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New Harvard Business School Working Paper on incentivizing behavior change to reduce carbon emissions

06 May

In a working paper from Harvard Business School entitled “Pay for Environmental Performance: The Effect of Incentive Provision on Carbon Emissions”, researchers Robert G. Eccles, Ioannis Ioannou, Shelley Xin Li, and George Serafeim analyzed the incentive structures of climate change management for a sample of large, predominantly multinational organizations, then characterized and assessed the effectiveness of different types of incentive schemes that corporations have adopted to encourage employees to reduce carbon emissions. Some of their key findings include:

  • Monetary incentives are associated with higher carbon emissions.
  • Non-monetary incentives are associated with lower carbon emissions.
  • When employees perceive their action as socially positive, the adoption of non-monetary incentives might be more effective than monetary incentives in reducing carbon emissions.
  • For tasks involving socially positive behavior, monetary incentives are not effective and actually detrimental unless they are provided to people for whom such tasks constitute part of their formal job responsibility.
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