There has been an increased awareness of the dangers posed by climate change. This has forced people globally to rethink their approach in life and business so as to mitigate the effects of climate change. Among these people are the stakeholders in the world of business. The pressure on businesses from these stakeholders has in turn required that the businesses put climate change and its effects in mind while operating the businesses.
The resultant effect of the stakeholder pressure has been the integration of climate change into the business strategies of businesses globally.
Apart from the individual external stakeholders such as the customers, institutional external stakeholders such as lending banks and governments have also applied pressure. Institutions such as governments have passed laws that mandate business to give consideration to climate change. This has further pushed more businesses into developing, implementing and including environmental sustainability strategies into their business strategies.
In addition to passing laws, governments around the world are also involved in climate change campaigns. The campaigns are meant to convince businesses to move to more environmental sustainable strategies in order to manage the effects of climate change. Whereas penalties can be set for any business that does not adhere to the laws passed on climate change, it is important to remember that the governments get there revenues from taxes collected from the businesses. This therefore means that more amicable ways have to be found to convince the businesses to move to more environmental sustainable strategies.
The governments in their campaigns offer incentives to businesses for climate management. This incentives, unlike penalties, convince the businesses to move to more environmental sustainable strategies. Whereas the penalties would discourage operations in the particular country enforcing a law on climate change mitigation.
Western countries have been the biggest contributors to carbon emissions and hence climate change since the industrial revolution (Crafts, 2011). Since they are the biggest contributors, these countries also bear the biggest responsibility in the mitigation of climate change.
This research paper interrogates the role that business strategies on climate change and climate management incentives have in carbon emission reduction for the case of five western countries. The purpose is to observe the climate change mitigation among, historically, the biggest contributors to climate change through carbon emissions.
The western countries selected in this research paper are: Two countries from the Nordic States; Denmark and Sweden, one from mainland Europe; France, one from outside continental Europe; United States of America, and the United Kingdom in continental Europe.
Consideration was given to the diversity in the socio-economic systems among the western countries. This is key since climate change affect both the social and economic aspects of human life. The Nordic States; Denmark and Sweden are largely welfare states (Fraggina, 2015). The United Kingdom and France have more restricted systems which has been regulated to a great extent by the European Union (Pinder & Usherwood, 2013). The United Kingdom has however started the process of leaving the European Union in what is popularly known as Brexit. The United States of America has a capitalistic system with markets having control over the economy the social life in general (Schram, 2015).
Climate change mitigation has become an important area research work in recent times. Numerous research works have been done on the impacts of business strategy on climate change on carbon emissions reduction as well as the impacts of climate management incentives on carbon emissions reduction.
The integration of climate change into the business strategies is important for firms (Anthoff, et al., 2009). Presently, external stakeholders such as governments and customers may cease associating with a firm if it does not integrate climate change into its business strategy. (Anthoff, et al., 2009) Outlines the importance of this integration not only for the firm but also for the climate.
The reduction in pollution in general, including reduction in carbon emissions, is the net result of this integration. This integration enables firms to be able to balance their climate change mitigation obligations and profits (Anthoff, et al., 2009). It proves to be both environmental and economical beneficial way of mitigating the effects of climate change.
In recent times governments globally have tend to prefer incentives to penalties as a means of bringing companies into the discussions on the climate change agenda (Jacobson, 2009). The governments are preferring understanding over enforcement of the climate change policies.
The purpose is mainly to keep the environment clean while at the same time keeping the companies in business (Jacobson, 2009). Data from countries such as United States of America and United Kingdom has shown promising outcomes on the effectiveness of the use of incentives.
Firms should focus more in having renewable energy technology to replace the pollutant technologies (Jacobson & Delucchi, 2009). This is the long-term goal in the mitigation of climate change. Effort should not only be in managing the climate change but also in setting targets to completely stop climate change (Jacobson & Delucchi, 2009). This will only be possible if firms integrate renewable technology into their strategies.
