Towards more climate adaptation across large-scale businesses in the service sector of Amsterdam

(1)

Towards more climate adaptation across

large-scale businesses in the service sector of

Amsterdam

Bachelor Thesis Urban Climate Adaptation

Author: Marie Jeanne Maj Maurice van de Wal Student number: 12272469

Bachelor Future Planet Studies Universiteit van Amsterdam

28-5-2021 Amsterdam

Thesis Supervisor (1st_{reader): Jannes Willems} Supervising teacher: Rosa van Schaik

2nd_{Reader: Joeri Sol} Word count: 9956

(2)

Abstract

In order to protect the city of Amsterdam against risks such as extreme heat, drought and heavy precipitation, different sectors need to contribute to climate adaptation. The service sector is the most common business sector in Amsterdam, which gives service businesses a powerful position. However, they are currently barely considering climate adaptation and take little responsibility in the protection of the city against climate risks. Since climate adaptation is a relatively new topic to such large-scale businesses, they have little knowledge about it. Therefore, businesses pay little attention to this topic and rather concentrate on core-business activities. As a consequence, few financial means are invested in climate adaptation strategies.

This research identifies different dynamic capabilities which can be developed to overcome these barriers. Conducting a literature review and interviews with different organizations in Amsterdam, helped to determine what dynamic capabilities are required to contribute to more climate adaptation in the city. Employees of different organizations within Amsterdam mention that recognizing the need of climate adaptation is the first and yet most important dynamic capability to contribute to the protection of the city against extreme weather events. In addition, more collaboration between different business departments and with other organizations supports the development of climate adaptation strategies. For many businesses it is still a challenge to develop these dynamic capabilities and consequently tackle the barriers. Presumably, this is a consequence of the fact that climate adaptation across large-scale service businesses is still in its infancy stages.

Keywords: The city of Amsterdam, Urban Climate Adaptation, Service Businesses, Sustainable Business Innovation, Dynamic Capabilities, Barriers

(3)

1. Introduction

The Stern review (2006) showed that urban areas are responsible for approximately 75% of global carbon emissions. A result of the increasing urbanization and activities such as transport, industry and building (UNEP/UN-HABITAT, 2005). The high amount of GHG emissions in urban areas leads to increased temperatures, causing heatwaves and other extreme weather events such as heavy precipitation to occur increasingly frequent (IPPC, 2007). Consequently, the IPPC report emphasizes the importance of adapting to climate change, especially in cities where risks are high (Bulkeley, 2010; While & Whitehead, 2013; Susskind, 2010). Even though climate adaptation is something that already happens, it is of great importance to strengthen it to tackle upcoming challenges (Amundsen et al., 2010). An important recognition therefore is the transition from if there is a need to adapt, to how to adapt (Biesbroek et al. 2013, 1120).

According to Gemeente Amsterdam (2020), climate adaptation is an increasingly important topic within the city of Amsterdam. There is a need to prepare the city as much as possible against the risks of climate change, since consequences are already visible and will increase rapidly in the coming years to decades. For example, temperatures already exceeded 45 degrees in summer (Metropool regio Amsterdam, n.d.) with consequences for the health of the population (Leemkolk et al., 2020). To address this challenge, Gemeente Amsterdam (2020) describes strategies for climate adaptation in Amsterdam. This requires focussing on multiple levels (Rauken et al., 2015), including both state and non-state stakeholders (NAS, 2020). The state, municipality, private sector and other organizations need to increase climate adaptation strategies in order to protect the city from dangerous risks (Vedeld et al., 2016).

Current literature on urban climate adaptation is mostly focused on the role of authorities in cities (e.g. Eckersley et al., 2018; O’Donnel et al., 2017). However, businesses have a powerful position, which means they can influence others (Kundurpi et al., 2021) and consequently stimulate climate adaptation in the city of Amsterdam. The problem is that many businesses still lack climate adaptation strategies and are thus not yet considering the risks of climate change enough while making investment decisions (Gemeente Amsterdam, 2020). Therefore, this research will study how companies are contributing to climate adaptation. The focus will be on large-scale businesses in the service sector of Amsterdam, which are mainly located in the Amsterdam business district, also known as ‘the Zuid-As’. It is important to focus on these businesses because of their influential position and significant potential to contribute to climate adaptation in the city (van Bree et al., 2016).

In literature it is argued that dynamic capabilities play a major role to stimulate sustainability within businesses (Hargadon, 2015). These are based on the standard capabilities (Teece, 2018; Zollo & Winter, 2002), which include day-to-day activities to operate the usual business functions. By improving business as usual and eliminating non-effective behaviour, businesses can improve their standard capabilities (Zollo & Winter, 2002). To actually provoke change in the standard activities and organization of a business, dynamic capabilities are implied (Winter, 2003). Eisenhardt & Martin (2000, 1106) describe dynamic capabilities as "strategic and organizational processes", such as innovating products and processes, making deliberate decisionsand collaborate with partners. Increasing climate adaptation within businesses asks for change and requires the right set of dynamic capabilities (Hargadon, 2015).

The first aim of this study, therefore, is to identify the dynamic capabilities to increase climate adaptation and as a consequence become less vulnerable for climate change. This will create the possibility to recognize new strategic and organizational processes, businesses can implement to protect themselves against climate risks. This can be beneficial for companies who want to reduce costs and increase profits

(5)

(Foster et al., 2011; UN Global Compact & UNEP, 2012), or improve their reputation (UN Global Compact & UNEP, 2012).

Clearly, climate adaptation is not yet included throughout every service business. Therefore, the second aim of this study is to identify what withholds businesses from climate adaptation development. Biesbroek et al. (2013) uses the concept of barriers. Different aspects and circumstances within businesses, such as a lack of a clear understanding of climate adaptation (Uittenbroek et al., 2012), prevent businesses from addressing climate adaptation. By interviewing different businesses, both barriers and dynamic capabilities will be identified. This can stimulate businesses to optimize their climate adaptation strategies and contribute towards more climate adaptation within the city of Amsterdam.

The following research question will be posed to address the abovementioned aims: ‘What are the

dynamic capabilities of large-scale service businesses in the city of Amsterdam in order to transition towards more climate adaptation, and which barriers do they face in this process?’

