Business and Environment

The vital connection between the natural environment and the business world has long been a central focus of our research at HBS – from Richard Vietor’s study of business-government relations in U.S. energy policy in the 1980’s to Michael Porter’s new concept of the relationship between the environment and competition in the 1990’s. Today, with depleting natural resources, growing pollution, and other environmental challenges reaching crisis levels worldwide, our faculty members are joining forces with peers from across HBS and Harvard University to study how to develop environmentally sustainable business models that create both shareholder value and social value. We are focusing on the following areas:
  • Corporate environmental strategy, operations and reporting
  • Sustainable cities and infrastructure
  • The role of government and environmental policy
  • Clean energy generation and demand-side energy efficiency
  • The effective management of natural resources essential to human prosperity
The interdisciplinary nature of our research enables our faculty to study the field of business and the environment from various angles as we draw on a wide range of unique perspectives. For example, Robert Eccles of the Organizational Behavior unit collaborated with George Serafeim of Accounting and Management to analyze sustainability reporting standards. As another example, focusing on the importance of innovation to the environment, Entrepreneurial Management professors Joseph Lassiter, Ramana Nanda, and Michael Roberts investigated the $38 billion of stimulus funding aimed at developing U.S. clean technology, while Mike Toffel of the Technology and Operations Management unit identified circumstances when the private sector rather than government can effectively monitor environmental performance. As our research contributes new insights, we are getting closer to understanding how business can help address the world’s looming and current environmental crises, and foster a more sustainable future for both business and society.
 
  1. Green Mountain Coffee Roasters, Inc.: Taking on seasonal starvation in Latin America

    A company with a strong commitment toward corporate social responsibility since its founding days, Green Mountain faced an ethical decision point in 2007 as new information from the field uncovered a chronic dire problem facing coffee communities - seasonal starvation. Company leaders are driven to re-assess their social impact and address this widespread problem while aligning their efforts with their broader, rapidly expanding business of selling coffee.

    Keywords: Fair Trade; coffee; Corporate Social Responsibility and Impact; Environmental Sustainability; Food and Beverage Industry; Consumer Products Industry; Latin America; Central America; Mexico; Guatemala; Nicaragua;

    Citation:

    Marquis, Christopher, and Zoe Yang. "Green Mountain Coffee Roasters, Inc. Taking on seasonal starvation in Latin America." Harvard Business School Case 414-065, April 2014.
  2. Corporate and Integrated Reporting: A Functional Perspective

    In this paper, we present the two primary functions of corporate reporting (information and transformation) and why currently isolated financial and sustainability reporting are not likely to perform effectively those functions. We describe the concept of integrated reporting and why integrated reporting could be a superior mechanism to perform these functions. Moreover, we discuss, through a series of case studies, what constitutes an effective integrated report (Coca-Cola Hellenic Bottling Company) and the role of regulation in integrated reporting (Anglo-American).

    Keywords: sustainability; sustainability reporting; integrated reporting; corporate reporting; corporate accountability; corporate social responsibility; Corporate Disclosure; disclosure; accounting; Corporate Accountability; Corporate Disclosure; Integrated Corporate Reporting; Corporate Social Responsibility and Impact;

    Citation:

    Eccles, Robert, and George Serafeim. "Corporate and Integrated Reporting: A Functional Perspective." Harvard Business School Working Paper, No. 14-094, April 2014.
  3. Promoting Corporate Sustainability through Integrated Reporting: The Role of Investment Fiduciaries and the Responsibilities of the Corporate Board

    This book is a comprehensive reference work exploring recent changes and future trends in the principles that govern institutional investors and fiduciaries. A wide range of contributors offer new perspectives on dynamics that drive the current emphasis on short-term investment returns. Moreover, they analyze the forces at work in markets around the world, which are bringing into sharper focus the systemic effects that investment practices have on the long-term stability of the economy and the interests of beneficiaries in financial, social, and environmental sustainability. This volume provides a global and multi-faceted commentary on the evolving standards governing institutional investment, offering guidance for students, researchers, and policy makers interested in finance, governance, and other aspects of the contemporary investment world. It also provides investment, business, financial media, and legal professionals with the tools they need to better understand and respond to new financial market challenges of the twenty-first century.

