University of California at Santa Barbara
Donald Bren School of Environmental Science and
ESM 210: Business and the Environment
Instructor: Professor Gary Libecap (4412 Bren Hall)
Class Lecture: MW 11:00-12:15 (Bren 1414).
Discussion M 3:00-3:50 (Bren 1424)
Discussion M 4:00-4:50 (Bren 1424)
Discussion W 8:30-9:20 (Bren 1424)
Prof. Libecap’s office hours: MW 2:00-3:00 and by appointment. Email: email@example.com, phone 893-8611
Teaching Assistant: Trevor O’Grady Office hours: by appointment.
Course Overview and Objectives: Private firms are the major producers and deliverers
of goods and services in a market economy. They are the largest employers; largest
sources of research and development in applied knowledge; and largest outlets for
investment. As such, they play a critical role in addressing environmental and natural
resource issues. As Masters of Environmental Science and Management Bren graduates
will work within, work with, or regulate firms as employees, as members of NGOs and
other groups, and as government officials. Accordingly, it is important to understand
them and their position in the environment.
The following topics will be covered in the class:
a) the Firm—definition, history, structure, organization, objectives, products,
activities, stakeholders. We are interested in how these factors influence firm
positions on environmental and resource issues.
b) Industry Structure and its impact on firm behavior. We will address how
competitive conditions, including price elasticity (sensitivity) of demand and
globalization, influence firm environmental actions.
c) Macroeconomic Conditions and the Firm. We will examine business cycles and
how income elasticity (sensitivity) of demand affects firm positions regarding
introduction of green products, adoption of new technologies that may have
d) Externalities and Public Goods. These are the environmental and natural
resource problems that are especially challenging to firms because they do not
capture many of the benefits or costs involved. We will address these issues and
discuss how some of the social benefits and costs might be internalized.
e) the Debate over Social Responsibility of Business. There are many issues and
ways of addressing how firms respond to social, economic, and political
pressures. We will explore them.
f) Firm responses to environmental and resource problems through product
differentiation strategies. We will examine the conditions where it may pay to
be green through new or altered product offerings.
g) Firm responses to environmental and resource problems through innovation,
supply chain management, life cycle analysis, and cost control. We will explore
how environmental concerns and changing commodity prices may influence
firm investment decisions and operations.
h) Firm/Policy interface. We will summarize policy options to address externalities
(air pollution, GHG emissions) and open access problems (fisheries, aquifers)
and explore industry reactions both in molding and responding to policies. The
major areas covered are tax and regulatory constraints on inputs and outputs and
market-oriented options, such as use of property rights regimes including
tradable emission permits, individual transferable quotas and water rights.
The lectures will cover basic concepts and the discussion sessions will go over problems
and readings that illustrate key concepts. By taking the course, students will better
understand the factors affecting firm responses to the environment and resource problems,
how to work with firms as a leaders to explore strategies for providing environmental and
resource benefits while at the same time being responsive to key constituencies and
constraints facing the organization.
Announcements. From time to time I will need to send an email to everyone in
class. We have created a listserv for the class. Please make sure to subscribe using the
following link: http://www.list.bren.ucsb.edu/mailman/listinfo/esm210
Readings. Most readings will be available either through required materials, reserve
reading, or via downloads.
Assignments. Students will be organized into teams to work on environmental and
natural resource problems and be ready to turn in and present their findings in the
discussion classes. Grading will be based on team assessments 50%, individual
participation in discussion groups, 20%, and final exam 30%. All assignments are due
on the date shown on the syllabus before class as electronic files sent to Trevor
O’Grady (firstname.lastname@example.org). Honor Code and Joint Work. Each student is responsible for his or her own work within the team.
Required: Bruce Hay, Robert Stavins, and Richard H.K. Vietor, eds, Environmental
Protection and the Social Responsibility of Firms, 2005, Resources for the Future, paper.
Andrew J. Hoffman, Competitive Environmental Strategy, 2000, Island Press.
Optional for later in the term: Andrew J. Hoffman, Carbon Strategies: How Leading Companies Are Reducing their Climate Change Footprint, 2007, University of Michigan Press, available through Amazon.com, etc.
