John D. Black Professor Unit Head, Business, Government and the International Economy
Forest L. Reinhardt is the John D. Black Professor of Business Administration at Harvard Business School.
Professor Reinhardt is the head of HBS’s Business, Government, and the International Economy unit. He also serves as the faculty chair of Harvard Business School's Asia-Pacific Research Center and the chair of the HBS Executive Education in the Asia-Pacific Region.
Forest L. Reinhardt is the John D. Black Professor of Business Administration at Harvard Business School.
Professor Reinhardt is the head of HBS’s Business, Government, and the International Economy unit. He also serves as the faculty chair of Harvard Business School's Asia-Pacific Research Center and the chair of the HBS Executive Education in the Asia-Pacific Region.
Recently, Professor Reinhardt taught, with HBS colleagues Martha Crawford and Joe Lassiter, an MBA elective course called “Twenty-First Century Energy.” This course analyzes the global energy system from economic and political perspectives, and explores the strategies both of incumbent firms and startups.
Professor Reinhardt also teaches regularly in the HBS Agribusiness Seminar, and he teaches an MBA elective course called “Food and Agribusiness,” which uses case studies from all over the world to examine the ways in which people raise plants and animals and the ways in which food is transported, processed, distributed, marketed, and consumed.
Professor Reinhardt’s other recent teaching assignments have included a core course called Global Markets in the HBS Owner/President Management Program. Drawing on microeconomics, macroeconomics, political science, and history, the course helps business leaders understand the economic and political environment in which business is conducted, and the strategic opportunities and risks to which globalization gives rise. In addition, Professor Reinhardt has taught the required MBA courses on Strategy and on Business, Government, and the International Economy at HBS.
Professor Reinhardt is interested in the relationships between market and nonmarket strategy, the relations between government regulation and corporate strategy, the behavior of private and public organizations that manage natural resources, and the economics of externalities and public goods. He is the author of Down to Earth: Applying Business Principles to Environmental Management, published by Harvard Business School Press. Like that book, many of his articles and papers analyze problems of environmental and natural resource management. He has written numerous classroom cases on these and related topics, used at Harvard and elsewhere in MBA curricula and in executive programs.
Professor Reinhardt serves on the Board of Tutors for the Harvard College concentration in Environmental Science and Public Policy, on the Steering Committee of the Harvard University Center for the Environment, and on the Steering Committee of the HBS-Harvard Kennedy School Joint Degree Programs. He is Co-Chair of the Harvard Advanced Leadership Initiative.
Reinhardt received his Ph.D. in Business Economics from Harvard University in 1990. He also holds an MBA from Harvard Business School, where he was a Baker Scholar, and an A.B., cum laude, from Harvard College.
Born and raised in Montana, he lives in Belmont, Massachusetts.
We talk about how a giant, global enterprise that operates and owns assets at sea level is fighting climate change—and adapting to it. We discuss what the private sector can learn from the U.S. Navy’s scientific and sober view of the world. We are also the authors of “Managing Climate Change: Lessons from the U.S. Navy” in the July–August 2017 issue of Harvard Business Review.
The U.S. Navy operates on the front lines of climate change. It manages tens of billions of dollars in assets on every continent and on every ocean, which take many years to design and build and then have decades of useful life. This means that it needs to understand now what sorts of missions it may be required to perform in 10, 20, or 30 years and what assets and infrastructure it will need to carry them out. Put another way, it needs to plan for the world that will exist at that time. The navy is clear eyed about the challenges climate change poses. It knows that the effects of a warmer world will expand the geographic scope of its mission and increase demand for its military and humanitarian services. Climate change will also decrease its capacity to deliver those services, as the risk of damage to its bases and ports increases. This article examines the Navy’s approach to climate change and reflects on the implications for business.
Ramon Casadesus-Masanell, Michael Crooke, Forest L. Reinhardt and Vishal Vasishth
To shed light on individuals' willingness to pay for "green" goods (i.e., goods that are supposed to have lower adverse environmental impacts either in production or in use), we study data from the introduction by Patagonia, Inc., of organic cotton sportswear in the mid 1990s. Patagonia, a maker of high-end outdoor wear, substituted organic cotton for conventionally grown cotton in all of its sportswear (i.e., casual clothing for travel and leisure) in 1996. We find that customers were willing to pay significant premiums for organic cotton garments although the organic cotton provided no demonstrable private incremental benefits to the customer.
Business leaders, government officials, and academics are focusing considerable attention on the concept of "corporate social responsibility" (CSR), particularly in the realm of environmental protection. Beyond complete compliance with environmental regulations, do firms have additional moral or social responsibilities to commit resources to environmental protection? How should we think about the notion of firms sacrificing profits in the social interest? May they do so within the scope of their fiduciary responsibilities to their shareholders? Can they do so on a sustainable basis, or will the forces of a competitive marketplace render such efforts and their impacts transient at best? Do firms, in fact, frequently or at least sometimes behave this way, reducing their earnings by voluntarily engaging in environmental stewardship? And finally, should firms carry out such profit-sacrificing activities (i.e., is this an efficient use of social resources)? We address these questions through the lens of economics, including insights from legal analysis and business scholarship.
Climate change will affect everything businesses do, as government efforts to mitigate carbon emissions cause their prices to rise steeply. This special edition of Forethought takes a hard-nosed look at the risks and opportunities of climate change. Michael E. Porter and Forest L. Reinhardt argue that the effects of climate change on companies' operations are now so tangible and certain that the issue is best addressed with the tools of the strategist, not the philanthropist.
Reinhardt, Forest. "Tests for Sustainability." In Global Competitiveness Report 2003-2004, edited by Peter K Cornelius. New York: Oxford University Press, 2003.
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Reinhardt, F. L., Fiona Murray, and Richard Vietor. "Foreign Firms in the Chinese Power Sector: Economic and Environmental Impacts." In Energizing China: Reconciling Environmental Protection and Economic Growth, edited by M. McElroy, C. Nielsen, and P. Lydon. Cambridge: Harvard University, Committee on Environment, 1998.
