On the Profitability of Corporate Environmentalism

Corporations often take environmentally friendly actions that go beyond what is required by law. Whether such corporate environmentalism is a profitable form of corporate strategy, or altruism in the form of a sacrifice of profits in the public interest, has been hotly debated. This chapter offers a theoretical framework for understanding when proactive environmental management is profitable, incorporating market forces, government regulation, and pressures from civil society, sometimes referred to as private politics. It then reviews, summarizes and critiques the empirical evidence relating corporate profitability to corporate environmentalism and identifying specific sources of “green” profits. It concludes with perspectives on the most valuable lessons for managers and the most promising areas for further scholarly research.