The Impact of Organizational Heuristics on Firms’ Sensemaking for Climate Change Adaptation

The complexity and uncertainty of climate change pose unique challenges to the development of corporate adaptation strategies. Climate change adaptation requires organizations to rely on sensemaking to understand climate events, the implications for their operations, and develop the required responses. In this context, organizational heuristics can support sensemaking by simplifying decisions and reducing cognitive effort but can also hinder it by creating biases and errors that lead to inefficient decisions. This paper identifies and analyzes organizational heuristics used when making decisions on climate change adaptation by empirically investigating the climate change adaptation responses of key infrastructure providers in the UK. Looking at selection, prioritization, procedural, and temporal heuristics, we examine how organizations make sense of climate change events and develop their responses accordingly. The analysis shows that while these rules-of-thumb are sensible in some instances, they can also create biases that may deflect responsibility or create a false sense of security leading to inefficient adaptation decisions.