Archive for the ‘The Greening of Business’ Category

Green trends and sustainable practices are the talk of everyone in business–well, almost everyone until now. Deloitte reports that companies involved in Mergers & Acquisitions haven’t been paying much attention to them. Read their report, “How Green Is the Deal? The Growing Role of Sustainability in M&A”. From the press release:

The “greening” of products and business operations has become a central theme in virtually every industry. In today’s environment, companies that have strong corporate responsibility and sustainability (CR&S) programs in place are likely to be rewarded for their efforts. As CR&S wields growing influence on the strategy and operations of a company, so too will it become an increasingly important aspect of mergers and acquisitions (M&A).

In this paper, we provide an outline of six key areas of focus for executives, and discuss how greater consideration of sustainability related issues, when evaluating potential M&A transactions, can help to improve deal success.


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This week’s issue of Businessweek is its annual focus on MBA Schools, and it has a fascinating article called “The Millennials Invade the B-Schools.” The opening paragraph sounds like it could be one of our students:

Sara Hochman, 27, has always been interested in environmental issues, so it wasn’t much of a surprise that her first job out of college was as an environmental consultant. But after a few years on the job, she grew frustrated working with clients who didn’t have a clue about sustainability and didn’t care to learn. “They simply weren’t interested,” she says. Part of the problem, Hochman concluded, was that she wasn’t able to make the business case for sustainability. “I needed to beef up my business skills,” she says. So she decided to attend business school, ultimately choosing the University of Chicago. Since enrolling last fall, she has immersed herself in green business activities—including co-chairing the Energy Club and taking a new elective on renewable energy that was added at the urging of Hochman and fellow students.

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The United Nations, International Labour Organization, and Cornell University’s ILR school have collaborated on “Green Jobs: Toward Sustainable Work in a Low-Carbon World”, which was released today. It’s billed as “the first comprehensive study of the ‘green economy’ and its impact on the work world” and features some interesting findings, as well as taking the argument beyond going “green” for the environment’s sake and using this as a platform to address economic inequalities. From Cornell’s press release:

Optimistic findings in the report include:

  • green jobs could grow by the millions by 2040
  • billions are being spent this decade to retrofit buildings, creating jobs
  • “clean tech” investment shot up 60 percent from 2006 to 2007, to $148 billion
  • renewable energy jobs – now at 2.3 million — are expanding rapidly

Formidable challenges to advancing the green economy are also cited:

  • only a tiny portion of work worldwide can be described as green
  • many “green jobs” may be “dirty, dangerous and difficult”
  • energy research spending is down for government and the private sector
  • green employment does not have a foothold in most developing countries, home to 80 percent of the world’s workers.

The report goes on to state:

There is nothing intrinsically fair or just about either the process of becoming green or the end result . . . . The issue is not simply about the transition itself, but what follows the transition – the goal being a new mode of production and consumption that allows for greater social inclusion, equity, and opportunity.

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“How Firms Respond to Being Rated”, an HBS working paper, investigates whether companies respond when being ranked according to their corporate environmental policies and actions. In their preliminary findings, companies responded to a low ranking by improving their performance. From the abstract:

While many independent rating systems are designed primarily to help buyers overcome information asymmetries when making purchasing decisions, we investigate whether these same ratings might also influence the companies being rated. We focus on corporate environmental ratings, the primary purpose of which is to help investors select “socially responsible,” and avoid “socially irresponsible,” companies. We hypothesize that company ratings are particularly likely to spur responses by firms that receive poor ratings, especially those that face lower cost opportunities to improve and that operate in highly regulated industries. Our empirical analysis examines how nearly 600 firms in the United States respond to corporate environmental ratings issued by a prominent independent social rating agency, and avoids selection issues by taking advantage of a natural experiment that arose when the agency expanded the scope of its ratings. We find empirical support for our hypotheses, and present implications for managers of rated companies and of private and public rating agencies. While negative ratings may “shame” firms that are performing poorly, the threat of regulatory action and the presence of “low hanging fruit” are important drivers of how firms respond to information-based incentives.

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Two young men in China, one an American Fullbright scholar and the other a Chinese national, have begun a fascinating video blog called China’s Green Beat, covering environmentalism in China.  Their documentary-like YouTube videos cover topics such as solar hot-water heaters, wind power, and transportation.  I’d highly suggest watching at least one of these videos, which clock in around ten minutes.

In related news, National Geographic has never failed to provide its reading public with breathtaking photography of the world, from the massive to the microscopic.  This month’s issue focuses on China and, alongside the photography stands a wonderful set of essays, including a piece by Amy Tan on the rural life of the Dong people, an examination of the pressures felt by the Chinese middle class, and an investigation into the polluting of the Yellow River.  Fascinating stuff which I would recommend checking out (especially for students going into BGGE!).

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Maybe Kermit the Frog was right–that sometimes, it isn’t easy being green.  But with the steady increase of journals and magazines that come across my desk, it looks like the green movement is taking hold and mainstream culture has begun to embrace it.  This week, Newsweek magazine highlighted the green movement in their special section called “Leadership and the Environment”.  I’d highly suggest checking it out–it’s all available online and it features some wonderful articles.  From lessons we could learn about Iceland’s energy policies, to socially responsible business schools, to how the candidates stack up, this issue was certainly a highlight for my week.  See the link here to Newsweek‘s special section on “Leadership and the Environment”.

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The Chronicle of Higher Education has an informative article in its most recent issue titled “Cost and Red Tape Hamper Colleges’ Efforts to Go Green”.  While at first blush it may seem wholly negative in its coverage, the article has information about the future of LEED Certification as well as academia’s current perspectives on the issue.  Read the article online here.

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