This research paper builds on the above works on the impacts of both business strategy on climate change and climate management incentives, on the carbon emissions reduction. This will be done by focusing specifically on the case of the western countries. The research will provide impact that is specific for the case of the western countries.
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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) |
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Please describe your gross global combined Scope 1 and 2 emissions for the reporting year in metric tonnes CO2e per unit currency total revenue – % change from previous year +/- |
Dependent variable. |
Scale (Ratio) |
|
|
Business Strategy on Climate Change |
Is climate change integrated into your business strategy? |
Independent Variable |
Ordinal |
|
Do you provide incentives for the management of climate? |
Moderating Variable |
Ordinal |
H0: Business strategy on climate change and climate management incentives have no impact on carbon emissions reduction.
H1: Business strategy on climate change and climate management incentives have an impact on carbon emissions reduction.
The dataset considered for the analysis in this research paper consists of a sample size = 699 firms. The sample of firms was drawn from five countries among the western economies. Two countries were drawn from the Nordic States; Denmark and Sweden, one from mainland Europe; France, one from outside continental Europe; United States of America and the United Kingdom in continental Europe.
The choice of the countries is not only meant to include countries from the western economies. These countries represent the different socio-economic systems that are present in the western world. By considering the different socio-economic systems in the western world, we ensure that this research accommodates all of the western world economies.
The Nordic States; Denmark and Sweden are largely welfare states (Fraggina, 2015). The United Kingdom and France have more restricted systems which has been regulated to a great extent by the European Union (Pinder & Usherwood, 2013). The United Kingdom has however started the process of leaving the European Union in what is popularly known as Brexit. The United States of America has a capitalistic system with markets having control over the economy the social life in general (Schram, 2015).
The firms in the sample cut across all the industries in the five countries. These are the industries in the CDP dataset that are available in the five selected countries.
In terms of generalisability, the conclusions on the analysis of the impacts that the business strategy on climate change and climate management incentives have on the carbon emission reduction, can be applied for all the countries in the western world. The research puts into consideration the diversity in socio-economic systems among the western economies, this therefore means that the conclusions are applicable for the western countries regardless of the socio-economic systems.
The conclusions are however limited to the western countries and cannot be applied for other countries globally. Although this is true, the analysis can still be used for reference by countries that aim to emulate western economies. Hence the conclusion, in this view, becomes a critical pointer for such countries as far as the impacts that the business strategy on climate change and climate management incentives have on the carbon emission reduction is concerned.
The firms having been drawn from across all industries, makes the results from this research paper referable for all firms. This means that any firm in the any of the western countries can reference the results without necessarily having to come from specific industries.
The independent variable is the Business Strategy on Climate Change. It is measured as the integration of climate change into the business strategy in the CDP dataset. This variable is a categorical data variable: 1 (Yes, integration of climate change into the business strategy has been done) and 2 (No, integration of climate change into the business strategy has not been done).
|
Statistics |
||
|
Business Strategy on Climate Change |
||
|
N |
Valid |
699 |
|
Missing |
0 |
Table 1
Table 1 above shows that the sample had a total of 699 entries on the Business Strategy on Climate variable from the firms with no missing entries (Source SPSS).
Table 2 above shows 604 firms (86.4%) have integrated climate change into their business strategies, while 95 firms (13.6%) have not integrated climate change into their business strategies (Source SPSS).
The plot in Figure 1 above shows the bar graph analysis of the Business Strategy on Climate Chang
The dependent variable is the Carbon Emissions Reduction. This variable is the percentage reduction in the carbon emissions for the year 2012 in the CDP dataset.
Table 3 above shows the maximum percentage reduction in carbon emissions for the year 2012 was 87.90%, while the maximum percentage reduction in carbon emissions for the same year was -77%. The mean for the dependent variable was -5.3342% and the standard deviation was 15.03458 (Source SPSS).
The plot in Figure 2 above shows the histogram graph analysis for the Carbon Emissions Reduction for the year 2012.
