Q1.

Read, update and synthesize all relevant materials on the market phenomenon chosen by
your group; document and reference your data by source, date, page, and the like. Explain
why you chose this current turbulent market phenomenon for your analysis. Define also your
“unit of analysis” of the market phenomenon: for instance, in respect to the Case chosen, is
it the entire Case, or any specific component (e.g., the Case from the management side, the
case from the labor or customer side, the case in its inputs versus process versus outputs,
specific major actor or action, and so on) that you choose to investigate and analyze under
the following questions. Why do you choose this unit of analysis? Justify your choice.

A1

Rationale Behind Choice of Phenomenon

As business professionals on the cusp on entering the corporate world, it is paramount importance to
anticipate and tackle any upheavals that could affect the quality of our work. While all the other
phenomena to choose from had far reaching manifestations into various aspects of the market, there is
no subject that has more critical consequences than global warming. Not only is it threatening to be an
epicenter of turbulence in the world markets, but it could severely affect the quality of life of a very
large portion of the population.

From the point of view of business ethics, curbing this phenomenon poses an intriguing challenge.
This is due to the fact that while climate change affects everyone on the planet, it affects the poorer
section of the community more than it does the upper sect. In 2016 alone, as many as 24 million
people were displaced internally due to disasters that could be attributed to climate change and this
accounted for a staggering 80% of all internal displacements that 2016 saw. What is even more
ominous is that almost all of these displacements have occurred in third world countries where the
governments and the people are less equipped to deal with sudden shifts in the economic markets and
fewer resources to adeptly mitigate the crisis.

In conjunction with the fact that it is this less affected portion that is responsible for a majority of the
decision making in today’s business world, the required corrective action has to have a flavor of
ethical and moral reasoning for it to be sufficient in making a dent in the current onslaught of rising
global temperatures. A landmark report from the United Nations’ scientific panel on climate change
found that if greenhouse gas emissions continue to escalate at the current frightening rate, the earth
will warm up by as much as 1.5 degree Celsius by 2040. An immediate consequence of this would be
inundation of coastlines causing mass migration and a displacement of the workforce, thus crippling
any form of business.

This worrying conclusion brings us to another reason why climate change is a unique specimen in the
context of examining the implementation of ethics into our work. While most other acts and situations
with such dire consequences are heavily penalized and frowned upon, release of greenhouse gases and
general inaction in this area is barely noted. It is considered justifiable to clinch on to the middle
ground when it is evident that immediate action is imperative to even slow the progress of a calamity
of awesome proportions. According to the same report as above, to prevent 1.5 degrees of warming,
there has to be a drastic reduction in the usage of greenhouse gases: a drop of 45% relative to the 2010
levels by the time 2030 arrives. In addition to this finding, it concluded that coal would have to be all
but eliminated as an energy source by 2050 so as to have the necessary effect on global temperature
rise.

This is counter-intuitive at its core and it stems from the perception of global warming that most
businesses hold today. A majority of the concerned individuals take global warming at its face value,

1
concentrating solely on what it is, or its conceptual definition. While most people involved agree on
the what of climate change- the rise in temperature and the cause of the same, they do not fully
understand its implications, or the operational definition. To closely scrutinize this complex
relationship between comprehension of the problem and lack of adequate resolution to combat it is the
reason our group chose this topic.

Unit of Analysis

Our report is going to be focused on the action taken (or lack thereof) by various nations and the
widespread impact that climate change has had on them. We intend to look at the ramifications of
short-sighted focus on growth by nations who intensively aggravate climate change in their quest for
better numbers. This shall include a study of policies undertaken that have directly or indirectly,
intentionally or by accident, had an impact of considerable proportions in the present situation with
regards to global warming. When it came to choosing a unit of analysis, there lies an obvious
dichotomy between choosing to analyze businesses and the changes that they were able to bring about
vis-à-vis reduction of greenhouse emissions in contrast to the effect of various measures that have
been taken up by nations in order to address the same problem of climate change.

The first reason why the unit of analysis was chosen to be nation states instead of business entities is
due to the scale and scope of difference that a country can make on its stakeholders as opposed to the
relatively limited reach that an organization would have. For an illustration, let us look at the Kyoto
Protocol signed by 38 countries to address the problem of global warming. The 38 countries vowed to
reduce their CO2 emission levels by a cumulative quantum of 2 Giga Tons relative to their 1990
levels. While the countries were indeed successful in achieving this goal, it was due to various
extraneous factors that had little to do with the protocol. Even though it was not a complete success it
shows us just how huge a difference even a fraction of the most polluting countries in the world can
make by making strong commitments.

