business,
University of Calgary, 2500 University Drive NW, Calgary, Alberta, Canada T2N 1N4.
Email: [email protected]

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2 Business & Society 

But when it comes down to “walk II,” meaning actual Technology-related

investments, North American firms’ performance is equal or superior
to that of the European companies. The authors formulate public policy
recommendations to accelerate firm-level, sector-level, and cluster-level
implementation of climate change strategies.

Keywords
public policy, Carbon Disclosure Project, climate change, resource-based
view, GISTe model, walk the talk, walk I, walk II

Since the late 1980s, climate change impact mitigation has increasingly
become a major issue for government policy makers (Harrison & Sundstrom,
2010a; Liu, Lindquist, & Vedlitz, 2011; McCright & Dunlap, 2010;
Meadowcroft & Langhelle, 2009; Pinkse & Kolk, 2009). As the climate
change issue has gained traction in society, firms have adapted and changed
their strategies and routines. Over time, the different strategies pursued by
firms have amounted to differential firm-level investments along various
resource domains (Buysse & Verbeke, 2003). These investments have been
driven by the specific views held by senior managers on the requirements
imposed by the external environment as well as by each firm’s extant resource
base, and their outcome has been the development of idiosyncratic internal
competencies (Amit & Shoemaker, 1993; Marcus & Geffen, 1998).
The prime objective of the present article is to connect mainstream con-
ceptual thinking in strategy with practitioner-focused industry data to pro-
duce more evidence-based public policy recommendations with regard to
climate change impact mitigation. A second objective is to analyze statistical
differences between implementation patterns by FT500 and non-FT500 firms
based in Europe versus North America. This evidence-based research pro-
vides a foundation for designing future public policies to mitigate climate
change impacts. Furthermore, this research produces a baseline for time-
series tracking of corporate strategies, in an evolving context of more proac-
tive public policies to reduce climate change impacts of firms based in Europe
and North America.
The heterogeneity of country, industry, and firm responses to emerging
environmental issues has been well documented in the climate change litera-
ture (Jones & Levy, 2007; Levy, 1997; Levy & Egan, 1998; Pinkse & Kolk,
2009, 2010; Weinhofer & Hoffmann, 2010). However, at the same time, the
global nature of the climate change challenge is increasingly recognized as
exceeding the problem-solving capacity of any one nation or industry, and

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Backman et al. 3

requiring international collective action (Keulartz, 2005; Pattberg, 2005;

Rosenau, 1990; Sanwal, 2004). But even though agreement in principle on
addressing climate change impacts has appeared at different times in the
international policy discussions, large differences among country-level per-
spectives have remained until today, often driven by individual countries
being “specialized” in particular industries and types of firms (Cass, 2006;
Harrison & Sundstrom, 2010a; Newell & Paterson, 1998; Victor, 2001). In
turn, the differential regulatory regimes across countries have influenced
firm-level strategies and competitiveness (Griffiths, Haigh, & Rassias, 2007).
Overarching, one-size-fits-all global governance may therefore not even be
appropriate because existing national climate change regulations differ
greatly, as do the firm-level responses to these regulations.
Past analysis of heterogeneity among firm responses and differences in
regulatory regimes has utilized various methodologies. A first set of extant
studies is entirely descriptive and provides accounts of events and outcomes
(Christiansen, 2004; Hoffman, 2007). A second set of studies has chosen a
particular theoretical lens merely to interpret climate change impact mitiga-
tion challenges (Kamieniecki, 2006; Levy & Egan, 2003; Levy & Newell,
2003; McCright & Dunlap, 2000, 2003; Pattberg & Stripple, 2008). A third
set has used more of an inductive methodology, relying on the case study
approach or using small sample sizes (Levy, 1997; Levy & Kolk, 2002;
Okereke, 2007).
A relatively recent literature based on empirical data has emerged to clas-
sify firm-level responses to climate change (Cogan, 2006; Kolk & Pinkse,
2004, 2005, 2007). However, this research has focused on just a few broad
dimensions of climate change strategies and whereas these frameworks can
differentiate among firms within or across industries, the basis for classifying
firms into groups has been almost exclusively data driven.
Clearly lacking has been both an in-depth understanding of firm-level
adaptation to the climate change issue and the usage of large samples. There
is an urgent need for a new conceptual approach that would go beyond the ad
hoc and ex post rationalization of observed firm behavior. Ad hoc and ex post
approaches divorced from management theory are also unlikely to provide
useful analytical information to guide public policy choices. This article
addresses these gaps by using a powerful theoretical lens, namely, the
resource-based view (RBV, see below), coupled with the large-scale Carbon
Disclosure Project (CDP) database to explore firm-level responses to their
own climate change impacts.
In the next section, the authors develop an RBV conceptual model, build-
ing upon earlier empirical work for analyzing corporate environmental strate-
gies, but adapted here to the context of climate change impact mitigation

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4 Business & Society 

strategies. In the third section, the authors describe the CDP database and
establish the linkages with their new conceptual model. The fourth and fifth
sections describe the empirical analysis and the results, respectively. The
authors develop public policy recommendations based on the empirical
results in the sixth section. The last section concludes the article.

Development of an RBV Conceptual Model

To mitigate corporate climate change impacts, public policy makers should
start from an in-depth understanding of firm-level footprints and the related
firm-level strategies to reduce these footprints. Accordingly, the authors
develop a new conceptual approach to analyze climate change impact miti-
gating strategies, following the inductive top-down method of theorizing
(Shepherd & Sutcliffe, 2011). This approach starts with a literature review to
develop the theoretical lens (in this case, an RBV lens) through which to
interpret the data. This particular interpretation of the data generates a “the-
ory-driven” storyline that can then be confronted with a practitioner-oriented,
“data-driven” narrative (in this case, informed by the CDP reports), whereby
the former analysis can be fine-tuned (for example, as a result of the cluster
analysis performed), and extant theory augmented accordingly. In other
words, the new conceptual approach that emerges is, on the one hand, disci-
plined by prior theory and, on the other hand, firmly grounded in the data.
This article’s theoretical foundation is the RBV, which assumes that dif-
ferential investments across a firm’s resource domains can contribute to com-
petitive advantage through crafting idiosyncratic resource combinations.
RBV thinking suggests that firms seeking competitive advantage attempt to
develop resource combinations that are valuable, rare, inimitable, and non-
substitutable (Barney, 1991). The RBV model suggests that a firm will adopt
an increasingly proactive environmental management strategy if it possesses
or can acquire resources and transform those into competences instrumental
to competitive advantage and higher returns. Actually developing such com-
petences is conditional upon prior capital budgeting decisions and gover-
nance choices amenable to mitigating bounded rationality and bounded
reliability challenges (Verbeke, 2013; Verbeke, Bowen, & Sellers, 2006;
Williamson, 1996).
Hart (1995) was the first scholar integrating the descriptive literature
focused on classifying firm-level choices in the realm of environmental pro-
activeness (Carroll, 1979; Davis & Blomstrom, 1975; McAdam, 1973;
Wilson, 1975) with the RBV. Hart and others built upon RBV concepts for a
more rigorous categorization of firms in terms of environmental proactive-
ness (Buysse & Verbeke, 2003; Hart, 1995; Hart & Dowell, 2011; Sharma &

