Greenhouse Gas Impacts & Financial Performance

This assignment examines the impact of greenhouse gas (GHG) emissions on a company's financial performance. It requires students to analyze empirical studies, particularly one by Garcia Sanchez & Prado-Lorenzo (2012), which uses various dependence models to assess the influence of GHG emissions on financial performance. Students will delve into how companies manage GHG emissions and their potential consequences for profitability and sustainability.

Contemporary Issues in Accounting
1

Acknowledgement:
I acknowledge and endorse that university`s academic misconduct policy is being understood
and followed by me. In the assignment, the ideas expressed by me are not related with other
individual`s ideas. However the ideas proposed by other individuals expressed in the assignment
are referenced in appropriate manner.
2

Contents
Introduction......................................................................................................................................4
Practical Motivation.........................................................................................................................5
Theoretical Motivation....................................................................................................................6
Literature Review............................................................................................................................7
Hypothesis.......................................................................................................................................9
Appendix........................................................................................................................................10
References......................................................................................................................................14
3

Introduction
In today’s world day to day increasing in the technology, commercial and social developments
and growing population has become a big question for protection of environment against the
corporate bodies. For causing the harm to environment whether the companies is paying the
allowance for harm of environment or they pay to go green ( Robbins , et al., 2013). In this case
study it shows that corporate bodies is mainly responsible for the carbon radiation in the
environment which harm the atmosphere. Due to this reason there is climate change all over the
world. Carbon radiation is the most harmful due to this it rise to failure in protecting the related
harmful ultra violet rays to natural environment. The meeting of the companies about the
environment through Corporate Social Responsibility mechanism, the revelation of carbon
radiation has become essential for every company. The main target of research proposal at
developing a theory for carbon radiation performance related by the companies voluntarily and
mandatorily (MCSWEENEY, 2015). In this proposal it includes the theoretical and practical
motivation for justify the issue related of research with extensive literature review and related to
carbon radiation.
4

Practical Motivation
Carbon radiation level has been increasing day to day and for the environment it has become
serious issue at international level and it cause a huge climate change and fall of atmosphere. It
has been contended that we are at leaning point in concern to change in climate. One of the
principal source of emission of carbon is organizations. For various processes such as
manufacturing of products leads to emission of carbon. Therefore, organizations have the utmost
prospective to make essential modifications so that emission of carbon could be reduced.
Escalation in regards to general concern for environment has been intended. In addition to this,
regulations for reducing emission of carbon has been increased by the government (Casper,
2010). the harmful effect of the carbon radiation on the environment it effects the business of the
corporates bodies there are most of the reasons such as adverse effect on the quality of raw
material, reduced the share price, due to change in the climatic changes it effects the availability
and supply of raw materials, decline in the value of shareholders investment etc. It is the bridge
which make the direct connection between the carbon radiation and financial performance and
growth of a company (Leonard , 2010). The pressure regrading demonstration of organization`s
commitment to minimize their contribution in context to change in climate are also increasing so
that further increase in regulation could be avoided.
5

Theoretical Motivation
The legitimacy theory research carried out formerly laid emphasis on disclosure in context to the
carbon emissions by organizations voluntarily (Ghomi & Leung, 2013). In contrast to this,
conflicting research are also there which is related with the organizations are more likely to
disclose voluntarily when their performance is effective or ineffective (Hoefnagels, 20110).
Targets are not being considered by the previous researches. In addition to this it has been
noticed that the carbon radiation has effect the performance of the corporate bodies (See, 2011).
Beside this climatic change is the important distress for international business, and it became the
important issue for the research. The research done in the previous research and merge the
conflicts to solve the problem in an efficient manner. The carbon radiation leak by the company
and it is the responsibility of shareholders to determine the actual financial performance of the
company. It is also important prove the environment efficiency (Leonard , 2010).
6

