Impact of Climate Change on Business Performance

Table of Contents

  1. Introduction. 3

1.1.     Research Background. 3

1.2.     Problem Statement 3

1.3.     Research Objectives. 6

1.3.1.     Objectives. 6

1.3.2.     Specification. 6

1.4.     Research Question. 7

1.5.     Significance of the Research. 7

1.6.     Scope of the Research. 8

 

 

 

1.     Introduction

1.1.           Research Background

The 20th and 21st Century business faces multiple challenges arising from climate change. Due to climatic changes associated with global warming, various incidents have occurred leading to an increase in the rate of business risks, low profits/sales and high operating costs among other forms of negative impacts on business performance.

The United Kingdom is not isolation when it comes to how climate change affects businesses worldwide. As a result of climate change, the United Kingdom faces weather changes such as increased rainfall, hotter weather, rising sea levels, threats to wildlife and high maintenance costs (Parkinson, 2015). This study will look into some of the major ways in which climate change affects business operations and performance in the United Kingdom.

1.2.           Problem Statement

As most Small and Medium Enterprises (SMEs) strive to expand their market boundaries and aim for larger market niches, the issue of climate change becomes a necessary issue. It is mandatory for an entity to understand the current challenges posed by climate change.

There have been numerous studies conducted in relation to impacts of climate change on the nature of business operations in various parts of the world. According to Shresha (2014), for example, climate change on Nepal businesses is responsible for the increased risk and low returns to enterprises. Focusing on the small-scale retain family businesses, the study investigated into the step-by-step ways in which climate change has affected the sales levels in small-scale businesses in Nepal. There currently exists limited information on how climate change has affected business performance across the United Kingdom’s SMEs. This study will focus on these areas to provide relevant information that can be used for business decision-making and creation of innovative ways to mitigate the risks associated with climate change.

A mix of primary and secondary studies will be used to investigate into the effects that climate change has on the United Kingdom’s SMEs. Secondary research will be done through a review of literature on the past related studies associated with climate change and its impacts on various regions of the world. In addition, the review will seek to identify the missing issues with regards to the topic analysis. Journal articles and company annual reports will be used as the fundamental sources of data for this research. The secondary study will focus on sources published not earlier than 2005. Due to the need to cover the latest information, historical facts will not be actively taken up for decision-making by the research.

Primary research will be carried out across randomly selected SMEs within London. A survey will be useful in generating first-hand information from the businesses and operations that most small-scale commercial businesses engage in. An original study through the issue of questionnaires based on the research question and objectives will help in retrieving important information relating to climate change and its impact on business transactions in the United Kingdom. To produce unbiased and coherent results (Cochran, 2014), a random sampling technique will be used to identify the participants from the entire population of SMEs across London. This will also make it easier for the researcher to work within the limits of available time and resources.

The study will obtain both qualitative and quantitative information on business performance in relation to climate change in United Kingdom. This will provide for a complete evaluation of business challenges arising from the major world problem. Qualitative analysis will be done through comparison and tabulation of various elements of business performance for the past 10 years. The sales trends, profitability and customer retention capacities will be used as some of the major determining factors in evaluating the impacts of climate change. Quantitative analysis, however, will concentrate on the financial and accounting aspects of business performance in relation to climate change. For instance, impact on investment risk and return, profitability index and business goodwill will be investigated into through an evaluation of the business financial records and performance.

To vividly analyze quantitative information, different techniques will be used. A simple regression analysis will be done to compare the relationship between increased climate change and business risks. A hypothetical equation will be developed based on the information generated from the primary survey. The relationship established will inform on the best approaches towards mitigating the most severe impacts associated with climate change (Kahn & Kotchen, 2011). Furthermore, t-test will be used to determine whether there is an association between climate change and business performance through the application of different data sets and variables. Quantitative analysis is important in business research since it provides accurate and specific results in a given research problem (McMurray, Scott & Pace, 2014). The results obtained from the selected study samples will be generalized across all the United Kingdom’s SMEs.

The study will actively involve developing SMEs since they are the set of organizations that carry out multiple instances of risk and investment. Since investments are associated with risks and return, this population is rich in facts related to climate change. In a bid to expand their operations, the countering forces constantly disrupt their operations and lame the capability of their investments to take shape. The research problem will, therefore, best be solved by concentrating on SMEs that become adversely affected by the slightest challenges within the business supply chain. The study will report its results formally, taking into account results from both primary and secondary studies. The report will also identify the limitations and challenge encountered in the process of survey.

