Business and Environment

Business and Environment is a featured research topic and an initiative at Harvard Business School.
 
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, our faculty members focus on 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; and the effective management of natural resources essential to human prosperity.
  1. The Power of C.E.O. Activism: How Politically Outspoken Executives Sway Public (and Consumer) Opinion

    Aaron K. Chatterji and Michael W. Toffel

    Some CEOs are making news by taking public stances on controversial social issues largely unrelated to their core business. This article summarizes the insights from our research paper that shows that such "CEO activism" can influence public opinion and consumer attitudes.

    Keywords: leadership; Leadership &Corporate Accountability; Non-market Strategy; corporate social responsibility; politics; political influence; political strategy; political risk; equity; gender; climate change; Communication Strategy; Law; Leadership; Brands and Branding; Media; Problems and Challenges; Civil Society or Community; Social Issues; Public Opinion; United States; Georgia (state, US); North Carolina; Indiana; Indianapolis;

    Citation:

    Chatterji, Aaron K., and Michael W. Toffel. "The Power of C.E.O. Activism: How Politically Outspoken Executives Sway Public (and Consumer) Opinion." Grey Matter. New York Times (April 3, 2016), SR10. View Details
  2. Do CEO Activists Make a Difference? Evidence from a Field Experiment

    Aaron K Chatterji and Michael W. Toffel

    Several CEOs are receiving significant media attention for taking public positions on controversial social and environmental issues largely unrelated to their core business, ranging from gay marriage to climate change to gender equality. We provide the first evidence that such “CEO activism” can influence public opinion and consumer attitudes. Our field experiment examines the impact of Apple CEO Tim Cook’s public statements opposing a pending religious freedom law that critics warned would allow discrimination against same-sex couples. Our results confirm the influence of issue framing on public opinion and suggest that CEOs can sway public opinion, potentially to the same extent as prominent politicians. Moreover, Cook’s CEO activism increased consumer intentions to purchase Apple products, especially among proponents of same-sex marriage.

    Keywords: politics; policy; policy-making; corporate social responsibility; lobbying; campaign contributions; regulation; Leadership; Policy; Ethics; Governance; Social Issues; United States;

    Citation:

    Chatterji, Aaron K., and Michael W. Toffel. "Do CEO Activists Make a Difference? Evidence from a Field Experiment." Harvard Business School Working Paper, No. 16-100, March 2016. View Details
  3. Voluntary, Self-Regulatory and Mandatory Disclosure of Oil and Gas Company Payments to Foreign Governments

    Paul M. Healy and George Serafeim

    Transparency advocates argue that disclosure of oil and gas company payments to host governments for natural resources is a public good, helping to reduce corruption and increase accountability in resource rich countries. Yet we find a very low frequency of voluntary disclosures of payments to host governments by oil and gas firms, and negative stock price reactions for affected firms at the announcement of regulations mandating disclosure. This suggests that sample firm managers and their investors perceive that there are private costs of such voluntary disclosures, contributing to continued low transparency and weak governance in resource rich countries. However, we document that industry self-regulation has generated information to substitute for the gap in voluntary company disclosure. We also find some evidence that these disclosures are accompanied by lower country corruption ratings, suggesting that collective action may be an effective way for the industry to manage the private costs of disclosure and respond to public pressure to improve governance in resource rich countries.

    Keywords: transparency; regulation; industry self-regulation; disclosure; accountability; competition; Competition; Corporate Accountability; Corporate Disclosure;

    Citation:

    Healy, Paul M., and George Serafeim. "Voluntary, Self-Regulatory and Mandatory Disclosure of Oil and Gas Company Payments to Foreign Governments." Harvard Business School Working Paper, No. 16-099, March 2016. View Details
  4. Nuclear Energy: An Answer to Climate Change?

    Michael W. Toffel, Glen W. S. Dowell and James Weber

    Environmental activist groups have traditionally opposed nuclear energy. However, the growing environmental problems associated with global climate change require major changes to reduce the carbon intensity of electricity generation. Should environmental groups reverse course and support the construction of new nuclear plants—using technology that could be rapidly deployed at scale—to reduce greenhouse gas emissions that are causing global climate change?

