S P E C I A L F E AT U R E O N I N D U S T R I A L E C O L O G Y A S A S O U R C E O F C O M P E T I T I V E A DVA N TA G E

Benefits Organizations Pursue when

Seeking Competitive Advantage by
Improving Environmental Performance
Mark P. Finster and Michael T. Hernke

Keywords:
business strategy
eco-cognition
environmental strategy
industrial ecology
organizational theory
strategic management

Summary
Organizations cognitive of the strategic risk and opportunities associated with environmental challenges may employ industrial ecology (IE) concepts, methods, and tools to develop
capabilities that both enhance environmental performance and provide competitive benefits. We introduce a typology of strategic benefits related to competitive advantage that are
enabled by improved environmental performance. Industry examples illustrate how organizations embed IE concepts and methods into systems to generate capabilities that deliver
these benefits and configure them for competitive advantage. The examples demonstrate
the idiosyncratic, path-dependent nature of capability development that helps sustain advantage, especially when competitors lack cognition of the global scope of the challenge,
and the risks and benefits involved.

Introduction
When planning for environmental improvement, decision
makers aspire to recognize and generate mission-central benefits. This article illustrates a typology of benefits leading organizations pursue when employing industrial ecology (IE) concepts and techniques to seek competitive advantage. Decision
makers, and those who influence them, become more effective
at mustering resources to improve environmental performance
when they recognize the full spectrum of potential benefits
(Eggers and Kaplan 2013; Hart and Dowell 2011). Conversely,
insufficient cognition of potential benefits may lead to failure
in both environmental improvement and competitive position.
We use eco-cognition to refer to the capabilities by which organizations recognize benefits that source from improvement of environmental performance. For example, Toyota initially priced
its Prius at a premium so much higher than equivalent products from competitors, that purchasers could not capture net
economic gains from fuel savings. However, sales exceeded expectations because early purchasers bought the hybrid to make a
lifestyle statement that they cared deeply about people and their

future (Heffner et al. 2007). That benefit enabled the premium

price. Today, consumers purchase a Prius not only for economic
and lifestyle reasons, but also because a Prius offers a quiet ride
that had only been available in luxury-priced vehicles (Ozaki
and Sevastyanova 2011). Whereas the fundamental concept
of dematerialization led to development of hybrid technology,
eco-cognition provided insights to market behavior that helped
justify and sell hybrids and create competitive advantage. This
article illustrates a typology of benefits from leading organizations that demonstrate how improvement to environmental
performance enables competitive advantage.

Benefit Typology
To effectively seek competitive advantage, decision makers,
and those who influence them, must consider a broad array
of potential organizational benefits when planning environmental improvement activities. The benefit typology presented
in figure 1 includes seven traditional domains where IE improves competitive delivery of benefits: markets and products;

Address correspondence to: Mark P. Finster, Wisconsin School of Business, 975 University Avenue, Madison, WI 53706, USA. Email: mfinster@wisc.edu
2014 by Yale University
DOI: 10.1111/jiec.12106

Editor managing review: Peter Wells

Volume 18, Number 5

652

Journal of Industrial Ecology

www.wileyonlinelibrary.com/journal/jie

S P E C I A L F E AT U R E O N I N D U S T R I A L E C O L O G Y A S A S O U R C E O F C O M P E T I T I V E A DVA N TA G E

Stra
Strategic
Opportuniess Competencies
Miss
Mission
Domains
Vision
Strategic
Direcon
Markets &
Sourcing
Products

Opportunies
Innovaon
Learning
Cost/Supply Volality
Vercal Integraon
Availabilityy
Security
Cost Reducon
Risk Reducon
Quality of Work Life
Health & Safety
Producvity
Movaon
Costs to Aract
& Retain Talent

Collaboraon
Hu
Human
Res
Resources

Risk
Migaon

Reputaon

Sourcing Risk
Market Risk
Investor Risk
Regulatory Risk
Compeve Risk

New Products & Markets

Market Access
Market Share
Legimacy
Messaging
g g
Retenon & Brands
Stakeholder Relaons
Brand Image
Cost of Promoon
Cost of Capital

Figure 1 Benefits in seven domains that enable competitive advantage.

reputation; risk; human resources; sourcing; collaboration; and

strategic direction. The typology, compiled from more than 100
organizations, presents benefits in domains that organizations
typically manage.
The remainder of this article illustrates those benefits with
organizational examples that address the subcategories of each
benefit domain. Because organizations seek bundles of benefits when improving environmental performance, each example
elucidates benefits from a variety of domains.

Benefits Related to Products and Markets

Improved environmental performance may create competitive advantage with products and markets by strengthening
legitimacy and access to markets, bolstering knowledge of consumer behavior, innovating products and services, launching
new brands and marketing campaigns, developing new collaborations and channels, generating new markets, and increasing
market share. The examples below illustrate these benefits.
Product and Market Benefits at Unilever
To develop competitive strategies, Unilever (2010) conducted hundreds of life cycle assessments (LCAs) in 14 countries that revealed significant environmental impacts in their
supply and customer chains (26% of their greenhouse gases
[GHGs] in agriculture and 68% in consumer use, 50% of their
water use in agriculture and 50% in consumer use, 59% of their
waste in primary packaging and 14% in transport packaging,
and 27% in product leftovers). Through collaboration with
outside experts, partners, and suppliers, they crafted strategies
that targeted innovation to products and systems with the greatest environmental impacts. Four product families (soap, shower
gel, and skin care; laundry detergents and fabric conditioners;
shampoo and conditioners; and soups, sauces, and stock cubes)
contributed 78% of life cycle GHGs and consumed 84% of life
cycle water. Those strategies precipitated innovations that, for
example, enabled consumers to rinse clothes with less water, re-

sulting in faster washing cycles that led to a Comfort One Rinse

branding strategy, a strategy that placed product in 12.5 million
households while generating a 60% revenue growth in Vietnam.
The brand targets 70 million households by 2020. In addition to
brand development, sales, and revenue growth, those improvements provided additional competitive advantage when Tesco
and Wal-Mart tightened policies for their suppliers, because
Unilever was well positioned to respond ahead of competitors
(Bent and Draper 2007).
Product and Market Benefits at Grohe
Through LCA, the sanitary fittings company, Grohe, realized that water consumption during consumer use constituted a
large environmental impact for many products (Halabi 2010).
Through research and development, they crafted low-flow and
water-reduction technologies for products, such as fixtures and
toilets, that dramatically reduce water use without constricting consumer benefits during use. For example, sophisticated
technologies for faucets and shower heads break water streams
into micro flows that increase pressure, creating the sensation of
strong water flows, while dramatically reducing consumption.
They recognized (eco-cognition) the benefit of embedding
IE and LCA thinking into consumer research, leading to marketing strategies that communicate benefits of reduced-resource
consumption in a manner that connected to consumer values.
Toilets that employ less water produce less noise and are marketed as whisper quiet, a benefit important to sleeping babies
and partners. Less water enabled the design of thin tanks that sit
invisibly within walls, enlarging useful bathroom space, a benefit further developed into a fold-up toilet, attractive to home
remodelers who seek to enlarge bathrooms and improve bathroom aesthetics without increasing the rooms footprint. Other
water-saving devices, such as quick-response thermostats, heat
water in 0.3 seconds, faster than competitors whose technology must heat more water. That reduced water flow created a
competitive advantage through consumer benefits, such as hot
water on demand, while lowering energy use 20%. In the cases

