24.sept-Ecosystems

Climate Change in Organizations

• Climate change is increasingly treated as an organizational and strategic issue, not only as a corporate social responsibility issue. Businesses are expected to see climate change as both a risk and an opportunity that can affect their future.

• Wright and Nyberg (2017) studied how large companies responded to climate change. They found that companies initially made serious efforts to address climate change. They measured emissions, created targets, introduced new initiatives, and received strong support from senior management.

• A key problem, however, is that companies need to balance environmental goals with business goals. Climate change can therefore be translated into language that fits existing business priorities.

Wright & Nyberg (2017): From Climate Change to “Business as Usual”

The basic idea

• Wright and Nyberg show how companies can start with strong commitments to addressing climate change, but these commitments can become weaker over time.

• The process can be understood through three stages:

  • Framing → Localizing → Normalizing

• The overall process is:

  • Climate change as a major global challenge → translated into business opportunities and risks → turned into specific organizational activities → becomes part of normal business.

Stage 1: Framing

• Framing means deciding how climate change is understood and presented within the organization.

• They often framed climate change as something that could create business opportunities or business risks.

Climate change as a business opportunity

Companies could present climate action as a win-win situation, where environmental protection also benefits the company.

Examples include:

• Improved efficiency – using less energy and reducing costs.

• Innovation – developing new technologies and products.

• New markets – creating products and services for a low-carbon economy.

• Staff engagement – attracting and motivating employees.

• Shareholder value – increasing the economic value of the company.

The important point is that climate action becomes easier to support when it can also be presented as good for business.

Climate Change as a Business Risk

1. Regulatory risk

• The risk that governments introduce rules that increase the cost of carbon emissions.

• Examples:

  • Carbon taxes

  • Carbon markets

  • Mandatory limits on emissions

• Companies may respond by:

  • Lobbying against strict carbon regulation.

  • Building coalitions with groups that oppose climate regulation.

  • Investing in low-carbon technologies.

  • Investing in renewable energy.

  • Including carbon prices in investment decisions.

  • Supporting market-based forms of carbon regulation.

  • Voluntarily reporting emissions to avoid mandatory reporting requirements.

• Companies may respond to the possibility of regulation by trying to influence regulation, prepare for it, or find ways to reduce its impact on the company.

Climate Change as a Business Risk

2. Market risk

• The risk that competitors will gain an advantage by developing greener technologies or products.

• Companies may respond by:

  • Investing in R&D for green products.

  • Monitoring competitors and new technologies.

  • Buying companies that already have green technologies.

• A company may take climate change seriously because it is afraid that its competitors will become more successful by becoming greener.

Climate Change as a Business Risk

3. Reputational risk

The risk that customers will see a company as environmentally harmful and respond negatively.

Companies may respond by:

• Using green marketing and branding.

• Working with environmental NGOs.

• Presenting themselves as responsible corporate citizens.

• Emphasizing job creation and social responsibility.

Some companies may also argue that reducing emissions is ineffective, or even question the seriousness of climate change.

Companies may take environmental action partly because they want to protect their public image and reputation.

Climate Change as a Business Risk

4. Physical risk

• The risk that climate change directly damages business operations and infrastructure.

• Examples include:

  • Extreme weather.

  • Flooding.

  • Heat.

  • Changes in physical conditions affecting supply chains.

• Companies may respond through:

  • Climate modelling.

  • Scenario planning.

  • Protecting or relocating infrastructure.

  • Emergency plans.

  • Selling activities that are particularly vulnerable.

  • Working with suppliers to prepare for climate-related disruption.

• Climate change can physically disrupt the company's buildings, infrastructure, production and supply chains.

Stage 2: Localizing

• Localizing means taking climate change and turning it into specific actions that an organization can understand and manage.

• the company turns the general problem of climate change into practical issues and activities that fit its own organization.

• Three important processes are involved:

Incorporation

• Climate change becomes incorporated into the organization through:

  • New roles.

