Government and Business in Global Context - Literature review Example

GOVERNMENT AND BUSINESS IN GLOBAL CONTEXT Name Institution Professor Course Date Question 2 Globally, societies confront immense environmental challenges, which require competent and decisive responses from governments, citizens and corporations. Drawing upon the course academic resources and your research, discuss how corporations are taking action to address environmental challenges and the difficulties they confront in doing so Abstract Globalisation holds far-reaching effects on the social and natural environment. It has triggered increased access to technology, improved communication and innovation. Besides playing a crucial role in bringing human beings together, globalisation has steered a novel era in the economic growth and opened vast development channels. Nevertheless, globalisation has established some concern areas such as its impact on the environment. It has featured widely in the environmentalism debates. For instance, globalisation has prompted a rise in the use of products that has affected the ecological cycle. Augmented consumptions prompt a rise in goods’ production, which subsequently amount stress on the environment. Transportation and manufacturing of goods by industrial corporations trigger environmental pollution there requiring corporations to implement ways of addressing environmental challenges. Drawing on extensive literature review and situational analysis of some renowned corporations, this report discusses how corporations are taking action to address environmental challenges and the difficulties they confront in doing. Corporations use environmental CSR and sustainable development strategies to address environmental challenges. Challenges faced by these corporations include government regulations, insufficient involvement by stakeholders, limited resources and time and transparency issues to mention but a few. Firms should think strategically, creatively and comprehensively regarding the CSR business benefits. Table of Contents 1.0 1.0 Introduction Environmental degradation is one of major issues facing the world today. It has influenced the lives of many people around the world. Corporations both in the national and global context have been major causes of environmental degradation. The world environment is constantly shifting because of the activities of major corporations. The inescapable and gradual degradation of the global environment systems is a major portion of centuries of industrialisation entrenched in a worldview of unbridled advancement. Some of the challenges facing the environment include climate change caused by emission of green house gases in industrial organisations, and deforestation. Another major challenge facing the environment is decline in biodiversity prompted by human activities. Other major environmental challenges include extraction of natural resources by corporations, pollution of soil, air and water. All these challenges points at the ethics and sustainability of corporations. As a result, major corporations implement Corporate Social Responsibility strategies to address environmental challenges besides use of environmental friendly and sustainable means in their industrial processes. 2.0 Globalisation and Environmental Effects Globalisation is in essence an economic occurrence and like all economic occurrences, it can affect the environment. Subsequently, the environment conditions the globalisation process through altering the political and physical contexts in which economic practices are carried out. The major links amid globalisation and the environment are often cast in a negative manner. For instance, environmental costs are usually perceived as an extra burden that companies have to bear. Similarly, environmental requirements are usually perceived as being sacrificed for the interests of business. Globalisation alters the technology, composition and scale of consumption and production activities. This generates economic impacts, which may be either negative or positive for certain actors in the economy. Each of these shifts may prompt environmental effects thereby prompting introduction of environmental policies aimed at offsetting negative outcomes of environmental effects. However, it must be noted that the impact of globalisation on the environment could be both positive and negative. For instance, in China, globalisation has made numerous major positive contributions to the country’s environment. It has allowed China to specialise with respect to its comparative advantages and relocate its resources away from land, capital and energy-intensive dirty industries to labour-intensive cleaner industries (Tisdell & Sen 2004, p.299). Globalisation has also allowed China to obtain access o the globe’s advanced pollution abatement technology. However, the great expansion of the countries exports produces huge negative impacts on the country’s surroundings that dwarfs the positive impacts of globalisation. These activities have increased environment degradation. In the contemporary world, people use products developed in foreign nations. These products require transportation to the place where consumers need them. The amount of fuel used in transporting these commodities has augmented environmental pollution levels. Transportation has also strained non-renewable energy sources such as gasoline. The gases emitted from aircraft have prompted the depletion of the ozone layer besides augmenting greenhouse effect. The industrial waste generated following production has been dumped on the oceans leading to water pollution and killing of organisms living in water. For instance drilling by oil companies such as BP Plc causes intense environmental impacts. Drilling in clay inevitably causes a degree of disturbance to the surrounding environment, especially if open wells crumple during the drilling process. Any derelict sidetrack drilling runs also augments the intensity of the disturbance. Wells’ collapse is often treated through raising the drilling fluid pressure until fluid trapped within the well is capable of breaking through and fleeing to the surface. While this enables the