Finster and Hernke, Competitive Advantage by Environmental Performance

653

A P P L I C AT I O N S A N D I M P L E M E N TAT I O N

described above, most residential consumers sought benefits

other than water and cost savings. Eco-cognition revealed benefits (space, noise, time, cost, and water) capable of attracting
additional sales, moving the product beyond a niche market,
spurring market growth, and gaining competitive advantage
(Finster et al. 2001).
To further leverage their water reduction technology and
eco-cognition, Grohe branded both the fixtures (DreamSpray)
and the technology (Eco-Joy) as part of a strategy that develops
new technologies and innovative products through embedding
of LCA and other IE methodologies in the product development system (Grohe 2013). Innovative technologies are first
branded as Eco-Joy products and offered at premium pricing to
fund development. Over time, as competitors replicate these
innovations, Grohe plans to develop new technologies through
these capabilities and migrate old technology into their mainstream products, thereby leveraging both reduction of resources
and cost savings during consumer use as well as other benefits
(time and space) revealed through eco-cognition, benefits that
provide competitive advantage at the product level.
Grohe further leveraged their resource reduction capabilities to target new markets for their innovative products, such
as the arid Middle East that has some of the worlds highest per
capita water consumption. Grohes success in reducing resource
use and environmental impacts provided reputation gains as
leaders in water reduction technology. That reputation enabled
collaboration with government officials and others interested
in water reduction, including water utility providers such as the
Dubai Electricity and Water Authority (DEWA), who struggle with economical water provision to growing demand in
an arid climate. For example, the Middle East leads the world
in expensive desalination water generation (Nair and Kumar
2013). Collaboration with DEWA and further consumer LCAs
identified mosques as key water consumers and clarified cultural
practices for water use, such as the ablution cleansing ritual that
precedes daily prayers.
Grohe employed its eco-cognition, technologies, and life cycle insights to launch its Green Mosque initiative in Dubai.
In collaboration with the Ministry of Water, DEWA, and local
Sesam Business Consultants, Grohe donated mixers to the AbuHamed Ghazali Mosque, resulting in a 30% decrease in water
usage while demonstrating a 2-month payback. The mosque
marketing campaign grew to Syria, Saudi Arabia, Jordan,
Bahrain, and Lebanon, including one of Islams most significant establishments, the Great Umayyad Mosque in Damascus,
a destination for thousands of worshippers and tourists daily
(Nair 2013). Their use of Grohes water-saving products legitimized Grohes presence in the Islamic community and demonstrated market benefits of resource reduction, a value enhanced
by eco-cognition of prophet Al-Ghazalis (Ghazali 1966) teachings that promote water conservation during ablution.
That new legitimacy and the urgency for water reduction
precipitated new partnerships with government initiatives, such
as the United Arab Emirates Water Saving Campaign. In this
new marketing channel, Grohe provided expertise that clarified
the need for water-saving technology and educated stakehold654

Journal of Industrial Ecology

ers about the benefits and options available to reduce water

consumption.
Grohe then expanded their initiative to other high-wateruse areas with the Green Hotels, Green Hospitals, and
Green Schools campaigns. Daily per capita water consumption in hotels averages two to five times more than in residential settings. In addition to demonstrated savings with water
and cost, as well as short payback times, eco-cognition enable
Grohe to tout the benefits of enlarged bathrooms while creating
whisper quiet rooms for hotel guests.
Grohe then employed IE to create a learning system for
key stakeholders. To provide education around benefits related
to reduced water consumption, Grohe offered Green Conferences to lead customers (Lin and Seepersad 2007; Von Hippel 1986), such as interior designers, architects, and engineers.
These conferences provided analysis of the water crisis and approaches to solutions, employing IE concepts and LCA insights
to deliver knowledge and demonstrate findings. Grohe also engaged universities and taught engineering, architectural, and
interior design students who will be key decision makers regarding design and purchase of water-related infrastructure. Those
engagements strengthened access to key human resources.
Finally, Grohe recognized that the developed world also
lacked the prerequisite knowledge to understand the imminent
water crisis and engage effective solutions. So, they employed
a reverse-innovation approach, moving the procedures for ecocognition spawned in the Middle East to postindustrial countries, expanding campaigns to educate and lead customers in
the United States, for example.
To gain a competitive advantage, Grohe not only embedded
IE concepts and technologies into a variety of its own systems
and employed the resulting reputational gains to enhance legitimacy and gain access to new markets, but also developed an
approach to eco-cognition and water reduction consistent with
human ecology, such as local culture and social practices. They
engaged local consultants, partnered with local government officials and institutions, and expanded benefits to local religious
practice and beliefs. They collaborated with local educational
and religious institutions as well as with professional associations to educate key decision makers. These practices constitute
a complex web of activities that embed IE thinking and practices into social and technical systems. These practices not only
develop sustained behavior change, but they also produce an
idiosyncratic, path-dependent, complex approach that is difficult for competitors to copy as a result of first-mover advantages
(Gavronski et al. 2011; Hart 1995; Hart and Dowell 2011). For
example, competitors may find the most attractive government
agencies, mosques, hotels, hospitals, schools, professional organizations, and college programs unavailable as either customers
or for partnerships.
Product and Market Benefits: Reverse Innovation
Grohe innovated in an environmentally stressed area of the
developing world, to identify solutions that provided competitive advantage there, and then adapted those solutions to the

S P E C I A L F E AT U R E O N I N D U S T R I A L E C O L O G Y A S A S O U R C E O F C O M P E T I T I V E A DVA N TA G E