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Backman et al. 5

Vredenburg, 1998). Empirical work by Buysse & Verbeke (2003) identified

five essential resource domains through which environmental proactiveness
can be determined: strategic environmental planning, formal routine-based
environmental management, organizational competencies in environmental
management, employees’ green skills, and conventional technology-based
green competences.
Buysse & Verbeke (2003) found that a proactive environmental strategy
is likely to drive a closer alignment between strengthening the above
resource domains and responding to an external environment increasingly
focused on environmental impact mitigation. However, not all firms respond
to changes in the external environment in the same way or at the same time
(Oliver, 1991; Sherer & Lee, 2002). In addition, not all firms will command
strengths in all of the above resource domains at a particular point in time.
Proactive firms, building upon their senior management’s vision and their
extant resource base, will typically invest more in environmental impact
mitigation. Success then builds upon introducing innovative resource com-
binations into the market and doing this sooner, more astutely or more fortu-
itously, and in a more seamless fashion than other companies (Cockburn,
Henderson, & Stern, 2003; Eisenhardt & Martin, 2003; Helfat & Raubitschek,
2003). Thus, the classification scheme from less proactive firms toward
more proactive firms reflects increasing firm-level investments in the above
five resource domains.
As noted above, Buysse & Verbeke’s (2003) work empirically validated
the relevance of five resource domains, in line with Hart’s (1995) RBV con-
ceptual analysis. However, careful analysis of the CDP database and the
availability of measurable variables led to the conclusion that two research
domains, namely, “organizational competencies” and “employee skills,”
could be usefully proxied by what is referred to below as “Systems capabili-
ties,” encompassing both ex ante targets and the ex post verification of target
achievement. The mainstream management literature suggests this approach
is appropriate. What matters most to achieve high effectiveness of organiza-
tional and human resources management practices in terms of improving
skills, knowledge, and motivation is a “strong climate,” reflective of a “strong
situation . . . in which employees share a common interpretation of what is
important and what behaviors are expected and rewarded” (Bowen & Ostroff,
2004, p. 203). Here, formally agreed upon organizational strategic goals (in
this case, climate change impact mitigation targets) linked to performance
reviews (in this case, through using performance verification systems) are
instrumental to creating a “strong situation,” and will drive the development
of both organizational competences and employee skills. Locke and Latham
(1990) is the classic reference on the importance of targets.

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6 Business & Society 

As a result of the above approach, the four resource domains analyzed in

the present study are the following: Governance capabilities (or G, the equiv-
alent of strategic environmental planning in Buysse & Verbeke, 2003),
Information management capabilities (or I, the equivalent of formal, routine-
based management), Systems capabilities (or S, the key antecedent of organi-
zational competencies and employee green skills), and Technology-related
investments (or Te, the equivalent of conventional green competences).
Together, these four resource domains constitute the GISTe model of firm-
level strategy. The GISTe model is applied in the present article in the context
of climate change impact mitigation through the use of the CDP database.
Here, continuous investments across the GISTe resource domains are viewed
as the tangible expression of a more proactive environmental strategy with
respect to climate change (Verbeke, Sellers, & Bowen, 2011), though it is not
assumed that investments in all domains will or should increase at the same
pace or with the same magnitude to trigger effective impact mitigation.

CDP Database
Data Source
The CDP was established in 2002 at the behest of 35 institutional investors
with more than US$4.5 trillion of assets under management. There was a
growing perception among investors that companies provided inadequate
information regarding the financial risks their operations generated with
regard to climate change. By 2014, CDP support had grown to more than 767
institutional investors with combined assets of $92 trillion, seeking climate
change information from almost 6,000 firms. The CDP solicits information
on the business risks and opportunities presented by climate change and
greenhouse gas (GHG) emissions data from the world’s largest companies.
The resulting database includes firm-level data across 10 industry sectors,
numerous geographic regions, and two size categories, thus enabling com-
parisons across sector, region, and size.
The CDP and its partner organizations around the world have synthesized
and interpreted this information on a regular basis, providing insightful
reports on corporate responses to climate change. By the time of the sixth
CDP information gathering in 2008, the survey was sent to more than 3,000
of the largest, publicly-traded companies in the world. Whereas the results
for the 10th request for information are now in the public domain, the present
study relies on the 6th request for information, which provides a baseline for
future research regarding dynamic changes over time in corporate strategies
and public policy.

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Backman et al. 7

Sample Selection
Before analyzing the CDP database, the varying regulatory contexts should
be considered within which the firms operate, and the possible related impacts
thereof on data quality. First, the sample for this study includes 552 firms that
voluntarily reported to the CDP and are based in North America (269) or
Europe (283). Firms from other parts of the world also participated in the
CDP, but the sample includes the largest data segments and likely has the
fewest data quality problems that might result from idiosyncratic interpreta-
tions of the survey questions. The data are also transparent and false state-
ments would be subject to considerable scrutiny and possible subsequent
challenges by activist stakeholders in the environmental and social sphere
(Reid & Toffel, 2009).
Second, the choice of geographic coverage was also made because of the
clear differences in public policy and societal pressures in the realm of cli-
mate change impact mitigation in North America as compared with the
European Union (EU). Harrison and Sundstrom (2010b) observed that many
EU countries, which account for almost 90% of the European sample, and the
EU itself, in terms of the European Parliament, rely on proportional represen-
tation to elect political representatives. This voting system leverages the
influence of political parties and voters for which climate change is a high
priority (Schreurs & Tiberghien, 2010). On the contrary, the North American
political systems (Canada and the United States) rely on a majority voting
approach, which typically reduces voter leverage for consideration of envi-
ronmental issues, including climate change (Harrison, 2008, 2010). Not only
is the climate change issue more likely to gain traction in EU policy forma-
tion but in addition the resulting EU decisions concerning burden sharing and
various policy directives are enforced by the European Commission (Schreurs
& Tiberghien, 2010).
Furthermore, as Cass (2006) noted, most European states have argued in
favor of norms requiring national responsibility for climate change while rec-
ognizing that a greater share of the CO2 burden should fall on developed
countries because of their prior contribution to the issue’s root cause. There
was little EU debate on the merits of climate change impact mitigation and
this normative view quickly became embedded in the preferences espoused
by most governments in the EU, thereby assuming a taken-for-granted status.
EU-based activists also saw the climate change issue as furthering broad
societal support for stronger public policy in the overall consideration of
environmental issues (Schreurs & Tiberghien, 2010).
In contrast, climate change impact mitigation failed to resonate in the
United States, not only due to its significant cost implications (Kamieniecki,

