Behavioral Economics and Corporate Sustainability – Dr. Kent Hickman

The likelihood of meaningful legislation supporting a shift toward more sustainable practices by business and individuals seems miniscule. Without government policies or incentives the move to sustainability depends largely on the voluntary actions of companies. Companies choose the types of products they produce–the materials they are made of, their recyclability, their energy consumption, their durability–and how the products are manufactured–production efficiency, working conditions and so on. In theory individuals, through their consumption choices, can send a message to companies about the types of products they want. But if the range of choices doesn’t include price competitive green alternatives this message never gets back to corporate decision makers.

Some companies include sustainability in their strategic planning, but the adoption rates appear well below those required to address the most urgent problems related to climate change, biodiversity loss, fisheries depletion and water availability. Abrupt changes in climate and increasingly expensive raw materials and energy threaten the ability of companies to continue to create value for stakeholders. So, why aren’t companies doing more?

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