developed world. This article defines that process as reverse

innovation. Organizations engaged in reverse innovation include Nokia, UNICEF, Renault-Nissan, Logitech, John Deere,
Nestle, Unilever, Microsoft, HP, Xerox, Gillette, Santa Clara
University (Frugal Innovation Lab), Stanford University (Entrepreneurial Design for Extreme Affordability), and Cambridge
University (Inclusive Design) (Anderson and Markides 2007;
Govindarajan and Trimble 2012; Jana 2009; Jenkins 2007; Lurtz
et al. 2013; Radjou et al. 2012; Wille and Barnham 2009;
Schumpeter 2012; Hammond et al. 2007). The examples below
further illustrate benefits from product and market innovations
related to reverse innovation.
Environmental Challenges as Drivers of Reverse
Innovation
The developing world, particularly the 4.5 billion people
at the base of the pyramid (BoP), face severe and immediate
challenges related to resources and environmental performance,
such as availability of water and energy, and prevalence of toxins (Landrum 2007). For example, Corcoran and colleagues
(2010) report that more than half the worlds hospital beds are
occupied by patients suffering from water-related problems and
that more people die from polluted water than are killed by
all forms of violence, including wars. Annually, over 1.8 million children under the age of five perish from such disease.
Diarrheal disease kills another 2.2 million people, 88% from
poor hygiene and unsafe water. Developing countries discharge
90% of their wastewater into rivers, lakes, or oceans without
treatment. Because necessity is the mother of invention, the
BoP offers a fertile framework for applying IE concepts to spur
solutions that shape innovations for the developed world.
The BoP provides an important domain for innovation not
only because it faces severe shortages and environmental challenges today, but also because it offers a large, growing market
with few competitors while accounting for nearly all global
population growth (Govindarajan and Ramamurti 2011). Further, products and services developed there often result in lean,
creative solutions difficult to obtain through first-world development systems. Thus, reverse innovation systems codevelop
solutions with the BoP, targets solutions for the BoP, and produces and distributes at the BoP (Follman 2012; Jenkins 2005).
Example: Reverse Innovation at Procter & Gamble
Procter & Gambles (P&Gs) venture in Brazil illustrates
how IE applications at the BoP open new markets and provide
first-mover competitive advantages while driving reverse innovation. During the recent recession, P&G faced challenges in
Brazil with slow growth and layoffs. Population growth occurred
primarily at the BoP, which was not served well by P&Gs global
premium products (Kanter 2008).
Many poor Brazilians live in favelas where P&G struggled
to introduce products such as laundry soap, even though the
need was strong. P&G attributed failure to lack of experience
with favela distribution channels. People there obtain supplies

from micro, limited-product stores, often a closet or shed, not

from supermarkets. After developing low-cost production and
micro-distribution capability, P&G still sold little. To gain
eco-cognition and understand the constraints of limited resources, an immersion team lived with families in the favelas
and scrutinized every P&G process. They experienced firsthand
the struggle to rinse soapy clothing with limited water supply.
Eco-cognition led to innovative products with an entirely new
brand, Basico.
Motivated by a higher purpose, the immersion team felt
inspired and developed unprecedented collaboration across
functions and with customers, for whom the excitement was
captivating (Kanter 2008). Innovations included low-water formulas for soap that achieved tremendous success in an arena
where few traditional competitors existed. Demand for the first
Basico productswomens hygiene, diapers, and greener laundry detergentimmediately exceeded supply. P&G captured
market share through small neighborhood shops, substituting
colorful store displays for costly TV advertising. Premium products sales also rose.
These innovations, such as P&Gs low-water formulas for
soap, soon migrated to the developed world, especially to waterscarce regions such as Germany and Australia, where further
market research (eco-cognition) discovered a new set of benefits
associated with water reduction, such as the ability to complete
laundry faster when less water is required for rinsing. P&G now
sells the Basic product line in the United States.
In 2010, P&G targeted 4 billion people, and in 2012,
5 billion (P&G 2011). Whereas such growth requires the development of many capabilities, IE proved essential for identifying
the base as a new domain for value creation, focusing the development on scarce resources, and developing the insights to innovate with global appeal. Global appeal arises from the global
nature of environmental challenges, such as toxin buildup and
resource scarcity.
Product and Market Benefit Example:
Market-ResearchGenerated Reuse
Even those far removed from engineering who understand
IE concepts, such as consumer-facing sales personnel, may serve
as catalysts that improve environmental performance and provide competitive advantage. For example, at the service units
of both General Electric (GE) and Lucent, customer-contact
personnel first recognized that competitors were capturing their
brands at end of life (EOL) to provide low-cost replacement
components. To remain competitive, their service units requested the development of reverse logistics that captured EOL
product and prevented competitors from gaining access to those
replacement components (Donnelly et al. 2007; Martin et al.
2010). That EOL and subsequent design for reuse strengthened
competitiveness by reducing part costs, increasing competitor
costs, and enabling the provision of the widest variety of original equipment repairs. From a profitability perspective, service

Finster and Hernke, Competitive Advantage by Environmental Performance

655

A P P L I C AT I O N S A N D I M P L E M E N TAT I O N

parts hold strategic significance not only because after service

frequently drives customer retention and loyalty, but also because, in complex products such as medical imaging, automobiles, and aerospace, replacement parts, even when refurbished,
are more valuable than original equipment parts.

Benefits Related to Risk Management

Risk management identifies and mitigates risks that affect an
organizations capability to compete (Howell 2013). Risk occurs
when competitors are better able to address environmentally
related challenges, such as resource shortages, rising prices for
supplies, products that consume large amounts of resources, increased regulations, market shifts, supply-chain volatility, and
increasing costs of capital. Advantage may occur when addressing risks better than competitors. Examples below illustrate how
IE tools and concepts help address risk management issues related to competitive advantage.
Risk-Management Benefits: Profit, Credit Availability,
and Cost of Capital
Investors examine company risk to guide investment strategy and pricing, affecting credit availability and cost of capital.
For example, investors controlling one third of the worlds investment capital ($87 trillion) act as signatories that fund data
reporting on GHG emission from the Carbon Disclosure Project
(CDP), whereas major accounting firms and universities work
to develop generally accepted accounting procedures for carbon reporting (CDP 2013; Simnett et al. 2009). Investors care
about GHG reporting, in part, because those Global 500 companies (G500) who lead in either carbon reporting or reduction
produce collective profits twice the average of reporting companies over both short- and long-term horizons (PwC 2012).
The CDP also reports that growing percentages of the G500
have integrated reduction initiatives into their overall business
strategy (48% of those reporting in 2010 to 78% in 2012) and
have board or senior-executive oversight to GHGs (from 85%
to 96%). The International Finance Corporation (IFC) reports
11% higher returns from companies that demonstrate environmental and social standards (WWF 2012).
Many financial institutions now collaborate with nongovernmental organizations (NGOs), such as the World Wide
Fund for Nature (WWF), to develop new risk-management
tools and services and then attach environmental performance
criteria to their lending and investment methodology, raising
standards in critical markets. More than 70 financial institutions
worldwide, such as Rabobank, the worlds largest agricultural financier, have adopted the IFCs performance standards, such as
those of the Marine Stewardship and Forest Stewardship councils (WWF 2012). These developments indicate the growing
importance of environmental performance in the acquisition
and cost of capital. For example, the investment firm Goldman
Sachs (GS) (GS Sustain 2009) considers the impact of climate
change on companies by examining the carbon intensity and

656

Journal of Industrial Ecology

responses of companies, regions, and nations, including company publication of carbon performance and targets for reduction, leadership responsibility, and assessment of their financial
impacts. Their data analysis demonstrates the meaningful relationships carbon efficiency has to company valuation in carbonintensive industries by calculating the explanatory power of
carbon efficiency (carbon dioxide [CO2 ]-equivalents/assets in
U.S. dollars [US$]) as a determinant of valuation multiples
(EV/EBITDA).1

