Sustainability Strategy Course Guide Template (MBA Elective)
Climate and sustainability strategy elective: theories, risks, SBTi V2.0 dates, 13-session roadmap, Northfield mini-case with MACC, teaching note, rubric, self-test
Як використовувати: Use it when you take or plan a climate and sustainability strategy elective. Close the prerequisites with mba-stakeholder-esg-card first, then work the Northfield mini-case alone before the teaching note. The main pitfall is choosing options by cost per tonne when the question is the cheapest way to reach a target.
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Sustainability Strategy Course Guide: [Your programme, term and section]
A course guide for the MBA elective in climate and sustainability strategy: how a company decides which sustainability issues matter to its strategy, how climate change creates transition and physical risks and opportunities, how a decarbonisation plan is built from a greenhouse gas inventory, a target and a marginal abatement cost curve, when customers pay a green premium, how circular business models change the economics, and what the research says about whether sustainability pays. It is for second-year students taking the elective, first-years planning their electives, and candidates recruiting for sustainability, strategy or impact roles. It builds on the core strategy, finance and operations courses and on mba/mba-stakeholder-esg-card, which covers stakeholder salience, double materiality, the reporting regimes and the GHG inventory, and it does not repeat them. It gives the competencies the course builds, prerequisites, the course in one page, dated facts on voluntary target standards, a 13-session roadmap, a key concepts map, an original mini-case (Northfield Outdoor Co.'s climate plan) with exhibits, discussion questions and a teaching note, a grading rubric, an exam preparation plan, common struggles, a reading list and a self-test with an answer key. Source basis: Porter and van der Linde (1995), Hart (1995), Porter and Kramer (2011), Eccles, Ioannou and Serafeim (2014), Khan, Serafeim and Yoon (2016), Bolton and Kacperczyk (2021), the GHG Protocol corporate standards and the Science Based Targets initiative (SBTi) Corporate Net-Zero Standard Version 2.0 (released 11 June 2026), written up in original words. Session order and grading are typical of leading international programmes; your syllabus decides. Replace every [bracketed] value and every row marked Example. This is a learning aid, not legal, reporting, investment or engineering advice.
Document control
| Field | Value |
|---|---|
| Learner | [Your name] |
| Faculty and teaching assistants | [Names, office hours] |
| Syllabus version used | [Date of syllabus] |
| Team or study group | [Team name and members] |
| Dated facts checked on | YYYY-MM-DD |
| Final memo or exam date | YYYY-MM-DD |
| Reviewed by | [Team member, teaching assistant or industry mentor] |
| Version | [0.1] |
| Last updated | YYYY-MM-DD |
Contents
- What the course is for
- Prerequisites
- The course in one page
- Standards and rules as of October 2026
- Session roadmap
- Key concepts map
- Mini-case: Northfield Outdoor Co.'s climate plan
- Teaching note
- Typical assignments and how they are graded
- Exam preparation plan
- Common struggles
- Reading list
- Self-test questions
- My notes and next steps
- Sources and further reading
- Answer key
What the course is for
Sustainability strategy sits where four core courses meet: strategy (where to compete and how to win), finance (how risks and investments are valued), operations and supply chain (where the emissions and the costs are), and ethics and governance (who decides and who is accountable). The elective asks four questions a leadership team faces: which sustainability issues can change our cash flows or our licence to operate, what is our plan to cut emissions and what does it cost, where can we create advantage rather than only comply, and how do we govern and report the plan credibly. A strong student leaves able to read a footprint, build a cost curve, test a target against the budget, price a green product, and write a memo a board could approve.