To put these numbers into perspective, let us look at one of the most successful efforts by a company
to reduce the carbon emissions- the 3P plus program by the giant 3M. The firm achieved a
commendable 64% reduction in greenhouse gas emissions and has stayed on course religiously. The
total reduction in carbon emissions through this incredible effort over 12 years amounted to 100
million tons. It is immediately apparent that even with this level of success, a company specific focus
is not adequate by itself to measurably make a dent in the huge problem that global warming has
amounted to be.

The second reason why we choose our unit of analysis to be nations is the motive or intent involved in
the measures taken to address the issue. While a firm may be willing to temporarily sacrifice a
minuscule portion of its profits to implement measures that reduce their carbon footprint, it cannot be
its sole motivation. For a firm’s measure to be implemented for a meaningful duration of time, the
measure has to be profitable to the company and its shareholders. While a robust ethical foundation is
instrumental in jump starting such an activity, in the long run, ethical reasons cannot support such a
cause.

Continuing the example above of 3M, it managed to reduce its energy efficiency by implementing the
above measures and causing a 30% reduction in energy requirements. This indirectly translated to
profits for the company and this is why it was possible for the firm to support the initiative for as long
as it did. There have been several instances where effective but unprofitable initiatives by companies
had to be shutdown due to their unprofitable nature.

In contrast to this, governments are driven by their ideologies and policies and can afford to
implement initiatives even if they turn out to be financially unviable as long as they show promising

2
 results. We have seen great examples in countries like Norway, which has dropped its per capita
carbon emission from 11.45 to 9.27 metric tons in a single year due to a plethora of affirmative and
decisive actions.

While it is still acceptable for nations to be lethargic with respect to battling climate change, as we
have seen from the lackluster performance of the Paris agreement, nations with a solid ethical
foundation in their governments have been able to make a difference. This is why we feel it would be
insightful to examine the intricacies of the circumstances that shape a nation’s governing body to
prioritize global warming over immediate effect in performance indicators.

The last reason that led to the choice of nations as the unit of analysis was the fact that national
policies can sometimes be instrumental in deciding the impact that companies can have on global
warming. Supportive policies and tax schemes, strong regulatory environments and adoption of
successful nationwide measures can go a long way in not only helping firms that are willing to shape
themselves to reduce their carbon footprint, but also promote and nurture the same response in other
firms. Thus, nations can play a strongly influential role in curbing the headlong rush of mankind
towards an uninhabitable planet, and we intend to examine the various roles and methods it shall have
to undertake to achieve this.

References

Goals & Progress | Sustainability at 3M United States. (n.d.). Retrieved December 7, 2018, from
https://www.3m.com/3M/en_US/sustainability-us/goals-progress/
Norway - CO2 emissions (metric tons per capita). (n.d.). Retrieved December 7, 2018, from
https://www.indexmundi.com/facts/norway/indicator/EN.ATM.CO2E.PC
Kyoto Protocol. (2018). In Wikipedia. Retrieved from https://en.wikipedia.org/w/index.php?
title=Kyoto_Protocol&oldid=872514418
UN launches global plan to strengthen protection of internally displaced persons. (2018, April 18).
Retrieved December 7, 2018, from https://news.un.org/en/story/2018/04/1007552
Major Climate Report Describes a Strong Risk of Crisis as Early as 2040 - The New York Times.
(n.d.). Retrieved December 7, 2018, from https://www.nytimes.com/2018/10/07/climate/ipcc-
climate-report-2040.html
List of countries by carbon dioxide emissions. (2018). In Wikipedia. Retrieved from
https://en.wikipedia.org/w/index.php?
title=List_of_countries_by_carbon_dioxide_emissions&oldid=871641626
Plastic Bag Ban Worldwide with Facts and Statistics [AMAZING INFOGRAPHIC]. (2018, March
27). Retrieved December 7, 2018, from https://www.reusethisbag.com/articles/plastic-bag-bans-
worldwide/
Ozone depletion. (2018). In Wikipedia. Retrieved from https://en.wikipedia.org/w/index.php?
title=Ozone_depletion&oldid=872238565
Montreal Protocol. (2018). In Wikipedia. Retrieved from https://en.wikipedia.org/w/index.php?
title=Montreal_Protocol&oldid=871805883
China electric vehicle market is poised for explosive growth: expert. (n.d.). Retrieved December 7,
2018, from https://www.cnbc.com/2018/09/03/china-electric-vehicle-market-is-poised-for-
explosive-growth-expert.html