Risk-Management Benefits at Nestle

The World Economic Forum (Lee 2013) describes water as
societys greatest risk when considering both impact and likelihood. International Food Policy Research Institute analysis
(Veolia Water 2011) explains how water risk provides a driving force for risk reduction to many organizations whose life
cycles depend on water. The Water Resources Group (Addams et al. 2009) analysis conducted for organizations in financial, beverage, and food industries reports that, by 2030, the
worlds reservoirs will be able to supply only 60% of demand,
given current trajectories. They project water shortage of more
than 50% for 33% of the worlds population and claim world
withdrawal rates will exceed replenish rates by 62%, leading
to depletion of many reservoirs and the natural capital they
support.
Veolia Water (2011) reports that agriculture consumes 69%
of global water use and that 45% of global gross domestic
product (GDP) will be at risk from future water shortages. As
the worlds largest nutrition and food company, Nestle recognizes the strategic importance of water. LCAs focus risk reduction within their supply chains. Three strategies illustrate
how risk management depends on their LCA analysis and
the resulting technologies that involve reduction and reuse
(FSG and Nestle 2007).
First, Nestle helps farmers reduce water consumption. They
educate local farmers on innovative methods, such as drip irrigation, no-till farming, prevention of overirrigation, systems to
intensify rice, rain-fed fertilizer balances, and use of crop cover.
Second, Nestle realizes that addressing their supply chain alone
will not reduce their risk if others continue to deplete their
suppliers water basins. So, they educate local communities on
safe water practices and benefits. They help communities understand how to gather safe water, how to detect whether water
is safe, and the importance of doing so. By launching grassroots
movements, Nestle provides communities with tools and resources to gain access to clean, safe water. Third, Nestle trains
local communities in a variety of jobs that utilize water reduction methodology and other environmental improvement
practices. By targeting the large number of unskilled and uneducated workers in rural communities throughout the world,
they help provide concepts and tools they need to begin successful careers. That training enables them to teach others how
to employ similar methods and diffuse both job training and
environmental improvement practices.

S P E C I A L F E AT U R E O N I N D U S T R I A L E C O L O G Y A S A S O U R C E O F C O M P E T I T I V E A DVA N TA G E

Benefits Related to Sourcing

When embedding environmental performance improvement capabilities into sourcing, organizations seek competitive
advantage through a variety of benefits, including enhanced
traceability deep into their supply chains to where resources are
extracted from the earth, better vertical integration of supply
chains, improved visibility for key organizational members from
engineers to sales that create better eco-cognition for improved
product development and more-effective sales, transparency for
outside stakeholders (such as investors), bolstered security, reduced volatility and cost, and improved reverse logistics for
reuse (Frohlich and Westbrook 2001; Isil 2014; Klassen and
McLaughlin 1996; Rao and Holt 2005).
Sourcing Benefits with Shipping: Maersk
Ninety percent of global trade employs sea transportation.
Even though ships efficiently move mass goods, the containershipping industry owns a large footprint, accounting for 3%
to 4% of global CO2 emitted, more than Germany. Emissions
source mostly from bunker fuel, a low-grade, heavy oil. The
International Maritime Organization sets goals such as sulfurcontent reduction from 4.5% to 0.5% by 2020. However, that
is still 33 times greater than limits for fuel in long-haul trucks in
the United States. Ships also discharge ballast water gathered in
other ports, leading to invasive species that disrupt ecosystems
and bear high economic costs by both altering ocean materials
that are sold and through cost of remediation (Maersk 2012;
Pruzan-Jorgensen and Farrag 2010).
Maersk, the worlds largest shipper, reduced fuel costs 50%
by designing an efficient triple-eshaped hull that allowed increased payloads while reducing drag, by adding a second propeller (4% reduction), developing policy to reduce top speed
from 25 to 23 knots (19% reduction), and cogeneration (9%
reduction). The ships design closes the loop at EOL, through
tracking systems for the all material used in the vessel. A modularized design enables easy updates to components, disassembly at EOL, component and material reuse, and separation
of biodegradable and recyclable materials, enhancing Maersks
bottom line (Jorgensen 2011).
Sourcing Benefit with Apparel: Hennes & Masuritz,
Patagonia, Teijin, Sears, and Bagir
Hennes & Mauritz (H&M), the second-largest global
fashion chain, recognized the value in discarded clothes
(eco-cognition). The U.S. Environmental Protection Agency
(USEPA) reports that the United States discards 68 pounds of
clothes per capita annually (USEPA 2010). H&M recognized
that 95% of the discards could be used again and launched
a global clothes collection initiative where consumers receive
a voucher for discarded clothes, bringing more customers to
their stores, spurring future sales, and strengthening retention,
loyalty, and brand value (H&M 2012). Patagonia had employed a similar strategy for brand development targeting a

niche market with its Common Threads recycling program and

e-Fibers brands that include polyester, organic cotton, hemp,
chlorine-free wool, and recycled nylon, developed by its partner,
Japans Teijin Group, a leading manufacturer of synthetic fibers
(Unruh 2008). Teijin enabled recycled Capilene to substitute
for petroleum, resulting in new garments produced with 76%
less energy and 42% less GHGs. Teijin gained competitive advantage by developing the capability to up-cycle waste, such as
plastic bottles, into clothing, producing fabric for retailers such
as Sears Covington Perfect Brand manufactured by the Israeli
firm, Bagir Group Ltd. Twenty-five 2-liter polyethylene terephthalate bottles up-cycle into a mans suit (GreenerDesign Staff
2009).
Sourcing Benefits through Up-cycling: Interface
Interface, the worlds largest commercial modular carpet
maker, developed the capability to up-cycle old carpets through
a repolymerization process that later evolved into a competitive
competency that creates new products from waste. They also
reengineered their economic model by turning carpets into a
service through a lease program to ensure ownership and recapture at EOL (Agrawal and Toktay 2010). Interface now mines
landfills for low-cost supplies that create competitive advantage.
For example, their Net-Works program partners with the Zoological Society of London, local experts, fishing communities,
and conservations groups, such as the Project Seahorse Foundation for Marine Conservation, to collect, process, and transport
discarded fishing nets and convert them to nylon for new carpet
while providing funding for livelihood development schemes in
economically depressed regions suffering from depleting fishing
opportunities. Interfaces Mission Zero goal seeks to eliminate
all virgin material from their supply chain by 2020, sourcing entirely from waste streams (Anderson and White 2009; Witkin
2013).
Sourcing Benefits: Walmart and the Supplier
Consortium
After suppliers achieved as much as a 10 times return on
investment from dematerializing their supply chain (Bayat
et al. 2011; Lovins and Cohen 2011), Walmart pushed similar
efforts onto their 100,000+ suppliers to bolster their low-cost
core competency. They expanded participants from their initial
focus on large global suppliers with a simple 15-question assessment and now tailor assessment to more than 400 product categories, examining impacts on nine stakeholder groups (TSC
2013). The Sustainability Consortium (TSC), established to
gain competitive advantage in supply chains through improvement of environmental performance, provides a generic LCA
for each product group that helps suppliers focus on improvements (Lloyd 2011; Nagappan 2012). They measure health impact by assessing toxins across the life cycle with a common
epidemiological metric, disability-adjusted life years, which estimates the impact of toxins on average human lifespans at

Finster and Hernke, Competitive Advantage by Environmental Performance

657

A P P L I C AT I O N S A N D I M P L E M E N TAT I O N

each stage of the life cycle. They measure LCA resource use
through a footprint assessment, square meters of land required
to produce resources employed. For example, in wood cabinet
making, they assess the resource impact of electronics in the
equipment used to process wood as well as the years subtracted
from human life resulting from employment of that technology
(TSC 2013). Walmarts vision is to acquire this information for
all products it sells and display it prominently for consumers to
help them make better choices. They seek differentiation from
competitors through supply-chain information.