The competencies the course builds, mapped to the competency list used across this library (see mba/mba-core-curriculum-map). The AACSB Global Standards for Business Education, ratified by AACSB members on 20 April 2026, leave each school to define its own learning goals, so check your programme's list (as of October 2026, see aacsb.edu):
| Competency area | What you should be able to do by the end of the course |
|---|---|
| Analytical and quantitative reasoning | Build a marginal abatement cost curve, compute the annual cost of a target, carbon price exposure and a green premium per tonne |
| Ethical decision making | Distinguish reduction from compensation claims, recognise greenwashing risk, weigh effects on workers and communities in a transition |
| Communication | Write a two-page climate strategy memo with the target, the plan, the cost and the risks on page one |
| Leadership and teamwork | Run a cross-functional workshop with procurement, operations and finance to agree abatement options and owners |
| Global perspective | Compare regulatory regimes, grid factors and carbon prices across the countries where the company and its suppliers operate |
| Technology, data and AI | Judge the quality of emissions data, use supplier-specific data, and check model or AI outputs against the source data |
Prerequisites
| Skill | Check yourself | Where to fix it |
|---|---|---|
| GHG inventory | Build scope 1, 2 (location and market-based) and 3 from activity data and factors | mba/mba-stakeholder-esg-card |
| Materiality | Explain single and double materiality and score a topic | mba/mba-stakeholder-esg-card, finance/sustainability-double-materiality-assessment |
| NPV and annuities | Convert a capital cost into an equivalent annual cost with =PMT | mba/mba-npv-irr-card |
| Competitive strategy | Use five forces and the value chain to locate advantage | mba/mba-five-forces-card, mba/mba-value-chain-card |
| Pricing | Compute the volume loss a price increase can absorb | mba/mba-pricing-card |
| Supply chain | Describe tiers, sourcing and supplier development | mba/mba-supply-chain-guide |
The course in one page
Why sustainability is a strategy question. Porter and van der Linde (1995) argued that well-designed environmental regulation can trigger innovations that offset the cost of compliance, because pollution is often a sign of wasted resources. Hart (1995) proposed a natural-resource-based view: capabilities in pollution prevention, product stewardship and sustainable development can be sources of competitive advantage. Porter and Kramer (2011) framed "creating shared value" as finding business opportunities in social and environmental problems rather than treating them as costs. Critics answer that these ideas can blur real trade-offs; the course asks you to name the trade-off, not to assume it away.
What the evidence says. Eccles, Ioannou and Serafeim (2014) compared companies that adopted sustainability policies early with matched companies that did not, and found differences in governance, stakeholder engagement and long-run stock and accounting performance in favour of the adopters. Khan, Serafeim and Yoon (2016) found that performance on sustainability issues that are material to the industry is associated with better future stock returns, while performance on immaterial issues is not. Bolton and Kacperczyk (2021) found that stocks of companies with higher emissions earn higher returns, consistent with investors demanding compensation for carbon risk. Read the samples, periods and methods: these are associations in particular data, not laws.
Risks and opportunities. Climate change affects a company through transition risks (policy and carbon prices, technology, market preferences, reputation and litigation) and physical risks (acute events such as floods and storms, chronic changes such as heat and water stress). The same categories appear in the 2017 recommendations of the Task Force on Climate-related Financial Disclosures, which IFRS S2 now carries forward (see mba/mba-stakeholder-esg-card). Carbon price exposure is a first, rough measure:
where is a carbon price per tonne, the company's own emissions, supplier emissions whose cost could be passed on, and the share passed on.
Decarbonisation logic. A plan starts from the inventory, sets a target, and ranks options by their cost per tonne abated. The equivalent annual cost of option , with capital cost , life , discount rate and change in annual operating cost (negative for savings), and its cost per tonne:
where is tonnes abated a year. Sorting options by and plotting the cumulative abatement gives the marginal abatement cost curve (MACC). Options interact, so the curve must be built in order (efficiency before renewable contracts on the remaining load), and the cheapest per tonne is not always the cheapest way to hit a target. The mechanics are taught in mba/mba-decarbonisation-macc-card.
Green premium. The extra cost of a lower-carbon product, per tonne avoided, tells you whether carbon prices alone can justify it or whether customers must pay:
with the extra cost per unit and the tonnes avoided per unit.
Circularity. Circular models (repair, resale, rental, take-back and recycling) change where value and emissions sit in the value chain. They work when the company can control the product's return flow, when used products keep enough value, and when the operating model (reverse logistics, grading, refurbishment) costs less than that value.
Governance and credibility. A plan is credible when the board owns it, the targets are specific and measured on the same inventory boundary each year, capital allocation and incentives follow it, and claims distinguish what the company reduced from what it compensated for. Corporate governance links: mba/mba-corporate-governance-card.
