Business and Environment

Business and Environment is a featured research topic and an initiative at Harvard Business School.
 
The vital connection between the natural environment and the business world has long been a central focus of our research at HBS – from Richard Vietor’s study of business-government relations in U.S. energy policy in the 1980’s to Michael Porter’s new concept of the relationship between the environment and competition in the 1990’s. Today, our faculty members focus on corporate environmental strategy, operations and reporting; sustainable cities and infrastructure; the role of government and environmental policy; clean energy generation and demand-side energy efficiency; and the effective management of natural resources essential to human prosperity.

Featured Works

 

  1. Book | 2018

    Varieties of Green Business: Industries, Nations and Time

    G. Jones

    Published at a time of ever-increasing warnings that the pace of climate change and other environmental changes risks making the Earth unsustainable within our own lifetimes, this book looks at the past of green business to identify lessons for the future. It provides rich new evidence and insights on green business as it examines its variation between industries and nations, and over time. It shows the deep historical origins of endeavors to create for-profit businesses that were more responsible and sustainable, but also how these strategies have faced constraints, trade-offs and challenges of legitimacy. The industries covered range from sustainable finance and solar energy, to organic food and wine, eco-tourism and outdoor clothing. Strategies purused range from incremental shifts towards sustainability to abandoning for-profit business entirely and re-wilding and conserving millions of acres of lands in Latin America. The book's distinctivness lies in the use of original empirical data, and the willingness to engage with both sucessful and unsuccessful cases. The wide geographical coverage includes not only the United States and Europe, but also less studied settings, including Chile, Costa Rica, New Zealand and Japan. The book serves as a warning against facile beliefs in the potential of win/win solutions as business tries to reduce its environmental impact, or even save the planet. The lesson of history is that making business sustainable is a hard journey, littered with system-wide roadblocks, but it is a journey that is possible, and one that is urgently needed.

    Keywords: Green Business; sustainability; business history; renewable energy; eco-tourism; organic wine; organic food; waste management; sustainable finance; Ethics; Finance; History; Entrepreneurship; Accommodations Industry; Agriculture and Agribusiness Industry; Banking Industry; Energy Industry; Food and Beverage Industry; Green Technology Industry; Tourism Industry; Europe; Asia; Latin America; North and Central America; New Zealand;

    Citation:

    Jones, G. Varieties of Green Business: Industries, Nations and Time. Northamption, MA: Edward Elgar Publishing, 2018.  View Details
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  2. Working Paper | HBS Working Paper Series | 2018

    Golden Opportunity? Voluntary Sustainability Standards for Artisanal and Small-scale Gold Mining and the United Nations Sustainable Development Goals

    Kristin Sippl

    While much is known about transnational climate governance, less is known about transnationalism's contributions to the realization of the United Nations Sustainable Development Goals (SDGs). This paper helps balance the literature via comparative analysis of the potential contributions of two voluntary sustainability certification programs for artisanal and small-scale gold mining (ASGM): Fairtrade International and the Alliance for Responsible Mining. Assessment of four necessary conditions for SDG contributions (goal alignment, rule strength, uptake patterns, indirect effects) suggest weak contributions to date. First, only the weakest versions of standards are being adopted, and only by miners above the poverty line prior to certification. Second, adoption levels are low, and rates of decertification almost as high as certification. Third, awareness raising among consumers and partnerships with public actors are equally weak. Yet programs do align well with the SDGs and have potential. To improve, programs should consider uniting, becoming more “producer-friendly,” and consider the role within ASGM governance systems they are best suited to play (which may be none at all). Findings contribute to debates on the merits of increasing governance fragmentation and the role of political consumption in global problem solving. The ASGM case provides lessons about the diffusion of certification to new sectors, with the aim of guiding global resources towards their most efficient and effective ends.

