Environmental group Greenpeace hit a raw nerve in mid 2014 with its viral video targeting Lego’s cobrand deal with oil giant Shell. Racking over six million views and converting a substantial percentage to signatures on its on line petition, the video created guilt by association. It used Lego bricks and figures to create a vision of the Arctic wilderness being plundered by Shell in the pursuit of petro-dollars against the melancholy strains of the usually up beat “Everything is Awesome” song from the recent Lego Movie.
In October, Lego announced that it would not be renewing its contract with Shell, which involved the toy maker selling a range of brick kits in Shell retail outlets featuring Shell branded petrol tanker trucks and stations.
Already the Internet is full of protesters’ distortions of the major oil companies’ logos. But this is a new development, where the activists are making it difficult for what we call “emissions neutral” companies like Lego to form bilateral business partnerships with fossil fuel firms.
This is an example of what we term a “Quadrant 3” risk associated with climate change, where negative reputational impact makes a certain course of business increasingly untenable.
A sustained attack on reputation can have a dramatic impact on revenue: just look at the fate of Malaysia Airlines, which suffered two devastating accidents in quick succession and has required government assistance to survive.
Many risks associated with climate change – like damage to property from extreme weather events – can be mitigated to an extent. More distant challenges like the decline of winter sports or coral coast tourism in some countries can be planned for and managed over a long time frame, though declining asset values will affect exit prices. Reputational risk, on the other hand, can and is striking companies with less warning and can have devastating consequences.
Our advice is to look carefully at your environmental impact sensitivity. Even if your business has a neutral footprint, can the same be said of your suppliers, the use of your products and services, or the businesses you finance, insure or partner with?
Talk to Adaptive Capability today about safeguarding your business’ future.
Image credit: Stefano Tinti