Full title: Profiting from addressing environmental problems - An exploration of how firms create and appropriate environmental value

Status: Ongoing project

Schedule: 2010-10 – 2013-01

CBI staff: Marcus Linder, Sofia Börjesson, Joakim Björkdahl

Funding: CBI

Description: This project explores the strategies for appropriating public value utilized by firms that provide offers that are differentiated on environmental performance. The study employs both qualitative and quantitative methods. An initial question in this project is to what extent that small firms that are differentiated by their environmental performance have higher or lower profits than comparable firms. An important follow-up question is what characterizes the appropriation strategies utilized by firms that are successfully profiting from environmentally differentiated offers. The project is now in its second phase.

Findings: Findings from the first phase indicate that firms addressing environmental problems (independently if categorized by a government agency or by using self-ratings in a questionnaire) are on average less profitable than comparable normal firms. However, there are many exceptions, and some firms are very successful in capturing profits from their environmentally differentiated offerings. Notable strategies that seem to be able to support the profitability of environmentally differentiated offers include eco-branding, eco-lobbyism and the use of functional sales. In addition, sustainability vision statements turned out to be important for the discovery of new, profitable green opportunities in established firms.

The results from phase 1 can be found in the Licentiate level thesis of Marcus Linder.

Going forward: In the second phase, the project will delve deeper into the practical implications for a firms' appropriation logic (and business model) when a firm is attempting to radically decrease its environmental impact. Further, the results from a web survey of the CEOs of small cleantech firms will be used to evaluate which particular strategies for appropriating environmental value are found useful in different types of firms and industries. In order to estimate a model of "what really works", the perceived usefulness of the different appropriation strategies will be compared and related to the profitability of the respective firms, taking into account differences in industry, size and age.