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. Peru: Economic Miracle or Just a Mirage

    Richard H.K. Vietor, Fernando A. D'Alessio and Ricardo M. Pino

    After years of rapid growth, Peru's economy had recently slowed. Mineral prices were down and the current President, Humala, had only a year remaining in office before the next election. And he could not run again. While the country had many strengths, especially in minerals, natural resources and tourism, infrastructural problems, corruption, drugs, and inequality continued to plague its growth.
    The next election would help determine Peru's future growth.

    Keywords: country; economic growth; resources; internal security; politics; Peru;


    Vietor, Richard H.K., Fernando A. D'Alessio, and Ricardo M. Pino. "Peru: Economic Miracle or Just a Mirage." Harvard Business School Case 716-028, October 2015. View Details
  2. Clearwater Seafoods

    Forest L. Reinhardt

    Clearwater sought to market value-added shellfish products in a traditionally commodities based industry, while facing supply uncertainties and regulatory, environmental, and foreign exchange challenges. Clearwater harvested lobsters, clams, scallops, shrimp, and other marine creatures from the Canadian Atlantic, and sold the seafood all over the world. Although seafood buyers traditionally bought on price, Clearwater's innovations and technology investments enabled it to produce higher quality products; still, it faced the challenge of convincing buyers to pay a premium price. The firm's managers also prided themselves on their sustainable fishing practices, which were not the historical norm for the industry; here, again, translating these practices into increased willingness to pay was a challenge. As background, the case also discusses the challenges of fishery management at the national and international levels, using the collapse of the cod fishing industry as an example, and discussing the economics and politics of the fishery in classical terms of externalities and public goods.

    Keywords: Agribusiness; Profit; Goods and Commodities; Governing Rules, Regulations, and Reforms; Product Marketing; Corporate Social Responsibility and Impact; Environmental Sustainability; Agriculture and Agribusiness Industry; Canada;


    Reinhardt, Forest L. "Clearwater Seafoods." Harvard Business School Case 716-023, October 2015. View Details
  3. UPower Technologies Inc.

    Joseph B. Lassiter III, William A. Sahlman and Liz Kind

    The UPower founders, Jake DeWitte and Caroline Cochran, were recent graduates from MIT's Nuclear Science and Engineering Department. They chose to attend Palo Alto-based Y Combinator's accelerator program to focus on building a "mini" nuclear reactor that would produce up to ten MWt and could fit in two 40-foot intermodal shipping containers.
    The UPower reactor was designed to serve the need for "off-grid" electric power. These off-grid customers were in remote locations such as mining operations, military bases, Arctic townships or even island nations. While DeWitte and Cochran were ecstatic about the progress they had made and the enthusiastic open-mindedness of Bay Area investors to backing groundbreaking and even potentially contentious "big ideas," they wondered if their investors would have the patience to finance UPower over the long term.

    Keywords: nuclear; nuclear energy; nuclear power; energy; energy markets; renewable energy; new nuclear; entrepreneurial finance; entrepreneurial marketing; Business & government relations; off-grid; Energy; Renewable Energy; Energy Generation; Energy Sources; Entrepreneurship; Marketing; Business and Government Relations; Energy Industry; Utilities Industry; United States;


    Lassiter, Joseph B., III, William A. Sahlman, and Liz Kind. "UPower Technologies Inc." Harvard Business School Case 816-054, October 2015. View Details
  4. Integrated Reporting for a Re-Imagined Capitalism

    Robert G. Eccles and Birgit Spiesshofer

    An essential element of capitalism is corporate reporting. Today's capitalism is supported by financial reporting. Critics of today's capitalism argue that it is too short-term oriented and rewards companies for creating negative externalities. Integrated reporting can play an important role in changing this since it is focused on the material issues that affect a company's ability to create value over the short, medium, and long term. Each country must take its own path to integrated reporting. This is illustrated by analyzing the different regulatory and legislative regimes in the United States and the European Union.

    Keywords: integrated reporting; materiality; Securities and Exchange Commission; European Union; Information and Transformation function; Integrated Corporate Reporting; United States; European Union;


    Eccles, Robert G., and Birgit Spiesshofer. "Integrated Reporting for a Re-Imagined Capitalism." Harvard Business School Working Paper, No. 16-032, September 2015. View Details
  5. Market Reaction to Mandatory Nonfinancial Disclosure

    Jyothika Grewal, Edward J. Riedl and George Serafeim

    This paper examines the equity market reaction to events associated with the passage of a directive in the European Union (EU) mandating increased nonfinancial disclosure, which affected firms listed on EU exchanges or having significant operations in the EU. The mandated disclosures relate to firms' environmental, social, and governance performance. Using a cross-country sample, we first document an on average negative market reaction to events increasing the likelihood of passage for this regulation, consistent with equity investors anticipating net costs with the directive's passage for most firms. Exploiting cross-sectional variation, we then predict and document a more negative market reaction for firms having: (i) low pre-directive nonfinancial disclosure levels, consistent with investors anticipating these future disclosures to reveal worse-than-expected news; (ii) weaker performance on nonfinancial issues, consistent with expectations for these firms to incur future costs to internalize current externalities; and (iii) lower ownership by institutional asset owners, consistent with such investors demanding further disclosures than mandated by the directive. The average market reaction for firms with superior nonfinancial performance and disclosure in our sample is positive, suggesting that investors expect net benefits from the passage of the directive for these firms.

