The assignment focuses on the carbon emission and the management responsibility for climate change and the incentive provided to attain target of carbon disclosure. Now- a- days, most of the companies have been taking important steps for managing carbon emissions from manufacturing their products. In fact, the organizations have become highly resilient to inevitable climate affects. Internally, the organizations management are seeking deeper understanding of risks as well as opportunities of changing climate and are taking internal as well as external actions to reduce carbon footprints
Externally, the companies are engaging with suppliers, customers, policymakers, key stakeholders and are reporting energy – usage data, climate- related risk, management strategies and providing incentives to attain carbon emission target. The companies are demonstrating its commitment to the climate action by collaborating with stakeholders and other enterprises on solutions and supporting policies such as Paris Agreement (Benjaafar, Li and Daskin 2013).
Practical motivation
The response of organization to climate change stemmed from the requirement to protect businesses from adverse impact of climate change. The organizations have been at risk owing to impact by climate change. These risks include- business operations disruptions, increased maintenance as well as material costs and increasing insurance prices. Over the last few years, the enterprise have begun to involve climate change in corporate agenda. Despite rising pressure from customers to create environment -friendly goods, the management are now- a- days foster strategies which engage enterprise to disclose as well as address the effect that is brought about by the climate change.
The stakeholders are mostly influenced in response to mitigation of climate change. The enterprise have started to see significance of stakeholder engagement as its strategic responses in battle against the climatic change. Through the engagement of stakeholders, the enterprise coordinates with its stakeholders for understanding their concerns on the climate change. The enterprise however address their views as well as opinions of key stakeholders for understanding their concerns on climate change. According to (Mózner 2013), the expectations of stakeholders have driven the enterprise to increase its bar higher in context of climate change.
For this reason , the stakeholders engagement in understanding climate change have become vital for investors since they takes into account environmental and governance factors while assessing investment decisions. As per (Matisoff, Noonan and O’Brien 2013), investors also have the responsibility to climate change as they largest affect on firms when it comes to carbon disclosure. The rising demand from investors have made this enterprise disclose its carbon emission reduction targets and initiatives.
The stakeholder’s communication always leads to better management strategy regarding climate change. Effective communication of the management for the climate change strategy aids them to gain customer loyalty and competitive advantage. The stakeholders mainly provides various perspectives as well as expectations, which enable business to build proper understanding on the climate change and its climate risk as well as opportunists (Benjaafar et al. 2013). However, the communication of stakeholders is the vital element to consider specifically when the enterprise tackle climate change. Several ways in which a specific enterprise engage its stakeholders and communicate their program on the climate change includes-
Theoretical motivation
This research study has motivated to explore more theoretical concepts and theories relating to the research topic. The theories that have been explored in this study are- stakeholder theory, institutional theory and so on. The stakeholder theory has been first stated by Ansoff to define the firm’s objectives. Ansoff emphasized that the firms major objective is to attain balance between various demands of different stakeholders. By implying this theory to context of the carbon emission, it can be stated that each firm should be more focused to provide incentives to its stakeholders to achieve carbon disclosure target. However, social disclosure of this carbon emission has been seen as vital part of information flow between the stakeholders and organization to maintain trusting relationship.
Moreover, by maintaining good relationship with its stakeholders, the organizations can have its carbon emission ensured by external party. In addition to this, if the organizations do not address social responsibility issue of this carbon emission, then the company might face adverse confrontation from the stakeholders. As a result, this might lead to reduced shareholder value via lawsuits. Based on this theory, it can be said that the organizations in which management take the responsibility of climate change and external party assures carbon emission, they might improve its reputation regarding CSR(corporate social responsibility) with stakeholders. The findings of this theory states that stakeholders can benefit when the management meets their demand in case of organization’s carbon emission assurance.
According to Andrews-Speed (2016), regulatory changes mainly create certain institutional pressures for the carbon disclosures. It has been argued by few researchers that organizations from carbon- intensive industry might choose to have carbon emission ensured for avoiding compliance regulatory risk and decrease institutional pressures. Furthermore, legitimacy as well as stakeholders theory mainly recommends that when organizations face certain threats by stakeholders and closes legitimacy gap, these organizations can ensure their carbon emission. Benjaafar et al. (2013) recommends that the institutional theory is highly effective in social environmental accounting as compared to stakeholder theory. The organizations having its carbon emission assure that it might create few social responsible examples for other entities as well as enhance its legitimacy in carbon assurance.
