1. ESM 210: Strategic Management and the Environment Fall, 2007 Instructor: Professor Gary Libecap (4412 Bren Hall) Class: MW 3:30-5:20 (Bren 1414). Prof. Libecap’s office hours: MW, 1:00-2:00 and by appointment. Email: glibecap@bren.ucsb.edu, phone 893-8611glibecap@bren.ucsb.edu Teaching Assistant: Vered Doctori-Blass (3518 Bren Hall) Office hours: Tuesday, 1:00-3:00 and by appointment. Email: vdoctori@bren.ucsb.edu, phone 893-8485vdoctori@bren.ucsb.edu Bruce Hay, Robert Stavins, and Richard H.K. Vietor, eds, Environmental Protection and the Social Responsibility of Firms, 2005, RFF, paper. Forest L. Reinhardt, Down to Earth: Applying Business Principles to Environmental Management, 2000, Harvard University Press. Reserve: Daniel C. Esty and Andrew S. Winston, Green to Gold, How Smart Companies use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage, 2006, Yale University Press. Thomas P. Lyon and John W. Maxwell, Corporate Environmentalism and Public Policy, 2004, Cambridge University Press.

2. Monday, October 1 Externalities, Public Goods, Private Goods Garrett Hardin, “The Tragedy of the Commons,” Science, 162, December 13, 1968, available online via Pegasus. Reinhardt, Chapter 1. Teams of 5 students each will be formed—either out of class or by me. Teams must be ready by Wednesday October 3. Discussion of the problem of externalities, public goods, private goods and property rights. Appropriability and firm incentives to address environmental and resource problems. Each of you must be ready to discuss how to address the problem of externality and how it affects firms. Wednesday, October 3 Externalities, Public Goods, Private Goods, Environme ntal Drivers Garrett Hardin, “The Tragedy of the Commons,” Science, 162, December 13, 1968, available online via Pegasus. Reinhardt, Chapter 1 Drivers of Environmental Action: Daniel Esty and Andrew Winston, Chapters 2, 3 in reserve. Discussion of the problem of externalities, public goods, private goods and property rights. Appropriability and firm incentives to address environmental and resource problems. Each of you must be ready to discuss how to address the problem of externality. Individual summaries of Hardin due. Students in odd numbered groups will be responsible for researching the problems facing General Electric as it attempts to be environmentally responsible across multiple product lines with multiple and sometimes competing constituencies. Students in even numbered groups will be responsible for researching the case of TXU and the utility’s change in investment plans for coal-fired power plants in response to pressures from various constituencies. How will consumers, suppliers, and the environment be affected? Write up and power point presentations due Monday Oct 8.

3. Monday, October 8 Environmental Drivers: The cases of General Electric and TXU. Student discussion and presentations on the problems facing General Electric and TXU within the context of externalities and environmental drivers. Presentations on the General Electric and TXU cases. Team summaries of the GE/TXU cases due before class. Discussion of environmental drivers. Wednesday, October, 10 The Social Responsib ility of Firms Hay, Stavins and Vietor, “Overview;” “The Legal Perspective,” Elhauge, Donohue, Roe, and Summary. Team summaries of Elhauge, Donohue, and Roe due. Discussion of the pros and cons and conditions for the social responsibility of firms. We will have presentations and debates within class. Monday, October 15 The Social Responsib ility of Firms Hay, Stavins and Vietor: “The Economic Perspective,” Portney, Aigner, Esty, and Summary. Team summaries of Portney, Aigner, Esty due. Discussion of the pros and cons and conditions for the social responsibility of firms. We will have presentations and debates within class.

