Abstract This study entails an analysis of the effects of climate change on the word’s automobile sector. Considering the broad nature of the sector, the study has taken into account the case of Toyota Motor Corporation which is one of the firms operating within the sector. To guide the research, the study has taken into account both the positive and negative effects of climate change. To ensure effective completion of the project, the study is organized into a number of chapters. The first chapter gives a comprehensive background study on the issue of climate change. It also outlines the research objectives, research questions, scope and limitations of the study. Chapter two entails a review of relevant literature and theoretical framework. The method used to conduct the study is outlined in chapter three. On the other hand, chapter four outlines the research findings for the study while chapter five entails a comprehensive discussion and interpretation of the research findings. Chapter six outlines the conclusion of the entire study, a number of recommendations and future research. Introduction Background study Currently, climate change is being considered as a major global issue. One of the core causes of climate change relates to human activity such as combustion of fossil fuels which culminates in emission of Greenhouse Gases (GHGs) into the atmosphere. Greenhouse gases are considered as some of the emissions that cause climate change by increasing the rate of global warming (Hardy, 2007, p.22). The high rate of global warming is evidenced by the rising temperature levels on the earth’s service over the past decades. For example, during the period ranging between 1906 and 2005, the global average air temperature increased by a margin of 1.33±0.32 0 F. Greenhouse gases are considered to be the major cause of climate change (Parliamentary Office of Science and Technology, 2004, p.1). According to the United Nations Framework Convention on Climate Change (n.d, p.2), the high rate of climate change that is being experienced is affecting firms in different economic sectors. On a global scale, business sectors are considered to be amongst the largest emitters of greenhouse gases (Gadesmann & Kuhnert, 2007, p.20). Climate change affects businesses in different economic sectors irrespective of their size. According to Klynveld Peat Marwick Goerdeler [hereafter referred to as KPMG] (2008, p.1) which is a renowned international auditing firm, businesses are increasingly being confronted with diverse implications of climate change. Over the past few decades, businesses have acknowledged the fact that climate change presents both risks and opportunities (Jolly, 2010, p. 73). There is a wide range of business risks associated with climate change. These risks are categorized into competitive, market risks, operational, supply chain, reputational, physical, and regulatory and litigations risks (Organization for Economic Co-operation and Development, 2010, p. 34). It is projected that these risks will increase in the future. According to Ryan & Turton (2007, p.1) climate change is widely recognized as one of the key issues within the automobile sector. The automobile sector is a major contributor to the climate change that is being experienced today. F