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Business & Environment

Business & Environment

    • July 2015
    • Article

    BYOB: How Bringing Your Own Shopping Bags Leads to Treating Yourself, and the Environment

    By: 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.

    • July 2015
    • Article

    BYOB: How Bringing Your Own Shopping Bags Leads to Treating Yourself, and the Environment

    By: 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...

    • Article

    Integrated Reporting and Investor Clientele

    By: 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.

    • Article

    Integrated Reporting and Investor Clientele

    By: 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...

    • April 14, 2015
    • Article

    The Type of Socially Responsible Investments That Make Firms More Profitable

    By: George Serafeim

    • April 14, 2015
    • Article

    The Type of Socially Responsible Investments That Make Firms More Profitable

    By: George Serafeim

    • Article

    Transition to Clean Technology

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

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

    • Article

    Transition to Clean Technology

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

    We develop a microeconomic model of endogenous growth where clean and dirty technologies compete in production and innovation, in the sense that research can be directed to either clean or dirty technologies. If dirty technologies are more advanced to start with, the potential transition to clean technology can be difficult both because clean...

    • 2015
    • Book

    Leading Sustainable Change: An Organizational Perspective

    By: Rebecca Henderson, Ranjay Gulati and Michael Tushman

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

    • 2015
    • Book

    Leading Sustainable Change: An Organizational Perspective

    By: Rebecca Henderson, Ranjay Gulati and Michael Tushman

    The business case for acting sustainably is becoming increasingly compelling—reducing our global footprint to sustainable levels is the defining issue of our times, and it is one that can only be addressed with the active participation of the private sector. However, persuading well-established organizations to act in new ways is never easy. This...

    • September 2014 (Revised November 2017)
    • Case

    Sustainability at IKEA Group

    By: V. Kasturi Rangan, Michael W. Toffel, Vincent Dessain and Jerome Lenhardt

    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.

    • September 2014 (Revised November 2017)
    • Case

    Sustainability at IKEA Group

    By: V. Kasturi Rangan, Michael W. Toffel, Vincent Dessain and Jerome Lenhardt

    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...

Initiatives & Projects

The Business & Environment Initiative and the Social Enterprise Initiative deepen business leaders’ understanding of today’s environmental challenges and assist them in developing effective solutions.
Business & Environment
Social Enterprise

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.

Initiatives & Projects

The Business & Environment Initiative and the Social Enterprise Initiative deepen business leaders’ understanding of today’s environmental challenges and assist them in developing effective solutions.

Business & Environment
Social Enterprise

Recent Publications

Natura: Weathering the Pandemic at Brazil's Cosmetic Giant

By: Brian Trelstad, Pedro Levindo and Carla Larangeira
  • January 2023 |
  • Case |
  • Faculty Research
Brazil's Natura, a multi-brand cosmetics group, has taken several measures to safeguard the livelihoods of its thousands of employees and millions of sales representatives during the COVID-19 health and economic crisis. The company has also made strides in its efforts to increase digital sales. Now the purpose-driven group must decide whether to vocalize its opposition to private companies buying COVID-19 vaccines to inoculate their employees before priority groups in Brazil's public health system.
Keywords: COVID-19 Pandemic; ESG Reporting; Acquisition; Customer Focus and Relationships; Decision Making; Social Entrepreneurship; Environmental Sustainability; Environmental Management; Climate Change; Ethics; Moral Sensibility; Values and Beliefs; Global Strategy; Corporate Governance; Health Pandemics; Human Resources; Human Capital; Crisis Management; Growth and Development Strategy; Marketing; Distribution Channels; Supply Chain; Corporate Social Responsibility and Impact; Mission and Purpose; Organizational Culture; Customer Ownership; Relationships; Business and Community Relations; Business and Stakeholder Relations; Networks; Partners and Partnerships; Science-Based Business; Reputation; Human Needs; Social Issues; Strategy; Equality and Inequality; Beauty and Cosmetics Industry; Brazil; Latin America
Citation
Educators
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Trelstad, Brian, Pedro Levindo, and Carla Larangeira. "Natura: Weathering the Pandemic at Brazil's Cosmetic Giant." Harvard Business School Case 323-065, January 2023.