Two copies of these three will be in the Periodicals room
Date Topic Readings Assignments
Lecture 1: The Firm-- Teams of 4 or so students each Each student is to describe
Definition, Structure, will be formed based on his or her experience with Organization, experience by Oct 1. firms—economics, business Monday, Objectives, Activities, Lecture materials and education, work and submit Sept 29, and Stake Holders as background reading are on the to Trevor O’Grady via Lecture 1 they influence course website: PPTs ESM email. Teams will be positions regarding the 210, Fall 2008; Lecture 1; organized so members have environment and Business Concepts1; Profit a mix of backgrounds.
natural resource Maximization1; Market1; problems. GNPSegments1 Discussion sessions will
focus on Lecture1 Lecture 1: The Firm--
concepts—firm structure Definition, Structure,
and organization and Organization, We will complete Lecture 1
discuss the role of profit Objectives, Activities, on firm definition,
maximization. and Stake Holders as organization, and structure.
A. Overall lecture concepts. they influence Lecture materials on Website:
B. Why is profit positions regarding the PPT lecture 2, Hoffman Wednesday, maximization essential environment and Drivers, Hoffman NGOa, October 1, for firms? natural resource NGOb. Read Hoffman, Lectures 1, 2 C. How can it conflict with problems. Lecture 2: Chapters 1-6.
environmental and The Firm—Profit Research teams will be
natural resource goals? objectives, drivers of formed and projects began.
D. How might these two be environmental action Lecture 2 materials on course
meshed? and market conditions webpage.
that shape the
Discussion sessions will
focus on lecture concepts
and the material in
Hoffman, Chapters 1-6.
A. Overall lecture
B. Are any of the
drivers likely to be
C. If so, under what
D. Alliances between
firms and NGOs. Assignment 1:
Student teams will be
organized. They will begin
research on assessing why
Toyota and General Motors
have had very different
records with regard to Lecture 2 The Firm—We will continue discussion
introduction of hybrid cars. Profit objectives, of the drivers of
A. What are the firm Monday, drivers of environmental action and the
structures? October 6, environmental action role of industry structure on
B. What is their size? Lectures 2 and market conditions firm actions regarding the
C. Where are their that shape the environment.
major markets? response.
D. What marketing
decisions have led to
E. What input supply
conditions have led
to their position
F. What environmental
Research will be done using
web sources. Be sure to
document sources. The
analysis is to include the
concepts in lectures 1-3. Send five page PowerPoint assessments l to Trevor
O’Grady via email by Monday, Oct 13, 8:00am. 5 Teams will be prepared to present their analyses for 8-10 minutes each. Be sure to
use the notes section of ppt
to include additional
Lecture 2 The Firm—
environmental action We will complete discussion and market conditions of market structure factors that that shape the influence firm behavior response. regarding the environment in Lecture 2 and turn to Lecture Lecture 3 3 on macro economic Macroeconomic Wednesday, conditions, income and wealth Conditions, the Firm, October 8, on firm incentives for and the Environment. lectures 2, 3 responding to environmental We will then turn to problems. macro economic Lecture3, US Pollution, conditions, income and Consumption, Business wealth on firm Cycles. incentives for responding to
Conditions, the Firm,
and the Environment. We will complete material on We will then turn to macro economic conditions macro economic that affect firm responses to conditions, income and environmental problems in wealth on firm Lecture 3 and turn to Lecture Monday, incentives for 4. Read Garrett Hardin, “The October 13, responding to Assignment 1 due 8am Tragedy of the Commons,” Lectures3, 4 environmental Monday. Science, 162, December 13, problems. 1968, available online via Lecture 4: Presentations in discussion Pegasus. Also, lecture 4 Externalities and groups. materials on course webpage. Public Goods. The Fundamental Problem
of the Environment
and Open Access
Lecture 4: We will complete the
Wednesday, Externalities and discussion of Lecture 4,
October 15, Public Goods. The Externalities and Public
Lecture 4 Fundamental Problem Goods and the Firm Response
of the Environment to Environmental Problems.
and Open Access
Complete Lecture 4. Lecture Discussion groups will
5. Readings: Hay, Stavins, focus on the Tragedy of the
and Vietor: Overview, Part I, Commons and Firm
the Legal Perspective. Read responses to environmental
also, “Do It Right,” and natural resource
Economist, January 17, 2008, problems and the Social
on the course webpage. Skim Responsibility of Business
also CSR in Review of debate.
