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. Government Green Procurement Spillovers: Evidence from Municipal Building Policies in California

    We study how government green procurement policies influence private-sector demand for similar products. Specifically, we measure the impact of municipal policies requiring governments to construct green buildings on private-sector adoption of the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) standard. Using matching methods, panel data, and instrumental variables, we find that government procurement rules produce spillover effects that stimulate both private-sector adoption of the LEED standard and investments in green building expertise by local suppliers. These findings suggest that government procurement policies can accelerate the diffusion of new environmental standards, which require coordinated complementary investments by various types of private adopter.

    Keywords: Public procurement; green building; quality certification; environmental policy; Buildings and Facilities; Environmental Sustainability; Policy; Government and Politics; Green Technology Industry; Public Administration Industry; California;

    Citation:

    Simcoe, Timothy, and Michael W. Toffel. "Government Green Procurement Spillovers: Evidence from Municipal Building Policies in California." Journal of Environmental Economics and Management 68, no. 3 (November 2014): 411–434. View Details
  2. Sustainability at IKEA Group

    By 2014, IKEA Group was the largest home furnishing company, with EUR28.5 billion of sales, and planned to reach EUR50 billion by 2020, mainly from emerging markets. At the same time, IKEA Group had adopted in 2012 a new sustainability strategy that focused the company's efforts on its entire value chain from its raw materials sourcing to the lifestyle of its end consumers. The plan especially centered on wood, which represented 60% of IKEA Group's total procurement in volume and constituted a key lever for the company to increase its positive impact on sustainability. IKEA Group Management therefore had to decide how to manage its portfolio of wood sustainability initiatives, especially in the context of the company's aggressive growth plan.

    Keywords: furnishing; sustainability; supply chain; wood; Customer Value and Value Chain; Supply Chain Management; Environmental Sustainability; Growth and Development Strategy; Consumer Products Industry;

    Citation:

    Rangan, V. Kasturi, Michael W. Toffel, Vincent Dessain, and Jerome Lenhardt. "Sustainability at IKEA Group." Harvard Business School Case 515-033, September 2014. View Details
  3. Chief Sustainability Officers: Who Are They and What Do They Do?

    While a number of studies document that organizations go through numerous stages as they increase their commitment to sustainability over time, we know little about the role of the Chief Sustainability Officer (CSO) in this process. Using survey and interview data we analyze how a CSO's authority and responsibilities differ across organizations that are in different stages of sustainability commitment. We document increasing organizational authority of the CSO as organizations increase their commitment to sustainability moving from the Compliance to the Efficiency and then to the Innovation stage. However, we also document a decentralization of decision rights from the CSO to different functions, largely driven by sustainability strategies becoming more idiosyncratic at the Innovation stage. The study concludes with a discussion of practices that CSOs argue to accelerate the commitment of organizations to sustainability.

    Keywords: sustainability; Change; change management; Organizational change; organizational culture; innovation; Performance; leadership; Leadership & Corporate Accountability; Organizational Change and Adaptation; Leadership; Change Management; Environmental Sustainability; Innovation and Invention;

    Citation:

    Miller, Kathleen, and George Serafeim. "Chief Sustainability Officers: Who Are They and What Do They Do?" Harvard Business School Working Paper, No. 15-011, August 2014. View Details
  4. Husk Power

    In late 2013, Husk Power Systems found itself falling further and further behind plan. The founding CEO had decided to resign. His co-founder is faced with the decision of quitting his corporate job in the US to head to India and help form a new management team. Husk is an Indian startup founded in 2007 with the goal of global rural electrification. The company has decided to pivot from operating biomass gasification plants towards developing solar microgrids in India and East Africa.

