Sustainability and business

Global warming and climate change

Student no.

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Table of Contents
1. Description of the global sustainability issue...........................................................................3
1.1 Sustainability.....................................................................................................................3
1.2 Issue of global warming....................................................................................................3
1.3 Cause of global warming..................................................................................................4
1.4 Major impacts/ consequences of the global warming.......................................................4
2. Identification of debates, value system and stakeholders............................................................5
2. 1 Major debate on the global warming issue...........................................................................5
2.2 Value systems........................................................................................................................5
2.2.1 Triple bottom line (TBL).................................................................................................5
2.2.2. Value systems.................................................................................................................6
2.3 Impact of stakeholders...........................................................................................................7
3. Critical analysis of implication on the business..........................................................................9
3.1 Impact of the global warming issue on global business context............................................9
Risk and threat..........................................................................................................................9
New potential business opportunities.......................................................................................9
New processes and innovations..............................................................................................10
3.2 Role of leadership on sustainability.....................................................................................11
Conclusion.....................................................................................................................................11
Bibliography..................................................................................................................................12

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 1. Description of the global sustainability issue

1.1 Sustainability

The concept of sustainability is defined and argued in a different ways from individual level to
global context. Sustainability encompasses there main aspects of ecological system, sustainable
resources and growth concept (Harrington, 1992). According to the Brundtland (1987), the
sustainability is defined as the meet the needs of first generation without compromising the
ability of future generation to meet their needs (Werbach, 2011). It embedded the economic
resources as well as natural resources and social resources. This encourages the business to act in
accordance with sustainability goals rather focusing on maximizing the profit for investors.

1.2 Issue of global warming

Among of numerous sustainability issues, the global warming is top of the list (Lacy.P., Cooper,
Hayward, & Neuberger, 2010). Global warming is identified as an increase of global annual
temperature. Some scholars have argued the climate change and global warming as synonyms,
but the increase in global warming is recognized as one dimension of climate change
experienced in last decade (Victor, 2011). Journal of environmental research report has
identified the past 5 years as the world warmest years (Diener & Frank, 2010). Climate Scientists
have claimed that global warming will be go beyond 1.5 Celsius by 2040 (Diener & Frank,
2010).

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Figure: Estimation of past and future global warming Source: World Meteorological
organization (2012)

1.3 Cause of global warming

Starting from the industry resolution to the date, the expansion in world economy and population
growth has lead to this sustainability issue. It is proved that the human activity as the main cause
of this sustainability issue. The greenhouse effect is always having strong relation with the
climate change as increase in the level of Carbon dioxide (CO2) is directly linked with hike of
temperature level (Costanza & Patten, 1995). Moreover the burn of fossil fuels mainly oil and
gasoline are collect at the atmosphere leads to the greenhouse effect. The greenhouse effect will
increase the concentration of CO2, methen, fluorinated gases and nitrous oxide in atmosphere
(Fischer & Riechers) The usage of fossil fuels for industry, transport and power generation has
increased rapidly.

Modern civilization has increased the carbon dioxide level in atmosphere due to human
involvement. The several laboratory experiments also become one of main contribute to this
issue (Marcuse, 2008). Cutting down of forest and livestock farming is recognized as other
causes for increase in CO2 level and thereby global warming.

1.4 Major impacts/ consequences of the global warming

Global warming has a strong link with the extreme weather conditions such as droughts, heat
waves, rain fall issues etc. Also it has found that it may have serious influence on storms and
their powerfulness. The more community has to suffer from this issue and could lead to natural

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disasters and thereby deaths. The melting of glaciers is affecting to the increase in sea level. It
has found that global sea level is rising by 3.2 millimeters annually and expected that it will be
faster in future (Diener & Frank, 2010). The impact of global warming can be seen in across the
world as some regions are experience in sea level increase while some are experience in
droughts. Hence this is challenging to the lives on planet and makes serious harm to earth’s eco
system. The global warming has severe impact in reducing rainfall and thereby leads to water
shortage in world. High temperature impacts on health condition of people especially to elder
generation. It is evident that high level of temperature leads to allergies, skin issues, asthma and
breathing issues (Leroux, 2006). The global warming and corresponding climate change has lead
the world to search for alternatives to fuel and gas. Scientist has claimed that the leaders of
world’s powerful countries need to take immediate actions to reduce the global warming to
reduce the future worst consequences.

