The possibility that business can profit from environmental investments — the win-win hypothesis1 — has captured the imagination of academics, managers and the general public for quite some time. If investing in environmental protection were profitable,2 normal business practices would be conducive to sustainable societies. Based on this premise, academics have persistently looked for causal relationships between environmental investments and variables such as stock price and market share.3 The business case for sustainability exists indeed. Business schools around the world teach success stories of environment-oriented investments (or eco-investments, for short) that paid off, generated competitive advantage or even new market spaces. But if there are so many advantages for business, why is corporate proactive behavior not a widespread phenomenon? Why hasn’t commerce yet led us to sustainable societies? Although simple, it took a while for people to realize that the profitability of environmental investments is similar to other issues in business: it is conditional on specific circumstances. As Forest Reinhardt4 put it, the question is not whether corporations can offset the costs of eco-investments, but when it is possible to do so. In his view, the possibility for corporations to profit from eco-investments depends on “the economic fundamentals of the business, the structure of the industry in which the business operates, its position within that structure, and its organizational capabilities”.5 Hence, directing a firm’s efforts toward profit generation from cleaner technologies or green products might make business sense in certain circumstances, but not in all.
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