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. 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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  2. 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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  3. Case | HBS Case Collection | May 2018

    Environmental Platform LEEDership at USGBC

    Michael W. Toffel, Timothy S. Simcoe and Aldo Sesia

    By 2018, it was clear that U.S. Green Building Council (USGBC) had significantly contributed to the growth of green building and over its 25-year history had become a powerful brand in the construction sector with its Leadership in Energy and Environmental Design (LEED) standard. Nonetheless, USGBC faced two significant challenges moving forward: maintaining LEED’s leadership position as the green building standard in the U.S. and increasing the proportion of building stock that met the LEED standard. The case provides background on the USGBC and the evolution of its LEED standard, including how the standards are set and green building benefits and costs.

    Keywords: Environmental Sustainability; Standards; Multi-Sided Platforms; Business Model; Leadership; Problems and Challenges; Construction Industry; Green Technology Industry;

    Citation:

    Toffel, Michael W., Timothy S. Simcoe, and Aldo Sesia. "Environmental Platform LEEDership at USGBC." Harvard Business School Case 618-027, May 2018.  View Details
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  4. Editorial | Harvard Business Review (website)

    Elon Musk's Unusual Compensation Plan Isn't Really About Compensation at All

    George Serafeim

    Earlier this year, Tesla shareholders approved likely the largest compensation package ever awarded to a CEO—for a CEO who clearly doesn’t need the money. Elon Musk is already incredibly rich and also doesn’t seem particularly motivated by further wealth. So why do it? In fact, the design of the compensation plan and its announcement were not about compensation at all. They were about signaling a credible commitment to Tesla’s purpose: to become a clean energy giant that helps address climate change by transforming mobility. To get there, Musk needs not only the normal sort of investor confidence, but also for investors to buy into his radical vision for the company.

    Keywords: Tesla; Elon Musk; innovation; investor communication; investor relations; Short-termism; long-termism; disruption; Executive Compensation; Business and Shareholder Relations; Communication Intention and Meaning; Mission and Purpose;

    Citation:

    Serafeim, George. "Elon Musk's Unusual Compensation Plan Isn't Really About Compensation at All." Harvard Business Review (website) (May 1, 2018).  View Details
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  5. Case | HBS Case Collection | April 2018

    Wilderness Safaris: Ecotourism Entrepreneurship

    James E. Austin, Megan Epler Wood and Herman B. "Dutch" Leonard

    Wilderness Safaris sees itself as a conservation company that is built on a business model of providing high-end, premium-priced wildlife safaris in various locations in Africa. Dependent on functioning, healthy ecosystems for its long-term survivability as a business, it invests heavily in conservation efforts, both directly, with communities and governments, and with partners and competitors. It may be reaching saturation of the high-cost, high-priced, low-volume, luxury travel product in its existing locations; so to continue its growth, it is now trying to expand into East Africa, where the traditional safari approach by most providers has been a high-volume, low-cost, low-priced product. As a publicly listed company, can Wilderness Safaris find a sustainable growth path that will allow it to profitably expand its business and meet its shareholders’ interests while still achieving its priority purposes of protecting and investing in the ecosystems and communities on which its services are based?

    Keywords: strategy; social enterprise; sustainability; social entrepreneurship; conservation planning; corporate social responsibility; ecotourism; Strategy; Social Enterprise; Social Entrepreneurship; Environmental Sustainability; Corporate Social Responsibility and Impact; Expansion; Growth and Development Strategy; Tourism Industry; Entertainment and Recreation Industry; Travel Industry; Africa; Botswana;

    Citation:

    Austin, James E., Megan Epler Wood, and Herman B. "Dutch" Leonard. "Wilderness Safaris: Ecotourism Entrepreneurship." Harvard Business School Case 318-040, April 2018.  View Details
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  6. Case | HBS Case Collection | April 2018 (Revised May 2018)

    Goldman Sachs: Making an Imprint in Impact Investing

    Shawn Cole, Vikram S. Gandhi, Caitlin Reimers Brumme and Lynn Schenk

    Goldman Sachs acquired Imprint Capital Advisors, a small firm that specialized in advising clients on environmental/social/governance (ESG) and impact investments. The founders sold Imprint with the belief that joining a global financial firm would help to scale impact investing, if not bring it into the mainstream. The case is set two years after the acquisition. It describes impact investing, the founding of Imprint, its evolution from serving foundations and home offices to financial institutions, and its sale to and integration within Goldman Sachs. The founders consider the past two years and whether the acquisition has, in fact, helped to scale ESG/impact investing.

    Keywords: impact investing; ESG; Investment; Corporate Social Responsibility and Impact; Environmental Sustainability; Growth and Development Strategy; Acquisition; Integration;

    Citation:

    Cole, Shawn, Vikram S. Gandhi, Caitlin Reimers Brumme, and Lynn Schenk. "Goldman Sachs: Making an Imprint in Impact Investing." Harvard Business School Case 218-069, April 2018. (Revised May 2018.)  View Details
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  7. Article | Journal of Applied Corporate Finance

    Investors as Stewards of the Commons?