4. Wednesday, October 17 Business Presentati on Deckers Corporation--Environmental Differentiation Monday, October 22 The Social Responsib ility of Firms Hay, Stavins, and Vietor: “The Business Perspective,” Reinhardt, Orts, Vogel, and Summary. Team summaries of Reinhardt, Orts, Vogel due. Discussion of the pros and cons and conditions for the social responsibility of firms. We will have presentations and debates within class. Wednesday, October 24 Environmental Strategies Product Differentiation, Managing Competitors Reinhardt, Chapter 2, Chapter 3

5. Monday, October 29 Environmental Strategies Reducing Costs, Redefining Markets Reinhardt, Chapter 4, Chapter 5 Wednesday, October 31 Environmental Strategies Managing Risk and Uncertainty, Integrating Environment and Business Practice Reinhardt, Chapter 6, Chapter 7 Introduce case for Monday. Monday, November 5 Case Analysis: McDonald' s and the Environme nt A & B1 Stafford, Edwin R., Michael Jay Polonsky and Cathy L. Hartman (2000) “ Environmental NGO-Business Collaboration and Strategic Bridging: A Case Analysis of the Greenpeace-Foron Alliance” Business Strategy and the Environment 9: 122-135 King, A. (2006.) The Role of Management Systems in Stakeholder Partnerships in Leveraging the Private Sector. Cary Coglianese and Jennifer Nash Editors: 228-245 McDonald's and the Environment, Case A McDonald's and the Environment, Case B1 Case preparation in class Case Questions: 1. Why did EDF approach McDonald's? 2. Why did McDonald’s enter into the Joint Task Force with EDF? 3. Was EDF the right choice for a partner? 4. How well does the structure of the Joint Task Force serve as a model for future partnerships? 5. Has the Joint Task Force worked? 6. Should McDonald's continue its current recycling efforts or drop the "clamshell" sandwich container? Why? 7. Comment on the use of life-cycle analysis to arrive at your decision. What are the difficulties in using LCA for decision- making? Is there one best solution? Does this change over time?

6. Wednesday, November 7 McDonald’s Case Study Case presentations in class by randomly selected groups In-class discussion: what are the pros and cons of firms’ collaboration with NGOs? Each group will prepare a 5 slide presentation of their solution to the case. Case slides are due before class via e-mail to Vered Monday, November 12 No Class, University Holiday Wednesday, November 14 Measuring Environme ntal Performanc e Flatz, Alois, 2002, “Corporate sustainability Financial Indexes,” in Environmental Performance Measurement. The Global Report 2001-2002. World Economic Forum, ed. Daniel Esty and Peter K. Cornelius, 54-65. Available on webpage Hussey, Dennis, Patrick Kirsop, and Ronald Meissen, 2001, “Global Reporting Initiative Guidelines: An Evaluation of Sustainable Development Metrics for Industry,” Environmental Quality Management, 1-20. Available on webpage. http://www.epa.gov/tri/ http://www.innovestgroup.com (Innovest Group) http://www.sam-group.com/ (SAM sustainability group) http://environmental- performance.org/index.php http://www.riskmetrics.com/ http://www.sis.pitt.edu/~mbsclass/standar ds/martincic/discussn.htm/ (ISO 14000) Students in odd numbered groups will evaluate the comparative environmental performance of Hewlett Packard, IBM, Intel Students in even numbered groups will evaluate the comparative environmental performance of Exxon Mobil, BP, Shell. Teams should describe the criteria they choose and why. Use information from corporate environmental report as well as public sources NOTE: for this class we will meet at the computing facility (room 3022b)

7. Monday, November 19 Measuring Environme ntal Performanc e Presentations by randomly selected groups and discussion in class. Team Comparative Evaluations due; all groups should submit 5 slide presentation to Vered before class Wednesday, November 21 No Class, Thanksgivi ng Holiday Monday, November 26 Regulation and Tax Policy Lyon and Maxwell, Chapters 3-5 Discussion of the use of the coercive power of the state—command and control regulation and the firm’s response. Wednesday, November 28 Voluntary Agreement s Ronald Coase, “The Problem of Social Cost,” 1960 Journal of Law and Economics, Pegasus. Lyon and Maxwell, Chapter 6 Individual summaries of Coase due. Discussion of voluntary agreements; Coasian solutions.

8. Monday, December 3 Environmental Strategy: Climate Change “Cleaning Up: A Special Report on Business and Climate Change” the Economist, June 2-8, 2007 Odd numbered teams will present on the business response to Kyoto. Even numbered teams will present on the concerns and response of automotive companies to state versus federal climate regulation. Team Presentations due. Wednesday, December 5 Final Exam