Version 1
: Received: 23 October 2023 / Approved: 24 October 2023 / Online: 25 October 2023 (11:21:15 CEST)
How to cite:
Sánchez González, C.A.; Lochmuller, C.; Builes-Vélez, A.; Osorio, A.M. A Procedure for Assessing the Effect of Climate Change on Organizational Cash Flows in Developing Countries. Preprints2023, 2023101563. https://doi.org/10.20944/preprints202310.1563.v1
Sánchez González, C.A.; Lochmuller, C.; Builes-Vélez, A.; Osorio, A.M. A Procedure for Assessing the Effect of Climate Change on Organizational Cash Flows in Developing Countries. Preprints 2023, 2023101563. https://doi.org/10.20944/preprints202310.1563.v1
Sánchez González, C.A.; Lochmuller, C.; Builes-Vélez, A.; Osorio, A.M. A Procedure for Assessing the Effect of Climate Change on Organizational Cash Flows in Developing Countries. Preprints2023, 2023101563. https://doi.org/10.20944/preprints202310.1563.v1
APA Style
Sánchez González, C.A., Lochmuller, C., Builes-Vélez, A., & Osorio, A.M. (2023). A Procedure for Assessing the Effect of Climate Change on Organizational Cash Flows in Developing Countries. Preprints. https://doi.org/10.20944/preprints202310.1563.v1
Chicago/Turabian Style
Sánchez González, C.A., Ana Builes-Vélez and Ana M. Osorio. 2023 "A Procedure for Assessing the Effect of Climate Change on Organizational Cash Flows in Developing Countries" Preprints. https://doi.org/10.20944/preprints202310.1563.v1
Abstract
Climate change and net zero are expected to have a significant impact on eco-nomic activity in developing countries, and thus, on the financial cash flow of organizations. In this paper, we propose a procedure for assessing the financial impact of climate change on organizational cash flow in developing countries. Our study contributes to the research on scenario-based climate change impact analysis. The applied research design is exploratory and mainly qualitative, constructing financial impact scenarios combined with narratives to determine the impact of climate change on individual cash flow line items. The narra-tives rationalize cash flow variations and enrich the estimates by adding expert knowledge, in the form of financial micro-stories and descriptions to the pro-posed procedure. We present a hypothetical citrus farming company in a de-veloping country to demonstrate the application of the proposed measurement procedure. The results obtained suggest that (1) the procedure is practical be-cause financial cash flows are known and widely used in financial analysis and because they can be implemented in a spreadsheet; that (2) the procedure pro-vides flexibility because it can be adapted to suit the specific needs of different companies, depending on a selected climate change scenario, the company’s exposure to climate change, its resilience and vulnerability; (3) that the prac-tice of thinking in terms of financial worst-case, base-case and best-case sce-narios, which reflect different levels of uncertainty, helps to model the finan-cial impacts of climate change and provides a forward-looking perspective on how much a company’s cash flow could change.
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
