Climate Change and Innovation Report - ENGT5219 Module Assignment

This report delves into the multifaceted impacts of climate change on the UK food industry, examining various challenges and opportunities for businesses operating within this sector. The introduction establishes the significance of climate change as a critical factor influencing business operations, emphasizing the need for adaptation and strategic responses. A case study on the effects of climate change on UK food stores highlights the vulnerability of the industry to extreme weather events, constrained resources, and shifting consumer demand. The analysis covers specific impacts such as extreme weather events, constrained resources and high costs, shifting demand, unfavorable working conditions, the effects of regulations, and the role of public intervention. The report also explores the concept of innovation, differentiating between disruptive, incremental, breakthrough, and game-changing innovations, and discusses how these innovation types can be applied to mitigate the effects of climate change in the food industry. The report concludes by synthesizing the key findings and implications for businesses, emphasizing the need for proactive strategies to ensure resilience and sustainability in the face of climate change.

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Table of Contents
Introduction....................................................................................................................................3
Case study: Effects of climate change on food stores in the UK...............................................4
Extreme weather........................................................................................................................5
Constrained resources and high costs......................................................................................6
Shifting demand.........................................................................................................................6
Unfavorable working conditions...............................................................................................7
Regulations.................................................................................................................................7
Public intervention.....................................................................................................................8
The innovation theory.................................................................................................................10
Disruptive innovation..............................................................................................................10
Incremental innovation............................................................................................................11
Breakthrough innovation........................................................................................................11
Game-changing innovation.....................................................................................................12
Disruptive innovation in the food industry...............................................................................12
References.....................................................................................................................................15

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Introduction
Every business operating under normal business environment is exposed to a lot of
challenging factors that in one way or another if not well addressed may render the business
obsolete or on the other hand act as an opportunity for strategic survival technique to of the
business. The major concern in the business world today is the effects of climate change which
come in different forms and affects different types of businesses in varying capacities. Every
business type, however, is prone to the ills of climate change which either affects the business
directly or indirectly. Schiano (2018) points out that the effects of climate change are so intense
that businesses and other enterprises will have to undergo a transition in order to acclimatize
with the new order of the day as far as climate change is concerned and to avoid extinction.
According to the United Nation’s Intergovernmental Panel on Climate Change report of
2018, climate change is headed the uncontrollable way. With a higher level of confidence, the
report points out that the period between the year 2030 and the year 2052, the world is likely to
receive a 1.5 degree Celsius of climate change which has far more devastating effects than what
is currently underway. This change will bring in its wake a higher level of global warming likely
to cause an irreversible change full of damages to livelihoods in varying degrees such as health-
related risks, negative impacts on food security, dwindling and/or stagnated economic growth,
human security, supply of water among other unforeseen risks (IPCC, 2018).
Therefore, it is all evident that with the current practices in different business sectors such
as the industrial and energy production areas, there is a likelihood that climate change is
something that is here to stay. Unless combating strategies are put in place to contain the rapid
increase in climate change to sustainable levels, there is every chance that high levels of climate
change are going to be achieved which will bring with it far much devastating biting effects to

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humanity and all its associations. The Economist (2019) points out a new paradigm shift in doing
business and most companies now focused on participating in the reduction of climate change
using different strategies. Volkswagen company, for example, informed its suppliers to cut down
in carbon and other greenhouse gas associates emission into the environment or run the risk of
losing their customs. There are a number of regulations and policies that are implemented in both
national and international fronts to curb the biting consequences of climate change. This is a step
towards the right direction for the survival of future generations and businesses in general.
Case study: Effects of climate change on food stores in the UK
Even though the effects of climate change could impact all businesses in an economic
environment, some businesses are far much at risk as compared to their counterparts in other
sectors. The impact of climate change in the motor and engine industry, for instance, cannot
favorably compare to businesses in the agricultural industry. The climate change impacts are far
much reaching in the agricultural and food-related sectors than it bites in other sectors. Impacts
of climate change in non-agricultural sectors may be considered a negative externality which
indeed bites the economy indirectly. Confino (2014) observes that Asda, a subsidiary of Walmart
and a dealer in fresh agricultural produce is already running the risk of its business affected by
climate change. According to Confino (2014), 95% of Asda’s range of agricultural products sold
is at risk of climate change which in essence implies that climate change is progressively biting
businesses and if left to continue, businesses may pack up. This section will, therefore, consider
the impacts of climate change in the food and agricultural industries in the UK and will also
lightly summarize the other indirect effects of climate change in other non-agricultural sectors.