wells to develop, it causes the rise of pore pressures, hydraulic fracturing and swelling of the surrounding soil mass. Besides soil disturbance, offshore drilling and production causes water pollution that affects marine and human life. The offshore oil industry discharges produced water into the sea. The principal origins of the produced water are fossil that are present in the seawater and reservoir injected into the reservoir to uphold pressure (Ball 2011, p.24). Produced water holds a complex mixture of inorganic and organic substances with large variations in the composition and amount amid reservoirs. As a result, oil and gas production companies encounter challenges in their efforts to meet the increasing demand of energy resources. For instance, the Deep Horizon oil spill was one of the worst oil calamities that cause enormous environmental pollution (King 2010, p.2). However, the severity of the oil spill, the obscurity of the response efforts and the effect on the environment, called for collaboration amid state and federal agencies, local organisations and BP as the responsible party. The oil spill did not only cause damage to the environment, but it also negatively influenced BP Oil Company through threatening its social responsibility concerns (Hagerty 2011, p.25). Although BP Group was successful in securing the wellhead on July 2010, and sealed it on September 2010, the incident put on test the capability of oil companies to prevent and respond to environmental problems caused by their activities. The duration and scope of the Deepwater Horizon oil spill presented intricate environmental challenges faced by Oil industries. Besides effects of offshore drilling on the natural environment, industrialisation has led to an increase in soil pollution. The toxic waste produced by industrial organisations damages plants. Globalisation has also put pressure on accessible land resources with nations clearing mountains for development of highways or passing tunnels. Large pieces of land have been intruded to pave way for buildings. These global environmental concerns are as a result of understanding that ecological procedures do not usually respect national limits and that environmental problems hold impacts beyond borders. Therefore, it is important that the global society maintain unity with the environment. Apparently, the survival of human beings is reliant on the environment to such a great extent that people cannot disregard the consequences of human activities. The global temperament of the environment requires global environment governance and a worldwide infrastructure of international accords. However, many of the modern global environmental concerns have outgrown the governance systems. In this regard, corporations and societies require to implement strategies and policies aimed at addressing environmental problems. 3.0 How Corporations Address Environmental Challenges The environment is an open access resource utilised by everybody, but owned by nobody. Corporations, governments and individuals hold an ethical duty to address problems related to the environment (Dotto 2010, p.1). It is unwise to depend entirely on global organisations and other big establishments to solve the environmental problems. Corporations must apply equivalent environmental principles to all their facilities and practices around the world. Scores of environment issues are global in temperament and their effects cannot be addressed within borders. Corporations no longer avert ethical roles by assigning them to consumers or governments. The cost of their products must entail the true value of the resources utilised in the development of raw material, land, water, air, energy, labour, the effect of emissions and cost of disposal. These firms must operate effectively and utilise the fewest resources possible to preserve resources for the future. In the past few decades, public anticipations of corporations has progressively augmented. While business owners expect companies to maximise profits, the public has become greatly conscious of the significance of the environmental and social effects of businesses. Firms are now required to make practical effort to lower their harmful externalities such pollution while pursing their practices. The society requires firms to augment their constructive externalities or their effect on tackling significant environmental problems. The growth of economic globalisation has led to a political backlash with the public disregarding it benefits as unsatisfactory and its environmental cost too huge. Scores of government seem to be unwilling or not able to control the activities of global firms and their intricate global distribution and supply networks. This has prompted an imbalance amid the power of large corporations and local government regulations. In this view, CRS surfaces to help in addressing environmental challenges via creating a public province between markets and states. In the past, corporations committed themselves to wealth generation in a narrow commercial and economic sense. Companies dismissed the wider environmental and social impacts of corporate practices as externalities. People, communities and government attending to the environmental and social damage prompted by corporate practices was the prominent mercenary sentiment. The coarse commercial ideology that blighted the establishment of industrialism is no longer tolerable in a globalised world with a fragile and endangered ecology, socio-economic and demographic challenges and universal environmental dilemmas than ever before (Clarke & Branson 2009, p.30). Modern firms have to confront their environmental and social responsibilities in a transparent and accountable ways. In addition, corporations are required to make their environmental and social impact as compassionate as possible. The materiality of environmental and social sustainability is becoming considerably evident. The integration of corporate governance with the concerns of corporate sustainability is proceeding and directors and boards of corporations are becoming considerably aware that their license to operate is at stake. If corporations do not willingly respond to the sustainability imperative, the ultimately regulation will compel them to do so. Through compliance-compelled perspectives, which were once characteristic of corporate responses to the challenges of sustainability, there is proof of a great rise in the range, impact and significance of environmental and social initiatives. Corporate environmental and social responsibility seems to be becoming developed in scores of corporations as a crucial component of strategic direction (Clarke & Branson 2010, p.30). More so, CRS is one of the major drivers of business development besides a crucial element of risk management. CRS and environmental responsibility appear to be moving from the margins to the mainstream of corporate practice with increased understanding of an inescapable and direct relationship between corporate governance, sustainable and corporate responsibility. 