Standards and rules as of October 2026
| Item | Dated fact (check before you rely on it) | Official source |
|---|---|---|
| SBTi Corporate Net-Zero Standard | The SBTi released Version 2.0 on 11 June 2026. Version 1.3.1 remains available for target setting until 31 January 2028; validation under Version 2.0 starts in Q1 2027, when companies can submit under either version; from 1 February 2028 all new target submissions must align with Version 2.0. Existing near-term targets are expected to remain valid to the end of their timeframe. A voluntary standard, not a law. | sciencebasedtargets.org/net-zero and the SBTi news page |
| Version 2.0 approach | The SBTi's launch announcement emphasises implementation and progress reporting, a hierarchy that puts direct reductions in operations and value chains first, targets set on a "best efforts" basis with transparency about barriers, a voluntary recognition mechanism for action on ongoing emissions, and a longer-term requirement for larger companies to take progressive responsibility for them | SBTi announcement, 11 June 2026 |
| Version 2.0 company categories | A secondary summary (BDO, 21 July 2026) reports Category A (large companies in all countries and medium-sized companies in high-income countries) and Category B; near-term targets of about five years for scopes 1 and 2; near-term scope 3 targets for Category A; transition plan disclosure and limited assurance over base-year emissions for Category A. Read the standard for the exact criteria | Secondary: bdo.com.au; primary: the Version 2.0 document linked from sciencebasedtargets.org |
| GHG Protocol | Corporate Standard (revised edition 2004), Scope 2 Guidance (2015), Corporate Value Chain (Scope 3) Standard (2011). The GHG Protocol is revising these standards; check ghgprotocol.org for the status of each revision before a filing | ghgprotocol.org/standards |
| Reporting regimes | ISSB IFRS S1 and S2, the CSRD as amended by Omnibus I and the simplified ESRS are summarised with dates in mba/mba-stakeholder-esg-card, section "Reporting regimes as of October 2026" | ifrs.org, EUR-Lex |
What follows for strategy: a target is now judged less on its headline year and more on the plan behind it, the data that measures it and the disclosure of barriers. A strategy memo should state which version of a voluntary standard it follows and which regulatory regime applies, with dates.
Session roadmap
| Session | Topic | Card to read | Case or exercise | Deliverable |
|---|---|---|---|---|
| 1 (Example) | Why sustainability is a strategy question: shared value and its critics | This guide: "The course in one page" | Map trade-offs and win-wins for one company | One-page position note |
| 2 (Example) | Stakeholders and materiality | mba/mba-stakeholder-esg-card | Score six topics under single and double materiality | Materiality matrix |
| 3 (Example) | The GHG inventory and data quality | mba/mba-stakeholder-esg-card | Build scopes 1, 2 and 3 for a retailer | Inventory workbook |
| 4 (Example) | Climate risk: transition and physical | This guide, finance/issb-sustainability-disclosure | Carbon price exposure and a flood scenario for a plant | Risk register |
| 5 (Example) | Targets and voluntary standards | This guide: "Standards and rules as of October 2026" | Draft a near-term target and its boundary | Target statement |
| 6 (Example) | Abatement options and the cost curve | mba/mba-decarbonisation-macc-card | Rank seven options and cost a target | MACC and budget |
| 7 (Example) | Integrative case | This guide: mini-case | Northfield Outdoor Co.'s climate plan | Individual memo |
| 8 (Example) | Supply chain decarbonisation and supplier engagement | mba/mba-supply-chain-guide, mba/mba-supply-chain-resilience-card | Supplier programme for top mills | Supplier engagement plan |
| 9 (Example) | Green products, pricing and the green premium | mba/mba-pricing-card | Price a lower-carbon product line | Pricing note |
| 10 (Example) | Circular business models | mba/mba-value-chain-card | Resale and repair economics | Business model sketch |
| 11 (Example) | Policy, carbon markets and nonmarket strategy | mba/mba-nonmarket-strategy-card | Respond to a proposed carbon border measure | Stakeholder and policy map |
