Corporate Climate Change Strategy Drivers And Motivations Commerce Essay

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There has been fury over Government's Carbon Pollution Reduction Scheme (CPRS), but the reality is that per capita, Australia is the world's largest emitter of greenhouse gases.  Even if passed, the CPRS will impact directly only Australia's 1,000 most polluting companies, which leaves over 7 million registered businesses direct incentive to change their behaviour.  The modest price signals that will flow from the CPRS will be too small to drive emissions reductions in any meaningful way. In this regard it looks as if government is no doing enough to regulate industries and corporations are not promoting in-depth reductions in emissions that foster rapid changes in business practices and culture.

In literature, few attempts have been made to understand the actual dynamics of corporate climate change strategy (emissions reduction actions and/or programs and the key reasons (drivers and motivational factors) for this.


The Australian Department of Climate Change boldly declares climate change as one of the greatest social, economic and environmental challenges of our time and reasoned that human activity is causing the climate to change [1] . This is supported by a similar statement by the International Panel on Climate Change (IPCC, 2007). This challenge inevitably affects every aspect of Australia including rainfall, temperatures, bushfire frequency, health, heritage and biodiversity. Whilst scientists may differ on some issues regarding climate change, there is general consensus that even if all emissions are blocked today, the amounts of greenhouse gases already in the atmosphere would raise global temperatures by an additional 2oC by year 2100 (Environment Health Perspective, 2009). Since 1910 the average temperature of Australia has risen by about 1°C. Although these increases sound small, they have a big impact on the world's climate. [2] Thus businesses need to realise that greenhouse gas emissions are dangerous and need to be reduced. The biggest challenge for bus is how to achieve the cuts most efficiently (Hoffman, 2007; Porter and Reinhardt, 2007; Wittneben, 2007).

Over the last decade, interesting research on corporate strategy with regard to climate change has emerged (Levy and Newell, 2000, 2005; Hoffman 2001, 2006; Dunn, 2002; Okereke, 2007; Kolk and Pinkse, 2004). Most of this research has shown a gradual movement of corporate leaders from opposition lobbying to a more supportive stance for the need for action against climate change. Not only are some companies entering into business-NGO partnerships for climate action; some have even started formulating firm-specific corporate strategy that enable them to effectively act against climate change (Okereke, 2007; Hoffman, 2006). This is in direct contrast to the mid 1990s and earlier where companies focused on political lobbying that was designed to oppose regulatory legislation (Kolk and Levvy, 2001).

Furthermore, corporate business has a number of options at their disposal that help them address climate change such as innovative product development and process enhancements through emissions trading. As this is company -specific action, it could depend on climate change specific risk and opportunities and the operational regulatory environment (Baron, 2004). This implies that corporate managers have room to explore different strategies that help them address climate change issues. However, such major organisational changes need the acceptance and support of organisational members for their successful implementation (Piderit, 2000). Despite well documented literature on change management (launch and manage), most strategic change initiatives have been found to fail at implementation (Burke, 2002; Probst & Raisch, 2005).

However, before corporate climate change strategy can be implemented, businesses have to understand climate change and its risk implications. For many businesses, lack of understanding of these challenges leaves them exposed to possibilities of failure (Bettina & Dagmar, 2009). Whereas the common approach has been for governments to subscribe to international conventions on climate change and coming up with domestic regulatory policies to force companies to reduce carbon emissions, the companies themselves need to be aware of the direct impact of climate change to their long-term sustainability and profitability (Esty, 2007). In retrospect, not only do companies directly affect climate change but climate change also affects companies. Consequently, not only do companies need to respond to climate change risks but they must also come up with strategic vision that allows them to be able to proactively minimise physical risk. This is because as economic losses due to natural disasters accumulate, climate change related risks and opportunities need to be integrated into business' financial, operations and investment decisions. To this end, Esty (2007) argues that companies that lack comprehensive environmental and sustainability mitigation plans risk lowering their borrowing capacity. Hence businesses that act responsibly and make an effort to find the right answers can increase the company brand image and the possibility of attracting new clients (Bortz, 2007, p.32)

To this end it could be argued that appropriate environmental regulation has an important effect on conventional business operations. This is particularly so where businesses have to take long-term strategic decisions that will be carried out under previously unknown regulatory conditions. Not only are businesses faced with the difficulty of predicting, initiating, and implementing climate change policy regulations; most regulatory agencies also have limited means of predicting the efficacy of the regulatory policies on firms (Okereke, 2007). This makes it hard to predict whether the regulation will effectively fullfil its intended purpose. Hence, developing a detailed understanding of corporate response strategies to regulatory uncertainty benefits both, firms and regulators.

