Influence Of Corporate Climate Change Targets On Environmental Performance

Importance of Carbon Emission Reduction

At present, higher amount of carbon emission has become a serious issue among companies, policy makers and scientists. The Carbon Disclosure Project (CDP) has observed companies based on their activities to understand about their contributions for creating greenhouse gases. They have provided a report by stating that 100 companies all over the world have created almost 71% gases from their production activities (Qian, 2018). Industries of the United States, China and India in this aspect have played significant role. Moreover, rapid growth of fossil fuel companies have led the carbon level to increase further and this consequently has increased the temperature of earth. It is observed that around 25 state-owned as well as corporate entities have created around 50% of total carbon emission of industries between 1988 and 2015 across the world (Liu, 2017). Hence, the report has intended to focus this issue through understanding about the reason for carbon emission and various strategies based on which they can control this emission. The entire discussion will be based on stakeholder theory. This is because the behaviour of corporate on environment depends chiefly on the stakeholder pressure, which can stimulate international management practices and various organisational practices relating with environmental issues further. For this, the report has chosen some Australian industries that have followed various strategies to manage their carbon emission.

This section will discuss about various issues regarding the importance of carbon emission reduction and its impacts on accountants, regulators, managers and the public. Carbon emission with higher level can influence environment adversely and in this context industries of a country plays significant role (Dietz, 2015). Due to higher level of carbon emission, the world is experiencing climate change and this further has affected social, political and economical contexts of a country. For instance, rapid change of climate has increased the sea level and this further has caused floods. Global warming has become another important issue for which almost all countries have come together to implement some environmental strategies to reduce the level of green house gases within the environment (Baylis, 2017). Stakeholders also affect adversely due to this increasing reason, as assets and liabilities of those stakeholders are affected negatively. In this situation customers change their preferences and they also have experienced health problems. In this context, the government of any higher carbon emitted countries have implemented various policies to control these serious issues. To emit higher carbon, many companies bear emissions related trading schemes, which permit these companies to release excess carbon though these schemes increase the financial costs of these companies. The Emissions Trading System of European Union is considered as the biggest trading scheme across the world, which gives allowances to companies for reducing this emission (Healy, 2018). According to this scheme, companies measure and prepare their reports regarding the carbon emissions for getting allowance on every tone of production. These companies get opportunity to receive incentives through trading their allowances. Thus, it can be beneficial to observe about various benefits and importance that these companies have enjoyed by reducing the carbon emission level compare to other companies of other countries. In a report, the Guardian has stated that Australian manufacturing industries have created around 11.5% carbon dioxide while this percentage is increasing over the year. In this context, expectations of various stakeholders have assisted different entities to decrease the carbon emission level to control the climate change (Teh, 2017). For this, each firm produces separate report related to their socio-economic performances to attract investors as well as customers during long-term. In addition to this, the government can impose various actions on these companies based on their reports. The other important factor of this environmental report is that companies can recognise their risk level for management and demonstrate this for controlling carbon emission. Hence, to understand about the stakeholder’s engagement and concern for controlling the climate change, this paper intends to discuss about the important role of shareholders and investors to measure their investment decisions by considering various factors related to society, government and environment.

Stakeholder Engagement and Concern for Controlling Climate Change

This section of the paper will give an overview describing about the contribution that the paper can provide to the theory by replicating existing research, addressing gaps within literatures, testing theory and reconciling conflicting outcomes from previous researches. For this, it is essential to discuss about different literatures related to stakeholders and carbon emissions. However, most of the literatures do not consider all aspects regarding emissions of carbon for different countries. In addition to this, dynamic business models do not consider different risks related with management. As a result, the government of different nations need to impose different rules and regulations for managing the increasing environmental issues. Thus, based on different dependent and independent variables the concept of corporate social responsibilities is essential to change, as this concept various country wise. Moreover, this paper will focus on various research objectives and questions for forming research hypothesis to implement proper research methodology on some Australian manufacturing industries to decrease the level of carbon emissions compare to other countries.

