While the U.S. declined to send a delegation to this month’s COP30 climate summit in Brazil, many of the world’s countries remain committed to lowering carbon emissions. American businesses find themselves stuck in the middle of these competing priorities, wondering what to do with their green initiatives and products.

Today, we feature two recent Kellogg Insight stories about sustainability efforts—where they have fallen short and how consumers feel better than ever about green-product options at the store.

Why “net zero” has fallen short

In times when sustainability was more in political favor, many U.S. companies committed to net-zero goals—an ambitious promise to reduce their carbon emissions dramatically by a target date.

But when Aaron Yoon, an associate professor of accounting and information management, and colleagues looked at data on environmental initiatives at hundreds of American companies in the 2010s, they found the companies focused mostly on small and short-term solutions.

Across nearly 10,000 projects, the median investment was only $127,000—far short of the millions needed to truly help a company hit its carbon goals. Overall, firms’ total annual investment in emission-reducing projects amounted to less than 1 percent of their previous year’s profit.

“Contrary to popular belief, firms’ emission-reduction initiatives are not focused on the long term,” Yoon says. “It’s generally the very quick-and-dirty type of stuff.”

In fact, about three-quarters of projects fell into the category of energy efficiency in buildings or production, usually related to lighting projects such as LED upgrades. For the most part, these types of projects offered companies affordable and immediate carbon savings and were expected to generate more cash flow.

“From a financial perspective, short-term payback projects are much more attractive, especially given that most CEOs are worried about the next year’s return,” Yoon says.

The researchers found that the optimal mix for companies to reach net zero would be 48 percent short-term and 52 percent long-term projects. But reaching that balance will require more sacrifices from companies, investors, and consumers.

“How much are we willing to forgo? And do we have the right incentives in place to encourage firm managers to take on projects that could lead us to net zero?” Yoon says. “Those are the big questions that we have to ask ourselves.”

Read more at Kellogg Insight.

Green but good

Today, it’s easy to find an eco-friendly alternative to almost every consumer product, from dish soap to toothpaste. For a long time, consumers viewed these green products as a trade-off: better for the environment but lower quality.

Researchers call this phenomenon the “sustainability liability.” But a new paper, coauthored by Kellogg professors Alexander Chernev and Ulf Bockenholt, found that customers may no longer hold this belief.

The researchers presented 3,342 participants with scenarios and questions about ten types of hypothetical products, including mouthwash, all-purpose cleaners, hand sanitizer, and a set of car tires. Some were told the product was eco-friendly, while others were not. Then they were asked to rate each product for perceived effectiveness.

Instead of bias against green products, the research team found negligible differences. Even during the early months of the Covid-19 pandemic, consumers showed no preference for standard sanitizers over eco-friendly alternatives.

“The sustainability-liability intuition might not be as strong as one might have thought,” Chernev says.

A second study on what words people associate with terms such as “ecological” and “recycled” found closer associations with positive descriptions, like “efficient” and “reliable,” than with those that imply negative performance, such as “fragile” or “ineffective.”

The findings may calm companies’ concerns about investing in eco-friendly technology and rolling out green products. While individual purchasing decisions might not seem significant, customers’ choices ultimately shape corporate actions. “This is what drives companies’ behavior,” Chernev says.

Read more at Kellogg Insight.