  • New teams.

  • New responsibilities.

  • New systems, such as insurance.

• Climate change becomes part of the organization's structure.

Commensuration

• Commensuration means turning something into numbers so that it can be measured and compared.

  • Measuring carbon emissions.

  • Creating emission targets.

  • Putting a number on environmental performance.

  • Comparing environmental costs and benefits.

• Climate change becomes something that can be measured and managed through numbers.

Proselytization

• Proselytization means actively trying to convince others to accept and support a particular idea.

• In this context, people within organizations become advocates for climate action. They explain why climate change matters and why the organization should respond.

• People try to spread and gain support for climate-related ideas inside the organization.

Stage 3: Normalizing

• This is called the “unhappy ending.” Normalizing means that climate initiatives become part of the organization's normal business activities. Instead of focusing mainly on climate change, the organization starts asking how these initiatives can help its usual business goals.

• Climate initiatives are then judged by things like profit, efficiency, growth and competitiveness. Because of this, the original environmental goals can become weaker or less important. Managers may try to make climate activities fit with the main goal of making more money for shareholders.

• The organization may still do things that are good for the environment, but the climate initiative no longer challenges the way the business normally works. Climate change simply becomes part of “business as usual.”

New Corporate Environmentalism

• New Corporate Environmentalism means that companies take an active role in dealing with environmental problems instead of only following environmental laws. They may reduce emissions, use greener technology, improve efficiency, set environmental goals, work with NGOs or create green products.

• This can lead to real environmental changes, so it is not necessarily just greenwashing. However, companies often support environmental actions when these actions also benefit the business. For example, they may continue with green initiatives when they can increase profit, growth, competitiveness or shareholder value.

• This means that companies can make environmental improvements without changing the basic economic system or business practices that contribute to environmental problems in the first place.

The Problem: Capitalism and Carbon

• A central problem is the connection between economic growth and carbon emissions.

• Modern capitalism is strongly dependent on continuous economic growth.

• The problem is that climate change requires rapid decarbonization, while companies and economies are often expected to keep growing.

Why Can't We Rely Only on Business and Markets?

1. Temporal disconnect

• Businesses often focus on short-term goals, like yearly profits and immediate growth. Climate change requires thinking about long-term effects. This can make it difficult for businesses to focus on climate issues that may only show their effects much later.

2. Complicity

• Businesses are not only part of the solution. They are also part of the problem because their activities can contribute to pollution and climate change. This creates a contradiction because companies are expected to help solve a problem that they also help create.

3. Lack of central authority

• There is no single global authority that can force every company to take the same action on climate change. Dealing with climate change requires cooperation between businesses, governments and different industries. Because of this, relying only on companies to voluntarily take action is unlikely to create the large changes needed.

Changing Our Worldview: Ecosystems

• From exploiting Earth to understanding interdependence

• A traditional worldview can treat Earth as something humans can exploit for economic purposes.

• An ecosystem perspective instead emphasizes that:

• Humans are part of nature, not separate from it.

• We depend on other organisms, natural resources and environmental systems.

• The idea of “Spaceship Earth” highlights that the planet is a limited system in which everything is connected.

• We are not outside the system controlling it. We are part of the system.

What Is an Ecosystem?

• An ecosystem is a community of living organisms that interact with each other and with their environment.

• More broadly, it can be understood as a complex system of interdependent relationships.

• Everything is connected to something else.

• Important features of ecosystems include:

• Diversity

  • Different organisms, actors and forms of knowledge exist within the system.

• Interaction

  • The different parts of the system affect each other.

• Adaptation

  • Actors and organisms need to adapt when the environment changes.

• Interdependence

  • No single actor exists completely independently from the others.

Ecosystem vs Egosystem

• An egosystem focuses mainly on the individual organization and its own interests. The organization focuses on its own performance, growth and shareholders.