| 12 (Example) | Finance: green capital, investors and impact | mba/mba-impact-investing-card, mba/mba-npv-irr-card | Carbon-adjusted NPV of an investment | Investment note |
| 13 (Example) | Governance, disclosure and greenwashing risk | mba/mba-corporate-governance-card, mba/mba-ethics-guide | Board session on a climate plan | Team presentation |
Key concepts map
| Concept | One-line meaning | Card |
|---|---|---|
| Shared value, natural-resource-based view | Theories of when sustainability creates advantage | This guide |
| Stakeholder salience, double materiality | Who and what counts, and why | mba/mba-stakeholder-esg-card |
| Scope 1, 2, 3; location and market-based scope 2 | How a footprint is built | mba/mba-stakeholder-esg-card |
| Transition and physical risk | How climate change reaches cash flows | This guide, finance/issb-sustainability-disclosure |
| Carbon price exposure, internal carbon price | A first measure of transition risk | This guide |
| Near-term and long-term targets, base year, boundary | What a company commits to and how it is measured | This guide |
| Equivalent annual cost, cost per tonne, MACC | How abatement options are ranked | mba/mba-decarbonisation-macc-card |
| Green premium | What a lower-carbon product costs per tonne avoided | This guide, mba/mba-pricing-card |
| Supplier engagement | How scope 3 is reduced in practice | mba/mba-supply-chain-guide |
| Circular business models | Value from keeping products and materials in use | mba/mba-value-chain-card |
| Reduction against compensation claims, greenwashing | What a company can credibly say | mba/mba-ethics-guide |
| Board oversight, incentives | How a plan becomes binding | mba/mba-corporate-governance-card |
Mini-case: Northfield Outdoor Co.'s climate plan
Situation (fictional). Northfield Outdoor Co. is a mid-size outdoor-gear retailer and brand with stores, a distribution centre and e-commerce: revenue USD 640 million and EBITDA of USD 80 million (12.5%), with 1,600 employees. Its first full GHG inventory (Worked example A of mba/mba-stakeholder-esg-card) showed that it is a supplier footprint. Chief executive Ilse Marrow wants a climate plan for the board in March: a target, the options, the annual cost, the exposure to carbon prices and a decision on a recycled-fabric jacket line. The chief financial officer, Tomas Adeyemi, warns that the plan must cost less than 2.5% of EBITDA a year. The head of sourcing, Priya Vance, says the top 20 fabric mills are willing to work with Northfield if it co-funds their energy projects.
Exhibit 1: inventory, base year 2025 (tCO2e, market-based).
| Scope | Sources | tCO2e |
|---|---|---|
| Scope 1 | Natural gas 338.6, fleet diesel 562.8, refrigerant 25.1 | 926.4 |
| Scope 2, market-based | Electricity: 40% under renewable contracts, 60% at residual mix (3,840,000 kWh at 0.450 kgCO2e per kWh) | 1,728.0 |
| Scope 3 | Purchased goods 88,200.0, upstream transport 5,280.0, employee commuting 3,360.0 | 96,840.0 |
| Total | 99,494.4 |
Exhibit 2: abatement options (Example, discount rate 9%).
| ID | Option | Scope | tCO2e abated a year | Capital cost (USD m) | Life (years) | Change in annual operating cost (USD m) |
|---|---|---|---|---|---|---|
| AB-01 | LED lighting and HVAC controls (cuts 800,000 kWh of residual-mix electricity) | 2 | 360 | 1.20 | 10 | -0.25 |
| AB-02 | Renewable contracts for the remaining 3,040,000 kWh of residual-mix electricity, at a premium of USD 0.0045 per kWh | 2 | 1,368 | 0 | +0.01368 | |
| AB-03 | Electric delivery fleet | 1 | 450 | 2.40 | 8 | -0.12 |
| AB-04 | Supplier energy programme, top 20 fabric mills (co-funding) | 3 | 18,000 | 0 | +0.90 | |
| AB-05 | Recycled and lower-impact fabrics across the range (scalable) | 3 | 12,000 | 0 | +1.80 | |
| AB-06 | Shift from air to ocean freight (net of extra inventory carrying cost) | 3 | 2,000 | 0 | -0.13 | |
| AB-07 | Heat pumps replacing gas heating (electricity covered by renewable contracts) | 1 | 300 | 1.60 | 15 | +0.02 |
Exhibit 3: target proposed by the sustainability team (Example). Cut scope 1 and 2 emissions by 70% and scope 3 emissions by 25% by 2030 against 2025. The figures are illustrative choices for the case, not the criteria of any voluntary standard; checking them against the current SBTi criteria is part of question 6.