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Chicago-based CME Group is the world’s largest futures and options marketplace, with annual trading volume of over 4.8 billion contracts in 2018. This case is set in late 2019, as heightened perceptions of risk stemming from the U.S.-China trade war are driving record trading volumes of agricultural futures. CME Group leads the agricultural futures market, but changing global dynamics are raising new questions about the security of its competitive position. With roots dating to the 1850s, CME Group became the market leader by developing liquid markets for reliable products tied to U.S. agricultural production. But the U.S. no longer dominates global grain and oilseed production and trade, raising questions about whether U.S.-domiciled futures and options will remain relevant globally. Other pressures on CME Group include the U.S. political environment—there is talk of taxing futures trades—and potential competition from Chinese futures exchanges. How should the management team adjust their strategy? While this case focuses on CME Group’s agricultural products business, some of the questions at play—e.g., about the role of speculators, the usefulness of a financial transactions tax, and the positioning of price discovery in commodity source markets versus destination markets—apply to other lines of business such as foreign exchange or precious metals.
Brazilian logistics company Rumo operated 13,500 km in railway networks, port terminals, and inland transshipment terminals, connecting major Brazilian ports to the agriculture hubs of Mato Grosso and São Paulo state. Controlled by Cosan, Brazil's leading sugar and ethanol producer, Rumo had been through a turnaround over the last 3 years, including heavy investment in operational improvements, financial deleverage, and taking cash flow generation from a negative $278 million in 2015 to positive $15.3 million in 2018. In 2019, as the company planned its new expansion cycle ($3.4 billion would be invested from 2019 to 2023), Rumo's executives had to find the best way to continue to capture the value created, while preserving its relations with customers and other stakeholders.
Reinhardt, Forest L., Mariana Cal, Ruth Costas, and Natalie Kindred. "Rumo: Infrastructure for a Healthier Economy." Harvard Business School Case 720-008, January 2020. (Revised February 2020.)
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In October 2018, LIU Chang (Angela), chairman of Beijing-based New Hope Liuhe (NHL), was considering the strategy of the firm. With $9 billion in sales and a presence in nearly 20 countries, NHL was China’s largest animal feed producer and a major pork and poultry producer and processor. The firm also marketed a range of food products to consumers. This case describes NHL’s entrepreneurial beginnings, growth, and recent efforts to transform from a feed producer into an integrated agri-food company with an active presence throughout the chicken, duck, and pig value chains. Considerable context is provided on the structure and evolution of these livestock industries in China, the food processing industry, and important issues such as food safety. This background is helpful in enabling students to assess NHL’s evolution in scale and scope and consider what (if any) changes should be made to the firm’s strategy in the context of this critically important market.
Founded in 1963 by Bhavarlal Jain (Bhau), who believed in “providing solutions for every problem,” Jain Irrigation in 2018 had a global footprint and $1.1 billion in revenue. Bhau had insisted that his business add value to farmers' lives and promote sustainable agricultural practices, and that social mission remained at the heart of the organization. Jain’s business was now run by Bhau’s four sons and included five main business units: micro-irrigation (MI) systems, industrial-use pipes, tissue culture research and development, food processing and solar energy products. As a new, third generation began to move into company management, the Jain family considered how to sustain growth, profitability, and also their commitment to farmer livelihoods.
Reinhardt, Forest, Gunnar Trumbull, and Mahima Rao-Kachroo. "Jain Irrigation Systems Limited: Continuing a Legacy." Harvard Business School Case 719-044, January 2019. (Revised July 2019.)
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The Nature Conservancy (TNC) is a U.S.-based environmental NGO with $7 billion in assets and a presence in 72 countries in 2018. TNC originated in 1951 as a land trust, acquiring land in order to conserve it. Over the last 20 years, it developed a pragmatic conservation philosophy that embraces both the economic and intrinsic value of nature. Rather than working against economic development, TNC partners with industry and other stakeholders to find more nature-friendly ways of doing business—a posture that irks some in the environmental movement. This case focuses on TNC under Mark Tercek, a Goldman Sachs veteran who became TNC’s CEO in 2008 and steered the organization toward a greater focus on influencing large-scale, complex challenges. As an example of TNC’s approach and of the tension that often exists between nature preservation, economic development, and food production, the case explores TNC’s work in aquaculture, a diverse and fast-growing global industry that is a vital source of food and income in many countries, but that also has a troubling environmental record. The case invites an evaluation of TNC’s strategy, its potential to influence the aquaculture industry, and the factors that can affect the success of partnerships between NGOs and firms. The case also allows for an assessment of the contributions that aquaculture can make to global protein supplies and the challenges that aquacultural expansion poses.
This note discusses the centuries-long history and current situation of Mexican farmworkers north of the border—documented or undocumented, resident or temporary, and increasingly indigenous. The story provides the background for discussion of dilemmas facing policymakers, agricultural enterprises, and the workers themselves.
Agriculture was Ireland’s largest indigenous industry. Its agri-food sector was export driven, with almost 90% of production exported. Bord Bia was the Irish government agency charged with the promotion, trade development, and marketing of the Irish food, drink, and horticulture industry. Bord Bia's CEO, Tara McCarthy, was shaping the government agency's new strategy amid a volatile socio-political environment (with Brexit and other cross-border trade issues) and in light of consumer trends in the macro food and drink industry.
In 2017, Joelle Faulkner, CEO of Area One Farms, a Canadian private-equity fund focused on investing in the best Canadian farms and helping them expand, considered the merits and disadvantages of expanding her business to the U.S. While the markets shared some similarities, Faulkner did not know the U.S. market as well as the Canadian one. Could her joint venture partnership model work as well in the U.S. as it had in her home country?
Reinhardt, Forest, Jose B. Alvarez, and Annelena Lobb. "Area One Farms." Harvard Business School Case 518-069, December 2017. (Revised April 2018.)
