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Undergraduate Economic Review

Abstract

As awareness of sustainability grows, firms are being pressured to adopt social and environmental practices to keep pace with ethical standards and consumer demand. Firms must adapt to a changing marketplace, and new management strategies are being developed. Our central purpose in this paper is therefore to explore the economic implications of enhanced environmental sustainability through a case study of 3M, a chemical company that has been implementing sustainable solutions for over 30 years. We begin our case study by analyzing the effectiveness of the lifecycle management approach (LCM) currently advocated to businesses in search of sustainability. Although the LCM methodology is still developing at this stage, it has yielded great results for 3M when combined with employee expertise. We will then go on to analyze why these increases in sustainability have increased profits, and what effect tighter environmental legislation would have on competitive markets. The final section of this paper will analyze the performance of environmentally responsible firms on the stock market to determine whether increased sustainability makes firms more desirable to investors. Our critical analysis of the multi-faceted economic implications of enhanced environmental sustainability will therefore allow us to determine 1) the effectiveness of current approaches to sustainability; 2) the economic implications of enhanced corporate responsibility and legislation, and 3) the impact of enhanced sustainability on the performance of companies on the stock market.

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