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8 Business & Society 

2006) but also because of a political system that allows several veto opportu-
nities, as an expression of desired checks and balances (Cass, 2006; Harrison
& Sundstrom, 2010b). The polarization (McCright & Dunlap, 2000, 2003,
2010) between Democrats and conservative Republicans, whose party held
the Presidency in the United States from 2001 to 2008, provided heated
debates and introduced doubt in the minds of many non-experts regarding the
actual occurrence of climate change, its anthropogenic origins, the possible
benefits of mitigation strategies, and the logic of past responsibility.
Canada, unlike the United States, formally adopted the Kyoto protocol,
despite large-scale disagreement among the government and private sector
stakeholders (Harrison, 2010). The Canadian bicameral parliamentary sys-
tem does not have the same level of checks, balances, and vetoes prevailing
in the United States. As a result, the support of the Prime Minister led
Canada’s position to be somewhat in the middle between the strong govern-
ment support in many EU nations and the heavy political pushback in the
United States by Republican and Tea Party supporters. Subsequently, imple-
mentation of climate change strategies in Canada had little visible traction
when the CDP data reported in this study were collected in 2008. Thus, one
would expect, ceteris paribus, that firms with European-based headquarters
would demonstrate greater proactiveness in the realm of climate change
impact mitigation than North American firms, given the prevailing regulatory
systems facing the respective corporate head offices.
Table 1 displays the almost equal distribution of firms in the sample by
region (North America and Europe). The large, publicly-traded Financial
Times (FT) 500 firms comprise nearly 40% of the North American sample
and slightly less than one-third of our European sample. Table 1 shows the
sectoral decomposition of the sample.

Linkages Between the CDP Database and

the GISTe Framework
The CDP database contains data describing corporate strategic responses to
climate change along four themes: (a) risks and opportunities, (b) GHG emis-
sions accounting, (c) performance, and (d) governance. The first CDP section
is designed to identify strategic risks and opportunities of climate change and
their implications. The objective of the second CDP section is to determine
actual, absolute GHG emissions. The intent of the third CDP section is to
determine performance against the firm’s targets and plans to reduce GHG
emissions. The fourth CDP section addresses governance and provides infor-
mation on the hierarchical level in the firm supposed to address climate
change issues and the management approach adopted.

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Backman et al. 9

Table 1. Distribution of Firm Sample (Count) by Sector, Size, and Region.

Sector

Consumer Consumer Energy

Size Region discretionary staples intensive Financials Industrials Other Total

FT500 Europe 7 19 23 24 10 9 92
North America 8 13 31 23 15 27 117
Total 15 32 54 47 25 36 209
Non-FT500 Europe 28 17 30 45 54 17 191
North America 20 18 44 22 26 22 152
Total 48 35 74 67 80 39 343
Total Europe 35 36 53 69 64 26 283
North America 28 31 75 45 41 49 269
Total 63 67 128 114 105 75 552

Note. “Consumer Discretionary” includes media; automobiles; specialty retail; hotels, restaurants and leisure;
auto components; household durables; internet and catalog retail; multiline retail; textiles, apparel and
luxury goods; diversified consumer services; leisure equipment and products. “Consumer Staples” includes
food and staples retailing; beverages; food products; personal products; tobacco; household products.
“Energy Intensive” includes oil, gas, and consumable fuels; energy equipment and services; utilities; materials.
“Financials” includes banks, insurance; real estate; capital markets; diversified financial services. “Industrials”
includes machinery industrial conglomerates; road and rail; aerospace and defense; air freight and logistics;
building products; commercial services and supplies; construction and engineering; electrical equipment;
marine; trading companies and distributors; airlines; professional services; transportation infrastructure.
“Other” includes health care; information technology; telecommunications. FT = Financial Times.

Answers to questions under each of the four CDP themes described above
capture the variation in firm-level approaches to the climate change issue.
The variation in firm-level answers allows classifying firms according to
their specific levels of proactiveness regarding climate change impact mitiga-
tion. The granular, firm-level CDP data were analysed using survey outcomes
relevant to the four GISTe resource domains. First, the questions from the
CDP 2008 survey were unbundled and assigned to one of the four GISTe
resource domains. Second, a set of indicators was developed, based on the
types of responses presented. Corporate CDP responses were then mapped,
using the GISTe framework. Given the pursuit of parsimony, the authors
restricted the number of indicators per resource domain to two, thus enabling
a clearer understanding of the differences among firm-level categories along
individual resource domains. Table 2 shows the final eight indicators and
related linkages with the CDP survey questions.

Development of Indicators
The indicators for the Governance (G) domain can be visualized in a 2 × 2
matrix, and provide insight on the decision-making level in each firm that

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10 Business & Society 

Table 2. GISTe Model Characteristics.

Resource domain (RD) Scale range

Indicator X- or Minimum Maximum CDP 2008

Name Number number Y-axis Indicator description value value questions

Governance RD1 1 Y Decision level 0 4 4a

2 X Incentive system 0 2 4b
Information RD2 3 Y Data tracking system 0 3 2b, 2c
4 X Value chain disaggregation 0 3 2b, 2c
Systems RD3 5 Y Ex ante targets 0 3 3a i
6 X Ex post verification 0 2 2d
Technology RD4 7 Y Product improvement 0 3 Ia i, ii, iii; Ib i,
ii, iii; 3a iv
8 X Process improvement 0 3 la i, ii, iii; Ib i,
ii, iii; 3a iv

Note. GISTe = Governance, Information management, Systems, and Technology; CDP = Carbon Disclosure
Project.