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 Q8. This is Executive Exercise AOL7. Apply critical thinking and LEMS to the phenomena (see
Chapter 13): Study its legal (e.g., approval, legitimacy, license, safety, vigilance, security, liability,
quality, …), ethical (is it the right thing, economically justifiable, due-diligence, right trade-offs,
socially desirable, form versus function, nationally benefiting, ecologically sound, sustainability-
wise planetary and cosmic, ethical audit, …?), moral (is it doing the right thing rightly, in the right
time, right place, right people, highest number of stakeholders, with right moral principles, right
moral standards, right moral categorical imperatives, moral audit, …?) and spiritual (Is it doing
right thing, rightly and for the right reasons and intentions, motivations and aspirations, right
spirit of dharma, spiritual audit, …?

A8

We evaluate the present scenario surrounding national action vis-à-vis climate change from four
important viewpoints. We shall unravel the assumptions and frameworks that are in place and
scrutinize them for consistency from each of these perspectives.

Before proceeding to examine a scenario with global implications, we shall first try to narrow down
the points of discussion to focus on:

We first recognize the organizations and institutions involved in taking the major decisions regarding
climate change. Intergovernmental Panel on Climate Change (IPCC), Governmental bodies like
CPCB in India are some of the primary bodies directly responsible in bringing about relevant change.
Other bodies that can also be leveraged would include institutions like Organization for Economic
Cooperation and Development (OECD), International Energy Agency (IEA), International Maritime
Organization (IMO), Major Economies Forum (MEF) and similar institutions with global reach.

The stakeholders that are adversely affected by climate change are fragmented into property and live
losses but are not limited to this classification. We may also try to analyze of certain sector of the
population is more affected by this change than others. Property includes but is not limited to areas of
importance to humans like agricultural damage and coastal inundation. Loss of habitat and
intergenerational losses also have to be considered.

Some of the most important events that have influenced and studied climate change over the last 20
years will be examined. This will include the formation of the international bodies as described above
and the various initiatives taken by them. This category would include initiatives like United Nations
Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol, the International Carbon
Action Partnership (ICAP) and the Muslim Seven Year Action Plan on Climate Change.

With this basic framework of the most important contributors and mechanisms that have hitherto
worked towards combating climate change, we will evaluate the factors that are within the control of
governments and weigh them against factors that are not within our area of influence. We shall do this
from four perspectives and evaluate what has been done and against the required reforms from the
aforementioned perspectives.

Legal

From an eagle’s eye view of the scenario, there has been considerable progress in the implementation
of climate change laws over the last 2 decades. Going by sheer numbers, there are 1200 relevant
policies that have been implemented across 164 countries and around 95% of the global greenhouse

4
gas emissions fall under the gambit of these laws. Looking at the recent past, since the Paris
Agreement in 2015, there have been an additional 47 laws that have been passed. The third world
countries have also slowly started to realize the importance of the issue and have started to implement
laws concerning climate change.

To understand the execution of the laws let us look at the rationale behind their conception. The
United Nations Framework Convention on Climate Change (UNFCC) was founded in 1992 for the
purpose of monitoring and controlling the factors that contributed to global warming. The first real
step forward that rose out of this was the Kyoto Protocol. This protocol was based on the grounds that
the responsibility for lowering emissions would largely rest on the developed countries. Developing
nations even of the size of China and India were not required to commit to any restrictions while
developed nations were required to drop their emissions to 5% below their 1990 levels. This caused
an alienation of countries like US who dropped out of the agreement.

With regards to this very important development, we look at two important factors. First is the
legitimacy of the argument behind treating different countries differently as per their present growth
trajectories. While this decision was taken based on the conclusion that developing countries need to
be given leeway to catch-up with the more developed countries, it ended up doing more harm than
good. From the point of view of the daunting target of limiting the worlds temperature rise to within 2
degrees from their 1990 levels, it is absolutely paramount that countries like US and China conform to
the regulations. Thus, the trade-off in allowing developing countries to emit greenhouse gases goes
beyond their explicit output. It resulted in the expulsion of 2 countries who now cumulatively release
more than 40% of the GHG emissions from the Kyoto Protocol and severely impeded the success of
this initiative.