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Extreme weather
When analyzing climate change, weather receives significant attention and one cannot
talk of climate change without mentioning weather since the main effects of climate change are
expressed and first felt through the change in the weather patterns. Folk (2018) asserts that
extreme weather and change in weather patterns is the initial stages of climate change. Research
shows that there is a direct linkage between climate change and extreme weather conditions such
as storms, prolonged drought, the experience of heat waves, droughts, movement of glacier
among other extreme weather conditions (Levin, 2017). Extreme weather conditions such as the
experience of an extensive wave of heat in California and San Francisco in the United States
recording a high of 106 degrees F killing six people and straining the power grid leaving people
without electricity imposes a great risk to businesses which depend on electricity for survival
(Panteli and Mancarella, 2015). The most affected are the agricultural produce which should be
kept fresh in grocery stores (Lesk, Rowhani, and Ramankutty, 2016).
Heavy floods have also swept across nations destroying homes, killing people and
destroying business premises and customer base due to forceful relocation has also been
experienced in some Asian countries such as India, Nepal, and Bangladesh. Millions have been
displaced forcing businesses to relocate to other locations. Agricultural lands are destroyed
resulting in poor or low harvests which in turn contribute to the dwindling performance of many
agricultural stores such as Walmart and Asda. Extreme weather condition as a result of climate
change also leads to depletion of resources such as forests (Demski et al, 2017). In the United
States in 2017, for instance, suffered the effects of wildfires which cleared vast lands making the
economy struggle with such ills spending close to 1.75 Billion dollars in trying to mitigate this
situation (World Resource Institute, 2017). Therefore, it is quite evident that in the subsequent

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years ahead, the business environment will experience far many disruptions caused by climate
change causing significant financial loses and physical damage to businesses. For this reason, it
is foreseeable that most insurance charges by insurance companies on business coverage will
also shoot to unsustainable levels, which is not good for businesses.
Constrained resources and high costs
As a dire consequence of extreme weather conditions due to climate change, there will be
a significant change in the availability of resources making production difficult and unfeasible.
Most producers will face a lack of raw materials for the production of their products. The limited
resources would push the cost of production to higher levels which in return will put pressure on
the supply chains. Drought and famine, for example, will cause a shortage in the food supply.
The cost of moving goods will also rise due to the increase in transportation costs and the cost of
electricity. On the other hand, regulations which are enacted to control climate change in regards
to production and control of dangerous emissions to the atmosphere and environment, in general,
will also bite businesses in terms of high costs of operation due to restrictions imposed by the
regulations. On the positive hand though, depletion of resources may put pressure on businesses
to be more innovative in their endeavors and consider alternative means of production and
encourage recycling of their wastes.
Shifting demand
Climate change is another main determinant in the market forces such as demand of a
particular good or group of goods. Folk (2018) notes with concern that a shift in demand for
goods and products sold in different seasons such as winter will have to be experienced in the
vent of rising temperatures which cause a shift in the seasons as well. The rise in temperature as
a case of climate change, for example, will affect the demand for heating oil which consumers

