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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

Sustainability as a Business-Model Transformation

By: Ivanka Visnjic, Felipe Monteiro and Michael L. Tushman
  • May–June 2025 |
  • Article |
  • Harvard Business Review
Many global companies have made public commitments to sustainability targets. Fulfilling these commitments will require firms to transform their business models and organizational architectures. A few pioneers are leading the way, demonstrating that companies can make sustainability not only a goal but also the driver of their business model. They are leveraging what they’ve learned from developing innovation capabilities to help them on their sustainability journey. This article identifies three fundamental tensions that companies must address. First, they need to maintain a long-term sustainability vision while delivering on short-term financial targets. Second, they must introduce systemwide change while keeping their employees engaged at the local level. And third, they have to be open to external collaboration while maintaining strong internal integration. Drawing on real-world examples such as the Italian energy group Enel and Swiss cement giant Holcim Group, the authors describe the practices companies can use to face each challenge with intention.
Keywords: Environmental Sustainability; Business Model
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Visnjic, Ivanka, Felipe Monteiro, and Michael L. Tushman. "Sustainability as a Business-Model Transformation." Harvard Business Review 103, no. 3 (May–June 2025): 80–89.

The Limits of Insurance Demand and the Growing Protection Gap

By: Parinitha Sastry, Tess Scharlemann, Ishita Sen and Ana-Maria Tenekedjieva
  • 2025 |
  • Working Paper |
  • Faculty Research
In a world with rising risk, how much are U.S. households willing to pay for homeowners insurance, and what does their demand imply for the future of insurance markets? We provide the first estimates of household willingness to pay for homeowners insurance and the drivers of household insurance demand elasticities by exploiting quasi-exogenous regulatory shocks to insurance pricing. We utilize newly available individual-level data on homeowners insurance contracts covering the entire United States for over a decade, with rich information on mortgage contracts, property characteristics, and climate exposures. We document pervasive under-insurance, particularly among the most financially vulnerable households. We find that even at actuarially fair premiums, households’ willingness to pay is below expected losses, and demand remains elastic—results that are inconsistent with the textbook models of insurance demand. Financial constraints are a key force: constrained households reduce coverage as premiums rise, while unconstrained households borrow more to maintain insurance coverage. Exogenous increases in the cost of credit also reduce coverage demand. These results raise the concern that financial constraints reduce willingness to pay for insurance even below the actuarially fair price required for insurers to remain solvent, suggesting that the market may disappear for the most constrained, financially vulnerable households. If prices were to continue growing at historical rates moving forward, our estimates imply that between 17% to 31% of households would hit binding LTV constraints and be forced to reduce coverage substantially, meaning insurance markets may shrink even as losses from natural disasters rise.
Keywords: Climate Change; Risk and Uncertainty; Insurance; Personal Finance; Consumer Behavior; Mortgages
Citation
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Sastry, Parinitha, Tess Scharlemann, Ishita Sen, and Ana-Maria Tenekedjieva. "The Limits of Insurance Demand and the Growing Protection Gap." Harvard Business School Working Paper, No. 25-054, February 2025.

Institutional Entrepreneurship and Climate Change

By: Ann-Kristin Bergquist and Geoffrey Jones
  • 2025 |
  • Chapter |
  • Faculty Research
This chapter explores when and why private regulatory governance systems became the primary form of global environmental governance. The chapter explores two different historical paths in such private regulation and how they came about. The first path involved certification and standards programs designed to facilitate the growth of green industries and the early stages of ESG investing. The second path, which developed from the 1970s, grew out of the interest of big business which sought an alternative route to governmental regulations they regarded as costly and as a threat to international trade. A key agent was the International Chamber of Commerce during the 1990s. The chapter argues that self-regulation proved an inadequate response to climate change, and resulted in confusing metrics, lack of transparency, and blatant greenwashing. Yet it is not apparent that government regulation was practical or would have produced better results. The governments of democracies as a whole prioritize generating wealth over the environment, because it translates into votes.
Keywords: Institutional Entrepreneurship; Environment; Climate Change; Governing Rules, Regulations, and Reforms; Environmental Regulation; Standards; Corporate Social Responsibility and Impact
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Bergquist, Ann-Kristin, and Geoffrey Jones. "Institutional Entrepreneurship and Climate Change." Chap. 1 in Climate Change and Business: Historical Perspectives, edited by Teresa da Silva Lopes, Paul Duguid, and Robert Fredona, 8–29. London, United Kingdom: Routledge, 2025.

