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$ustainability & Business

This text explores why firms often don't act sustainably, discussing market rules, competitive implications, and the uncertain regulatory landscape. It also highlights potential opportunities, such as political change, changing demand conditions, and new design and managerial standards.

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$ustainability & Business

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  1. $ustainability & Business

  2. Measuring dollar-value GDP against dollar-value firm revenue, the nine largest firms on the list would place among the top 60 economies in a GDP-ranking

  3. Source: CIA World Factbook

  4. Why Firms Don’t Act Sustainably • The Market Rules: • Focus on earnings targets • A function of production costs • Future discounted heavily • Investments with uncertain, long term paybacks are discouraged

  5. Why Firms Don’t Act Sustainably • The Market Rules: • Focus on earnings targets • A function of production costs • Future discounted heavily • Investments with uncertain, long term paybacks are discouraged • Competitive Implications: • Improving social & environmental outcomes may increase costs • Compete with firms with lower cost structures • Will consumers discriminate?

  6. Why Firms Don’t Act Sustainably • What is sustainability for traditional energy firms (e.g. BP)? • Voluntarily abandon fossil fuel assets? • Regulatory uncertainty: • What will be regulated? Energy efficiency? CO2? • Not clear what actions are helpful: • What is sustainable banking? C offsets? • Some actions make no difference

  7. Good news: Opportunities? • Political Change • Carbon will be priced? Regulated? EPA whip? • Demand conditions changing • Activist groups successful in targeting visible brands • Better information on products, allowing consumers to discriminate

  8. Good news: Opportunities? • New Design & managerial standards emerging • LEED – energy efficiency & renewable resource standards • Cradle to Cradle – closed loop product life cycles and manufacturing trends • ISO14001 – standards for environmental management

  9. Good news: Opportunities? • Emergence of important new ideas for markets: • Rethinking mobility: • Better Place • Rethinking product life cycles & manufacturing: • Flor Carpeting • Surmounting capital constraints: • Solar Power financing

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