Business and Climate Change
§ 1.0 Introduction
Although research on climate change is quite vague about the exact degree of warming and the consequences for the natural environment, a wide range of impacts can be expected (Metz, 2011). The temperature changes and the sea level rise, this has a negative impact on food production, water availability, human health, biological environment and infrastructure in coastal areas. Vulnerability is highest in poor countries where the changes will have a devastating effect. Metz (2011) states that there is no escape from the conclusion that human beings are responsible. As a consequence, the general opinion imposes responsibility for companies to put effort in reducing their carbon emission. Several companies and industries are trying or have the intention to implement their strategy e.g. to reduce carbon emission. The company UBS is seriously active in corporate responsibility (CR) for some time. However, according to environmental specialists and senior executives at UBS, UBS lagged behind its competitors concerning their public commitment to help mitigate global warning. The working group suggested the adoption of a more progressive policy. Policy options range from stabilizing UBS’ current carbon emission, which means no CO2 reduction, to carbon neutrality, which means 100% CO2 reduction.
In line with the feelings of Marco Suter, chairman of the UBS Corporate Responsibility Committee, this paper emphasizes the importance of climate change issues for financial service companies. Since numerous corporate scandals sent shock waves through the global economy, clients, the media and financial analysts pay greater attentions to companies CR programs. Employees and executives believe that companies should contribute to the broader public good. As a consequence, numerous business opportunities emerge in the field of CR. Moreover, stakeholders’ expectations increasingly concern climate change issues. Therefore, UBS should support the most climate responsible policy option. To do so, UBS has to move beyond solely profit-oriented considerations and legal requirements. This paper addressed the following statement: UBS should take an aggressive stance on climate change, at least 40% reduction on carbon emission. In order to defend this statement, this paper first addresses the benefits of a green policy. Followed by a section how UBS should implement a green policy in order to be social responsible. Third, strategic options are presented for UBS in order to reach the target of at least 40% to reduce their carbon emission. Finally, a conclusion is provided to defend this paper’s statement.
§ 2.0 Benefits of green policy
As described by Rugman and Verbeke (1998), commitment to resources for improving environmental responsible performance will result in the development of competences and capabilities that in turn improve industrial performance. Similar, Hoffman (2005) describes how greenhouse gas (GHG) reduction can result in strategic benefits for companies. One of these benefits can be the consequence of the development of quality management (Rugman & Verbeke, 1998). This is referred to as operational improvement by Hoffman (2005) and includes optimization of supply chain logistics and energy cost reduction from transportation. UBS already attempts to reduce transportation costs by replacing business travel with videoconferencing, which reduce both energy use and operations costs.
Suter explains that it is his job to anticipate what stakeholders will expect from them in the future. These stakeholders include regulatory agencies, voluntary reduction of GHG emission beyond legal requirements can result in advantages compared to competitors. By early commitment, companies can influence on the forms of standards and compel other, less-committed competitors to follow suit (Hoffman, 2005). When UBS take a lead together with the current leading HSBC...