MPA Research Proposal: Environmental Disclosure & Climate Change

This research proposal investigates the influence of voluntary environmental performance disclosure on the climate sensitivity of organizations, framed within the stakeholder theory. It addresses the debate between shareholder and stakeholder perspectives, focusing on the moral obligations of organizations to stakeholders and the role of voluntary disclosure in mitigating carbon emissions and climate change. The literature review highlights the impact of carbon emissions on climate and the potential for organizations to positively influence climate change through reducing emissions. The theoretical motivation emphasizes the stakeholder theory, where businesses create value for all stakeholders, not just shareholders, and the importance of aligning the interests of customers, suppliers, employees, communities, and shareholders. The conceptual model illustrates the relationship between stakeholders, organizations, and climate through voluntary environmental performance disclosure. The methodology proposes a longitudinal in-depth investigation using secondary data and case studies of Terex Corporation and Omnicorp Group to analyze the adoption of stakeholder theory and its impact on performance and accountability.

GRADUATE SCHOOL OF ECONOMICS AND ACCOUNTING*
MASTER OF PROFESSIONAL ACCOUNTING
ASSIGNMENT TYPE: RESEARCH PROPOSAL
TOPIC: VOLUNTARY DISCLOSURE OF ENVIRONMENTAL PERFORMANCE
QUESTION: DOES PERFORMANCE DISCLOSURE INFLUENCE CLIMATE
SENSITIVITY OF ORGANIZATIONS?
TITLE: STAKEHOLDER THEORY
SUBMISSION DATE: XXX
STUDENT NAME: XXX
TUTOR NAME: XXX

Acknowledgement:
I certify that I have carefully reviewed the university’s academic misconduct policy. I understand
that the source of ideas must be referenced and that quotation marks and a reference are required
when directly quoting anyone else’s words.

ABSTRACT
The battle for supremacy has gone on for a while now, between shareholders and stakeholders.
Shareholders seek to steer organizations towards profit oriented while stakeholders seek to widen
the perspective into non-profit areas. This calls for need to determine what is important and what
is not. Hence, “the shareholders’ theory and stakeholders’ theory.”
In our research paper, we delve into the stakeholder theory seeking to make a connection
between the organization, its obligations to stakeholders, and the role of voluntary disclosure of
environmental performance on checking the role of an organization in carbon emissions and
ultimately climate changes.

LITERATURE REVIEW
It is almost instinctive to share your performance if the metrics are impressive, or more, they can
even become a benchmark if they are excellent. This also goes for business organizations. But
again, what if it becomes compulsory to share your performance? What if measures are put in
place to ensure sustainability is nurtured all the way to fruition? Is it true that climate largely
influences human life, or so, existence?
The basic definition of climate is that it is statistics of weather over time. John, H et al. (2016).
Nature has a way of getting back to humans, either positively or negatively. As it is famously
put, “Nature does not make limps,” and therefore every action has a reaction, this is also true for
climate. Every effort to positively affect climate comes back as positive shift in weather patterns,
whereas the converse also holds. The effects cut across:
i. Governments
ii. Customers
iii. The population in general. Etcetera.
Therefore, it is imperative to determine what is influencing the climate change. According to
research, a carbon emission has been linked to lead in causing climate shifts. However, it is not
surprising for organizations to be noted as principal sources of carbon emissions. According to a
research for what is your impact journal, the burning of fuels has been the biggest contributor of
Carbon emissions (CO) to the environment that adversely affect climate. Le Quéré, C. et al. (2013).
"There are thousands of oil, gas and coal producers in the world," climate researcher and author
Richard Heede at the Climate Accountability Institute in Colorado said. "But the decision
makers, the CEOs, or the ministers of coal and oil if you narrow it down to just one person, they
could all fit on a Greyhound bus or two." Suzanne Goldberg. (2013). Hence organizations
contribute the highest number of carbon emission.
As a sign of hope, this implies that organizations have a role in positively influencing climate
changes, through reducing carbon emissions. A research by Yale Environment 360 new statistics
show that the world economy is expanding while global carbon emissions remain at the same
level. Fred Pierce. (2016).This indicates that it is possible drop the carbon emissions if
organizations take it upon themselves to put measures.
Interestingly, organizations have a moral responsibility to its stakeholders, who include
government, business community, and shareholders. Etc. I.e.:

