Where Green Corporate Ratings Fail
| Published: | January 6, 2012 |
|---|---|
| Feature: | Op-Ed |
| Forum: | open for comment; 7 Comments posted |
Many companies receiving high marks in environmental sustainability are hurting the planet in other ways, write professor Michael Toffel and executive Auden Schendler. Here's where green rankings fall short.
Published in 2011
Carbon Tariffs: Impacts on Technology Choice, Regional Competitiveness, and Global Emissions
| Author: | David F. Drake |
|---|---|
| Published: | November 22, 2011 |
| Paper Release Date: | October 2011 |
| Feature: | Working Papers |
Under current emissions regulation such as the European Union Emissions Trading Scheme (EU-ETS) and the Regional Greenhouse Gas Initiative (RGGI) in the Northeast US, imports entering the region fall outside the regulatory regime and incur no carbon costs. As a result, imports can compete within the carbon-regulated region with a new-found advantage, potentially altering the competitive balance between emissions-regulated and -unregulated firms. While implementing carbon tariffs—border adjustments— may appear to be a straightforward solution to this asymmetry, the potential for such a measure to be interpreted as a trade barrier, and thereby initiate a reciprocal tariff, has thus far stymied debate on the issue. This paper explores the impact of such border adjustments on firms' technology choice, regional competitiveness, and global emissions. The analysis shows that border adjustments (or lack thereof) play a vital role in determining firms' technology and production choices, both of which are fundamental operations management decisions that ultimately determine economic and environmental performance. Results have implications for each of the primary stakeholders: regulators making the policy decision regarding border adjustments; firms interested in understanding their competitiveness and location strategies under a border adjustment; and technology producers interested in assessing the potential impact of border adjustments on demand for cleaner technologies.
Engaging Supply Chains in Climate Change
| Authors: | Chonnikarn Fern Jira and Michael W. Toffel |
|---|---|
| Published: | November 15, 2011 |
| Paper Release Date: | October 2011 |
| Feature: | Working Papers |
Managing a company's risks and opportunities associated with climate change—including its physical and regulatory implications—requires focusing not only on internal operations, but also on supply chains, especially since greenhouse gas (GHG) emissions in supply chains typically exceed those from a company's own operations. But this requires obtaining climate change information from suppliers, which some are reluctant to share. In this paper, Chonnikarn (Fern) Jira and Michael W. Toffel examine proprietary data from the Carbon Disclosure Project's Supply Chain Project, a collaboration of multinational corporations asking their key suppliers to share information about their GHG emissions and their vulnerabilities and opportunities associated with climate change. Jira and Toffel find evidence that a supplier is more likely to share this information when it faces several buyers requesting the information, when its buyers appear committed to actually using this information, and when the supplier is in a relatively competitive industry and is thus particularly vulnerable to being replaced by its rivals. These findings can help managers better predict which suppliers will be more willing to share climate change information, and which might require more incentives or pressure to share this information.
The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance
| Authors: | Robert G. Eccles, Ioannis Ioannou, and and George Serafeim |
|---|---|
| Published: | November 14, 2011 |
| Paper Release Date: | November 2011 |
| Feature: | Working Papers |
Robert G. Eccles, Ioannis Ioannou, and George Serafeim compared a matched sample of 180 companies, 90 of which they classify as High Sustainability firms and 90 as Low Sustainability firms, in order to examine issues of governance, culture, and performance. Findings for an 18-year period show that High Sustainability firms dramatically outperformed the Low Sustainability ones in terms of both stock market and accounting measures. However, the results suggest that this outperformance occurs only in the long term. Managers and investors who are hoping to gain a competitive advantage in the short term are unlikely to succeed by embedding sustainability in their organization's strategy. Overall, the authors argue that High Sustainability company policies reflect the underlying culture of the organization, where environmental and social performance, in addition to financial performance, are important, but these policies also forge a strong culture by making explicit the values and beliefs that underlie the mission of the organization.