addresses the climate change impact file (Y-axis), as well as the magnitude
of managerial incentives in the realm of impact mitigation (X-axis). The
indicators for the Information management (I) domain were selected to
assess the robustness of the information system as to the magnitude of the
climate change impact footprint (Y-axis) and the loci within the firm’s value
chain where this footprint is created (X-axis). The indicators for the Systems
(S) domain reflect goal setting (Y-axis) and performance assessment (X-axis)
in the realm of impact mitigation. Finally, the indicators for the Technology
(Te) domain capture investments in product innovation (Y-axis) and process
innovation (X-axis). Importantly, as a set, the G, I, and S domains may facili-
tate investments in the Te domain, but do not necessarily trigger actual
investments.
The Resource Domain 1 (Governance capabilities) indicators include the
level of decision making inside the firm where responsibility rests for the
climate change file (Indicator 1) and the incentive compensation linked to
climate change impact performance achievement (Indicator 2). Irrespective
of whether a firm views climate change as a threat or an opportunity, if the
responsibility for the file lies below the level in the firm’s hierarchy respon-
sible for strategy formation, then impact mitigation is unlikely to gain much
traction or have impact on the firm’s strategy. Although the locus of respon-
sibility for the climate change file within the firm provides an indication of
the reach that the climate issue could potentially have across the firm in terms
of operational adjustments, this aspect does not consider a second key param-
eter, namely, the magnitude of incentives given to influence positively

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Backman et al. 11

climate change impacts. Absent such incentives, the climate change file is
likely to compete poorly in the context of internal resource allocation.
The Resource Domain 2 (Information management capabilities) indica-
tors include the data tracking system (Indicator 3) and the level of disaggre-
gation of relevant data along the firm’s various value chain segments,
including the geographic distribution of the sources of carbon impacts
(Indicator 4). Together, these indicators provide insight on the scale and
scope of a firm’s carbon footprint, and a rationale for specific investments
designed to reduce this footprint in key loci inside the value chain. The indi-
cators may also provide insights regarding potential future effects of public
policy on the firm.
The Resource Domain 3 (Systems capabilities) indicators include ex ante
targets for reduction of the firm’s carbon footprint (Indicator 5) and ex post
verification of performance relative to these targets (Indicator 6). More
extensive and challenging targets require greater employee skill levels, as
well as more co-ordination among functions and units inside the firm.
Increasing levels of verification provide motivation to boost extant employee
skill levels and to re-enforce the linkages among managerial actions within
and across the firm-level boundaries, and may facilitate constructive stake-
holder linkages and consultation.
The Resource Domain 4 (Technological investments) indicators include
investments in product innovation (Indicator 7) and process innovation
(Indicator 8). The first type implies creating new products or modifying exist-
ing ones as a response to the new market reality that values climate change
impact mitigation. The second type of improvement reflects the extent to
which a firm makes non-reversible investments designed to reduce its carbon
footprint, while not changing its products. With each of the two Te indicators,
the key issue is the reversibility of the investments performed. A non-revers-
ible investment, as discussed below, can be considered more proactive,
whereas a reversible investment typically reflects lower proactiveness.
The reversibility of investments is an important attribute, given that a firm
is less likely to engage in irreversible investments in the absence of a stable
or predictable regulatory regime favoring climate change impact mitigation.
If a firm makes a reversible investment to reduce its carbon footprint and
subsequently climate change no longer drives stakeholder preferences or
regulatory requirements subside, the investment can more easily be rede-
ployed or disregarded with minimum internal consequences in terms of added
costs. An example of a reversible investment is the purchase of electricity as
an input from external organizations that use renewable energy sources such
as wind or solar power. In this example, reverting to the original corporate
strategy would produce little loss of sunk costs.

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12 Business & Society 

In contrast, non-reversible investments are justified in the case of longer

time horizons over which a more severe but predictable regulatory regime,
favoring impact mitigation, unfolds. An example is the corporate decision
whether to generate green power within the firm’s internal operations. Here,
comparing the full cost of the internally generated green electricity with the
cost of conventionally produced or conventionally acquired electricity, must
include both qualitative and quantitative considerations of future societal
preferences and the likelihood of a regulatory regime favoring long-term cli-
mate change initiatives.

Empirical Analysis
Scale Development
After unbundling the questions from the CDP 2008 questionnaire and assign-
ing these to the GISTe resource domains, the authors developed scales for the
individual indicators. As the CDP database includes mostly qualitative and
descriptive data, scales were developed based on word associations in the
CDP text for each firm-level response. The range of responses to each ques-
tion or bundle of questions informed a firm’s position for each of the eight
indicators (ranging from 0 to a maximum of 2, 3, or 4 for each indicator), in
Table 2.
Each unique position of a firm for a particular indicator reflects an objec-
tive association between the firm’s response to CDP survey questions and
its actual proactiveness in the relevant GISTe resource domain. In each
case, the least proactive state was coded as 0 to reflect an absence of infor-
mation, assuming that firms would have provided a response if there were
any reportable actions. The most proactive state for each indicator was not
determined in an abstract fashion but was made dependent on the actual
responses. The ordinal scales reflect increasing resource allocation across
the indicators in the four GISTe resource domains. The scale development
process followed an iterative process utilizing a subset of the data before
finalizing the ordinal scale length and word association for each state for all
eight indicators.

Coding of the Data, Factor Analysis, and Cluster Analysis

Two researchers independently coded the responses from every firm for all
indicators of the four GISTe resource domains. An overall first-pass reliabil-
ity of 90% was achieved for the eight indicators. For the 10% of cases with

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Backman et al. 13

different coding of firm-level responses by the two researchers, a third

researcher and both initial coders revisited the answers and achieved a con-
sensus on the proper coding. Subsequently, a confirmatory fit analysis was
conducted (χ2 = 20.52, df = 16, p = .198, root-mean-square error of approxi-
mation [RMSEA] = 0.021, confirma-tory factor index [CFI] = 1.00) to ensure
that the indicators loaded onto the four GISTe resource domains.
Originally, 657 firms were coded in the sample of North American and
European firms along the eight indicators of the GISTe resource domains, and
these data were imported into SPSS 15.0. The cluster analysis technique was
applied, following Hair, Black, Babin, Anderson, and Tatham (2006), to gener-
ate firm-level archetypes reflecting increasing integration of the climate change
issue into corporate strategy. These archetypes were unbundled along the four
GISTe resource domains, enabling more focused public policy options designed
to encourage firm migration from the least proactive to more proactive levels.
A hierarchical method was the first step in identifying a potential number of
clusters of firms in terms of proactiveness level. The final cluster solution was
based on the initial cluster groupings formed under the hierarchical method,
subjected to the non-hierarchical K-cluster technique. The Euclidian distance
measure was applied using the furthest-neighbor algorithm.
Three- and four-cluster solutions were selected for further analysis using
the K-cluster technique. Selecting a four-cluster solution did not yield a stable
solution. Changing the initial centroids for the indicators used to determine
firm proactivity resulted in poor replication of firm-level cluster membership
in the four-cluster solution across 30 iterations of the cluster routine. A three-
cluster solution yielded close to 85% stability across 30 randomly selected
starting centroid arrays.
Only the 552 firms out of the sample of 657 that were uniquely identified
across 30 iterations were used in the further analysis. Each of the three clus-
ters represents a set of firms with strategies and operations that represent a
particular level of proactiveness across the four GISTe resource domains
critical to climate change impact mitigation. The differences were analyzed
among the three clusters using the ANOVA option within SPSS. After the
statistical analysis was completed, the authors revisited the original CDP data
to link the clusters with concrete corporate actions.
Cluster 3 firms are the most proactive and are positioned closest to the
upper right quadrant for the four GISTe resource domains in Figure 1. Cluster
2 firms were essentially in an intermediate position in terms of climate change
proactiveness. Finally, Cluster 1 represents the least proactive firms with
respect to climate change impact mitigation and positioned closest to the
lower left-hand quadrant.

