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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

ReMo Energy: Sizing Up Investors

By: Jeffrey J. Bussgang and Tom Quinn
  • September 2023 |
  • Case |
  • Faculty Research
In 2023, executives with ReMo Energy (founded 2020) were deciding which size ammonia plant to build as their first project. Their innovative model produced ammonia – useful for making fertilizer and for energy storage – from renewable energy, and they had received funding from a prominent environmentally-conscious venture capital fund. However, they needed more funding to build their first plant. Smaller plants were less efficient, but bigger plants were riskier, and different potential funders had different priorities. The case prevents three size options for ReMo’s first plant, with a detailed model of how various present and future factors – the price of ammonia, power supply, taxes, and more – affect risk and return.
Keywords: Factories, Labs, and Plants; Business Startups; Cost vs Benefits; Design; Energy Conservation; Energy Generation; Renewable Energy; Venture Capital; Investment Return; Goods and Commodities; Size; Infrastructure; Risk and Uncertainty; Science-Based Business; Commercialization; Chemical Industry; Energy Industry; Green Technology Industry; United States; Boston
Citation
Educators
Related
Bussgang, Jeffrey J., and Tom Quinn. "ReMo Energy: Sizing Up Investors." Harvard Business School Case 824-027, September 2023.

Diamond Standard

By: Lauren H. Cohen, Zhaoheng Gong and Grace Headinger
  • September 2023 |
  • Case |
  • Faculty Research
Cormac Kinney, Founder and CEO of Diamond Standard, was on a mission to transform the U.S. diamond market through unlocking the precious gems as market-traded assets. As a serial FinTech entrepreneur, he hoped to add an additional service to his vault: Carats. The commodity currency would be backed by a fungible resource, being the first in its field to have a physical-digital combination. Following the recent crypto-market crash, Kinney wondered if this was the right opportunity to launch his product. Although Kinney saw Carats as the best of both gold and other decentralized currencies, his advisors were wary of the potential regulatory risks that could ensue, in addition to the current dreary landscape of the crypto-market. Should Diamond Standard pursue Kinney’s vision of Carats, or focus its limited resources on other diamond-backed financial products?
Keywords: Tokenization; Fintech; Cryptocurrency; Liquidity; Digital; Rare Earth Minerals; Decentralized; Crypto Economy; Financial Product; Metals; Diamonds; Commodity; Assets; Financial Instruments; Financial Institutions; Financial Markets; Investment; Technological Innovation; Natural Resources; Financial Services Industry; United States
Citation
Educators
Related
Cohen, Lauren H., Zhaoheng Gong, and Grace Headinger. "Diamond Standard." Harvard Business School Case 224-009, September 2023.

Stock Price Reactions to ESG News: The Role of ESG Ratings and Disagreement

By: George Serafeim and Aaron Yoon
  • Article |
  • Review of Accounting Studies
We investigate whether ESG ratings predict future ESG news and the associated market reactions. We find that the consensus rating predicts future news, but its predictive ability diminishes for firms with large disagreement between raters. Relation between news and market reaction is moderated by the consensus rating. In the presence of high disagreement between raters, the relation between news and market reactions weakens while the rating with most predictive power predicts future stock returns. Overall, while rating disagreement hinders the incorporation of value relevant ESG news into prices, ratings predict future news and proxy for market expectations of future news.
Keywords: ESG; ESG (Environmental, Social, Governance) Performance; ESG Disclosure; ESG Ratings; ESG Reporting; ESG Disclosure Metrics; Sustainability; Investments; Disagreement; Rating Disagreement; Ratings; Environmental Sustainability; Social Issues; Corporate Social Responsibility and Impact; Performance; News; Investment; Financial Markets; Stocks; Price
Citation
Find at Harvard
Related
Serafeim, George, and Aaron Yoon. "Stock Price Reactions to ESG News: The Role of ESG Ratings and Disagreement." Special Issue on RAST 2022 Conference. Review of Accounting Studies 28, no. 3 (September 1, 2023): 1500–1530.