There are many kinds of ways for taking into account what and who are the primary stakeholders in case of both the projects of any business organisation and the business organisation itself. The eminent Economist Milton Friedman introduced the theory of stakeholders. According to him and his stakeholder’s theory it has been said that company works for the other stakeholders of a business organisation as well and not just for the shareholders of the company (Freeman, 2010). It has been described by Dr Edward Freeman, that shareholders although being the actual owners of the company, are just one of the other stakeholders of the business organisation. This theory delves deep into the identification and the role of the stakeholders in the betterment of the business entity. It has been described by Dr Freeman, that anyone who has a vested interest in the company in the form of any investment or any other kind of monetary as well as non-monetary interest with the business organisation are regarded as the stakeholders of the business entity (Freeman, 2010). They are of no less significance than the shareholders of the entity. It mainly comprises of both internal as well as external shareholders. It mainly consists of suppliers, customers, government agencies, local communities, environmentalists, vendors, etc. In his theory Dr Freeman has advocated that the real success of any business entity lies in the fact that the satisfaction of all the stakeholders of the entity. It has been strongly proposed by Dr Freeman that without the support and the cooperation of each of these stakeholders an organisation cannot succeed and would inevitably collapse. This perspective provides a view that with the importance of the all these groups are essential (Freeman, 2010).

Contribution to Stakeholder Theory

Many researchers have acknowledged that both normative and managerial motivations has an influence on the decisions have provided many suggestions on the various approaches to the stakeholder’s theory, which might help in the analysis of the interaction between firm and stakeholders. Trevino and weaver (1999) is an example, which has suggested that stakeholder’s theory would better be characterised by a research tradition than a single theory.

This research provides a metaphoric approach towards stakeholder’s theory. The motivations, which have been recognised through different theories, are applied in the analysis of the interaction between management and the stakeholders (Dahlmann, 2017). The empirical aspect of the task aims to identify if these motivations have been recognised by the theory take part in the decision making process by the management (Stoll-Kleemann, 2010).

Arguments have been presented based on the firm stakeholder interaction in a framework of motivations, revealed from different theories (Freeman, 2010). This approach was chosen as it would help in better exploration of the nature of interaction in the decisions taken by the management, for making the environmental data, which have been identified through different stakeholder’s theory. This would help in providing an approach of executing the stakeholder’s theory, by exercising the motivations, which have been gathered from the different theories of stakeholders (Decker, 2012).

Dependent variable:

In this research, dependent variable (DV) is changing percentage of carbon emission of ten large-scale industries between 2015 and 2017. This data can be obtained from CDP report that represents percentage change of carbon dioxide emission, based on different companies across the world for different years. As, the stakeholders of different countries take different decisions for reducing carbon emissions, this percentage change occurs.

Independent Variable:

For this paper, the independent variable influences companies to reduce their amount of carbon emissions. In this context, the independent variable is physical change of climate and its impact on stakeholders.

It is not possible for this paper to consider all companies in Australia to estimate their carbon emission over the selected years. Hence, this paper chiefly considers manufacturing industries related with chemical products.

Theoretical Construct	Proxy measure (From CDP survey provided)	Dependent (DV) and Independent (IV).   Control Variable (CV), Mediating Variable (MeV) or Moderating Variable (MoV). In a sentence explain why it is a DV, IV, CV, MeV or MoV	Measurement Scale: Nominal, Ordinal, or Scale (Ratio)
Carbon emissions	Percentage change in carbon emission during 2015 to 2017 measured in metric tonnes carbon dioxide	Dependent Variable	Scale
Physical change of climate	Physical climate change that can affect the level of carbon emissions	Independent variable	Nominal
Industry Type	Chemical manufacturing industries	Control variable	Nominal

Physical climate change influences manufacturing companies significantly to reduce their carbon emission by using fewer amounts of chemicals

Physical climate change cannot influence manufacturing companies

References

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