3.1 Corporate Social Responsibility and Sustainable Development Strategies The term corporate social responsibility is about developing wealth in a sustainable manner. According to Flodgren (2006, p.190), corporate social responsibility entails optimising the positive effects on society and lowering the negative impacts. Corporations require altering the terms of engagement specifically the manner in which shady business operations can prompt corruption and environmental effects. Corporate Social Responsibility has obtained interest in the past ten years. CRS is not a stagnant concept but an evolving idea. The concept is not a replacement for the role of government in addressing the challenges facing the environment. According to Lorey (2003, p.xvii), an extremely essential context for the efforts to establish sustainable ways of development is the operation of the global business as it expands to attain the needs and desires of an ever bigger population. CRS, which entails enhancing and protecting the natural environment, is a swiftly developing movement for addressing the ills of the environment. For instance in 2000, Chiquita cut the use of agricultural chemicals in its banana firms in Latin America an aspect that lowered waste and promoted wild conservation. Flammer (2013, p.758) asserts that corporate social responsibility has attained increasing recognition in the past years both among academicians and practitioners. Despite the fact that the original focus of corporate social responsibility was on social responsibility such as paying employees or community-based programs, a recent creation is the involvement of environmental responsibility such as lowering emission of green house gases. The environmental CSR has become a crucial component of CSR and it plays a great role in the corporate landscape. For instance, a recent study involving 766 Chief Executive Officers of major corporations indicated that sustainability is a critical factor in the future success of their business (Flammer 2013, p.758). Ninety-one percent of the CEOs indicated that they would employ novel technologies such as renewable energy to tackle sustainability issues over the coming years. Sustainability helps in maintaining and retaining conditions through which nature and human beings subsist in effective harmony, that allow fulfilment of the economic, social and other needs of the current and prospective generations (Barrow 2006, p.5). If sustainability is not upheld, people will lack materials, resources and water needed to protect the environment and human health. For a corporation to obtain appreciation from its stakeholders, it conducts its operations through demonstrating social, environment and economical responsibility. Sustainability calls for pursuit of social equity, economic welfare and ecological health. It is founded on the ethical devotion to the well-being of the current populace as well as the improved prospects for future generations. Environmental CRS promotes sustainability of natural resources. Corporations prevent exploitation of natural resources and base their production on long-term quality and security instead of quantity. They need to minimise environmental impacts through preventive manner requires firms to be proactive in correcting any mishaps caused by their activities (Pennnell & Choi 1992, p.164). According to Berg and Ferrier (2000, p.116), corporations try to find business prospects in environmental efficiency through product design, resource recovery, process engineering and pollution prevention. They implement a strategic orientation for their environmental management practices through incorporating the environmental costs with corporate productivity investment policies. For instance, given the pervasiveness of environment issues in China, no firm can guard itself against all dangers. However, firms implement policies that can at least mitigate partially the challenges instigated by environmental degradation. The county requires corporations to bring global standards and best practices to the country’s operations (Mullerat & Brennan 2011, p.21). The country positions corporations as environmental leaders rather that a probable laggard vulnerable to accusations of using China as a place to put highly polluting parts of production procedure given the poor enforcement of environmental regulations. Corporations engage in corporate social responsibility activities that handle environmental issues. These activities include supporting the efforts of environmental NGOs aimed at promoting people’s understanding of environmental issues. Corporations also contribute to special programs in schools that promote environmental education (Mullerat & Brennan 2011, p.21). Firms can also use water-saving technologies and methods aimed at reducing energy use besides establishing health systems aimed at taking complete account of problems emanating from degraded environment. For example, the incidence of respiratory disease, cancer and other environmental liked illnesses requires corporations to set up a health plan that shield the firm from potential accusations of disregarding the well-being of employees. A study carried out by (Sutherland et al. (2004) indicated that the automotive industry and its suppliers are aware of the growing need to address environmental issues in their processes and products. Scores of automobile companies are very large corporations with information about legal, sociological and technological trends across the world that call for improved environmental performance. The study indicated that Automobile corporations in Japan focuses on reducing soil waste and energy use, those in Europe focuses on reducing solid water and attaining ISO 14000 certification while those in the U.S focuses on compliance with government regulations and enhancing work safety ( Sutherland et al.2004, p.107). 