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 Type of Socially Responsible Investments That Make Firms More Profitable

    George Serafeim

    Keywords: sustainability; corporate social responsibility; corporate sustainability; Investing; investment; investment management; Corporate Social Responsibility and Impact; Profit; Investment; Environmental Sustainability;


    Serafeim, George. "The Type of Socially Responsible Investments That Make Firms More Profitable." Harvard Business Review (website) (April 14, 2015). View Details
  2. Corporate Sustainability: First Evidence on Materiality

    Mozaffar Khan, George Serafeim and Aaron Yoon

    An increasing number of companies make sustainability investments, and an increasing number of investors integrate sustainability performance data in their capital allocation decisions. To date however, the prior academic literature has not distinguished between investments in material versus immaterial sustainability issues. We develop a novel dataset by hand-mapping data on sustainability investments classified as material for each industry into firm-specific performance data on a variety of sustainability investments. This allows us to present new evidence on the value implications of sustainability investments. Using calendar-time portfolio stock return regressions we find that firms with good performance on material sustainability issues significantly outperform firms with poor performance on these issues, suggesting that investments in sustainability issues are shareholder-value enhancing. Further, firms with good performance on sustainability issues not classified as material do not underperform firms with poor performance on these same issues, suggesting investments in sustainability issues are at a minimum not value-destroying. Finally, firms with good performance on material issues and concurrently poor performance on immaterial issues perform the best. These results speak to the efficiency of firms' sustainability investments, and also have implications for asset managers who have committed to the integration of sustainability factors in their capital allocation decisions.

    Keywords: sustainability; corporate sustainability; corporate social responsibility; investment; investment management; investment return; investment strategy; Investments; Corporate performance; Corporate Social Responsibility and Impact; Performance; Investment; Environmental Sustainability;


    Khan, Mozaffar, George Serafeim, and Aaron Yoon. "Corporate Sustainability: First Evidence on Materiality." Harvard Business School Working Paper, No. 15-073, March 2015. View Details
  3. Unilever: Combatting Global Food Waste

    David F. Drake, Janice H. Hammond and Matthew G. Preble

    The global consumer goods company Unilever was on pace to hit a number of aggressive targets by 2020 as part of the Unilever Sustainable Living Project, including a goal to halve the waste associated with the disposal of its products. Unilever's Chief Supply Chain Officer Pier Luigi Sigismondi and his team were working towards this goal and had chosen to first focus on three key areas—sugar, tomatoes, and tea—and had analyzed where in the 'farm to fork' value chain product was wasted. This analysis showed that very little was wasted within areas of the value chain directly controlled by Unilever, and most occurred either upstream with its suppliers or downstream with consumers. How could Unilever encourage these actors to change established practices and entrenched behaviors within a short timeframe to help Unilever meet its sustainability targets and also to improve the operations of its partners in the value chain? By encouraging consumers to better manage their food purchases, did Unilever risk harming its own sales or those of its retail customers? Could Unilever encourage industry-wide changes to have a real impact on global environmental sustainability?

    Keywords: food waste; sustainable business and innovation; sustainable supply chains; Sustainable Operations; organization alignment; Organizational Change and Adaptation; Environmental Sustainability; Operations; Supply Chain Management; Growth and Development Strategy; Food; Agribusiness; Strategy; Beauty and Cosmetics Industry; Consumer Products Industry; Food and Beverage Industry; Forest Products Industry; Manufacturing Industry; Retail Industry; North and Central America; Europe; Asia; Africa; Latin America; India;


    Drake, David F., Janice H. Hammond, and Matthew G. Preble. "Unilever: Combatting Global Food Waste." Harvard Business School Case 615-040, March 2015. View Details
  4. Making the Business Case for Environmental Sustainability

    Rebecca Henderson

    Can a business case be made for acting sustainably? This is a difficult question to answer precisely, largely because there is no generally accepted definition of the term "sustainability". Is it acting sustainably to protect the human rights of the firm's workforce? To invest in education in local communities? To switch to renewable power? All of these actions might improve social welfare, and some of them might improve profitability but they are very different, and the business case for each of them is similarly likely to look quite different. Here I begin to explore the issue by focusing on a more limited question, namely whether a business case be made for acting in an environmentally sustainable way, which I define as acting in any way that reduce a firm's environmental footprint.

    Keywords: Corporate Social Responsibility and Impact; Decision Making; Environmental Sustainability;


    Henderson, Rebecca. "Making the Business Case for Environmental Sustainability." Harvard Business School Working Paper, No. 15-068, February 2015. View Details
  5. Solar Geoengineering

    Joseph B. Lassiter III and Stephanie Puzio

    On December 8th 2013, as Dr. David Keith was leaving the set of the Colbert Show, he couldn't help but replay the interview over and over in his mind. Did he actually get his point of view on solar geoengineering across or had he just added to the stereotype that he was more of a ‘mad scientist’ than a scholar? Science knew, beyond doubt, that volcanoes cooled the planet by forcing sulfates high into the stratosphere. This cooling effect had been recorded in history over and over again. The question that Keith and many other climate scientists wanted to answer was: could humanity learn how to design, deploy, and manage similar cooling effects to manage the threats from climate change?

    Keywords: climate change; geoengineering; carbon; carbon emissions; energy; nuclear; nuclear energy; de-extinction; Aerospace Industry; Biotechnology Industry; Chemical Industry; Energy Industry; Green Technology Industry; Technology Industry;


    Lassiter, Joseph B., III, and Stephanie Puzio. "Solar Geoengineering." Harvard Business School Case 815-081, February 2015. View Details
  6. China Shenhua Energy Company

    Forest L. Reinhardt, G. A. Donovan and Keith Chi-ho Wong

    A leading Chinese energy firm, active in coal mining and electric power generation, analyzes coal-to-liquids technology in light of energy security and environmental concerns.