This issue creates several risks for business and impact to their sustain in future. As per the
findings of Deloitte Global Report, global warming is affecting to the one in every four
companies across the world (Harrington, 1992). The direct and indirect costs of companies have
increased due to extreme weather and disruptions in supply chain. Moreover the increase of
regulations to limit the adverse actions has impact on operations. All the companies around the
world need to take actions to prevent the harmful activities as good corporate citizens. The new
era of accounting and business reporting requires company to report on sustainability practices
and environmental footprints.

2. Identification of debates, value system and stakeholders

2. 1 Major debate on the global warming issue

Evans and Stevan (2007) have identified global warming as the hottest debate of the decade
(Ghussain). The term of greenhouse effect has changed to global warming around mid of 1900’s.
The scholars have argued that the theory of anthropogenic warming has emerged after the
industry resolution (Letcher, 2019). Accordingly, the theory of global warming is now refereed
to the increase in temperature due to human involvement. The national academy of science has
proved this view by mentioning that 97% of climate change is attributed to the activities of
human (Koutroulis, 2019).

In contrast, Bast (2010) has identified that the climate change happen due to natural forces and it
will be remain continue even without human involvement (Choi, Gao, & Jiang, 2020). This view
is supported by Meredith (2012), who has revealed that world Carbon percentage has been
increased without any human involvement. However Strauc, Guest (2016) and his co-authors

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have argued about these views and questioned about the validity of computerized climate models
(Brown & Caldeira, 2017).

A charge of “Junk science” is criticized by the National academy of science (Ceppi & Nowack,
2021). It raises a concern of unwise actions of governments. The modern debate on global
warming and climate change has put a pressure on different governments to put standards and
regulations to overcome this matter.

2.2 Value systems

2.2.1 Triple bottom line (TBL)

Triple bottom line is a concept that business should measure their impact on social and
environmental impact (Hubbard, 2009). It has recognized three pillars in sustainability as profit,
people and planet.

Figure 1; Triple bottom line Source; OXFORD university press

Profit dimension refers to the financial performance of the company. In the capitalist view, only
profit is identified as the goal of a business. But the TBL expands this into other two dimensions.
Commitment to the people measures the social impact of company operation (Pava, 2007).
Positive impact to the environment is concern by the pillar of Planet.

The concept of TBL is significant to identify the sustainable practices of the company. It helps in
developing sustainable business strategies and improved the sustainability reporting.

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2.2.2. Value systems

The concept of sustainability highlights the significance of extending the value system of a
company beyond the financial value creation. Accordingly, it recognizes the following transition
of value system.

Figure 02: shareholder value to shared value (Future fit foundation, System value creation,
2017)

Shareholder value encompasses the creating a financial return (profit) for its investors (Maltz &
Sachein, 2012). This did not concern about the aspects of environment and society. In
contrasting, the shared value considers the all aspects of financial return and impacts to the
environment and society. It align the financial value creation with the social value creation. The
shared value creation has transition to system value creation where it matches the financial value
creation with the social and environmental systems of the economy.

2.3 Impact of stakeholders

Government

The government is playing essential role in sustainability. As policy makers, government held
responsibility in developing policies to improve the sustainability practices. The government is
the major institution which developed rules, litigations and actions against the unsustainable
actions to avoid any harmful impacts. Accordingly, the sustainable view of the state, policy and
rules of national government has impacted to the actions of human as well as for business
practices. Government monitors activities of public and companies to ensure the sustainability
and impose new regulations and do amendments to face the new requirements. Taxes imposed

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by the government are the one of effective mechanism to improve the actions of business as well
as community (Gibson, 2012).