Exhibit 4: the recycled-fabric jacket (Example). The core jacket sells 400,000 units a year at USD 180 with a unit cost of USD 99. Recycled fabric adds USD 3.20 to unit cost and avoids 5.0 kgCO2e per unit. Marketing proposes a price increase of USD 4.00.
Questions.
- Compute the equivalent annual cost and the cost per tonne of each option, sort them into a MACC and explain why some options have a negative cost.
- Which options meet the scope 1 and 2 target at the lowest total annual cost? Why is that not the same as picking the options with the lowest cost per tonne?
- Which options meet the scope 3 target, and what does the whole plan cost a year against the CFO's limit?
- What is Northfield's carbon price exposure at USD 100 per tonne, for its own emissions and for half of its purchased goods emissions passed on by suppliers, before and after the plan?
- Should Northfield switch the jacket to recycled fabric at a USD 4.00 price increase? Compute the green premium per tonne and the volume loss the price increase can absorb.
- Write the recommendation: target, options, cost, owners, governance, what the board should check against the current SBTi criteria, and what Northfield must not claim.
Teaching note
Q1. The cost curve. Capital recovery factors at 9%: 0.1558 for 10 years (=PMT(9%,10,-1)), 0.1807 for 8 years and
0.1241 for 15 years.
| Rank | ID | Equivalent annual capital cost (USD m) | Net annual cost (USD m) | Cost per tCO2e (USD) | Cumulative tCO2e |
|---|---|---|---|---|---|
| 1 | AB-01 | 0.1870 | -0.0630 | -175.04 | 360 |
| 2 | AB-06 | 0 | -0.1300 | -65.00 | 2,360 |
| 3 | AB-02 | 0 | 0.0137 | 10.00 | 3,728 |
| 4 | AB-04 | 0 | 0.9000 | 50.00 | 21,728 |
| 5 | AB-05 | 0 | 1.8000 | 150.00 | 33,728 |
| 6 | AB-03 | 0.4336 | 0.3136 | 696.93 | 34,178 |
| 7 | AB-07 | 0.1985 | 0.2185 | 728.31 | 34,478 |
AB-01 in Excel: =(PMT(9%,10,-1.2)-0.25)*1000000/360 = -175.04. Negative costs mean the savings exceed the annualised
capital cost: the option pays for itself at a 9% cost of capital. Ask why such options have not been done already:
split incentives (landlords own the HVAC), capital rationing, management attention or hidden costs. A MACC that is
full of negative-cost options usually has missing costs.
Q2. Scope 1 and 2 target. Base year scope 1 and 2: 2,654.4 tCO2e (=926.4+1728); 70% is 1,858.1 tCO2e. AB-01 and
AB-02 together remove all residual-mix electricity, 1,728 tCO2e (65.1%). One more option is needed. AB-03 is cheaper
per tonne (696.93 against 728.31), but AB-07 is enough on its own (2,028 tCO2e, 76.4%) and costs 0.2185 a year
against 0.3136 for AB-03, so the cheapest way to reach the target is AB-01, AB-02 and AB-07, total 0.1692 a year
(=-0.063+0.01368+0.2185). Ranking by cost per tonne answers "what is cheapest per unit"; a target asks "what is
cheapest in total to reach a threshold", which is a small knapsack problem. Note also the order: AB-02 is costed on
the load left after AB-01; reverse the order and AB-01 would abate nothing under the market-based method while still
saving money.
Q3. Scope 3 target and the whole plan. Scope 3 base 96,840.0; 25% is 24,210 tCO2e. AB-06 and AB-04 give 20,000;
the remaining 4,210 come from part of AB-05 at 150 per tonne, 0.6315 a year (=4210*150/1000000). Scope 3 cost:
1.4015 a year (=-0.13+0.9+0.6315). Whole plan: 1.5707 a year, 1.96% of EBITDA (=1.5707/80), inside the CFO's
2.5% limit, at an average of about USD 60 per tonne (=1.5707*1000000/(2028+24210)). The capital cost is 2.80 up
front (AB-01 and AB-07). The real constraint is not money but execution: AB-04 depends on 20 suppliers, and its 18,000
tonnes are an estimate until supplier-specific data confirms them.