    Keywords: accounting; disclosure; regulation; mandatory disclosure; mandatory reporting; sustainability; sustainability reporting; environmental and social sustainability; environment; environmental performance; corporate governance; corporate social responsibility; Corporate Disclosure; Corporate Social Responsibility and Impact; Accounting; Environmental Sustainability; Corporate Governance; European Union;


    Grewal, Jyothika, Edward J. Riedl, and George Serafeim. "Market Reaction to Mandatory Nonfinancial Disclosure." Harvard Business School Working Paper, No. 16-025, September 2015. View Details
  6. BYOB: How Bringing Your Own Shopping Bags Leads to Treating Yourself, and the Environment

    Uma R. Karmarkar and Bryan Bollinger

    As concerns about pollution and climate change have become more central in public discourse, shopping with reusable grocery bags has been strongly promoted as environmentally and socially conscious. 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 these initiatives 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 purchases of environmentally friendly as well as indulgent (hedonic) items. We use experimental methods to further demonstrate causality and to consider the effects of potential moderators. 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; Marketing Strategy; Consumer Behavior; Environmental Sustainability; Retail Industry;


    Karmarkar, Uma R., and Bryan Bollinger. "BYOB: How Bringing Your Own Shopping Bags Leads to Treating Yourself, and the Environment." Journal of Marketing 79, no. 4 (July 2015): 1–15. View Details
  7. American Electric Power: Facing the Challenges of Distributed Generation

    Richard H.K. Vietor and Hilary White

    American Electric Power, like most utilities in the USA, is currently exposed to distributed generation and the problem of net-metering. Solar installations in particular have been heavily subsidized, by the state and by regulation, which does not allow grid operators to to recover their fixed costs. This results in stranded assets and cross-subsidies from poor to rich.

    Keywords: energy; Electricity; utilities; Electric Power Generation; net metering; distributed generation; disruptive innovation; energy markets; solar power; wind power; solar; wind; subsides; legislation; regulation; Disruption; Energy; Energy Generation; Renewable Energy; Problems and Challenges; Risk and Uncertainty; Technology; Business Strategy; Corporate Strategy; Energy Industry; Green Technology Industry; Utilities Industry; United States;


    Vietor, Richard H.K., and Hilary White. "American Electric Power: Facing the Challenges of Distributed Generation." Harvard Business School Case 716-008, June 2015. View Details
  8. Integrated Reporting and Investor Clientele

    George Serafeim

    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 commitment to IR. 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. Finally, firms that report more information about the different forms of capital or follow more closely the guiding principles as described in the IR Framework of the IIRC exhibit a more long-term oriented investor base.

    Keywords: integrated reporting; sustainability reporting; long-term investing; Short-termism; corporate governance; accounting; Integrated Corporate Reporting; Environmental Sustainability; Investment; Corporate Governance;


    Serafeim, George. "Integrated Reporting and Investor Clientele." Journal of Applied Corporate Finance 27, no. 2 (Spring 2015): 34–51. View Details
  9. Colgate-Palmolive Company: Marketing Anti-Cavity Toothpaste

    John A. Quelch and Margaret L. Rodriguez

    In October 2013, Colgate-Palmolive Company, the world's leading oral care company, was about to launch its new Colgate® Maximum Cavity Protection™ plus Sugar Acid Neutralizer™ toothpaste in Brazil. Oral care category accounted for 46 percent of Colgate's $17.4 billion sales worldwide in 2013. The new toothpaste was clinically proven to reduce and prevent cavities more effectively than toothpaste with the same level of fluoride alone. All major industry players, including Procter & Gamble, GlaxoSmithKline and Colgate itself, had long ago launched products with the maximum amount of fluoride allowed by Health authorities. Yet cavities remained a significant threat to public health in many countries, both developing and developed. As Suzan Harrison, Colgate's president of Oral Care, prepared to launch CMCP+SAN in Brazil, the world's third largest oral care market, her executive team was divided over the product's positioning and pricing. Should it be positioned as a basic product to maximize reach for its health benefits or as a premium product for consumers who sought superior cavity protection?

    Keywords: marketing; new product management; Consumer segmentation; global marketing; corporate social responsibility; healthcare; sustainability; Health Care and Treatment; Environmental Sustainability; Marketing; Segmentation; Product Development; Product Launch; Corporate Social Responsibility and Impact; Consumer Products Industry; Brazil; United States;


    Quelch, John A., and Margaret L. Rodriguez. "Colgate-Palmolive Company: Marketing Anti-Cavity Toothpaste." Harvard Business School Case 515-050, May 2015. (Revised September 2015.) View Details
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