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This case describes the business model and workplace philosophy of NatureSweet, a privately owned, vertically integrated greenhouse grower and marketer of fresh tomatoes with sales across the United States and $329 million in 2016 revenues. CEO Bryant Ambelang treated NatureSweet more like a consumer-packaged goods manufacturer than an agricultural producer, with a focus on consistency, branding, margin, and price stability, and a frontline-worker-centric production model inspired by the Toyota Production System. Workers—who, because of NatureSweet’s year-round greenhouse production model, were employed full time—were empowered with training and productivity incentives, allowing them to earn well above the minimum wage and advance their careers within the company. Indeed, improving the lives of workers was the explicit purpose of NatureSweet’s operations. Through its financial incentives, personal and professional development initiatives, and worker-appreciation programs, NatureSweet had cultivated a truly unique, uplifting workplace culture in its Mexico operations. Ambelang aspired to replicate the model in the United States as a way of demonstrating the potential to “transform the lives of agricultural workers in North America.” But in late 2017, the Arizona-based production operations that NatureSweet had acquired in 2014 were still struggling to attain the successes achieved in Mexico. This case describes NatureSweet’s history, achievements in Mexico, and challenges in Arizona, inviting students to evaluate the keys to NatureSweet’s success in Mexico and analyze their potential for replication in the United States. Will Ambelang succeed in Arizona and, in doing so, demonstrate that it is possible to transform the lives of agricultural workers in North America?
Alvarez, Jose, Forest Reinhardt, and Natalie Kindred. "NatureSweet." Harvard Business School Case 518-002, December 2017. (Revised January 2018.)
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Kristin Fabbe, Forest Reinhardt, Natalie Kindred and Alpana Thapar
This case explores the strategy of OCP Group, the 95% state-owned Moroccan firm charged with managing the North African country’s vast reserves of phosphate. Phosphate was one of the most vital macronutrients for plant health, along with nitrogen and potassium, and Morocco had about 75% of known worldwide reserves. In 2017, under the leadership of Dr. Mostafa Terrab, OCP was halfway through a $20 billion industrial transformation program aimed at increasing its industrial capacity, improving cost efficiencies, and boosting long-term competitiveness. The program involved moving OCP beyond mining and exporting raw phosphate rock—its traditional focus, which it performed at a relatively low cost—towards greater production of phosphoric acid and finished fertilizer products. In the next phase of the program, OCP planned to ramp up its focus on fertilizer production, especially for markets in Africa, where fertilizer was historically underutilized. Terrab and his team saw an opportunity to nurture and meet fertilizer demand by creating products tailored to the needs of African farmers. This case provides background on Morocco, the fertilizer industry, and OCP Group’s past, current, and envisioned strategy and operations. With this context, students are invited to consider how aggressively OCP Group should pursue downstream integration (and specifically its Africa strategy), as well as how OCP can best leverage its competitive advantages and utilize Morocco’s phosphate reserves to its—and Morocco’s—benefit.
Fabbe, Kristin, Forest Reinhardt, Natalie Kindred, and Alpana Thapar. "OCP Group." Harvard Business School Case 718-002, December 2017. (Revised December 2018.)
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In 2016, Muñoz Group, a multifaceted agribusiness company that developed, produced, packed, imported, and exported citrus, flowers, grapes, juice, and ice cream, faced an unexpected new challenge in the British public’s vote for the United Kingdom to exit the European Union. The outcome of the vote led to uncertainty around investment conditions, instability in the British pound, growth in anti-immigrant sentiment, and other changes. This created unusual business conditions for Muñoz Group’s CEO, Alvaro Muñoz, who had to decide how to adjust his strategy for the coming years, given that his company was headquartered in the United Kingdom—but did business all over the world.
Reinhardt, Forest, Gunnar Trumbull, Naoko Jinjo, and Mayuka Yamazaki. "Rice in Japan." Harvard Business School Case 717-032, December 2016. (Revised April 2019.)
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This is a follow-up to the “HEINEKEN—Brewing a Better World (A)” case, with updated information on sustainability at HEINEKEN and some new initiatives.
This brief case is a supplement to “Cresud and Argentina” (515-043) and “Note on Agriculture in Argentina” (515-069). Set in early 2016, it describes developments in Argentina under newly elected President Mauricio Macri, including the country’s return to international credit markets, major economic and agricultural policy reforms, and the potential improvements and obstacles Argentina faces under this new administration. The case also describes Cresud’s performance in 2015. It allows students to consider the outlook for Cresud amid the evolving context in Argentina, with volatility in Brazil a potentially important factor.
Climate Corporation is a San Francisco–based data analytics company focused on agricultural applications. It was acquired by Monsanto in 2013. In 2015, Climate's decision support platform was used on 75 million acres of farmland in the U.S.; however, most of those acres were "free" acres. To build a viable business, Climate had to convince farmers to subscribe to and pay for premium offerings. The case describes Climate's technology approach, product offerings, marketing plans, and the competitive environment for "digital agriculture."
Bell, David E., Forest Reinhardt, and Mary Shelman. "The Climate Corporation." Harvard Business School Case 516-060, February 2016. (Revised February 2017.)
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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?
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.
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.
Reinhardt, Forest L., G. A. Donovan, and Keith Chi-ho Wong. "China Shenhua Energy Company." Harvard Business School Case 715-026, February 2015. (Revised March 2016.)
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The Dutch company HEINEKEN, one of the leading global brewers known for its brands like Heineken, Amstel, and Desperados and for its award-winning marketing campaigns, seeks to closely integrate its long-term sustainability "Brewing a Better World" approach into its corporate strategy. HEINEKEN had set itself ambitious 2015 and 2020 sustainability targets in six pillar areas around energy/CO2, water, sustainable sourcing, responsible consumption, community/inclusive growth, and health and safety. The case focuses on HEINEKEN's efforts in the sustainable sourcing pillar, with its work on farming standards and supplier code as well as its support for local sourcing programs in the growing African market. HEINEKEN's management finds that marketing its achievements in these sustainability areas poses new challenges though. For example, its current "mass-balance" sourcing, in which sustainable and traditional material got mixed in the supply chain, did not allow for effective communication on a given bottle. But was this reason enough to try to move to "segregated" sourcing, if that was even reasonable?
Reinhardt, Forest L., José Alvarez, Tonia Junker, and Daniela Beyersdorfer. "HEINEKEN—Brewing a Better World." Harvard Business School Case 715-022, December 2014. (Revised July 2016.)
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Patagonia produces high-quality environmentally friendly garments that command significant price premiums. In Spring 2010, Patagonia rolled out a new, radical environmental initiative called "Product Lifecycle Initiative" (PLI), which was committed to lengthening the lifecycle of each product and reducing landfill waste. This case provides an update on Patagonia's PLI as well as on other company environmental and social commitments.