Another factor that plays an important role in the success of any such initiative is the extent to which
the agreement can be enforced. The Kyoto protocol mainly focused on monitoring and had very weak
compliance mechanisms. The penalty was limited to making up the difference during the second term
after an addition of 30%. Let us look at this scenario in contrast to nuclear proliferation. Even though
climate change is not acknowledged as a problem of the same proportions, the consequences are far
more devastating than nuclear regulations being flouted. Yet the enforcement in nuclear proliferation
is much stronger than in climate change. For example, countries like India have been explicitly
excluded from acquiring nuclear fuel and has restricted growth of nuclear reactors. Stronger audits
and economic consequences such as sanctions and embargoes form a powerful motivation to stay in
line and has thus been successful.

Climate change needs to be recognized as a threat that is just as severe as nuclear proliferation and has
to dealt with the same level of enforcement measures. Presently, the implementation of climate
change regulations has stronger implementation domestically than it does internationally. Most of the
initiatives being undertaken are voluntary resolutions by countries themselves. For example, India has
voluntarily undertaken Intended Nationally Determined Contribution (INDC) measures. Some
examples of the initiatives undertaken include creating an additional carbon sink of 2.5 to 3 billion
tons of CO2 and achieving renewable power target of 175 GW by 2022 which will result in abatement
of 326.22 million tons of CO2 eq. /year. However, there are no consequences to failure of meeting
these targets and this makes it much less effective in countries which place lower stress on emissions
control. Even within India, the framework of national and state bodies such as CPCB are in their
nascent stage and requires a stronger push for faster maturing. This can only come from an
international pressure to recognize the threat of global warming and call for immediate action.

Ethical

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To construct a foundation on which to base our evaluation of the ethical rights, responsibilities and
actions of nations with respect to climate change, we base it on some of the initiatives that have been
taken and the consequences thereof. As democracy and the importance of free will has invaded most
corners of the global political structure, the nations have organized themselves to form republics with
ratified constitutional duties towards the people and land that come under its jurisdiction.

Looking at the recent history of lethargic action by the nations, it is intriguing to note that nations fall
prey to the same symptoms that plague individual entities. The well-known voter’s paradox manifests
itself when it comes national action against global warming. Most individual countries succumb to the
belief that their individual contribution would be too little to halt the problem in its tracks and they
participate in a mass bystander affect. From the ethical viewpoint, nations built themselves on the
foundation of protecting its citizens from harm to the best of its abilities. Lethargic action on their
behalf all but flouts this very basic responsibility.

While the above has held true for the most part of the past three decades since we have started to
recognize the menace of global warming, the nations are only a personification of the people who
empower these powerful bodies. Even well-meaning governments can fear the discontent of the
people who voted them to power and this could form a compelling yet fallacious basis to make such
decisions. A very recent demonstration of this phenomenon would be the year long moratorium for
the proposed fuel tax hike in 2019 by the French government. The government succumbed to
unrelenting pressure from the public who lumped the tax hike with other prevalent issues and
participated in widespread unrest. This is a scenario where the government proposed a well-meaning
policy change but was immediately held back due to the shortsightedness of its subjects. This
accentuates two very important ethical questions that governments need to ask themselves.

What is the true responsibility of the government? Does it consider itself to be wiser than its subjects
under these scenarios and take a short-term battering for the long term good of its people? Or does it
prioritize the immediate welfare of its residents and consent to their demands even when they have the
potential to be devastating in the long run? These are questions that the government has to weigh on a
day to day basis and the fabric of democracy makes this weight a heavy one. As we have seen from
one of the laws above, the cause and effect are often separated by considerable amount of space and
time and the general populace, with its limited knowledge can often fail to recognize these threats.
This poses and very dangerous challenge in battling global warming in the years to come, as the
stakes get higher and the implications of this ignorance exhibits itself in more threatening forms.

Having looked at nations as a community, let us differentiate between nations and evaluate their
ethical obligations in answering the conundrum of widespread action against climate change. While in
a utopian world all nations could work at par with each other in solving the problem, it is quite
evident that this would not be a fair assumption to make. Just two countries- US and China, are
responsible for over 40% of the global CO2 emissions. Underdeveloped nations, for example
Philippines, Myanmar or a major chunk of the African subcontinent comprises of nations that have
per capita emissions well within the limits that could be sustainable. These are countries that are in
dire need of uplifting their people and providing them basic amenities and this makes it a very grey
area to consider action against climate change to be a major factor in the betterment of their people.
The Kyoto protocol tried to implement this inequity in its framework but it evidently severely
backfired, resulting in the expulsion of US from the protocol and allowing China to continue its
operation unhindered. Seeing as these two countries alone form a majority of the problem, any
solution that do not include them would be incomplete.

