Economic Forces and Sustainability

1. Brian Holdmeyer Economic Forces and Sustainability

2. Maslow’s Pyramid

3. “Sustainable Business”

4. Sustainability & Financing • Fewer constraints on Financing • Better Stakeholder engagement • Reduces likelihood of short-term opportunistic behavior • More likely to report Corporate Social Responsibility actions to public • Increases transparency • More available data for investors

5. Optimal Level of Sustainability • Portfolio Approach • Diminishing Returns • Optimal level is being raised • New Government Regulations • Changing Social Expectations • Innovation • Sustainability is directly determined by executives and board • Highly sustainable companies have incentives tied to sustainability targets

6. Leading and Lagging Countries Integrated Reporting by Countries Low High Investor Interest High Low

7. Regulations • Incentives • Needed if there are high economies of scale • “Learning by doing” • Not necessarily effective • Fails to induce the socially optimal level of investment • Over-invest in socially attractive projects, under-invest in less attractive but more practical opportunities

8. Market Interest • Growing interest from investors and stakeholders • Environmental and Governance more of an interest than Social • Environmental is easier to quantify • More data available on Governance

9. Incentives • Reduce bribery and corruption • Increase in managerial credibility • Stronger financial performance • Availability of capital • Government Incentives • Tax credits • Cap and Trade • Savings can outweigh costs • Not always the case though

10. Resources • Public attitudes toward climate change: findings from a multi‐country poll • http://documents.worldbank.org/curated/en/2009/12/11479932/public-attitudes-toward-climate-change-findings-multi-country-poll • Corporate Social Responsibility and Access to Finance • http://hbswk.hbs.edu/item/6766.html • Corporate Sustainability Reporting: It’s Effective • http://hbswk.hbs.edu/item/6701.html • Essay: Is there an optimal degree of sustainability? • http://www.ethicalcorp.com/governance-regulation/essay-there-optimal-degree-sustainability • Is sustainability now the key to corporate success? • http://www.guardian.co.uk/sustainable-business/sustainability-key-corporate-success?newsfeed=true • Leading and Lagging Countries in Contributing to a Sustainable Society • http://hbswk.hbs.edu/item/6716.html • Market Interest in Nonfinancial Information • http://hbswk.hbs.edu/item/6841.html • Regulatory design and incentives for renewable energy • http://econpapers.repec.org/article/kapregeco/v_3a41_3ay_3a2012_3ai_3a3_3ap_3a315-336.htm • Sustainability and Capital Markets: How firms can manage the crucial link • http://www.europeanbusinessreview.com/?p=3588 • The Consequences of Mandatory Corporate Sustainability Reporting • http://hbswk.hbs.edu/item/6691.html • The Impact of Corporate Social Responsibility on Investment Recommendations • http://hbswk.hbs.edu/item/6484.html • The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance • http://hbswk.hbs.edu/item/6865.html • The Rise and Consequences of Corporate Sustainability Reporting • http://www.europeanbusinessreview.com/?p=4538 • The growing power of non-financial reporting • http://bsr.london.edu/lbs-article/611/index.html • VIEWPOINT – The role of the board in creating a sustainable strategy • http://www.trust.org/trustlaw/news/viewpoint-the-role-of-the-board-in-creating-a-sustainable-strategy/ • When do firms support environmental agreements? • http://econpapers.repec.org/article/kapregeco/v_3a41_3ay_3a2012_3ai_3a3_3ap_3a380-401.htm • Why Sustainability Is Winning Over CEOs – BusinessWeek • http://www.businessweek.com/magazine/content/11_15/b4223025579541.htm • How to understand and measure environmental sustainability: Indicators and targets • http://www.sciencedirect.com/science/article/pii/S1470160X11001282