    Keywords: sustainability standards; gold; certification; eco-labeling; international law; luxury; extractive industries; Environmental Sustainability; Standards; Adoption; Governance; Global Range; Luxury; Mining Industry;

    Citation:

    Sippl, Kristin. "Golden Opportunity? Voluntary Sustainability Standards for Artisanal and Small-scale Gold Mining and the United Nations Sustainable Development Goals." Harvard Business School Working Paper, No. 19-024, September 2018. (Revise and Resubmit.)  View Details
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  3. Working Paper | HBS Working Paper Series | 2018

    Ratcheting, Competition, and the Diffusion of Technological Change: The Case of Televisions Under an Energy Efficiency Program

    Tomomichi Amano and Hiroshi Ohashi

    In differentiated goods markets with societal implications, quality standards are commonly implemented to avoid the under-provision of innovation. Firms have clear incentives to engage in strategic behavior because policymakers use market outcomes as a benchmark in designing regulation. This study examines a unique energy efficiency standard for television sets, under which future minimum efficiency standards are explicitly a function of current product offerings. The setting illustrates firms' dual incentives at work: A firm better differentiates products under a looser standard but may want to induce a tighter standard if it can benefit from raising rivals' costs. These incentives drive firms to ratchet quality. We develop a structural model of product entry that illustrates how the regulator's standard setting rule affects a firm's product quality decision. Counterfactual simulations illustrate that ratcheting down was prevalent in this market and that incentives to ratchet up did not exist. The results suggest that in many commonly regulated markets in which firms share similar cost structures, firms are likely to experience incentives to ratchet down and delay the introduction of innovative products. The study highlights the importance of understanding supply side incentives, such as ratcheting, in designing and assessing policy.

    Keywords: product differentiation; energy efficiency standards; ratcheting; diffusion of innovation; Technological Innovation; Competition; Quality; Governing Rules, Regulations, and Reforms; Policy;

    Citation:

    Amano, Tomomichi, and Hiroshi Ohashi. "Ratcheting, Competition, and the Diffusion of Technological Change: The Case of Televisions Under an Energy Efficiency Program." Harvard Business School Working Paper, No. 19-021, September 2018.  View Details
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  4. Article | Financial Analysts Journal | Third Quarter 2018

    Why and How Investors Use ESG Information: Evidence from a Global Survey

    Amir Amel-Zadeh and George Serafeim

    Using survey data from a sample of senior investment professionals from mainstream (i.e., not SRI funds) investment organizations, we provide insights into why and how investors use reported environmental, social, and governance (ESG) information. Relevance to investment performance is the most frequent motivation for use of ESG data followed by client demand and product strategy, bringing change in companies as well as ethical considerations. Important impediments to the use of ESG information are the lack of reporting standards and as a result, lack of comparability, reliability, quantifiability, and timeliness. Among the different ESG investment styles, negative screening is perceived as the least investment beneficial while full integration into stock valuation and engagement are considered more beneficial, but they are all practiced with equal frequency. Current practices of different ESG styles, especially screening, are driven by product and ethical considerations. In contrast, integration is driven by relevance to investment performance. Future practices of ESG styles are driven by relevance to investment performance, bringing change in companies and concerns about data reliability.

    Keywords: ESG; ＂ESG (environmental, social, governance) performance; sustainability; investment; investment management; investment strategy; metrics; standard setting; accounting standards; finance; Investment; Information; Environmental Sustainability; Governance; Performance Effectiveness; Strategy;

    Citation:

    Amel-Zadeh, Amir, and George Serafeim. "Why and How Investors Use ESG Information: Evidence from a Global Survey." Financial Analysts Journal 74, no. 3 (Third Quarter 2018): 87–103.  View Details
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  5. Working Paper | 2018

    Ethical Hedonism? How Consumers' Prosocial Behavior Varies Along the Utilitarian-Hedonic Product Spectrum: Evidence from a Survey Experiment

    Kristin Sippl

    The marketing literature classifies products along a spectrum from utilitarian (e.g. rice) to hedonic (e.g. cannabis), and additionally using terms such as “luxury” and “illicit.” Research in business ethics has proposed a counter-intuitive mismatch between ethics and luxury, which has not yet been rigorously tested. This paper fills that gap by using a representative sample of roughly 2,000 consumers to conduct a survey experiment exploring consumers’ (potentially) divergent prosocial behavior in the face of varying product types. The findings will help activists, business leaders, and governments make efficient, effective decisions regarding their approach to the sustainability challenges posed by the luxury sector.

