5. Multi-criteria Decision Aid (MCDA)
6.7 Summary of Findings
The general finding is that climate change response varies significantly between the two companies although they are operating within the same jurisdiction. The main factors affecting corporate climate change response suggested by previous research (Whittaker, 2004; van der Woerd et al., 2000) are also applicable, such as the regulatory pressure in the particular industry, stakeholder demands and pressures, a firm‘s market positioning, financial and economic stability of the company, accessibility to alternative technologies and organisational and institutional differences such as the entrepreneurial flair of the organisation, or the dispositions of the executive managers within the business. Other company specific factors such as internal climate change response expertise, corporate histories of the companies, corporate culture, degree of centralisation and particularly the management styles of the key decision makers, explain the variations in the timing, pace and types (Kolk & Levy, 2001) of climate change response initiatives being adopted by the two companies.
Although there are significant differences which can be traced to industry differences, this study shows that industry differences are just one of the factors informing corporate responses to climate change. These will be explored fully in this discussion portion of this thesis, but as Kolk and Levy (2001:502) observed, ―Company strategies can only be explained from a combination of distinct traditions, backgrounds and idiosyncrasies.‖
Cost savings, business opportunities, management commitment and compliance with existing or pending regulations are identified as the most important motivators and drivers to respond to climate change. Operational efficiency and cost savings are seen as the major benefits for the businesses to respond to climate change. But organisational legitimacy in terms of maintaining or building brand reputation is important to both companies. Lack of policy clarity and the immaturity of climate change legislation in South Africa were cited as major barriers to response. This was followed closely by the lack of financial resources to tackle the climate change challenge. Financial prudence is a key area of attention - particularly given the world economic recession and the continued uncertainties in the PIGS (Portugal, Ireland, Greece, and Spain) countries. Technologies are also still seen as expensive, which is slowing down the rate of replacement of legacy systems with more environmental friendly systems and technologies.
Both companies have a general understanding that climate change is impacting the way they do business. There is, however, varying levels of understanding of the climate change risks and opportunities among different executives within the same company. There are also varying opinions concerning what is motivating their respective businesses to respond the way they are.
Neither of the two companies is actively legal and regulatory policy and outcomes. This is a surprising finding in view of the fact that climate change legislation is still very much in its infancy in South Africa, with the South Africa National Climate Change Response Strategy having only been published in September 2011, leaving many opportunities for both companies to play leading influencing roles. There is still lack of clarity in terms of the impact of different aspects of this strategy, with businesses still awaiting policy direction and clarity in terms implementation. For example, renewable feed-in-tariffs were gazetted in early 2010, revised later that year and finally withdrawn in 2011, leaving companies planning to venture into renewable energy generation in suspense.
The physical risks of climate change were not seen as a key phenomenon by both companies, but Tongaat Hulett expressed a serious need to actively and proactively monitor water availability, given that South Africa is a water-constrained country and Tongaat Hulett is in the agro-processing industry. Because Tongaat Hulett‘s operations are mostly based in the eastern parts of South Africa which has been positively impacted by changing rainfall and weather patterns (Collier et al., 2008), the climatic variations have actually worked in their favour by increasing their crop yields (MD: Tongaat Starch). The issue of water is very salient in ATNS being in the service sector with a low-water footprint. Other weather-related business impacts were not mentioned as these were expected to be long-term issues that would impact everyone else on planet earth.
Both companies emphasised the business opportunities that climate change is presenting. There were key competitive drivers that both companies were exploiting or seeking to exploit, including opportunities to be more efficient, thereby increasing economic sustainability. They were also looking at ways to generate more revenues through the sales of waste and other by- products and other process innovations. Tongaat Hulett is considering an opportunity for new revenues as a result of innovative breakthroughs in the reuse of production process by-
products. Both companies saw opportunities to build and enhance their brands through partnerships with supply chain, value chain and industry partners, and the communities in which they operate. The opportunities for technological advancements and developments were emphasised in ATNS, largely due to requirements and expressions of interests from their customers in the airline industry and also as a result of the drive for climate change response in the aviation industry being driven by the world aviation governing bodies, such as IATA, ICAO, and the Civil Air Navigation Services Organisation (CANSO). By working closely with airlines and aircraft manufacturers, ATNS sees great opportunities for technological breakthroughs in flight practices that have significant fuel savings, and consequently significantly reduced carbon emissions.
Within both companies, some executives expressed their firm belief in the concept of good corporate and earth-citizenship, noting that each business doing their part to reduce the earth‘s overall carbon emissions was the right thing to do. They however stated that this was still an aspirational goal which both organisations are working towards.
Overall, economic motivations are still the dominant drivers for corporate climate change response. Financial and strategic benefits such as image and reputation, organisational legitimacy and industry leadership are key motivators for corporate action.
7 Analysis and Discussions
7.1 Business Risks Driven by Climate Change