    Keywords: Governance; Integrated Corporate Reporting; Institutional Investing; Financial Services Industry;

    Citation:

    Eccles, Robert G., J. Herron, and George Serafeim. "Promoting Corporate Sustainability through Integrated Reporting: The Role of Investment Fiduciaries and the Responsibilities of the Corporate Board." Chap. 31 in Cambridge Handbook of Institutional Investment and Fiduciary Duty, edited by James P. Hawley, Andreas G.F. Hoepner, Keith L. Johnson, Joakim Sandberg, and Edward J. Waitzer, 403–415. Cambridge University Press, forthcoming. (Due in April 2014.)
  4. Waste, Recycling and Entrepreneurship in Central and Northern Europe, 1870–1940

    This working paper examines the role of entrepreneurs in the municipal solid waste industry in industrialized central and northern Europe from the late nineteenth century to the 1940s. It explores the emergence of numerous German, Danish, and other European entrepreneurial firms explicitly devoted to making a profitable business out of conserving and returning valuable resources to productive use, while maintaining public sanitation and in many cases offering nascent environmental protections. These ventures were qualitatively different from both earlier smaller private waste traders, and the later garbage agglomerates, and have been neglected in an era that historians have treated as a period of municipalization. These entrepreneurs sometimes had strikingly modern views of environmental challenges and the need to overcome them. They initiated processes for sorting and recycling waste materials that are still employed today. Yet it proved difficult to combine making profits and achieving social value in accordance with the “shared value” model of today. As providers of public goods such as health and sanitation and a cleaner environment, the entrepreneurs were often unable to capture sufficient profits to sustain businesses. Recycled-goods markets were volatile. There was also a tension between the constant waste stream on the collection side and a seasonal/cyclical demand for recycled products. The frequent failure of these businesses helps to explain why in more recent decades private waste companies have been associated with late entry into recycling, often trailing municipal governments and non-profit entities.

    Keywords: Environmental Entrepreneurship; business history; Entrepreneurship; Health; History; Green Technology Industry; Germany; Denmark; Hungary; United Kingdom;

    Citation:

    Jones, Geoffrey, and Andrew Spadafora. "Waste, Recycling and Entrepreneurship in Central and Northern Europe, 1870–1940." Harvard Business School Working Paper, No. 14-084, March 2014.
  5. Royal Caribbean Cruises Ltd.: Safety, Environment and Health

    In January 2014, Gary Bald, senior vice president of Safety, Environment and Health at Royal Caribbean Cruise Lines (RCL), prepared for a review meeting with the company’s chief executive, Adam Goldstein, and chairman, Richard Fain. Prior to joining RCL in 2006, Bald had spent 28 years with the Federal Bureau of Investigation. After seven years of upgrading security for the cruise line, Bald stated, “We’ve come a long way, but what keeps me up at night is what I don’t know.” As he prepared for his meeting with Fain and Goldstein, Bald considered whether his department’s current initiatives would be sufficient to maintain RCL’s position at the cutting edge of cruise industry best practice, and whether RCL could and should differentiate itself in marketing from its competitors in the areas of safety, environment and health.

    Keywords: marketing; Market segmentation; operations; shipbuilding; travel industry; cruising; cruise lines; Royal Caribbean; Carnival; environmental and social sustainability; environment; safety; Security; health; public health; environmental protection; health care; International; Safety; Environmental Sustainability; Travel Industry; Health Industry; Europe; West Indies; Mexico; United States; United Kingdom;

    Citation:

    Quelch, John A., and Margaret L. Rodriguez. "Royal Caribbean Cruises Ltd.: Safety, Environment and Health." Harvard Business School Case 514-069, February 2014.
  6. Integrated Reporting and Investor Clientele

    In this paper, I examine the relation between Integrated Reporting (IR) and the composition of a firm’s investor base. I hypothesize and find that firms that practice IR have a more long-term oriented investor base with more dedicated and fewer transient investors. This result is more pronounced for firms with high growth opportunities, not controlled by a family, operating in ‘sin’ industries, and exhibiting more stable IR practice over time. I find that the results are robust to the inclusion of firm fixed effects, controls for the quantity of sustainability disclosure, and alternative ways of measuring IR. Moreover, I show that investor activism on environmental or social issues or a large number of concerns about a firm’s environmental or social impact leads a firm to practice more IR and that this investor or crisis-induced IR affects the composition of a firm’s investor base.

    Keywords: sustainability; sustainability reporting; integrated reporting; reporting; disclosure; disclosure strategy; investor behavior; investor communication; investment management; corporate accountability; corporate social responsibility; Behavior; Integrated Corporate Reporting; Corporate Social Responsibility and Impact; Investment;

    Citation:

    Serafeim, George. "Integrated Reporting and Investor Clientele." Harvard Business School Working Paper, No. 14-069, February 2014. (Revised April 2014.)
  7. BYOB: How Bringing Your Own Shopping Bags Leads to Treating Yourself, and the Environment

    As concerns about climate change and resource availability become more central in public discourse, using reusable grocery bags has been strongly promoted as an environmentally and socially conscious virtue. In parallel, firms have joined policy makers in using a variety of initiatives to reduce the use of plastic bags. However, little is known about how adopting reusable bags might alter consumers' in-store behavior. Using scanner panel data from a single California location of a major grocery chain, and completely controlling for consumer heterogeneity, we demonstrate that bringing your own bags simultaneously increases your purchases of environmentally conscious and indulgent (hedonic) items. Supporting these effects, we use experimental methods to demonstrate that participants who imagined shopping with their own bags are more likely to spontaneously consider purchasing chips or dessert items, and indicate relatively higher willingness to pay for foods in these categories, as well as for organic foods. Furthermore, we show that the impact on organic and indulgent items is dissociable in a manner dependent on the consumers' motivation for bringing bags. These findings have implications for decisions related to product pricing, placement and assortment, store layout, and the choice of strategies to increase the use of reusable bags.