Business

Unlike the traditional view, the modern era of economy emerge a trend that shareholders are
concern about the sustainable practices of a company. The concept of sustainability has changed
the practices of business in a way that never imagine. The unsustainable business will be rejected
from the society. Hence it is significant to ensure the future sustain. The green concept of
business practices will help to attract more customers and enhance the reputation. The practices
of business are the main cause for most of the issues in sustainability. Hence their actions have
wider impact to future. The new reporting of accounting requires company to report on
sustainability. Accordingly, most of the companies now provides sustainability reporting under
their annual reports or as a separate publish. The society is expected that a business will conduct
their operation as a good corporate citizen. Hence it is deemed to be that business should be
conduct in responsible way. The business should develop sustainability practices to face those
new requirements.

Community

The human activities have been identified as the main cause for the sustainability. The increase
of awareness in sustainability has changed the community perception towards this issue and now
people are more concern about the environment and society. The emerging the concept of green
world has changed the actions of human. The waste management, use of recyclable materials,
green purchases, reduces waste and building the society are the most common trends that can be
identified. People are more tend to buy green products has impacts to the practices of business.
Also the environment friendly actions of community will be positively impact to world. The
actions of individuals are ultimately impact to the survival of planet. Hence the responsible
citizens are crucial to develop a better world.

Regulatory institutions

In addition to the government, there are different institutions which set up the policies and
regulations on sustainability. Each country has different authorized bodies to develop the new
rules and regulation on these aspects. Further they will instruct the government to develop
procedures. These institutions will monitor the activities of business to avoid the harmful actions.

Pressure groups

Pressure groups such as environmental pressure groups have a huge impact to the sustainability.
They will pressurize the community specially business organization to follow social responsible
behavior. There are some pressure groups which are impacting specially to the certain industry

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practices. They are playing wider role in providing pressurizing the government and other
regulatory bodies to implement mechanisms and make new regulations to protect the
environment. Moreover pressure groups enhance the public awareness in sustainability practices.

NGO

Non-Governmental organizations contribute to the sustainability by various social welfare

activities. They are conducting different programs to improve the social and environmental
conditions. Further they are taking actions to increase the awareness on those sustainability
matters.

3. Critical analysis of implication on the business

3.1 Impact of the global warming issue on global business context

Risk and threat

The increase of energy price is the most highly impacted business threat (Romilly, 2007). The
price of many commodities is highly volatile to the energy price. Hence it is impact on cost of
operations and prices of goods. The rising demand for energy and emerging trend for renewable
energy sources will impact to this. Shortage of water is another risk facing by the business
especially in the region where experienced heavy droughts due to climate changes. Hence the
water scarcity will interrupt to the operation of companies. This will directly influence to the
generation of electricity.

The issues of global warming and associated climate change will impact to the long term
resilience. The intervention of government will limit the business activities and their
potentiality to expand. The revision of government policies and new tax regime may impact to
their operation and as well as to profitability. The applying of sustainability practices are
inevitable and thereby it will make unnecessary burn on business management (Henederson &
Reinert, 2015). Also this may create unavoidable cost to companies.

The companies have to face to different physical risks due to climate changes and natural
disasters. Especially the climate variability will impact to the agricultural production. This is
unpredictable risk and companies will be badly impacted. The magnitude of this impact may
vary based on company location and industry. Moreover the new dimensions of sustainability
make more exposure to reputational risk and credit risk.

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New potential business opportunities

The new modern technology world, uses different data analyses such as probabilistic climate
change models to predict the climate changes. Especially those will be benefited to the industries
which are more vulnerable to climate changes. Since the data is the power, there is a massive
opportunity for new scientific methods and machines to recognize the changes in climate such as
predicting rain for agricultural activities.

The companies which are recognizing this new emerging trends in the market, can be capitalized
those and develop new concepts. The investment in low carbon products and production
technologies will be a good opportunity to reduce the risk exposure and better survival. The
green efficiency technologies will create new dimension of business. Zero emissions vehicles
(Electric vehicle) will be dominant in future world. There is a huge growth potentiality for
renewable energy sources. Accordingly, the leading oil companies in South Arabia is looking for
generate renewable energy using nuclear power (Rickards, Wiseman, & Kashima, 2014).
Moreover the sola power greatest opportunity.