• An ecosystem asks: “How does our organization affect and depend on the wider system?”

• The focus shifts from individual organizational success to relationships, interdependence and systemic consequences.

Shareholder Value and the Egosystem

• The traditional corporate goal is shareholder value.

• This means increasing the wealth of the company's owners through:

  • Dividends.

  • Increasing the share price.

• This can encourage companies to treat profit as the main measure of success.

• The problem is that the wider consequences of business activity can be treated as externalities.

• Externality

• An externality is a cost or benefit created by an economic activity that affects people who are not directly involved in that activity.

• The company receives the economic benefit, while someone else experiences part of the environmental cost.

• This can lead to an egosystem perspective, where the organization focuses on its own success while the wider consequences are treated as somebody else's problem.

Circular Economy Systems

• Systemic collective action approach to sustainability: cooperation between businesses and other actors

• Waste as a raw material: recycling, reuse, and remanufacturing – circular re-use of residual materials

  • We can make waste efficient

  • If companies work togetheer they can find a way to reuse waste

• Closed-loop economic system: maintaining value in resources as they are reused and recycled across multiple organizational owners

Why Are Circular Economy Systems Difficult to Implement?

1. Lack of perceived value

• Residual materials are often seen as waste rather than valuable resources.

• For example, after a building is demolished, thousands of bricks may be left behind. Technically, they could be reused, but they may not initially be seen as valuable.

2. Lack of scale

• A material might have value, but there may not be enough of it, or it may be too difficult or expensive to recover.

• So the material may have theoretical value without being economically practical.

3. Lack of information

• Companies may not know:

  • What resources other companies have.

  • Who needs those resources.

  • When they will become available.

  • What their quality is.

• Companies may also be unwilling to share information because it could reveal commercially sensitive information.

4. Lack of governance

• There may be no clear system for coordinating all the different actors.

• Governments, companies, NGOs and other organizations may have different priorities and operate at different speeds.

• Therefore: Who coordinates the system?

• This is one of the main governance problems.

Many actors must cooperate

• Circular economy systems require cooperation across industries and across the value chain.

• This creates the central challenge:

• How do we bring different organizations together to create one functioning circular system?

How Can Circular Economy Systems Work?

1. Mutual Adjustments

• Actors need to adapt their behaviour to each other.

• This can involve three types of adjustment.

a)        role adjustments – from government to ecosystem facilitator, from NGO to entrepreneurial innovator, from private sector firm to steward of recycling. Actors may take on new roles.

b)        governance logic adjustments – open information sharing, giving up resource autonomy. Actors may need to change how they think about control and information.

c)        temporal frame adjustments – public sector aimed at speeding up regulatory processes or accepting to progress at a pace that is acceptable for the whole collective. Different actors work at different speeds.

• Actors change how they work so that cooperation becomes possible.

How Can Circular Economy Systems Work?

2. Practices for Collective Agency

• The second element is developing the ability to act together.

• Actors need practices that allow them to share information, learn together and make collective decisions.

a)        Protocols and shared strategies – experimentation, collective decision- making processes, standardization practices (e.g., ecolabels to develop shared goals and allowing for recognition of milestones). These help different organizations understand what they are trying to achieve together.

b)        Building and sharing systemic knowledge – e.g., creating a supportive consultancy firm, searching for advanced knowledge outside the main system, maintaining databases.

• Actors build the knowledge and practices they need to work together.

How Can Circular Economy Systems Work?

3. Structures for Sharing Resources

• The third element is creating stable structures that make resource sharing possible.

• Support diverse, interconnected units of governance

a)        setting up long-term collective plans for resource use and monitoring outcomes to quantify the benefits

b)        platforms for sharing resources: regional sustainability centers, resource exchange platforms and inventories, and resource and material reprocessing hubs as public/private partnerships

• Actors create practical systems that allow resources to move between organizations.

The Commons

• The idea of the commons provides another way of thinking about resources.

