Download Business and Climate Change Issues: Discussion on Awareness and Motivational Factors

BUSINESS AND CLIMATE CHANGE ISSUES: DISCUSSION
ON AWARENESS AND MOTIVATIONAL FACTORS
Rawshan Ara Begum and Joy Jacqueline Pereira
Abstract
Climate change and its implications on businesses
are receiving greater attention and recognition, with
investors and other stakeholders in the business
sector and this has already become a reputational
and strategic issue for businesses. The article
presents how corporate managers view about
climate change, their level of awareness and its
sources. It also discusses important motivational
factors to address climate change issues at the
company level. This article is part of a survey on the
issue of climate change, business and sustainability,
conducted by the Institute for Environment and
Development
(LESTARI)
through
Malaysian
Network for Research on Climate, Environment and
Development (MyCLIMATE), with support from the
Ministry of Natural Resources and Environment in
Malaysia. The survey was conducted through
interviews with senior managers and management
officers of the respective companies, who were
members of the Malaysian International Chambers
and Commerce Industry (MICCI) and Federation of
Malaysia Manufacturers (FMM). The findings of the
survey could be useful for policy and decision
makers in formulating national climate change
action plans in Malaysia.
Field of Research: Environmental economics and management
Dr Rawshan Ara Begum, Institute for Environment and Development (LESTARI) & South East Asia
Disaster Prevention Research Institute (SEADPRI), Universiti Kebangsaan Malaysia, email:
[email protected]
Prof. Dr. Joy Jacqueline Pereira, Institute for Environment and Development (LESTARI) & South East
Asia Disaster Prevention Research Institute (SEADPRI), Universiti Kebangsaan Malaysia, email:
[email protected]
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1. Introduction
Climate change and its implications on businesses are receiving greater attention
and recognition, with investors and other stakeholders in the business sector (Kolk
and Pinkse, 2004) which is already become a reputational and strategic issue for
businesses. Therefore, there has been an increase of business responses to climate
change in terms of market and political strategies such as economic and policy
responses for tackling climate change. For example, the Carbon Disclosure Project
(CDP) operates worldwide to collect and distribute high quality information that
motivates investors, corporations and governments to take action to prevent
dangerous climate change (CDP, 2009). There is a concern for socio-economic
issues related to climate change including business opportunities and threats,
vulnerability of economies and market conditions as well as co-benefits and risks of
climate change mitigation actions (Begum & Pereira, 2011). Many businesses have
already started to recognise that climate change poses both risks and opportunities,
but in most cases there is lack of effective frameworks in place for understanding
and managing those long-term risks and opportunities. The risks from climate
change can be significant and that not all companies in the same sector will be
affected to the same degree. It is also raised concerns over the potential for litigation
if business and financial organisations fail to consider the impacts of climate change
(POST, 2004).
This article is part of a survey on the issue of climate change, business and
sustainability, conducted by the Institute for Environment and Development
(LESTARI) through Malaysian Network for Research on Climate, Environment and
Development (MyCLIMATE), with support from the Ministry of Natural Resources
and Environment. The article presents how corporate managers view about climate
change, their level of awareness and its sources. It also discusses important
motivational factors to address climate change issues at the company level.
2. Sampling, Survey and Analysis
The survey was conducted through interviews with senior managers and
management officers of the respective companies, who were members of the
Malaysian International Chambers and Commerce Industry (MICCI) and Federation
of Malaysia Manufacturers (FMM). Interviews were based on a set of questionnaires
comprising the issue of business, awareness and perception of climate change as
well as factors to motivate and other environmental concerns. Purposive random
sampling method was used for data collection and the data was collected from 54
senior managers and management officers during the month of July to September in
2008.
Initially, simple descriptive statistics such as averages, ranges and percentages were
used to analyze the data obtained and then the study adopted a modified method of
weighted average and coefficient of variation models that was employed the
previous research on waste minimization factors (Begum, 2007). The following
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weighted average model was used to examine the relative level of importance
among the factors that motivate the respondent to address climate change issues.