Benefits to Reputation
Reputation gains with stakeholders, such as customers, investors, employees, and communities, can contribute to competitive advantage through improved sales, market share,
customer retention, and loyalty, lower cost of capital, better
employee retention and lowered costs for human resource management activities, such as recruitment and promotion, and
increased legitimacy (Chiu and Sharfman 2011; Delmas and
Montiel 2009). Organizations seek reputation gains through
venues such as Web communication, participation in industry
alliances, adoption of environmental principles and measurement systems, development of charters, and promotion through
carbon and sustainability/responsibility reports (Haanes et al.
2011). For example, the portion of the largest 250 global corporations that deliver corporate responsibility reports increased
from 35% in 1999 to more than 95% in 2011 (KPMG 2011).
Similarly, CDP (2012) reports that more than 75% of the G500
now disclose their GHG emissions.
The meta-analysis of Orlitzky and colleagues (2003) concluded that organizations undertake environmental management, in part, to improve their reputation with stakeholders,
such as retailers, consumers, employees, investors, communities,
governments, regulators, suppliers, and partners. Godfrey and
colleagues (2009) reasoned that environmental improvement
activities afford the organization a positive moral capital with
stakeholders that can act as insurance against negative environmental acts. BCGs 2011 survey lists reputation gains as the
most reported benefit (Haanes et al. 2011). The Grohe example
cited above also illustrates how reputation gains support acquisition of benefits in other domains, such as access to strategic
partnerships, legitimacy, and access to markets.

reducing training and new employee orientation costs, as well as

costs to attract new talent (Buysse and Verbeke 2003; Renwick
et al. 2013). Understanding these benefits and their competitive benefits involves eco-cognition. For example, designing an
office building to improve environmental performance can improve QWL, reduce absenteeism, and increase productivity by
2%, dwarfing the savings in energy costs, which typically comprise less than 1% of an office buildings payroll costs (Singh
et al. 2010; Sustainability Victoria 2007).
Improved QWL and company values that promote social responsibility may also increase motivation and involvement and
thereby increase employee creativity and innovation. Herman
Miller (Birchard 2011) and Kanter (2008) report that many
employees carry a passion for the environment that motivates
improvement and leads to significant gains. Google recognized
the competitive gains possible from fundamental changes in perspective involving environmental performance and developed
a Green Employees program to help employees to lead lowimpact lifestyles that ingrain low-impact behavior and thinking in their daily actions, both at work and in other aspects of
their lives (Google 2010, 2013b). Their 20% Program (Steiber
and Alange 2013) produced new products and solar panels that
provide 30% of their energy, community bikes for traveling
across campus, and ride-share and shuttle programs that enable
employees to work online while commuting, increasing productivity, and turning frustrating daily experiences into valued
growth opportunities not only increasing productivity, but also
enabling Google to better attract employees in a competitive
labor market. Employees also developed electric car-charging
stations and spawned campus food gardens that supply their
cafes with fresh organic options (Google 2013a).
The P&G reverse-innovation example described above further illustrates the benefits to motivation that lead to competitive gains, whereas the Grohe example demonstrates the use
of environmental improvement to leverage access to key human resources at universities, professional organizations, and
government.
Ernst & Young (2012) found that employees are a key driver
to environmental improvement in 22% of companies, ranking second behind customers (37%) and ahead of shareholders
(15%), policy makers (7%), and NGOs (7%). Thus, improving
environmental performance in employee processes may leverage gains that lead to further environmental and competitive
improvement.

Benefits to Human Resources

Improved environmental performance can deliver human
resource benefits related to competitive advantage in several
ways (Strandberg 2009). Reduced toxins, green space, and daylighting may reduce stress and improve quality of work life
(QWL) (Kjellgren and Buhrkall 2010). Improved QWL, such
as that found in low-impact buildings, may lead to better health,
reduced absenteeism, and higher productivity (Singh et al.
2010; Sustainability Victoria 2007). Reputation gains and improved QWL may also strengthen employee retention, thereby

658

Journal of Industrial Ecology

Benefits to Collaboration
During major paradigm shifts, organizations lack the knowledge and technologies necessary to innovate by themselves. For
example, Johnson and Johnson (J&J) has a strategic objective to
strengthen collaboration around environmental improvement.
Walmart built their Sustainable Value Networks (Lubin and
Esty 2010; Walmart 2012) to collaborate with external stakeholders, such as academics, NGOs, and government agencies,
who spawn innovations related to environmental performance.

S P E C I A L F E AT U R E O N I N D U S T R I A L E C O L O G Y A S A S O U R C E O F C O M P E T I T I V E A DVA N TA G E

Walmart then crafts strategies that reduce material and energy flows and cost to improve their low-cost competitive position. Illustrations above of competitive gains from collaboration include Grohe, Unilever, P&G, GE, Nestle, Interface, and
IBM.
A variety of partnerships, such as company/NGO, company/company, single industry, and multiindustry coalitions,
provide valuable, cost-effective knowledge and skills for both
improving environmental performance and creating economic
value by strengthening corporate credibility and reputation,
providing independent validation, and helping achieve a longterm vision (GEMI and EDF 2008; Globescan 2012). When
collaborating to improve the environment, businesses report
benefits through access to expertise and competencies, reduced
risk, strengthened reputation and leadership credentials, firstmover advantages, reduced costs, employee engagement, new
products and services, innovative business models, value-chain
practices, establishing and maintaining standards, engaging citizens and consumers, and advocating public policy (Globescan
2012).
For example, biodiversity serves as a key indicator for the
health of natural capital (UNEP 2012). As organizations recognize the importance of biodiversity, some, such as J&J (2006,
2010, 2011) collaborate with outsiders to develop training and
plans that address biodiversity. Others participate in collaborations, such as the Rio+20 (UN 2012), the Gaborone Declaration (Conservation International 2012), and the World
Business Council for Sustainable Development (WBCSD 2011,
2012, 2013) that seek the creation of accounting systems capable of considering biodiversity in organizational decision
making.