Taylor Farms: Adding Value to Fresh Produce

By: Forest L. Reinhardt, Jose B. Alvarez, Jenyfeer Martinez Buitrago and Pedro Levindo
  • December 2022 |
  • Case |
  • Faculty Research
In October 2022, Bruce Taylor (HBS MBA, 1981), Chairman and CEO of Taylor Farms, the leading producer of salads and healthy fresh foods in the United States, wondered whether this was the right time for Taylor Farms to venture into the Controlled Environment Agriculture (CEA). Taylor Farms’ operations involved farming, processing, and distributing about 50 million pounds of fresh produce every week. To accomplish such a feat, Taylor Farms faced a number of ongoing challenges related to features such as food safety, climate change, labor shortages and wages, input prices, and logistics. CEA, either in high-tech, single-level greenhouses or vertical farms (multi-layer indoor crop cultivation systems), could not entirely help address environmental and logistic challenges, but its smaller geographic footprint enabled operations closer to consumption sites. Indoor farms were promoted as using far less water and requiring less transportation than traditional farms, but they required more power and were more expensive to build and run. With these solutions still under development, Bruce harbored some qualms about their actual benefits. After all, Taylor Farms had been able to sustain double-digit revenue growth rates by sticking to conventional agriculture. Yet, he did not want the company to fall behind in new technologies that could render its operations more efficient. Moreover, CEA producers might turn into a threat for Taylor Farms, eating into its market share by catering to consumers who favored “environmentally-friendlier” products. Was this the right time for Taylor Farms to venture into the CEA space, or should it wait for the technology to evolve further or the industry to consolidate?
Keywords: Technology Adoption; Cost vs Benefits; Logistics; Environmental Sustainability; Agriculture and Agribusiness Industry
Citation
Educators
Related
Reinhardt, Forest L., Jose B. Alvarez, Jenyfeer Martinez Buitrago, and Pedro Levindo. "Taylor Farms: Adding Value to Fresh Produce." Harvard Business School Case 523-041, December 2022.

Marfrig's Quest for Greener Beef

By: Jose B. Alvarez, Pedro Levindo and Ruth Costas
  • December 2022 (Revised January 2023) |
  • Case |
  • Faculty Research
Marfrig, one of the world’s leading meatpackers, strived to comply with its commitment to have a deforestation-free value chain in Brazil by 2030. The company also pledged to reduce its emissions of greenhouse gases in accordance with the guidelines set by the Science-Based Targets Imitative (SBTi). Controlling shareholder and chairman Marcos Molina, and Director of Sustainability and Communications for South America Paulo Painez, must figure how to achieve these goals while dealing with increased pressures from NGOs, customers, and foreign governments. The pair believed that a solution to the company’s—and the sector’s—challenges would only be achieved by working together with other stakeholders of the Brazilian beef industry: cattle ranchers, NGOs, the government, and civil society at large. Aligning the interests of the different players, while keeping Brazil’s lead as the world’s top beef exporter, was especially challenging given the country’s fraught political environment and its tarnished image abroad.
Keywords: Agribusiness; Animal-Based Agribusiness; Plant-Based Agribusiness; Acquisition; Family Business; Communication Strategy; Environmental Management; Climate Change; Environmental Regulation; Environmental Sustainability; Bonds; Food; Global Strategy; Goods and Commodities; Government and Politics; Political Elections; Leading Change; Marketing; Product Marketing; Product Positioning; Supply Chain; Supply Chain Management; Corporate Social Responsibility and Impact; Business and Government Relations; Business and Stakeholder Relations; Partners and Partnerships; Strategy; Adaptation; Business Strategy; Commercialization; Competitive Strategy; Corporate Strategy; Diversification; Expansion; Agriculture and Agribusiness Industry; Food and Beverage Industry; Brazil; Latin America; Argentina; Uruguay; North America; United States; Europe; Asia; China
Citation
Educators
Related
Alvarez, Jose B., Pedro Levindo, and Ruth Costas. "Marfrig's Quest for Greener Beef." Harvard Business School Case 523-073, December 2022. (Revised January 2023.)

Iberdrola: Leading the Energy Revolution

By: Juan Alcácer and Emer Moloney
  • December 2022 |
  • Case |
  • Faculty Research
At the end of 2019, Ignacio Galán, the Chairman and CEO of the world's third largest utility, Iberdrola, relected on his almost 20 years at the company. He managed a portfolio of three very different businesses, each with their own specific opportunities and challenges. From the outside, the Renewables business appeared to be the flagship business, with engineering projects constantly increasing in scope and size. Less high profile but no less strategically important was the Networks business, which was characterized by its regulated nature and provided a stable financial base for the company. Finally, the Wholesale and Retail business developed customized and innovative solutions for customers. Iberdrola had invested early in renewable technologies to position itself as a leader in driving the electric industry’s role in the fight against climate change. Over time, Iberdrola had honed the skill of constantly monitoring new technologues and strategically deciding when to make its move. Faced with the decision to invest in green technology, heralded as a key technology in the fight for net zero, Galán and his team were weighing up their options.
Keywords: Energy; Energy Generation; Energy Sources; Non-Renewable Energy; Renewable Energy; Engineering; Innovation and Management; Innovation Leadership; Innovation Strategy; Technological Innovation; Leadership; Growth and Development Strategy; Market Timing; Industry Growth; Mission and Purpose; Strategy; Energy Industry; Green Technology Industry; Utilities Industry; Transportation Industry; Auto Industry; Spain; United Kingdom; United States; Brazil; Mexico
Citation
Educators
Related
Alcácer, Juan, and Emer Moloney. "Iberdrola: Leading the Energy Revolution." Harvard Business School Case 723-398, December 2022.

