Relation to Other Stakeholders

TEAM 5 GLO-420

Stakeholder Analysis Dr. Edward S. Cohen

Stakeholder Group: Large Institutional Investors in the U.S.

Large institutional investors in the U.S. have a collection of professional traders who

focus on futures contracts trading on exchanges. Due to group sophistication compared to

average retail investors, there are less restrictive regulations. Stakeholders invest by spending

funds gained from product purchases and personal funds. Again, they invest cash on behalf of

other individuals. The group wishes to take private debt and project bonds as alternative

investments to meet its long-term and medium asset requirements. Through the company

investment, group members obtain maximum profit. The acquisition is possible due to optimized

trade operations, reduced intermediaries, and the absence of unnecessary formalities such as

verification, unproductive formalities, and agreements with brokers.

During the decision-making process, stakeholders seek private statistics through social

relationships. They apply information sharing effectiveness in the fund networks to learn about

data transmission effects on the stock market’s financial systemic and extreme risk. The fund

information network demonstrates small-world characteristics by reflecting rapid information

diffusion speed. Information-sharing behavior improves fund managers’ behavior consistency

that increases stock volatility through herd effects. Additionally, data sharing reduces systematic

financial risk by enhancing market pricing efficiency and information flow comprehensiveness.

Large Institutional Investors have an interest in data sharing to reduce systematic financial risk

by enhancing market pricing efficiency and information flow comprehensiveness. Today, the

group invites everyone to collaborate to make money and decent profits from services and

products' sales by capitalizing even small funds. Finally, the group of stakeholders is interested

in climate change to make sure they maximize their wealth. According to Guyatt (2019),

negative climate changes have adverse effects on investors' profits.

Climate Change Challenges to Stakeholders

According to Peker (2020), climate change poses significant challenges to organizations,

and they cannot ignore the risks. Climate change creates new business risks, whereby

stakeholders experience transition risk due to society’s climate change response. The responses

include changes in markets, regulation, and technologies that undermine products’ viability,

increase business cost, and affect asset values.

Additionally, the group members face direct costs due to changes in the climate

initializing from rising sea levels and extreme weather events. For instance, the members suffer

high losses for properties in coastal areas and exposure to drought spells. The greenhouse gas

emissions from human activities alter the world’s climate and affect a range of their natural and

human systems. Technological innovations associated with climate change, such as fuel cells and

electric-powered vehicles, threaten the business models that operate in traditional productions.

Climate change results in physical consequences such as sea levels, extreme weather, and a

threat to world food supplies that causes significant economic harm.

Moreover, regulations and policies implemented to fight climate change negatively affect

the company. For instance, since the public support for anti-climate change actions is increasing,

the idea of individuals punishing unresponsive organizations by boycotting has hurt stakeholders.

Additional carbon cost resulting from carbon emissions restrictions by federal legislation also

reduces the earnings. Climate change projections are too expensive for group members since

they require an understanding of climate system response, greenhouse gas emissions, human

activities, and atmospheric composition alterations. The time horizon uncertainty for climate risk

materialization becomes a significant challenge. Hence, the group endures the cost of managing

risks. The regulatory, technological, and physical climate risks affect institutional investors’

outcomes, such as shareholders, pension beneficiaries, and clients.

Climate Change Opportunities to Stakeholders

Moving to low carbon opportunities has resulted in low-carbon investment value and

enhanced stakeholder’s market. The low-carbon transition has created opportunities for

efficiency growth and innovation-investments in low-carbon ventures such as energy efficiency

and renewable help to carry out operational cost savings. Reducing reliance on fossil fuels

enhances supply chain resilience that unlocks market opportunities and fosters competitiveness.

According to Hoffman (2016), greener operations minimize capital costs. Green lending, where

proceeds applications have a tie to specific low-carbon projects, provides group members with

new opportunities to acquire cheaper finance. Again, the low-carbon evolution creates demand

for stakeholder’s sustainable services and goods. The majority of individuals compare the

seriousness of climate change to pandemics, whereby they want it highlighted in recovery

planning.

The group has capitalized on this attitude to increase market share and enhance brand

loyalty among concerned consumers. The push for healthier and cleaner energy motivates

workers, suppliers, and customers. By reducing emissions and those of the suppliers,

stakeholders save materials and energy costs, attract and retain talent, serve new customer needs,

and enhance reputation. The combination of environmental investment, structural reforms, and

climate change policies are significant to promote sustainable and inclusive growth. The three

elements result in improved individuals’ skills, fostering employment access, and increasing

market competition. Warmer temperatures reduce the winter heating cost and result in healthier

outdoor lifestyles.

Stakeholder’s Position to Address Climate Change

Investors need to consider the climate change threat as a serious issue due to the mandate

of ensuring stable returns within long periods (Pearse, 2016). The group’s board of directors

helps capture climate opportunities by focusing on long-term value and reviewing corporate

strategy. Directors also attract talent and increase staff satisfaction to produce lower emissions

than competitors do. Here, stakeholders make emission reduction targets that do not exceed 1.5

C warming and ambitious plans to meet the target. As patriotic citizens, group members aim to

work with government leaders concerning climate action. They advocate that citizens vote in

leaders who view climate change as a serious issue. The leaders should set science-based targets

and implement clear plans to reduce harmful carbon emissions.

The group also enhances legal accountability by urging the government to follow its

commitments. Directors help to ensure that their tactics keep sight of the amount of money that

low-carbon opportunities hold. Again, stakeholders adjust to energy-efficient light tubers and

unplug electronics such as computers when not in use to save energy. As investors, stakeholders

focus on talking to individuals concerning climate changes using trusted people such as family

members, loved ones, and peers. Here, they encourage the public to make climate-friendly diets

by buying local and organic products. Individuals should focus on life’s humble pleasures by

being with loved ones and spending time in nature to make a difference. Stakeholders urge

individuals to reduce transportation emissions by advocating for bike lanes, flying less, car

sharing, and public transit. Additionally, they encourage communities to participate in the clean-

energy economy by searching for renewable energy projects with a return on investment.

Bibliography

Guyatt, D. (2019). Institutional Investors and the Behavioural Barriers to Taking Action on

Climate Change. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3598847

Hoffman, A. (2016). Communicating About Climate Change with Corporate Leaders and

Stakeholders. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2767545

Pearse, R. (2016). Gender and climate change. Wiley Interdisciplinary Reviews: Climate Change,

8(2), e451. https://doi.org/10.1002/wcc.451

Peker, E. (2020). Urban water management in Istanbul: exploring the challenges in the face of

climate change. Heritage Turkey, 10, 29-29. https://doi.org/10.18866/biaa2020.14