The Role of Corporate Governance in Addressing Climate Change

This report examines the intricate relationship between corporate governance and climate change, particularly within the context of Australia. It elucidates how corporate activities, such as the extraction and utilization of fossil fuels and excessive electricity consumption, significantly contribute to environmental degradation and pose a threat to human existence. The paper delves into the ethical dimensions of corporate governance, exploring environmental ethics and the responsibilities of businesses in mitigating climate change. It highlights the adverse consequences of climatic shifts, including rising sea levels, damage to infrastructure, and the impact on agriculture, fisheries, and human health. Furthermore, the report assesses the role of the Australian government and corporations in addressing these issues, while also presenting examples of organizations that are adopting sustainable practices and investing in renewable energy sources. The report underscores the urgency for corporate governance to adopt stringent environmental standards and promote practices that foster a more sustainable future.

Running head: GOVERNANCE IN A GLOBALISATION WORLD
GOVERNANCE IN A GLOBALISATION WORLD
Name of the Student
Name of the University
Author note

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1. In this paper, we are going to discuss about one of the aspects of corporate
governance. Corporate governance is a set of rules, processes and practices by which
an organisation is controlled and directed (Harford, Mansi and Maxwell 2012). This
paper will explain how corporate governance has a direct impact on climatic change.
Climatic change is happening at an unexpected rate. It could be an existential threat in
future to humanity. This paper researches about how corporate government is
responsible for the climatic change (Cogan 2006). Climatic change not only affect the
living beings but it also affects the non-living beings. Climatic change is occurring
due to the misuse or overuse of resources like fossil fuels, electricity by the corporate
sectors. Australia is one of the largest crude oil extracting country in the world and the
excessive extracting of crude oil is not only reducing the level of natural fuels but it
also creating some serious environmental problems. The change in climatic conditions
due to corporate government activities is responsible for acid rain, which destroys the
building and monuments. The climatic change also affecting the marine life by
melting the glaciers and are destroying their natural habitat. The climatic change is
creating natural deforestation, which is affecting the wildlife and destroying the
ecosystem. Climatic change is highly responsible for diseases like heat stroke,
cardiovascular diseases and respiratory problems. The excessive use of electricity is
increasing day by day and it will be right to say that the corporate organisation is
misusing the electricity and that can be a big threat in future. Australia is generally
considered as one of the highest emitter of carbon and it is leading towards the
destruction of human race. Many organisation is working to implement the proper
environmental standards and are looking for better solutions to consume less energy.
Organisations like Hewlett-Packard are working on IT solutions that will consume
less energy and will reduce the emission of greenhouse gases. Safeway is investing a

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lot of money in solar energy to reduce the use of electricity. Many organisations are
providing pick and drop facility, which reduces the use of individual’s cars. Corporate
sector should understand the effect of polluting the environmental would cause a
devastating and life threatening damage to the environment and should stop or reduce
the issue as soon as possible.

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2. Ethics theory
Corporate governance has many different theories like stakeholder theory,
stewardship theory, agency theory, political theory, resource dependency theory and
transactional cost theory. Apart from these fundamental theories, there are some ethical
theories as well. Ethical theory deals with business ethics, environmental ethics, discourse
ethics and feminist ethics theories. The environmental theory relates to the environmental
guidelines that are necessary to maintain good environmental condition for the society. There
have been many reports about the smog effect in the environment, which is unhealthy, and
people are facing problem in breathing. Due to this and other environmental issues,
government has come up with this theory. The issue, which is raised in this paper directly,
relates to this ethics theory.
Climatic change is increasing day by day and it is becoming an existential threat for
human being, a threat that may cause permanent negative consequences, which may not be
reversible, this may cause due to the use of fossil fuels. This is a major concern for Australia
as the country is highly exposed to the use fossil fuel (Sarr 2018). Apart from this Australia is
one of the largest emitter of carbon. Australia is among one of the country, which is creating
a dangerous environment for human existence. The issue, which is raised in this paper
directly, relates to this ethics theory.
The climatic change will cause a devastating social and economical impact if the
policy of the corporate organisation is not reversed. The adverse effect of climatic change
can be seen already for example the unexpected hurricane season that happened in Atlantic,
the sudden bushfire in California during the winters, rising temperature in many places of
South Asia and rapid melting of ice due to rising temperature in the Arctic. The impact of the

