It pays to be green: The managerial incentive structure and environmentally sound strategies

Abstract The traditional view in management circles about the relationship between the environment and business can best be summed up as pollution pays, pollution prevention doesn't. Notwithstanding the recent proliferation of literature on the benefits of green management, many managers continue to see environmentally sound strategies as detrimental to the principal goals of profitability, maintaining markets, controlling costs and efficient production. Such conclusions about the environmental drag on business are based on mistaken assumptions about the incentives businesses encounter. Stricter government regulation of the environment in developed nations changed the equation. There are also many opportunities for managers to profit from environmentally sound strategies that are independent of public pressures. Together, these two types of incentives serve to turn the traditional vision about the incompatibility between good business and the environment on its head: it is becoming increasingly apparent that, indeed, pollution prevention pays while pollution doesn't.