The capitalization of behavior changes of people provides chances in developing new products
and services. The various researches have found that the new products which are generated
sustainable brands have increased their market share in USA (Mills & Lecomte, 2006).The
environmental friendly products are the one of greatest example for this. The construction using
boon and other environmental friendly resources will have good growth potentiality. Also there
is an opportunity for climate change financial options and solutions.

New processes and innovations

The development of new process and innovations are motivated due to nee trends in
sustainability. Accordingly new innovative products and business models have been developed
to avoid the issues in climate changes.

The innovation in green transport is one of main innovation originated to reduce the air pollution.
The development of electrical cars will create zero emissions. The burn of fossil fuels which
generates carbon will be replaced by zero emission or low carbon emission sources such as
nuclear power, solar, natural gas and wind. Non biomass renewables will be a main innovation to
create sustainable energy sources.

The innovation in technology will simply reduce the pollution and global warming. The
innovation in new production technologies that reduce the waste and carbon emission will
positively impact to environment. The new technological innovation to measure the emission and

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footprints will help in minimizing the harmful impact. Hence it is necessary for innovation
technology.

UNFCC recognizes the clean technology as one of main innovation to address the climate
change issue (Vogel, 2009). Recyclable materials will be contributed for this. Reinforce energy
infrastructure will drive in future. The buildings which are facing better to natural disasters are a
crucial requirement to face challenges in climate change.

The green growth approach is one of new process to reduce carbon emission by creating
environmental friendly business models. Green economy is one of new process to generate
profitability of operation while protecting the society and environment. Moving to climate smart
agriculture is one of proactive innovation which company can apply. Sustainable land
management techniques also helped to solve this matter. Invest in water infrastructure also
significant.

3.2 Role of leadership on sustainability

The sustainable leadership refers to manage business while achieving the goals in sustainability.
Mainly it refers to the management of business with triple bottom line concepts. Sustainable
leaders give equal priority to short term goals as well as long term goals. He or she will evaluate
the environment to identify the sustainable issues in this context the climate changes and
associated risk and opportunities. Sustainable leaders recognize the new global trends which
arise as a result of those sustainability issues.

Sustainable leadership is key to the success of a company and long term survival. They will grab
the opportunities while minimizing the risk. The risk assessment and preventive actions will help
to face future challenges. Sustainable leadership changes the organization and world into better
place. The entire world will be benefited from those activities as the activities of business will
determine the survival of planet. Not only the business, the country should be manage by
sustainable leadership to ensure the sustainability of world. The government policies are crucial
to make all those sustainable changes. Without sustainable leadership in top government it is
hard to achieve all sustainable objectives. It will guide the whole community to better practices.

Conclusion

The empirical evidences gathered from this research have identified the global warming and
associated climate change as one of biggest challenge in sustainability. The rise in global
temperature has numerous short term and long term impacts mainly increase in sea level, natural
disasters, decrease of water, extreme weather conditions etc. The growth in population and
industrial expansion after the industrial resolution has identified as main causes for this issue.

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The burn of fossil oils and greenhouse gas effect has contributed to increase the global surface
temperature. Accordingly, the world is facing to huge rise of temperature and unexpected climate
changes. Further it has revealed that the different stakeholders have different impact on
sustainability. Those climate changes have serious impact on business by creating several risks
mainly physical risk, shortage of water and increase of energy prices. The intervention of
government, regulations, tax regimes and pressure groups will make unnecessary burn on
companies. Despite all those risks, the issue of global warming and climate change is recognized
as an opportunity where company can thrive to success. The renewable energy sources, zero
emission and less emission innovation and business models have identified as some opportunities
which company can capitalized. Further this research has recognized the sustainability issues
will drive the business to innovation. Accordingly, this research suggested the companies to
identify the new opportunities arise from new trends in the market and use those to success.

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