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14 Business & Society 

Figure 1. Distribution of Firms by Cluster According to GISTe Model.

Note. GISTe = Governance, Information management, Systems, and Technology.

Results
Three Clusters
Figure 1 shows the clear differences that separate firms in each of the three
clusters along proactivity levels for each of the four GISTe resource
domains.
Cluster 3 firms, accounting for 28% of the sample, reflect the most proac-
tive climate change impact mitigation strategies. The climate change file has
caught the attention of senior management and reflects the necessary high-
level leadership to enable corporate action regarding effective climate change
mitigation (Wittneben, 2009). Furthermore, incentivizing action through
compensation encourages lower-level management usage of corporate
resources toward climate change impact mitigation.
Most Cluster 3 firms used “greener” inputs produced by other firms or
made non-reversible investments to generate “greener” outputs within the
internal boundary of the firm. As a group, this cluster has also taken steps to

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Backman et al. 15

modify existing products or to develop and introduce new products focused

on changes in consumer preferences. Except for Information management
capabilities, the analysis indicated that Cluster 3 firms are statistically dis-
tinct from Cluster 2 firms and Cluster 1 laggards. Cluster 3 firms have trans-
lated their largely reversible investments in the Governance, Information
management, and Systems (GIS) domains into actual Technology-related
investments that reduce the firm’s carbon footprint.
The Cluster 2 “middle” group of firms accounts for 46% of the sample.
These firms are clearly lagging behind Cluster 3 firms from a Governance
perspective and do not see the need to have senior management involved with
the climate change file. Clearly lacking are incentives to motivate decision
makers within the firm to allocate scarce resources for initial impact mitiga-
tion, and to follow-up with additional resources, if needed, in the future.
Little differentiates Cluster 2 firms from Cluster 3 firms with regard to
Information management capabilities. There is a general understanding of the
firm’s climate change impacts, but lacking are accounting details for the spe-
cific carbon impacts throughout the value chain.
The lower priority attached to climate change by Cluster 2 firms, as
reflected in Governance capabilities, is also associated with the limited
investments that these Cluster 2 firms have made in developing Systems
capabilities. Cluster 2 firms are just starting to introduce company-wide
reduction targets and have not introduced ex post verification beyond the use
of internal auditors.
Notwithstanding the absence of incentives at the senior executive level,
the actual use of carbon reduction targets by Cluster 2 firms is associated with
some investments in process improvements to reduce the firm’s climate
change impact. However, unlike Cluster 3 firms, Cluster 2 companies rely
more on inputs purchased from outside suppliers, as opposed to making non-
reversible Technology-related climate change investments.
Climate change impact mitigation for Cluster 1 firms is not a strategic
priority and this cluster represents 26% of the sample. The climate change
file is absent at the senior governance levels in the firm, where the main deci-
sions are made about strategic direction and allocation of scarce resources.
Incentives are lacking for Cluster 1 decision makers to achieve either climate
change impact mitigation or improved energy efficiency. Cluster 1 firms have
made only limited investments to develop their Systems capabilities and have
neither targets for reduction of their carbon footprint nor internal capabilities
to audit carbon reductions.
Although some Cluster 1 firms have taken steps toward purchasing inputs
from suppliers active in climate change impact mitigation, most are only con-
templating changes in their own internal routines. These firms are even

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16 Business & Society 

further behind with regard to modifying or developing new products to take

advantage of changing stakeholder preferences in their external environment.
Most troubling for Cluster 1 firms is the apparent lack of enthusiasm for
adapting their internal routines in response to the climate change issue. These
firms completed only the minimal legal reporting and appeared to be volun-
teering their carbon emissions data so as to be able to report “participation”
in the CDP.
From the discussion above, two conclusions follow. First, Cluster 3 firms
are statistically and managerially different from Cluster 2 and Cluster 1 firms
in all resource domains except for Information management capabilities. In
the Information management domain, convergence can be observed between
Cluster 2 and Cluster 3 firms. In addition, Cluster 2 and Cluster 3 firms
appear somewhat similar in Governance capabilities, as Cluster 2 firms are
beginning to attach greater managerial importance to climate change impact
mitigation, but do not have an incentive system meshing with the firm’s
senior management, where this file is addressed.

Differences Involving Size, Sector, and Region

Size, sector, and region influence the degree of proactivity of firms toward
climate change impact mitigation. The distribution of firms across the three
clusters differs significantly as a function of size, sector, and region. Table 3
shows that the (large) FT500 firms in aggregate are significantly (p = .000)
more proactive regarding climate change impact mitigation than (smaller)
non-FT500 companies. However, within the group of FT500 companies in
the energy intensive sector (7% in Cluster 1 and 57% in Cluster 3), there is
also a marked difference in distribution across the clusters (p = .018) between
European firms and North American ones.
In contrast to the above, the authors did not observe a statistically signifi-
cant difference between European and North American non-FT500 firms
(p = .143). With regard to climate change impact mitigation in North America,
the difference in proactiveness between FT500 and non-FT500 firms is not
overly significant (p = .062), as measured by their relative presence across
the three clusters. This lack of significance is in sharp contrast with the sig-
nificant difference (p = .000) within Europe for the size dimension. Overall,
the institutional influence of the region on larger firms is more prevalent in
sectors in close proximity to the final consumer or in which energy represents
a significant share of the overall cost structure. The regional effect is not
significant in the Industrial sector (p = .793), the Information Technology
(IT) sector and the Health sector (p = .363), which collectively comprise the
“Other” sector.

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 Table 3. Distribution of Firms Across Proactive Cluster by Sector and Size.

