Investment Management Essay Question
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Explain how you will respond when the President of Norges Bank Investment Management, which manages the assets of the world’s largest sovereign wealth fund, “The Government Pension Fund Global of Norway,” calls upon you in your Michigan office to tell you that the Fund is no longer happy with your company’s record of caring for the environment. Specifically, the President tells you that her fund wants Ford to announce the cessation of manufacturing of all gasoline and diesel powered cars and trucks within two years. The Fund owns 4.99% of Ford common stock and the President indicates that she has had informal contacts with Carl Icahn, Bill Ackman, Paul Singer and “others who are interested in Ford’s future and in enhancing shareholder returns from their investments in Ford.”
SAMPLE ANSWER
Investment Management Essay Question
To address this problem, it is important to check on the cause of the problem and the alternatives for solving it. It is clear that the environmental pollution is emanating from the use of diesel and gasoline fuels, and that the Government Pension Fund Global is not happy with the continued use of these pollutants. Communication is an important aspect in management. I will inform the President of the Fund that I support her call for cessation of manufacturing of all cars and trucks that are powered by gasoline.
Corporate social responsibility requires a company to meet its obligations and to make decisions that are committed to the improvement of community welfare through corporate contributions and discretionary business practices. This includes environmental management, pollution management, waste management, biodiversity conservation, and pollution prevention and control. Since environmental pollution is seriously spoiling the company’s image in line with our corporate social responsibility, we need to adopt an environmental friendly approach to avoid the risk of losing the Fund and ultimate collapse. Accordingly, Ford is adopting a ‘Smart Movers’ approach whereby we will exploit all available opportunities established by the green consumers (Welford, nd). The company has realized that it is not prudent for a business to merely restrain itself to its financial impact. We realize the great impact that our company has been having on the environment as well as the community in which we operate. Indeed, the emissions from exhaust pipes, including carbon monoxide and carbon dioxide lead to air pollution and creation of smog. These gases also lead to climate change due to global warming. Thus, we consider it our responsibility to deal with all risks, stakeholder and market pressures, and conditions emerging in the course of our business. Our vision is to manufacture cars and trucks that do not emit fumes, which are harmful to the public and the environment.
Ford is going to adopt various ways to ensure that alternative fuels such as bio-diesel, electricity, LPG, and natural gas (Srisurapanon & Wanichapun, 2010) are adopted in two years’ time. Ford is ready to partner with such stakeholders as Carl Icahn, Bill Ackman and Paul Singer to ensure that there is a proper balance between the interests of the company and its corporate social responsibility. We gladly invite Paul Singer, Bill Ackman and Carl Icahn to come in to contribute to our shift to more efficient and reliable sources of energy for our cars and trucks. We also greatly need the Fund to contribute to our new move, owing to the fact that the adoption of alternatives to fossil fuels tends to have heavy financial requirements in the short-term period.
Despite the overwhelming expenses involved in the initial stages of adopting alternative sources to fossil fuels, we realize that it is very beneficial for us to go beyond regulatory standards due to the fact that this move will save on money and time, in addition to reducing hassles. It is evident that environmental friendly energy sources have the ability of paying dividends with regard to effectiveness and efficiency. As a result, Ford will have an opportunity to outshine its competitors and even attract more investors. We need the Fund’s good will to help us in achieving these goals. Thus, I would communicate all this to the President and ask her to be patient with us a little longer to get financial backups in order to shift to environmental friendly sources of energy.
References
Srisurapanon, V. & Wanichapun, C. (2010). Environmental Policies in Thailand and their Effects. Retrieved from: http://www.un.org/esa/gite/iandm/viroatpaper.pdf
Welford, R. (nd). Corporate Environmental Management: Systems and Strategies. Erthschan Publications Ltd.
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