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climatic change can be worst but it can be prevented if emergency action is taken by the
corporate society.
Leaders of different organisation are shocked to see how the community’s are losing
faith and trust towards their activities. The excessive use of fossil fuels like crude oil and
natural liquefied gas in Australia by the corporate sector is becoming a future threat for
Australian people (Hinkley et al. 2017). Apart from this many corporate organisation does
not follow the proper environmental rules and regulations that is affecting the weather change
in Australia. Australian government is also responsible to quite an extent, as they have not
imposed strict policies to reduce the air pollution. Australia’s petrol standard is one of the
lowest among many countries as it contains an excessive amount of sulphur, which is
recorded as 15 times more than the actual limit of sulphur content (Chee, Melisa and Dong
2017). The excessive use of vehicle by the corporate sector people is also creating an
environmental issue as the excessive use of vehicles emits the harmful nitric oxide (NOx)
gasses. According to past researches, corporate business has a huge contribution in emitting
the harmful global greenhouse gases to the environment (Ross 2017). According to reports
published by Climatecorp.eu (2018), 2017 is recorded as one of the hottest year in Australia.
The excessive power use by the Australian corporate sector is another reason of concern. The
excessive use of electricity in the corporate business is another reason why people are losing
faith from the corporate governance. Due to theclimatic, change the energy infrastructure like
nuclear power plants, which is built along the sea coasts are also in danger due to the rising
sea levels, flood, and higher intensity of climatic outburst.The leaders of the corporate
business should bring some changes in the law that ensures that the manufacturing process
does not affect the environment.
Corporate leaders should understand the misuse or excessive use of natural fossil fuels
will not only create a shortage in future but also it will create lots of environmental damage.

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Corporate governance of Australia should impose some rules and regulations that will control
the use of natural resources and will help in reducing the pollution created by this
organization. Corporate organizations should use recyclable material to make their products,
which will help in keeping the cities clean (Vildåsen and Havenvis 2018). Shareholders of the
company should examine the manufacturing process whether they are meeting the
manufacturing standards before investing in that organization. The use of pool cars by
corporate employee will reduce the emission of harmful nitrogen oxide (Nox) gases (Kacem
et al. 2018). Australian government should also impose some environmental standards
regarding the sulfur content in the petrol. The increase of temperature cannot be stopped
immediately but it can be stopped in long run if the organization follows the safety standards
of air filters.
There are many organization who working on the safety standards of the environment
and bringing new techniques which will not degrade the environmental conditions. Hewlett-
Packard (HP), renowned software and computers making company has been working on
energy efficiency for a decade. HP is now working on delivering IT solutions that helps in
reducing the emission of GHG gases. HP also launched some technology that uses solar
energy instead ofelectricity. Tesco planned to spend a hefty amount of $613m in next five
years to decrease the use of energy consumption (Swaffield, Evans & Welch 2018). To
implement low energy consumption technology Tesco invested $105million, which includes
lighting with lesser consumption of electricity, efficient energy consumption bakery ovens. In
2005, a company named Safeway started using renewable energy. Safeway is currently
working on solar projects in California. It is expected that this project will give a solar energy
of 7500MWh per year (Bandyopadhyay and Desai 2017). The company planned to supply
solar energy to 40 stores. Safeway also announced to purchase renewable wind energy of
90M kWh that is enough to power 300 fuel stations.

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3. The issues are of importance to the public due to these reasons:
 Rising sea levels: According to Nationalgeographic.com (2018), the Global Mean
Sealevel has increased by 10-20 centimeters. The excessive burning of natural fuels
like woods, fossil fuels released a huge amount of gases that melted a large portion of
arctic ice and resulted in increase of sea levels. The rising sea level cause flooding,
contamination of agricultural soil, soil depletion and it also affects the coastal habitats
(Hu and Bates 2018).
 Effects on city monuments and buildings:Excessive use of fossil fuels emits harmful
gases like sulfur dioxide. When this gas reacts with the atmosphere, it causes Acid
rain. Acid rain when is exposed tomarble or limestone it creates a chemical reaction.
The acidrain has a corrosive effect on the buildings and monuments, which cause a
permanent damage to the structures (Gibeaux et al. 2018). Effects on agriculture, fisheries and forestry:The climatic change also increased the
drought frequency in Australia, which severely affects the agricultural production.
Rising temperature affects the livestock and reduces their reproductive rates and
productivity. Climate change also increases the frequency of wildfire and storms.
Flood caused by rising sea level cause soil eruption, which affects the roots of the
trees and cause natural deforestation. The fisheries are also being affected due to the
acid rain when it mixes with the natural reservoir (Taghizadeh-Toosi et al. 2018).
 Decrease in water resources: Australia has a very low rainfall and it varies from time
to time. According to Department of the Environment and Energy(2018), rainfall over
southern Australia has decreased at a huge amount. In the continental region, the
rainfall has decreased by 11% in between 1996-2015. The decrease in rainfall during
the agricultural season has affected Australia’s economy as well (Cooper 2017).

