Theoretical Constructs In Forming New Law As Per Which Firms Are Required To Disclose Their Carbon Performance On A Quarterly Basis

Practical motivation

Theoretical Constructs In Forming New Law As Per Which Firms Are Required To Disclose Their Carbon Performance On a Quarterly Basis?

The current assignment focuses upon the legitimacy theory which has used to analyse the legal frame work within a business organization. In this respect, the legitimacy theory will be used by the researcher as a base for a new law. As per the legitimacy theory, a business organization is required to report their carbon performance (Hagstrom and Engman 2017). The legitimacy theory is the one of the most cited theories within social and environmental accounting g area. It laid much importance upon the voluntary disclosures of organization towards maintaining the corporate social responsibility (Busch and Kolbel  2016). There has been growing environmental concerns regarding carbon emissions. Hence, the researcher will evaluate whether the theory could form the basis of new environmental laws.

• There has been growing concerns regarding the huge rate of carbon emissions released by business firms and organizations.
• Some of these have been contributing significantly to the growing concerns of global warming.
• The global warming and the emission of some of the green house gases have been seen to enhance the rates of respiratory tract infections (Bae Choi et al. 2013).
• Some of the firms  have been specifically investing in environmental  [projects to reduce their carbon footprints with the help  of refined technologies (Freedman  and Park 2014)
• Due to increased pressure from the media and concerns expressed by social activities some firms have introduced a number of environmental campaigns. However, most of these have laid to inaccurate reporting (Guenther et al. 2016)

• Low legitimacy could have dire consequences for organizations which can affect their rights to operate within a global scenario (Bae Choi et al. 2013).
• Legitimacy is  an abstract concept and the view differs based upon the observer (Tauringana and Chithambo 2015)
• Legitimacy can help the organizations achieve resources for operating (Prasad et al.2016).
• Some of the previous researches have failed to address the way in which business firms can implement the legitimacy theory and guidelines in order to meet the legal requirements.

A business firm or organization is operating within a large social circle and is duly affected by various processes of the social realm.   Hence, the organization is entitled to give back to the society by way of its products and services. However, the value added services of the organization should be designed in a manner so that possesses little threat to the environment, which is in accordance with the corporate social responsibility (Malarvizhi and Matta 2016). As per the legitimacy theory the business firm needs to acts in accordance with the social beliefs and overall social well being objectives (Higgins and Larrinaga 2014).

• The  organizations need to legitimize their actions by  showing responsiveness to the environmental issues (Ahmadi and Bouri 2017).
• The need to legitimize the actions of the company is the primary motivation  behind   voluntary corporate social disclosures
• Maintaining legitimacy is challenging for an organization as the expectations and values of the society can change over time (Mir et al. 2015).
• Each and  every organization is individually responsible for contributing towards the  environment by virtue of its products and services
• The moralist model  states that responsibility to the environment is an obligation  to the society as well as the stakeholders
• The  business firms worldwide have placed immense importance upon the use of carbon accounting system  for development  of an effective strategy for reducing the carbon footprints  of  an organisation
• The ratification of KYOTO protocol with emission trading scheme (ETS) have mentioned carbon emissions as bringing risk opportunities to the organization (mfe.govt.nz 2018).
• The firms have focused upon the importance of internal carbon reduction by implementing combustion emissions reduction, process emissions reduction, lowering product output.
• The hydrocarbons form an inevitable part of certain products. Therefore, every time the products are synthesized huge amount of free carbons are released into the environment. in order to reach out to  the maximum number of target customers  an organization  also  needs to double its production rate, which  further leads to the development of an ethical dilemma as it is not meeting  with its target  of low carbon footprints(Higgins and Larrinaga 2016)
• Therefore, the organizations have often been seen to provide false data regarding environmental regulations compliance rate (Tauringana and Chithambo 2015).
• The legitimacy theory emphasises upon balanced and truthful reporting rather than putting or highlighting false and boastful data (Abeysekera 2013).
• The firms have emphasized upon the importance of carbon management control systems, which are information based routine and procedures which managers use to change patterns of organizational activities (Grauel and Gotthardt 2017).
• As per the Kyoto protocol there has been more emphasis upon the use of green business and energy efficient systems for reduction in the rate of carbon emissions (mfe.govt.nz  2018).
• In the absence effective legal guidelines and structure most firms are reluctant to invest in carbon reduction technologies (Metaxas and Tsavdaridou 2017).

Hypothesis 1: the stringent law sets based upon the legitimacy theory can be used to motivate the firms to offer improved carbon performance disclosures.  

Hypothesis 2: The newly developed laws cannot help the firms achieve improved carbon disclosures until and unless there is sufficient contribution from the top management

The theoretical constructs will be further divided into dependent and independent variable by the researcher and will be further evaluated using a number of proxy measures. The independent variable over here is the stringent laws directing firms to disclose their carbon performance. The dependent variable is expressed in the form of improved carbon performance of the firm.

• New Zealand has stressed upon the importance of eco-innovation policies. Some of these policies are aimed at reducing the amount of carbon footprints.
• Measures have been taken by companies to promote capital investment in carbon reduction technologies (Chua 2016).
• However, there is misbalance regarding the establishment of green procurement initiatives at the local and national level.
• The  institutional problems related to intellectual property rights have been seen to further  act as barriers in the achievement of the green goals of the organization  (Abeysekera 2013)
• As per the resource management act (1991), environmental management was found upon the subsidiary principle (mfe.govt.nz 2018).
• As per the Newzealand energy strategy very business firm or organization needs to pass the suitable standards of carbon emissions and present a detailed report o the same (Bepari and Mollik 2016).  However, failure to comply with the legal framework makes the attainment of the goal difficult for the organization. The failure could be attributed to the lack of interest on the part of the management (mfe.govt.nz 2018).