After defining the key concepts (2) and describing the research methods (3), this project is subdivided into three sections. The first section (4.1) argues the required dynamic capabilities for businesses to move towards more climate adaptation. The second section (4.2) discusses the barriers to cope with, while increasing climate adaptation. The third section (4.3) elaborates how the dynamic capabilities relate to the barriers. Then implications of these results will be discussed, as well as the limitations of this research (5). Finally, a conclusion answering the aforementioned research question and other conclusions are drawn (6).

2. Theoretical Framework

2.1. Defining the key concepts

To answer the proposed research question and introduce the additional sub-sections, it is important to explain the key concepts of this research. Respectively, climate adaptation across large-scale service businesses, dynamic capabilities and barriers.

2.1.1. Climate adaptation across large-scale service businesses

A report of the Gemeente Amsterdam (2020) stresses that companies in Amsterdam, are not yet considering the risks of climate change enough while making investment decisions. Increasing climate adaptation strategies across the private sector however is of great importance (Linnenluecke et al., 2013). Especially in the city of Amsterdam, this topic requires more attention, since consequences of climate change are already on-going (Metropool regio Amsterdam, n.d.). Amundsen et al. (2010) stresses that climate adaptation has become an unavoidable agenda item last years. Hence, a short review of literature on climate adaptation across large-scale service businesses is presented as starting point. Bulkeley (2010, 230) describes climate adaptation strategies as "measures to reduce current and future vulnerabilities to the impacts of climate change". Uittenbroek et al. (2012) adds that besides decreasing vulnerability, climate adaptation is also important because it can reduce social issues within an organization, or with external parties. Moreover, it can protect the built environment from damage. If businesses increase their climate adaptation strategies it will reduce its vulnerability towards climate change effects and at the same time stimulates economic well-being (Adger et al., 2005). Anticipating to climate risks with climate adaptation strategies requires two different steps according to Adger et al. (2005). First, an organization needs to be able to adapt to changes, then these changes need to be implemented throughout the organization. These two processes towards more climate adaptation, foster changing the standard activities and organization of a business (Zollo & Winter, 2002). To actually provoke change to these day-to-day pursuits, dynamic capabilities are implied (Winter, 2003).

(6)

2.1.2. Dynamic capabilities

To stimulate the transition of more climate adaptation across large-scale service businesses, dynamic capabilities are required (Hargadon, 2015). If circumstances are changing, dynamic capabilities are needed to adapt to the changing circumstances. Different scholars have defined this concept. First, Zahra & George (2002) use the term to describe business's ability to redesign its business-strategies and adapt to transitioning conditions. Second, Hargadon (2015) describes it as the tools needed for sustainable innovation within a business and states that only with dynamic capabilities, a business can identify and adapt threats such as climate change risks. El Sawy & Pavlou (2008) state it as the rearrangement of current operations in order to match the changes. Lastly, Teece (2018) states that dynamic capabilities upgrade the static capabilities of a business, the standard activities to maintain the usual business functions. Summarizing, dynamic capabilities can change existing business-strategies, into strategies that support more climate adaptation. Besides, dynamic capabilities can stimulate satisfactory outcomes of partner businesses, by developing new business propositions such as sharing resources to develop climate adaptation (Teece, 2018). Combining these definitions and adding the formulation of Eisenhardt & Martin (2000), dynamic capabilities can be defined as the required strategic and organizational processes businesses need, in order to overcome certain challenges and transform their existing strategies. In this case, the challenge is to recognize climate change threats and find opportunities to improve climate adaptation and tackle these threats.

In order to analyze dynamic capabilities, Teece (2007) classifies them into three sections: sensing, seizing and transforming. Sensing means identifying climate change threats and adaptation opportunities for a business. Seizing, is about designing and shaping the adaptation opportunities that are recognized based on the threats. Transformation is needed to restructure the business aspects towards more climate adaptation, so future threats and opportunities can be identified (Teece, 2018). Teece (2018) argues that it is often impossible for a business to be skilled in all three sections, since one company can sense threats easily but at the same time experiences difficulties with implementation. Generally, a result of little experience in climate adaptation development. Therefore, the classification of Teece is not yet described for climate adaptation applications.

2.1.3. Barriers

According to Biesbroek et al. (2013), there is still limited research on potential barriers, which evolve within climate adaptation development. This is because barriers are difficult to identify and evaluate since they are context dependent. Before discussing one way to identify potential barriers in this research, it is necessary to consider some examples of how the concept is defined in the literature. Amundsen et al. (2010) construe barriers as policies and legal requirements that hinder adaptation measures. Here, legal requirements are understood to be "institutional frameworks, financial conditions, available technology, information, awareness, and knowledge as well as external shocks" (Amudsen et al., 2010, 277). Likewise, Uittenbroek et al. (2012) describes barriers as obstacles that decrease the ability to execute climate adaptation measures. Biesbroek et al. (2013) adds that the obstacles are by nature social factors, such as low priority of climate adaptation development. Addressing the barriers in the right way creates the ability to overcome them (Moser & Ekstrom, 2010). However, barriers must not be confused with limits, absolute obstacles that can’t be overcome. These limits are often ecological or physical in nature, and therefore almost impossible to tackle (Adger et al., 2007). Moser and Ekstrom (2010) stress that it is sometimes difficult to define whether something is a barrier or a limit. This recognition can be understood as a barrier itself but can be overcome through self-study of a company. To analyse the barriers businesses in Amsterdam cope with, it is necessary to classify the barriers by type. Adger et al. (2007) describes four types of barriers. Respectively, (1) Technological barriers, (2) Financial barriers, (3) Informational and cognitive barriers, and (4) Social and cultural barriers.

(7)

Technological barriers refer to shortcomings of technologies. Financial barriers include the shortcomings on resources for climate adaptation measures. The third type is based on insufficient expertise on climate change effects and thus the necessity of climate adaptation. The last type refers to conflicting views of different sectors or individuals within an organisation (Uittenbroek et al., 2012).

2.2. Conceptual framework

A conceptual framework is developed to create a more general basis for this research (figure 2). The framework builds on the dynamic capability framework of Teece (2007). It implies that the dynamic capabilities and climate change effects, together lead to more climate adaptation. This process will be stimulated if a business develops more dynamic capabilities and therefore can adapt climate change effects. It decreases, with fewer dynamic capabilities and thereby suffer more from climate change effects. Teece (2007) argues that this framework also shows that a business can transform, and that it is not stuck in a static structure.