1.3.           Research Objectives

The primary aim of the study is to evaluate the ways in which climate change affects business performance, focusing on the SMEs in the United Kingdom. This is broken down into specific objectives.

1.3.1.      Objectives

The study will strive to:

  1. Identify the ways in which climate change affects business sustainability and development in the United Kingdom.
  2. Measure the effects of climate change disasters on business risk and return on investments.
  • Measure the effects of climate change on sales volumes and profitability within a financial year.

1.3.2.      Specification

The study will be modularized into smaller tasks each of which will have its unique steps and set of objectives. For example, sampling will have a unique set of objectives some of which will be to use as relevant respondents as possible in the research. Specifically, the research will focus on issues such as business risks, profitability, returns on investments, sales volumes, sustainability, customer retention and preferences, business growth and expansion and management among others. These will be aligned to the primary objectives.

1.4.           Research Question

What is the impact of climate change on business performance across SMEs in the United Kingdom? This will be the primary research question. Sub-questions will be derived to meet each of the three research objectives.

1.5.           Significance of the Research

Climate change is a major cross-industry disaster worldwide. According to Clark (2013), temperatures across the UK have risen by about one degree since the 1970s. Given the rate at which greenhouse gases are produced from commercial and industrial operations, further warming is expected. Carrington (2016) explains the manner in which the UK government was poorly prepared for the severe impacts of climate change that currently hits the country. Instances of floods and displacements have been seen across some parts of the country (Great Britain & Great Britain, 2010).

The incidents of climate change have at some point paralyzed transport operations within major cities such as London. This has had negative impacts on the supply chain leading to direct effects on the enterprises across UK (George, 2010). Furthermore, due to the need to combat effects of climate change, businesses are expected to act within the scope of Corporate Social Responsibility (CSR) to mitigate the impacts associated with climate change (MARSH, 2006). This form of investment reduces profitability in the short-run despite being a promising investment in the life cycle of most growing enterprises.

Given the different incidents associated with climate change and business performance, this study will use useful in identifying the specific ways in which climate change affects businesses. The report will not only be relevant to the SMEs but also be an important reference point to aspiring entrepreneurs. In addition, multinational corporations (MNCs) will also be beneficiaries of the provisions of this research. The research will also be a reference point for academicians willing to explore issues of climate change in relation to business operations and performance. The report will be open to citation by future researchers. This will act as a secondary data source for future studies related to its objectives.

1.6.           Scope of the Research

The study will limit its scope to the case of United Kingdom. In fact, it will only concentrate on the London SMEs. It will only be focused on climate change and its impact on business performance. To keep up with its primary aim, each step in the study will be evaluated on the basis of conformity to the main objectives. This will aid in keeping the study relevant to its course. The data collection process will be limited to issues related to the primary research question.

 

 

References

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Carrington, D. (2016). UK poorly prepared for climate change impacts, government advisers warn. London: The Guardian. Retrieved from https://www.theguardian.com/environment/2016/jul/12/uk-poorly-prepared-for-climate-change-impacts-government-advisers-warn

Clark, D. (2013). What are the potential impacts of climate change for the UK? The Guardian. Retrieved from https://www.theguardian.com/environment/2013/oct/08/potential-impacts-climate-change-uk

Cochran, W. (2014). Sampling Techniques. S.L.: Wiley India.

George, D. G. (2010). The impact of climate change on European lakes.

Great Britain., & Great Britain. (2010). Adapting to climate change: Sixth report of session 2009-10 : report, together with formal minutes, oral and written evidence. London: Stationery Office.

 

Kahn, M.E. & Kotchen, M.J. (2011). Business cycle effects on concern about climate change: the chilling effect on recession. Climate Change Economics Journal, vol. 2 (3): 257-273. Retrieve from https://environment.yale.edu/kotchen/pubs/CCEfinal.pdf

MARSH (2006). Climate change: Business risks and solutions. Climate change, vol. 5 (2): Retrieved from http://solutions.marsh.com/climate/documents/climateChange200604.pdf

McMurray, A., Scott, D., & Pace, R. W. (2014). Research: A commonsense approach. Southbank, Vic: Thomson/Social Science Press.

Parkinson, J. (2015). Five ways climate change could affect the UK. BBC News. Retrieved from http://www.bbc.com/news/magazine-35037983

Shresha, D. (2014). The impacts of climate change on businesses. International Journal of interdisciplinary studies, vol. 2 (2): 93-112. Retrieved from http://www.nepjol.info/index.php/CTBIJIS/article/d

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