Article’s

Agribusinesses generate revenues from a process which no management acumen can shield from weather vagaries. In most cases, even the majority of financial analysis views climate as merely a variable in the background. Conceptual paper seeks to pose the following question: how do climate variabilities get to the firm’s financials? Relying on the climate risks literature, resource dependence theory and stakeholder theory, this paper posits that the linkage occurs through five channels – physical disruptions, transition costs, regulatory costs, supply chain vulnerability, cost of capital and price and yield volatility. The effectiveness of these channels depends on size, geographic diversity, adaptation technologies and policies support. Based on the above, the paper presents a conceptual framework linking climate variabilities to profitability, firm value and sustainability. The paper concludes by extending the discussion through some propositions, literature review, Indian agribusiness environment and implications for the managers, investors and policy makers. Overall, this paper contends that agribusinesses which view climate risk as a financial planning issue, and not just a mere operational inconvenience, emerge winners whenever the weather goes against their expectation.