Your Company Needs a Space Strategy. Now.

By: Matthew Weinzierl, Prithwiraj (Raj) Choudhury, Tarun Khanna, Alan MacCormack and Brendan Rosseau
  • November–December 2022 |
  • Article |
  • Harvard Business Review
Space is becoming a potential source of value for businesses across a range of sectors, including agriculture, pharmaceuticals, consumer goods, and tourism. To understand what the opportunities are for your company, the authors advise you to consider the four ways in which using space could create value: data, capabilities, resources, and markets.

For most companies thinking about their space strategy over the next five to 10 years, data will be the dominant focus. For instance, many companies are turning to remote-sensing satellites for data that will inform business decisions. Whether it’s tracking the number of cars parked in retail locations, detecting costly and environmentally damaging methane leaks from natural-gas wells, or assessing soil type and moisture content to maximize crop yields, creative uses for data gathered from space abound.

Companies looking further ahead will want to explore the value to be gained from conducting activities in space, utilizing space assets, and meeting demand from the new space age.

Businesses engaging with commercial space should be willing to experiment and should look for partners.
Keywords: Space Strategy; Emerging Markets; Natural Resources; Analytics and Data Science; Organizational Change and Adaptation; Adaptation; Competition; Aerospace Industry
Citation
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Weinzierl, Matthew, Prithwiraj (Raj) Choudhury, Tarun Khanna, Alan MacCormack, and Brendan Rosseau. "Your Company Needs a Space Strategy. Now." Harvard Business Review (November–December 2022): 80–91.

How Do Investors Value ESG?

By: Malcolm Baker, Mark Egan and Suproteem K. Sarkar
  • 2022 |
  • Working Paper |
  • Faculty Research
Environmental, social, and governance (ESG) objectives have risen to near the top of the agenda for corporate executives and boards, driven in large part by their perceptions of shareholder interest. We quantify the value that shareholders place on ESG using a revealed preference approach, where shareholders pay higher fees for ESG-oriented index funds in exchange for their financial and non-financial benefits. We find that investors are willing, on average, to pay 20 basis points more per annum for an investment in a fund with an ESG mandate as compared to an otherwise identical mutual fund without an ESG mandate, suggesting that investors as a group expect commensurately higher pre-fee, gross returns, either financial or non-financial, from an ESG mandate. Our point estimate has risen from 9 basis points in 2019 when our sample begins to as much as 28 basis points in 2022. When we incorporate the possibility that investors are willing to accept lower financial returns in exchange for the psychic and societal benefits of ESG, when we consider that the holdings of ESG and non-ESG index funds overlap, when we measure the ESG ratings of these holdings, and when we focus on 401(k) participants who report being concerned about climate change or who work in industries with lower levels of emissions, we find that the implicit value that investors place on ESG stocks is higher still. A simple model of supply suggests that the large majority of these benefits accrue to investors and firms, with intermediaries capturing 5.9 basis points in fees, half of which reflect higher markups.
Keywords: Investment; Investment Portfolio; Corporate Social Responsibility and Impact; Business and Shareholder Relations; Environmental Sustainability; Governance; Financial Services Industry; United States
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Baker, Malcolm, Mark Egan, and Suproteem K. Sarkar. "How Do Investors Value ESG?" NBER Working Paper Series, No. 30708, December 2022. (Harvard Business School Working Paper, No. 23-028, November 2022.)

The Issuance and Design of Sustainability-linked Loans

By: Maria Loumioti and George Serafeim
  • 2022 |
  • Working Paper |
  • Faculty Research
Sustainability-linked loans (i.e., syndicated loans for which pricing is linked to a sustainability performance indicator) have rapidly evolved into a significant private debt product. We find that sustainability-linked lending has been available mostly to borrowers with low environmental, social, and governance (ESG) risk profiles. We show that borrower’s ESG risk is associated with the use of aggregate (e.g., ESG score) rather than granular (e.g., carbon emissions) performance indicators and the monitoring by a reputable sustainability verifier. Further, ESG risk is unrelated to sustainability indicator materiality and target restrictiveness. Overall, we provide evidence consistent with the sustainability-linked lending market acting as a signaling mechanism of ESG credentials and being at the early stages of contract design sophistication.
Keywords: Sustainability; Sustainability Management; Credit Products; Loan Contracts; Loans; Corporate Finance; Credit Risk; Environment; ESG; ESG Ratings; Climate Change; Finance; Borrowing and Debt; Risk and Uncertainty; Credit
Citation
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Loumioti, Maria, and George Serafeim. "The Issuance and Design of Sustainability-linked Loans." Harvard Business School Working Paper, No. 23-027, November 2022.