Market Interest in Nonfinancial Information
| Authors: | Robert G. Eccles, Michael P. Krzus, and George Serafeim |
|---|---|
| Published: | October 21, 2011 |
| Paper Release Date: | September 2011 |
| Feature: | Working Papers |
During the past two decades, there have been many ideas for improving business reporting of nonfinancial information such as on a company's environmental, social, and governance (ESG) performance. Using data from Bloomberg, authors Robert G. Eccles, Michael P. Krzus, and George Serafeim provide insights into market interest in nonfinancial information at a level of granularity not available until now. They identify exactly what information is of greatest interest, contrasting both the global and U.S. market across the full spectrum of ESG information and for each component of ESG, as well as Carbon Disclosure Project metrics. They also show variation in interest across asset classes and firm types, and present preliminary explanations for these differences.
Designing Cities for a Sustainable Future
| Published: | October 19, 2011 |
|---|---|
| Feature: | Research & Ideas |
| Forum: | open for comment; 7 Comments posted |
The city of the past is likely not the city of the future—climate change is bringing an end to the traditional model. Harvard Business School faculty are thinking along with government leaders and business practitioners about how to create sustainable places to live and work. From HBS Alumni Bulletin.
Historical Trajectories and Corporate Competences in Wind Energy
| Authors: | Geoffrey Jones and Loubna Bouamane |
|---|---|
| Published: | October 18, 2011 |
| Paper Release Date: | May 2011 |
| Feature: | Working Papers |
Analyzing developments in the wind turbine business over more than a century, Geoffrey Jones and Loubna Bouamane argue that public policy has been a key variable in the spread of wind energy since the 1980s, but that public policy was more of a problem than a facilitator in the earlier history of the industry. Geography has mattered to some extent, also: Both in the United States and Denmark, the existence of rural areas not supplied by electricity provided the initial stimulus to entrepreneurs and innovators. Building firm-level capabilities has been essential in an industry which has been both technically difficult and vulnerable to policy shifts.
What Environmental Ratings Miss
| Authors: | Auden Schendler and Michael Toffel |
|---|---|
| Published: | October 7, 2011 |
| Paper Release Date: | September 2011 |
| Feature: | Working Papers |
Environmental ratings of companies are based on "green" management efforts and the environmental performance of their operations. In this paper, Michael Toffel and Auden Schendler argue that these ratings neglect companies' actions that seek to influence environmental policy, which can have a much broader impact than their internal efforts. As a result, sustainability ratings risk seriously misleading consumers and investors, and can even enable "greenwashing" by allowing corporations to game the system, gaining high rankings for greening their operations despite advocating for less stringent environmental policy. Toffel and Schendler argue that environmental ratings should factor in political contributions, CEO advocacy work, and engagement with non-governmental organizations, among other actions. This would erode the environmental ratings of companies advocating weaker environmental policy, and bolster the ratings of those advocating more stringent environmental policy.
Transforming Manufacturing Waste into Profit
| Published: | October 3, 2011 |
|---|---|
| Feature: | Research & Ideas |
| Forum: | open for comment; 15 Comments posted |
Every manufacturing process leaves waste, but Assistant Professor Deishin Lee believes much of this left-behind material can be put to productive—and profitable—use.
The Globalization of Corporate Environmental Disclosure: Accountability or Greenwashing?
| Authors: | Christopher Marquis and Michael W. Toffel |
|---|---|
| Published: | August 19, 2011 |
| Paper Release Date: | May 2011 |
| Feature: | Working Papers |
Between 2005 and 2008, the world saw a dramatic increase in corporate environmental reporting. Yet this transition toward greater transparency and accountability has occurred unevenly across countries and industries. Findings by professors Christopher Marquis and Michael W. Toffel provide the first systematic evidence of how the global environmental movement affects corporations' environmental management practices. Firms' use of symbolic compliance strategies, for instance, is affected by specific corporate characteristics and by institutional context. This study contributes to a larger body of research on the effects of global social movements and environmental reporting.