    Keywords: grocery shopping; reusable bags; licensing; priming; goals; hedonic; Motivation and Incentives; Consumer Behavior; Attitudes; Environmental Sustainability;

    Citation:

    Karmarkar, Uma R., and Bryan Bollinger. "BYOB: How Bringing Your Own Shopping Bags Leads to Treating Yourself, and the Environment." Harvard Business School Working Paper, No. 14-065, January 2014.
  8. The Kursk Submarine Rescue Mission

    The Kursk, a Russian nuclear-powered submarine sank in the relatively shallow waters of the Barents Sea in August 2000, during a naval exercise. Numerous survivors were reported to be awaiting rescue, and within a week, an international rescue party gathered at the scene, which had possessed between them all that was needed for a successful rescue. Yet they failed to save anybody. Based on the recollections and daily situational reports of Commodore David Russell, who headed the Royal Navy's rescue mission, the case explores how and why this failure—a classic coordination failure—occurred. The Kursk rescue mission also illustrates the challenges of pluralistic risk and disaster management, and asks students to consider how to bring about solutions in the face of pluralistic risk issues, such as the depletion of natural resources and many other disasters, when multiple parties with competing and often conflicting values and expertise have to learn to coordinate and establish a virtual, well-aligned organization.

    Keywords: Risk Management; Moral Sensibility; Leadership; Organizational Structure; Crisis Management; Failure; Cooperation; Cross-Cultural and Cross-Border Issues; Norway; United Kingdom; Russia;

    Citation:

    Mikes, Anette. "The Kursk Submarine Rescue Mission." Harvard Business School Case 114-046, January 2014.
  9. CleanSpritz

    Sales of CleanSpritz all-purpose cleaning spray have been steadily declining for the past five years, and management believes the decline correlates to a growing environmental concern among U.S. consumers. CleanSpritz's management is considering several options to address the environmental concerns in hopes of reversing the decline in revenue: re-launching the current product; adding a new product that includes stronger concentrate in a recyclable pouch; adding a new stronger concentrate in a dissolvable packet; or keeping the business status-quo. Students must present their recommendations for the most effective strategy, keeping in mind the potential risks of each alternative. Students learn to demonstrate the importance of packaging in the marketing mix, analyze the costs and benefits of being a first mover, and learn about the decision-making process for a product extension that represents a creative attempt to rejuvenate a mature brand. This case can be used in courses on marketing management, product management or new product development, or marketing and social responsibility.

    Keywords: Product Positioning; Competition; Marketing Strategy; Corporate Social Responsibility and Impact; Performance Improvement; Environmental Sustainability; Product Launch; Product Development; Consumer Products Industry;

    Citation:

    Quelch, John A., and Alisa Zalosh. "CleanSpritz." Harvard Business School Brief Case 914-537, January 2014.
  10. Reinventing State Capitalism: Leviathan in Business, Brazil and Beyond

    In this book we describe the transformation of state capitalism from a model in which governments owned and ran corporations and broadly controlled the allocation of financial resources into two new varieties of state capitalism: Leviathan as a majority and as a minority investor. In this book we study the implications of such transformation using detailed data from Brazil between 1976 and 2009. In the Leviathan as a majority investor governments have started to list state-owned enterprises, have selected professional managers to run them, and have given them more financial autonomy. We argue that the transformation from owner and manager to majority shareholder has reduced many agency problems commonly faced by SOEs, but has not reduced the temptation governments face to intervene in the operation of large strategic enterprises. In the Leviathan as a minority shareholder mode, governments have small equity ownership in corporations and in general do not intervene in management. We find evidence that such equity investments allow firms to alleviate capital constraints and increase capital expenditures. Yet we also find instances in which governments use their minority positions to intervene in the management of firms, especially in natural resource industries.

    Keywords: State capitalism; state-owned enterprises; industrial policy; development banks; Capitalism; Financial Markets; corporate governance; corporate governance theory; CEO effects; Public Sector; Economic Systems; Financial Institutions; Corporate Governance; Business and Government Relations; Governing and Advisory Boards; State Ownership; Privatization; Public Ownership; Emerging Markets; Banking Industry; Mining Industry; Energy Industry;

    Citation:

    Musacchio, Aldo, and Sergio G. Lazzarini. Reinventing State Capitalism: Leviathan in Business, Brazil and Beyond. Cambridge: Harvard University Press, 2014.
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