Business and Climate Change - Assignment Example

CORPORATE SOCIAL RESPONSIBILITY AND CLIMATE CHANGE Background During 2006, the effects of global warming were becoming more evident as global averagesurface temperatures have risen during the last 30 years (BSR 2006). Global temperature s are now within one degree Celsius of the maximum temperature of the past million years (BSR 2006) and this has been demonstrated by melting glaciers in the Arctic, the lack of snow at ski resorts and repeat flooding. Apart from the destruction and threat to wildlife, businesses are also being affected. Businesses are now faced with the challenge of responding to climate change in a way that will support their corporate strategy, which includes the business’ corporate social responsibility. The effects of climate change are disrupting business operations and transportation, for example, in the UK; high-sided vehicles are increasingly at risk of accidents from floods and gale force winds. Such disruptions have the effect of reducing customer demand and purchasing power (Dudek and Wiener 1996, Romm 1999), as products and services become less available due to erratic supply. These disruptions also restrict the ability of the business to grow, as the sales revenues will be insufficient to generate profit for investment purposes. Climate change therefore poses a risk to businesses, and the onus is on re-evaluating corporate social responsibility in a bid to gain efficiencies, and to reduce the businesses contribution to the climate change problem. Climate change is commonly associated with industrial factories churning out smoke from cooling towers, however, non-industrial organisations contribute to climate change through their carbon and greenhouse emissions generated by their operations and product/service lifecycle (Grubb 1989, Cantwell 1995, ICTSD 2005). Whilst this represents an element of change and uncertainty, climate change-focused corporate actions can have benefits for the organisation in the way of new products and new markets (Mendelsohn 2000, Richards 2001, Lawrence 2002, Jochem and Madlener 2003). Climate change strategies are also perceived as risky due to the large scale, renewable energy investments that are associated with reducing the carbon footprint (McCarthy et al 2001, Egenhofer et al 2004). For instance, if fossil fuels ran out, Shell, BP and other large fuel providers would have to invest large amounts in alternatives, which BP has started doing with its Autogas even though it is not widely available. The transport industry also contributes to climate change and global warming through vehicle emissions and businesses in this sector are beginning to take notice, and accepting responsibility for the part they play. For instance, in September 2006, Sir Richard Branson, founder of the Virgin Group donated three billion dollars over ten years from his organisation to fund the development of low carbon energy sources such as wind turbines, cleaner aviation fuel and ethanol (BSR 2006). This demonstrates the levels of commitment expected from businesses, and Virgin have acknowledged their role especially as they run train services and flights that contribute to global warming. Corporate social responsibility in United States is now recognised as the fifth largest venture capital investment category after biotechnology, software, medical and telecommunications (CSM 2001, Raynard and Forstater 2002). The market for clean technology is set to expand and is already worth an estimated $40 billion (Raynard and Forstater 2002). This is not surprising considering that the United States is responsible for a significant proportion of global emissions. This is also representative of the increasing market and customer awareness of their environment, and businesses in this region are already capitalising on this. This also demonstrates that businesses are adopting strategies that are action and adaptation oriented to focus on the energy efficiency aspects and renewable energy sourcing (Burton 1996, Adger 2003, Hertin et al 2003, Berkhout et al 2004). By redefining corporate social responsibility, the organisation is ensuring that every employee is involved as managing change in energy usage requires the involvement of people (Burton 1996, Adger 2003, Hertin et al 2003, Berkhout et al 2004). The development of effective strategies should also mould this issue into the identity of the firm, which becomes focussed on emitting less and less over time, while identifying new growth markets for the organisation (Burton 1996, Adger 2003, Hertin et al 2003, Berkhout et al 2004). Examples of identity transformations include BP and its programme to raise awareness on how members of the public can reduce their carbon footprints. BP is also an interesting case because its business activities have previously and still are associated with generating carbon emissions, but changes in their corporate social responsibility are slowly changing their image. Businesses represent a significant portion of greenhouse gas emissions through industrial processes, transportation and commercial energy use (Burton 1996, Adger 2003, Hertin et al 2003, Berkhout et al 2004). In order to reduce these emissions, businesses need to focus on the following three strategies for climate change (Burton 1996, Adger 2003, Hertin et al 2003, Berkhout et al 2004): Increasing the efficiency of current energy use Securing their offsets of emissions Sourcing less carbon-intensive and increasing renewable-based energy These strategies cannot be applied individually and their success is dependent on the business’ corporate social responsibility and how this places the business in a more favourable position with regards to climate change. Brief review of the literature (N.B. maximum 500 words) Corporate social responsibility can be defined as the responsiveness of businesses to stakeholders’ legal, ethical, social and environmental expectations (CSM 2001, Raynard and Forstater 2002). Corporate social responsibility is one organisational strategic issue that has recently come under scrutiny from stakeholders which includes members of the general public, as business operations will indirectly their standards of living as well as the quality. This issue has been previously concerned with the globalisation of trade, the size and influence of companies and knowledge and brand image (CSM 2001, Raynard and Forstater 2002). These areas gained prominence