Corporate Social Responsibility and Access to Finance
| Authors: | Beiting Cheng, Ioannis Ioannou, and George Serafeim |
|---|---|
| Published: | July 22, 2011 |
| Paper Release Date: | June 2011 |
| Feature: | Working Papers |
Corporate social responsibility may benefit society, but does it benefit the corporation? Indeed it does, according to a new study that shows how CSR can make it easier for firms to secure financing for new projects. Research was conducted by George Serafeim and Beiting Cheng of Harvard Business School and Ioannis Ioannou of the London Business School.
Twenty-first Century Skill: Trading Carbon Credits
| Published: | June 8, 2011 |
|---|---|
| Paper Release Date: | October 2010 (revised) |
| Feature: | Lessons from the Classroom |
| Forum: | open for comment; 7 Comments posted |
As cap and trade becomes an increasingly popular mechanism for governments to cut corporate pollution, students at Harvard Business School use a simulation to learn how it works. An interview with professor Peter Coles.
Corporate Sustainability Reporting: It's Effective
| Published: | May 23, 2011 |
|---|---|
| Feature: | Research & Ideas |
| Forum: | open for comment; 11 Comments posted |
In a growing trend, countries have begun requiring companies to report their environmental, social, and governance performance. George Serafeim of HBS and Ioannis Ioannou of London Business School set out to find whether this reporting actually induces companies to improve their nonfinancial performance and contribute toward a sustainable society.
The Consequences of Mandatory Corporate Sustainability Reporting
| Authors: | Ioannis Ioannou and George Serafeim |
|---|---|
| Published: | May 17, 2011 |
| Paper Release Date: | March 2011 |
| Feature: | Working Papers |
The number of firms reporting sustainability information has grown significantly in the past decade, both due to voluntary actions and to mandates from several national governments and stock exchange authorities. In this paper, London Business School's Ioannis Ioannou and Harvard Business School's George Serafeim investigate whether mandatory sustainability reporting has any effect on a company's tendency to engage in socially responsible management practices.
HBS Faculty Comment on Environmental Issues for Earth Day
| Published: | April 26, 2011 |
|---|---|
| Feature: | Op-Ed |
| Forum: | open for comment; 3 Comments posted |
Harvard Business School faculty members offer their views on the many business facets of "going green."
Will the Japan Disaster Remake the Landscape for Green Energy in Asia?
| Published: | April 8, 2011 |
|---|---|
| Feature: | Research & Ideas |
Entrepreneurs at the recent Asia Business Conference at Harvard Business School said the disaster in Japan could accelerate the move toward "green" energy sources in Asia, opening opportunities.
Water, Electricity, and Transportation: Preparing for the Population Boom
| Published: | March 14, 2011 |
|---|---|
| Feature: | Research & Ideas |
| Forum: | open for comment; 17 Comments posted |
By 2050, the world's cities will have to support 3 billion more inhabitants, mostly in developing countries, with crucial investments needed in three areas: water, energy, and transportation. Several of the planet's top city planning and environmental business experts gathered at Harvard Business School earlier this month to discuss available options.
Sustainable Cities: Oxymoron or the Shape of the Future?
| Authors: | Annissa Alusi, Robert G. Eccles, Amy C. Edmondson, and Tiona Zuzul |
|---|---|
| Published: | February 9, 2011 |
| Paper Release Date: | December 2010 (Revised March 2011) |
| Feature: | Working Papers |
| Forum: | open for comment; 2 Comments posted |
Among the issues looming large in the twenty-first century is a rapid rise in the number of people living in cities and a rapidly growing awareness of our threat to the Earth's environment. In response to both, a number of major corporations and various government bodies have teamed up to explore the idea of "ecocities" —urban communities ideally designed around the idea of environmental sustainability. This paper explores the idea by looking at several ecocities in progress in China, Abu Dhabi, South Korea, Finland, and Portugal. Research by professors Robert G. Eccles and Amy C. Edmondson, doctoral candidate Tiona Zuzul, and HBS research assistant Annissa Alusi.
