Essay Sample on Climate Change and Business Success: Examining the Link

Introduction

The economy of the world has been supported by different types of businesses that have been developed in the past few years. The revenue that has been earned from these businesses has played an important role in economic development. However, the success of these businesses can be affected by certain issues. According to Okereke, Wittneben, and Bowen (2012), one of the major issues that may affect the success of the business is climate change. Therefore, this paper will look at the significant sustainable development issue of climate change that is affecting the business sector by identifying the sustainability issues, the business interface as well as the future implications.

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Sustainability Issue

One of the sustainable development issues of climate change that can affect the business sector is the change in resource availability and cost (Winn, Kirchgeorg & Griffiths, 2011). Most businesses, especially industries, rely on various raw materials to produce their goods. There has to be a constant supply of these raw materials for these businesses to operate effectively (Linnenluecke & Griffiths, 2013).

Climate change has generally contributed to the availability of the raw materials, as well as the cost. In most cases, extreme weather conditions have led to the scarcity of resources. The few resources that are found are available at a high cost (Linnenluecke & Griffiths, 2013). The main effect of this issue is that it has led to the increased cost of products, which has eventually led to the high cost of living.

Various key events have defined these issues to date. According to Tyler and Chivaka (2011), one of these events is the change in recent extreme weather conditions. Extreme weather conditions such as severe drought have led to a shortage of crops that can be used to produce foods and other products. Moreover, the change in weather patterns has led to the disruption of the transport systems, especially roads (Tyler & Chivaka, 2011). This factor has made it the cost of transportation of raw materials high.

Another event that has defined this issue is strict regulations. Strict regulations have been enacted to contain climate change. Due to the strict regulations, it has become difficult to access some of the raw materials, thus raising the cost (Linnenluecke & Griffiths, 2013).

Other companies have been driven to use alternative sources of raw materials as well as recycling waste. In the past few years, this issue has been growing steadily (Tyler & Chivaka, 2011). Currently, the state of the issue has become large in that 70% of the industries have been affected.

Moreover, the matter has evolved from a national level to international (Linnenluecke & Griffiths, 2013). Climate change is taking place all over the globe, and this means that every country is affected by the issue related to it. This matter has prompted the development of global agreements to tame it.

Business Interface

They are various instance of the interactions of business concerning this issue. An example of an industry that has a close interaction with this issue is the food production industries. On the one hand, the business has contributed to this issue. Most businesses have led to increased climate change (Galbreath, 2011).

For example, industries released poisonous gases into the atmosphere, which slowly eats the Ozone layer. Also, most businesses have cleared trees in the name of expansion, and this has led to deforestation, leaving the ecosystem in a state of imbalance (Linnenluecke & Griffiths, 2013). In this case, the crops that are used to produce different products find it hard to survive in these situations.

On the other hand, the business has been affected by this issue. One of the ways that the business has been affected by the issue is financial constraints. Since businesses cannot access their usual resources at a normal rate because they are few, they have been forces to dig deeper into their pockets to get more cash that would be used to get these materials (Scott & Becken, 2010). As a result of this issue, the cost of production has gone as the businesses deal with this issue.

Even though the presence of this problem has been challenging for the business, there have been many ways that can be used for survival. One of the ways that the business has used to respond to this matter is by seeking alternative resources (Eleftheriadis, 2015). The alternative resources have been achieved mainly through recycles of waste materials.

The second way that the business has responded to this issue is by increasing the cost of the products. Since the cost of production has gone, the business increased the cost of its products to be able to recover the amount that was incurred while producing the products. The third way that the business has responded to this issue is sourcing these resources locally.

Some of the resources needs in the food industry have to be sourced from international markets. Since climate change has led to the scarcity of resources, the cost of transportation is bound to go up. Most businesses have opted to get their materials from the local market to avoid the cost that comes along with importing from other nations.

Future Implications

Every that happens at the moment is bound to have certain effects in the future, especially in the field of business (Graff Zivin & Neidell, 2014). One of the current trends that are associated with this issue is the pressure from the customers. Customers are main element who help a business to succeed as they purchase the products. Inadequate of raw materials has led to the increased cost of good as businesses strive to maintain the cost of production (Marshall, 2010).

This matter attracted a lot of pressure from the customers because they are the ones who are the most affected since they are forced to spend a lot of money to acquire these goods. Succumbing to the pressure of the consumers means that the business may experience huge losses (Linnenluecke & Griffiths, 2013). Therefore, the prices of the products have to be maintained. However, high prices threaten the business since the number of customers will reduce.

Apart from the pressure of the consumers, there are also the shareholders in every business. Shareholders play an important role within a business because they benefit from it (Linnenluecke & Griffiths, 2013). The main pressure that is achieved from the shareholders is not to reduce the cost of goods (Yang, Tseng & Chen, 2012). Most shareholders prefer the cost of a good to be higher to recover the cost of production, as this means that their benefits will be high (Marshall, 2010).

