Dyson School 4580/6580 The Economics and Psychology of

SUSTAINABLE BUSINESS

Course Information

Instructor: William Schulze (wds3)

TAs: Pim Rusmevichientong (pr223@cornell.edu)

Jubo Yan (jy489@cornell.edu)

Lauren Schrader (lvs28@cornell.edu)

Meets Tuesday and Thursdays from 8:50-9:55 pm CMH A106

Office Hours: Tuesday 10:00-11:30 Warren 141

Course Information

The course requirements include one paper for undergraduates and two papers for graduate students (50%) and a final exam (50%). Extra credit will be given for participation in relevant behavioral economics experiments. Graduate students will also be assigned additional journal article readings.

Required Texts

Environmental Law Stories, edited by Richard Lazarus and Oliver Houck, $40.

Strategies for the Green Economy: Opportunities and Challenges in the New World of Business by Joel Makower, $27.95.

EXAMPLE: TOMS SHOES

Mycoskie got the idea for TOMS Shoes when he visited Argentina and saw many children who had no shoes. At the same time, many adults in that country were wearing a very simple yet comfortable shoe that caught Mycoskie's eye. Mycoskie's new company, TOMS Shoes, adopted that shoe style, produced it in many styles and colors, and promised customers that for every pair of shoes they bought, another pair would go to children in need. The idea took off and now Mycoskie spends half of his time on his business and the other half flying around the world making "shoe drops" to smiling kids all over the word. (September, 2009, Success magazine)

TOMS Shoes embodies several lessons for others who want to combine doing good with business:

1) Ride a trend. In this case TOMS Shoes intersected with the rise in consumers who have become more

conscious about their spending. They are willing to spend for consumer goods that also do some good in the world. The rise in cause-related marketing has been spectacular, benefiting many causes as well as helping companies polish their reputations as good corporate citizens.

2) Bake in the good. TOMS Shoes goes beyond what other companies do. It is founded on the premise that sales equal the good done. Mycoskie said, "...we know every day that we're going to give away one pair of shoes for every one we sell, and that's that. If we can't make the business work that way, then the business just doesn't work."

3) Build in sustainability. Mycoskie says of his premise, "If I would've taken half a million dollars and just bought shoes to give to the kids, I would've been able to give the shoes once. It never would've been as far-reaching and sustainable as TOMS Shoes is now."

4) Give employees something to be proud of. Mycoskie says that the employee morale at TOMS Shoes is phenomenal. "..how could you be down when you know everything you do makes children happy?" he says.

5) Attach a story to your product. Give your customers a story that they can retell again and again. These shoes are unique enough to garner attention, and the wearer can boast about the fact that they are from TOMS Shoes, and here is what it means. Buyers feel good about their purchase and want to tell their friends. TOMS Shoes are cool and create buzz.

EXAMPLE: BP

Sold itself as a Green company (Greenwashing)

In fact, BPs practices were among the worst in the industry

Why, from a management perspective, did the accident happen?

Why has the unprecedented response by BP failed to convince the public?

QUESTIONS

When, if, and how can firms make money by going green?

How can you as a manager prevent costly environmental penalties, damage to the company reputation, and lawsuits?

To answer these questions requires a knowledge of economics, psychology, and law.

COURSE OUTLINE

Insights from economics and environmental economics

Insights from psychology and behavioral economics

Environmental law and case studies

Major issues in sustainable business such as greenwashing, profitability of sustainable practices, green marketing, etc.

Case studies.

PLAN FOR COURSE

New course so anything may change as we get into the course including incorporating your ideas and suggestions!

Lectures and experiments.

You will be required to write up and present at least one case study in class.

Final exam

Dyson School 4580/6580The Economics and Psychology of SUSTAINABLE BUSINESSCourse InformationCourse InformationRequired TextsEXAMPLE: TOMS SHOESTOMS Shoes embodies several lessons for others who want to combine doing good with business:EXAMPLE: BPQUESTIONSCOURSE OUTLINEPLAN FOR COURSE