AISi = 4j=1 XjNij / N
Where, AISi is the average importance score to the factor i, Xj the importance grade,
to be assumed Grades I–IV. Grade I indicates not important at all and Grade IV
indicates most important and the middle Grades II–III indicate important and least
important to motivate the companies, Nij the number of respondents who give the
factor i for the grade Xj and N is the total number of respondents.
For calculating AISi, the four grade scales for X need to be converted into numerical
scales, such as Grade IV carries a value of 4, Grade III of 3 and so on are taken for
the purpose of simplicity. To rank the importance among all the factors, the
combined value of the weighted average and coefficient of variation has taken into
account. The coefficient of variation measured by the model of factors index value
(FIV) as below:
FIVi = ASSi + ASSi/δi
Where, FIVi is the coefficient of variation of the factor i, AISi the average impotance
score of the factor i and δi is the standard deviation of the importace score for factor
i. After calculating FIV, the study showed the ranks of the importance between
factors (RFIV). The Statistical Package for Social Sciences (SPSS) software was
used for data analysis.
3. Survey Findings
The survey respondents reflect a wide range of corporate types and sectoral
businesses in which most of them are from multi-national companies (41%) while the
rests are from small and medium enterprises (26%), large corporations (24%) and
the government-linked companies (9%). In order to the types of sectoral businesses,
again a majority of them (41%) represents manufacturing sectors such as electrical
and electronics industry, food processing & beverages, rubber processing and
products, wood and plastic products while service sectors such as hotel and resorts,
environmental management or pollution control, recycling and recovery consist of 24
% and the rests of 13% represent oil and gas and 10% of other sectors such as
banking, finance and insurance, respectively. The subsequent sections discusses
the survey findings on corporate managers view about climate change, level of
awareness and its sources as well as motivational factors to address climate change
issues.
3.1. Awareness of Climate Change
From the survey, it reveals that all the respondents are generally aware of climate
change issues meaning that all of them knew or heard about any of the following
terms related to climate change such as ‘climate change’, ‘global warming’
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‘greenhouse effect’ or ‘sea level rising’. From the survey, it was asked to the
respondents that how did they become to know or aware of climate change issues
and found that the most two common sources of awareness are newspapers (87%)
and television (82%) (Table 1). The other common sources include seminars,
conferences and workshops (69%); internet (65%); own company (56%); and radio
(33%); followed by the industry association (22%) and among others.
Table 1: Sources of awareness about climate change
Sources of awareness
% of respondents
Newspapers
87
Television
82
Seminars, conferences and
workshops
69
Internet
65
Own company
56
Radio
33
Industry Association
22
Others sources
17
Other companies
6
Source: Begum & Pereira, 2011
3.2. Motivational Factors
In the survey, respondents were asked what factors would motivate them to actively
address the issue of climate change at their companies rather than of business
profit. Here we call these factors as motivational factors meaning that these factors
can contribute or capable to incite the corporate managers to undertake actions for
tackling climate change issues at their company. The survey presents six major
factors to be considered as motivational factors in addressing climate change issues
at the corporate level indentified from a wide range of literatures (Okereke, 2007;
Hoffman, 2006; Ko¨hler et al., 2006; Kolk and Pinkse, 2004; Nieuwenhuis et al.,
2004;Skjaerseth and Skodvin, 2003; Ko¨hler, 2003). It is common that business
community or company managers feel economic gain or profit which is the only way
to communicate the need for climate action to their employees. The survey
conducted by Okereke (2007) also found that nearly 100% of the FTSE companies
that report on climate change actions on their websites make a link between profit
and carbon management. This is why this survey exclude the profit factor as
motivational factors because it is always be there for business and obviously have a
greatest motivation to underpine business or corporate’s action for tackling climate
change issues specially for reducing carbon emissions.
