4.1. Korean Companies’ Carbon Management Status
provides a statistical summary of CMAs adopted by the surveyed companies. The reliability of construct of the 20 CMA items was tested by calculating Cronbach’s alpha. The scale coefficient of 0.78 confirmed the reliability of a company’s answers on their CMAs according to the criteria that the alpha should be larger than 0.7 [51
A large portion of the companies implemented CMAs belonging to STAGE 1 and STAGE 2, but not CMA02 (In-house training program for energy saving and GHG emission reduction). Considering the activities in STAGE 1 and 2 are practices that companies used to perform under conventional environment management, this result is intuitively expected to some extent and also in the line with existing studies [18
Among STAGE1, CMA01 (Collect information on energy saving and carbon mitigation policies) and CAM03 (Daily energy saving activities in office) are the most adopted CAM items, with a ratio of ‘YES’ answers of 91% and 85%, respectively. Meanwhile, companies display a relatively low frequency of internal training on energy saving (CAM02, 38%), with such training possibly including learning based around the key drivers of climate change, measurement, methodologies, and application and performance management. The reason for the low score of CAM02 is likely because only divisions responsible for such, i.e., Energy Managers, Facility Managers, Environment Managers and Environmental Representatives are involved in this matter. This result is supported by the result of CAM 04, which is related to participating in training programs for energy saving and GHG emission reduction held by the national or local government. The participants from companies are those persons in divisions of such responsibility. The overall average is about 69%. If CAM02 is ignored as an item that did not adequately reflect local circumstances, the average rises to 80%.
The average percentage of practices for CMS in STAGE 2 is 72%. Individually, CMA05 (Targets for energy savings and GHG emission reduction) is practiced by 73% of companies, CMA 06 (Analysis on potential areas for energy savings and emission reduction) by 82% of companies, CMA 07 (Monitoring equipment on energy consumed facilities) by 59% of them and CMA 08 (Daily facility maintenance for energy saving and GHG emission reduction) by 78%. Most of them have set up energy saving and GHG mitigation targets and monitor their energy consumption status and further saving potential. This is likely because most ETS targeted companies used to be subjected by the ‘Target Management Scheme’ (TMS), a mandatory measurement to limit the energy consumptions and GHGs emissions launched in 2011. As TMS required the target entities to establish their inventories of GHG emissions, a necessary basis for the actual implementation of inventory for GHG were implemented in a company in early time [27
However, the activities in STAGE 2 were not likely to take place for companies’ capital allocation for low carbon investment. Thus moderate participation is scored for CMAs in STAGE 3, with an average of 55%: CMA09 (Internal guidance for energy GHG emission management, 52%), CMA11 (Purchase new production facilities to save energy and reduce GHG emissions, 60%) and CMA12 (investment to improve production process for energy savings and emission reduction, 71%). Yet, ‘established a team specialized for carbon pricing’ (CMA10) is relatively low, at 38%, most likely because most of the companies already have a division for environment and energy and merged the dual responsibilities of climate change and carbon pricing together without establishing a new team.
On the other hand, the participation rate of companies for more innovative and proactive CMS is poor. CMAs in STAGE 4, CMA13 (Optimization in transporting materials and goods, 43%), CMA14 (Energy mix to use more clean energy sources, 38%), CMA15 (Publication of sustainable reports, 21%) and CMA16 (Set up strategic carbon management (plan-do-check-act), 35%) achieved participation ratios in the range of 21–43%. Especially, carbon disclosing is one important factor of carbon performance companies are required to report regularly via publication, but only a few Korean companies, mainly large ones, published the report, which is consistent with the result, and which achieved the lowest score among those in STAGE 4.
