Promoting Change from the Outside: Directing Managerial Attention in the Implementation of Environmental Improvements

What is it about?

Many 'win-win' environmental projects exist in practice, where firms can benefit financially while reducing their environmental impact. We study why not more of these projects are realized. Specifically, we show that managerial attention can determine what gets implemented, and which projects become shelved. Firms that are hit by related environmental sanctions before a project is proposed are more likely to implement it. Firms that are hit by unrelated environmental sanctions after the project is proposed are more likely to abandon it.

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Why is it important?

Sustainability is becoming more and more bottom-up as opposed to top-down driven. Our paper shows that by properly framing and timing improvement opportunities, we could see much more bottom-up sustainability initiatives with huge potential environmental gains.