Essays on climate change from stakeholder engagement perspective

Abstract

Achieving environmental sustainability has been a priority for firms in the recent past. Firms are trying to reduce emissions and engaging with stakeholders to reduce the overall emissions in their extended value chain to be environmentally sustainable. While substantial knowledge is available on stakeholder engagement, there has been limited exploration on it for sustainability purposes and the determinants that might influence it. The first essay investigates factors influencing a firm’s ability to engage stakeholders in mitigating value chain emissions. The essay proposes that internal (i.e., board oversight of climate-related issues and incentivization) and external (i.e., climate change commercial risk opportunity and ESG controversies) factors, along with contingencies (e.g., emission targets and management commitment) might drive firms to engage with stakeholders for value chain emissions. The essay relies on the tenets of control theory to theorize the effects. Using data from 226 firms and a robust empirical setup, the essay finds that board oversight, incentivization, and climate change commercial risk opportunity positively influence firm’s engagement with stakeholders for value chain emissions, but there is no significant influence of ESG controversies. Through post hoc analyses, the essay illustrates the effects of different factors on customer engagement and supplier engagement, with particular focus on how monetary and non-monetary incentives and beneficiary types influence stakeholders. The second essay examines how a firm’s awareness of various climate change risks and opportunities influences its decision to reduce emissions in its value chain through stakeholder engagement. Despite extensive discussions about climate change’s impact on businesses and preventive measures, little is known about climate change risks and opportunities. With data from 211 firms across 24 industries over five years, the essay reveals that firms display varied behavior in response to different categories of risks and opportunities. The essay identifies a significant positive association between transition risks and opportunities and stakeholder engagement, and no significant link for physical risks and opportunities. The essay further delves into the market-generated aspect of transition concerns, revealing that risk identification prompts supplier engagement, and opportunity identification drives customer engagement. It theorizes the effects of market-generated risk and opportunity on customer and supplier engagement, with the moderating effects of board oversight and environmentally sensitive industries, based on the principles of natural resource-based view of firms. The essay contributes to the field of climate change and expands the boundary of marketing literature by investing its implications on firms and subsequent behaviour.