The future response to this issue would be to take part in activities that would reduce climate change (Linnenluecke & Griffiths, 2013). Some of these activities include planting trees that would reduce the rate of carbon monoxide in the atmosphere, thus slowing the destruction of the Ozone layer.

The other activity is to treat industrial waste before being emitted into the environment (Graff Zivin & Neidell, 2014). The emitted waste will be less harmful; therefore, it will not harm the environment, and this means it will be conserved (Graff Zivin & Neidell, 2014). Conservation of the environment plays an important role towards reducing climate change.

The continued presence of this issue will ultimately have various implications on the business Graff Zivin & Neidell, 2014). The main implication that this matter would have on a business is that eventually, they may be forced to shut down their operations. The cost of production, which causes the business to increase the prices of products, may discourage the customers (Marshall, 2010).

These customers will cease purchasing the products from the industry, meaning that the revenue will go down. Declining revenue means that the business will be experiencing losses. The continued losses will lead to the eventual closure of the business.

Conclusion

Concluding, it is evident that business is one of the main activities that has led to massive economic growth in the world. It is through business that human beings have been able to access various items or goods that they need daily. However, businesses are being faced with various issues making it hard for them to thrive. One of the issue that has led to certain challenges in business is climate change. Climate change has led to the scarcity of resources as well as the cost. An example of a business that has been affected by this issue is the food production industry. Climate change has led to harsh weather conditions, which has made it difficult for food crops to survive. This issue has led to the scarcity of resources required making businesses spend a lot of money on the available resources. Due to the presence of this problem, the cost of production has gone up, thus affecting the cost of the products as many companies strive to recover the cost used in production. It is recommended that strong measures should be taken to deal with this issue; otherwise, it would lead to the closure of many businesses.

References

Eleftheriadis, I. M., & Anagnostopoulou, E. G. (2015). Relationship between corporate climatechange disclosures and firm factors. Business Strategy and the Environment, 24(8), 780-789. https://onlinelibrary.wiley.com/doi/abs/10.1002/bse.1845

Galbreath, J. (2011). To what extent is business responding to climate change? Evidence from aglobal wine producer. Journal of Business Ethics, 104(3), 421-432.https://link.springer.com/article/10.1007/s10551-011-0919-5

Graff Zivin, J., & Neidell, M. (2014). Temperature and the allocation of time: Implications forclimate change. Journal of Labor Economics, 32(1), 1-26.https://www.journals.uchicago.edu/doi/abs/10.1086/671766

Linnenluecke, M. K., Griffiths, A., & Winn, M. I. (2013). Firm and industry adaptation toclimate change: a review of climate adaptation studies in the business and managementfield. Wiley Interdisciplinary Reviews: Climate Change, 4(5), 397-416.https://onlinelibrary.wiley.com/doi/abs/10.1002/wcc.214

Marshall, N. A. (2010). Understanding social resilience to climate variability in primaryenterprises and industries. Global Environmental Change, 20(1), 36-43.https://www.sciencedirect.com/science/article/pii/S0959378009000880

Okereke, C., Wittneben, B., & Bowen, F. (2012). Climate change: Challenging business, transforming politics. Business & Society, 51(1), 7-30.https://journals.sagepub.com/doi/abs/10.1177/0007650311427659?casa_token=VmWW3kBEy4EAAAAA:w94KZY5_MUcZZeVYWImRzPgSuQj2SPlNJJhQ6M4VA8sREa0H_eOmBKrMZOtLstVKl-At-HmXCI-BMfo

Scott, D., & Becken, S. (2010). Adapting to climate change and climate policy: Progress,problems, and potentials. Journal of Sustainable Tourism, 18(3), 283-295.https://www.tandfonline.com/doi/abs/10.1080/09669581003668540

Tyler, E., & Chivaka, R. (2011). The use of real options valuation methodology in enhancing theunderstanding of the impact of climate change on companies. Business Strategy and theEnvironment, 20(1), 55-70. https://onlinelibrary.wiley.com/doi/abs/10.1002/bse.668

Winn, M., Kirchgeorg, M., Griffiths, A., Linnenluecke, M. K., & Gunther, E. (2011). Impacts ofclimate change on organizations: a conceptual foundation. Business strategy and theenvironment, 20(3), 157-173. https://onlinelibrary.wiley.com/doi/abs/10.1002/bse.679

Yang, C. H., Tseng, Y. H. & Chen, C. P. (2012). Environmental regulations, induced R&D, andproductivity: Evidence from Taiwan's manufacturing industries. Resource and EnergyEconomics, 34(4), 514-532.https://www.sciencedirect.com/science/article/pii/S0928765512000292