Greening Markets
Informing Green Markets: The Roles of Industry, NGOs and Government
September 13, 2010
June 17-19, 2010
Informing Green Markets: The Roles of Industry, NGOs and Government
Sponsored by the Erb Institute at the Ross School in Ann Arbor/ By Invitation only.
The conference is designed to stimulate dialogue between the private sector, the public sector, non-governmental organizations (NGOs), and academia and will focus on the dynamic processes by which information in green markets emerges and evolves. It is designed to provoke a “deep dive” discussion into how green markets will develop in upcoming years, and the appropriate roles of government regulation, corporate environmenal claims, and external evaluations by NGOs.
Download the Conference Report(pdf)
Complete Conference website
Papers and Slide Presentations
Honest Tea: Sell Up or Sell Out?
September 5, 2010
Honest Tea: Sell Up or Sell Out? (pdf abstract)
Purchase the full report on Honest Tea: Sell Up or Sell Out? (Case study #1-428-947) – published 09/2010, 22 pages.
By: Lauren Start, Tina Tam, David Weinglass, and Ryan Whisnant, under the supervision of Professor Andrew Hoffman and Arie Jongejan
Description: Are “wide-scale distribution” and “sustainability” mutually exclusive? This case explores this question through the examples of Honest Tea, one of the fast growing companies in the Ready-To-Drink market, and Coca-Cola. Honest Tea faces a challenging decision: whether or not to sell part of its business to Coca-Cola. Honest Tea desires to stay committed to CSR goals and maintain its niche market appeal; however, it needs to expand its distribution network to make a large impact in the mainstream market, grow profitability, and affect positive change by introducing healthy, sustainable products to the beverage industry. This case asks whether it makes sense for Honest Tea to scale up its organic and fair trade beverages, and if the partnership with Coca-Cola is the best move. The case focuses on business strategy, and promotes understanding of the complexities of a sustainable business and the challenges that arise while trying to maintain growth.
Teaching Note: Available to Registered Educators. Please login to view it.
Teaching Points: After discussing this case study, students will be able to:
- Describe Honest Tea’s business model,
- Discuss the target market of Honest Tea before and after its partnership with Coca-Cola,
- Compare alternative strategies Honest Tea may have considered for reaching national scale instead of selling 40% to Coca-Cola,
- Analyze Honest Tea’s distribution networks and retail channel access prior to and after its partnership with Coca-Cola.
- Debate the importance of consumer trust in a beverage such as Honest Tea and how that may differ from non-organic, non-fair trade beverages,
- Describe general consumer trust at a company level,
- Describe the importance of image and reputation to consumers of corporate conglomerates, such as Coca-Cola,
- Compare organic food trends in the United States and their implications for both small companies, such as Honest Tea, and large organizations, such as Coca-Cola.
Key Topics:
- Consumer Products
- Corporate Social Responsibility (CSR)
- Environmental Sustainability
- Innovation
- Manufacturing
- Marketing & Sales
- Strategic Management
Clorox Goes Green
May 25, 2010
Clorox Goes Green (pdf abstract)
Purchase the full report on Global Lens (Case study # 1-429-087) – published 05/2010, 26 pages.
By: Craig Cammarata, Jennifer Gough, Brian Moss, Ashley Nowygrod, and Nathan Springer under the supervision of Professor Andrew Hoffman and Arie Jongejan.
Description: ~~Finalist and 3rd Place winner in the 2011 Oikos Casewriting Competition~~ In early 2008, Clorox released a new line of environmentally friendly cleaning products called GreenWorks. The product line was the first new brand released by Clorox in 20 years. Following the success of smaller firms such as Seventh Generation and Method, Clorox targeted the niche market of green products, with an estimated market size of $150 million. Unlike the smaller firms, Clorox commanded shelf space at big-box stores such as Wal-Mart, Target, and Costco. Using its competitive advantages in distribution and economies of scale, Clorox priced its GreenWorks products below those of smaller competitors. Surprisingly, Clorox’s market entry did not steal revenue from smaller players, but instead caused the market for green cleaning products to explode. This result left Clorox with several strategic questions.
Teaching Note: Available to Registered Educators. Please login to view it.
Teaching Points: After discussing this case study, students will be able to
- analyze the strategies Clorox employed to develop and market this product,
- analyze Why Clorox chose to develop a new brand instead of acquiring an existing brand or Extending existing Clorox household cleaner product lines,
- compare Clorox’s pricing strategy against those employed by competitors,
- discuss whether the partnership with the Sierra Club is essential for any additional products or new product lines,
- determine whether Clorox leverage the success of GreenWorks in other areas
Key Topics:
- Consumer Products
- Environmental Sustainability
- Innovation
- Strategic Management
BP: Beyond Petroleum?
April 5, 2010
BP: Beyond Petroleum? (pdf abstract)
Purchase the full report on BP: Beyond Petroleum? (Case study # 1-429-229) – published 04/2010, 28 pages.
By: Andrew Hoffman
Description: British Petroleum (BP), one of the world’s largest oil companies, spent over $200 million rebranding itself as environmentally responsible, with the tagline “Beyond Petroleum.” However, after the catastrophic 2010 Gulf of Mexico Oil Spill, the company’s name seemed permanently tarnished. Through a deep dive into the well-known and little-known events of the spill, this case study asks students to determine: what should BP do now? Newly appointed CEO Bob Dudley inherited a company that faced billions of dollars in damages, a furious public, and an irate US government. The “Beyond Petroleum” campaign that the company had so successfully undertaken in 2000 was now the focus of derision and disbelief. As CEO, Dudly must repair the company’s image, re-establish some level of trust with government, and convince investors that BP will return to profitability after this disaster.