Climate Change Vulnerability and Currency Returns

By: Alex Cheema-Fox, George Serafeim and Hui (Stacie) Wang
  • 2022 |
  • Article |
  • Financial Analysts Journal
Using measures of physical risk from climate change, we develop a methodology to allocate currency pairs according to a country’s vulnerability and construct portfolios with decreasing vulnerability to physical risk. We show that non-G10 currencies are more vulnerable to physical risk, have become less vulnerable over time, and that the vulnerability measure is correlated with higher losses from natural disasters. Portfolios exposed to currencies with decreasing vulnerability have exhibited positive abnormal returns, with the abnormal return coming from currencies that have relatively high levels of vulnerability. These results exist in non-G10 currencies, while no relation is found within G10 currencies.
Keywords: Climate Finance; Vulnerabilities; Currencies; Foreign Exchange; Climate Change; Currency; Natural Disasters
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Cheema-Fox, Alex, George Serafeim, and Hui (Stacie) Wang. "Climate Change Vulnerability and Currency Returns." Financial Analysts Journal 78, no. 4 (2022): 37–58.

Single.Earth

By: Rembrand Koning and Emer Moloney
  • October 2022 |
  • Case |
  • Faculty Research
Estonian greentech company Single.Earth is launching a nature-backed token that is linked to and funds the protection of a specific plot fo land. The first landowners had been onboarded to the company's Digital Twin, a virtual representation of the planet's natural resources. Now the founders had to innovate on the demand side of the market, which had been shaken by the May 2022 web3 crash. They needed to generate interest in individuals, companies and institutions to buy and use the tokens in order to get their dream of a nature-based economy up and running.
Keywords: Alternative Assets; Business Startups; Entrepreneurship; Climate Change; Environmental Sustainability; Green Technology; Natural Resources; Pollution; Analytics and Data Science; Marketing; Product Marketing; Product Launch; Product Positioning; Markets; Market Timing; Strategy; Green Technology Industry; Estonia
Citation
Educators
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Koning, Rembrand, and Emer Moloney. "Single.Earth." Harvard Business School Case 723-388, October 2022.

When Climate Collaboration Is Treated as an Antitrust Violation

By: Matteo Gasparini, Knut Haanaes and Peter Tufano
  • October 17, 2022 |
  • Article |
  • Harvard Business Review (website)
Carbon emissions transcend firms and borders—they are a massive, unpriced externality. Companies across industries are increasingly waking up to the need to cooperate in the fight against climate change but the law might get in the way. Across Europe and the U.S., regulators are discussing whether corporate climate collaborations violate antitrust law. Companies need to keep an eye on this debate, and regulators should strive to incorporate the effect of a partnership on emissions into antitrust considerations.
Keywords: Climate Impact; Climate Finance; Antitrust; Anti-trust; Climate Change; Environmental Regulation; Law
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Gasparini, Matteo, Knut Haanaes, and Peter Tufano. "When Climate Collaboration Is Treated as an Antitrust Violation." Harvard Business Review (website) (October 17, 2022).
More Publications

Faculty

George Serafeim
Michael W. Toffel
Forest L. Reinhardt
Richard H.K. Vietor
Joseph B. Lassiter
Rebecca M. Henderson
Max H. Bazerman
David E. Bell
Geoffrey G. Jones
James K. Sebenius
Lynn S. Paine
Ray A. Goldberg
→See All

HBS Working Knowlege

    • 15 Nov 2018

    Can the Global Food Industry Overcome Public Distrust?

    Re: Ray A. Goldberg
    • 17 Oct 2016

    Business Solutions That Help Cut Food Waste

    Re: Jose B. Alvarez
    • 09 Apr 2012

    Who Sways the USDA on GMO Approvals?

    by Michael Blanding
→More Articles

Harvard Business Publishing

    • September–October 2022
    • Article

    The Essential Link Between ESG Targets and Financial Performance

    By: Mark R. Kramer and Marc W. Pfitzer
    • October 2022 (Revised December 2022)
    • Case

    Reimagining Enel: Enabling Sustainable Progress

    By: Michael L. Tushman and Kerry Herman
→More Harvard Business Publishing
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