'Climate crisis' needn't mean corporate crisis: boards that want to be part of the solution can take steps right now to respond to a concern that is driving societal debate and investor attention.

• Author: Guzy, Gary S.
• Position: ENVIRONMENTAL OVERSIGHT

THE SUPREME COURT ruled in early April that climate change creates sufficiently imminent damage to warrant allowing lawsuits on the matter to be heard in federal court--a development that many newspapers headlined. Before that, Al Gore's film, "An Inconvenient Truth," took home an Oscar. And for those who tend to skip both the hard-news headlines and the latest Hollywood entertainment in favor of the box scores, please note that Sports Illustrated devoted a cover story earlier this year to global warming, and not the kind brought on by changes in swimsuit fashion.

Climate change is being discussed everywhere by almost everybody, including virtually all media and important government regulators. As a topic, it is permeating the culture and will therefore drive consumer expectations and investor demands.

Companies need to decide right now whether to be part of the problem or the solution. Thankfully, there are concrete steps that corporate leaders can take to understand and respond to the many dimensions of this issue.

From our perspective as business risk advisers--and former environmental regulators--we note a number of factors that have combined to amplify interest in climate change. These are worth examining when talking about solutions (see sidebar, "Climate Change: A Hot Risk ... and Getting Hotter").

With this fuller understanding of how the issue is gaining momentum, what are best practices for managing the web of climate-related risks? Here are eight principles we recommend executives and directors keep in mind.

Think broadly about climate impacts

As Hurricane Katrina demonstrated--whether it was caused or exacerbated by global warming or not--climate-related events can be broadly disruptive to the ability to deliver goods and services. Basic business requirements such as power supply, transportation, and telecommunications can all be seriously disrupted, as can access to facilities, employees, and customers. Likewise, both regulations and market-driven consumer demand may make some products and means of production more costly and others more attractive, and may even alter a firm's value proposition. Business resources now often taken for granted--such as timber supplies, clean water, and pharmaceutical source materials--may become increasingly scarce and more expensive.

Assess and plan for these impacts

Climate change will create winners and losers as firms develop new growth strategies. Regulation and the economic reality of imparting a price to carbon means that company growth plans will need to shift. And new...