4.0 Difficulties Faced by Corporations while Addressing Environmental Challenges Environmental matters are currently receiving a great amount of attention from the investment and socially responsible community. Firms such as Goldman Sachs, a prominent financial institution, view a healthy environment as a key factor for business success (Rezaee 2009, p.502). Therefore, firm play constructive roles in addressing the environmental challenges. However, while doing so these firms encounter a number of challenges. One of the greatest challenges that face environmental governance entails overcoming the mismatch amid ecological, social and political scales. According to Flammer (2013, p.761), corporations face external pressure to behave responsibly toward the environment. These pressures may affect the worth of environmental CSR and such pressure emanates from environmental regulations, customers sensitivity to environmental concerns and media attention. Many corporations struggle to manage their environmental CSR. The challenges faced by corporations when addressing environmental challenges include: Inadequacy of environmental protection measures Stringent government regulations Demands for greater disclosure by stakeholders and powerful stakeholders’ conflict Augmented customer interest and investor pressure Constrained time, money, diplomatic negotiations and energy while pursing CSR practices Insufficient global environmental agreements Inadequate participation of community in CSR activities Lack of agreement while executing CSR issues Transparency issues (Farooque & Ahulu 2015, p.104) Commercial and economic pressure Unresolved tensions between maximum protection, sustainable development and maximum development Lack of incorporation of sector strategies Ill-defined priorities Corruption and government failure to establish key infrastructure; this is a challenge faced by Shell Nigeria as well as other corporations around the world Lack coordination with the civil society and governments 5. 0 Conclusion and Recommendations As environmental problems grow in complexity and severity, so does the level of corporation’s environmental responsibilities. This analysis demonstrates that corporations in every industry are rethinking their approach to the natural environment and are implementing innovative ways of reducing their environmental exposure. The movement is compelled by a combination of public pressure, consumer preference and stringent regulations. Firms implement environmental CSR to address environmental challenges. However, there are challenges involved in the corporations’ efforts to address environmental challenges. These challenges include stakeholder’s demands and conflicts, lack of resources, time and energy, strict government relegations and inadequate community participation to mention but a few. To address these challenges, corporations need to collaborate with government and non-governmental organisations. CSR goals should be made clear and attainment of its goals should be reported to prevent stakeholder conflicts. Firms should think strategically, creatively and comprehensively regarding the CSR business benefits. The CSR strategies for a firm should be intertwined to the core business objectives aimed at increasing social and economic values. Firms should implement specific strategic CSR programs that entail coordination’s with other sectors and businesses. In addition, firms should promote disclosure as it is an essential corporate accountability and transparency and it enhances engagement with the stakeholders. 6.0 References Balk, L 2011, ‘Biomarkers in natural fish populations indicate adverse biological effects of offshore oil production’, Journal Pone 6, 5, pp.1-10. Barrow, C 2006. Environmental management for sustainable development. London: Taylor & Francis. Berg, D., Ferrier, G 2000, The U.S. environmental industry: Meeting the challenge: U.S industry faces the 21st century, USA, DIANE Publishing Clarke, T., & Branson, D 2012, The SAGE handbook of corporate governance, UK, SAGE. Dotto, L 2010, Ethical choices and global greenhouse warming, UK, Wilfrid Laurier University. Farooque, O & Ahulu, H 2015, ‘ Environmental reporting in the UK, Australia, and South African multinational companies’, The Journal of Developing Areas, vol.49, no.6, pp.103-117. Flammer, C 2013, ‘ Corporate social responsibility and shareholder reaction: The environmental awareness of investors’, Academy of Management Journal, vol.56, no.3, pp.758-781 Flodgren, B 2006, Corporate and employment perspectives in a global business environment, UK, Kluwer Law International. King, R.2010. Deepwater horizon oil spill disaster: Risk, recovery, and insurance implications. London: DIANE Publishing. Lorey, D 2003, Global environment challenges of the twenty-first century: Resources, consumption and sustainable solutions, UK, Rowman & Littlefield. Mullerat, R & Brennan, D 2011, Corporate social responsibility: The corporate governance of the 21st Century, UK, Wolters Kluwer Law & Business. Pennell, A., & Choi, P 1992, Business and the environment: a resource guide, UK, Island Press. Rezaee, Z 2007, Corporate governance post-sarbanes-oxley: Regulations, requirements and integrated processes. UK: John Wiley & Sons. Sutherland, J et al.2004, ‘ A global perspective on the environmental challenges facing the automotive industry: State-of-the-art and directions for the future’, International Journal of Design, vol.35, no.1/2, pp.86-110. Tisdell, C, & Sen, R 2004, Economic globalisation: Social conflicts, labour and environmental issues, UK, Edward Elgar Publishing. Read More