due to the increasing awareness of sweat shops in third world countries which highlighted the exploitation for massive profits that did not benefit these environments. Businesses had to change negative practices associated with these issues to respond to expectations of their shareholders. Corporate social responsibility also enables an organisation to respond to consumer and civil society pressures, as showing responsibility has its strategic value in aligning products and business relationships through supply chains (CSM 2001, Raynard and Forstater 2002). Governments are really not able to enforce this responsibility but can only enable legislation (CSM 2001, Raynard and Forstater 2002) to keep climate change at bay and to raise awareness of the importance of reducing carbon emissions. One example of such enforcement is the requirement for electrical appliance to be energy rated to ensure that the customer is making an informed choice. Corporate social responsibility is also underpinned by a strong business case that links social and environmental responsibility with financial success (CSM 2001, Raynard and Forstater 2002). This financial success is often realised through operational cost savings from environmental efficiency measures, enhanced reputation, sharper anticipation and management of risk and the improved capacity to learn and innovate (CSM 2001, Raynard and Forstater 2002). These benefits are also dependent on the organisation, as products and services vary and therefore no one particular model exists that can be readily applied. The market is also demanding climate-aware products and this is evident in retail outlets where electrical appliances now come with an energy efficiency rating. This demand for climate-aware products is not limited to products, but to clean technology and this is demonstrated by the various initiatives to harness wind technology and to reduce the dependence of fossil fuels and nuclear power. Even supermarkets are procuring renewable-focused items, such as biodegradable wrapping, or reducing the amount of wrapping used in a bid to be energy conscious. The design, sourcing and sales of energy efficiency products offers an expanding area of business opportunity, as business increase their target market and reduce wastage in their supply chains (Hahn 1990). This is also important for business particularly with issues regarding the disposal of old appliances, so their suppliers will have to introduce energy efficiency considerations into the design stage, as these determine more than 70% of the costs of product development and manufacture and have a significant impact on end of life management for a product (Goodman 1998). A design that minimises energy consumption during its use saves customers the time and energy of making adjustments to a product after a purchase, for example, wrapping water heaters with insulation blankets (Goodman 1998). Research questions (Aim and supporting objectives) My research philosophy is to produce research that will inform and raise awareness of the solutions available to businesses, which will enable them to redefine the corporate social responsibility so that they can take part in reducing the occurrence and effects of climate change. The goal of this research is to suggest a draft approach that will enable businesses to re-align their corporate social responsibility with those of reducing global warming. This will be achieved by: Finding out how organisations are changing their corporate social responsibility strategy in light of climate change. Analysing the effect corporate social responsibility has on growth strategies for organisations. The effect increased competition and product homogeneity has had on the drivers for climate change. The views of shareholders on climate change and the business’ corporate social responsibility. The main drivers for change for corporate social responsibility. The impact of climate-friendly strategies on business. Proposed methodology This research will follow a qualitative, induction model as it involves the investigation of a complex and sensitive issue, and qualitative research will enable the author to achieve an in-depth understanding of this topic (Patten 1990, Ratcliff 1994, Sandelowski 2000). The data collected from qualitatative research is also often detailed and cannot be generalised as the data shapes and limits the analysis (Patten 1990, Ratcliff 1994, Sandelowski 2000). Quantitative research methods would have inappropriate as they involve generalising results, they require formalised sampling methods and include a mechanism for estimating a true score (Patten 1990, Ratcliff 1994, Sandelowski 2000). This research is looking at a complex issue that cannot be generalised and that requires detailed information. Inductive approach has also been selected because this research will start looking at specific observations and measures to detect patterns and regularities (Patten 1990, Ratcliff 1994, Sandelowski 2000). Any findings will be used to formulate any hypotheses that are worth exploring, leading to general conclusions on the issue (Patten 1990, Ratcliff 1994, Sandelowski 2000). A deduction approach would have involved coming up with a theory and testing the resulting hypotheses (Patten 1990, Ratcliff 1994, Sandelowski 2000), however this is more aptly suited to quantitative research as the findings of the observations would be specific, and lead to the confirmation or non-confirmation of an original theory (Patten 1990, Ratcliff 1994, Sandelowski 2000). The induction approach will allow for the research to open-ended and exploratory which supports qualitative research and the fact that opinions and views will be collected. The research will not involve any testing or the confirmation of hypotheses and therefore, the use of the deduction approach would not be very helpful in achieving any objectives. Credibility The credibility criterion involves establishing that the results of qualitative research are credible or believable from the perspective of the participant in the research (Patten 1990, Ratcliff 1994). As the purpose of this research is to understand and describe perceptions of interest, it is important that the participants judge the credibility of the results. This will be ensured by making sure that the participants have completed and agree with their statements prior to analysis. Transferability Transferability refers to the degree to which the results