Impact of Global Warming on Business and Environment

This article discusses the impact of global warming on businesses and the environment. It covers the effects of climate change on supply chains, financial reporting, and regulatory obligations. It also explores the measures taken by governments and businesses to mitigate the effects of global warming.

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Accounting theory
Global Warming

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The global warming also referred to as the climate change which is observed in the
Earth’s Climate system and its related effects. The current increase in the temperature of the
Earth’s surface as well as its atmosphere is called as the global warming. Average temperature
around the world has risen by 0.75C over the last 100 years. Mostly it has been observed that
about two thirds of this increase has occurred since the year 1975. The average temperature
changed and the activities such as burning of the fossil fuels and the deforestation are the key
drivers in the occurrence of the global warming (Whats your impact, 2018).
Climate change is an imperative change in the statistical distribution of the pattern of the
weather which ranges from decades to million years. The extreme climate such as the global
warming, floods, hurricanes earthquakes and a lot more are the superior sources that affect the
business with greater force (Novy-Marx, 2014). What other things that are affected in the
business are the firm’s reputation, legal responsibilities, regulatory obligation, reporting of the
financial statements, and also supply chains can be affected drastically. Climate change is
basically dependent in two situations. First the natural changes like flood, soil erosion landslide,
rainfall and a lot more. Second the artificial changes like manufacturing industries which are the
causing a lot of pollution and wastage form the various industries. Businesses that are there for
the long term purposes and which are dependent on the long term investment are likely to have
an adverse impact such as for example in case of Nepal, due to the high temperature and the
humidity there was a discomfort faced by the employees and they were not able to work due to
suffocation and heat. The global warming resulted into landslides and soil erosion (Chandler,
2018). Looking out the tourism business global warming affects the ecosystem services and it
affects the business in such a way that the agriculture products are damaged and the fisheries are
affected. The company which is engaged in the business of the energy production and the

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intensive sectors need to reduce the carbon emission level which in fact gives the boost to the
additional global warming. This in turn is a heavy capital expenditure for the company (Burke,
Hsiang & Miguel, 2015).
The impact on the environment is relatively different from that on the business. On an
average the precipitation has increased globally over the last century in almost all the areas of the
world. In other words, regions which are dry at present will in general become even drier, while
regions that are currently wet will in general become even wetter (Moore & Diaz, 2015). The
temperature over the ocean has been increased suddenly and on the hand the glaciers are melting
which ultimately gives rise to the increase in temperature. Moreover the human activities have
also contributed in a major way such as burning of the fossil fuels and increases the GHGs in the
atmosphere. Another human influence is the emission of the Sulfur dioxide which is the drivers
of the formation of the sulfate aerosols in the atmosphere.
The environmental issues are nowadays becoming quite severe because of increasing
impact of industrialization and urbanization. These issues have demanded significant attention
across the world due to their adverse impacts. Waste disposal, climate change, pollution are few
of those environmental challenges that are commonly faced by various constituents of the eco-
system (Gov.UK, 2015). In the recent era, different institutions have been developed to address
the environmental matters. Also, economic instruments and approaches have been introduced by
the governmental bodies for the business organizations so as to protect the environment by
promoting the ways of clean production. Further, many environmental and legal regulations have
been brought in existence to control those activities of various industries that directly or
indirectly contributes to environmental destruction.

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The World Bank Group functions with the developing countries together with the
development partner in order to mitigate the problem of environmental pollution which is caused
due to the enormous number of business activities and operations. The bank has recently
approved the loans in financial years 2015 and 2016, of more than dollar 2.1 billion for the
advancement of activities and techniques that could control the emission of toxic elements, by
various business organizations, in the open air and also the disposal of waste water from their
factories in the open environment. These loans were granted to the business industries with the
aim of improving the air and water quality in the environment (Gov.UK, 2015).
The Australian government has introduced several policies that encourage the business
industries to effectively utilize the natural resources from the environment. The government has
recently funded the Waste And Resource Action Programmer which is intended to provide
assistance and guidance to different business organizations to consume raw materials, water as
well as energy resources in the most effective and efficient manner. The UK government has also
encouraged the introduction of such tools and techniques for the use by business firms that can
help them to produce such products which are eco-friendly. They have introduced environmental
management systems and other tools that can facilitate reporting by the business firm on the
emission of greenhouse gas (The world bank, 2018).
Further, the UK government has introduced a concept of carbon footprints data
publishing which contains the information the carbon emission caused by a particular
organization or the product and thereby enabling the consumers to take informed decisions while
selecting the business organizations to purchase products and services for the consumption.

