Climate-resilient strategy planning using the SWOT methodology: A case study of the Japanese wind energy sector

Abstract

As climate change leads to more frequent and intense extreme weather events, industry stakeholders and policymakers must assess their business strategies, practices, and entire sector policies under these uncertain conditions. Much recent research has integrated quantitative climate risk modeling into frameworks to engage policymakers and inform adaptation decisions in a general way, but relatively little attention has been devoted to extending this to strategic business and investment decisions. This falls short of identifying economic opportunities and threats in a wider socio-economic context, such as the development of new technologies or evolving political and regulatory environments. Here, a methodology is developed to integrate quantitative climate risk modeling with SWOT analysis (strengths, weaknesses, opportunities, and threats) which is commonly used in business and investment strategic planning. This moves the focus from avoidance of negative outcomes to prospective planning in an evolving environment. This methodology is illustrated with a case study of the Japanese wind energy sector, using open-access data and the open-source climate risk-assessment platform CLIMADA. This Climate risk assessment indicates threats from increasing damages to the wind energy infrastructure, as well as the profitability of typhoon-resistant wind turbines under present and future climate. Expert interviews and extensive literature research on opportunities and threats, however, also show that the transition towards renewable energies faces restrictive market dynamics, political and social hurdles, which set external conditions surpassing physically-informed dimensions. Beyond this illustrative case study, the methodology developed here bridges established concepts in climate risk modeling and strategic management and thus can be used to identify industry-centric ways forward for climate-resilient planning across a wide range of economic sectors.