Climate change and sustainability strategy: MNCs performance assessment - impact of climate change on business sector

AL Ghunaim, Mashari S
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Southern New Hampshire University
Climate change poses many challenges for business operations worldwide. The study evaluated multinational companies (MNCs) and the implications of climate change on their business operational activities. Moreover, the study adopted a mixed-methods research design in a bid to evaluate sustainability strategies embraced by these business organizations purposely to counter climate change risks. Two methods were adopted for this research. First, this study utilized the quantitative method where the Natural-Resource-Based View (NRBV) concept was adopted to investigate whether companies are complying with the implementation of strategies geared towards reducing its impact on climate change compared to their competitors whose strategies are less proactive. This study also embraced, the Return on Assets (ROA) and Asset Turnover (AST) for assessment purposes given their distinctive nature as financial parameters. The criteria used to select companies for this study was based on their best practices that met the requirements of the MSCI ESG Global Indexes, like, Climate Index, Environment Index, Pollution Index, Clean Technology, and Sustainability Index. The companies for this study were selected from industries located in the United States, Japan, ٍand some European and Asian countries. Findings for the first part of the study reveals that, United States companies, the proactive MNC’s financial parameter (mean AST) was significantly lower than the less proactive MNC’s. While, in the Japanese, Europe, and the Global group samples of the proactive MNC’s, financial parameter (mean ROA) was significantly higher than less proactive MNCs. Remaining Asian group sample show, no significant differences in mean ROA or the mean AST across proactive and less proactive MNC’S. Second, the study also utilized a qualitative method where research participants shared their different experiences, viewpoints, ideas, and thoughts on climate change were sought. The methodology also entailed the selection of 108 companies to help understand the impact of climate change on business and the sustainability strategies adopted to cope climate change risks. Data collection was conducted through self-administered open-ended questions with data analyzed qualitatively and quantitatively through thematic and descriptive methods respectively. In this part it was found that slightly more than half of the subjects were awareness of on climate change while the rest had no idea on climate change or were uncertain about the concept. By contrast, about three quarters of the subjects were not aware about the difference between climate change adaptation and mitigation; a quarter of them had some knowledge on the difference while only about a tenth of them were well versed with the differences. 45.37% of the subjects agreed that their companies were proactive in climate change adaptation, 28.70% strongly in agreed, 14.81% were uncertain and 10.19% disagreed. Only 1.85% of the subjects strongly disagreed. Moreover, 60.19% of the subjects disagreed that climate change affects business while 40.74% supported the idea. 56% of the companies did not have the climate change adaptation plan versus 44% that had. Additionally, 72.22% of the companies did not have the sustainability strategy for climate change versus 27.78% that had. Regarding knowledge sharing on mitigation and adaptation with partners, slightly more than one third of the companies shared their knowledge with partners compared to slightly more than half of the companies that did not. The study recommended future research to explore on factors contributing to this practice in order to facilitate effective climate change management. (Author abstract)