• It has been seen that the organizations acting in accordance with the NewZeland based energy strategies have been seen to perform better.
• The disclosure behaviours of the firms have been taken as positive motivation for the rest of the firms to follow (Rahim 2013).
• However,  reports  in the past have highlighted that many firms  practice poor disclosure and provide wring boastful  figures to the media just to  evade the legal  barricades (Haque . and Islam 2015)
• Almost 43.7% of the excessive carbon generation have been seen to be reduced with the implementation of effective environmental framework and guidelines (Bae Choi et al. 2013).

For the current proposal, the researcher will use a secondary research design where he will be collecting data from a number of evidence based journals as well as consult government reports and factsheets. The methodology adopted over here could be divided into a number of components such as- research philosophy, approach of the research, research design, research strategy, data analysis tools, research ethics.

Theoretical motivation

The researcher will adopt   interpretivism research philosophy over here. Thus, the data will be gathered by the researcher from practical scenario by integrating human subjects into the study design. It helps in qualitative data analysis and presentation (Smith 2015).

The researcher will adopt an inductive approach over here which will help the researcher on in collecting data and analysing themes based upon the case study analysis. The inductive approach starts with the observations and the theories are suggested at the end of the research process (Bryman and Bell 2015).

The researcher will use a descriptive research design for conducting the study. The descriptive research design will help in the researcher in identification of the existing relationship between variables and thus understand the effect produced on a variable by manipulating the other variable. The researcher will use literature review for collating of the data and analysing those making themes.

The researcher will use case studies and published literature sources for the collection and the presentation of the data. The researcher will use secondary databases for the collection of facts and data. Some of the secondary databases which will be used by the researcher over here are NCBI, ELSEVIER, etc. The researcher will use a number of keywords for locating or finding out the exact journals. Additionally, the researcher will use a number of filters such as articles published in English only will be considered by the researcher.  Moreover, the articles published within the last ten years will only be taken into consideration. The researcher will therefore mainly focus secondary research design for the collection of data.

The researcher will use case study analysis for the collection of effective data. The researcher will further group the data intro similar dissimilar themes. They will be used to perform a thematic analysis by the researcher.

The research ethics forms an important part of the entire research study.  In this respect, the researcher needs to be careful while analysing the data from the case studies.  At no point of time the exact name of the participants will be used by the researcher as this will be treated as an ethical breach (Berger 2015). Before publishing the research data the review board will need to ensure that anonymity is maintained. In case the secondary data is freely available over internet, books or other public platform for re-using them further permission will need to be collected by the researcher.

Literature review : Base theory –legitimacy theory

Therefore, the study undertaken here focuses upon the use of legitimacy theory for development of stricter legal framework aimed at reducing the carbon footprints generated by a firm. Studies and reports have depicted that inspite of strict legal implications many companies fail to meet the environmental protection laws and regulations (Herbohn et al. 2017). The research here emphasizes upon the importance of legitimacy theory in the drafting of an effective legal framework for reducing the rate of carbon emissions. However, most of the firms have been seen to practice poor disclosure norms which violate the legitimacy theory. The legitimacy theory on a whole emphasizes upon the CSR rules and guidelines thereby maintaining the environmental norms as well as follows the transparency norms while drafting of the carbon reports (Breitinger and Bonardi 2017).However, both the legal framework and the improvements in carbon performance are directly proportional (Elijido-Ten and Clarkson 2017). Therefore, a stricter imposition of the legal policies can contribute positively towards the environment.

References 

Abeysekera, I., 2013. A template for integrated reporting. Journal of Intellectual Capital, 14(2), pp.227-245.

Ahmadi, A. and Bouri, A., 2017. The relationship between financial attributes, environmental performance and environmental disclosure: Empirical investigation on French firms listed on CAC 40. Management of Environmental Quality: An International Journal, 28(4), pp.490-506.

Bae Choi, B., Lee, D. and Psaros, J., 2013. An analysis of Australian company carbon emission disclosures. Pacific Accounting Review, 25(1), pp.58-79.

Bepari, M.K. and Mollik, A.T., 2016. Stakeholders’ interest in sustainability assurance process: An examination of assurance statements reported by Australian companies. Managerial Auditing Journal, 31(6/7), pp.655-687.

Berger, A.A., 2015. Media and communication research methods: An introduction to qualitative and quantitative approaches. London: Sage Publications, pp.93-105.

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Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA, pp.102-212.

Busch, T. and Kölbel, J., 2016. Paper 3: How risky is your business? The role of institutional context, corporate social responsibility, and rating agencies. Sustainability and risk: the role of stakeholders, p.97.

Chua, J.F., 2016. Corporate liability and risk in respect of climate change. NZJ Envtl. L., 20, p.167.

Elijido-Ten, E.O. and Clarkson, P., 2017. Going Beyond Climate Change Risk Management: Insights from the World’s Largest Most Sustainable Corporations. Journal of Business Ethics, pp.1-23.

Freedman, M. and Park, J.D., 2014. Mandated climate change disclosures by firms participating in the regional greenhouse gas initiative. Social and Environmental Accountability Journal, 34(1), pp.29-44.

Grauel, J. and Gotthardt, D., 2017. Carbon disclosure, freedom and democracy. Social Responsibility Journal, 13(3), pp.428-456.

Guenther, E., Guenther, T., Schiemann, F. and Weber, G., 2016. Stakeholder relevance for reporting: explanatory factors of carbon disclosure. Business & Society, 55(3), pp.361-397.

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Haque, S. and Islam, M.A., 2015. Carbon emission accounting fraud. In Corporate Carbon and Climate Accounting (pp. 243-257). Springer, Cham.

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