Companies’ proactive carbon management categorized in STAGE 5 scored even less, with an average of 28%. The activity CMA20 (Green or carbon management accounting system, 11%) was implemented with the lowest ratio of ‘YES’ answers among activities of STAGE 5. In order to participate in emissions trading in the carbon market, it is a prerequisite for companies to conduct market analysis (CMA 19), set up an internal decision making process for emission trading (CMA 18), and allocate the necessary budget for emission trading (CMA 17). However, each activity has only been implemented in 22%, 36% and 42% of surveyed companies in this study, which explained the stagnant trading results of participation in the carbon market under K-ETS in the first and second compliance year (2015–2016) [52
Overall, these results imply that the main activities involved in Korean companies’ practices in accordance with carbon pricing policy have not progressed to the next level from that of conventional energy saving and environmental management, and that a company’s response to carbon pricing is based on mere compliance, indicating carbon management has not penetrated into their business cycles, in utilizing carbon assets.
further shows the distribution of companies’ TCMA. The average TCMA is 10.5, indicating a moderate level in adopting CMAs overall, of the surveyed companies. The number of companies with less than five activities is about seven. Half of the samples practiced 8 to 12 items of CMAs and less than 20% of the companies implemented 13 to 17 items of ESAs. Only 10% of the respondents practiced 18–20 of the activities.
4.4. Determinant Factors for Carbon Management in Korean Companies
As the TCMA and sub-categories of CMAs, STAGE 1, STAGE 2, STAGE 3, STAGE 4 and STAGE 5, are ordinal dependent variables, ordered logistic regressions were performed, with results given in Table 8
(STAGE 1 to 3) and Table 9
(STAGE 4 to 5 and TCAM). Results showed a significant association are shown in shade. The robustness of the results was tested by repeating regression with certain variables omitted. Three models were adopted: Model 1 includes external and internal factors but excludes controls; in Model 2, SECTOR is excluded; and Model 3 includes all the variables discussed earlier. The total observations of econometric analysis are 71 due to invalid data. The results indicate that top managers’ support (‘TOP_SUPPORT’) is a commonly significant determinant for all STAGEs of CMA and TCAM. Meanwhile, interestingly, different factors are significantly associated with each STAGE: technology level is associated with STAGE 1, government pressure negatively with STAGE 2, and energy price negatively with STAGE 3. The initial stages of carbon management, STAGE 1–3 are overall not related to the control variables, but are mainly influenced by external and internal factors.
For the higher level of CMA included in STAGE 4 and STAGE 5, together with top manager’s support, policy understanding on carbon pricing and carbon market is an essential factor leading to better performance of companies in carbon management. This result is consistent with several current studies. Noteworthy is that the internal carbon price of companies (‘IN_CARBON_PRICE’) is related to proactive carbon management. Companies that have higher internal carbon price are more concerned with carbon pricing policy and strategically respond to it.
On the other hand, this reveals to what extent government pressure (‘GOVERNMENT’) is effective in promoting corporate proactive carbon management as similarly appeared with the finding of positive coercive effects among firms in European Union (EU) addressing climate change [3
]. Interestingly, contrary to this result, government pressure was not an important factor in the results of a study that analyzed the determinants of energy conservation activities in energy-consuming industries in 2012 [18
]. At that time, we concluded that firms felt strong pressure on government regulation, nevertheless this did not act as a decisive factor in actual corporate energy activities. The survey was conducted at the end of 2011, and the introduction of ETS in Korea was discussed at that time. Based on these results of previous and current, it can be said that the Korean government policy, especially K-ETS, has become an important factor of corporate energy and carbon management.
At a high level of carbon management in STAGE 4 and 5, company characteristics, i.e., sector, size, and type of production, are positively or negatively related. No significant relationship could be found between the externally mimetic pressures of ‘COMPETITION’ and ‘STAKEHOLDER’ with a company’s carbon management at any practice level, which were confirmed in other studies as important determinant factors for existing energy and environmental management in energy intensive industries [10
]. In effect, this means that participation in the carbon market, as well as concern over carbon pricing may not be considered issues as regards competition between companies or the relationship with stakeholders