Reinhardt, Forest, Ramon Casadesus-Masanell, and Lauren Barley. "Patagonia (B)." Harvard Business School Supplement 714-465, February 2014.
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In 2012, Syngenta, one of the world's largest agricultural input companies, committed to build a $1 billion business in Africa over the next 10 years. In mid-2014, CEO Michael Mack and Africa Venture Team head Dimitri Pauwels are reviewing progress. Was the company's commitment to Africa still relevant and achievable?
From modest beginnings as a cashew trader in Nigeria, Olam, founded by Indian nationals in 1989, has grown into a leading global agricultural trading company, with annual revenues of $14 billion. The company recently has begun investing in farms and in the production of packaged goods, shifting from its traditional focus on the midstream of the value chain. The case raises questions involving competitive positioning, corporate strategy, sustainable development, and the management of business and political risk.
Bell, David E., Forest Reinhardt, and Mary Shelman. "Olam: On a New Course." Harvard Business School Case 513-044, December 2012. (Revised April 2013.)
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This case examines world fertilizer markets from the perspective of a large Norwegian producer. The global fertilizer industry is critical to food production and to food security, and hence is the object of numerous forms of government intervention. The case analyzes questions of business strategy within this politically charged economic environment.
The (A) case describes the launch of a new passenger vehicle in China, produced jointly by Nissan of Japan and by Chinese automaker Dongfeng. Early sales results following the April 2012 launch were disappointing and the joint venture's managers had to decide how to respond. The case includes information on the structure of the industry, on government regulation, and on the preferences of Chinese purchasers of automobiles, including information about environmental considerations. The short (B) case, designed for distribution in class, describes further complications, as an international dispute between the Japanese and Chinese governments created further uncertainties for Chinese consumers and hence for the carmakers. The (C) case concludes the story; it too can be distributed in class.
The (A) case describes the launch of a new passenger vehicle in China, produced jointly by Nissan of Japan and by Chinese automaker Dongfeng. Early sales results following the April 2012 launch were disappointing and the joint venture's managers had to decide how to respond. The case includes information on the structure of the industry, on government regulation, and on the preferences of Chinese purchasers of automobiles, including information about environmental considerations. The short (B) case, designed for distribution in class, describes further complications, as an international dispute between the Japanese and Chinese governments created further uncertainties for Chinese consumers and hence for the carmakers. The (C) case concludes the story; it too can be distributed in class.
The (A) case describes the launch of a new passenger vehicle in China, produced jointly by Nissan of Japan and by Chinese automaker Dongfeng. Early sales results following the April 2012 launch were disappointing and the joint venture's managers had to decide how to respond. The case includes information on the structure of the industry, on government regulation, and on the preferences of Chinese purchasers of automobiles, including information about environmental considerations. The short (B) case, designed for distribution in class, describes further complications, as an international dispute between the Japanese and Chinese governments created further uncertainties for Chinese consumers and hence for the carmakers. The (C) case concludes the story; it too can be distributed in class.
Reinhardt, Forest L., and Shon R. Hiatt. "Colbún and the Future of Chile's Power (TN)." Harvard Business School Teaching Note 713-054, March 2013.
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This case is about Colbún, Chile's second largest electricity generator, which is facing significant uncertainty regarding the cost and availability of alternative energy sources. Problems with the contracted supply of natural gas and the volatility of oil prices, coupled with pressure from collective activists, force Colbún to revise its business strategy and its sourcing mix. The case also deals with the pros and cons of various energy sources in view of their perceived environmental impact. The company's CEO, Bernardo Larrain Matte, has to take all these different considerations into account when planning Colbún's future, especially in the light of new opportunities and challenges posed by global climate change. The case analyzes the operations of Colbún to illustrate the complexities associated with conducting business under the influence of global energy markets, political uncertainty, and environmental activism.
Reinhardt, Forest L., Michael W. Toffel, Noel Maurer, and Frederik Nellemann. "Colbun - Powering Chile (TN)." Harvard Business School Teaching Note 712-021, December 2011.
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This case is about Colbún, Chile's second largest electricity generator, which is facing significant uncertainty regarding the cost and availability of alternative energy sources. Problems with the contracted supply of natural gas and the volatility of oil prices, coupled with regulatory changes made by the government, force Colbún to revise its business strategy and its sourcing mix. New legislation will replace historically regulated electricity prices for certain customers with free market prices and therefore change the conditions under which the company must operate. The case also deals with the pros and cons of various energy sources in view of their perceived environmental impact. As the company's CEO, Bernardo Larrain Matte has to take all these different considerations into account when planning Colbún's future, especially in the light of new opportunities and challenges posed by global climate change. The case analyzes the Chilean electricity sector and the operations of Colbún to illustrate the complexities associated with conducting business under the influence of global energy markets, government regulations, and environmental activism.
Reinhardt, Forest L., Gustavo A. Herrero, and Sanjay Patnaik. "Colbún—Powering Chile." Harvard Business School Case 709-060, June 2009. (Revised December 2011.)
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Duke Energy, an American investor-owned electric utility, confronts multibillion dollar decisions about its future fuel mix. In particular, its leaders are considering building new nuclear capacity. Whether this is sensible depends, among other things, on demand growth, capital costs, fossil fuel prices, possible regulatory or other delays in constructing the reactors, and possible future restrictions on carbon dioxide. CEO Jim Rogers believes that nuclear power makes sense from a social standpoint but also must consider the perspectives of his ratepayers and his shareholders.
Forest L. Reinhardt, J. Gunnar Trumbull, Mikell Hyman, Patia McGrath and Nazli Zeynep Uludere
Global climate change is an increasingly prominent political and business problem. Design of market-based systems to reduce carbon emissions has proven difficult. More broadly, national attempts to comply with the provisions of the Kyoto Protocol present both governments and firms with significant challenges. The design of international institutions that will be useful for managing change after the Kyoto period is a challenge both for Kyoto ratifiers and for countries like the United States that have not ratified the agreement. Creation of a post-Kyoto treaty on climate change requires agreement by China and the United States, the world's largest carbon emitters. The case summarizes the science and economics of climate change and encourages readers to contemplate the strategic and risk management problems that it presents to government officials and to business leaders in developed countries and in the developing world.