This study shows some gap in the existing literature. The theoretical predictions that have not been tested in this research are the enterprise awareness of the climate change risk and the actions taken for tackling these risks. Besides this, there are few theories such as signaling theory, agency theory, legitimacy theory that have not be analyzed in this study. The previous researches have been limited to particular industries for which the research topic cannot be analyzed in detail.
Literature Review
Cotter and Najah (2012) opines that the management of the organizations integrating corporate strategies and addressing climate change have begun to reshape their business operations. The companies making efforts to address change in climate are facing new opportunities such as development of new technologies, innovating new products and having accessibility to new markets. With the increase in size and reach of entities, there has been huge change in climate and thus has become the most important global threat. Over the years, the carbon emission from entities has adversely affected climate and thus global temperature rises.
The researchers have found out that around 89% of the globe’s biggest environmental enterprises have carbon emission targets. The companies are now trying to close the carbon emission gap in the recent years. The target growth of these companies are mainly aligned with latest climate science. Recent evidences reflect that as the companies are now strategizing to reduce carbon emission from manufacture of products, it is driving their innovation. Most of the enterprises are now utilizing internal carbon pricing and also plans to adopt this within two years.
Even the renewable energy manufacturing target in few companies increased by near around 36% over the last few years. According to (Yadoo and Cruickshank 2012), near about 98% of the enterprises are now having management responsibility for the climate change and around 90% companies are having financial incentives for attaining corporate disclosures. (Bui and De Villiers 2017) managing carbon emission effectively will need development of various kinds of options that includes-
The researchers have disclosed that the organizations providing incentives to their managers and stakeholders to comply with carbon emission guidelines effectively decrease carbon emission. There are few firms where the management finds other methods in maximizing their compensation, which in turn becomes harmful for environment.
The primary research question is-
The secondary questions are-
Hypothesis
Null Hypothesis- The score of carbon disclosure is not influenced by incentives provided by management in context to climate change.
Alternative hypothesis- The score of carbon disclosure is influenced by incentives provided by management in context to climate change.
Research Method
For conducting this research, the primary data collection method has been used. Moreover, quantitative method has been used through survey questionnaire method. For analyzing the hypothesis, sample size of 40 enterprises has been selected from CDP database. Furthermore, SPSS will be done for analyzing the data. Other statistical analysis will be conducted in order to test the validity of proposed hypothesis.
Conclusion
In the present years, the companies are developing climate action plans based on the kind of business and goals it needs to achieve. Implementation of actions helps these companies to drive innovation and spur internal programs, which in turn helps them to meet the target. The companies are also raising customer awareness so that they becomes aware of their major role in contributing to the change in climate. The management providing incentives to carbon disclosure helps to improve their business operations. (Hahn, Reimsbach and Schiemann 2015).
References
Andrews-Speed, P., 2016. Applying institutional theory to the low-carbon energy transition. Energy Research & Social Science , 13 , pp. 216-225.
Benjaafar, S., Li, Y. and Daskin, M., 2013. Carbon footprint and the management of supply chains: Insights from simple models. IEEE transactions on automation science and engineering, 10.1, pp. 99-116.
Bui, B. and De Villiers, C., 2017. Business strategies and management accounting in response to climate change risk exposure and regulatory uncertainty. The British Accounting Review, 49.1, pp. 4-24.
Cotter, J. and Najah, M.M., 2012. Institutional investor influence on global climate change disclosure practices.. Australian journal of management, 37(2), pp. 169-187.
Hahn, R., Reimsbach, D. and Schiemann, F., 2015. Organizations, climate change, and transparency: Reviewing the literature on carbon disclosure. Organization & Environment, 28.1 , pp. 80-102.
Matisoff, D.C., Noonan, D.S. and O’Brien, J.J., 2013. Convergence in environmental reporting: assessing the Carbon Disclosure Project. Business Strategy and the Environment, 22(5), pp. 285-305.
Mózner, Z.V., 2013. A consumption-based approach to carbon emission accounting–sectoral differences and environmental benefits. Journal of cleaner production, 42 (2013), pp. 83-95.
Yadoo, A. and Cruickshank, H., 2012. The role for low carbon electrification technologies in poverty reduction and climate change strategies: A focus on renewable energy mini-grids with case studies in Nepal, Peru and Kenya. Energy Policy , 42 , pp. 591-602
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