    George Serafeim

    Over the past few years, there has been a significant increase in the number of initiatives seeking to mobilize investor voice towards positive social impact. In this paper, I provide a framework outlining the role of investors as stewards of the commons. While companies are increasingly addressing environmental and social issues that also improve their economic value, for some of these issues individual company action is costly. At the same time, for a further subset of those issues, company action coupled with collaboration between companies is value enhancing. However, collaboration between companies is notoriously difficult and fragile requiring commitment mechanisms. I suggest that a small set of large institutional investors, importantly, but not exclusively, index and quasi-index investors, could provide this commitment mechanism. Common ownership of competitors within industries and long-time horizons in ownership of shares are key characteristics for investors that could act as stewards of the commons. Social pressure fueled by socially responsible investment funds and non-profit organizations and customer pressure from individual investors are critical in mitigating free-rider problems among asset managers and sustaining engagement practices. Finally, I explore the limits and anticompetitive concerns to the theory of change presented here.

    Keywords: collaboration; industry self-regulation; sustainability; ESG; capital markets; investor behavior; Investment Activism; Social Issues; Environmental Sustainability; Corporate Social Responsibility and Impact; Cooperation;

    Citation:

    Serafeim, George. "Investors as Stewards of the Commons?" Journal of Applied Corporate Finance 30, no. 2 (Spring 2018).  View Details
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  8. Case | HBS Case Collection | March 2018 (Revised July 2018)

    GreenLight Biosciences: In Search of Impact Investment

    Michael Chu, Annelena Lobb and Joni Coughlin

    Greenlight Biosciences, a biotech company, is in search of impact investment for its next round of financing.

    Keywords: Investment; Environmental Sustainability; Financing and Loans; Biotechnology Industry;

    Citation:

    Chu, Michael, Annelena Lobb, and Joni Coughlin. "GreenLight Biosciences: In Search of Impact Investment." Harvard Business School Case 318-072, March 2018. (Revised July 2018.)  View Details
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  9. Case | HBS Case Collection | March 2018 (Revised April 2018)

    Morgan Stanley: Building Long-Term Sustainability

    Vikram S. Gandhi and Lynn Schenk

    This case focuses on the 10-year journey of one of the world's largest global financial institutions developing a sustainability strategy and integrating it across all of its business units. The case provides a deep dive into the challenges and successes of trying to integrate impact, sustainability, and ESG across the firm and how that strategy translates within each unit. The case delves into the topics of building out a wealth management platform that integrates products and advice focusing on impact, embedding ESG in research, and building a green bonds business.

    Keywords: finance; sustainability; green bonds; ESG; Environmental Sustainability; Strategy; Business Units; Integration; Financial Institutions;

    Citation:

    Gandhi, Vikram S., and Lynn Schenk. "Morgan Stanley: Building Long-Term Sustainability." Harvard Business School Case 318-103, March 2018. (Revised April 2018.)  View Details
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  10. Case | HBS Case Collection | March 2018

    X: The Foghorn Decision

    Robert S. Huckman, Karim R. Lakhani and Kyle R. Myers

    In February 2016, Kathy Hannun--a project leader at X, Alphabet Inc.'s so-called "moonshot factory--had to prepare a recommendation for the senior leadership of X regarding the future of Foghorn, a project she was leading to develop a carbon-neutral process for converting sea water into fuel. Recognizing the blueprint for projects at X--(1) addressing a huge problem with a (2) radical solution using (3) breakthrough technology--Hannun had to decide whether to recommend killing the project. Despite the technical feasibility of the Foghorn process, its expected cost per gallon of fuel produced was signficiantly higher than the established "kill metric"--the maximum unit cost that Hannun and colleagues had set for continuing the project. The case provides an opportunity to examine the management of radical innovation and the challenges associated with assessing early stage ideas. Topics covered include the importance of experimentation and failure as well as the management of opportunity costs in solving large problems.

    Keywords: innovation; R＆D Project Management; radical innovation; Clean Technology; energy; Innovation and Management; Technological Innovation; Research and Development; Projects; Management; Decision Choices and Conditions; Technology Industry; Energy Industry; Green Technology Industry; California;

    Citation:

    Huckman, Robert S., Karim R. Lakhani, and Kyle R. Myers. "X: The Foghorn Decision." Harvard Business School Case 618-060, March 2018.  View Details
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    11.  
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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

Pic
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
PicPic
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.

More »

Harvard Business Publishing

Article
by Michael E. Porter and Mark R. Kramer
Case
by Michael W. Toffel, Timothy S. Simcoe and Aldo Sesia

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