In this research also barriers are included. As stated, barriers withhold businesses from climate adaptation development. It therefore influences dynamic capabilities, since they foster climate adaptation within a business. Concomitantly, dynamic capabilities can be helpful to overcome certain barriers (Teece, 2018). This suggests that both dynamic capabilities as well as barriers define the ability of a business to transition towards more climate adaptation and additionally have a reciprocal relationship. Based on this framework, dynamic capabilities and barriers of the implementation of climate adaptation will be identified of the interviewed businesses.

Figure 1. Conceptual framework of transition towards more climate adaptation across large-scale service

businesses.

3. Methodology

3.1. Research design

This research is following a similar qualitative research approach as Uittenbroek et al. (2012), which investigated how the concept of climate adaptation can be integrated into city policy of two Dutch cities. This study also discusses both the required means to improve this and the additional barriers. It started with literature reviews and consequently focussed on the two cases by interviewing the leading actors. During the interviews it was questioned how the interviewees defined climate adaptation and its corresponding barriers and opportunities.

Instead of interviewing key actors from two different cities, this research analysed different stakeholders that are involved in the contribution of service businesses towards more climate adaptation. Varvasovsky & Brugha (2000, 338) describe a stakeholder-analysis as "an approach, a tool or set of tools for generating knowledge about actors, so as to understand their behaviour, intentions, interrelations and interests, and for assessing the influence and resources they bring to bear on decision-making or

(8)

implementation processes". Hence, it is a proper research design to achieve a better understanding of how the stakeholders in this research vision the transition towards more climate adaptation. It consequently helps to identify what service businesses need in order to increase climate adaptation development and what barriers might arise during this transition.

3.2. Data collection

Like the study of Uittenbroek et al. (2012), first an emerging theory of the key concepts of this research is reviewed, to create a basis for the second part (Patten & Newhart, 2018). To answer the research question, three sub questions were constructed. The first being ‘What are the dynamic capabilities to

move towards more climate adaptation within service businesses’. The second, ‘What barriers are businesses coping with during climate adaptation development?’ and the third ‘How do the dynamic capabilities relate to the barriers?’. Consequently, different indicators to define the concepts of dynamic

capabilities and barriers were identified (table 2). Based on this, semi-structured interview questions were created which consisted of either asking directly by what means service-businesses need to improve climate adaptation and which barriers are in the way. Alternatively, this was asked indirectly by adding suggestions based on the indicators, such as how the business collects information about climate adaptation or how climate adaptation arranged financially? (See Appendix for a complete list of interview questions). Before turning to the second method, interviewing the stakeholders, it was necessary to gain knowledge about the interviewees. Buenz (2019) stresses the importance of knowing your audience. Hence, some pre-research was done to get an understanding of the interviewed businesses.

The second part consisted of interviewing the relevant businesses to support the primary data. Different types of businesses, which are somehow linked to climate adaptation, are interviewed, to identify the most apparent capabilities and barriers of climate adaptation. This approach provides in-depth knowledge of the research area (Creswell, 2013). The questions were semi-structured, since new questions arise during the interviews, which provide valuable information (Patten & Newhart, 2018) and additionally a better understanding of the answers.

The aim of this research is to identify dynamic capabilities and barriers, service businesses in Amsterdam cope with by implementing climate adaptation measures. To obtain in-depth knowledge in the field, it was necessary to interview real-life stakeholders in this area, as discussed in the introduction. distinction is made between two types of stakeholders to create a clear overview of the contribution of service businesses towards climate adaptation in the city. First large-scale businesses in the service sector were interviewed, to gain into their business model. Different businesses were approached for participating, since climate adaptation is a joint responsibility and therefore all service businesses should contribute towards more climate adaptation in the city (Leemkolk et al., 2020). Therefore, it was interesting to include different types of service businesses. Criteria such as number of persons employed, or number of investments can be used to operationalise ‘large-scale enterprises’ (Eurostatics, 2016). Eurostatics classifies large enterprises as organizations with more than 250 employed persons. In this research, the same number of employed persons is used, to define large-scale businesses. In the analysis section, the participants of these businesses are abbreviated by letters A,B,C,D (table 1). However, to create a complete overview of the dynamic capabilities and barriers, it was of extra value, to also interview third parties such as architect and real-estate firms, but also the municipality of Amsterdam. These organizations support the development of climate adaptation at other businesses (Arcadis, n.d.; Metabolic, 2019; Ligtvoet et al., 2015). Since they are closely in contact with companies they collaborate with, it was postulated that they could provide information about the required dynamic capabilities to implement climate adaptation measures and consequently, could describe barriers

(9)

businesses might cope with during this process. In the analysis section, these are abbreviated by numbers 1,2,3,4 (table 1).

Table 1. Stakeholders and participants

Abbreviation Stakeholder Organization Function

A Bank Anonymous Business Development

Manager

B Accounting and tax adviser company Anonymous Associate Sustainability and Responsible Governance

C Law firm Stibbe Head of Facilities

D Consultancy and engineering company Arcadis Global Sustainability Director

1 Architects company Anonymous Director

2 Municipality Gemeente

Amsterdam

Junior strategic advisor Climate Adaptation & Future-proof Assets

3 Real-estate company Anonymous Project Developer

4 Public Company and Impact organization

Waternet and Green Business Club Zuid-As

Advisor Climate Adaptation and Spatial Planning (Waternet)

Project manager Water and Green (Green Business Club Zuid-As)

3.3. Data analysis

This study is based on the three questions, and subsequently categorised into different sub-dimensions (Table 2, column 2). For the dynamic capabilities, the subdivision of the key concept is done with the classification of Teece (2007). Three categories of dynamic capabilities, respectively: sensing, seizing and transforming. Sensing opportunities and threats, is indicated by adapting information and setting goals. Seizing climate adaptation opportunities is indicated by experimentation, recombining existing innovations or nexus work. Transformation to more climate adaptation is indicated by integrating the best opportunities and committing to them in the long term (Table 2). Based on current literature, it is identified how these indicators (column 3) can be measured. This is translated into different values (column 4) and corresponding codes which illustrate the indicators in abbreviated format (column 5).