Cluster membership

Cluster 3 Cluster 2 Cluster 1 χ2 significance

Non- Non- Non- North Non-

Sector FT500 FT500 FT500 FT500 FT500 FT500 Combined Europe America FT500 FT500
Consumer discretionary 27% 15% 40% 42% 33% 44% 0.532 0.021 0.387 0.011 0.902
Consumer staple 47% 23% 47% 63% 6% 14% 0.099 0.013 0.942 0.037 0.652
Energy intensive 57% 30% 35% 49% 7% 22% 0.004 0.000 0 421 0.018 0.033
Financials 36% 10% 47% 46% 17% 43% 0.001 0.001 0 083 0.022 0.542
Industrial 48% 15% 36% 59% 16% 26% 0.003 0.021 0.177 0.793 0.532
Other 47% 13% 28% 44% 25% 44% 0.005 0.040 0.044 0.363 0.730
Total 46% 18% 39% 50% 15% 32% 0.000 0.000 0.062 0.000 0.143
Cluster distribution 28% 46% 26%

Note. Percentage for size and sector in each of the three clusters. Percentages summed across size = 100. Chi-square ‘Combined’ denotes
probability, comparing all FT500 versus non-FT500 firms, that distributions across size for the designated sector are different. Chi-square for
regions (Europe and North America) denotes probability for designated sector that distributions across size are different. Chi-square for FT500

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denotes probability for designated sector that distributions across regions are different. Chi-square for Non-FT500 denotes probability for
designated sector that distributions across regions are different. Cluster distribution reflects the share of the total sample located in each cluster.
FT = Financial Times.The bolded Chi-square scores are significant at the 0.05 level

17
18 Business & Society 

Figure 2. European versus North American FT500 Firms Across GISTe Resource
Domains.
Note. GISTe = Governance, Information management, Systems, and Technology.

Figure 2 shows that, when compared with their North American counter-
parts, European FT500 firms, overall, are more proactive in the realm of
Governance (p = .304), but significantly only as regards incentives for deci-
sion makers (p = .000). The authors also found significant regional differ-
ences for Information management and Systems capabilities, in these two
cases for both indicators (p = .000, p = .000). However, more importantly,
there are no significant differences in the realm of Technology-related invest-
ments for either indicator (p = .853, p = .762). In addition, Figure 3 shows
that in the realm of Governance, North American non-FT500 firms actually
have greater incentives for impact mitigation (p = .000) in place.
In the Technology-related investments resource domain (see Figure 3),
North American non-FT500 firms report more (p = .001; p = .041) actual
investments for both indicators than their European counterparts. Overall,
many FT500 firms are taking more steps to reduce their carbon footprint,
whereas most non-FT500 firms are at an earlier stage of climate change
impact mitigation.

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Backman et al. 19

Figure 3. European Versus North American Non-FT500 Firms Across GISTe

Resource Domains.
Note. GISTe = Governance, Information management, Systems, and Technology.

From the overall analysis, the authors draw four main conclusions. First,
Cluster 1 firms lag Cluster 2 and Cluster 3 firms across all four GISTe resource
domains. However, in the critical resource domain of Technological invest-
ments, even Cluster 1 FT500 firms, most of which are located in North
America, are beginning to make reversible investments in process improve-
ments through purchasing green inputs to reduce their carbon footprint.
Second, sectoral affiliation does have an effect, but this effect is relevant
primarily in the distribution of firms across the three Clusters. For all four
GISTe domains, sector differences are muted based on the Scheffé criteria
with an alpha of .05 for post hoc comparisons to minimize the probability of
a Type 1 error. Scheffé’s method adjusts significance levels to give narrower
confidence limits by considering all possible comparisons among means.
Third, European firms generally demonstrate greater commitments in the GIS
capability domains, but this holds only for FT500 firms.
Fourth, surprisingly, and in sharp contrast with a widely propagated myth
on the alleged superiority of European companies in the impact mitigation

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20 Business & Society 

sphere, the greater European resource commitments toward improved com-

petences in GIS have not translated at all into greater investments in
Technology-driven product and process innovations. North American firms
are approximately equal to European firms in the FT500 category and even
superior in the non-FT500 category. The results indicate that European FT500
firms are making greater investments than North American FT500 firms in
the GIS domains, which can act as enablers of carbon footprint–reducing
investments. However, these greater commitments are not triggering larger,
actual footprint-reducing Technology-related investments.

Public Policy Implications

Enabling Investments in the G, I, and S Domains
Public policy makers can greatly benefit from using the above, RBV-driven
GISTe model when reflecting on the choice of specific climate change regula-
tions for firms headquartered in their area of jurisdiction. Most importantly,
and in the realm of Governance, a regulatory framework pushing the climate
change file to the highest levels of corporate decision making appears to be
useful, so as to enable Technology-related investments for impact mitigation.
Recent research not only supports the importance of having the climate
change file addressed at the senior management level, but also adds the
related power of industry-level governance and associations as key drivers of
proactiveness (Lin, 2012; Okereke, Wittneben, & Bowen, 2012). In this con-
text, policy makers can sponsor public forums and facilitate linkages among
firms and with non-profit organizations, media, and social media to acceler-
ate firm-level changes. As one example, the 14 firms in the Canadian Oil
Sands Innovation Alliance (COSIA), the 31 firms in the Oil Sands Developers
Group (OSDG), and the more than 200 companies and 5 government mem-
bers of the Petroleum Technology Alliance of Canada (PTAC) have Board of
Directors and CEO support for cooperative solutions to common energy
industry issues, including GHG emissions, tailings ponds, water manage-
ment, climate change, cooperative testing of new technologies, and the chal-
lenge of protecting a social license to operate.
Furthermore, sector-level associations provide a forum regarding emer-
gent issues, such as climate change, within which firms of all sizes can inter-
act, cooperate rather than collude, and not be perceived as anti-competitive.
These discussions within the context of sector-based organizational fields
(Scott, 1995) often lead to a common vision on what actions can best be
undertaken (Risse, 2004). Coupling such “sensemaking” with more struc-
tured contacts facilitates convergence toward the typically higher standards

