IDEAS home Printed from https://ideas.repec.org/a/bla/srbeha/v40y2023i3p417-428.html
   My bibliography  Save this article

Bet on innovation, not Environmental, Social and Governance metrics, to lead the Net Zero transition

Author

Listed:
  • Bartley J. Madden

Abstract

The conventional Net Zero perspective with its emphasis on Environmental, Social and Governance (ESG) metrics represents linear cause‐and‐effect thinking. That is, implementation of the metrics will then change company behaviour with the eventual effect of a successful Net Zero transition. Different perspectives are presented, rooted in systems thinking. Numerous company examples explain why innovation, not ESG metrics, will be the prime mover in achieving Net Zero. The crux of the argument for systems thinking is that a company like Honeywell, currently given an ‘F’ ESG score, is delivering stellar innovations that will enable its customers to significantly reduce their greenhouse gas emissions. As to behaviour, boards of directors should demand new information from management with particular attention to returns on capital versus the cost of capital under scenarios that include a price (tax) on carbon. The integration of corporate finance principles with systems thinking will improve decision‐making and facilitate an efficient Net Zero transition.

Suggested Citation

  • Bartley J. Madden, 2023. "Bet on innovation, not Environmental, Social and Governance metrics, to lead the Net Zero transition," Systems Research and Behavioral Science, Wiley Blackwell, vol. 40(3), pages 417-428, May.
    • Handle: RePEc:bla:srbeha:v:40:y:2023:i:3:p:417-428
    DOI: 10.1002/sres.2915
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/sres.2915
    Download Restriction: no
    File URL: https://libkey.io/10.1002/sres.2915?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Deborah Dougherty & Danielle D. Dunne, 2011. "Organizing Ecologies of Complex Innovation," Organization Science, INFORMS, vol. 22(5), pages 1214-1223, October.
    2. Nigel Roome & Céline Louche, 2016. "Journeying Toward Business Models for Sustainability: A Conceptual Model Found Inside the Black Box of Organisational Transformation," Post-Print hal-01183743, HAL.
    3. William Nordhaus, 2019. "Climate Change: The Ultimate Challenge for Economics," American Economic Review, American Economic Association, vol. 109(6), pages 1991-2014, June.
    4. Tobias Hahn & Jonatan Pinkse & Lutz Preuss & Frank Figge, 2015. "Tensions in Corporate Sustainability: Towards an Integrative Framework," Journal of Business Ethics, Springer, vol. 127(2), pages 297-316, March.
    5. Bartley J. Madden, 2021. "The Pragmatic Theory of the Firm," Journal of Applied Corporate Finance, Morgan Stanley, vol. 33(1), pages 98-110, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Syed Awais Ahmad Tipu, 2022. "Organizational change for environmental, social, and financial sustainability: A systematic literature review," Review of Managerial Science, Springer, vol. 16(6), pages 1697-1742, August.
    2. Fabien Martinez, 2019. "On the Role of Faith in Sustainability Management: A Conceptual Model and Research Agenda," Post-Print hal-02887640, HAL.
    3. Fabien Martinez, 2019. "On the Role of Faith in Sustainability Management: A Conceptual Model and Research Agenda," Journal of Business Ethics, Springer, vol. 155(3), pages 787-807, March.
    4. Landry, Joel R., 2021. "The political allocation of green pork and its implications for federal climate policy," Journal of Public Economics, Elsevier, vol. 201(C).
    5. Cheng, Cheng-Feng & Chang, Man-Ling & Li, Chu-Shiu, 2013. "Configural paths to successful product innovation," Journal of Business Research, Elsevier, vol. 66(12), pages 2561-2573.
    6. Ju Liu & Bo Bengtsson & Helena Bohman & Karin Staffansson Pauli, 2020. "A System Model and An Innovation Approach toward Sustainable Housing Renovation," Sustainability, MDPI, vol. 12(3), pages 1-16, February.
    7. Michael M. Bechtel & Kenneth F. Scheve & Elisabeth Lieshout, 2022. "Improving public support for climate action through multilateralism," Nature Communications, Nature, vol. 13(1), pages 1-9, December.
    8. Christoph Constantin Niemann & Petra Dickel & Gordon Eckardt, 2020. "The interplay of corporate entrepreneurship, environmental orientation, and performance in clean‐tech firms—A double‐edged sword," Business Strategy and the Environment, Wiley Blackwell, vol. 29(1), pages 180-196, January.
    9. Martín-Rojas, Rodrigo & García-Morales, Victor J. & Garrido-Moreno, Aurora & Salmador-Sánchez, Maria Paz, 2021. "Social Media Use and the Challenge of Complexity: Evidence from the Technology Sector," Journal of Business Research, Elsevier, vol. 129(C), pages 621-640.
    10. Xiaoshu Xu & Jiangpei Pan & Xuechen Meng, 2024. "Intelligent Manufacturing and Green Innovation—Evidence from China’s Listed Manufacturing Firms," Sustainability, MDPI, vol. 16(23), pages 1-15, November.
    11. Peter Harrison Howard & Derek Sylvan, 2020. "Wisdom of the experts: Using survey responses to address positive and normative uncertainties in climate-economic models," Climatic Change, Springer, vol. 162(2), pages 213-232, September.
    12. G. Cornelis van Kooten & Mark E. Eiswerth & Jonathon Izett & Alyssa R. Russell, 2021. "Climate Change and the Social Cost of Carbon: DICE Explained and Expanded," Working Papers 2021-01, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
    13. Mario Vaupel & David Bendig & Denise Fischer-Kreer & Malte Brettel, 2023. "The Role of Share Repurchases for Firms’ Social and Environmental Sustainability," Journal of Business Ethics, Springer, vol. 183(2), pages 401-428, March.
    14. Mara Del Baldo & Maria-Gabriella Baldarelli, 2017. "Renewing and improving the business model toward sustainability in theory and practice," International Journal of Corporate Social Responsibility, Springer, vol. 2(1), pages 1-13, December.
    15. Cameron D. Miller & Puay Khoon Toh, 2022. "Complementary components and returns from coordination within ecosystems via standard setting," Strategic Management Journal, Wiley Blackwell, vol. 43(3), pages 627-662, March.
    16. Hu, Yuanfeng & Tian, Yixiang, 2024. "The role of green reputation, carbon trading and government intervention in determining the green bond pricing: An externality perspective," International Review of Economics & Finance, Elsevier, vol. 89(PB), pages 46-62.
    17. Best, Bernadette & Miller, Kristel & McAdam, Rodney & Maalaoui, Adnane, 2022. "Business model innovation within SPOs: Exploring the antecedents and mechanisms facilitating multi-level value co-creation within a value-network," Journal of Business Research, Elsevier, vol. 141(C), pages 475-494.
    18. In Choi, 2024. "Does climate change affect economic data?," Advanced Studies in Theoretical and Applied Econometrics, in: Subal C. Kumbhakar & Robin C. Sickles & Hung-Jen Wang (ed.), Advances in Applied Econometrics, pages 483-500, Springer.
    19. Maria Margarida Avillez & Andrew Greenman & Susan Marlow, 2020. "Ethical Judgments About Social Entrepreneurship in Sub-Saharan Africa: The Influence of Spatio-Cultural Meanings," Journal of Business Ethics, Springer, vol. 161(4), pages 877-892, February.
    20. Benjamin Cole & Preeta Banerjee, 2013. "Morally Contentious Technology-Field Intersections: The Case of Biotechnology in the United States," Journal of Business Ethics, Springer, vol. 115(3), pages 555-574, July.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:srbeha:v:40:y:2023:i:3:p:417-428. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1111/1092-7026 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.