• A commons is a resource that a group manages collectively for individual and shared benefit.

• The commons therefore emphasizes:

  • Stewardship rather than exploitation

  • Long-term thinking rather than short-term profit

  • Multiple forms of value rather than only financial value

  • Relationships rather than simple transactions

  • Collective rather than individual benefit

Polycentric Governance

• Polycentric governance is a way of organizing collective action without relying on one central authority

• These different centres can operate at different levels while sharing some common values and rules.

• Multiple, nested, autonomous centers of decision-making at various levels

• Working within a shared set of values and rules

• Spontaneous order or emergent system through ‘evolutionary’ processes of adaptation (e.g., the scientific community) - actors mutually adjust their activities

• Mix of governance mechanisms from different sectors

Cosmolocalism

• Cosmolocalism combines global digital knowledge with local production.

• Digital knowledge and designs can be shared openly, while physical products can be produced locally.

1) Why is climate change described as a wicked or even super-wicked problem that renders the development of strong corporate responses particularly difficult?

Wright and Nyberg describe climate change as a wicked problem because it is extremely complex and cannot be solved by one organization or through one simple solution. Climate change involves many different actors, countries, industries and interests, and actions in one place can affect people and organizations elsewhere. There is also disagreement about what should be done and who should be responsible for the costs. It is super-wicked because the problem becomes even harder when we consider time. Climate change requires action now, but many of its worst effects will happen in the future. At the same time, the actors that contribute to the problem are also expected to help solve it. Businesses therefore face a difficult situation: they are expected to reduce their environmental impact while also continuing to grow, compete and make profits. This makes it difficult for corporations to develop strong responses that challenge their normal ways of doing business.

2) How do the authors explain New Corporate Environmentalism? Why are the corporate environmental activities under study, on the one hand, more than simple ceremonial green facades (greenwashing) and, on the other hand, unable to engage with the grand challenge of climate change?

New Corporate Environmentalism describes the way businesses increasingly respond to environmental problems by making them part of normal business activities. Companies do not simply ignore climate change. They introduce real environmental initiatives, such as reducing emissions, improving energy efficiency, investing in cleaner technologies and setting environmental targets. This means their activities are more than simple greenwashing, where companies only create the appearance of being environmentally responsible without making meaningful changes. However, Wright and Nyberg argue that these activities still have important limits. Companies translate environmental problems into terms that fit their existing business goals, such as efficiency, innovation, reputation, risk management and profit. As a result, environmental initiatives can produce real improvements but do not challenge the deeper economic system or business practices that contribute to climate change. In this way, corporate environmentalism can be genuine while still being unable to deal with climate change as a grand challenge requiring much deeper change.

3) The paper explains why corporate environmental initiatives deteriorate over time despite initial strong and diverse commitments to address climate change. Explain how the ‘translation’ of potentially challenging ideas and concepts plays a major role in this process. Describe the three key stages in which the corporations under study translate climate change into ‘business as usual’.

The authors argue that corporate environmental initiatives often become weaker over time because organizations translate challenging ideas into forms that fit their existing ways of working. Translation means that climate change is not simply copied into the organization. Instead, its meaning changes as organizations connect it to familiar business ideas and priorities. The authors identify three main stages. First is framing, where climate change is presented as an important issue and companies develop ambitious environmental commitments. Second is localizing, where the broad problem is turned into specific organizational issues, such as energy efficiency, new technologies, costs or business opportunities. This makes climate change easier to manage but also reduces its wider meaning. Third is normalizing, where environmental activities become part of ordinary business routines. At this stage, initiatives are increasingly judged according to normal business criteria such as efficiency, profitability and competitiveness. Climate change therefore moves from being a challenge to the existing business model to becoming part of business as usual

4) Why can societies not rely on business and market responses to the climate crisis, according to Wright and Nyberg?