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will shift to other alternatives. Since consumers are very skeptical, they will prioritize how
sustainable the products they buy are in satisfying their needs and wants hence shift their demand
towards goods and products that are more environmentally fit and friendly to them. This
prioritization is not a good move for some businesses which may be forced to jump shape into
other going business endeavors.
Unfavorable working conditions
As earlier identified, extreme weather is one way to determine climate change. The rise in
temperatures is a weather condition which clearly points towards the possibility of climate
disruptions. Taking temperature rise above normal for instance, working conditions both indoor
and outdoor would be greatly affected. Professions that require hard and physical labor just as in
the construction and mining industry and in the agricultural industry would feel the hit of the
rising heat. This will also come with associated health conditions which tag a cost in their
eliminations. Cost of operation is set to rise when labor costs go high. Other costs such as
medical cover for employees working in physical labor sectors will also contribute to pushing the
business operational cost further higher.
Regulations
As a move to contain climate change, there are government interventions through
impositions of regulations and enactment of laws of international standards to govern the
business sector behavior and individual behaviors that may in one way or another contribute
towards destruction of the environment which is a key indicator when addressing climate change.
Imposing a regulation as a way of containing and controlling climate change may work in
disfavor of a business establishment. The carbon act for example which seeks to intimate
companies to lower the amount of carbon emitted into the environment in the face of it all works

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in the interest of containing climate change but for business establishment, it could be damaging.
Such companies herein referred to as business establishments, which emit say carbon and
associated greenhouse gases into the environment could have to invest heavily in designing
means of ensuring less harmful emissions. This could require investment in technological
advancements which will require a significant allocation of finances driving the business costs of
operations to very high levels.
Center for Climate and Energy Solutions, (2019) notes an imposition of caps on trade
which is a form of regulation that targets the market forces in reducing emissions of carbon. The
cap allows the business or markets to set prices for the amount of carbon emitted by the business
into the environment (Koch et al, 2016). The more a company emits the more it pays for the cap
licensing. Companies that have lower emissions have an upper hand in trading their extra cap
credits to higher emitters (Perino, 2015). Therefore, the setting of caps on carbon is both a devil
and an Angel depending on the type of business one runs.
Public intervention
The aftermath of climate change bites unsparingly irrespective of whether one
contributed less or more or did not contribute in any way towards climate change. The effects of
climate change are therefore felt by people of different geographic locations even when one
geographic location has measures in place to combat climate change (Boserup, 2017). This,
therefore, calls for global intervention by citizens of different nations. The intervention could be
in various forms depending on the situation at hand in a particular locality. Therefore, as the
public continues to experience the ills of climate change, intervention mechanisms come in
handy. One intervention mechanism is the act of rejecting businesses and their products that are
not operating and not produced respectively in a manner that upholds environmental

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sustainability and protection mechanisms (Araos et al, 2016). The public has mastered the art of
seeking products that are produced in an environmentally sustainable means. This move makes
businesses to adopt the global production standards in line with environmental protection goal
just like Adobe, Apple, IKEA among other companies that have committed their support to
100% use of renewable energy (RE100, n.d). This may require heavy capital investments which
may drive operational costs higher.
Effect of policy change on businesses
Uzialko (2018) points out that as a business, it necessary that it stays ahead and on top of
the regulations that govern the environment it operates. Further, the business should be flexible
and cognitive if the fact that regulations in a business environment are bound to change any time
hence the need to adopt an adaptation approach to such changes. Therefore, whether a business
likes regulations or not, compliance is a mandatory thing and very prudent of a business to
uphold. In order to maintain a competitive advantage and stay ahead of the game, a business
must adhere and adjust with every policy adjustment, failure of which may welcome sanctions,
penalties, all of which are business ills that will expose the business to competition challenges.
Policies such as those that govern carbon emission will subject businesses to invest more
in regulating their carbon emission to standards and accepted levels. This comes with the cost of
investing in such endeavors. In order to bring negative externalities to equilibrium, governments
set taxes as a regulatory mechanism that cushions a third party who is indirectly affected by the
externalities. This move may call for enactment of policies which regulate say the use of a public
resource for example water during a production process or better still disposal of waste materials
in a manner that upholds good health standards.