Literature Review
Greenhouse gases can be defined as such gases which trap heat in the air. Some greenhouse
gases befall certainly and go into the atmosphere because of human activities (for instance-
agriculture and burning fossil fuels0 and natural processes (like- organic matter`s
decomposition). Some of the greenhouse gases which occurs due to human activities as well as
natural processes are- Ozone (O3), Nitrous Oxide (N2O), Methane (CH4), Water vapour and
Carbon Dioxide (CO2). The release of carbon radiation make a big financial burden on the
companies and it may going to decrease in a profits to the company. It involves the cost of
monitoring, and achieved the target by the agencies and try to recover the losses from this
process (Lallanila, 2010). In addition to this it requires the involving the incentives of the agents
for achieving the targets efficiently and it also effect the performance of the company. With the
help of Legitimacy theory it clearly mention that relationship of organization`s performance,
carbon reporting and carbon performance is also attaining consideration from researchers. On the
other hand, there is an unsolved argument on whether disclosure of carbon are consistent with
organization`s carbon performance. In addition to this there are many ways which could help the
organizations in reducing the carbon radiation such as developing low carbon technology, use of
low energy radiation equipment, sharing carbon equipment for multitasking, implementing
carbon radiation management system within the business operation and procedures and setting
radiation targets for managers etc. With the help of carbon radiation reduction techniques,
companies can achieve their targets and then surplus can be sold to carbon trading market in
order to earn the profits (See, 2011). This the way by which only company financial burden is
not there it can be done by only carbon radiation.
After studying this report, it has been noticed by means of the legitimacy theory that the carbon
radiation performance of the company also create the non-financial impact on the business of the
company. This is intangible impacts which influence the financial burden. The problem of
carbon radiation can be solve out by making a reputation of the company in the trading market
and which attracts the investors and shareholders to invest and it is beneficial for the company
(Casper, 2010). The regulatory perspective, CSR policy is the effective way in developing the
better relationship of company with the government and with the local bodies. After building a
7

strong relationship it also make the reputation and goodwill of the company. In addition to this
company have to maintain the biter relationship with suppliers and customers the result of this
all the customers all over the world contributed towards for the environment protection they also
supports the company for paying the attention towards the environment.
According to (Lallanila, 2010) with the help of Legitimacy theory it is a process which helps in
maintain the relationship between the principles and agents to solve out the specific problem.
The principle find out the errors and the agents give out the solution to solve the problem by
using the Legitimacy theory. These types of problems mostly arisen in the relationship due to
difference in their goals and objectives so by the help of these legitimacy theory companies can
solve out these types of the problems. In addition to this legitimacy method can used the various
types of tactics, such as PDP aspects to solve the problem they use the theoretical model to test
the relationship between the financial and non-financial performance of the company and also
find out the solution of the carbon radiation (MCSWEENEY, 2015). The carbon radiation is term
as a principle factor by these various financial and intangible factors which affects the overall
performance of the company can be solve out through the agent, agent under this theory works as
in order to test the relationship and link connects the two variables.
According to the research proposed by (Hoefnagels, 20110), it can be assessed, that among the
242 companies of the world is the most polluting companies of US shows that they companies
having the high environment performance increase to achieve the growth in sales and
profitability. This report clearly show that financial impact of carbon radiation performance on
the company and there is no empirical evidence for the non-financial impact not found.
Legitimacy theory foresees that in context to today`s significance in relation to carbon issues, it
is not possible to intend that businesses be likely to unveil the information regarding greenhouse
gas in order to legitimate their operations (Ghomi & Leung, 2013).
8

Hypothesis
The disclosure of carbon radiation the performance of the company results in both financial and
non-financial impact on this and the growth and profit of the company is also depends on the
regular investment of the company.
H1. There is significant relationship between carbon radiation and company`s performance.
H2. As much as disclosure of carbon radiation, as much as impact on company`s financial and
non-financial aspects.
9