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Backman et al. 21

of dominant sector companies (Levy & Prakash, 2003). More specifically,

public policy makers can facilitate the migration of Cluster 1 and 2 firms
toward Cluster 3 positions, and prevent Cluster 3 firms from “backsliding,”
by ensuring that the latter firms receive credit for past proactive climate
change impact mitigating actions and appropriate public recognition for good
corporate citizenship.
Implementing the above recommendations may produce an upward dom-
ino-effect, as current Cluster 2 companies would feel less comfortable about
the proactiveness of their own strategies, if Cluster 1 firms were to reduce
GISTe gaps via more stringent, federally-mandated climate change mitigation
measures and therefore were able to “catch up.” Furthermore, current Cluster
2 companies could develop insights from their Cluster 3 competitors by
assessing those firms’ actions, as made visible in the CDP project. Finally,
facing a reduction of their current strategic advantage over industry competi-
tors in the realm of climate change impact mitigation, Cluster 3 firms could
proactively invest further in this area, possibly by lowering their investment
hurdle rate for projects involving climate mitigation strategies.
In the context of Information management, a parallel step for federal or
EU policy makers is to develop stronger information requirements for annual
and quarterly reporting of CO2 emissions and for fuller disclosure of impact
mitigating actions (Okereke, Wittneben & Bowen, 2012). Federal policy
makers should also seek alliances with professional associations in the
accounting, financial, investment, and standard setting spheres (including
ISO) to raise the minimal reporting compliance standards for all firms, with
the largest impact expected for Cluster 1 firms.
Information management capabilities can also involve industry coopera-
tion and information sharing for climate change impact mitigation, as already
done in some countries for injured worker compensation and occupational
health and safety. Public policy makers can also mandate carbon footprint
labels on consumer products, though consumers have often been laggards in
recognizing and “rewarding” environmental initiatives of their suppliers.
As regards Systems aspects, public policy makers familiar with ISO 14064
for climate change standards, as well as institutional shareholders, can greatly
affect firm-level targets and verification routines. Linking targets to an exter-
nal and transparent verification system will not only encourage investments
that enable reductions in a firm’s carbon footprint but may also support invest-
ments leading to actual carbon emission reductions. When establishing targets
and a verification system, the mandating of some form of stakeholder-based,
multi-criteria analysis might be useful, so as to measure performance on a
wide variety of parameters, irrespective of whether these can be expressed in
quantitative, monetary terms (De Brucker, Macharis, & Verbeke, 2013).

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22 Business & Society 

Technology-Related Investments
Public policy can also perform a major role in the Technology-related invest-
ment resource domain, by influencing directly senior management invest-
ment choices. Firms will allocate resources to climate change impact
mitigating projects based on corporate investment analysis. As each firm and
sector is different in terms of both climate change impacts and its unique
bundle of resources to remediate these impacts, any desired public policy
outcome can be derived through multiple paths, in terms of affecting possi-
ble, “effective” technological investment trajectories.
One strategy is to increase the costs of firm-level and/or sector-level non-
action in Cluster 1 by increasing the costs thereof, namely, through a cap-
and-trade system or carbon taxes. Public policy can thereby influence all
Clusters by altering the cost–benefit ratio of investment projects. For exam-
ple, governments can intervene by placing a price on undesirable outputs on
the demand side as with the carbon tax in France (Schreurs & Tiberghien,
2010) or by focusing on the supply side as with the Norwegian tax on CO2 for
offshore oil and gas activity (Tjernshaugen & Langhelle, 2009). Other pos-
sibilities include specifying minimum operating standards, as with SO2 regu-
lations (Driesen, 2008). Here, public policy should avoid supporting one
technology over another, given the notoriously poor record of public policy
makers to choose winners in the technological innovation and diffusion areas.
However, technological choices of firms may be constrained due to the
lack of experience with a given technology or the absence of a new technol-
ogy with proven performance outcomes. Governments can support choice
processes through proof-of-concept grant support, subsidizing R&D, sup-
porting sector cluster initiatives, and disseminating information on best prac-
tices. In other words, the role of public policy is to facilitate access to a wider
spectrum of tools available to firms through subsidies at the production level
for technological innovations such as carbon capture and storage projects in
the Netherlands (Vergragt, 2009). Selection of specific tools, however, should
be left to firms, based on internal investment analysis.
Finally, public policy can provide new choice options to firms contemplat-
ing Technology-related investments in the climate change impact mitigation
sphere. For example, in a carbon-constrained world with a price on carbon,
public policy makers can affect firm-level choices to make investments
across resource domains that reduce carbon emissions or to purchase from
government the right to discharge carbon. Governments can pool the result-
ing income from firms into the public purse and make investments on soci-
ety’s behalf that lead to a reduction in overall carbon footprint, as through the
Climate Change Technology Fund in Canada (Harrison, 2010; Jaccard &

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Backman et al. 23

Sharp, 2009). Interestingly, the current carbon price for large emitters in
Canada is a regulated C$15/ton of CO2 and the European market rate is about
50% lower. Furthermore, discussions and negotiations are currently under-
way in Canada to raise the carbon tax to C$40/ton for large emitters in
Canada.
In addition to the three distinct clusters from the CDP data analysis, each
of which has engaged in voluntary CDP information disclosure, there is also
a non-reporting laggard group of firms and public sector organizations. As
governments are significant employers and purchasers of goods and services,
one recommendation is that federal-level, regional-level, and city-level pol-
icy makers would demonstrate early-adopter leadership in requiring their
own organizations to report to the CDP and to engage in Technology-related
investments for their real estate portfolios, vehicle fleets, supply chains, and
employee–commute footprints. The authors expect that these governments
will, as a result of such investments, strengthen their social license to legis-
late/impose on business more stringent climate change mitigation policies.

Conclusions, Limitations, and Future Directions

In this article, the authors have introduced the GISTe model as a new RBV-
inspired methodological tool to analyze climate change impact mitigation
strategies. This model was used to study the corporate strategies of 552 firms
participating in the CDP. The GISTe model has four resource domains and
eight indicators, which allow classifying firms according to their proactive-
ness level.
The GISTe model is important at the firm level, where it allows individual
companies to position themselves vis-à-vis rivals, in terms of eight key indi-
cators. It is also critical to effective, evidence-based public policy formation,
for three main reasons. First, the GISTe model allows understanding better, at
the macro-level, where a country stands as regards the proactiveness level of
climate change impact mitigation by its firms as compared with other nations.
Second, the model permits isolating public policy priority areas for improv-
ing the performance of firms falling under a government’s jurisdiction, and
does so by recognizing that different clusters of companies are operating with
idiosyncratic resource bases. Here, a key policy goal should always be to
increase performance of Cluster 1 firms (the least proactive companies).
Third, building upon the GISTe model, any new public policy measure can
now be assessed in terms of expected “performance” in the realm of probabil-
ity of changing business firms’ positions as regards Governance, Information
management, Systems capabilities and Technological investments. Here, the
GISTe model should serve both as a screen to avoid or eliminate ineffective