    Keywords: Plant-Based Agribusiness; Business Model; Business Startups; Energy Generation; Renewable Energy; Social Entrepreneurship; Foreign Direct Investment; International Finance; Globalized Markets and Industries; Crime and Corruption; Employee Relationship Management; Independent Innovation and Invention; Employment; Leadership Style; Leading Change; Management Practices and Processes; Management Style; Management Succession; Management Skills; Emerging Markets; Social Psychology; Culture; Business Strategy; Agriculture and Agribusiness Industry; Energy Industry; Green Technology Industry; Utilities Industry; Africa; India; United States;

    Citation:

    Lassiter, Joseph B., III, and Sid Misra. "Husk Power." Harvard Business School Case 815-023, August 2014. (Revised October 2014.) View Details
  5. 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 July 2014.) View Details
  6. Rainmakers: Why Bad Weather Means Good Productivity

    People believe that weather conditions influence their everyday work life, but to date, little is known about how weather affects individual productivity. Contrary to conventional wisdom, we predict and find that bad weather increases individual productivity and that it does so by eliminating potential cognitive distractions resulting from good weather. When the weather is bad, individuals appear to focus more on their work than on alternate outdoor activities. We investigate the proposed relationship between worse weather and higher productivity through four studies: (1) field data on employees' productivity from a bank in Japan; (2) two studies from an online labor market in the United States; (3) a laboratory experiment. Our findings suggest that worker productivity is higher on bad rather than good weather days and that cognitive distractions associated with good weather may explain the relationship. We discuss the theoretical and practical implications of our research.

    Keywords: weather; productivity; opportunity cost; distractions; Weather and Climate Change; Performance Productivity; Cognition and Thinking;

    Citation:

    Lee, Jooa Julia, Francesca Gino, and Bradley R. Staats. "Rainmakers: Why Bad Weather Means Good Productivity." Journal of Applied Psychology 99, no. 3 (May 2014): 504–513. View Details
  7. The Sustainability Accounting Standards Board

    In 2014, as the Sustainability Accounting Standards Board (SASB) has just brought former New York City Mayor Michael Bloomberg on as chairman of the board, Jean Rogers, founder and CEO struggles with how best to ensure the nonprofit's financial sustainability while pushing for broad acceptance of its nonfinancial accounting metrics.

    Keywords: sustainability; sustainability reporting; accounting; reporting; Environmental Sustainability; Accounting; Accounting Industry; United States;

    Citation:

    Battilana, Julie, and Michael Norris. "The Sustainability Accounting Standards Board." Harvard Business School Case 414-078, May 2014. View Details
  8. 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. View Details
  9. 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; Investing; information; Corporate Accountability; Corporate Disclosure; Integrated Corporate Reporting; Corporate Social Responsibility and Impact;

    Citation:

    Eccles, Robert G., and George Serafeim. "Corporate and Integrated Reporting: A Functional Perspective." Harvard Business School Working Paper, No. 14-094, April 2014. (Revised May 2014.) View Details
  10. Corporate Social Responsibility and Access to Finance

    In this paper, we investigate whether superior performance on corporate social responsibility (CSR) strategies leads to better access to finance. We hypothesize that better access to finance can be attributed to a) reduced agency costs due to enhanced stakeholder engagement and b) reduced informational asymmetry due to increased transparency. Using a large cross-section of firms, we find that firms with better CSR performance face significantly lower capital constraints. Moreover, we provide evidence that both of the hypothesized mechanisms, better stakeholder engagement and transparency around CSR performance, are important in reducing capital constraints. The results are further confirmed using an instrumental variables and a simultaneous equations approach. Finally, we show that the relation is driven by both the social and the environmental dimension of CSR.

    Keywords: corporate social responsibility; sustainability; capital constraints; "ESG (environmental, social, governance) performance"; stakeholder engagement; disclosure; Corporate Disclosure; Corporate Social Responsibility and Impact; Environmental Sustainability; Capital;

    Citation:

    Cheng, Beiting, Ioannis Ioannou, and George Serafeim. "Corporate Social Responsibility and Access to Finance." Strategic Management Journal 35, no. 1 (2014): 1–23. View Details
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