Teaching Note: Available to Registered Educators. Please login to view it.
Teaching Points: After discussing this case study, students will be able to
- Evaluate in what type of businesses is it appropriate to promote sustainability efforts, and in what businesses does sustainability promotion causes more risk than benefit.
- Determine what level of commitment to sustainability (minor, significant, “all in”) is it appropriate to brand your firm as committed to sustainability.
- Analyze whether BP was guilty of “greenwashing.”
- Identify traits of leadership required to recover from dire situations.
- Generate risk mitigation options for catastrophic one-time events.
Key Topics:
- Crisis Management
- Environmental Sustainability
- Ethics
- Marketing & Sales
- Strategic Management
Who is part of the environmental movement? Assessing network linkages between NGOs and corporations
January 1, 2010
Andrew J. Hoffman, University of Michigan
T. Lyon (ed). Good Cop Bad Cop: Environmental NGOs and their Strategies toward Business (Washington DC: Resources for the Future Press): 48-69 (with Stephanie Bertels) (2010).
Greenwash: Corporate Environmental Disclosure under Threat of Audit
September 7, 2009
Thomas P. Lyon, University of Michigan
John W. Maxwell, Indiana University
ABSTRACT
We develop an economic model of “greenwash,” in which a firm strategically discloses environmental information and an activist may audit and penalize the firm for disclosing positive but not negative aspects of its environmental profile. We fully characterize the model’s equilibria, and derive a variety of predictions about disclosure behavior. We rationalize conflicting results in the empirical literature, finding a non-monotonic relationship between a firm’s expected environmental performance and its environmental disclosures. Greater activist pressure deters greenwash, but induces
some firms to disclose less about their environmental performance. Environmental management systems discourage firms with poor expected environmental performance from greenwashing, which may justify public policies encouraging firms to adopt them.
Corporate Social Responsibility and the Environment: A Theoretical Perspective
July 11, 2008
Thomas P. Lyon, University of Michigan
John W. Maxwell, The University of Western Ontario
What Drives Participation in State Voluntary Cleanup Programs?
February 1, 2008
Allen Blackman, Thomas P. Lyon, Kris Wernstedt, and Sarah Darley
Abstract
Virtually all U.S. states have now created voluntary cleanup programs (VCPs) offering liability relief and other incentives for responsible parties to remediate contaminated sites. We use a duration model to analyze participation in Oregon’s program. In contrast to previous VCP research, we find that this program attracts sites with significant contamination, not just relatively clean ones. Furthermore, we find that regulatory pressure—in particular, the public listing of contaminated sites—drives participation. These findings imply Oregon has been able to spur voluntary remediation via public disclosure, a result that comports with key themes in the literature on voluntary environmental regulation.
Investigating Opportunities to Strengthen the Local Food System in South Eastern Michigan
April 30, 2007
By Laura Kaminski ’08 (with Karl Buck, Deirdra Stockmann and Ann Vail)
Abstract: In 2004, a local food system report, entitled Toward a Sustainable Food System: Assessment and Action Plan for Localization in Washtenaw County, Michigan, was released at the conclusion of a master’s project conducted by a team of students at the University of Michigan’s School of Natural Resources and Environment. This research and report made a compelling argument for the viability of a local food system in Washtenaw County, Michigan, and was the first of its kind to assess the intricacies of the existing local food system within a single county of southeastern Michigan (Davis et al. 2004). Building upon this previous research, in early 2006 a second research team comprised of master’s students from the University of Michigan’s School of Natural Resources and Environment joined with members of the Food System Economic Partnership (FSEP) to develop resources and tools to identify unmet local consumer demands and opportunities for agricultural economic development in a fivecounty area of southeastern Michigan (i.e., Jackson, Lenawee, Monroe, Washtenaw and Wayne counties). FSEP, an urban-rural collaboration working to enable strong farms, healthy cities, community wealth, and job creation in southeastern Michigan, was officially launched in the beginning of 2005 to identify economic opportunities and implement creative solutions to chronic issues relevant to the food system in the region. As a new organization, FSEP required additional knowledge and data about the local food system, particularly from system participants, to develop the resources and tools needed to carry out their mission to catalyze change in the food system of southeastern Michigan through research, education and outreach.
Renewables, Policy, and the Cost of Capital
April 30, 2007
By Michael Baratoff ’08, Ian Black ’08, Bodhi Burgess ’07, Justin Felt ’08, Matthew Garratt ’08, Christian Guenther ’07
Public policy has played a critical role in creating and shaping global renewable energy markets. Yet 30 years since the passage of the first federal program in the U.S., under the Public Utilities Regulatory Policies Act (PURPA), renewable power generation still constitutes less than three percent of the aggregate U.S. portfolio. In spite of strong growth in project development, many risks and challenges remain, raising the price of capital in the sector and limiting acceptance of new power generation technologies. The project team, in cooperation with the UNEP/BASE Sustainable Energy Finance Initiative (SEFI), conducted a series of stakeholder interviews and related secondary research in order to understand how U.S. renewable energy policy environments influence the cost and overall availability of private financing for renewable power projects. By distilling the perspectives of capital providers and others familiar with the project financing process, we aim to deliver new insight to policy-makers on lowering the cost of capital needed to finance new renewable power projects. Our research findings indicate that although existing renewable energy policies have been effective in driving new development in the U.S., several problems with policy design and consistency contribute to the higher cost of renewable versus conventional power projects. A series of specific policy solutions favored by interviewees are discussed in detail in the report. Overall, the findings emphasize the opportunity for policy to create a more stable, transparent, and predictable market for renewable energy, which in turn will lower financing costs and improve the flow of capital to the sector.