Governing Sustainability in a Shifting Context (A)

By: Lynn S. Paine and Will Hurwitz
  • April 2025 (Revised May 2025) |
  • Case |
  • Faculty Research
In early 2025, boards of directors had to rethink corporate responsibility and sustainability efforts amid rapidly-shifting social, legal, regulatory, and economic forces. While just a few years earlier, calls to address racial justice and climate change reached into boardrooms, the pendulum seemed to swing the other way. A landmark 2023 U.S. Supreme Court rejecting race-conscious college admissions as unconstitutional sent shockwaves through corporate America for its potential to be applied in other contexts; a surge in so-called “anti-ESG” shareholder proposals sought to compel companies to undo diversity and environmental initiatives; and other social and regulatory changes found boards and business leaders at companies of all sizes grappling with difficult decisions about the role of corporations in society. This note includes five selected examples, including Tractor Supply addressing DEI programs and climate targets after an activist launched a social media campaign; McDonald’s navigating a high-stakes lawsuit over its long-standing Hispanic scholarship program; Costco confronting a shareholder proposal questioning its diversity programs; Wells Fargo debating whether or not to keep climate-related goals in the face of changing regulatory and legal dynamics; and Banco Santander considering multinational dynamics involving whether to use a diversity-focused executive compensation metric in all its markets or only in some markets, depending on regional legal and regulatory differences.
Keywords: Climate Change; Corporate Governance; Diversity; Leadership; Business or Company Management; Mission and Purpose; Social Media; Race; Environmental Sustainability; Governing Rules, Regulations, and Reforms; Governing and Advisory Boards; Lawfulness; Lawsuits and Litigation; Measurement and Metrics; Corporate Social Responsibility and Impact; Business and Shareholder Relations; Social Issues; Retail Industry; Food and Beverage Industry; Banking Industry; United States
Citation
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Paine, Lynn S., and Will Hurwitz. "Governing Sustainability in a Shifting Context (A)." Harvard Business School Case 325-121, April 2025. (Revised May 2025.)

Prices and Concentration: A U-shape? Theory and Evidence from Renewables

By: Michele Fioretti, Junnan He and Jorge Tamayo
  • 2025 |
  • Working Paper |
  • Faculty Research
We show that when firms compete via supply functions, transferring high-cost capacity to the largest, most efficient firm—thereby diversifying its production technologies while increasing concentration—can lower prices by prompting the leader to expand output and competitors to aggressively defend market shares. However, large transfers prove anticompetitive, as sizable capacity differences discourage price undercutting. Exploiting renewable intermittencies in Colombia’s electricity market, where firms are technology-diversified, we consistently find a U-shape relationship between prices and concentration. Counterfactually reallocating 30% of competitors’ high-cost capacities to the leader cuts prices 10%, while larger transfers raise them, revealing how capacity and efficiency influence market power.
Keywords: Diversified Production Technologies; Concentration Levels; Market Power; Supply Function Equilibrium; Hydropower; Energy Transition; Renewable Energy; Price; Competition; Supply and Industry; Energy Industry; Colombia
Citation
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Fioretti, Michele, Junnan He, and Jorge Tamayo. "Prices and Concentration: A U-shape? Theory and Evidence from Renewables." Harvard Business School Working Paper, No. 25-049, April 2025.

Corporate Ownership and ESG Performance

By: Belen Villalonga, Peter Tufano and Boya Wang
  • April 2025 |
  • Article |
  • Journal of Corporate Finance
Using a sample of 3083 firms from 62 countries over 18 years, we analyze how the structure and identity of firms' material owners influence their Environmental, Social, and Governance (ESG) performance. We find that firms with founding families or other individual investors as owners underperform, unless family members serve as CEOs, when they outperform all others. Non-family management and government entities also perform significantly better in most analyses. These results are robust to multiple data and methodological stress tests. Our findings show that ownership matters for ESG performance and give us an indication of the preferences of different types of owners regarding ESG.
Keywords: ESG; CSR; Family Firms; Social Responsibility; Environment; Sustainability; Ownership; Corporate Social Responsibility and Impact; Corporate Governance; Environmental Sustainability
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Villalonga, Belen, Peter Tufano, and Boya Wang. "Corporate Ownership and ESG Performance." Journal of Corporate Finance 91 (April 2025).

How Central Banks Manage Climate and Energy Transition Risks

By: Esther Shears, Jonas Meckling and Jared Finnegan
  • April 2025 |
  • Article |
  • Nature Energy
Central banks have begun to examine and manage climate risks, including both transition risks of moving from fossil fuels to clean energy and physical climate risks. Here we provide a systematic assessment of how and why central banks address climate risks on the basis of an original dataset of central banks across the Organization for Economic Co-operation and Development and Group of 20. We show that central banks vary substantially in the extent to which they re-risk fossil fuel investments and physical risks and de-risk clean energy investments. Our analysis finds that central bank climate risk management is not associated with a country’s economic exposure to transition risks, but instead with its climate politics. The results suggest that central banks may not be solely independent risk managers but also actors that respond to political demands. As such, central banks may reinforce national decarbonization policy, while not correcting for the lack thereof.
Keywords: Banks and Banking; Risk and Uncertainty; Climate Change; Transition; Risk Management
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Shears, Esther, Jonas Meckling, and Jared Finnegan. "How Central Banks Manage Climate and Energy Transition Risks." Nature Energy 10, no. 4 (April 2025): 470–478.