 Reduce pollution by using non-fossil fuels.
 Disposal of waste safely and in an environmentally friendly manner.
 Sponsoring local charity events.
 Trading fairly with developing countries. Tutor2u.(2015)
Either, “Stakeholders put pressure on firms to respond to social issues in various ways; and they
expect different things in response, dependent on the industry, location and other factors. These
pressures may have a positive effect — spurring firms to make changes that benefit not just
stakeholders…” Londonedu. (2018).These pressure include need to reduce carbon emissions.

Theoretical motivation
According to Edward Freeman, “Stakeholder theory states that the purpose of a business is to
create value for stakeholders not just shareholders. A business needs to consider customers,
suppliers, employees, communities, and shareholders.” The theory further suggests, “The
purpose of a business is to create as much value as possible for stakeholders. In order to succeed
and be sustainable over time, executives must keep the interests of customers, suppliers,
employees, communities and shareholders aligned and going in the same direction.”Edward.
(2009). Firms are taking steps in aim of fulfilling stakeholders’ expectations who power to
impact on their performance (Deegan 2009). In line with disclosure incentives, firms have
measures to disclose information to its different stakeholders to convince them of their
compliance with their expectations. Hence, stakeholder theory directs the moral actions of
managers mainly since they have a fiduciary relationship with stakeholders. According to
Gordon et al (2004), Managers’ perceptions about stakeholders’ interests are a key determinant
of environmental and social disclosure practices.
However much stakeholders theory hold in performance disclosure, research indicate that the
pressure by stakeholders in firm’s disclosure is still scarce. According to Edeltraud et al (2016 “…
Only one stakeholder group (government) acts as a moderator for the relationship between
carbon performance and carbon disclosure. Furthermore, the authors find that carbon
performance but not the affiliation to a carbon-intensive industry acts as a moderator between
stakeholder relevance and carbon disclosure.” Therefore, the pressure of stakeholders as a whole
does not influence disclosure.

CONCEPTUAL MODEL
Theoretical constructs.
The organization is inclined to the stakeholder’s needs; this prompts the executive to follow what
their stakeholders deem as fit for the organization, them, and those around it, as opposed to
shareholders first view. This improves accountability and monitoring of organization activities in
aim of sustainability.
Involvement of a wide range of players in managerial monitoring process, calls for performance
review and reporting. Reporting may involve:
i. Financial
ii. Non-financial
Whereas shareholders are concerned only in financial reporting, stakeholders are concerned in
both financial and non-financial performance reviews. Jeff. (2003)
Non-financial performance involves:
i. Organization impact on local communities.
ii. Environmental performance.
iii. Sustainability index.
Often, the stakeholders position is taken into consideration in managerial decision, this involve
their stand on key issues such as carbon emission control for the organization. I.e. they help in
choosing organization’s activities that will lead to lowering of carbon emissions hence positively
affecting climate control. This is done majorly through environmental performance disclosure.
According to a paper by Chika and Tomoki, they argue that adopting voluntary disclosure of
environmental performance will increase organizations commitment towards improving their
environmental conservation activities to record better performance. Chika and Tomoki. (2012).

VOLUNTARY DISCLOSURE on
ENVIRONMENTAL PERFORMANCE BY
ORGANIZATIONS
STAKEHOLDERS SHAREHOLDERS
ORGANIZATIONS
CLIMATE
STAKEHOLDER’S
THEORY
Government Customers
General
population
Managerial
(executive)