To analyse the barriers, the categorization of Adger et al. (2007) is used. Technological barriers are identified, by recognizing technological incompetence’s or other technological reasons why climate adaptation is failing. Financial barriers to increase climate adaptation, can be determined if a business has insufficient resources for the implementation. All failures of assessing climate adaptation within a business, due to financial reasons, can be assigned to this category. The third category contains all barriers concerning informational defects, such as lack of expertise and knowledge on the importance of climate adaptation. The last type of barriers, cultural and social, involve all reasons for climate adaptation failure because of opposing views about priorities among the business employees (Uittenbroek et al., 2012).

The analysis is executed using ATLAS.ti to identify what dynamic capabilities and barriers are being recognised by the different participants. ATLAS.ti allows to analyse and manage the unstructured data of the interview-transcripts (Ngalande & Mkwinda (2014). Using the codes from the operationalization results were conducted from the transcripts (Burnard, 1991). Context to the data could be assigned, by interpreting what dynamic capabilities and barriers of table 2 were most important according to the interviewees (Schreier, 2012).

(10)

Table 2. Operationalisation of key concepts. 1. Climate adaptation at Service businesses 2. Subdivision of concept 3. Indicators 4. Values 5. Codes Dynamic capabilities Sensing threats & climate adaptation opportunities

Setting goals 2,7 _{▪ Determine business vision}2 ▪ Reporting goals 7

▪ Defining activities within the firm 2

▪ Defining activities outside the firm 2 Setting goals, business vision, business activities Adapting information 1,2,3,4,5,8,11

▪ Recognizing the need of Climate Adaptation16 ▪ Experiencing climate

change effects 8, 14, 17 ▪ Conducting own Research

and development (R&D) 1,4,12

▪ Awareness about climate change risks 15

▪ Wide vocabulary 2,3,4 ▪ Exchange knowledge within

the business 4

▪ Exchange knowledge with other parties 3,4

▪ Input of all employees 9,10,11

Research, development, awareness, knowledge, exchange, input, informing, learning Seizing climate adaptation opportunities Experimenting 6,10

▪ Achieving new product introductions 1

▪ Brainstorming 2, 3, 12 ▪ Amount of (low risk)

experimental projects throughout all departments of a business 10

Experiment, meetings, brainstorm, projects, learning

Nexus work 3 _{▪ Collaboration between} business-departments 2,3,12 ▪ Collaboration with other

businesses / organizations 3 ▪ Subsidies 18 Collaboration, relationships, subsidies, grants, stimulation Transformation to more climate adaptation

Integration 11 _{▪ Changes in services}1,12 ▪ Integration of

well-functioning experiments 3,11 ▪ Investments in new dynamic

capabilities 2,12 Integrating, upgrading, implementing, changing, investments Commitment 3 _{▪ Maintain business activities}

3,12 ▪ Committing to adaptation initiatives/measures 3 Maintaining, committing, keeping up Barriers Technological barriers for climate adaptation Technological incompetence’s 13,14

▪ All barriers for implementing climate adaptation within a

business, that occur because of technological issues. Technology, buildings, spaces, construction, establishment Financial barriers for climate adaptation Insufficient resources 13,14

business, that occur because

No Financial means, no subsidies, scarcity, lack

(11)

of a lack of (financial) resources. Informational & cognitive barriers for climate adaptation Informational defects 13,14

business, that occur due to a lack of knowledge or expertise. Lack of knowledge, lack of expertise, complexity, other strategies, no awareness Social & cultural barriers for climate adaptation Conflicting visions 13,14

▪ All barriers for implementing climate adaptation within a business, that occur due social or cultural issues.

Controversial views,

conflicting ideas, other priorities References: 1. Teece (2007); 2. Teece (2017); 3. Hargadon (2015); 4. Cohen & Levinthal (1990); 5. Turner et al. (2003); 6. Cretney (2014); 7. The Department of Justice (2003); 8. Thomas et al. (2015); 9. Burnard & Bhamra (2011); 10. Hamel & Valikangas (2003); 11. Zollo & Winter (2002); 12. Katkalo et al. (2010); 13. Adger et al. (2007); 14. Uittenbroek et al. (2012); 15. Halady & Rao (2010); 16. Albers et al. (2015); 17. Amundsen et al. (2010); 18. Leemkolk et al. (2020)

4. Results

4.1. Introduction

In this chapter, the results from the interviews are presented. During the interviews it was questioned which dynamic capabilities and barriers, the organizations could identify during the process of increasing climate adaptation. The operationalisation created the basis for the interview questions. It was asked what sensing, seizing and transforming dynamic capabilities could be identified and consequently what technological, financial, informational & cognitive and social barriers could be identified. Since the questions where semi-structured, participants mainly mentioned what dynamic capabilities and barriers they thought where most important. However, this doesn’t imply that they don’t agree with other identified findings.

This chapter starts with general results, to describe what is most important to increase climate adaptation across large-scale service businesses, according to the interviewees. The most important dynamic capabilities to foster this will be discussed, followed by the barriers and how these can be solved by using dynamic capabilities. The parts are structured following the subdivisions of the concepts from the operationalisation (table 2).

4.2. Towards more climate adaptation

In order to increase climate adaptation across large-scale service businesses, different aspects are important. First of all, businesses should consider the long-term consequences every time a new decision is taken, to decrease future stress caused by climate change effects (Participant B, Stibbe (C), Arcadis (D), Participant 1, Gemeente Amsterdam (2), Waternet/Green Business Club (4)). Participant 2 quotes: "Keep in mind that the choices you make now on climate adaptation, but also consider the consequences on all other transitions. Decisions may still have an impact in 150 years' time". This is motivated by the

fact that a business should stay flexible and implement solutions continuously, to improve their own business (B, 2).

In addition, businesses should consider different climate scenarios, while making large investments and analyses of expenses (B). He quotes: "What will we do during a heatwave?". This requires considering the long-term perspective of your business and consequently stimulates businesses to take responsibility for their actions (Bank (A)). Taking responsibility is according to participant 1, not only installing a simple lawn on the roof. It needs to be a multifunctional roof garden, which properly contributes to the biodiversity of its surroundings. Participant 2 adds the suggestion of implementing all the aspects of the toolbox of Amsterdam Rainproof (n.d.), to increase climate adaptation. Furthermore, participant B states that businesses need to recognize their own impact and subsequently search for opportunities to reduce

(12)

this impact. This requires turning risks of climate change into opportunities (B, C). For example, participant 3 stated that heavy rainfall leads more rainwater storage development, which results in more green space and therefore a more pleasant environment for employees. Recognizing risks stimulates businesses to make changes and genuinely implement solutions to foster climate adaptation.