    Keywords: energy; environment; China; CO2; coal mining; Electricity; sustainability; Energy; Strategy; Business and Government Relations; Energy Generation; Energy Sources; Environmental Sustainability; Energy Industry; Utilities Industry; China; Asia;


    Reinhardt, Forest L., G. A. Donovan, and Keith Chi-ho Wong. "China Shenhua Energy Company." Harvard Business School Case 715-026, February 2015. View Details
  7. Staying the Same While Changing: Organizational Identity in the Face of Environmental Challenges

    Mary Ann Glynn, Christi Lockwood and Ryan Raffaelli

    We explore the role of organizational identity in the adoption of new sustainability practices, focusing on how identity functions as a driver of (or sometimes a drag on) adoption. Drawing on illustrations from the U.S. hotel industry, we examine how sustainability practices diffused across firms. Focusing on two exemplar hotels, we show sustainability is not only "what we do" as an organization, but also "who we are." We discuss avenues for future research on sustainability from an identity perspective and reflect on implications for practice.

    Keywords: Organizational Change and Adaptation; Mission and Purpose; Organizational Culture; Environmental Sustainability; Adoption; Accommodations Industry; United States;


    Glynn, Mary Ann, Christi Lockwood, and Ryan Raffaelli. "Staying the Same While Changing: Organizational Identity in the Face of Environmental Challenges." In Leading Sustainable Change: An Organizational Perspective, edited by Rebecca Henderson, Ranjay Gulati, and Michael Tushman. Oxford University Press, 2015. View Details
  8. The Role of Multiplier Firms and Megaprojects in Leading Change for Sustainability

    Amy C. Edmondson, Martine Haas, John D. Macomber and Tiona Zuzul

    In both the private and public sectors, organizations around the world face increasingly pressing questions about how to stimulate and manage change for long-term environmental, social, and economic sustainability. The purpose of this chapter is to highlight the roles of multiplier firms and megaprojects in leading change for sustainability around the world, particularly in the context of the built environment. Multiplier firms are organizations that work with and offer ongoing sustainability solutions to a range of client organizations. Megaprojects are finite-duration initiatives involving multiple diverse entities in the design and delivery of a large-scale development, such as a brand new ecologically sustainable city. Drawing on four illustrative case studies of multiplier firms and megaprojects engaged in sustainability-related initiatives, we also explain the value of learning logic, in contrast to blueprint logic, for leading change for sustainability.

    Keywords: Leading Change; Environmental Sustainability;


    Edmondson, Amy C., Martine Haas, John D. Macomber, and Tiona Zuzul. "The Role of Multiplier Firms and Megaprojects in Leading Change for Sustainability." Chap. 11 in Leading Sustainable Change: An Organizational Perspective, edited by Rebecca Henderson, Ranjay Gulati, and Michael Tushman. Oxford University Press, 2015. View Details
  9. Leading Sustainable Change: An Organizational Perspective

    Rebecca Henderson, Ranjay Gulati and Michael Tushman

    The business case for acting sustainably is becoming increasingly compelling—reducing our global footprint to sustainable levels is the defining issue of our times, and it is one that can only be addressed with the active participation of the private sector. However, persuading well-established organizations to act in new ways is never easy. This book is designed to support business leaders and organizational scholars who are grappling with this challenge by pulling together leading-edge insights from some of the world's best researchers as to how organizational change in general—and sustainable change in particular—can be most effectively managed. The book begins by laying out the economic case for change, while subsequent chapters describe how leaders at firms such as Du Pont, IBM, and Cemex have transformed their organizations, exploring issues such as the role of the senior team and the ways in which firms shift their identities, build innovative cultures and processes, and begin to change the world around them. Business leaders will find the book a source of both powerful examples and immediately actionable ideas, while scholars will be deeply intrigued by the insights that emerge from the cross cutting exploration of one of the toughest challenges our society has ever faced.

    Keywords: environmental sustainability;


    Henderson, Rebecca, Ranjay Gulati and Michael Tushman, eds. Leading Sustainable Change: An Organizational Perspective. Oxford University Press, 2015. View Details
  10. Colombia and the Economic Premium of Peace

    Richard H.K. Vietor and Hilary White

    Colombia, the fastest growing country in Latin America, continues to struggle with productivity. Both labor productivity and total factor productivity have been low for the past decade, despite economic growth of 4.7% annually. Many factors contribute—everything from infrastructure, to banking, to informality. President Santos, one year into his second term, is well aware of these difficulties and has put in place new policies to mitigate them. His focus, however, is on peace negotiations with the FARC—a possible settlement of the 50-year struggle which itself would significantly impact productivity.

    Keywords: colombia; productivity; productivity growth; conflict; conflict management; economics; macroeconomics; labor force participation; labor market; competitive advantage; competitiveness; infrastructure; negotiation; dutch disease; Latin America; national security; Security; peace; informality; labor laws; total factor productivity; labor productivity; Economics; Development Economics; Economic Growth; Economy; Macroeconomics; Inflation and Deflation; Non-Renewable Energy; National Security; Government Administration; Latin America; Central America; Colombia; South America;


    Vietor, Richard H.K., and Hilary White. "Colombia and the Economic Premium of Peace." Harvard Business School Case 715-011, January 2015. View Details
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