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Gaining Competitive Advantage in a Carbon-constrained World:: Strategies for European Business

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  • Schultz, Karl
  • Williamson, Peter

Abstract

Beginning in 2005 over 12,000 industrial facilities throughout the European Union were granted allowances to emit carbon dioxide, the most common of greenhouse gases. A trade-able asset, these allocations will be but the first in what is likely to be an ever stricter limitation on greenhouse gas emissions. This article makes the case that companies need to view "carbon exposure" as more than just an environmental compliance issue, but rather a key factor in future corporate competitiveness. Karl Schultz and Peter Williamson discuss the impacts on different types of companies of both policies to address global warming, and climate change's direct potential to impact business decisions. They then assess the various risk exposures of companies. A number of strategies are provided for corporate managers and boards to understand their corporate exposure, and take steps to mitigate risk and, in many cases, come up with competitive advantage in a business environment that is becoming increasingly carbon constrained.

Suggested Citation

  • Schultz, Karl & Williamson, Peter, 2005. "Gaining Competitive Advantage in a Carbon-constrained World:: Strategies for European Business," European Management Journal, Elsevier, vol. 23(4), pages 383-391, August.
    • Handle: RePEc:eee:eurman:v:23:y:2005:i:4:p:383-391
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    Cited by:

    1. Yong Liu, 2018. "Exploring the Relationship between External Positive–Negative Pressures and the Carbon Management Behaviour of Industrial Firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(4), pages 628-641, July.
    2. Su‐Yol Lee & Robert D. Klassen, 2016. "Firms’ Response to Climate Change: The Interplay of Business Uncertainty and Organizational Capabilities," Business Strategy and the Environment, Wiley Blackwell, vol. 25(8), pages 577-592, December.
    3. Nicola Casolani & Emilio Chiodo & Lolita Liberatore, 2023. "Continuous Improvement of VIVA-Certified Wines: Analysis and Perspective of Greenhouse Gas Emissions," Sustainability, MDPI, vol. 15(3), pages 1-15, January.
    4. Talbot, David & Boiral, Olivier, 2013. "Can we trust corporates GHG inventories? An investigation among Canada's large final emitters," Energy Policy, Elsevier, vol. 63(C), pages 1075-1085.
    5. Su‐Yol Lee, 2012. "Corporate Carbon Strategies in Responding to Climate Change," Business Strategy and the Environment, Wiley Blackwell, vol. 21(1), pages 33-48, January.
    6. Maruli Sitompul & Arif Imam Suroso & Ujang Sumarwan & Nimmi Zulbainarni, 2023. "Revisiting the Impact of Corporate Carbon Management Strategies on Corporate Financial Performance: A Systematic Literature Review," Economies, MDPI, vol. 11(6), pages 1-21, June.
    7. Zhou, Jingyu & Liu, Weibai, 2024. "Carbon Reduction Effects of Digital Technology Transformation: Evidence from the Listed Manufacturing Firms in China," Technological Forecasting and Social Change, Elsevier, vol. 198(C).
    8. David Littlewood & Rachel Decelis & Carola Hillenbrand & Diane Holt, 2018. "Examining the drivers and outcomes of corporate commitment to climate change action in European high emitting industry," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1437-1449, December.
    9. Alexis Ngantchou, 2015. "Rendre Compte De L’Engagement Social Et Environnemental De L’Entreprise Par Les Comptes: Contribution Pour Un Cadre Conceptuel De Comptabilite Sociale Et Environnementale," Post-Print hal-01188842, HAL.
    10. Selma Regina MARTINS OLIVEIRA, 2019. "Relationship Between Technological Eco-Innovation Capacity And Innovation Performance: Evidence From Most Innovative Firms In The Usa," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 13(1), pages 163-178, November.
    11. Georg Weinhofer & Volker H. Hoffmann, 2010. "Mitigating climate change – how do corporate strategies differ?," Business Strategy and the Environment, Wiley Blackwell, vol. 19(2), pages 77-89, February.
    12. Neelam C. Poudyal & Jacek P. Siry & J. M. Bowker, 2012. "Stakeholders' Engagement in Promoting Sustainable Development: Businesses and Urban Forest Carbon," Business Strategy and the Environment, Wiley Blackwell, vol. 21(3), pages 157-169, March.
    13. Sanjay Patnaik, 2020. "Emissions permit allocation and strategic firm behavior: Evidence from the oil sector in the European Union emissions trading scheme," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 976-995, March.
    14. Luigi Galletto & Luigino Barisan, 2019. "Carbon Footprint as a Lever for Sustained Competitive Strategy in Developing a Smart Oenology: Evidence from an Exploratory Study in Italy," Sustainability, MDPI, vol. 11(5), pages 1-20, March.
    15. Federica Gasbarro & Francesco Rizzi & Marco Frey, 2016. "Adaptation Measures of Energy and Utility Companies to Cope with Water Scarcity Induced by Climate Change," Business Strategy and the Environment, Wiley Blackwell, vol. 25(1), pages 54-72, January.
    16. Konstantinos Evangelinos & Ioannis Nikolaou & Walter Leal Filho, 2015. "The Effects of Climate Change Policy on the Business Community: A Corporate Environmental Accounting Perspective," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 22(5), pages 257-270, September.
    17. Olivier Boiral & Jean‐François Henri & David Talbot, 2012. "Modeling the Impacts of Corporate Commitment on Climate Change," Business Strategy and the Environment, Wiley Blackwell, vol. 21(8), pages 495-516, December.
    18. Quader, M. Abdul & Ahmed, Shamsuddin & Ghazilla, Raja Ariffin Raja & Ahmed, Shameem & Dahari, Mahidzal, 2015. "A comprehensive review on energy efficient CO2 breakthrough technologies for sustainable green iron and steel manufacturing," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 594-614.
    19. Jabbour, Charbel José Chiappetta & Neto, Angelo Saturnino & Gobbo, José Alcides & Ribeiro, Maisa de Souza & Jabbour, Ana Beatriz Lopes de Sousa, 2015. "“Eco-innovations in more sustainable supply chains for a low-carbon economy: A multiple case study of human critical success factors in Brazilian leading companies”," International Journal of Production Economics, Elsevier, vol. 164(C), pages 245-257.
    20. Rjiba, Hatem & Thavaharan, Tharshan, 2022. "Female representation on boards and carbon emissions: International evidence," Finance Research Letters, Elsevier, vol. 49(C).
    21. Chen, Shi & Huang, Fu-Wei & Lin, Jyh-Horng, 2022. "Life insurance policyholder protection, government green subsidy, and cap-and-trade transactions in a black swan environment," Energy Economics, Elsevier, vol. 115(C).
    22. Su-Yol Lee & Young-Hoon Kim, 2015. "Antecedents and Consequences of Firms’ Climate Change Management Practices: Stakeholder and Synergistic Approach," Sustainability, MDPI, vol. 7(11), pages 1-16, October.
    23. Julie Cotter & Muftah M Najah, 2012. "Institutional investor influence on global climate change disclosure practices," Australian Journal of Management, Australian School of Business, vol. 37(2), pages 169-187, August.

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