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Integrating Climate Change with Core Business Activities

Integrating Climate Change with Core Business Activities. Jonatan Pinkse & Ans Kolk University of Amsterdam Business School The Netherlands. Introducing business and climate change. Initial business responses merely political :

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Integrating Climate Change with Core Business Activities

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  1. Integrating Climate Change with Core Business Activities Jonatan Pinkse & Ans Kolk University of Amsterdam Business School The Netherlands

  2. Introducing business and climate change • Initial business responses merely political: • At first most large firms opposed policy initiatives to cut greenhouse gas emissions, but since the inception of the 1997 Kyoto Protocol increasingly more firms are in favor • Gradual emergence of market responses: • Firms are starting to develop ‘climate-friendly’ technologies • Firms start to engage in emissions trading and other Kyoto mechanisms • Aim of our paper: • Analyze to what extent firms integrate climate change with their core business activities

  3. Integration of climate change • Commonly business response understood in terms of mitigation: reducing greenhouse gas emissions, e.g. improving energy efficiency • Usually only minor changes in the production process • But, do firms also choose for integration of their concern for climate change into their mainstream business activities? • And, to what extent does climate change motivate firms to modify their core business activities?

  4. A dynamic capabilities framework • Dynamic capabilities: competence to renew existing capabilities to maintain a fit with changing environment • Whether firms appear to integrate climate change with their core business depends on: • Nature of climate-induced dynamic capabilities • Green or conventional? • Origin of climate-induced dynamic capabilities • Geographic spread: global, regional, domestic? • Spillover effects throughout value chain • Aimed at upstream (suppliers) and/or downstream (sales) activities

  5. Data & Method • Analysis of Carbon Disclosure Project (CDP) 2004 questionnaire data of Global 500 firms • 218 multinationals publicly responded to CDP • Using content analysis with inductive coding, the data were scrutinized for activities that: • Form a response to the climate change issue • Fundamentally change current business practices • Are likely to have a significant impact on firm competitiveness

  6. Findings (1) • Firms follow distinctive pathways towards: • Technological (conventional) capabilities • Towards similar technologies (automotive) • Towards different technologies (oil & gas) • Organizational (green) capabilities • Exploitation of existing capabilities (utilities, finance) • New capabilities (emissions trading; in some cases only) • Activities undertaken by multinationals from all three regions of the Triad – US/EU/Japan (regulation not decisive) • Much cooperation for technological development: particularly with firms and research institutes in home country

  7. Findings (2) • Organizational capabilities potentially more location-bound than technological capabilities • E.g. emissions trading only where such systems exist and firms/sectors are included • Technology usually incorporated in products so better transferable • More opportunities in downstream activities, but • Worldwide marketing of technology-based products problematic • E.g. when an infrastructure is required (case of marketable hydrogen car)

  8. Conclusions • Integration still limited, some first steps for the long run in a few industries only • A strategic reorientation towards sustainability still utopia • But, quite some firms are developing different kinds of technological and/or organizational capabilities, mostly green sometimes conventional • In doing so, multinationals mainly rely on existing capabilities in making incremental changes

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