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24 Business & Society 

policy measures and as a road map to improve the GHG emission perfor-
mance of the Cluster 1, 2, and 3 firms falling under a particular government’s
jurisdiction.
A further implication is that public policy makers and societal stakehold-
ers can influence firms regarding actions affecting each of the four GISTe
resource domains, but should avoid unintended spill-over effects. More spe-
cifically, imposing investments in the realm of GIS should always be assessed
in terms of their capacity to stimulate, rather than hinder effective product
and process investments. Hindering firm-level investments is likely to occur
if unnecessary constraints are imposed on companies, such as firm-level tar-
gets that are unrealistic and can lead to opportunistic behavior from compa-
nies aimed to artificially satisfy the targets imposed (by outsourcing or
offshoring activities with a high carbon footprint). As regards actual
Technology-related investments, multiple pathways for firms commanding a
diversity of resources, favor choices among a pool of technologies to meet
societal objectives in the most cost-efficient manner. Governments can sup-
plement market mechanisms by expanding the pool of technologies to pro-
mote long-term cost efficiency and societal migration to a less carbon-intrusive
footprint on the environment.
A limitation of this study is that the analysis and conclusions largely rest
on the CDP database and the underlying responses completed by firm-level
managers. The limitations of this approach in terms of reliability and validity
include (a) the secondary nature of the data, meaning that these data were
collected without considering the present study’s specific research objec-
tives; (b) the possible impact of culture and language, whereby respondents
from various countries may not have interpreted the survey questions in
exactly the same way; (c) the open-endedness of some of the CDP questions,
allowing various managerial biases and agendas to be expressed; and (d) the
non-exhaustive scope of the sample, which limits the generalizability of the
results.
In addition to the above four limitations related to data quality, the transla-
tion of CDP data into the GISTe framework based on Buysse & Verbeke
(2003) meant that choices were made regarding indicators for the variables
identified as crucial in the conceptual framework. Furthermore, scales were
created for each item that were ordinal in nature, but the subsequent analysis
assumed that the variables were continuous, thereby somewhat reducing the
methodological robustness of the statistical analysis. In addition, the results
cannot necessarily be extrapolated to small and medium-sized enterprises.
Because only business firms were involved in the sample, the results or rec-
ommendations may not be fully applicable to organizations such as crown
corporations and other government-owned and managed operations. In

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Backman et al. 25

addition, as the geographic focus was restricted to developed economies in

North America and Europe, the results may not be fully applicable to emerg-
ing economies, especially in other parts of the world, including Asia, Africa,
and South America. To understand the degree to which the results and recom-
mendations are valid in these other regions, further study focused on firms
from these regions is required.
Regarding future directions for research on climate change strategy and
public policy, the present study has analyzed the strategies of publicly-traded
firms in North America and Europe at one particular point in time, namely
2008. The analysis revealed clear differences between firms based in Europe
and North America, along size and sector dimensions. Although it was shown
how firms have made differential commitments across resource domains in
response to their own climate change impacts, the path that individual firms
could follow when migrating from one state of proactiveness to another was
not fully articulated. This analysis would require following individual firms
and tracking their changing responses to the CDP questionnaires over time.
Alternatively, the evolution of the clusters could be analysed over time, to
determine migration patterns by each cluster, for each of the four resource
domains.
The cross-sectional analysis of firm-level strategic responses to the cli-
mate change impact mitigation challenge has assessed these responses along
the four resource domains of the GISTe model. However, as noted above,
though some resource allocation in the G, I, and S domains is required for
proactive Technology-related investments to take place, there is no sugges-
tion that more GIS investments automatically trigger an equivalent increase
in Te investments, as shown by the discrepancy between the GISTe configura-
tions of North American and European firms. At the individual firm level,
failure to follow-up increased GIS resource allocations with actual Te invest-
ments to reduce the firm’s carbon footprint can have many causes, especially
the lack of an underlying resource base to translate such Te investments into
a source of competitive advantage.
Perhaps the single most important question raised by external stakehold-
ers on firm-level behavior regarding climate change impact mitigation has
been whether firms actually “walk the talk.” The analysis in this paper, how-
ever, paints a more complex picture than the simple distinction between
“talking” and “walking.” The CDP data show unambiguously that many
firms are now indeed “walking” on a path toward greater impact mitigation.
However, there is a clear distinction between “walk I,” meaning investments
in strengthening the GIS resource domains, in which many European firms
appear to excel, and “walk II,” reflecting actual resource allocation in Te:
product and process innovation. Importantly, North American firms have

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26 Business & Society 

demonstrated that they can engage in “walk II” behavior as effectively as

European firms, but with somewhat lower commitments in the “walk I” GIS
resource domains. In other words, simply adding more incentives, more data
collection and dissemination requirements, more targets, more verification,
and so on, has not been the main driver for more “action” in North American
firms. The implication for public policy is that measures stimulating “walk I”
will reduce bounded rationality problems through improving firm-level
information processing and increasing information dissemination capacity.
Policy measures to increase “walk I” will also reduce reliability problems as
firms will more likely take targets seriously. Subsequently, this will increase
genuine efforts to implement open-ended promises to stakeholders regarding
reduction of GHG emissions. However, if the goal of public policy is to stim-
ulate “walk II” policies to increase technology-related investments, a careful
reflection on more “direct” policy measures to stimulate, adopt, and diffuse
new technology development should also be a priority.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research,
authorship, and/or publication of this article.

Funding
The author(s) received no financial support for the research, authorship, and/or publi-
cation of this article.

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Author Biographies
Charles A. Backman (PhD, University of Washington) teaches at the Department of
Business at Grande Prairie College (GPC), Alberta (Canada). His research interests
focus on firm adaptation and strategic intent in the sustainability sphere. His early
academic work was in forest resource management, whereby he focused on the
Russian forest sector at a time of change. He is presently preparing a second doctorate
in strategy and global management at the University of Calgary’s Haskayne School of
Business.

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Backman et al. 31

Alain Verbeke (PhD, Antwerp) holds the McCaig Chair in Management at the
Haskayne School of Business, University of Calgary (Canada), where he also serves
as Research Director. He is associated with the University of Brussels, Solvay
Business School (Belgium) and the University of Reading, Henley Business School
(United Kingdom), as the Inaugural Alan M. Rugman Memorial Fellow. His main
research interest is revisiting, rethinking, and augmenting the core paradigms in stra-
tegic management and international business, especially internalization theory, which
is a joint transaction cost economics (TCE) and resource-based view (RBV) theory of
the firm. His acclaimed textbook is titled International Business Strategy, Cambridge
University Press, 2013 (2nd edition).
Robert A. Schulz (PhD, The Ohio State University) is a professor at the Haskayne
School of Business, University of Calgary (Canada). He is the Academic Director for
the Petroleum Land Management concentration and teaches managerial strategy at the
undergraduate and graduate levels, including the Global Energy EMBA. His insights
on the energy sector and sustainability issues are frequently sought by the local,
national, and international media.

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