Operational proxies.
Voluntary reduction target
It involves an organization setting its own target for carbon emission and committing to it.
Involving, the process of carbon offsetting to build more sustainable livelihoods, to achieve
sustainability. Undertaken under carbon disclosure project for the organization. Doug & Michael.
(2001)
Stakeholder Power
Stakeholders wield different abilities to influence decisions of an organization, whereas the
government may set policies, the consumer has a different level of power. Generally, the power
of a stakeholder depends on their role in the industry. I.e. it is relativity is according to porter’s
forces of customers versus supplier. The petroleum energy industry largely depends on the
government policies and other stakeholders. However, it does not involve consumers in carbon
disclosure projects. Gold standards. (2016)
National concern for climate change.
Climate change influences a nation’s wellbeing and growth pattern. It becomes a concern about a
business inclination for climate impact by the organization activities. The nation encompasses
several of the organization stakeholders. Therefore, it is the wider environment for performance
measurement and control. The government will pass policies, the consumers will acquire tastes
according to ethical issues, and shareholders will invest according to profitability.
Relationship between proxies.
Low powered firms tend to depend on their stakeholders to a huge extent therefore bow to
pressure from them; this is in relevance to the size of a firm in an industry. This is in the process
of ensuring its sustainability in the industry.
Additionally, suppliers to huge firms have a brand to save its reputation and the customers are
the most powerful stakeholders, therefore they will adopt any challenging emissions target
whenever their consumers adopt a commitment to sustainability.

HYPOTHESES
The hypotheses to be tested are:
i. Stakeholder theory works where shareholder theory fails.
ii. Stakeholders influence organization’s role in reducing carbon emission.
iii. Voluntary disclosure performances are the answer to getting organizations review and
monitor their environmental performance.
iv. Carbon disclosure projects help in ensuring control of greenhouse effects.
v. Stakeholders’ pressure amount to managerial accountability

METHODOLOGY
Based on earlier research, stakeholders’ theory enables a wide range of accountability among the
executive and the organizations as a whole. Therefore investigating the theory in a real
organization setting is necessary to understand its applications and deficits. This is in relation to
management and environmental performance. Therefore, a longitudinal in-depth investigation
will suffice in this research.
We will mainly use secondary data from sources such as:
i. Newspapers
ii. Published organization journals
iii. United nations database
However, we will use 2 case studies:
- Terex Corporation.
- Omnicorp Group.
This will aim:
i. In investigating the adoption of stakeholders’ theory as a whole in the two case studies in
contrast to shareholders theory and how this has affected their performance and
accountability.
ii. Adoption of” voluntary disclosure of environmental performance”, by the organizations
and their carbon emission metrics over that period.
iii. Stakeholders’ role in reducing carbon emissions, through metrics.
iv. Measuring impact of stakeholders in management of contemporary issues.
The research method that will be highly considered will depend on access to data and
information. The general procedure has been laid. Using of available data on the two case studies
to establish the role of stakeholders in organizations accountability.

REFERENCES
Research gate. (2015. July 14th). Stakeholder Theory Classification: A Theoretical and Empirical
Evaluation of Definitions, journal of business ethics, vol.143, no.3, pp. 13-17.
John, H., David, E., Kristil, L., Akio, K. & Martin p. (2016. March 23th) Weather and Climate Extremes:
Observed and projected changes in weather and climate extremes, journal of climate and weather.
Vol.11, pp. 103-105
Le Quéré, C. et al. (2013). The global carbon budget 1959-2011. SSRN eLibrary.
Suzzane, G. (2013). Just 90 companies caused two-thirds of man-made global warming emissions.
Accessed from: https://www.theguardian.com/environment/2013/nov/20/90-companies-man-made-
global-warming-emissions-climate-change
Fred, P. (2016. April 14th ). Is it possible to reduce CO2 emissions and grow the global economy? SSRN
eLibrary.
Will. (2015). Organisation: Business Stakeholders, Socia. Accessed from:
https://www.tutor2u.net/business/reference/organisation-business-stakeholders-social-responsibility-
ethics
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Management's Perceptions with Reality', Journal of Business Ethics, vol. 49, no. 2, pp. 143-65.
London education. (2018). Stakeholders Threat or Opportunity. SSRN eLibrary.
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Stakeholder map.(2018). Stakeholder Theory. Accessed from:
https://www.stakeholdermap.com/stakeholder-theory.html
Deegan, C 2009, Financial Accounting Theory, 3 edn, McGraw Hill, Australia.
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Disclosure.
Jeff, S. (2013). The Shareholders vs. Stakeholders Debate. Accessed from:
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