Reinhardt, Forest L., J. Gunnar Trumbull, Mikell Hyman, Patia McGrath, and Nazli Zeynep Uludere. "The Political Economy of Carbon Trading." Harvard Business School Case 710-056, February 2010. (Revised April 2011.)
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The case describes CME Group, the world's largest commodities exchange, futures and options on futures contracts, history, regulation, and the strategic choices the company faced. CME Group was formed from the oldest and most well-known exchanges in the world. Traders on the exchange bought and sold contracts in order to hedge risk or speculate on future price trends. In recent decades trading had undergone significant growth. From its roots in agricultural commodities, with trading typically occurring in face-to-face transactions in pits on exchange floors, CME introduced new hedging products in metals, energy, and finance, and electronic trading, which brought new market participants. Some of these new participants, such as pension funds, were significantly larger and had different strategic agendas than the traditional agricultural related participants. The case raises the question of whether increased speculation was helping or hurting the exchange or its participants. In addition, the financial crisis of 2007 and 2008 was driving new regulation in the industry which brought new challenges and opportunities to CME.
Reinhardt, Forest L., and J. Gunnar Trumbull. "The Political Economy of Carbon Trading (TN)." Harvard Business School Teaching Note 711-098, March 2011.
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Casadesus-Masanell, Ramon, Hyunjin Kim, and Forest Reinhardt. "Patagonia (TN)." Harvard Business School Teaching Note 711-081, March 2011.
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Arcadia Biosciences is an entrepreneurial California agricultural biotech company seeking to earn carbon credits by modifying commodity crops for use in China and India. Eric Rey, Arcadia's CEO, faced a strategic inflection point in early September 2008. The company had a plan to share carbon credits allocated by the United Nations Clean Development Mechanism Executive Board to China, for use of Arcadia's rice varieties, since they enabled farmers to reduce nitrogen fertilizer use, in turn lowering greenhouse gas emissions. But the company's proprietary traits for nitrogen use efficiency, salt tolerance, and water use efficiency also had more conventional paths to market based on licensing deals to large seed companies. Alternatively, Arcadia could acquire a seed company and develop and market its seed directly. A different near-term growth area involved commercializing enriched safflower oil, which had undergone several proof-of-concept tests and for which Rey foresaw a clear market in nutritional supplements and functional foods. The case provides context on the company; describes advances in crops genetics focused to climate change and associated resource issues of fertilizer use, water use, and soil salinity; and poses strategic choices for a start-up company operating at the intersection of business, agriculture, and climate change.
Daemmrich, Arthur A., and Forest L. Reinhardt. "Arcadia Biosciences: Seeds of Change (TN)." Harvard Business School Teaching Note 711-042, November 2010. (Revised July 2012.)
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Mid-Missouri Energy (MME) is a farmer-owned cooperative that produces ethanol from corn. The cooperative has performed well in comparison to other producers, but margins in the industry had declined as industry production levels neared market demand limits. MME farmers needed to decide whether to take advantage of their success and expand through acquisitions, whether they should sell the plant, or whether they should continue current operations. MME must consider ongoing regulatory changes that impacted the industry, the possible impact of imported ethanol, the power of the petroleum industry that bought its product, and ongoing uncertainty about corn and ethanol price swings.
Patagonia was deeply committed to the environment. This commitment, at times, conflicted with the company's goal to create the most innovative products in its industry. Patagonia's founder and executives welcomed imitation of both its environmental commitment and its culture. The question remained whether Patagonia's model would work well for a wide range of companies. In 2003, Patagonia executives were considering which products and markets would fit best into their portfolio of product lines, which included alpine, skiing, snowboarding, fishing, paddling, rock climbing, surfing, kayaking, and mountain biking. There was a tradeoff between alienating its core customers and achieving growth via entry into new product markets.
Casadesus-Masanell, Ramon, Hyunjin Kim, and Forest L. Reinhardt. "Patagonia." Harvard Business School Case 711-020, August 2010. (Revised October 2010.)
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The Cosan case introduces students and executive education participants to political economy and business strategy in the biofuels industry. Cosan, based in Brazil, is the largest grower and processor of sugarcane in the world and the largest sugar and ethanol producer in Brazil; it is also the world's largest exporter of ethanol for vehicle fuels. Rubens Ometto, Cosan's CEO, has staked out a leading position in the Brazilian ethanol and sugar industries by virtue of his efficiencies in agricultural production and in downstream logistics. He now needs to consider whether, and how aggressively, to expand abroad, either with production facilities or by exporting Brazilian output. He also needs to decide the appropriate vertical structure for the firm: whether he should be involved more extensively in agriculture, processing, distribution, or retail. The answers to these questions depend on his views of the future of the industry and on the governmental institutions that will affect the distribution of value along the value chain.
Reinhardt, Forest L., Ramon Casadesus-Masanell, and David J Hanson. "BP and the Consolidation of the Oil Industry, 1998-2002; and Supplement (TN)." Harvard Business School Teaching Note 706-048, April 2006. (Revised March 2010.)
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Casadesus-Masanell, Ramon, and Forest L. Reinhardt. "Patagonia (TN)." Harvard Business School Teaching Note 705-028, January 2005. (Revised March 2010.)
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Examines the economics of the oil and gas industry with a focus on 1998 through 2001. Discusses the rationale behind using a growth in scale as a means to increase profitability and to gain competitive advantage. Also examines the classic strategic implications of vertical integration and questions the necessity of remaining vertically integrated in today's markets. During 1998-2001, the industry structure changed dramatically with the occurrence of a wave of merger activity. Set at the end of 2001, as BP's chief executive, Lord John Browne, ponders the company's future. BP set off the merger activity in 1998 with its combination with Amoco. Other major oil concerns quickly followed suit. Several large and dominant firms, termed "supermajors," separated themselves from the rest of the competitors. Although a large number of independent specialty firms also exist, the supermajor firms no longer believe them to be direct competitors. After the case discussion, students should be able to: 1) understand the basic economics of the oil and gas industry, 2) analyze the rationale behind vertical integration strategies, 3) analyze why the industry restructuring occurred, and 4) understand the economies of scale of the supermajor firms as well as the potential problems their immense size could create.
