The paper "Approaches to Business Strategies for Climate Change" is a perfect example of business coursework. Companies are faced with a global situation in which their activities are directly linked with environmental issues and climate change. Almost all climate change models predict that the global mean temperature would rise by 2-5oC from pre-industrial levels to somewhere between 2030 and 2060. Some more recent studies predict temperatures to rise even beyond 5oC, which would be something that the world has not experienced since the Ice Age. The temperature rise is primarily due to greenhouse gas emissions, as much as 85percent is composed of carbon dioxide emissions (Stern Review, 2007). Besides the natural emission of carbon dioxide, human-induced emission of carbon dioxide causes most of the greenhouse gas effects, resulting in climate change.
The largest sources of carbon emission are coal, oil, and gas burnt in power plants, automobiles, and industrial facilities for the production and processing of mineral, metal, and petroleum-based products. Simultaneously, deforestation and land use for urbanization and cultivation, leading to a break in the process of carbon sequestration, by which trees and plants absorb or remove CO2, is also halted or slowed down.
Climate changes are predicted to result in a self-triggering process since it would, in turn, allow plants to soak less carbon and hence release large amounts of methane, another greenhouse gas. Besides, rising temperatures would reintensify the water cycle, thereby increase water scarcity and put the world at risk of sudden and large temperature changes and droughts (Stern Review, 2007). Besides, a rise in water levels would increase risks of floods, displacing millions of people, and destroy the animal habitat and hence the ecosystem. Environmental panels, governments, and institutions have developed a market-based solution to address climate change through a carbon trading system in which companies are provided with financial incentives to mitigate their exposure to carbon emissions.
However, many countries, including the United States, which is responsible for one-third of greenhouse gas emissions, have not adopted the market-based solution yet. Hence, there is a combination of a market-based system, which provides direct financial benefits to companies involved, as well as voluntary programs, which result in cost-saving to businesses. In this paper, I will discuss both approaches to business strategies for climate change: 1) through the market-based system in which companies can earn carbon credits, and 2) a voluntary system that reduces costs to businesses adopting innovative strategies to reduce costs on electricity, water, and waste disposal.
The latter strategy may also be directed by government regulations, like for instance in the United Kingdom. Market-based solutions to climate change Market-based policy solutions like tax or trade have been proposed to control climate change. Both environmental tax or trade contribute to public revenues of countries hence advantageous for national economies.
Various trading schemes are operational, like the European Union carbon trading scheme. The Kyoto Protocol, the 1997 international treaty that came into force in 2005, has enabled the 141 signing developed countries to put the carbon cap and trade system into practice. The United States is the only industrialized country and which accounts for one-third of greenhouse gas emissions that have not yet ratified the Kyoto Protocol. The carbon trading system provides businesses in developed countries opportunities to earn carbon credits by setting up production facilities with clean technologies.
In addition, according to the treaty, the countries that emit less than the specified quota till 2012, will be able to sell carbon credits to countries that exceed the quota. At the national or regional level, specific policies have been developed, for example, the acid rain mitigation program in the United States (Stern Review, 2007).