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 Health related issues: Due to rising temperature, human health is getting affected.
Heat stroke is one of the common causes of death in Australia, which caused due to
rising temperature. Apart from this the harmful GHG gases causes respiratory disease
in Australia. In rural areas, reduced mental health is evident which is caused by
drought. Many water-borne diseases like diarrhea are highly sensitive to climatic
change. Climatic change increases the transmission of diseases like dengue and
malaria. Heat stress increases the chance of respiratory, renal and cardiovascular
diseases. Heat stress can also cause some serious mental and physical issues (Hines
and Balistreri 2017).
 Melting of Glaciers: Rise in temperature is making the glaciers melt at a rapid rate.
Due to the melting of the glaciers, many species are losing their natural habitat for
example Polar bear, Seals and Penguins. Apart from this melting of glaciers is also
increasing the sea level (Rehnus et al. 2018).
 Malnutrition/under nutrition: Climatic change also decreases the agricultural yield
and destroys the marine life, which resulted to malnutrition and under nutrition.
Drought is another reason behind the malnutrition.

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4. From the above discussion, it can be concluded that people in Australia is losing trust
in Corporate Governance due to their excessive use of fossil fuels. Australia is one of
the largest carbon emission countries in the world (Luque-Ayala, Marvin and
Bulkeley 2018). Corporate governance means directing and controlling the
organisation within some specific rules, processes and practices. Corporate
governance is needed to balance the interests of customers, shareholders, community
and the government. In this paper, we have discussed about the climatic issues caused
by corporate governance. Corporate governance of Australia is in a big threat as they
are responsible for degrading the environmental conditions. The extraction of crude
oils and the natural gases in huge quantity is degrading the environment and creating
an existential threat for future.The overuse of electricity by the corporate sector can
cause a major threat in future. Many renowned organisations in Australia are not
using the standard environmental rules, which is responsible for rising temperature in
the environment. Researchers have proved that Australian corporate governance is
hugely responsible for the emission of greenhouse gases. Australia’s petrol standard is
of low quality with a high amount of sulphur content, which is responsible for many
emitting harmful gases like nitrogen oxide. The causes of polluting the environment
can be seenby the rise in temperature. This has a negative impact on human life,
marine life and on agriculture. Due to rise in temperature, the heat stress is a very
common phenomenon in Australia. The air pollution due to the industrial activities
causes cardiovascular and respiratory diseases to the people of Australia. Increasing
level of sea level is directly connected to the increasing level of temperature. Due to
this increasing level of sea level, marine life is getting affected and they are losing
their natural habitat and are forced to move on different location. Another
consequence of rising sea level is flood. Due to flood, the depletion of top most soil is

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very common which causes natural deforestation. The frequency of wildfire and storm
has also increased in last few years due to the climatic change. Australia being a
country of irregular rainy season has suffered a lot. Malnutrition and Under-nutrition
is another issue that has taken place due to the change in climatic conditions. The
effects of climatic change is not only limited to living beings but it also affected the
non-living beings for example monuments and buildings. Many-reputed corporate
organisation has been working on improving and stopping the pollutions and climatic
change by implementing new technologies. For example, HP (Hewlett Packard) has
been working on delivering IT solutions, which will help in decreasing the use of
electricity. Safeway is working on solar projects, which will reduce the use of non-
renewal energy. The Corporate government should impose strict environmental laws
that will reduce the environmental pollution as well as will help in using the fossil
fuels correctly. Organisations should work on their air filtering system and should set
a standard mark, which everyone should maintain. The corporate people should use
pool cars instead of individual cars, which will reduce the level of pollution largely.
Climatic change is one of the greatest issues in today’s environment and the corporate
organisation is responsible for this issue largely but if necessary steps are taken and
maintained then this devastating problem can be avoided.

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