of qualitative research can be generalized or transferred to other contexts or settings (Patten 1990, Ratcliff 1994). From a qualitative perspective transferability is primarily the responsibility of the one doing the generalizing (Patten 1990, Ratcliff 1994). This means that the author will have to describe the context and assumptions that are central to the research, to enable this research to be reproduced or repeated in similar settings. This will achieved by ensuring that businesses of similar characteristics are chosen to participate. For instance, businesses in the UK will not be compared with business in France; however comparisons can be made against each other. Dependability The traditional quantitative view of reliability is based on the assumption of replicability or repeatability (Patten 1990, Ratcliff 1994). Essentially it is concerned with whether we would obtain the same results if we could observe the same thing twice. But we cant actually measure the same thing twice -- by definition if we are measuring twice, we are measuring two different things (Patten 1990, Ratcliff 1994). To get around this problem the author will assume that all businesses are concerned with the impacts of climate change and would like to do their bit to change global warming. The idea of dependability, on the other hand, emphasizes the need for the author to account for the ever-changing context within which research occurs (Patten 1990, Ratcliff 1994). The research is responsible for describing the changes that occur in the setting and how these changes affected the way the research approached the study (Patten 1990, Ratcliff 1994). Confirmability Confirmability refers to the degree to which the results could be confirmed or corroborated by others (Patten 1990, Ratcliff 1994). There are a number of strategies for enhancing confirmability which include document procedures for checking and rechecking the data throughout the study, getting another individual to document the process or searching for and describing negative instances that contradict observations (Patten 1990, Ratcliff 1994). This study will be have its procedures documented by the author for economical reasons, and because the addition of negative instances would not match with the aims and objectives of this study. The data will also be checked for bias potential and efforts will be made to explain any findings. Data collection and analysis This will include in-depth case studies and interviews as they allow interaction, direct observation and written documents (Patten 1990, Ratcliff 1994). Data will be collected by conducting unstructured interviews because unstructured interviews allow for initial guiding questions, the conversation can move in another direction of interest that has not previously been identified and this form of interviewing allows the author to explore other topics broadly (Patten 1990, Ratcliff 1994). Structured interviewing would have had the structure, however, the individuals interviewed will be unique and a heterogeneous group, which means the responses, cannot be pre-determined (Patten 1990, Ratcliff 1994). As the data is seldom categorised, the results will be divided into three main sections: Awareness of corporate social responsibility Awareness of climate change Suggestions for successful strategy change Contribution and expected outcomes The university library and the internet will be searched extensively for journals and articles on this topic. Books will also be obtained from the university library for more background on climate change. Limitations As with any research, there are limitations to this study. Due to the limited budget, it will not be possible to conduct face-to-face interviews due to the time and money constraints; however, all efforts will be channelled into conducting successful telephone interviews. In conducting these phone interviews, the author is also mindful that participant availability is a factor, and therefore efforts will be made to obtain a significant number of participants before the study begins. References Adger, W. N. (2003). “Social capital, collective action, and adaptation to climate change.” Economic Geography 79(4): 387-404. Berkhout, F., Hertin, J. and Arnell, N. (2004) “Business and Climate Change: Measuring and Enhancing Adaptive Capacity.” The ADAPT project. BSR. (2006) “A Three-Pronged Approach to Corporate Climate Strategy”. Business for Social Responsibility. Burton, I., (1996). “The growth of adaptation capacity: practice and policy. 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Goodman, A. (1998). “Chain Reaction. You’re not there until your suppliers are there” in Tomorrow Magazine July/August, pp 26-28. Gray, R (2001), Social and Environmental Responsibility, Sustainability and Accountability, Can the Corporate Sector Deliver? Glasgow, Centre for Social and Environmental Accounting Research, University of Glasgow. GRUBB, M. (1989). “The Greenhouse Effect: Negotiating Targets.” Royal Institute for International Affairs: London. HAHN, R.W (1990). “Regulatory Constraints on Environmental Markets”. Journal of Public Economics, Vol. 42, 2 July, pp. 149-175. Hertin, J., R.Haum and F.Berkhout (2003) Toolkit for business adaptation to climate change, Report to Yorkshire Forward, SPRU University of Sussex, May. ICTSD (2005) “Emerging Issues in the Interface between Trade, Climate Change and Sustainable Energy.” An ICTSD Discussion Paper* Geneva. Jochem, E and Madlener, R. 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(1994) “Analytic Induction as a Qualitative Research Method of Analysis” The University of Georgia. Raynard, P. and Forstater, M. (2002) “Corporate Social Responsibility: Implications for Small and Medium Enterprises in Developing Countries.” Small and Medium Enterprises Branch-UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION, Vienna. Richards, M. (2001) “A Review of the Effectiveness of Developing Country Participation in the Climate Change Convention Negotiations.” Working Paper, Forest Policy and Environment Group, Overseas Development Institute. Romm, J. (1999), Cool Companies. How the Best Companies Boost Profits and Productivity by Cutting Greenhouse Gas Emissions. Island Press, Washington. Sandelowski, M. (2000). “Focus on Research Methods Combining Qualitative and Quantitative Sampling, Data Collection, and Analysis Techniques in Mixed-Method Studies” Research in Nursing and Health, 23: 246-255. Read More