To really stimulate businesses towards more climate adaptation, governmental regulations and support from the municipality are necessary (A, B, D, 1, 2, 3). According to Uittenbroek et al. (2012), the municipality is mainly accountable for climate adaptation development. Participant 1 quotes: "At a

certain point you have to have regulations to stimulate the late majority as well". The late majority are

the ones who adopt innovations after almost everyone already adopted it (Rogers, 2003). Even though some business might take a frontrunner position in climate adaptation development, eventually every business has to adopt climate adaptation measures and as stated before, this can be fostered by certain dynamic capabilities. This aspect will be covered in more detail in the next paragraph.

4.3. Dynamic capabilities to increase climate adaptation

A list of 30 dynamic capabilities is identified and presented in table 3. According to the interviewees, these means are required in order to increase climate adaptation across the large-scale service businesses. The largest consensus across the participants was reached on 5 specific dynamic capabilities to increase climate adaptation see figure 2 and table 3. These will be explained in more detail in the next three paragraphs, where the most important dynamic capabilities of each category according to Teece (2018) will be discussed. The higher the position in the category in table 3, the more important the dynamic capability is according to the participants.

Only a few of this list were mentioned by every participant. Some because specific stakeholders, had experienced that a certain capability was necessary to make changes. For example, employees of Stibbe and the real-estate company both experienced that including the board of the business from the start of the development of adaptation measures, really helped to convince the board to make changes. Along the same line participants A and 3, explained that organizing training sessions for employees to become more aware of the consequences of climate change, supported the transition towards more climate adaptation. Other stakeholders possibly didn’t mention this specifically, which might be because they did not yet organize this type of events. Some capabilities are perhaps also not endorsed by all participants because the questions were semi-structured, and it wasn’t asked whether they agreed with specific dynamic capabilities.

Two aspects are emphasized by the participants, which are not easy to classify in the categories of Teece (2018), but according to the interviewees, important to support climate adaptation. The first the lack of an established market for climate adaptation (A, 2). Participant 2 states: "For some businesses, climate

adaptation can generate new business opportunities". Currently there is too little attention to climate

adaptation in many businesses, which means there are little negative perceptions about it (A). Gasbarro et al. (2017) notes that if businesses can regulate the effects of climate change, they might be able to create new market products.

The second aspect is timing (A,3). Taking measures for climate adaptation must be done at the right time, to benefit the most. Both participants stress this because sustainability and climate adaptation gained more attention over the last years. Albers et al. (2015) also stated this and argued that therefore more organizations are willing to inform themselves about adaptation developments. This implies that there is currently an increasing support for adaptation measures.

(13)

Figure 2. Most important dynamic capabilities to increase climate adaptation at large-scale service

(14)

Table 3. Overview of dynamic capabilities noticed by each participant. X means it is mentioned by the

participant, - means it’s not mentioned.

Dynamic Capability A B C D 1 2 3 4

Sensing Setting goals ▪ Take responsibility X X X X X X X - ▪ Frontrunner ambition X - X X X - - X ▪ Long term thinking - X X X X X - - ▪ Determine goals X - - X - - X X Adapting information ▪ Recognition of climate adaptation X X X X X X X X

▪ Research on climate change

effects

X X X X X X X X

▪ Sharing knowledge X X X X X X X X

▪ Awareness about sustainability X X X X X - X X

▪ Driven group of employees X - X - - X X X

▪ Consenting board X X X X - - X X

▪ Training employees X - - - X -

▪ Expertise - X X - X X X -

▪ Including board from start X - - - X -

▪ Time investment X - X X X - X -

Seizing Experimenting ▪ Brainstorming X X X X - X X X

▪ Experiment X X X - X - X X

▪ Designing attractive climate adaptation innovations X - - - X - X X Recombining innovation ▪ Reporting X X - X - X - X ▪ Recognition of simple innovations X - X - - X - X

▪ Develop multiple solutions - - - X - -

Nexus work ▪ Collaboration with other

organizations

X X X X X X X X

▪ Learning from others X X - X X X X X

▪ Collaboration between business departments

(15)

▪ Other financial support X X X X X X X X

▪ Using subsidies X - X X X X X -

Transform Integration ▪ Making changes instead of speaking out

X X X X X X X X

▪ Include in business-strategy X X X X - - X X

▪ Designate own department X X X X - - - -

▪ Own financial means X X X X X X X X

▪ Apply established rules to new construction

X - X - X X X X

4.3.1. Sensing dynamic capabilities

Sensing climate change threats and climate adaptation opportunities is done with different dynamic capabilities (table 4). The most important dynamic capability to increase climate adaptation is recognition of climate adaptation, as stated by all the participants. According to Gasbarro et al. (2017) the primary step to develop business-strategies to cope with climate change effects, is identifying the risks as well as ways to deal with them. Participants A, B, 1, 3, stress that recognizing climate adaptation is caused by experiencing heat, drought or flooding. The interviewee of Gemeente Amsterdam quotes:

"A trigger is needed, an event, then they become aware and take action". Participant 4 describes the

example of a huge downpour in 2014, as a result by which it was realized that accessibility to buildings could come under pressure.

Participant B states that another cause of recognition is a general risk analysis, for the entire company, which considers different climate scenarios. This is most common for companies with many physical assets, those companies recognize the strongest need for climate adaptation. However, the employee of Arcadis states that even though service businesses are less vulnerable for climate change, it doesn’t mean they can’t experience any risks by climate change. He quotes: "For us the risk is people’s ability

to access our own company infrastructure". Therefore, recognition of climate adaptation is important.

Participant 3 adds that employees also realise, that their working place should be a pleasant place, and not one disturbed by heat for example. Controversially, participant 1 believes that almost no businesses in Amsterdam recognize climate adaptation, at least way too little.