Appendix
The table given below depicts the annotated bibliography of some articles related with
Greenhouse Gas Performance.
Author Date Title Journal Type of
Paper
(Empiric
al or
Theoreti
cal)
If
empirical,
then,
method of
research
and
sample
If
empirica
l,
depende
nt
variables
and
independ
ent
variables
100 word
summary
of
contributi
on to the
research
question
Ric
Hoefnagel,
Septem
ber,
201o
Greenhou
se gas
footprints
of
different
biofuel
productio
n systems
Renewab
le and
Sustainab
le Energy
Reviews
Empirical The effect
of
methodolo
gical
adoptions
and
assumption
s on the
biofuel`s
life cycle
GHG
performanc
e by
providing
the results
Independ
ent
variable-
N2O
emission
Depende
nt
variable –
Conversi
on
system
The
research
question
of the
study aims
to portray
the
influence
or impact
of GHG
performan
ce.
10

for various
core
constraint
on a
constant
basis.
ROBERT
MCSWEE
NEY
2011 New
study
directly
measure
s
greenho
use
effect at
earth`s
surface.
CHGS
and
Areosols
Theoretic
al
- - This study
depicts the
effect of
greenhous
e on
surface of
earth.
Methane
as well as
carbon
dioxide
are the
gases
which are
considered
as cause of
warming.
Data from
the year
2000 to
the year
2010 was
used by
scientists
from the 2
11

sites of
USA:
northern
Alaska
and
Southern
Great
Plains.
Marc
Lallanila
2014 What Is
the
Greenhou
se Effect?
Live
Science
Theoretic
al
- - This
article
states that
approxima
tely thirty
% of the
energy is
replicated
back to
space.
Besides
this,
human
activities
are also
one of the
reason
behind the
increment
of
greenhous
e gases.
12

Isabel-
Maria,
Jose-
Manuel
2012 Greenho
use gas
emission
practices
and
financial
performa
nce
Internatio
nal
Journal
of
Climate
Change
Strategies
and
Manage
ment
Empirical Analytical
research
method is
considered
and the
sample of
the
research
are various
dependence
models
Depende
nt
Variable-
GHG
emissions
Independ
ent
Variable-
Financial
performa
nce of
companie
s
Assessme
nt of
various
dependenc
e models
has been
done so
that
variety of
impact of
GHG
emissions
on
financial
performan
ce could
be
analysed.
13

References
Kara, H., 2015. Creative Research Methods in the Social Sciences: A Practical Guide. s.l.: Policy
Press. .
Robbins , P., Hintz , . J. & A. Moore, S., 2013. Environment and Society: A Critical
Introduction. s.l.:Wiley-Blackwel.
Casper, J. K., 2010. Greenhouse Gases: Worldwide Impacts. s.l.:Infobase Publishing.
. F., 2012. Business Ethics and Corporate Governance. s.l.:Pearson Education.
Garcia Sanchez, I.-M. & Prado-Lorenzo, J.-M., 2012. Greenhouse gas emission practices and
financial performance. International Journal of Climate Change Strategies and Management,
4(3), pp. 116-254.
Ghomi , B. Z. & Leung, P., 2013. An Empirical Analysis of the Determinants of Greenhouse Gas
Voluntary Disclosure in Australia. [Online]
Available at: http://www.sciedu.ca/journal/index.php/afr/article/viewFile/2281/1403
[Accessed 30 8 2017].
Hoefnagels, R., 20110. Greenhouse gas footprints of different biofuel production systems.
Renewable and Sustainable Energy Reviews, 14(7), pp. 1661-1694.
Lallanila, M., 2010. What Is the Greenhouse Effect?. [Online]
Available at: https://www.livescience.com/37743-greenhouse-effect.html
[Accessed 26 8 2017].
Leonard , B., 2010. Economic Effects of Legislation to Reduce Greenhouse-Gas Emissions.
s.l.:DIANE Publishing.
MCSWEENEY, R., 2015. New study directly measures greenhouse effect at Earth’s surface.
[Online]
Available at: https://www.carbonbrief.org/new-study-directly-measures-greenhouse-effect-at-
earths-surface
[Accessed 27 8 2017].
14

See, M., 2011. Greenhouse Gas Emissions: Global Business Aspects. s.l.:Springer Science &
Business Media.
Tremblay , A., Varfalvy, L. & Roehm, C., 2011. Greenhouse Gas Emissions. s.l.:Springer
Scence & Business Media.
15