Reinhardt, Forest L., Ramon Casadesus-Masanell, and Deborah Freier. "Patagonia." Harvard Business School Case 703-035, March 2003. (Revised January 2010.)
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Following the sudden resignation of Sir John Browne, Tony Hayward, BP CEO, must decide how global climate change management will figure into BP's corporate strategy. Climate change management was a major part of BP's strategy under Browne: In 1997 Browne broke from his colleagues, publicly declaring that global climate change was a serious problem and pledging BP to play a significant role in the search for solutions. BP successfully reduced its own carbon emissions, and championed cap-and-trade style regulation over taxation or command-and-control. Despite this progress, as the climate issue gains in political prominence and the Kyoto Protocol nears expiration, Hayward must consider what actions to take in BP's business strategy and in the political arena to manage ongoing climate risk.
The carbon market has emerged in response to concerns about global climate change. This note characterizes the market in 2008, describing each segment and how it operates.
Perold, Andre F., Forest L. Reinhardt, and Mikell Hyman. "The Carbon Market." Harvard Business School Background Note 209-064, September 2008. (Revised October 2009.)
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In late 2008, Christoph Sutter, CEO of South Pole Carbon Asset Management, reflects on his firm's early success at originating carbon credits in developing nations and selling them to governments and firms that seek to offset their greenhouse gas emissions voluntarily or to fulfill regulatory obligations. South Pole's early strategy has focused on being a first mover in the niche market for premium quality carbon credits. But as the market evolves in the face of significant policy uncertainty, Sutter wonders what South Pole's strategy should be for the future. This case study can facilitate discussions about environmental markets, about opportunities for entrepreneurship raised by new environmental regulations, and about challenges in markets for tradable pollution permits.
In late 2007, EcoSecurities had to decide whether to undertake a new Clean Development Mechanism (CDM) project in China. EcoSecurities was an aggregator of carbon credits and also invested directly in projects that produced carbon credits. Governments and firms required to cut their greenhouse gas emissions under the Kyoto Protocol could use carbon credits to fulfill part of their compliance obligations. As demand for UN-issued carbon credits rose, the UN approval process had become increasingly burdensome. The Ventilation Air Methane Project was an opportunity to break into a new sector with large potential, and the economics and risks of the project needed to be assessed.
Presents data on opportunities to conserve energy in buildings, which account for about a third of all energy use. Encourages readers to think about the impediments to energy efficiency in the buildings sector and the ways in which entrepreneurs can profitably surmount the obstacles.
Reinhardt, Forest L., and Nazli Uludere. "Buildings and Energy." Harvard Business School Case 708-024, September 2007. (Revised September 2008.)
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Describes the economics, technology, and politics of the oil sands industry, focusing on one of the industry's leading firms. Oil sands deposits in Alberta represent a potentially vast reserve of hydrocarbons, but the extraction, refining, and transportation challenges are formidable, and the environmental consequences of large-scare oil sands development potentially severe. Encourages students to examine Suncor's strategic positioning and cost structure, and the challenges that the firm's leaders confront as of 2007.
Covers strategy and leadership. World Economic Forum founder Klaus Schwab has created the world's most famous-and exclusive-global business conference, held annually in Davos, Switzerland, and backed by a formidable membership organization that includes many of the world's most prominent firms. He now must consider how to keep the event and the organization vibrant and valuable, as similar new organizations arise and as the challenges of globalization become more difficult. In the aspirational slogan of the Forum, Schwab remains "committed to improving the state of the world," and readers are invited to ponder how he can use the organization he has created to make good on this promise.
Khanna, Tarun, Rakesh Khurana, and Forest L. Reinhardt. "World Economic Forum (A)." Harvard Business School Case 708-025, October 2007. (Revised May 2008.)
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Reinhardt, Forest L., and Dennis A. Yao. "Toyota Motor Corporation: Launching Prius (TN)." Harvard Business School Teaching Note 707-558, May 2007.
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Marco Suter, Executive Vice-Chairman, UBS Board of Directors, carefully studied the chart on his desk. It showed the public commitment of major financial institutions to help mitigate global warming. Evidently, UBS lagged behind its competitors. The graph was part of a report that environmental specialists and senior executives at UBS had compiled. It suggested the company adopt a more progressive policy on climate change. Suter thought about the options that the working group had generated. These ranged from stabilizing the company's current carbon emissions to complete carbon neutrality. The UBS Corporate Responsibility Committee would meet early next week. Suter wondered which option he should support.
In 1995, Hiroshi Okuda, president of Toyota Motor Corp., considers whether to push for a more aggressive launch of the Toyota Prius--an automobile that incorporates Toyota's new and technically advanced hybrid power train. This launch decision allows discussion of the importance of the Prius in Toyota's overall product strategy and explores issues ranging from market structure to competitive advantage and competitive dynamics.
In October 2005, Urs Riedener, head of marketing at Swiss retailer Migros, is contemplating the company's competitive position. Primarily a retailer for foods and near-foods products, the cooperative Migros, with close to 600 retail outlets in Switzerland (but only four outside its domestic market), is facing stiffer competition, both from existing competitors (such as Coop) and new arrivals (such as hard discounters Lidi and Aldi). Riedener and Migros management have so far always had faith in Migros' position in the marketplace, built around its governance structure (the customers were also the owners, creating a close link between the retailer and the market) and its emphasis on never selling harmful products. Socially, ecologically, and ethically produced products were key aspects of Migros' product offering. Riedener knows that Migros benefited from a unique position--and he wants to make sure that Migros defends it from both new and old competitors.
Reinhardt, Forest L., Vincent Marie Dessain, and Anders Sjoman. "Migros." Harvard Business School Case 706-028, December 2005. (Revised February 2006.)
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Examines the corporate strategy of German energy giant E.ON. The firm is vertically integrated, horizontally diversified across electricity and natural gas, and active in numerous countries in Europe as well as in the United States. Explores the costs and benefits of the company's choices about its vertical, horizontal, and geographical scope. Considers the risks of economic regulation, increasing concerns about environmental externalities from carbon emissions and nuclear power, and political and price risks in upstream markets for fossil fuels.