A second essential dynamic capability is doing research on climate change effects, to recognize the risks (B, D, 2, 4). Which subsequently motivates businesses to also do research on climate adaptation (A). According to the bank, this leads to more awareness of the challenge. Moreover, it makes you realise what the costs and benefits of your business activities are (B, C). Participant 1 quotes: "Companies need

to investigate what works for their business, only then new insights and opportunities can be recognized". According to participant 1, this is the most important topic of addressing climate

adaptation, because it can lead to a hitherto missing market. Participant A on the other hand states that there is already a lot of research on innovation technology for climate adaptation.

Developing adequate research also means one should share this knowledge (all participants). Either sharing with other organizations or sharing throughout the business. This is mostly done with the use of nexus work (table 3). Participant 3 for instance, presented their garden roof to various external parties. Participant B and D talked about sharing the risks analysis they did for other companies, for which they were hired to do research. Other businesses do their own research and Participant A states that they

(16)

report their findings and share it with clients. For example, by organizing campaigns, workshops and other events to gather employees, clients and other interested parties. The employee of Stibbe talked more about internal knowledge sharing. She states that as a knowledge department, you are obligated to share your investigations to climate change risks with other businesses departments. According to participant 1, someone has to provide a sufficient story about climate adaptation to stimulate businesses in climate adaptation. This requires external parties or organizations to do research and share this with businesses.

Taking responsibility to address climate change effects is important in order to transition towards more climate adaptation (all participants). This requires a socially engaged mindset (participant 3). The bank and Arcadis recognize that the financial sector has an important role in facilitating climate adaptation and therefore need to take responsibility for this. They have the financial means to provoke change and contribute to climate adaptation development. Since they want to spend their money carefully, they want to make conscious decisions. Besides, if they take responsibility, they can stimulate their clients to also make conscious decisions (A). Participant B adds that taking responsibility requires taking the awareness of climate change into account in every decision. Furthermore, if a business takes responsibility to address climate change effects, it shows its surroundings that they are working on various sustainability themes (4). For companies at the "concrete jungle of the Zuid-As", developing climate adaptation measures stimulates other businesses to go along with it (participant A). According to participant 1, businesses are not yet taking enough responsibility. They might talk about taking responsibility, but don’t act responsible yet.

The fifth most important dynamic capability to sense threats and climate adaptation opportunities, according to the participants, is awareness for sustainability. Realizing that your company needs to reduce its CO2 footprint (A, B, C), leads to the recognition of climate adaptation (A, B, C, 3). Participant A stresses that "A company should realize, what is needed for sustainability". Without this realization, a company can’t recognize the threats of climate change and consequently shift towards more climate adaptation. Participant 4 states that if organizations have awareness for sustainability, they can recognize that climate adaptation is not as complicated as they might think. Besides, businesses want to create awareness for climate change, to remain attractive to new employees (4).

Table 4. Most important sensing dynamic capabilities

Sensing

▪ Recognition of climate adaptation ▪ Research on climate change effects ▪ Sharing knowledge

▪ Take responsibility

▪ Awareness for sustainability

4.3.2. Seizing dynamic capabilities

Seizing dynamic capabilities is about designing and shaping the adaptation opportunities that are recognized based on the threats (table 5). The most important strategy to do this is by collaboration with other organizations. Partnerships with others are essential in assessing climate adaptation (A). Partnerships with knowledge institutes (A), architects and engineering companies (A,C,1,3), investors (B), authorities and platforms (C, 2, 3) and similar businesses (2,3). Some businesses hire other organizations to do research, since they have data on climate change effects (Arcadis). Nevertheless, some businesses hire for example a company to develop a green roof on top of their building (A,C,1,3), since they don’t have the capacity to do that themselves. Hence, businesses need these partnerships, to increase climate adaptation.

(17)

An important means to foster all dynamic capabilities is brainstorming about climate adaptation. Conversations together with different stakeholders, inside and outside the business (B, 2), to identify risks and opportunities of climate adaptation (A, C, 2). Participant 4 explains that meetings with many different stakeholders are organized to collectively develop climate adaptation measures for buildings at the Zuid-As. Without these meetings, businesses might not recognize the need for climate adaptation and develop measures to foster it. Also, taking a step back and recognize "what will we expect within 30

years?" (2) can be motivating to make changes. Rethinking your strategies and recognize what your

company can do to deal with climate risks (C). Participant D adds that businesses need to have a contingency plan, if climate risks accelerate.

These two dynamic capabilities support learning from others, the third rated seizing dynamic capability (A,B,1,2,3). So not only share knowledge with others, also adapt the information to your own business or business department to innovate develop and implement climate adaptation measures (participant 1). Participant B notes that adapting learning from others, leads to even more collaboration between organizations. Thus, more dynamic capabilities can be seized.

Another seizing dynamic capability, already stated before, that improves climate adaptation, is ‘collaboration between different business departments’ within an organization (A,B,C,3). Participant A emphasizes integral solutions to promote climate adaptation measures. Participant B states that the development of climate adaptation strategies moves between different departments. For example, it is initiated by the sustainability department and consequently must be executed by the asset management department. Participant C notes that decisions concerning climate adaptation, need to be in consultation with the board. Therefore, involving board members is essential in this process (A,B,C,D,3,4). Stibbe notes that having a flat business structure, really makes this task easier. Because then it is more effortless to communicate between different departments or employees.

Finally, participants A,B,C,1,3 stress to experiment in order to develop new climate adaptation measures. Participant A explains that the circular platform they developed, was an experiment in the first place, but resulted in completely new strategies for the entire business. Both participant A & C emphasize that to realize climate adaptation measures, a business needs space to do research and experiment.

Table 5. Most important seizing dynamic capabilities.

Seizing

▪ Collaboration with other organizations ▪ Brainstorming

▪ Learning from others

▪ Collaboration between business departments

▪ Experimenting

4.3.3. Transforming dynamic capabilities

To implement the right measures and restructure the business aspects towards more climate adaptation, transforming dynamic capabilities are required (table 6). Participants (A,C,1,3) stress that currently the topic of climate adaptation is more discussed than acted upon. Participant 1: "I personally feel that a lot

of people talk too much about the topic, instead of acting on it". In order to increase climate adaptation,

it is necessary to make changes. This works out, if another dynamic capability is executed; include in business-strategy (A,B,C,3). If sustainability becomes a core business pillar, climate adaptation gets more attention (A). Participant B quotes: "If it really is included in all decisions, only then you really

have a company that is well prepared for climate change". It thus necessary that businesses not only

(18)

questions if this is possible in large-scale businesses. Since it sometimes requires that businesses need to change their core-business, which they probably don’t want to do.