    Keywords: Ethics; Luxury; Consumer Behavior; Environmental Sustainability;

    Citation:

    Sippl, Kristin. "Ethical Hedonism? How Consumers' Prosocial Behavior Varies Along the Utilitarian-Hedonic Product Spectrum: Evidence from a Survey Experiment." Working Paper, September 2018. (Work in Progress.)  View Details
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  6. Working Paper | 2018

    Southern Responses to Gold Certification: Compete, Align, or Exit

    Kristin Sippl

    Artisanal and small-scale gold mining is a subsistence livelihood in the global South posing both challenges and opportunities for sustainable development. In 2011, Fairtrade International launched voluntary sustainability standards (VSS) to address the low wages and pollution associated with the sector. Southern actors have responded in three ways: Colombian NGO the Alliance for Responsible Mining launched two competing VSS; retailers chose to sell jewelry under the Southern Alliance’s program instead of Northern Fairtrade’s; and miners prefer the Alliance over Fairtrade, but are in some cases exiting both VSS altogether. Using original data, this paper explains the roles that resources, interests, and ideas played in these actors’ decisions. It finds that different beliefs about the best sourcing models, production methods, and prices of certified gold drove the rise of the Alliance as a competing VSS. Southern producers believe the Alliance’s rules align better with their interests, and the Alliance specifically recruited Southern retailers whereas Fairtrade recruited elsewhere. Yet Southern producers often exit both programs due to low financial rewards relative to compliance costs, misalignment with interests and lack of trust in programs promises. Overall, the paper helps balance the VSS literature by providing the Southern side of the governance story through an understudied sector case.

    Keywords: Environmental Sustainability; Standards; Adaptation; Decision Choices and Conditions; Mining Industry;

    Citation:

    Sippl, Kristin. "Southern Responses to Gold Certification: Compete, Align, or Exit." Working Paper, September 2018. (To be Submitted for Review as part of Special Issue in October 2018.)  View Details
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  7. Case | HBS Case Collection | August 2018

    Christine Lagarde (C): Managing the IMF

    Julie Battilana and Carin-Isabel Knoop

    This case covers the career of Christine Lagarde from 2011 to 2018 as she takes the helm of a troubled multilateral organization during a time of deepening economic turmoil. As the first female leader of the International Monetary Fund (IMF), and as a non-economist, she overcomes early challenges to gain her footing with the multiple constituencies she must serve. She also focuses the IMF on “macro-critical” issues including gender, socioeconomic inequality, and climate change. In 2016, she is reelected to serve another term as Managing Director and considers how to ensure that the IMF remains relevant. For coverage of her childhood to 2005, see “Christine Lagarde (A): A French Prime Minister Calls” (HBS No. 419-017). For coverage of her career from 2005 to 2011, see “Christine Lagarde (B): Being a Public Servant” (HBS No. 419-018). For comprehensive coverage of her evolution and career, see “Christine Lagarde” (HBS No. 419-016).

    Keywords: Personal Development and Career; Power and Influence; Change Management; Global Range; Gender; Equality and Inequality; Weather and Climate Change;

    Citation:

    Battilana, Julie, and Carin-Isabel Knoop. "Christine Lagarde (C): Managing the IMF." Harvard Business School Case 419-019, August 2018.  View Details
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  8. Working Paper | HBS Working Paper Series | 2018

    Sustainability and Green Business in Latin America During Globalization Waves

    Geoffrey Jones

    This working paper examines the impact of modern business enterprise on the natural environment of Latin America during the globalization waves between the 19th century and the present day. It argues that although global capitalism created much wealth for the region, this was at the cost of massive ecological destruction in Latin America. During the first global economy considerable wealth was created from the exploitation of natural resources for the land-owning elite in Latin America, at the cost of large-scale ecological destruction. During the Great Reversal in the mid-20th century, public policies aimed at “catching up” resulted in the co-proliferation of hydro-electric schemes and resulting co-creation of ecological damage by firms and governments. In the new global economy since 1980, renewed economic growth and consumerism resulted in mountains of waste in increasingly polluted mega-cities. Biodiversity and the natural environment have been challenged across the subcontinent. However, there were interesting positives as these ecological horrors also created opportunities for a surprising cohort of green businesses across sectors ranging from beauty and health to ecotourism. In the 21st century, both business and governments in the region needed to address sustainability issues far more seriously, before a point of no return was reached.