Benefits to Strategic Direction

Knowledge of environmental improvement concepts and
methods helps organizations identify new strategic opportunities and recognize first-mover advantages, develop new business
domains and strategic directions, mitigate risk with strategic intent, develop new competencies, and deploy environmental improvements that provide competitive advantage more quickly.
Nearly all the examples in this article illustrate these benefits,
as do the examples below.
Organizations and their stakeholders face steady depletion of
nonrenewable resources and natural capital services, as well as
increasing regulations and stakeholder pressures that constrain
options for future strategic directions while revealing strategic opportunity (UNEP 2012; Grossman et al. 2013). Recognition of the constraints and opportunities reduces risk and
enhances the chances for competitive gains. IBM developed
eco-cognition around the importance and extent to which environmental challenges affect strategic organizational choices
in all areas of the world and formulated a new strategic direction (Smarter Planet) that seeks competitive advantage by
developing capabilities (e.g., for cities, transportation, harbors,
energy, and health care) to help others identify and address

those challenges (Anthony 2012; Korsten and Seider 2010).

Building on their core competency, IBM developed capabilities to create integrated solutions by collecting information on
issues related to environmental performance, connecting that
data to key decision makers, and helping them make better decisions through eco-cognition (Palmisano 2008). For example,
in Smart Bay, Ireland, IBM engages collaborators who employ
buoys and seafloor cables to monitor wave conditions, marine
life, and pollution levels. They then send integrated information on salinity, temperature, water quality, and harmful algae
blooms to farmers cultivating shellfish, weather and water quality to fishers to better ensure safety for their catch, potential
energy in waves to energy companies, and safety of beaches
to tourists. A restaurant patron can engage an app that describes when, where, and the water quality in which a fish
was caught as well as its endangerment (Heffernan 2013). The
information flow creates eco-cognition around environmental
performance by providing data that connect to attributes of
stakeholder value.
GEs ecomagination similarly combined eco-cognition with
its core competencies to develop innovative capabilities that
help organizations respond to environmental challenges. Ecomagination quickly became GEs fastest growing business, targeting annual profits at least double that of their next-best
performing business approach (GE 2011).

Conclusion
This article illustrates the importance of recognizing and pursuing mission-central benefits when improving environmental
performance. Pursuit of those benefits allows environmental
improvement to drive competitive advantage. The typology of
benefits informs managers of potential mission-central benefits
that leading organizations engage. Organizations may gain competitive advantage by developing capabilities to address environmental challenges because those challenges touch everyone
and because the level of innovation needed far surpasses current
capabilities of competitors. Eco-cognition delivers insights that
competitors often lack, leading to blue-ocean strategies (Kim
and Mauborgne 2005). The capabilities are usually idiosyncratic
and path dependent and thus are difficult to copy, leading to
sustained advantage, especially when competitors lack the ecocognition to understand the global scope of the challenge and
the benefits available.

Note
1. EV = enterprise value; EBITDA = earnings before interest, taxes,
depreciation, and amortization, an often-used measure of the value
of a business.

References
Addams, L., G. Boccaletti, M. Kerlin, and M. Stuchtey. 2009. Charting
our water future: economic frameworks to inform decision-making.
Washington, DC: 2030 Water Resources Group.

Finster and Hernke, Competitive Advantage by Environmental Performance

659

A P P L I C AT I O N S A N D I M P L E M E N TAT I O N

Agrawal, V. and L. B. Toktay. 2010. Interdisciplinarity in closed-loop

supply chain management research. In Closed-loop supply chains:
New developments to improve the sustainability of business practices,
edited by M. E. Ferguson and G. C. Souza. Boca Raton, FL, USA:
Auerbach Publications.
Anderson, J. and C. Markides. 2007. Strategic innovation at the base
of the pyramid. MIT Sloan Management Review 49(1): 8388.
Anderson, R. C. and R. White. 2009. Confessions of a radical industrialist:
profits, people, purposedoing business by respecting the earth. New
York: St. Martins Press.
Anthony, S. D. 2012. The new corporate garage. Harvard Business
Review 90(9): 4453.
Bayat, A., S. Sundararajan, H. R. Gustafson Jr, and E. W. Zimmers Jr.
2011. Sustainably driven supply chains. Industrial Engineer 43(8):
2631.
Bent, D. and S. Draper. 2007. Leader business strategies. London: Forum
for the Future.
Birchard, B. 2011. Merchants of virtue: Herman Miller and the making of
a sustainable company. New York: Palgrave Macmillan.
Buysse, K. and A. Verbeke. 2003. Proactive environmental strategies: A
stakeholder management perspective. Strategic Management Journal 24(5): 453470.
CDP (Carbon Disclosure Project). 2012. Business resilience in an uncertain, resource-constrained world: CDP Global 500 climate change
report 2012. London/New York: Carbon Disclosure Project.
CDP (Carbon Disclosure Project). 2013. Carbon Disclosure Project
overview. www.cdproject.net/en-US/Pages/About-Us.aspx. Accessed 20 May 2013.
Chiu, S.-C. and M. Sharfman. 2011. Legitimacy, visibility, and the
antecedents of corporate social performance: An investigation of
the instrumental perspective. Journal of Management 37(6): 1558
1585.
Conservation International. 2012. The Gaborone Declaration of the Summit for Sustainability in Africa. Gaborone, Botswana: Republic of
Botswana.
Corcoran, E., C. Nellemann, E. Baker, R. Bos, D. Osborn, and H.
Savelli, eds. 2010. Sick water? The central role of wastewater management in sustainable development. A rapid response assessment.
Nairobi, Kenya: UNEP/UNHABITAT.
Delmas, M. and I. Montiel. 2009. Greening the supply chain: When is
customer pressure effective? Journal of Economics & Management
Strategy 18(1): 171201.
Donnelly, K., A. Salemink, F. Blechinger, A. Schuh, and T. Boehm.
2007. A product-based environmental management system. In
Strategic sustainability: The state of the art in corporate environmental
management systems, edited by R. Sroufe and J. Sarkis, pp. 106
122. Sheffield, UK: Greenleaf Publishing.
Eggers, J. P. and S. Kaplan. 2013. Cognition and capabilities: A multilevel perspective. The Academy of Management Annals 7(1): 295
340.
Ernst & Young. 2012. Six growing trends in corporate sustainability. New
York: Ernst & Young and GreenBiz Group.
Finster, M., P. Eagan, and D. Hussey. 2001. Linking industrial ecology
with business strategy: Creating value for green product design.
Journal of Industrial Ecology 5(3): 107125.
Follman, J. 2012. BoP at ten: Evolution and a new lens. South Asian
Journal of Global Business Research 1(2): 293310.
Frohlich, M. T. and R. Westbrook. 2001. Arcs of integration: An
international study of supply chain strategies. Journal of Operations
Management 19(2): 185200.

