Is your firm "indifferent" or "active" about greenhouse gases?
This study compares corporate responses to climate change by
firms in the UK and Pakistan. Companies in developing and developed
countries face some common barriers in responding to climate change
(e.g. lack of financial resources).
But, they have distinct strategies due to differences in
acceptance of and support for those initiatives by government and
other stakeholders, and regulatory influence specific to their
Pressure from owners, managers and regulators may be needed for
firms in developing countries to adopt climate strategies.
Research on how companies respond to pressure to reduce GHG
emissions has focused mainly on large multinationals. This study
examines the climate change strategies of firms residing in the UK
and Pakistan. It classifies firms as indifferent,
beginner, emerging, or active based on
their climate strategies and identifies the drivers and barriers
for their GHG reduction activities.
Country differences: More than 75% of Pakistani companies were
classified as either indifferent or beginner,
compared with just 30% of UK companies.
Sector differences: Most UK firms in indifferent or beginner
clusters were small and not regulated under the EU trading scheme.
In both countries, few multinationals were indifferent. Indifferent
and beginner companies in Pakistan belonged to textile, cement,
paper, food & drink and chemical sectors; firms in oil &
gas, power and automotive sectors were distributed across
indifferent, beginner and emerging.
Strategies for GHG reduction:
- Firm owners, management and regulators were perceived to have
high influence on firms’ climate change responses in contrast to
employees, competitors and other stakeholders.
- Drivers included cost savings, management commitment, or
targets and regulatory compliance.
- The high cost of initiatives and lack of capital were perceived
as barriers in both countries.
- Developing countries had added challenges like overall lack of
awareness, non-availability of technologies and an absence of
Implications for Managers
- In the face of regulatory uncertainty or lack of awareness,
managers and owners may need to take the initial steps towards
mitigating climate change risk. This is especially true if your
sector has not yet fully engaged in the climate change issue.
- To achieve meaningful global emissions reductions, emerging and
active industries need to become proactive and innovative, and help
those in indifferent and beginner industries. You might achieve
this through tech transfer, alliances or partnerships.
Implications for Researchers
More research is needed to better understand the role of factors
including stakeholder influence, management objectives,
institutional support and awareness in different countries
(especially developing countries) and across business sectors.
Authors compared strategies for climate change using survey
responses from 180 companies from 9 high-emissions sectors in the
UK and Pakistan. They conducted factor analysis on
operational and managerial activities followed by cluster analysis
to group companies based on factor scores for activities.
Jeswani, Harish Kumar, Wehrmeyer, Walter, & Mulugetta,
Yacob. (2008). How warm is the corporate response to climate
change? Evidence from Pakistan and the UK. Business Strategy and
the Environment, 17(1): 46-60.
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