How Will Climate Change Affect National Grid (UK) and How They do Business - PowerPoint Presentation Example

How will climate change affect National Grid (UK) and how they do business Introduction The change of climate globally has led to a series of significant changes in many aspects of daily human activities around the world. In fact, extreme phenomena that are related with the climate have caused severe damages in many urban and rural regions globally leading even to the evacuation of these regions and the movement of local populations in other (safer) areas. Gas emissions have been considered as having the responsibility for the radical changes in climate in all countries within the international community. However, despite the fact that the causes of climate change have been identified, the measures taken for the reduction of their effects on various aspects of human life are limited. On the other hand, it is suggested by Koomey et al. (1997, 1) that ‘the common perception among many policy makers and industry leaders is that the twin objectives of reducing greenhouse gas emissions and promoting a more competitive economy are inherently contradictory’. Many efforts have been made by the states globally in order to create a mutually – accepted plan for the reduction of greenhouse emissions; however this plan has faced significant oppositions mostly because it is against of the interests of specific parts of the population within each country globally; gas emissions and pollution in general seem to serve the interests of a specific group of people who ignore the effect of increased industrial activity on a continuous basis and promote personal interests even if they are related with severe damages on climate worldwide. Current paper focuses on the activities of National Grid, ‘an international electricity and gas company and one of the largest investor-owned energy companies in the world’ (corporate website) in terms of their relationship with the climate changes globally. More specifically, the effects of climate changes in the international context are being identified and evaluated trying to locate the relationship between the firm’s activities and the climate change as they can be observed in the firm’s daily operations specifically in Britain. 2. Main aspects of climate change around the world Climate has changed dramatically in all regions around the world. One of the main reasons for this change has been considered to be the extremely high percentage of carbon dioxide released by industries, households and a wide range of other sources (e.g. automobiles, fires and so on). Regarding this issue, it has been found by Marland et al. (2007) that ‘since 1751 roughly 315 billion tons of carbon have been released to the atmosphere from the consumption of fossil fuels and cement production; half of these emissions have occurred since the mid 1970s’. On the other hand, in accordance with a series of statistics presented by Energy Information Administration (2007) it is proved that ‘in recent years, atmospheric concentrations of carbon dioxide have been rising at a rate of about 0.5 percent per year; world carbon dioxide emissions are projected to rise from 26.9 billion metric tons in 2004 to 33.9 billion metric tons in 2015 and 42.9 billion metric tons in 2030’. It seems that carbon dioxide emissions are not likely to be reduced in the near future. For this reason, appropriate measures are necessary by businesses and individuals around the world. Indeed, the rates of carbon dioxide emissions present a trend for continuous growth. In accordance with CSIRO (27.11.2006) ‘from 2000 to 2005, the growth rate of carbon dioxide emissions was more than 2.5 per cent per year, whereas in the 1990s it was less than one per cent per year’. It is clear from the above, that climate changes globally will continue to get worsened; no signs for limitation of pollution caused by carbon dioxide emissions and other ‘material’, like the various toxics released through the business activities worldwide, have been observed all these years. For this reason, firms around the world should take all appropriate measures in order to protect the physical environment from the pollution that the release of ‘toxic’ material (like carbon dioxide) can cause. 3. National Grid – Company Overview As already stated above National Grid is an ‘international gas and energy company’ (corporate website). The firm’s operations are extended in many countries around the world, however the centre of its activities can be located in UK. National Grid (or National Grid Gas plc) is characterized by the speed in the development of managers’ decisions and the relatively risky decisions of shareholders who prefer to risk in order to gain even in the long term. The firm’s position in its market remains strong; however it would be preferable for all persons that participate in the firm to find a solution that would not lead the firm to stop its operations. The firm’s managers have taken all the appropriate measures in order to promote sustainability through all business activities. However, it is not clear whether the company is prepared to face effectively the conditions related with the extreme climate changes of our decade. 4. Effects of climate change on the firm’s activities This month National Grid was subscribed to the Climate Registry, a non-profit organization which has been established in order to support the governmental (US) initiatives towards the reductions of greenhouse gas-emissions across the country. The membership in Climate Registry means that National Grid will publish the greenhouse gas emissions released through the various operational activities of the firm primarily at USA (corporate website). Moreover, the firm’s managers proceeded to the restructuring of the firm’s corporate social responsibility report emphasizing the importance of appropriate actions towards the limitation of the firm’s waste in order to support the protection of the environment. The above initiative was just part of the measures taken by the firm for the protection of the environment and the limitation of greenhouse gas emissions around the world. In November 2007 the firm also supported the publication of McKinsey and Company’s report referring to the need of limitation of greenhouse gas emissions for the avoidance of further climate change globally. The firm’s activities have been influenced by the climate changes. More specifically, apart from the