Reinhardt, Forest L., and Sebastian Frankenberger. "E.ON Corporate Strategy." Harvard Business School Case 706-015, January 2006. (Revised February 2006.)
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The National Parks Conservation Association seeks to help the U.S. National Park Service increase its efficiency by incorporating principles of business management so that American national parks will be better managed. Its efforts raise fundamental questions about the roles of government, firms, and nonprofits in a mixed capitalist economy as well as the appropriate differences in managerial practices across sectors.
Swiss food giant Nestle attempts to improve the performance of its suppliers of agricultural commodities to raise quality, lower costs, and contribute to sustainable development. Its initiatives focus first on coffee, cocoa, and milk. Nestle managers assert that the initiatives deliver both private benefits (better quality and reduced costs to the firm) and social benefits (higher incomes for farmers, better environmental quality in farming regions). Questions include the ways in which these programs create value for shareholders, the manner in which they should be marketed, and their efficacy in addressing social issues.
Casadesus-Masanell, Ramon, Forest L. Reinhardt, and Deborah Freier. "E.ON AG." Harvard Business School Case 703-415, April 2003. (Revised July 2003.)
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In the United States, genetically modified corn and soybeans are now widely grown and consumed. In Europe, however, they have been dubbed "Frankenstein foods," shunned by packaged food manufacturers, and subjected to a host of governmental restrictions. This case provides information on the economics and politics of agricultural biotechnology. It emphasizes the divergent attitudes in the United States and Europe about how the technology ought to be regulated and highlights the resultant strategic dilemmas for companies in the business, including DuPont, Monsanto, and Novartis. Students can analyze the technology and its regulators from both a normative public policy standpoint (i.e., asking what sorts of regulatory institutions would enhance social well-being) and the point of view of positive political economy (i.e., asking how the regulatory system is likely to evolve given the current institutional setup and the interests of the various public and private players). Raises questions of how firms can develop strategy under conditions of extreme regulatory risk.
Several investment firms and mutual funds position themselves as providers or facilitators of opportunities for socially responsible investment. This case addresses the impact of these firms on publicly traded companies. Focuses on managers at ABB, a large multinational based in Switzerland that has tried to be a leader in integrating principles of sustainable development into its business strategies. ABB's managers now need to decide what sorts of relationships they would like to have with the firms in the socially responsible investment community and the extent to which they ought to take the preferences of these firms into account in tailoring their business strategies.
Chevron Corp., headquartered in San Francisco, manages a worldwide, vertically integrated value chain from the oil well to the gasoline station. Mishandling of oil at any stage of production can damage the natural environment, human health, corporate profitability, or all three. But at the same time Chevron needs to be prudent about the amount of money it spends on measures to manage these risks, and environmental programs within the firm can conflict with a long-standing tradition of decentralized management. To manage risks more efficiently, Chevron executives are contemplating the use of quantitative decision tools that enable operating managers to compute rough benefit-cost ratios for various alternative risk management projects. The case focuses on the pros and cons of using such tools within the context of Chevron's overall system for environmental risk management.
Reinhardt, Forest L. "Environmental Risk Management at Chevron Corporation TN." Harvard Business School Teaching Note 799-112, April 1999.
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Reinhardt, Forest L., and Carin-Isabel Knoop. "Duales System Deutschland." Harvard Business School Case 795-074, February 1995. (Revised March 1999.)
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Intended to assist faculty who teach courses on environmental management at business schools. Other people interested in the relationships between business and the environment may also find it useful.
Reinhardt, Forest L. Conceptual Overview: "Business and the Environment," An Elective for MBA Students TN. Harvard Business School Teaching Note 799-123, March 1999.
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Based on extensive interviews, this case discusses the environmental policies of a successful firm in the specialty chemicals business. Executives at Ciba have differentiated products along environmental lines and have used environmental scrutiny as a tool for cutting costs. Discusses these initiatives and also the firm's efforts to improve its management of environmental risk. Calls attention to the relationships among environmental policies, the competitive position of the firm, and the firm's overall strategy.
Reinhardt, Forest L. "Metsa-Serla: Environmental Labels in the European Forest Products Markets TN." Harvard Business School Teaching Note 799-058, November 1998.
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Since winning independence in 1965, Singapore achieved some of the world's highest rates of economic growth. A large part of GDP and employment came from direct investment by multinational companies in low-cost assembly work, but in the 1990s Singapore's rising wage rates increasingly priced it out of these industries. Could Singapore change itself from an assembler and fabricator of Western-designed parts to a designer and marketer of desirable products? Lee Kuan Yew, "the father of Singapore," repeatedly had shown an ability to guide the nation through such transitions. Not only did his successor have no such track record, but the next transition might be the hardest yet.
Reinhardt, Forest L., and Richard H.K. Vietor. "Du Pont Freon Products Division (A) and (B) TN." Harvard Business School Teaching Note 794-046, September 1993. (Revised April 1995.)
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In 1988, the Du Pont Co. is abruptly confronted with solid scientific evidence that chlorofluorocarbons are destroying the earth's ozone shield. Du Pont, with its Freon brand product line serving markets for foam insulation, electronics solvents, and especially refrigeration, was the world's leading producer of these chemicals. Although no substitutes were currently commercially available, or even proven, Du Pont had to decide what to do. The purpose of the case is to examine how changing science and environmental problems affect competitive conditions and corporate strategy. In particular, the case examines the criteria by which companies formulate policy.
Reinhardt, Forest L., and Richard H.K. Vietor. "Renewable Energy in the United States TN." Harvard Business School Teaching Note 795-083, January 1995.
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Reinhardt, Forest L., and Jackie Prince Roberts. "Brazilian Foundation for Sustainable Development TN." Harvard Business School Teaching Note 795-098, January 1995.