Above shows the country-wise analysis of the Carbon Emissions Reduction for the year 2012. Denmark has the highest average reduction in carbon emissions, while France has the lowest average reduction in carbon emissions (Source SPSS). We can therefore say that of the five countries, Denmark is more focused in reducing carbon emissions and France is least focused in reducing carbon emissions.
The moderating variable is the Climate Management Incentive. It is measured as the incentive for management of climate in the CDP dataset. This variable is a categorical data variable: 1 (Yes, there is incentive for climate management) and 2 (No, there is no incentive for climate management).
|
Statistics |
||
|
Climate Management Incentive |
||
|
N |
Valid |
699 |
|
Missing |
0 |
Table 4
Table 4 above shows that the sample had a total of 699 entries on the Climate Management Incentive variable from the firms with no missing entries (Source SPSS).
Table 5 above above shows in 482 firms (69%) there is incentive for climate management, while in 217 firms (31%) there is no incentive for climate management (Source SPSS).
The normality analysis for the Carbon Emission Reduction is given below:
For firms that have integrated climate change into their business strategies:
Table 6 shows that for these firms the Range = 164.90, Interquartile Range = 12, Skewness = -0.033 and Kurtosis = 6.907 (Source SPSS).
For firms that have integrated climate change into their business strategies:
Table 6 above shows that for these firms the Range = 115, Interquartile Range = 8.60, Skewness = 0.533 and Kurtosis = 6.910 (Source SPSS).
The firms that have integrated climate change into their business strategies have more range in their data, as well as their data being more normally distributed (from the kurtosis) compared to data from firms that have not integrated climate change into their business strategies.
The data from the firms that have integrated climate change into their business strategies is slightly skewed downwards (or to the left), while data from the firms that have not integrated climate change into their business strategies is skewed upwards (or to the right).
The graphs below show the description of the dependent variable, Carbon Emissions Reduction, in terms of the independent variable, Business Strategy on Climate Change.
The tabular summary of the outliers starred in Figure 6 above is given below:
The above 20 identified outliers in Table 7 above must be omitted from the dataset. The outliers are likely to result in outcomes that are a misrepresentation of the analysis of the sample data (Source SPSS).
The testing of the hypothesis in this research involves three variables; Business Strategy on Climate Change, Carbon Emissions Reduction and Climate Management Incentive. Hence, the most appropriate statistical test would be a multivariable regression analysis from which the test parameters can be obtained.
The Business Strategy and Climate Management Incentive variables are measured on the ordinal scale, therefore categorical, while the Carbon Emission Reduction variable is measured on the ratio scale therefore numerical. This implies that the best multivariable regression analysis would be the logistic regression analysis.
The assumptions for the logistic regression analysis are:
The sample dataset for this research satisfies the assumptions for the logistic regression analysis.
References
Anthoff, D., Tol, R. S. J. & Yohe, G. W., 2009. Discounting for Climate Change. Economics, Vol. 3,no. 2009-24. pp. 1-24.
Crafts, N., 2011. Explaining the First Industrial Revolution; Two Views. European Review of Economic History, Vol. 15, no 1. pp. 153-168.
Fraggina, E., 2015. The Four Worlds of ‘Welfare Reality’ – Social Risks and Outcomes in Europe. Social Policy and Society, Vol. 14, no. 2. pp. 287-307.
Hosmer, D., 2013. Applied Logistic Regression. 1 ed. Hoboken, New Jersey: Wiley.
Jacobson, M. Z., 2009. Review of Solutions to Global Warming, Air Pollution, and Energy Security. Energy and Environmental Science, Vol.2, no. 2. pp. 148-73.
Jacobson, M. Z. & Delucchi, M. A., 2009. A Plan to Power 100 Percent of the Planet with Renewables. Scientific American, Vol. 301, no. 5. pp. 58-65.
Pinder, J. & Usherwood, S., 2013. The European Union: A Very Short Introduction. 3 ed. Oxford: Oxford University Press.
Schram, S. F., 2015. The Return of Ordinary Capitalism: Neolibralism, Precasity, Occupy. 1 ed. Oxford: Oxford University Press.
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