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These factors might have a different level of importance to motivate the respondents
at the company level. For each factor, the respondents were asked to give their
opinion of importance of motivational factors by selecting one of four grades, namely,
Grades I–IV. Grade I indicates not important at all and Grade IV indicates most
important and the middle Grades II–III indicate important and least important to
motivate them. The survey results are summarised in Table 2.
Table 2 shows the number and percentage of respondents who gave a specific
grade to each factor. For the factor of education and awareness building, 74%
respondents indicate that education and awareness building is the most important
factor to motivate them, thus the importance of Grade IV is given where 24%
respondents considered that this factor is important to motivate, thus the importance
of Grade III is given. In addition, only 2% of the respondents considered the
importance of Grades II for least important and none of them considered of Grade I
means ‘not important at all’ to motivate them. The respondents followed the same
procedure to give the importance grade for the rest factors, which are presented in
Table 2. It should be noted that 4% respondents were perceived two factors such as
guidelines and training support; and research and development; as ‘not important at
all’ as motivational factors.
Table 2: Survey response: level of importance among motivational factors
Not
important
at all
Total
response
%
No.
%
No.
%
1
2
-
-
54
100
35
1
2
-
-
54
100
26
48
5
9
-
-
54
100
40
28
52
2
4
2
4
54
100
31
57
19
35
4
8
-
-
54
100
25
46
20
37
7
13
2
4
54
100
Least
Most
important
Important
No.
%
No.
%
No.
Education and awareness
building
40
74
13
24
Legislation and regulation
34
63
19
Financial incentives
23
43
Guidelines and training
support
22
Appropriate technology
Research and development
Factors
important
Table 3 summarises the estimated results of the weighted average and factor index
value (FIV) model. The average importance score (AIS) shows the relative levels of
importance among 54 respondents to each motivational factor. The result found that
the highest AIS is 3.72 for the factor of education and awareness building indicating
that education and awareness building is the most important factor contributing to
motivate them for addressing climate change issues. On the other hand, the lowest
AIS is 3.26 for the factor of research and development, which indicates the least
important factor contributing to motivate them. The rest of the AIS values of the
motivational factors are between 3.61 and 3.30 that show the importance level
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neither exactly most important (Grade IV) nor important (Grade III) among
motivational factors.
To examine and rank a clear and relative importance level, this study has been
calculated the ranking profile of the importance of motivational factors by using a
combined value of the weighted average and coefficient of variation. Although a
weighted average measure here AIS can be used to rank all the factors, however,
the commonly recognised weakness of using this measure is that it does not
consider the degree of variation between individual responses. In fact, a smaller
variation between individual responses can give better quality to the weighted
average value. Therefore, when two factors carry the same or very close average
values, the factor carrying smaller variation should be given a higher rank. So, the
typical technique is used to mitigate this weakness of ranking attributes by weighted
average value that is to apply a measure called the coefficient of variation, which can
be obtained through dividing the weighted average by standard deviation. That is
why this calculation considers both the weighted average and the coefficient of
variation measure for effective assessment of ranking attributes or factors. The
coefficients of variation are measured by the model of factor index value (FIV).
Table 3: Calculations of parameter values of motivational factors for RFIV
Average
Important
Score/AIS
Standard
Deviation, 
Factors
Index Value
(FIV)
Education and awareness
building
3.72
0.49
11.31
1
Legislation and regulation
3.61
0.53
10.42
2
Financial incentives
3.33
0.64
8.53
4
Guidelines and training
support
3.30
0.72
7.88
5
Appropriate technology
3.5
0.64
9.0
3
Research and development
3.26
0.83
7.19
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Factors
Rank of
Factors Index
Value (RFIV)
Table 3 shows the results of FIV and the ranks of relative importance motivational
factors (RFIV) based on FIV value. The highest FIV is 11.31 for the motivational
factor education and awareness building and the lowest FIV is 7.19 for the
motivational factor research and development. The fact is that that the ranks of the
relative importance between motivational factors did not change much by the
measures of AIS and FIV but it is fair enough to consider the ranks established by
both measures which provide an effective indication of relative importance between
6 factors in terms of motivating the respondents for tackling climate change issues of
their respective companies. The results of the ranking profile show empirical
evidence of relative importance of motivational factors and found that three factors
such as education and awareness building; legislation and regulation; and
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appropriate technology are perceived to be the most important factors to contribute
to motivate the senior managers and management officers of the companies while
the other three factors such as Financial incentives; Guidelines and training support;
and research and development are perceived as important factors that also
contribute to motivate them.