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Furthermore, the environmental agencies across the world have formulated stringent laws to stop
the business organizations to take up such business practices that harm the environment severely.
During 2012-13, government has terminated around 1279 illegitimate business sites of
operations and also dealt with around 107 incidents that involved illegal dumping by business
entities (Gov.UK, 2015).
Moreover, the two major regulatory approaches that have been used by the governmental
agencies to minimize the impact of business operations on disruption on environment are
discussed further. Firstly, the technology standard which has mandated the use of such
production processes or technologies that can control the pollution. The business firms are
mandated to use such processes in order to meet the emission standards so that they can survive
smoothly in the industry. Secondly, the formulation of performance based standards (The world
bank, 2018).
The use of U.S. Environmental protection agency has, at times, has completely banned or
phased out the consumption or production of any specific product or pollutant such as banning
chlorofluorocarbons as well as certain pesticides. The governmental agencies have formulated
various uniform or variable environmental policies for different business industries depending
upon the size of entities, production processes and other factors related to such entities. There is
various emission trading programmers initiated by the governmental agencies (Ingram, Hall &
Knight, 2018).
In addition, the government has also adopted various market based approaches to curb the
business practice that causes heavy pollution in the environment. These approaches are:
marketable permit systems, imposition of emission taxes, fees as well as charges, granting of

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various subsidies. The imposition of taxes and charges are one of those widely prevailing
initiatives by the governmental bodies that involves placing of monetary charges on pollution
emission or waste disposal practices of business organizations. The Marketable Permit Systems
such as Emission Reduction Credits and Crapped Allowance Systems, voluntary carbon trading
schemes, Acid rain Program are few examples of US governmental bodies to reduce the
emission of toxic gases in environment.
Environmental laws and rules can stimulate the innovation in the enterprises and the
regulation leading to the cost savings that match or either exceeds the cost of the compliance
with the environment (Karl, et al 2018). The profitability of the business is achieved through the
two ways majorly. The first way is the generation of the revenue through the normal sales and
secondly through the goodwill an brand value of the company. In such a scenario if the
implication has been imposed by the government the profitability of the organization will be
affected severely in the short term but if the concept is overviewed in terms of the longer
investment purpose it will give strength to the company to sustain itself and to fulfill its
corporate social responsibility.
In case of the short term the company might lose a part and the effects can be subsidized.
For example the installation of the pollution control equipment, the company needs to afford the
heavy costs of the installation as well as the maintenance. The benefits of the environmental
regulation often outweigh the costs. The costs of the environmental regulations need to be
outweighed. For example the Clean Air Act in the United States is the major magnitude of the
environment rather than the employment costs. The governmental regulations marginally affect
the competition and the profitability (Dechezleprêtre., 2016). The strengthening of the

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environment often demands some cost value. The impact may not increase immediately but the
same will be reflected in the future years.
The effects of a carbon tax on the U.S. economy would depend on how the revenues from
the tax were used. Options include using the revenues to reduce budget deficits, to decrease
existing marginal tax rates or to offset the costs that a carbon tax would impose on certain groups
of people (Global response to climate change, 2014). Driving retailers are as of now breaking
down the impacts of environmental change on generation supply chains, for example, farming.
Since the present hazard models depend on past information, protection premiums may end up
unreasonably expensive in a few areas as climate extremes turn out to be less unsurprising
In order to estimate the effect of sulfur dioxide emission restrictions on the rate of
productivity growth in the electric power industry, the company develops the variable measures
that regulate the intensity (Reasearch gate, (2017). The profitability of the business is achieved
through the two ways majorly. The first way is the generation of the revenue through the normal
sales and secondly through the goodwill and brand value of the company The idea to increase
shifts the cost functions upwards, implying a change in the input mix. The cost function in this
case is also estimated with econometric methods.
The power plants that have been installed and by default regulated by the government are
going to affect the budget of the company and it may help the environment yet now the EPA has
finalized new rules, or standards, that will reduce carbon emissions from power plants and the
company can retain the profitability along with the follow up of the corporate social
responsibility (Rassier, 2015).

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From the above analysis it can be concluded that it is the core responsibility of the
individual as well as the companies to keep a track of their activities and the implications of the
policies. The environment is not a responsibility of a single person or the organization. It is
required by every company to follow the corporate social responsibility towards the environment
as well as the business. The responsibility to reduce the carbon and sulfur dioxide and to install
the geo thermal technology and mainly to follow the rules imposed by the government in relation
to cope up with the global warming is going to save the company. The invention of the low cost
Nano technology can also be helpful in arriving at this common objective. Therefore it can be
assured that if following the steps rigorously the company will be able to lower down the effect
of the global warming and the business would be able to maximize the profitability and the
goodwill of the company will also be sustained. The company in the long term will be benefitted
and can sustain among the competitors.

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References
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economic production. Nature, 527(7577), 235.
Chandler, W. (2018). Energy and Environment in the Transition Economies: Between Cold War
and Global Warming. California: Routledge.
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and-the-environment/2010-to-2015-government-policy-business-and-the-environment
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Water Use of a Model Greenhouse Production System for 11.4-cm Annual Plants Using
Life Cycle Assessment. HortScience, 53(4), 441-444.
Karl, T. R., Arguez, A., Huang, B., Lawrimore, J. H., McMahon, J. R., Menne, M. J., ... &
Zhang, H. M. (2015). Possible artifacts of data biases in the recent global surface
warming hiatus. Science, aaa5632.
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Retrieved from https://www.sciencedirect.com/science/article/pii/S0921800915000580

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Reasearch gate, (2017). How has global warming/climate change has affected the international
business sector. Retrieved from
https://www.researchgate.net/post/How_has_global_warming_climate_change_has_affec
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