Hurtigruten: Sea Zero

By: Christian Kaps and Michael W. Toffel
  • March 2025 |
  • Case |
  • Faculty Research
Hurtigruten was deciding whether the next ship they built should be fully electric. But such a vessel's battery, the size of electric cars, needed to be charged on the ship's multi-day voyage along the Norwegian coast. Before making such a $250 million investment, the company needed to understand where en route it needed charging infrastructure and how it could access sufficient power at ports. These considerations had to be balanced against the uncertainty around the government's emissions targets for Hurtigruten's fleet, and customers' desire for sustainable tourism.
Keywords: Energy Sources; Alternative Energy; Ship Transportation; Environmental Regulation; Environmental Sustainability; Innovation and Management; Green Technology; Investment; Corporate Social Responsibility and Impact; Shipping Industry; Tourism Industry; Transportation Industry; Travel Industry; Battery Industry; Norway; Europe
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Kaps, Christian, and Michael W. Toffel. "Hurtigruten: Sea Zero." Harvard Business School Case 625-100, March 2025.

Calyx Global: Rating Carbon Credits

By: Michael W. Toffel and Adam Chen
  • March 2025 |
  • Case |
  • Faculty Research
This case describes how rating agencies and other organizations are seeking to improve the quality of carbon credits sold in the voluntary carbon market to organizations seeking to use them to supplement their internal decarbonization efforts to meet their net zero commitments. The case profiles one carbon credit rating company, Calyx Global, and describes its business model, its approach to ratings, and its emerging competitive landscape. The case protagonists face a series of dilemmas on how to lead Calyx Global through some challenging times for the industry, including whether changing its business model to tap new revenue streams jeopardize the firm's carefully crafted reputation of avoiding perceptions of conflicts of interest, and whether and how it should refine its target market clients.
Keywords: Service Design; Certification; Auditing; Auditor Reputation; Carbon Credits; Carbon; Rating Agency Disagreement; Ratings; Climate Change; Business Model; Environmental Sustainability; Corporate Social Responsibility and Impact; Conflict of Interests; Reputation; Business Strategy
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Toffel, Michael W., and Adam Chen. "Calyx Global: Rating Carbon Credits." Harvard Business School Case 625-102, March 2025.

Seattle's Climate Pledge Arena: Ticket to a Greener Future

By: Rosabeth Moss Kanter and Jacob A. Small
  • March 2025 (Revised March 2025) |
  • Case |
  • Faculty Research
Tim Leiweke reviewed how his development group and partners had completely rebuilt an aging Seattle landmark into the world’s greenest arena, carrying the visible name Climate Pledge Arena. It had attracted a new National Hockey League franchise, the Kraken, and featured major entertainers concerned about sustainability, such as singer Billie Eilish. Challenges included politics around the bidding process, the need for construction innovations, working during COVID-19, and meeting rising sustainability standards. Amazon bought the naming rights through its Climate Pledge Alliance, with founder Jeff Bezos insisting on a carbon zero plan, which added electricity uncertainties and further cost escalations. Leiweke had to manage his investors and find the resources and innovations to complete the project without public funding and then deal with further challenges of operating at carbon zero, including waste management, food, cooking, packaging, and community benefits such as free public transportation included with a ticket. Was the venture successful, and, given the multiplicity of stakeholders, from whose perspective? Leiweke wanted to inspire many similar projects. What kind of leadership and partnerships were required for a project with this climate impact?
Keywords: Environmental Sustainability; Leadership; Bids and Bidding; Standards; Corporate Social Responsibility and Impact; Seattle
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Kanter, Rosabeth Moss, and Jacob A. Small. "Seattle's Climate Pledge Arena: Ticket to a Greener Future." Harvard Business School Case 325-110, March 2025. (Revised March 2025.)
More Publications

Faculty

George Serafeim
Michael W. Toffel
Forest L. Reinhardt
Richard H.K. Vietor
Joseph B. Lassiter
Robert S. Kaplan
Geoffrey G. Jones
James K. Sebenius
Lynn S. Paine
Rosabeth M. Kanter
David E. Bell
Max H. Bazerman
→See All

HBS Working Knowlege

    • 18 Jun 2024

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    Re: Tiona W. Zuzul
    • 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
→More Articles

Harvard Business Publishing

    • May–June 2025
    • Article

    Sustainability as a Business-Model Transformation

    By: Ivanka Visnjic, Felipe Monteiro and Michael L. Tushman
    • April 2025 (Revised May 2025)
    • Case

    Governing Sustainability in a Shifting Context (A)

    By: Lynn S. Paine and Will Hurwitz
→More Harvard Business Publishing
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