Implementing climate adaptation measures, it can be beneficial for large-scale service businesses to designate an independent department that focuses on climate change and sustainability. Three of the four large-scale businesses that are interviewed (A,B,D), have this and emphasized that it really contributes to more research and awareness of climate adaptation. The employee of Arcadis stressed that sustainability teams are beneficial to a company since they can support the recognition of risks and stimulate the business to do something about it. At the same time, he quotes: "internal sustainability

teams should be relatively lean. Not small but lean". With this he meant that they should exist, however

they should not do the risk-analysis themselves. Since this would probably lead to controversial visions within the entire business.

All participants highlighted that in order to increase climate adaptation, financial means are essential. Large-scale service businesses often have the internal resources to take care of this (participant D). However, the investments need to be profitable. So, either economic profits need to be achieved or increased social value (participant 4). UN Global Compact & UNEP (2012) state that businesses are aware of the fact that they can’t continue growing, without community support. This implies that businesses are willing to make changes, not only motivated by financial reasons. Furthermore, the employee of Gemeente Amsterdam states that businesses can use subsidies, but that they still need to make investments to develop changes. So financial means are crucial to foster climate adaptation among service businesses.

To really push businesses towards more climate adaptation measures, rules for new construction are crucial (A,C,1,2,3,4). Participant 2 stresses that more and more rules are developed to stimulate climate adaptation at new constructions. Participant 1 states, that without these rules, businesses don’t feel the urge to adapt to enhance climate adaptation. Participants A,C,3,4 stress that certificates on the sustainability of their buildings, are also a stimulating factor. Such as the BREEAM certification, which assesses buildings on their sustainability and contribution to well-being of its users and surroundings (BREEAM, 2020).

Table 6. Most important transforming dynamic capabilities

Transform

▪ Making changes

▪ Include in business-strategy ▪ Designate department ▪ Financial means ▪ Rules new construction

4.4. Barriers of implementing climate adaptation measures

This section describes why large-scale service businesses often still lack climate adaptation measures. According to the participants different barriers withholds businesses to increase climate adaptation. A list of 20 barriers to climate adaptation is created, divided by the type of barrier conducted from Adger et al. (2007). Five barriers to climate adaptation stood out from the others (figure 4). Generally, these were emphasized by all participants. They will be elaborated in the following paragraphs.

Some barriers were only mentioned a few times, and not endorsed by all participants. For example, the barrier that there is no established market yet for climate adaptation. Since there is not a market for climate adaptation across large-scale service businesses, these businesses can only rely on the rules. However, almost no rules for climate adaptation exist, only suggested measures are developed by the municipality (Gemeente Amsterdam, 2020; Leemkolk et al., 2020). Participant 1 also explains that the financial governmental support to enhance climate adaptation across service businesses is still a bit

(19)

scarce. Besides he quotes: "it is a wrong assumption by some policymakers, that this market will be

formed by itself". So, the fact that there is not a market yet, leads to little effort in climate adaptation

across service businesses. Other participants might not have mentioned this barrier, but they probably do agree on it since they did notice the little governmental support and existing rules (participants A,B,C,D,1,4).

Another barrier that was only mentioned by two participants is that there are not many examples of climate adaptation measures for large-scale service businesses. Participant D states that there are only a few practical solutions which businesses can adapt easily. This barrier is presumably in line with the thoughts of other participants, but they stated it as the fact that the concept of climate adaptation is quite new. Which is in this research operationalised as another barrier, that there is not enough knowledge. So even though some barriers are not precisely endorsed by all participants, it does not imply that they don’t agree with it.

Participants C & 3 couldn’t think of any barriers in the first place. Participant 3 motivated this with the fact the board was involved from the start of the process, causing no difficulties with the decision-making. In addition, participant C motivated this, by explaining that the company knows that changes are needed to protect the environment. However, both participants did mention some barriers, while discussing this topic in more detail.

Figure 4. Most important barriers that cause less climate adaptation at large-scale service businesses

(20)

Table 7. Overview of barriers noticed by each participant. X means it is mentioned by the participant,

- means it’s not mentioned.

Barrier A B C D 1 2 3 4

Technological barriers

▪ Already other measures X - X X X X - -

▪ Existing building X - X - X X X - ▪ Shared ownership X X - X - - X X Financial barriers ▪ High costs X X X X X X - X ▪ Time intensive X - - X X - - X Informational & cognitive barriers ▪ No recognition of climate adaptation - X X X X X - X

▪ Not enough knowledge X X X X X X X X

▪ Complexity of problem X X - X X - - X ▪ No established market for climate

adaptation

- - - X X X - -

▪ Little examples of climate adaptation

X - - X - - - -

▪ High risk / uncertainty X X - X - - - X ▪ No existing rules for climate

adaptation

X - - - X X X -

Social & cultural barriers

▪ No responsibility X X - X X X X X

▪ Climate adaptation is not core

business

X X X X X - X X

▪ Innovations for other purposes X X - - X X X X ▪ No awareness for sustainability X X - X X - X -

▪ Non-consenting board X X - - - - X X

▪ Controversial visions among employees

- X - X - - - X

▪ Negative perception of climate adaptation

X - - X X X - -

▪ No motivated employees X - X X - - - -

4.4.1. Technological barriers

Amongst all types of barriers, technological barriers were not often mentioned. Only three barriers can be classified in this category. The most important one was the fact that businesses are already taking other sustainability measures. Different participants (A,C,D,1,2) state that service businesses focus more on climate mitigation, instead of adaptation. Participant A: "you will see everywhere that climate

(21)

participant C this has to with the fact that "that is the easiest to measure". As a result, they don’t feel obligated to also increase climate adaptation measures and have the idea that they are already contributing to a better environment.

Another technological barrier is that businesses often have existing buildings (participants A,C,1,2,3). Therefore, businesses find it difficult to implement climate adaptation measures. Participant 1 quotes:

"A very practical matter is that existing construction is simply not suitable". With this he meant that due

to certain construction choices, a green roof garden can’t be created. At new constructions it is much easier to take this into account (A, C, 1, 2) besides the municipality has drawn up a few rules that must be observed (participants A, 1, 3 & Leemkolk et al., 2020). So, because of this barrier, it is difficult for businesses to increase climate adaptation.