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Set in April 1990, this case focuses on H.J. Heinz and its subsidiary, StarKist, the largest producer of canned tuna in the United States. During the 1980s, the public became increasingly concerned about tuna fishing practices that killed dolphins. StarKist was the target of a consumer boycott initiated by the environmental community. Worried that bad publicity from the boycott would threaten the StarKist brand name, as well as Heinz's other branded products, senior management at Heinz decided that StarKist would become the first tuna processor to no longer purchase tuna caught by methods that killed dolphins. In making the decision, Heinz executives were not sure how StarKist's two major competitors would react, or how the decision would impact the procurement of raw tuna, StarKist's single largest expense item. Discusses the harvesting (fishing) and processing (canning) sector of the tuna industry. Also discusses the Marine Mammal Protection Act, and U.S. trade sanctions against Mexico and other countries.
Vietor, Richard H.K., and Forest L. Reinhardt. "StarKist (B)." Harvard Business School Supplement 794-139, April 1994. (Revised January 1995.)
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Vietor, Richard H.K., Forest L. Reinhardt, and Jackie Prince Roberts. "Note on Contingent Liabilities TN." Harvard Business School Teaching Note 795-091, January 1995.
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During the 1990s, environmental activists became interested in trade issues for the first time. Whereas GATT, the General Agreement on Tariffs and Trade, had previously been the province of trade specialists, a new poster popular among environmentalists depicted the monster "GATTzilla," devouring the earth, dolphins, and democratic institutions. This case describes the conflict between environmental and trade values as it is manifested in various multilateral institutions and treaties: GATT, especially after its controversial ruling on a United States dolphin protection law; NAFTA, the North America Free Trade Agreement, for which environmental matters have become an unexpected stumbling block; the European Community, as it tries to harmonize member regulations; and multilateral treaties such as CITES (the convention on trade in endangered species), the Montreal Protocol on ozone-depleting substances, and attempts to protect tropical timber.
Reading Energy builds facilities that produce energy from nontraditional fuels. A privately held, entrepreneurial organization, it has spent six years developing a plan to build a waste-to-energy plant in the town of Robbins, Illinois. The plant would burn municipal solid waste, producing electricity for sale to the local utility. Its economics are driven by the cost of alternative waste disposal technologies (mostly landfills) and by the Public Regulatory Policy Act of 1978, which ensures a market for the power. Reading's project has been delayed by political opposition at both the local and state levels. Robbins is a poor community, and some of Reading's antagonists have invoked environmental justice as a reason to oppose the project. Tom Cassel, the engineer who founded Reading, is negotiating contracts for waste with nearby municipalities. He needs to consider price, risk allocation, and other economic factors, in addition to political and social issues, in designing his firm's strategy and tactics.
Introduces students to the arithmetic of the accounting for national productivity growth. It defines labor productivity, capital productivity, and total factor productivity, describes the relationships among them, and discusses the phenomena that cause them to change over time. Exhibits include data for the United States and other industrial countries, which both show the relationships among the various measures and allow comparison across time and space. The end of the note discusses the 1992 controversy over productivity growth in Singapore. Productivity is an important phenomenon, widely discussed in the newspapers, but rarely even defined. Business students, especially those engaged in country analysis, need to understand the various ways in which it is measured and why those various quantities have changed over time in different nations. Intended for an introductory MBA course.
Addresses contingent environmental liabilities that are the result of unforeseen environmental risks where the dollar amount of such liabilities is unknown and depends on future events. In contrast, fines for violating environmental laws are liabilities, but are not considered contingent liabilities as such fines are relatively predictable. Covers liabilities under common law doctrines (including toxic torts), the Resource Conservation and Recovery Act (RCA), and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). In particular, discusses lender liability issues as of 1993 and briefly discusses financial reporting requirements. Concludes with a discussion of strategies for managing such liabilities.
The Montana Land Reliance is a small not-for-profit organization in the business of creating conservation easements on private lands in Montana. The easements preserve the scenic character and recreational value of the lands by precluding subdivision and other forms of real estate development. The Reliance, established only in 1976, has grown rapidly in recent years. At the time of the case, its leaders face the need to define the market they want to serve, determine the right rate of growth, and create the institutional capabilities to capitalize on their early successes.
Reinhardt, Forest L., and Thomas Patterson. "Montana Land Reliance." Harvard Business School Case 794-050, December 1993. (Revised January 1994.)
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Reinhardt, Forest L. "Acid Rain: Burlington Northern, Inc. (A) and (B), Teaching Note." Harvard Business School Teaching Note 794-033, August 1993. (Revised October 1993.)
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Reinhardt, Forest L. "Champion International Corporation: Timber, Trade, and the Northern Spotted Owl TN." Harvard Business School Teaching Note 794-034, September 1993. (Revised October 1993.)
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The governments of Malaysia and the Malaysian State of Sarawak need to assess possible changes in forest policy. Environmentalist pressure threatens traditional market relationships and patterns of business-government interaction. Harvest regulations, subsidies, trade restrictions, environmental controls, and property rights structures are all called into question.
Burlington Northern (BN) hauls low-sulfur coal from the northern Great Plains to electric utilities in the Midwest. Acid rain legislation may affect the geographic scope of BN's markets. Railroad managers need to assess the economic effects of acid rain controls and their chances of influencing the controls' structure.
The Southern Co., an electric utility, is planning its compliance with the 1990 amendments to the Clean Air Act. The Act established a system of tradeable permits for sulfur dioxide emissions. The company must decide whether to install pollution control equipment and generate excess permits for sale to other firms, or to emit larger quantities of sulfur dioxide, save capital costs, and purchase pollution permits. Can be used to teach discounted cash flow analysis of a make versus buy decision. Also raises issues of expected cost minimization, questions of economic and political uncertainty, and the value of flexibility.
Champion's forest products division owns timberlands, sawmills, and plywood mills in the Pacific Northwest. The listing of the northern spotted owl as an endangered species, and restrictions on exports of logs from state-owned lands, have disrupted the stumpage, log and product markets in which Champion competes. Tag Edwards, executive V.P. for forest products, needs to decide how to respond to these regulatory changes, using economic data and political information.
In addition to the issues of expected cost minimization elucidated in Acid Rain: The Southern Co. (A), problems involving regulatory uncertainty are critical to the firm's Clean Air Act compliance strategy. The regulatory uncertainty affects, and is affected by, the uncertainties about the price of allowances to emit sulfur dioxide. Provides additional information on the regulatory risks and uncertainties confronting the Southern Co.; permits exploration of the relations between federal environmental regulation and state-level regulation of rates of return.