measures taken by the firm towards the limitation of its waste (of all forms) its involvement in specific initiatives targeting the decrease of the percentages of greenhouse gas emissions globally is another fact that prove the firm’s intensive effort in order to prevent the development of climate changes around the world. In this context, it could be stated that climate changes have influenced corporate activities. The relationship between the climate change and the corporate activities cannot be doubted. In accordance with Kiernan (2007, 14) ‘climate change regulations have begun to impact companies competitiveness and financial performance, and investors must analyze the degree of climate risk faced by companies before investing; companies with outstanding environmental management outperform their competition over time and provide good return on investment for institutional investors’. On the other hand, the study of Kolk et al. (2007, 370) showed that ‘what a corporate climate strategy looks like depends on the type of stakeholders that a company manages more proactively, which is in turn determined by the extent to which these stakeholders control critical resources’. In other words, the influence of corporate strategy by the climate change should be regarded as expected. However, the measures taken by the firm towards the effective handling of the problem can be differentiated from those taken by other firms operating within the same industry. The firm has chosen to proceed to specific initiatives regarding the support of the efforts for the limitation of pollution worldwide and the protection of natural environment (as described above). The potential participation in initiatives taken by national or international organizations cannot be rejected, however all these actions should have been decided at a corporate level trying to align existing corporate practices with the requirements of the specific target: limitation of greenhouse gas emissions globally and increase of the measures taken for the protection of natural environment around the world. The firm’s activities that are expected to be most influenced by climate changes are the following ones: supply chain management, administration of energy resources (methods and materials used for this activity) and distribution of energy to consumers (materials chosen, waste created and emissions released to the environment). In fact, most of the firm’s activities (due to its objective) are expected to interact with climate changes. For this reason an appropriate framework should be developed by the firm ensuring the protection of environment in any of the firm’s activities around the world. 5. Conclusion In practice, it has been found that all types of corporate activities are related with the natural environment and the climate changes (either directly or indirectly). The study of Karl et al. (2003, 1719) showed that ‘the main source of global climate change is human-induced changes in atmospheric composition; these perturbations primarily result from emissions associated with energy use, but on local and regional scales, urbanization and land use changes are also important’. From a different point of view, it is supported by Kolk et al. (2004, 304) that ‘the issue of climate change has attracted increasing business attention in the past decade; whereas companies initially aimed primarily at influencing the policy debate, corporate strategies increasingly include economic responses; existing classifications for climate change strategies however still reflect the political, non-market components’. In accordance with the above corporate activity should be considered as having a major role in climate changes worldwide. However, it cannot be denied that a series of measures has been taken by firms within the international market trying to promote the protection of the environment and reduce the pollution caused because of their daily operational activities. The effectiveness of these measures is an issue that could be discussed but there is still a need for active participation in all the initiatives arranged by organizations around the world in relation with the limitation of climate change as a result of human activity. In the case of National Grid, it has been proved that the firm has made all appropriate preparation in order to achieve a low level of gas emissions through its daily activities. Moreover, the firm participates actively in all the relevant initiatives supporting the limitation of climate changes caused by the industrial activities in all countries around the world. In any case, the firm operates in the international market and for this reason all its initiatives towards the protection of the environment should be considered as important influencing the corporate social responsibility schemes developed also by other firms globally. References CSIRO. 27.11.2006. Increase in carbon dioxide emissions accelerating. [Online], available at http://www.csiro.au/news/ps2im.html Energy Information Administration. May 2007. International Energy Outlook 2007, [Online], available at http://www.eia.doe.gov/oiaf/ieo/emissions.html Karl, T., Trenberth, K. (2003) Modern Global Climate Change. Science, 302(5651): 1719-1723 Kiernan, M. (2007) Knowing Green. Benefits Canada, 31(7): 14-15 Kolk, A., Pinkse, J. (2007) Towards strategic stakeholder management? Integrating perspectives on sustainability challenges such as corporate responses to climate change. Corporate Governance, 7(4): 370-378 Kolk, A., Pinkse, J. (2004) Market Strategies for Climate Change. European Management Journal, 22(3): 304-314 Koomey, J., Richey, C., Laitner, S., Markel, R., Marnay, C. (1997) Technology And Greenhouse Gas Emissions: An Integrated Scenario Analysis Using The LBNL-NEMS Model, [online], available at http://enduse.lbl.gov/Info/42054-abstract.html Marland, G., T.A. Boden, and R. J. Andres. 2007. Global, Regional, and National CO2 Emissions. In Trends: A Compendium of Data on Global Change. Carbon Dioxide Information Analysis Center, Oak Ridge National Laboratory, U.S. Department of Energy, Oak Ridge, Tenn., U.S.A. Sullivan, R. (2007) Between the Market and the State: Corporate Responses to Climate Change [online], available at http://www.accountability-central.com/single-view-default/browse/4/article/between-the-market-and-the-state-corporate-responses-to-climate-change/?tx_ttnews%5BbackPid%5D=182&cHash=2b4a2d9726 Websites http://www.nationalgrid.com/uk/ Read More