Arla Foods: Data-Driven Decarbonization (A)

By: Michael Parzen, Michael W. Toffel, Susan Pinckney and Amram Migdal
  • August 2023 |
  • Case |
  • Faculty Research
Arla implemented a data based price incentive systems to measure, track, and influence climate friendly changes to reduce CO2 emissions across the world’s fourth largest dairy cooperative.
Keywords: Dairy Industry; Business Earnings; Agribusiness; Animal-Based Agribusiness; Acquisition; Mergers and Acquisitions; Decision Making; Decisions; Voting; Environmental Management; Climate Change; Environmental Regulation; Environmental Sustainability; Green Technology; Pollution; Moral Sensibility; Values and Beliefs; Financial Strategy; Price; Profit; Revenue; Food; Geopolitical Units; Global Strategy; Ownership Type; Cooperative Ownership; Performance Efficiency; Performance Evaluation; Problems and Challenges; Natural Environment; Science-Based Business; Business Strategy; Commercialization; Cooperation; Corporate Strategy; Food and Beverage Industry; Europe; United Kingdom; European Union; Germany; Denmark; Sweden; Luxembourg; Belgium
Citation
Educators
Related
Parzen, Michael, Michael W. Toffel, Susan Pinckney, and Amram Migdal. "Arla Foods: Data-Driven Decarbonization (A)." Harvard Business School Case 624-003, August 2023.

Plug Power (A)

By: Jonas Heese, Joseph Pacelli and James Barnett
  • August 2023 |
  • Case |
  • Faculty Research
Set immediately after a December 2019 short-seller attack, the case explores Plug Power’s long challenging history. It then focuses on two key issues raised in the short-seller report related to lease accounting and stock warrants that Plug purportedly used to boost profits.
Keywords: Accounting; Environmental Accounting; Financial Reporting; Ethics; Finance; Management; Social Enterprise; Energy Industry; Green Technology Industry; United States; Europe
Citation
Educators
Related
Heese, Jonas, Joseph Pacelli, and James Barnett. "Plug Power (A)." Harvard Business School Case 124-009, August 2023.

If 3 Was 9

By: Randolph B. Cohen
  • 2023 |
  • Other Unpublished Work |
  • Faculty Research
One determinant of where economies and markets are headed is how well we handle the climate crisis. Headlines on the climate tend to emphasize two points. First, average global temps are rising, with it being the hottest summer in 1,000 centuries per some estimates. Second, some crazy things are happening, or expected to happen, as a result of these temperature increases. Makes sense. But when we look at the numbers, it's weird -- there are intense weather phenomena occurring, and far worse anticipated, yet climate experts predict a total temperature increase of 3 degrees, and not tomorrow but a lifetime away, at the end of the century! Why so much impact from such a small rise in the mercury? Turns out the phenomenon relies on just two weird tricks.
Keywords: Climate Change; Measurement and Metrics
Citation
Read Now
Related
Cohen, Randolph B. "If 3 Was 9." August 2023. (LinkedIn Articles.)

Residential Battery Storage - Reshaping The Way We Do Electricity

By: Christian Kaps and Serguei Netessine
  • 2023 |
  • Working Paper |
  • Faculty Research
In this paper, we aim to understand when private households invest in rooftop solar installations and battery storage, and how these investment decisions affect their electricity usage patterns as well as the market structure overall. We answer three main research questions: 1) What drives customers to combine solar power with storage installations; 2) How does privately-owned storage change consumer autonomy and the grid provider business model, and how heterogeneous is this effect across the population; 3) What effects do subsidies have on investments, demands, and carbon emissions. We develop a structural estimation model of residential electricity usage, that allows us to estimate a household's hourly consumption preferences, and a non-financial utility the household has for using self-generated solar power over grid-procured electricity; we call this utility greenness valuation. Applying this model to a novel, proprietary, big-data-set of German households, we find the median household to have a greenness valuation of 0.29€ per kilowatt-hour(kWh). We furthermore find this sustainability-related valuation in the population follows an exponential distribution and helps explain the early adoption of behind-the-meter batteries. We then show that, in the future, at electricity prices of 38 cents/kWh, a rate seen in Europe in 2022, investing in solar and some amount of storage is optimal for 72% of households, even without any greenness valuation - this would reduce the energy purchased from the grid provider by over a quarter. Lastly, we quantify the amount of carbon saved per dollar spent of subsidies for the households observed in the data-set to be 674€ per metric ton. We show how storage subsidies' additionality depends on technology prices and a household's greenness valuation, while solar subsidies are not needed to incentivize broad adoption at current electricity prices.
Keywords: Solar Power; Energy Storage; Technology And Innovation Management; Energy; Energy Policy; Renewable Energy; Technological Innovation; Innovation and Management; Energy Industry
Citation
Related
Kaps, Christian, and Serguei Netessine. "Residential Battery Storage - Reshaping The Way We Do Electricity." Working Paper, August 2023.