Published in 2010
Cognitive Barriers to Environmental Action: Problems and Solutions
| Authors: | Lisa L.Shu and Max H. Bazerman |
|---|---|
| Published: | December 15, 2010 |
| Paper Release Date: | November 2010 |
| Feature: | Working Papers |
Researchers have long studied the cognitive barriers that cloud our thinking and decision-making. In a recent book chapter, HBS doctoral student Lisa L. Shu and professor Max H. Bazerman look at three barriers that can prevent clear decision-making, specifically on environmental issues. They also propose ways in which these biases could be put to advantage in promoting sound environmental policy and practice.
The Landscape of Integrated Reporting: An E-Book
| Published: | November 19, 2010 |
|---|---|
| Feature: | Research & Ideas |
An e-book written by participants of a recent HBS workshop on integrated reporting is now available. HBS Dean Nitin Nohria offers a forward.
HBS Workshop Encourages Corporate Reporting on Environmental and Social Sustainability
| Published: | October 20, 2010 |
|---|---|
| Feature: | Research & Ideas |
| Forum: | closed | 7 Comments posted |
The concept of integrated reporting could help mend the lack of trust between business and the public, Harvard Business School Dean Nitin Nohria tells attendees at a seminal workshop.
Venture Capital's Disconnect with Clean Tech
| Published: | October 18, 2010 |
|---|---|
| Feature: | Lessons from the Classroom |
| Forum: | closed | 18 Comments posted |
Clean-tech start-ups depend on patience and public policy to thrive—the Internet models for VC funding don't apply. That's why Harvard Business School professor Joseph Lassiter is making an unusual recommendation to his entrepreneurship students: Spend a few years serving time in a government job.
How to Speed Up Energy Innovation
| Q&A with: | Rebecca Henderson |
|---|---|
| Published: | August 9, 2010 |
| Feature: | Research & Ideas |
We know the grand challenge posed by shifting away from dirty energy sources. The good news, says Harvard Business School professor Rebecca Henderson, is that we have seen such change before in fields including agriculture and biotech, giving us a clearer pathway to what it will take.
Renewable Energy: Winds at Our Back?
| Q&A with: | Richard H.K. Vietor |
|---|---|
| Published: | July 6, 2010 |
| Feature: | Research & Ideas |
It certainly stirred up controversy in 2001 when an entrepreneur proposed erecting 130 wind turbines off the coast of Massachusetts' Cape Cod. After nine years of struggle over regulatory, environmental, safety, and social issues, the plan appears closer to becoming a reality. HBS professor Richard Vietor reflects on wind energy and innovations in the renewable energy industry.
Environmental Federalism in the European Union and the United States
| Authors: | David Vogel, Michael Toffel, Diahanna Post, and Nazli Z. Uludere Aragon |
|---|---|
| Published: | April 28, 2010 |
| Paper Release Date: | March 2010 |
| Feature: | Working Papers |
Under what circumstances will individual states take the lead in passing the most stringent environmental regulations, and when will the federal government take the lead? When a state takes a leadership role, will other states follow? HBS professor Michael Toffel and coauthors describe the development of environmental regulations in the U.S. and EU that address automobile emissions, packaging waste, and global climate change. They use these three topics to illustrate different patterns of environmental policymaking, describe the changing dynamics between state and centralized regulation in the United States and the EU.