This brings us to another, much more ambiguous ethical question. To what extent are nations
responsible in helping other nations achieving their targets while also limiting the damage to the

6
environment they could cause on the way? Going by the current definition of countries and the
constitutions that form the basis of their decision making, they are summarily exempted from this
responsibility. This is counter-intuitive because it affects their people even if the act and the
consequence is separated by time. This makes it painfully evident that certain concepts on the basis of
which nations were built need to be questioned and possibly built from the ground up to inculcate
today’s intensively interconnected world. Several systems like carbon markets and drive towards
Environmental P & Ls are all but manifestations of the business market trying to bridge this gap in the
structure of national governance.

Moral

It becomes conspicuous in the previous section that present systems of ethical reasoning that countries
apply to themselves have gaping holes that need to be corrected. A moral reasoning would be the first
step to mapping this uncharted path towards a more inclusive system of national teamwork. One
major impediment that has prevented strong and decisive action against climate change is the pitfall of
moral relativism. There are two ways governments rationalize and justify their inaction by this
phenomenon. Firstly, governments compare their relative performance with other nations and their
biases lead them to the conclusion of adequate action. The reason this is more widespread and
infectious is because it feeds into the thought process of other countries and this positive feedback of
their relative adequacy makes it a vicious cycle of neutrality.

The second route through which moral relativism impedes progress is comparison with previous
governments and passing on the blame to them whilst passing on the responsibility of stringent action
to future governments. These pitfalls can only be recognized and treated when nations look into their
conception and the moral obligations that were identified which led to the structuring the ethical
framework for nations.

Nations are morally culpable not only for the people that presently voted them to power but also the
next generation of people that call the country their home. By deliberately ignoring this important part
of their moral mandate, the nations and their governments make their jobs easier. Already, our present
trajectory of environmental corruption which will take us past the threshold of 2 degrees rise in
temperature will cause problems for the future generation due to inundation of important territories
and degrading air quality. With this dire predicament in sight, inaction and neutrality are all but a
direct attack on their moral responsibility towards their future residents.

The need of the hour is to recognize the indirect effects of various countries and to internalize these
uncalculated externalities. While the developed nations shirk responsibility for the pollution caused by
less developed nations, the pollution haven principal is a direct manifestation of a mechanism by
which these nations can be held morally responsible for the upliftment of these nations while
restricting their vast ecological footprint. This has to either come by compensating by the more
capable nations or by providing the required technological handholding that some nations would
require to sustain themselves without irreparably harming the environment.

Spiritual

As we have evaluated the other perspectives it has become more apparent that the modern frameworks
have conveniently omitted a major portion of their responsibility as nations. Looking at the most
rudimentary form of responsibility, nations are meant to unite people to move towards a future of
greater common welfare. Ignoring the welfare of generations and thoughtlessly passing over the
impending burden to future governments is a direct action against such an important notion. This
brings us to some important questions that could be the answer to a more holistic framework on which
to base our populous systems.

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Just how culpable are nations with regards to adverse impacts on generations that come after theirs?
Does it fall within the jurisdiction of the nation to ascertain that their decisions don’t severely impact
the sustainability of a minimum quality of life for their descendants. However, intergenerational
ambiguity is only part of the complex problem that we have simplified by exclusion. While
democratic constitutions like in India are explicit about their duty to protect the rights of the minority,
they have often failed to do so. Climate change related catastrophes such as inundation of land,
droughts, cyclones all affect a small sector of the community. Displacement of tribes due to global
warming does not only indicate a loss of habitat, but also an attack on the connection they hold with
the forest.

This brings us to a more fundamental reason for enforcing climate change laws rigorously. While
climate change mitigation has happened, it has mostly been based on economic necessity, or for
positive publicity. So, while some of the right initiatives have been taken, they have missed one of the
most fundamental reasons of why we should worry about climate change. While we explore our
universe for a habitable environment, we treat the earth like a temporary haven that we exhaust until
we find a way to colonize other planets. Humans have drawn on the resources of earth to rise to their
pinnacle over thousands of years. On the more primitive level, this endows us with a responsibility
and an underlying connection to nurse it back to health. While nations have collectively chosen to
ignore this facet due to its minimal economic backing, it could act as a powerful motivation to bring
together diverse nations and people to work cohesively towards solving this complex problem. With
the grim future that now faces us, battling against climate change and winning the war will demand
much of us; as nations, as individuals and as a species, and the only way we find the strength to pull it
off unflinchingly is when we as a global force recognize our spiritual connection to the planet and
own up the responsibility to heal the damage.