Wright and Nyberg argue that society cannot rely on businesses and markets alone because businesses are mainly organized around economic goals such as profit, growth and competitiveness. Climate change, however, requires changes that can challenge these priorities and sometimes require organizations to accept costs or limits in the short term for benefits that may only appear much later. Companies can therefore respond to climate change in ways that are useful but still compatible with their existing business models. For example, they may invest in cleaner technologies or become more energy efficient, but they can avoid changes that would fundamentally challenge how they make money or how the wider economic system works. Market competition also encourages companies to prioritize activities that create economic value. Because of this, climate action can gradually be translated into business opportunities rather than being treated as a reason to rethink the system itself. The authors therefore question whether voluntary corporate action and market solutions can address climate change at the scale required.

1) Explain how the authors define ‘circular economy systems’. Why is circularity beneficial or needed in view of global ecosystems but also economic and social systems? Why are circular economy systems difficult to implement?

Patala et al. (2022) define circular economy systems as systems where resources and materials are kept in use for as long as possible instead of being used once and then thrown away. The waste or leftover materials from one organization can become useful resources for another organization. Circularity is needed because the current linear economy puts pressure on natural resources and ecosystems by constantly extracting new materials and producing waste. A circular economy can reduce this pressure while also creating economic opportunities by making better use of resources. It can also have social benefits because it can support cooperation and create new forms of economic activity. However, circular economy systems are difficult to implement because resources are often privately owned. Organizations may not know who needs their leftover resources, and they may have little reason to share information or cooperate. Different organizations also have different interests, technologies and needs, making coordination difficult.

2) Why is self-regulation among actors not feasible in circular economy systems?

The authors argue that self-regulation is not enough to govern circular economy systems because the different actors are independent and have their own interests. A company may own a residual resource, but it does not necessarily benefit directly from making that resource available to another organization. There can also be uncertainty about the quality, quantity and timing of the resource. This makes it difficult for organizations to coordinate their behaviour on their own. Circular economy systems also involve many actors whose activities depend on each other. One organization might need another organization's leftover material, while transport companies, municipalities or other organizations may also need to be involved. Because these actors do not have one shared authority or automatically shared goals, simply expecting them to regulate themselves is unlikely to work. Some form of collective governance and coordination is therefore needed to connect the different actors and make resource sharing possible.

3) How do the authors explain the theoretical idea of polycentric governance? What are the main dimensions of the concept? What are the advantages of polycentric governance in comparison to other inter-organizational perspectives like network theory or collective action?

The authors describe polycentric governance as a system where several independent actors or decision-making centres govern a problem together, rather than one central authority controlling everything. These actors can make their own decisions but also interact, cooperate and adjust their actions to each other. The main dimensions of polycentric governance are therefore multiple centres of decision-making, independence, interaction and coordination. This is useful for circular economy systems because no single organization usually has control over all the resources and activities needed to make them circular. Compared with network theory, polycentric governance focuses more on how different centres actually govern and coordinate activities, rather than mainly looking at relationships between actors. Compared with collective action theory, it also recognizes that actors can remain independent while still developing shared ways of governing resources. This makes polycentric governance useful for understanding complex systems where organizations have different interests but still need to work together.

4) Which three main interacting elements are employed by actors in the studied circular economy systems to govern privately owned residual resources as a ‘virtual commons’?

The authors identify three interacting elements that actors use to govern privately owned residual resources as a kind of “virtual commons.” The first is mutual adjustment, where actors change and adapt their behaviour in response to each other. This helps them deal with differences in their needs, resources and activities. The second is collective agency, which means that actors develop the ability to act together and recognize that cooperation can achieve things that they could not achieve alone. The third is structures for sharing resources. These are the more stable arrangements, practices or systems that allow residual resources to be exchanged and used by others. The three elements work together rather than separately. Actors first adjust to each other, develop the ability to act collectively, and then create structures that support continued resource sharing. Through these processes, privately owned resources can function like a virtual commons, even though they are not actually jointly owned.