A third barrier is that businesses often share their building with other businesses or organizations (participants A,B,3). In that case, the building is often owned by a real-estate company. Therefore, the businesses have little say in what measures are taken to make the building more climate adaptive (participant 3). Participant 4 states that property managers simply want the building to last and function for what it was built for. Hence, to increase climate adaptation a change in attitude of the property managers is required. Participant D adds that "Service industries rarely own their own offices". Even tough businesses want to implement climate adaptation measures, they first need to convince others to recognize the need of climate adaptation and invest in measures accordingly.

4.4.2. Financial barriers

Financial barriers are presumably the most important reason why businesses experience difficulties with climate adaptation development. Two different barriers of this type were identified (table 7). The most considerable are the high costs of climate adaptation. Participant 1 stresses that the costs of a green garden are quite high. The discussion whether to take measures for climate adaptation, is therefore often about how to finance it (A,B,2). The employee of Gemeente Amsterdam adds that businesses consider if the risks outweigh the costs. If the risk can be overseen, the investment is at least postponed until the risk becomes too serious (participant 4). The employee of Arcadis adds that climate adaptation usually belongs to the finance department of the company because research to climate risks is part of the risk analysis, which is a financial issue. Finance departments have so many tasks to consider that this results in little research to climate adaptation and its potential financial opportunities in the long-term. Therefore, many large-scale service businesses still acknowledge climate adaptation as a costly expenditure.

Also, a business needs to invest time in order to foster climate adaptation (participants A, D, 1, 4). It is time intensive to delve into research of climate adaptation and consequently develop and implement measures (A). Businesses prefer spending time on their core-activities, therefore little time is left to foster climate adaptation within the business. The employee of Arcadis agrees on this, but states that on the other hand sometimes small climate adaptation developments, such as a simple green roof, are quickly implemented. However, these are often cheap developments and generally motivated to improve a business-image, which can be linked to social & cultural barriers.

4.4.3. Informational & cognitive barriers

Different barriers can be assigned to informational or cognitive barriers. The most important ones are elaborated. The first barrier includes a lack of recognition for climate adaptation (participants B, C, D, 1, 2, 4). Participant 1 notes that businesses experience small effects of climate change, and that they as a consequence don’t recognize the urgency of climate adaptation (B, C, 1, 2). Besides since climate adaptation is quite a new topic, it’s still in its initial development phase (D, 1, 4). According to participant 4, the concept of climate adaptation does not even exist for ten years. The employee of Gemeente Amsterdam states that only two years ago the stress-maps of the city of Amsterdam are developed. These show what areas in the city are most vulnerable towards increasing precipitation, heat, drought and flooding (Metropool regio Amsterdam, n.d.). Until recently there wasn’t much data

(22)

available on the effects of climate change, and service businesses in the city of Amsterdam were not aware of the effects of climate change.

This consequently leads to the second informational barrier, which is a lack of knowledge about climate adaptation across most service businesses (all participants). Participant 1 states: "I think many companies

have never heard the sermon for climate adaptation". People may never have heard of the concept of

climate adaptation or think it is the same as climate mitigation. The lack of knowledge on the concept, causes that they don’t see the risks of climate change effects and therefore don’t develop climate adaptation strategies (participant B).

Another barrier that can be linked to this, is the complexity of the problem (participants A, B, D, 1, 4). For example, participant B states "flooding is such a big thing, that companies cannot really think about

it". And participant D quotes: "There are so many risks that are ahead of a company, climate is not the only one. And how an individual company puts wage on each of these risks, versus the available funding that they have. That is a difficult conversation". Thus, since addressing climate change effects is such a

complex problem, and businesses also have other risks to deal with, little attention is left to climate adaptation.

4.4.4. Social & cultural barriers

Lastly, some barriers that lead to less climate adaptation at large-scale service businesses are social or cultural reasons. The most outstanding social barrier is the lack of responsibility (participants A, B, D, 1, 2, 3). Other barriers such as shared ownership or a lack of knowledge (table 7) for instance cause this. Having little influence in which measures are taken in preserving the property, leads to little responsibility on the part of the renting businesses. Besides, they assert that it’s the responsibility of the property owner. Another reason why businesses don’t recognize it as their responsibility to develop climate adaptation measures, is because they consider it as a governmental or municipal task (A, B, 1). Participant 1 states: "It has yet always been a subject that we outsource to the government".

Another social barrier includes that climate adaptation is not core-business for many companies (participants A, B, C, D, 1, 3, 4). Businesses have other priorities, as stated they would rather invest their money and time in what they are good at (Participant 4). Participant D: "Is it something that needs

to be looked at on a monthly basis, and updated on a monthly basis or quarterly basis? Probably not".

If businesses assume that climate adaptation is not a topic that requires attention as often as other activities, they rather don’t put much effort to it at all.

Participant 1 & 2 stress that employees can be motivated for climate adaptation, due to other purposes. Moreover, employees value greener working environments. According to participant 1, climate adaptation is a secondary argument to implement measures, the primary argument is marketing related. Participant 2 also confirms this but questions if it matters by what motivation climate adaptation is initiated, if ultimately an increase of climate adaptation is achieved. Participant 4 ads: "companies are

very concerned with their image and corporate identity". Since it shows to what extend businesses are

incorporating the environment and contribute to more sustainability.

The last noteworthy barrier identified by the interviewees, is that some businesses have little awareness for sustainability (A, B, D, 1, 3, 4). Participant A declares: "But it really is by no means that every

construction project takes that into account". Apparently, awareness for sustainability is not

incorporated throughout every organization. The employee of Arcadis states: "And they don’t know what

climate change risk is, that is a problem. So those people need to be upscaled". He indicates that

employees in risk-departments are more focussing on other risks, such as financial risk and compliance risk, than on the risk of climate change. Because until the risks have proven to be managed, companies perceive climate change much less as a risk (Gasbarro et al., 2017). Therefore, without awareness for climate change risks and sustainability, businesses often struggle with the transition towards more climate adaptation.

Towards more climate adaptation across large-scale businesses in the service sector of Amsterdam