Vytal: Packaging-as-a-Service

By: George Serafeim, Michael W. Toffel, Lena Duchene and Daniela Beyersdorfer
  • July 2023 |
  • Case |
  • Faculty Research
The Germany-based startup Vytal operated the largest digital-native reusable packaging-as-a-service network globally, having raised nearly €15 million, established a large network of restaurant partners, and prevented the use of millions of single-use take-out food containers. However, Vytal’s growth was slower than expected, challenging its unique pay-per-use model and environmental goals. This case highlights Vytal's growth trajectory in the years leading up to 2023, outlining its business model, utilization of digital technology, strategies for acquiring partners and customers, and regulatory developments within Europe. It also presents several options that the founders are considering to reach profitability, prepare for a Series B financing round, and expand internationally, such as charging partners for unused containers, implementing consumer fees on single-use containers, launching a loyalty program, and franchising to expand more rapidly.
Keywords: Climate Change; Climate Risk; Digital; Platform Strategies; Data; Packaging; Sustainability; Start-up; Startup; Entrepreneurship; Entrepreneur; Impact; Circular; Growth Strategy; Innovation; Environmental Sustainability; Innovation and Invention; Business Growth and Maturation; Growth and Development Strategy; Business Startups; Resource Allocation; Risk Management; Adoption; Strategy; Performance Productivity; Service Delivery; Service Operations; Supply Chain; Distribution; Green Technology Industry; Service Industry; Retail Industry; Germany; Europe
Citation
Educators
Related
Serafeim, George, Michael W. Toffel, Lena Duchene, and Daniela Beyersdorfer. "Vytal: Packaging-as-a-Service." Harvard Business School Case 124-007, July 2023.

Why Management Research Needs a Radical Rethink

By: Andrew J. Hoffman
  • July 5, 2023 |
  • Editorial |
  • Financial Times
Business school teaching and academic studies do not reflect new climate change realities
Keywords: Climate Change; Business Education
Citation
Read Now
Related
Hoffman, Andrew J. "Why Management Research Needs a Radical Rethink." Financial Times (July 5, 2023).

Accounting for Carbon Offsets

By: Robert S. Kaplan, Karthik Ramanna and Marc Roston
  • July–August 2023 |
  • Article |
  • Harvard Business Review
Markets for carbon trading function poorly, and many traded offsets do not actually perform as promised. Without robust protocols for monitoring offsets and in the absence of proper accounting mechanisms, market-based approaches to reducing atmospheric GHG will be vulnerable to misrepresentation and fraud.

This article presents an accounting framework based on five core principles. The first two define what can and cannot be counted as an offset and what may or may not be traded. The remaining principles set out basic accounting guidelines for offsets. Together they provide the foundation for a well-functioning market that accelerates innovation and deployment of improved offsetting technologies, leading to atmospheric decarbonization.
Keywords: Climate Change; Environmental Accounting; Environmental Regulation
Citation
Find at Harvard
Register to Read
Related
Kaplan, Robert S., Karthik Ramanna, and Marc Roston. "Accounting for Carbon Offsets." Harvard Business Review 101, no. 4 (July–August 2023): 126–137.
More Publications

Faculty

George Serafeim
Michael W. Toffel
Forest L. Reinhardt
Andrew J. Hoffman
Richard H.K. Vietor
Joseph B. Lassiter
Rebecca M. Henderson
Max H. Bazerman
David E. Bell
James K. Sebenius
Lynn S. Paine
Robert S. Kaplan
→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

    by Dina Gerdeman
    • 09 Apr 2012

    Who Sways the USDA on GMO Approvals?

    by Michael Blanding
→More Articles

Harvard Business Publishing

    • January – February 2011
    • Article

    Creating Shared Value

    By: Michael E. Porter and Mark R. Kramer
    • May 2023
    • Case

    Arcos Dorados: Decarbonizing McDonald’s in Latin America

    By: George Serafeim, Michael W. Toffel, Jenyfeer Martinez Buitrago and Mariana Cal
→More Harvard Business Publishing
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