Corporate Risk Tolerance and Acceptability towards Sustainable Energy Transition

Muhammad Rafiq,Shumaila Naz,Syed Muhammad Danish,Ahsan Akbar,Marcela Sokolová,Saif Maqbool,Syed Arslan Haider

doi:10.3390/en15020459

Abstract

The omnipresence of risk prevails in almost every aspect of human life. Individuals and societal factors are pivotal in the decision-making process to judge acceptability and tolerability of risk. Tolerability of risk (ToR) is characterized by dynamism pinned in the process of decision making that helps to gauge the society and individual’s risk. The energy transition implies switching the energy system from fossil fuels or any traditional mechanism to modern renewable sources that are sustainable. The energy transition is paramount important in the current global energy system to attain sustainable goals for organizations. This study used the positivism research paradigm to address the research questions. The quantitative approach helps to examine the cause-and-effect relationship. It also helps to collect systematic information to meet the objectives of the research. A total sample of 300 was selected for the data collection from renewable energy companies. The study used positivism research philosophy applied deductive approach. The data is analyzed through PLS-SEM. It is summarized that the scale of risk acceptability and tolerability in Pakistan is moderate which encourages companies to work progressively and increases sociocultural activities to make society a partner of this new shift in energy transition that will ultimately increase the level of risk acceptability. Nevertheless, as a society, people are neither high-risk takers nor risk avoiders due to income constraints, macroeconomic uncertainty, and political instability.

Highlights

The organizations that do not forecast risk probability cannot stay longer due to stiff competition in the corporate world
This study investigates the understanding of the impact of the sustainable energy transition on risk acceptability and tolerability
The study investigated the energies companies working in Pakistan that are using a sustainable energy transition model to measure the risk acceptability and tolerability

Summary

Introduction

The organizations that do not forecast risk probability cannot stay longer due to stiff competition in the corporate world. Risk is an undeniable factor in business operations, but it is an imperative factor for organizational growth and development, especially in energy transition [1]. The omnipresent risk is prevailing in almost every activity of human beings. To decide whether the risk is unacceptable, tolerable, or acceptable, risk analysis is a fundamental activity established for this precedent. The hazards potentially prevailing in societal activities associated with risk management remain a matter of sound public and technical interest. The establishment of many new frameworks of regulations is at its peak, except for the dearth in public debate on risk assessment at a general level, which needs remarkable extensions for an understanding of philosophical issues associated with tolerability and acceptability of risk especially related to sustainable energy transitions [3]. Changing the energy system is at the heart of public acceptability of risk towards the production of a more sustainable way of energy [4]

Results

Discussion

Conclusion