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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

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.

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
Citation
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Villalonga, Belen, Peter Tufano, and Boya Wang. "Corporate Ownership and ESG Performance." Journal of Corporate Finance 91 (April 2025).

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
Citation
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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
Citation
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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
Citation
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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.)

Good for the Seller, Good for the Buyer and Good for Society: Sampo-yoshi, Sustainability and Trust at ITOCHU

By: Sandra J. Sucher and Bethelehem Y Araya
  • March 2025 (Revised March 2025) |
  • Case |
  • Faculty Research
In 2024, ITOCHU CEO Masahiro Okafuji was at a crossroads. As the thirteenth CEO since ITOCHU’s founding in 1858, he had fueled the company’s growth since 2011 by bringing ITOCHU’s founding philosophy of Sampo-yoshi (good for the seller, good for the buyer and good for society) from the past to a live force in the present to produce industry-leading profitability and a top-10 market capitalization while using the strengths of ITOCHU as a general trading company to further the UN’s Sustainable Development Goals (SDGs). Yet with injunctions against ESG investing in the U.S. and pullbacks from climate commitments by oil majors, manufacturers, investment firms, and governments, Okafuji had to decide whether staying close to the wishes of customers and society—a key feature of Sampo-yoshi—required changing course. In recognition of its role in sustainability, ITOCHU had been selected by DJSI (Dow Jones Sustainability Index) World and DJSI Asia Pacific as first among Japan’s top 5 trading companies for 11 years and was in the top 5% of S&P Global ESG Score among trading companies and the distribution sector. In 2023, ITOCHU had 52 active projects to advance SDGs, initiated and managed through its eight division companies to pursue business opportunities from ammonia-fueled marine transport, integrated waste management for municipalities, residential energy storage systems, to textile recycling, a socially responsible supply chain for sourcing raw rubber, and a novel scalp-cooling system that helped women with breast cancer stave off hair loss from chemotherapy treatment. “I think the most challenging task is to achieve further growth even amidst our currently expanding revenues,” he said. “We can’t keep up this kind of growth by just doing the same thing as before.”
Keywords: Sustainability; Trust; Profit; Growth and Development Strategy; Organizational Change and Adaptation; Mission and Purpose; Corporate Social Responsibility and Impact; Environmental Sustainability; Japan
Citation
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Sucher, Sandra J., and Bethelehem Y Araya. "Good for the Seller, Good for the Buyer and Good for Society: Sampo-yoshi, Sustainability and Trust at ITOCHU." Harvard Business School Case 325-053, March 2025. (Revised March 2025.)

Methane Abatement Costs in the Oil and Gas Industry: Survey and Synthesis

By: Joseph E. Aldy, Forest Reinhardt and Robert N. Stavins
  • 2025 |
  • Working Paper |
  • Faculty Research
There is growing recognition of the relative importance of anthropogenic emissions of methane as a contributor to global climate change. An important source of such emissions in some countries, including the United States, is the oil and gas (O&G) sector. This points to the importance of developing understanding of the marginal abatement cost functions for methane emissions reductions. Scholars have employed a diverse set of methodologies to estimate abatement costs, including engineering cost models, econometric analysis of natural gas markets, and statistical retrospective analysis of state-level regulation. We critically summarize these approaches and synthesize their results. We find significant potential for low-cost methane abatement in the O&G sector in the United States and elsewhere, although claims of widespread negative abatement cost opportunities should be taken with a grain of salt. We also find that the potential for low-cost abatement is not without limit. Whereas it appears that cutting methane emissions in half would be relatively inexpensive, a sharp uptick in marginal abatement cost may occur when reductions exceed 60 to 80 percent below baseline levels. This threshold may change over time with technological advances in remote sensing, which can reduce abatement costs at various levels of ambition.
Keywords: Emission Reduction; Environmental Sustainability; Climate Change; Pollutants; Energy Industry
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Aldy, Joseph E., Forest Reinhardt, and Robert N. Stavins. "Methane Abatement Costs in the Oil and Gas Industry: Survey and Synthesis." NBER Working Paper Series, No. 33564, March 2025.

Limited Accountability and Awareness of Corporate Emissions Target Outcomes

By: Xiaoyan Jiang, Shawn Kim and Shirley Lu
  • March 2025 |
  • Article |
  • Nature Climate Change
Firms are increasingly announcing targets to reduce their carbon emissions, but it is unclear whether firms are held accountable for these targets. Here we examine emissions targets that ended in 2020 to investigate the final target outcomes, the transparency of target outcomes and potential consequences for missed emissions targets. A total of 1,041 firms had emissions targets ending in 2020, of which 88 (9%) failed and 320 (31%) disappeared. We find limited accountability and low awareness of the target outcomes. Only three of the failed firms are covered by the media. After a firm fails its 2020 emissions target, we do not observe significant market reaction, changes in media sentiment, environmental scores and environment-related shareholder proposals. In contrast, initial announcements of these 2020 emissions targets are rewarded with significant improvements in media sentiment and environmental scores. Our findings raise concerns for the accountability of emissions targets ending in 2030 and 2050.
Keywords: Carbon Emissions; Goals and Objectives; Corporate Social Responsibility and Impact; Corporate Accountability; Environmental Sustainability; Public Opinion
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Jiang, Xiaoyan, Shawn Kim, and Shirley Lu. "Limited Accountability and Awareness of Corporate Emissions Target Outcomes." Nature Climate Change 15, no. 3 (March 2025): 279–286.

Educating Students and Professionals on the Business Implications of Climate Change

By: Michael W. Toffel
  • 2025 |
  • Article |
  • Global Focus: The EFMD Business Magazine
As climate change poses unprecedented challenges and opportunities, the private sector must play a pivotal role in both adaptation and mitigation efforts. This article discusses the new Harvard Business School Online course, Business and Climate Change, designed to equip participants—whether fulltime students or professionals—with practical tools to understand how companies are addressing climate-related risks and opportunities. After introductory coverage of climate science and government policies, the course introduces a range of managers from companies around the world and across different sectors to explain how they are enacting practical solutions to improve their climate adaptation and decarbonise their products, operations, and supply chains. With engaging videos, short readings, and exercises, the course seeks to enable future leaders to integrate climate solutions into core business strategies, product and service design, operational decisions, and more. Given the increasing demand from Gen Z and Millennials—and MBA students—for meaningful, impactful careers, the course addresses an urgent need to align business education with the realities of a changing planet.
Keywords: Climate Impact; Online Courses; Online Education; Decarbonization; Mitigation Policies; Climate Risk; Climate Change; Risk Management; Science; Policy; Business Education; Adaptation
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Toffel, Michael W. "Educating Students and Professionals on the Business Implications of Climate Change." Global Focus: The EFMD Business Magazine 192, no. 2 (2025): 29–32.
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
Rosabeth M. Kanter
David E. Bell
Lynn S. Paine
Max H. Bazerman
→See All

HBS Working Knowlege

    • 18 Jun 2024

    How Natural Winemaker Frank Cornelissen Innovated While Staying True to His Brand

    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

    • September 26, 2024
    • Article

    A Better Way to Measure Social Impact

    By: Robert S. Kaplan and Constance Spitzer
    • March 2025
    • Case

    Hurtigruten: Sea Zero

    By: Christian Kaps and Michael W. Toffel
→More Harvard Business Publishing
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