    Keywords: Globalization; Natural Environment; Outcome or Result; Business History; Pollution and Pollutants; Environmental Sustainability; Green Technology Industry; Beauty and Cosmetics Industry; Tourism Industry; Latin America;

    Citation:

    Jones, Geoffrey. "Sustainability and Green Business in Latin America During Globalization Waves." Harvard Business School Working Paper, No. 19-009, August 2018.  View Details
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  9. Case | HBS Case Collection | July 2018 (Revised August 2018)

    Project Helios: Harvesting the Sun

    Mark Egan and E. Scott Mayfield

    Aware of the impact that modern society was having on the environment, Ashley Telkes had always tried to be cognizant of her own impact on the environment and to take reasonable steps to mitigate her own effects. Having already implemented a number of passive measures to minimize her “carbon footprint,” Telkes must now confront the bigger decision of whether or not to invest in solar panels to generate electricity for her home. Although pre-disposed to pursue environmentally friendly alternatives, the project entailed significant up-front expenses and Telkes could not afford to make a poor financial decision. Telkes must assess the financial merits of the project, as well as understand the regulatory and technological risks associated with going forward or choosing to delay.

    Keywords: Renewable Energy; Personal Finance; Decision Making; Environmental Sustainability;

    Citation:

    Egan, Mark, and E. Scott Mayfield. "Project Helios: Harvesting the Sun." Harvard Business School Case 219-009, July 2018. (Revised August 2018.)  View Details
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  10. Article | California Management Review | Summer 2018

    CSR Needs CPR: Corporate Sustainability and Politics

    Thomas Lyon, Magali A. Delmas, John W. Maxwell, Pratima Bansal, Mireille Chiroleu-Assouline, Patricia Crifo, Rodolphe Durand, Jean-Pascal Gond, Andrew King, Michael Lenox, Michael W. Toffel, David Vogel and Frank Wijen

    Corporate sustainability has gone mainstream, and many companies have taken meaningful steps to improve their own environmental performance. But while corporate political actions such as lobbying can have a greater impact on environmental quality, they are ignored in most current sustainability metrics. It is time for these metrics to be expanded to critically assess firms based on the sustainability impacts of their public policy positions. To enable such assessments, firms must become as transparent about their corporate political responsibility (CPR) as their corporate social responsibility (CSR). For their part, rating systems must demand such information from firms and include evaluations of corporate political activity in their assessments of corporate environmental responsibility.

    Keywords: Corporate Social Responsibility and Impact; Environmental Sustainability; Communication; Policy; Business and Government Relations;

    Citation:

    Lyon, Thomas, Magali A. Delmas, John W. Maxwell, Pratima Bansal, Mireille Chiroleu-Assouline, Patricia Crifo, Rodolphe Durand, Jean-Pascal Gond, Andrew King, Michael Lenox, Michael W. Toffel, David Vogel, and Frank Wijen. "CSR Needs CPR: Corporate Sustainability and Politics." California Management Review 60, no. 4 (Summer 2018): 5–24.  View Details
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Initiatives & Projects

  • Business & Environment

    The Business and Environment Initiative seeks to deepen business leaders' understanding of today’s environmental challenges and to assist them in developing effective solutions.

  • Social Enterprise

    The Social Enterprise Initiative at HBS applies innovative business practices and managerial disciplines to drive sustained, high-impact social change.

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Faculty

HBS Working Knowledge

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re Jose B. Alvarez
Up to 40 percent of food grown in the United States for human consumption is wasted. But solutions are starting to come together from retailers, farmers, academics, policy makers, and social service
Government agencies can be "captured" by the very companies or industries they regulate. Looking at how genetically altered food products are approved, Assistant Professor Shon R. Hiatt finds unexpec
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re David E. Bell and Ray A. Goldberg
Agribusiness has come to be seen not just as economically important, but as a critical part of society. The future for this massive industry will be both exciting and complex.

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Harvard Business Publishing

Article
by Michael E. Porter and Mark R. Kramer
Case
by Julie Battilana and Carin-Isabel Knoop

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