MBA Dq 1 environmental concerns have become a very critical factor
Companies must take into account important factors while developing their worldwide corporate-level plans from the standpoint of the global environment. In my opinion, resource shortage, changing environmental rules, and climate change are three major phenomena that require attention. These changes have a big impact on how decisions are made and could have negative effects on businesses and the environment.
Climate Shift
Companies around the world confront a variety of challenges as a result of the growing effects of climate change. Operational resilience is directly impacted by changes in weather patterns, increasing sea levels, and an increase in the frequency and severity of natural disasters. For example, the possibility of higher storm surges and flooding puts businesses operating in coastal areas, such as those in the energy and logistics sectors, at risk. Due to an increase in claims resulting from climate-related incidents, insurance companies are being forced to review their risk models and coverage approaches.
Furthermore, climate change’s effects go beyond direct dangers. Environmental awareness is causing a shift in customer preferences, which is influencing consumer purchasing behavior. Businesses are gaining a competitive edge by integrating sustainable practices into their plans, such as cutting carbon emissions and using renewable energy sources. With its emphasis on renewable energy and electric cars, Tesla is a prime example of a business leveraging this trend and reaping financial rewards in addition to having a good environmental impact. Over its lifetime, a single Tesla car prevents 55 tons of CO2 emissions (Environmental impact. (n.d.). Tesla).
Limited Resources
The growing concern over resource scarcity is exacerbated by the growing demand for essential resources such as energy, minerals, and water. Businesses that rely on these resources, such those in the IT and manufacturing industries, risk higher operating expenses and disruptions to their supply chains. Apple has taken steps to reduce the environmental impact of its product manufacture, such as supply chain audits and recycling programs, realizing the need of responsible mineral sourcing.
Water scarcity also presents a serious problem, especially in areas that are suffering from droughts. In order to reduce risks and keep their social license to operate, beverage firms like Coca-Cola have adopted water conservation measures and invested in sustainable water management methods. These actions are a response to the issues they have had in securing water sources for their bottling operations.
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Environmental Regulations
As concerns about climate change and resource depletion rise, governments over the world are passing strict environmental restrictions. Businesses have to anticipate tighter regulations and manage changing compliance obligations. For instance, the European Union’s pledge to become carbon neutral by 2050 gave rise to the European Green Deal, which has forced businesses doing business in the EU to assess their carbon footprint and switch to more environmentally friendly methods A European green deal. (n.d.).
Financial penalties, reputational harm, and legal ramifications can arise from breaking environmental standards. The Deepwater Horizon oil disaster, which BP experienced, is a sobering reminder of the far-reaching effects of environmental carelessness. The corporation suffered significant financial losses, legal disputes, and long-lasting harm to its brand, highlighting the significance of effective environmental risk management in business plans.
References:
A European green deal. (n.d.). European Commission. https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal_en
Environmental impact. (n.d.). Tesla. https://www.tesla.com/impact/environment
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