Accelerating Innovation In Energy: Insights from Multiple Sectors
| Authors: | Rebecca M. Henderson and Richard G. Newell |
|---|---|
| Published: | February 24, 2010 |
| Paper Release Date: | February 2010 (Revised February 2011) |
| Feature: | Working Papers |
How should the energy sector best respond to the threat of climate change? In this introductory chapter to a forthcoming book, Harvard Business School's Rebecca M. Henderson and Richard G. Newell of Duke University frame the discussion by highlighting the volume's contributions concerning four particularly innovative sectors of the U.S. economy: agriculture, chemicals, life sciences, and information technology. These four sectors have been extraordinarily important in driving recent economic growth. Henderson and Newell describe why accelerating innovation in energy could play an important role in shaping an effective response to climate change.
Is a Stringent Climate Change Agreement a Pot of Gold?
| Published: | January 6, 2010 |
|---|---|
| Feature: | What Do YOU Think? |
| Forum: | closed | 19 Comments posted |
Reading this month's comments, HBS professor Jim Heskett wonders if we even need a climate change agreement as a catalyst to foster innovation and the VC investment required to support it. (Online forum has closed; next forum opens February 4.)
Published in 2009
Business Summit: The Coming World Oil Crisis
| Published: | July 10, 2009 |
|---|---|
| Feature: | HBS Business Summit |
Without enormous changes the world faces an imminent oil crisis—and there are no silver bullet solutions. People must wake up to the sobering ramifications of peak oil, which may be the defining issue of this century.
Business Summit: Business and the Environment
| Published: | June 26, 2009 |
|---|---|
| Feature: | HBS Business Summit |
If the causes for global climate change are not addressed, the consequences for the planet are likely to be disastrous. Governments, business, and consumers must act.
Business Summit: The Evolution of Agribusiness
| Published: | June 19, 2009 |
|---|---|
| Feature: | HBS Business Summit |
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.
The Energy Politics of Russia vs. Ukraine
| Published: | March 11, 2009 |
|---|---|
| Feature: | HBS Cases |
A recent Harvard Business School case looks at Russia's decision in 2006 to cut off supply of natural gas to Ukraine's energy company—a move repeated this year. Is Russia just an energy bully? Students of professor Rawi Abdelal learn there is nothing black and white when it comes to Russia's energy politics. From HBS Alumni Bulletin.
Published in 2008
Economics of the Ethanol Business
| Published: | November 3, 2008 |
|---|---|
| Feature: | HBS Cases |
What happens when a group of Missouri corn farmers gets into the energy business? What appears to be a very lucrative decision quickly turns out to be much more risky. Professor Forest Reinhardt leads a case discussion on what the protagonists should do next. From HBS Alumni Bulletin.
Responding to Public and Private Politics: Corporate Disclosure of Climate Change Strategies
| Authors: | Erin M. Reid and Michael W. Toffel |
|---|---|
| Published: | October 1, 2008 |
| Paper Release Date: | August 2008, revised April 2009 |
| Feature: | Working Papers |
Social activists are increasingly attempting to directly influence corporation behavior, using tactics such as shareholder resolutions and product boycotts to encourage companies to improve their environmental performance, increase their transparency about operations and governance, and more stringently monitor their suppliers' labor practices. This paper examines how companies are responding to these pressures, in the context of requests for greater transparency about the risks climate change poses to their business—and the strategies these companies have developed to address these risks. This paper reveals that a company is more likely to comply with social activists' requests for greater transparency about climate change when the company itself, or other companies in its industry, has been targeted by formal shareholder resolutions on environmental topics—and when the company is facing potential regulations restricting greenhouse gas emissions. These findings demonstrate that changes in corporate practices may be sparked by both social activists and by the mere threat of government regulations, and that challenges mounted against a specific firm may inspire broader changes within its industry.
How Sustainable Is Sustainability in a For-Profit Organization?
| Published: | February 1, 2008 |
|---|---|
| Feature: | What Do YOU Think? |
| Forum: | closed | 77 Comments posted |
Online forum now closed. For managers, sustainability can mean the integration and intersection of social, environmental, and economic responsibilities. The concept is admirable, says Jim Heskett, but does it also confuse managers entrusted with the bottom line? How should they make trade-offs? Jim sums up reader responses.