    Keywords: nuclear energy; nuclear power; climate change; safety; activism; Energy; Energy Generation; Environmental Sustainability; Non-Governmental Organizations; Non-Renewable Energy; Energy Industry; United States;

    Citation:

    Toffel, Michael W., Glen W. S. Dowell, and James Weber. "Nuclear Energy: An Answer to Climate Change?" Harvard Business School Case 616-052, February 2016. View Details
  5. Greening Walmart: Progress and Controversy

    Rebecca Henderson and James Weber

    In 2005, Walmart, the world’s largest retailer, launched a sustainability initiative aimed at reducing waste and making the company more environmentally and socially conscious. By 2015, the company had made progress on multiple dimensions: energy efficiency in its stores and its supply chain, lower levels of greenhouse gas emissions, safer products for customers and manufacturers, and better treatment of its workers. The company promoted the idea that its size gave it significant influence in the economy and that if it took steps to operate more sustainably, and demanded its suppliers do the same, this would have an impact on its own bottom line and make the world a better place for everyone. Students can explore whether Walmart is making these changes to improve its battered public image, improve its bottom line, or because it is the right thing to do.

    Keywords: sustainability; Organizational Change and Adaptation; Business or Company Management; Motivation and Incentives; Reputation; Environmental Sustainability; Retail Industry; United States;

    Citation:

    Henderson, Rebecca, and James Weber. "Greening Walmart: Progress and Controversy." Harvard Business School Case 316-042, February 2016. View Details
  6. Transition to Clean Technology

    Daron Acemoglu, Ufuk Akcigit, Douglas Hanley and William R. Kerr

    We develop a microeconomic model of endogenous growth where clean and dirty technologies compete in production and innovation, in the sense that research can be directed to either clean or dirty technologies. If dirty technologies are more advanced to start with, the potential transition to clean technology can be difficult both because clean research must climb several rungs to catch up with dirty technology and because this gap discourages research effort directed towards clean technologies. Carbon taxes and research subsidies may nonetheless encourage production and innovation in clean technologies, though the transition will typically be slow. We characterize certain general properties of the transition path from dirty to clean technology. We then estimate the model using a combination of regression analysis on the relationship between R&D and patents, and simulated method of moments using microdata on employment, production, R&D, firm growth, entry and exit from the US energy sector. The model's quantitative implications match a range of moments not targeted in the estimation quite well. We then characterize the optimal policy path implied by the model and our estimates. Optimal policy makes heavy use of research subsidies as well as carbon taxes. We use the model to evaluate the welfare consequences of a range of alternative policies.

    Keywords: Technological Innovation; Entrepreneurship; Environmental Sustainability; Green Technology Industry;

    Citation:

    Acemoglu, Daron, Ufuk Akcigit, Douglas Hanley, and William R. Kerr. "Transition to Clean Technology." Special Issue on Climate Change and the Economy. Journal of Political Economy 124, no. 2 (February 2016): 52–104. View Details
  7. Executive Compensation and Environmental Harm

    Dylan Minor

    We explore the relationship between managerial incentives and environmental harm. We find that high-powered executive compensation packages can increase the odds of environmental law-breaking by 40-60% and the magnitude of environmental harm by over 100%. We document similar results for the setting of executive compensation and financial accounting misconduct. Finally, we outline some managerial and policy implications to blunt these adverse incentive effects.

    Keywords: Executive Compensation; corporate governance; Misconduct; environmental performance; accounting scandal; sustainable finance; Crime and Corruption; Corporate Social Responsibility and Impact; Executive Compensation; Environmental Sustainability; Corporate Governance;

    Citation:

    Minor, Dylan. "Executive Compensation and Environmental Harm." Harvard Business School Working Paper, No. 16-076, January 2016. (Revised April 2016.) View Details
  8. Woolf Farming and the California Water Crisis

    Forest Reinhardt, David Bell, Natalie Kindred, Mary Shelman and Laura Winig

    This case highlights the tough choices, competing interests, and decision-making mechanisms involved in California's management of its severe drought, entering its fifth year in 2015. Stuart Woolf, CEO of Woolf Farming, a grower and processor of almonds, tomatoes, and other crops in California's Central Valley, must decide how to respond to the changing operating environment. Scarce water resources—and institutional constraints on the use of water—have forced many producers, including Woolf, to fallow farmland. Meanwhile, competing demands for water from municipalities and environmental interests have raised the public's scrutiny of agricultural water use. This case describes farming in California's Central Valley and reviews the state's complicated system for managing water rights and resources. It invites students to analyze the relative merits of competing perspectives on how to allocate water, the institutional mechanisms for doing so, and the potential responses of agricultural producers to the changing marketplace. Is now the time to double down on farming in the Central Valley, shift to a higher-value-added crop portfolio (e.g., organics), or retreat from this challenging business?

    Keywords: Plant-Based Agribusiness; Natural Disasters; Weather and Climate Change; Resource Allocation; Environmental Sustainability; Government and Politics; Economics; Agriculture and Agribusiness Industry; California;

    Citation:

    Reinhardt, Forest, David Bell, Natalie Kindred, Mary Shelman, and Laura Winig. "Woolf Farming and the California Water Crisis." Harvard Business School Case 716-038, December 2015. (Revised January 2016.) View Details
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