Climbing empirical fitness landscapes requires companies to manage interconnected sustainability choices

51 Pages Posted: 6 Sep 2022 Last revised: 22 Dec 2023

See all articles by Simone Cenci

Simone Cenci

Imperial College Business School

Matteo Burato

Imperial College Business School

Marek Rei

Imperial College London

Maurizio Zollo

Imperial College Business School

Date Written: July 28, 2023

Abstract

Lowering the environmental externalities of business operations is a challenging task that involves complex sustainability decisions. These decisions involve highly interconnected choices of actions and goals that characterise the sustainability behaviour of companies. Here, we develop a framework based on empirical estimations of fitness landscapes to investigate the implication of choice interdependence on companies' integrated financial and environmental performance. Our results suggest that sustainability choices are strongly interconnected and have a measurable impact on integrated performance. However, the behaviours of companies in our sample diverge substantially from estimated optimal choices. Importantly, we observe a considerable performance gap from local peaks, a low differentiation of companies' choices across the population, a significant over-investment in operational risk mitigation activities and under-investment in developing innovation capabilities. Overall, our approach provides an empirical framework to study the complex dynamic relationship among sustainability choices in large organisations that play a crucial role in the transition to a sustainable and just economy.

Keywords: Sustainability behaviour, Fitness landscape, Genetic algorithm, Sustainable development

JEL Classification: C10, C80, Q5

Suggested Citation

Cenci, Simone and Burato, Matteo and Rei, Marek and Zollo, Maurizio, Climbing empirical fitness landscapes requires companies to manage interconnected sustainability choices (July 28, 2023). Available at SSRN: https://ssrn.com/abstract=4205664 or http://dx.doi.org/10.2139/ssrn.4205664

Simone Cenci (Contact Author)

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Matteo Burato

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Marek Rei

Imperial College London

Maurizio Zollo

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom
+447923241443 (Phone)

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