Is Green and Profitable Sustainable? Assessing the Trade-Off between Economic and Environmental Aspects

Figge, F., & Hahn, T. (2012). Is green and profitable sustainable? Assessing the Trade-off Between Economic and Environmental Aspects. International Journal of Production Economics, 140, 92-102. DOI 10.1016/j.ijpe.2012.02.001.

35 Pages Posted: 13 Jun 2013 Last revised: 7 Jan 2014

See all articles by Frank Figge

Frank Figge

KEDGE Business School

Tobias Hahn

KEDGE Business School

Date Written: June 11, 2013

Abstract

Businesses are more and more confronted with demands to play an active role to reduce environmental burdens effectively and to help to achieve environmental sustainability. We question the suitability of the green business case and argue that corporate environmental strategies need to aim at the creation of environmental value alongside economic value rather than the creation of economic value through environmental management. Three shortcomings of the green business case limit its usefulness to develop suitable corporate sustainability strategies. We contrast the green business case with an opportunity cost based approach for assessing the environmental performance of firms. Our argument is then applied to an integrated analysis of the financial, carbon and VOC-performance of 16 major car manufacturers worldwide to illustrate how companies respond to the twofold scarcity of economic capital and natural resources as well as the role of proactive technology choices in this context. Our analysis shows how firms can go beyond the standard green business case that ultimately limits environmental strategies to increasing capital efficiency. We argue that by applying the well established notion of opportunity costs to the assessment of environmental resources besides economic capital, companies can identify strategies that create economic and environmental value and help to maximize the contribution to sustainability rather than to economic capital efficiency alone.

Keywords: Environmental value, Environmental strategy, Automobile industry, Green business case, Environmental performance assessment

Suggested Citation

Figge, Frank and Hahn, Tobias, Is Green and Profitable Sustainable? Assessing the Trade-Off between Economic and Environmental Aspects (June 11, 2013). Figge, F., & Hahn, T. (2012). Is green and profitable sustainable? Assessing the Trade-off Between Economic and Environmental Aspects. International Journal of Production Economics, 140, 92-102. DOI 10.1016/j.ijpe.2012.02.001.. Available at SSRN: https://ssrn.com/abstract=2277827

Frank Figge

KEDGE Business School ( email )

Domaine de Luminy
BP 921 13288 Marseille Cedex 9, 13288
France

Tobias Hahn (Contact Author)

KEDGE Business School ( email )

Domaine de Luminy - BP 921
BP 921
Marseille, PACA 13288
France
+33491827313 (Phone)

HOME PAGE: http://www.kedgebs.com

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