Environmental Economics and A. What are the Policy, 2 (2), Summer 2008, underlying problems
Monday, Lecture 5, the Social 219-275, available on facing firms for
October 20, Responsibility of Pegasus. internalizing public
Lecture 4, 5 Business. Optional: Michael Porter and goods? Mark Kramer, “Strategy and B. What options are Society: The Link between available to capture Competitive Advantage and a portion of the Corporate Social social benefit? Responsibility,” Harvard C. What are the Business Review, December competing
2006, 78-93, available on definitions of CSR? Pegasus. D. Which ones are
likely to be aligned
with the incentives
of most stake
E. What options do
F. What are the trade
offs of CSR?
G. What is evidence Hay, Stavins, and Vietor: Part regarding CSR Wednesday, Lecture 5, the Social II, the Economics Perspective, October 22, Responsibility of Part III, The Business Assignment 2: Lecture 5 Business. Perspective. As preparation for debate, Student teams will prepare 5
power point page arguments
pro and 5 page con (10 page
total) regarding an
expansive view of the social
responsibility of business
(bullet points only) , due
Monday Oct 27 for
presentation on either side.
Draw on Hay, Stavins,
Vietor, as well as other
materials using actual firm
examples to make points.
Teams that did not present
in the Toyota/General
Motors project will lead the
debates with others added as
necessary. Business for Social
Responsibility and Pacific
Institute: “At the Crest of a
Waver: A Proactive Approach
to Corporate Water Strategy.” Available at
wave.pdf or on the course
webpage. Other information is
provided on water trends and
business strategies is found at http://www.gemi.org/water/wa
Monday, Lecture 6, Application Assignment 2 due 8am
October 27, of CSR: Business and An overall assessment of Monday.
Lecture 6 Water current views on climate change and its impact on the Discussion groups: Debate natural environment is found by teams over the pros and in “The Effects of Climate cons of CSR.
Change on Agriculture, Land Resources, Water Resources,
and Biodiversity in the United
Lecture 7, the Lecture 6, Environmental Wednesday, Business Response, Product Differentiation. October 29, Environmental Product Altering Strategic Objectives, Lecture 7 Differentiation Hoffman, Chapter 7; Forest
available from Pegasus.
Lecture 7 continued: Discussion sessions will
Environmental Product focus on lecture topics on
Lecture 7, the Monday, Differentiation. Altering environmental product
Business Response, November 3, Strategic Objectives, differentiation.
Environmental Product Lecture 7 Hoffman, Chapter 7; Forest A. What three factors
Differentiation Reinhardt, “Environmental are critical for
Product Differentiation.” successful
B. What market
analysis must be
C. What market
structure must exist
for the firm to
in such actions?
Firm Responses: Assignment 3: Innovation, Supply Each team will incorporate Wednesday, Chain Management, Reinhardt’s strategy criteria November 5, Life Cycle into analyses of how Lecture 8 Presentation by Professor Assessment, Industrial General Electric as a large Roland Geyer. Ecology. multiproduct firm and
Deckers as a smaller, more
focused firm address environmental product
differentiation. 5 page
power point slides due to
Trevor O’Grady by
Monday Nov 10 at 8 am.
Lecture 9: In this lecture we
will cover the basic issues of
environmental and social
corporate performance. We
will address evaluation
methods, available databases,
and challenges. Readings:
Levine D.I., Chatterji A.K. Assignment 3 due 8am 2006. "Breaking Down the
Monday. Wall Of Codes: Evaluating Non-Financial Presentation of General Performance Measurement", Electric and Deckers’ California Management environmental strategies. Review Vol. 48, NO.2, available on Pegasus.
Assignment 4: Students will evaluate the Flatz, Alois, 2002, "Corporate comparative environmental sustainability Financial Measurement of performance of three
Indexes" in Monday, Environmental firms in two different sectors Environmental Performance November Performance, Lecture (Hewlett Packard, IBM, Intel or Measurement. The Global 10, Lecture 9 10 by Vered Doctori-Exxon Mobil,
Report 2001-2002. Blass BP, Shell). Teams are required to World Economic Forum, ed. describe the criteria they choose Daniel Esty and Peter K. and why. Cornelius, 54-65. Teams will be assigned to the firms.
You can Available on webpage use information from corporate environmental reports as well as Hussey, Dennis, Patrick public sources. Presentation power Kirsop, and Ronald Meissen, points due Monday, November 17th 2001, "Global 8 am to Trevor Reporting Initiative O'Grady. Guidelines: An Evaluation of Sustainable Development Metrics for
1-20. Available on webpage.
Web sites for measurement