660

Journal of Industrial Ecology

FSG (Foundation Strategy Group) and Nestle. 2007. The Nestle water
management report. Vevey, Switzerland: Nestle S.A.
Gavronski, I., R. D. Klassen, S. Vachon, and L. F. M. d. Nascimento.
2011. A resource-based view of green supply management. Transportation Research Part E: Logistics and Transportation Review 46(6):
872885.
GE (General Electric). 2011. Ecomagination 2011 progress report. Fairfield, CT, USA: General Electric.
GEMI (Global Environmental Management Initiative) and EDF (Environmental Defense Fund). 2008. Guide to successful corporateNGO partnerships. Washington, DC: Global Environmental Management Initiative.
al-Ghazali, A. H. 1966. The mysteries of purity, being a translation with
notes of the Kitab Asrar al-Taharah of Al-Ghazzalis IhyaUlum alDin: Translated by NA Faris. Lahore, Pakistan: SH. Muhammad
Ashraf.
Godfrey, P. C., C. B. Merrill, and J. M. Hansen. 2009. The relationship
between corporate social responsibility and shareholder value:
An empirical test of the risk management hypothesis. Strategic
Management Journal 30(4): 425445.
Globescan. 2012. Collaborating for a sustainable future: A Globescan/SustainAbility survey. Toronto, Ontario, Canada: Globescan
Incorporated.
Google. 2010. Green employee programs. www.google.com/corporate
/green/employee-benefits.html. Accessed 14 April 2010.
Google. 2013a. Google green. www.google.com/green/. Accessed 31
July 2013.
Google. 2013b. Our campus operations. www.google.com/green/
efficiency/ Accessed 20 May 2013.
Govindarajan, V. and R. Ramamurti. 2011. Reverse innovation, emerging markets, and global strategy. Global Strategy Journal 1(34):
191205.
Govindarajan, V. and C. Trimble. 2012. Reverse innovation: Create far
from home, win everywhere. Boston, MA, USA: Harvard Business
School Press.
GreenerDesign Staff. 2009. Sears to sell eco-friendly mens
suits made of recycled plastic bottles. Published 2 April.
www.greenbiz.com/news/2009/04/02/sears-sell-eco-friendlymens-suits-made-recycled-plastic-bottles. Accessed 26 May
2013.
Grohe. 2013. GROHE Technologies. http://projects.grohe.com/en/
benefits/grohe-technologies/p/25_78638.html.Accessed 15 May
2013.
Grossman, D., J. Erikson, and N. Patel. 2013. GEO-5 for business:
Impacts of a changing environment on the corporate sector. Nairobi,
Kenya: United Nations Environment Programme.
GS (Goldman Sachs) Sustain. 2009. Change is coming: A framework for
climate changeA defining issue of the 21st century. New York: The
Goldman Sachs Group, Inc.
H&M (H & M Hennes & Mauritz). 2012. H&M conscious actions
sustainability report 2012. Stockholm: H & M Hennes & Mauritz
AB.
Haanes, K., D. Arthur, B. Balagopal, M. T. Kong, M. Reeves, I.
Velken, M. S. Hopkins, and N. Kruschwitz. 2011. Sustainability:
The embracers seize advantage. Sloan Management Review 52(3):
327.
Halabi, T. 2010. Potential of water saving devices in our daily environment. Paper presented at Muscat Green Days: Conference
and Workshops Dedicated to Environmentally Friendly Forms of
Building, 5 October, Muscat, Sultanate of Oman.

S P E C I A L F E AT U R E O N I N D U S T R I A L E C O L O G Y A S A S O U R C E O F C O M P E T I T I V E A DVA N TA G E

Hammond, A. L., W. J. Kramer, R. S. Katz, J. T. Tran, and C. Walker.

2007. The next 4 billion: Market size and business strategy at the base
of the pyramid. Wachington, DC: World Resources Institute and
International Finance Corporation.
Hart, S. L. 1995. A natural-resource-based view of the firm. Academy
of Management Review 20(4): 9861014.
Hart, S. L. and G. Dowell. 2011. A natural-resource-based view of the
firm fifteen years after. Journal of Management 37(5): 14641479.
Heffernan, P. 2013. The Marine Institute of Ireland creates
smart approaches to managing a blue economy. Published 7 January. www.managementexchange.com/story/marineinstitute-ireland-creates-smart-approaches. Accessed 23 May 23
2013.
Heffner, R. R., K. S. Kurani, and T. S. Turrentine. 2007. Symbolism in Californias early market for hybrid electric vehicles.
Transportation Research Part D: Transport and Environment 12(6):
396413.
Howell, L., ed. 2013. Global risks 2013. Cologny/Geneva: World Economic Forum.
Isil, O. 2014. Evolution of organizational focus when managing environmental impacts: The shift from operations to external supply and customer chains. Doctoral thesis, business, University of WisconsinMadison, Madison, WI, USA.
J&J (Johnson & Johnson). 2006. Healthy planet and people 2010 goals.
New Brunswick, NJ, USA: Johnson & Johnson.
J&J (Johnson & Johnson). 2010. Johnson & Johnson 2010 sustainability
report. New Brunswick, NJ, USA: Johnson & Johnson.
J&J (Johnson & Johnson). 2011. Johnson & Johnson healthy
future 2015. www.jnj.com/news/all/Johnson-Johnson-LaunchesHealthy-Future-2015-Its-Citizenship-And-Sustainability-Goals.
Accessed 21 May 2013.
KPMG. 2011. KPMG international survey of corporate responsibility reporting 2011. Zug, Switzerland: KPMG International Cooperative.
Jana, R. 2009. Innovation trickles in a new direction. Published 11 March. www.businessweek.com/magazine/content/
09_12/b4124038287365.htm. Accessed 21 December 2011.
Jenkins, B. 2007. Expanding economic opportunity: The role of large firms.
Corporate social reponsibility initiative report no. 17. Cambridge,
MA, USA: Kennedy School of Government, Harvard University.
Jenkins, R. 2005. Globalization, corporate social responsibility and
poverty. International Affairs 81(3): 525540.
Jorgensen, R. 2011. Slow steamingThe full story. Copenhagen: A.P.
Moller-Maersk Group.
Kanter, R. M. 2008. Transforming giants. Harvard Business Review
86(1): 4352.
Kim, W. C. and R. Mauborgne. 2005. Blue ocean strategy: How to create
uncontested market space and make the competition irrelevant. Boston,
MA, USA: Harvard Business School Press.
Kjellgren, A. and H. Buhrkall. 2010. A comparison of the restorative effect of a natural environment with that of a simulated
natural environment. Journal of Environmental Psychology 30(4):
464472.
Klassen, R. D. and C. P. McLaughlin. 1996. The impact of environmental management on firm performance. Management Science
42(8): 11991214.
Korsten, P. and C. Seider. 2010. The worlds 4 trillion dollar challenge:
Using a system-of-systems approach to build a smarter planet. Somers,
NY, USA: IBM Institute for Business Value.
Landrum, N. E. 2007. Advancing the base of the pyramid debate.
Strategic Management Review 1(1): 112.