In literature, few attempts have been made to understand the actual dynamics of corporate climate change strategy (emissions reductions actions and/or programs and the key reasons (drivers and motivational factors) for this (Okereke, 2007, Kolk and Pinkse, 2005, Hoffman, 2006). Okereke (2007) recently pointed to this gap when he observed that the most businesses action on climate change could be related to the inherent tendency by business to maximise profit and to a lesser extent wider societal environmental concerns and pressures. This is closely related to Kolk and Pinkse (2008) argument that companies are essentially driven by both innovation (improved production processes and products) and compensation (carbon trading). While compensation is quite popular, its major effect is that companies do not primarily aim to reduce greenhouse gas emissions. They merely transfer emissions or emission-generating activities within the company or to other companies. Such companies essentially do not participate in the innovation process, choosing a rather passive approach to climate change.

Consequently, this research project explores the internal dynamics of corporate climate strategy. To this end, the PhD thesis develops a classification of intrinsic drivers and motivational factors that influence corporate climate change response strategies to uncertainty derived from the responses to a global survey covering large Australian firms in carbon intensive industries such as chemicals, mining, metals, & utilities). Furthermore, it elaborates how these different factors may interact with some of the key features of the evolving climate change regime. This will allow for the generation and testing of hypotheses on the impact of different factor interactions on policy design and implementation.

Finally, based on case studies in the Australian industry, the thesis studies the importance of these factors and as well as the existence of other non-obvious causal factors. We will argue that corporations need to look 'inside out' to understand the impact of the firm's activities on the climate and 'outside in' at how the changing climate may affect the business environment in which the firm competes.


To explore the internal dynamics of corporate climate change strategy in terms of their different drivers and motivational factors.

To establish the reality or accuracy of this differentiation and inter-linkages that may exist.

Statement of Research Problem:

In literature, few attempts have been made to understand the actual dynamics of corporate climate change strategy (emissions reductions actions and/or programs and the key reasons (drivers and motivational factors) for this.

Motivation & Importance: Research outcomes generated from this thesis would go a long way toward informing corporate strategy and policy decision making. Thus a good understanding of the drivers and motivational factors that influence corporate climate change actions will help global, national and regional climate change policy. This is because policy makers will have a better understanding of why business act in different ways against climate change. Furthermore, this research will help confirm the need for effective implementation of strategic plans through appropriate change management protocols.

For Australia and New Zealand, this will show the actual investment and achievements in climate change mitigation such as energy efficiency by corporate Australia as well as ensuring that these companies are not pushing their emissions off balance sheet and down the supply chain.

As companies do not operate in a vacuum, insight is needed on business climate change strategy as part of broad field of climate change policy.

Research Hypothesis:

There are different factors that drive business organisations to adopt specific actions against climate change

Corporate climate change strategic plans without clear change management protocols cannot be implemented effectively


This research seeks to build on existing knowledge of prior efforts, and extend this knowledge further by shifting the corporate climate change strategy perspective from a largely passive carbon trading or traditional profit maximisation base to one that focuses on real drivers and motivations for climate change mitigation, and effective implantation.

In the initial phase, the study will seek to gain in-depth climate change mitigation strategy understanding of 10 case business organisations based on industry type such as mining, agriculture, power utilities. This will be done by means of participant company observations (press releases, company websites, publications and margin abatement cost curves) and interviews with appropriate staff and/or owners involved in corporate strategy formulation and implementation). Robustly rigorous Marginal Abatement Cost Curves provide strong insights to the operational and technological systems of organisations. The focus will be to address drivers, motivational factors and barriers (such as lack of change management protocols) they face in addressing climate change.

This will be followed by the administration of 1000 questionnaires to enterprises in Australia and New Zealand (covering utility, mining and agro-input manufacturers). The survey will seek to assess the level of corporate climate change strategy with the focus being on what the individual companies are doing to address climate change and in particular the interactions (if any) of the different drivers, motivational factors as well as barriers they face (confirmed by strong data sets and detailed investigation of on ground operating realities). The survey will also seek to establish the existence of change management protocols that help in effective implementation of corporate climate change strategy.

Lastly three case studies will be done to investigate climate change policy strategy formulation by regional bodies [e.g. NSW, Victoria and Auckland Regional Council] and impact on business. Such important issues as MACC will be studied to see if regional bodies do require companies to report their MACCs. This will help citizens understand which companies are taking climate change and emissions abatement seriously; it will also show shareholders which companies are most committed to efficiency and not wasting money. All of this adds up to a more competitive Australia or New Zealand in a low carbon world.

At the interpretation phase, qualitative analysis will be used to enhance quantitative results. Thus, in-depth analysis will be made to establish the reality or accuracy of this differentiation and inter-linkages that may exist.


This study will bring together insights from strategic management, international and local business, orgnaisation theory, change management and political economy to better understand how individual businesses deal with climate change challenges and how this may transform traditional business models and political approaches.