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Tariffs for instance as a policy regulation on business would have devastating effects on
that business (Rubin, 2019). A case scenario for instance, in Donald Trump's administration, the
United States government imposed tariffs in most international goods including its close
confidants and trading partners such as Canada and the United Kingdom. This, in essence,
pushed costs incurred by the exporting companies to the United States to higher levels making
the prices of services and products in the economy of US to increase (Barattieri, Cacciatore and
Ghironi, 2018). This is not good for business and consumers definitely would move to seek
better and cheaper alternatives (Guan and Yam, 2015). On the other hand, retaliatory effects of
the US move to set tariffs was also felt the opposite direction and tariffs also announced in kind
with the other United States trading countries.
The innovation theory
Disruptive innovation
Disruptive innovation is also referred to as stealth innovation because it involves the
introduction of new technology into the business or by changing part of or a complete overhaul
of the business process. The aspect of stealth is due to the gradual nature of the new technology
applied in the business. A new technology introduced in a business process takes time to
acclimatize with the business procedures and also to the market technology in practice
(Christensen, Raynor and McDonald, 2015). Ideally, the introduction of new technology is often
expensive in the long run, has limited attributes and often difficult to implement at the initial
stages. It is after some time that the new technology shall have acclimatized with the business
procedures and the market practice that it overrides the existing technology and causes a star up
in various companies which might find it difficult for their existing technology to keep pace with
the new technology (King and Baatartogtokh, 2015).

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Incremental innovation
This is said to be the most familiar and applied technique towards technological
advancement in a business environment (Lopez, 2015). Incremental innovation utilizes the
available technology in determining avenues for increasing the value of a business undertaking
in order to completely satisfy your clients. If it is a product, incremental innovation will seek to
find avenues within the business environment to improve the design and other physical changes
to a product to add value to the customers (Behera et al, 2017). Incremental innovation may
include but not limited to adding of information to a product, adding new features to a product
and/or removing more information or features on a product which is more of simplification of
the product.
Breakthrough innovation
Day (2017) defines breakthrough innovation as an innovation that culminates from inside
a business environment, it is innovation from within that takes the business to a whole new level.
The breakthrough innovation opens up a business to new markets and also can change the mode
of customer interaction with the business. Silva et al, (2017) point out that breakthrough
innovation is not a walk in the pack. It entails the introduction and application of new technology
into the business or changing totally the business model. In comparison with other types of
innovation, breakthrough innovation is rather challenging to many businesses since it involves
risk-taking in investing large amounts of capital, time and other resources in making the new
model feasible. On the positive end though, breakthrough innovation if well structured, the fruits
are quite rewarding since many a time it results in the production of a customer-oriented product
that satisfies through its value than the offering of a competitive market (Kaplan and Vakili,
2015).

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Game-changing innovation
Game-changing innovation just like the name suggests is about transforming a business
environment that causes a competitive star up in a market. The idea is coming up with an
innovative idea or technology that sets the pace in the product market rendering other means of
technology obsolete or ineffective as compared to the innovative idea (Bradford, 2011). A game
changer according to Kenton (2018) refers to a person or company that has the vision to alter a
business process and come up with a whole strategy which it implements and causes a significant
change in the business sector or growth of the business as compared to others in the same
market. The game-changing innovation may require a complete overhaul of the current business
structure and strategy in order to embrace a new whole strategy to gain a favorable competitive
advantage in the market (Avelino et al, 2017). A game changer, therefore, has the responsibility
of transformation in practice, thought and/or application.
Disruptive innovation in the food industry
Wilson et al, (2018) highlight that disruptive innovation gives remarkable results to a
business model that implements it as a growth strategy. Furtherly, disruptive innovation is said to
be uncompetitive conventionally when evaluated on the basis of market attributes such as
pricing, performance, and reliability based on the main consumers. This is so because of
disruptive innovation gears towards offering the fast movers a new set of product attribute far
ahead of competitor offerings. There is a chance of capturing new market niches with new
demands and consumer tastes and preferences. This new provision causes a star up in the market
which disrupts the going market technology and business models of the existing firms.