Lee, H., ed. 2013. Global risks 2013, eighth edition. Cologny/Geneva:
World Economic Forum Risk Response Network.
Lin, J. and C. C. Seepersad. 2007. Empathic lead users: The effects
of extraordinary user experiences on customer needs analysis and
product redesign. Paper presented at ASME DETC Design Theory
and Methodology Conference, paper no. DETC2007/35302, 47
September, Las Vegas, NV, USA.
Lloyd, E. M. 2011. Greening the supply chain: Why corporate leaders
make it happen. Journal of Land Use 27(1): 3168.
Lovins, L. H. and B. Cohen. 2011. Climate capitalism: Capitalism in the
age of climate change. New York: Hill and Wang.
Lubin, D. A. and D. C. Esty. 2010. The sustainability imperative.
Harvard Business Review 88(5): 4250.
Lurtz, K., S. Muller, and D. Ruede. 2013. Social innovations: Expert opinions on the status quo and future directions. Wiesbaden, Germany:
World Vision Center for Social Innovation.
Maersk. 2012. Sustainability report 2012. Copenhagen: A.P. MollerMaersk Group.
Martin, P., V. D. R. Guide Jr, and C. W. Craighead. 2010. Supply chain
sourcing in remanufacturing operations: An empirical investigation of remake versus buy. Decision Sciences 41(2): 301324.
Nagappan, P. 2012. How Walmart is using its sustainability metrics
to drive productivity. Published 6 June. www.greenbiz.com/
blog/2012/06/06/how-walmart-using-its-sustainability-metricsdrive-productivity. Accessed 6 June 2012.
Nair, M. and D. Kumar. 2013. Water desalination and challenges:
The Middle East perspective: A review. Desalination and Water
Treatment 51(1012): 20302040.
Nair, P. 2013. Ablution solutions. BuildGreen, 7 March, 3840.
Orlitzky, M., F. L. Schmidt, and S. L. Rynes. 2003. Corporate social
and financial performance: A meta-analysis. Organization studies
24(3): 403441.
Ozaki, R. and K. Sevastyanova. 2011. Going hybrid: An analysis of
consumer purchase motivations. Energy Policy 39(5): 22172227.
P&G (Procter & Gamble). 2011. 2011 sustainability report: Commitment
to everyday life. Cincinnati, OH, USA: Procter & Gamble.
Palmisano, S. J. 2008. A smarter planet: The next leadership agenda.
Remarks as prepared for the IBM Business Leadership Forum in Istanbul, Turkey, on 12 November 2008. Armonk, NY, USA: IBM
Corporation.
Pruzan-Jorgensen, P. M. and A. Farrag. 2010. Sustainability trends in the
container shipping industry. New York: BSR.
PwC (PricewaterhouseCoopers). 2012. Business resilience in an uncertain, resource-constrained world. London: Carbon Disclosure
Project.
Radjou, N., J. Prabhu, and S. Ahuja. 2012. Jugaad innovation: Think
frugal, be flexible, generate breakthrough growth. San Francisco, CA,
USA: Jossey-Bass.
Rao, P. and D. Holt. 2005. Do green supply chains lead to competitiveness and economic performance? International Journal of Operations & Production Management 25(9): 898916.
Renwick, D. W. S., T. Redman, and S. Maguire. 2013. Green human resource management: A review and research agenda. International
Journal of Management Reviews 15(1): 114.
Schumpeter. 2012. Asian innovation: Frugal ideas are spreading from East to West. The Economist, 24 March. www.
economist.com/node/21551028. Accessed May 21, 2013.
Simnett, R., M. Nugent, and A. L. Huggins. 2009. Developing an
international assurance standard on greenhouse gas statements.
Accounting Horizons 23(4): 347363.

Finster and Hernke, Competitive Advantage by Environmental Performance

661

A P P L I C AT I O N S A N D I M P L E M E N TAT I O N

Singh, A., M. Syal, S. C. Grady, and S. Korkmaz. 2010. Effects of green

buildings on employee health and productivity. American Journal
of Public Health 100(9): 16651668.
Steiber, A. and S. Alange. 2013. A corporate system for continuous
innovation: The case of Google Inc. European Journal of Innovation
Management 16(2): 243264.
Strandberg, C. 2009. The role of human resource management in corporate social responsibility issue brief and roadmap. Burnaby, British
Columbia, Canada: Strandberg Consulting.
Sustainability Victoria. 2007. Employee productivity in a sustainable building: Pre- and post-occupancy studies in 500 Collins
Street. Melbourne, Australia: Sustainability Victoria and Kador
Group.
TSC (The Sustainability Consortium). 2013. The sustainability measurement and reporting system. www.sustainabilityconsortium.
org/smrs. Accessed 23 May 2013.
UN (United Nations). 2012. Report of the United Nations conference on
sustainable development, Rio de Janeiro, Brazil, 2022 June. New
York: United Nations.
UNEP (United Nations Environment Programme). 2012. Global
environment outlook (GEO 5): Environment for the future
we want. Nairobi, Kenya: United Nations Environment
Programme.
Unilever. 2010. Sustainable development overview 2009. Rotterdam:
Unilever N.V.
Unruh, G. C. 2008. The biosphere rules. Harvard Business Review 86(2):
111117.
USEPA (United States Environmental Protection Agency). 2010. Municipal solid waste in the United States: 2009 facts and figures. Report
no. EPA530-R-10012. Washington, DC: United States Environmental Protection Agency, Office of Solid Waste.
Veolia Water. 2011. Finding the blue path for a sustainable economy.
Chicago, IL, USA: Veolia Water North America.
Von Hippel, E. 1986. Lead users: A source of novel product concepts.
Management Science 32(7): 791805.

662

Journal of Industrial Ecology

Walmart. 2012. Beyond 50 years: Building a sustainable future: Walmart

2012 global responsibility report. Bentonville, AR, USA: Walmart
Stores, Inc.
WBCSD (World Business Council for Sustainable Development).
2011. Guide to corporate ecosystem valuation: A framework for improving corporate decision-making. Geneva: World Business Council for Sustainable Development.
WBCSD (World Business Council for Sustainable Development).
2012. Biodiversity and ecosystem solutions scaling up business solutions: Company case studies that help achieve global biodiversity targets. Conches-Geneva: World Business Council on Sustainable
Development.
WBCSD (World Business Council for Sustainable Development).
2013. Eco4Biz: Ecosystem services and biodiversity tools to support
business decision-making, version 1. Conches-Geneva: World Business Council for Sustainable Development.
Wille, E. and K. Barnham. 2009. A role for business at the bottom of the
pyramid. Berkhamsted, UK: Ashridge Business School.
Witkin, J. 2013. Recycling old fishing nets to limit environmental
damage. Published 16 January. www.guardian.co.uk/sustainablebusiness/creating-sustainable-livelihoods-recycling. Accessed 23
May 2013.
WWF (World Wide Fund for Nature). 2012. Living planet report 2012:
Biodiversity, biocapacity and better choices. Gland, Switzerland:
World Wide Fund for Nature.

About the Authors

Mark P. Finster is an associate professor at the Wisconsin
School of Business, College of Engineering and Nelson Institute for Environmental Studies at the University of Wisconsin
in Madison, WI, USA. Michael T. Hernke is a research fellow at the Wisconsin School of Business at the University of
Wisconsin.