4. Discussion and Conclusion
The corporate managers surveyed in Malaysia are well aware about climate change,
demonstrating a high concerned of the issues. The main source of awareness
regarding climate change issues is the mass media, particularly newspapers and
television. Other important sources are technical meetings such as seminars,
conferences and workshops, the internet, own company and the industry
association. The implications of climate change may vary across the types of
corporate and businesses for example some businesses, individual companies and
sectors may face increasing threats, while others may be less affected and some
may even get opportunities and benefits (Begum & Pereira, 2011; Okereke, C.,
2007). The Stern review (2007) also stresses that climate change and weather
events can disrupt businesses and indirectly alter market demand and supply.
Therefore, businesses should take into account climate change impacts specially
when making long term investment decisions, as well as taking advantages of the
opportunities.
The survey also provides empirical evidence on the level of importance among the
six motivational factors from the view of corporate managers and their companies.
The most important motivational factor is education and awareness building whilst
the factor research and development is the least important that contribute to motivate
the corporate managers in addressing climate change at the company level. The
corporate managers perceived that education and awareness building; legislation
and regulation; and appropriate technology are the most important factors and
financial incentives; guidelines and training support; and research and development
are the important factors to contribute to motivate them to take climate change
actions at their company. However, better understanding of motivational factors
provides a great extent of value to the business or corporate sectors for developing
their strategies and actions in line with global and national climate change policies.
Corporate support for mitigation and adaptation measures became evident to the
initiatives and activities of reducing GHG emissions through product and process
improvements, cooperation with other companies, government and non-government
agencies to exchange technologies and expertise, and the exploration of options
such as emission trading (Kolk and Pinkse, 2004; Dunn, 2002; Rosenzweig et al.,
2002; Whittaker et al., 2003). More obviously, business or corporate sector is well
known about the adverse effect of climate change and that’s why some of the
international and multi-national companies are being proactive and pioneers in
undertaking climate activities; they would gain credibility and the leverage that
enables them to play active roles in deciding the exact direction of change (Okereke,
2007; Hoffman, 2006; Begum and Pereira, 2011). Okereke (2007) has shown an
example of Shell (2007), in its website, Shell emphasizes that it is uniquely equipped
to contribute to the development of effective climate policy both nationally and at the
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international level because of its experience in ‘‘in-house emissions trading scheme’’
and also reported that it actively supported the establishment of the European Union
Emission Trading Scheme (EU ETS) and offered valuable advice in the process. In
Malaysia, one example is the effort of YTL Corporation in building capacity of
Malaysian corporate sector with respect to disseminating information on business
strategies for managing climate change and sustainability (Tang and Yeoh, 2007).
However, such effort needs to be mainstreamed in the country. As there is a
sizeable private and corporate sector presence in Malaysia, public-private
partnership could play a significant role to the climate action that allows government
to implement climate change and green technology policies (Begum et al. 2011;
Begum and Pereira 2011). However, the survey findings could be useful in
formulating appropriate policy interventions and implementing national policies and
action plans in addressing climate change issues in Malaysia. There is also an
urgent need for further researches on corporate responses and business
approaches in identifying effective strategies and proactive practices due to the
issues of climate change in Malaysia.
5. ACKNOWLEDGEMENTS
The authors are grateful to the Malaysian International Chambers and Commerce
Industry and Federation of Malaysia Manufacturers for their assistance during data
collection. Respondents of the survey are also acknowledged for their cooperation.
The support of Tan Ching Tiong and Shahriman bin Samsudin in the research team
is gratefully acknowledged.
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