Q4. Carbon price exposure at USD 100 per tonne. Own emissions: 0.27 a year before the plan (=2654.4*100/1000000)
and 0.06 after (=(2654.4-2028)*100/1000000). Supplier pass-through on half of purchased goods emissions: 4.41 a year
(=88200*100*0.5/1000000), 5.5% of EBITDA, falling to 3.30 after AB-04 and the part of AB-05
(=(88200-18000-4210)*100*0.5/1000000). The lesson: Northfield's carbon risk sits in its supply chain, and the supplier programme is a
risk-management investment as well as an emissions one.
Q5. The recycled jacket. Green premium per tonne: 640 USD (=3.2/0.005), far above the USD 100 carbon price, so
carbon alone does not justify the switch. The case for it is commercial. Current profit on the line: 32.40
(=400000*(180-99)/1000000). At USD 184 and unit cost USD 102.20, the unit margin rises to 81.80; with no volume loss
profit rises to 32.72, and the line breaks even at 396,088 units, a volume loss of 0.98% (=1-32400000/81.8/400000).
A 2% loss would cut profit to 32.07. The decision turns on evidence about customers' willingness to pay: run a priced
test in a few stores or online before switching the range, and count the jacket's tonnes inside AB-05, not twice.
Q6. Recommendation. Adopt the 70% scope 1 and 2 and 25% scope 3 targets for 2030 as internal targets now, with AB-01, AB-02, AB-07, AB-06, AB-04 and part of AB-05, at about 1.6 a year and 2.80 of capital. Give each option an owner (facilities, procurement, logistics, sourcing) and a quarterly metric; tie part of executive pay to the scope 3 milestones; and ask the board's audit or sustainability committee to own the data. Before announcing a target as aligned with any voluntary standard, check it against the current SBTi criteria (Version 1.3.1 until 31 January 2028, Version 2.0 thereafter), including the category Northfield falls into and the scope 3 coverage required. Do not claim "carbon neutral" products on the strength of renewable contracts or offsets alone, and report location-based and market-based scope 2 side by side.
Typical assignments and how they are graded
Common assessment forms in leading programmes: individual and team strategy memos (30% to 50% of the grade), a quantitative assignment such as a cost curve or a carbon-adjusted valuation (10% to 20%), class participation (15% to 25%), and a final project with a company or a final exam (20% to 40%). Your syllabus decides the weights; record them here: [weights].
| Criterion | Excellent (4) | Adequate (2 to 3) | Weak (0 to 1) |
|---|---|---|---|
| Recommendation | Target, plan, cost and owners on page one | Recommendation stated, cost or owners missing | No clear decision |
| Strategic logic | Shows where the plan creates advantage or protects the licence to operate, and names trade-offs | Generic business case | Sustainability treated as separate from strategy |
| Numbers | Inventory, cost curve, target cost and exposure consistent and auditable | Numbers present but not linked | Errors in units or scopes |
| Data quality | Flags weak factors and proposes better data | Mentions data limits | Treats estimates as facts |
| Standards and rules | Dated, correct version, correct scope | Mentioned without dates | Wrong or outdated rules |
| Claims and ethics | Separates reduction from compensation, avoids greenwashing | Some care | Unsupported claims |
| Writing | Two pages, numbers consistent with exhibits | Long or repetitive | Unclear |
Exam preparation plan
| Days before exam | Task | Card |
|---|---|---|
| 14 | Rebuild the Northfield inventory from activity data | mba/mba-stakeholder-esg-card |
| 12 | Rebuild the cost curve from Exhibit 2 in under 30 minutes | This guide, mba/mba-decarbonisation-macc-card |
| 10 | Explain three theories of sustainable advantage with one example each | This guide |
| 8 | Practise carbon price exposure and green premium questions | This guide |
| 6 | Re-read the dated facts and check them on the official pages | This guide |
| 4 | Write a two-page memo on a past case in 90 minutes | mba/mba-case-write-up |
| 2 | Self-test from memory, log misses | mba/mba-error-log |
| 1 | Rest and review your error log only | mba/mba-exam-prep |
Common struggles
- Mixing scopes and methods. Adding location-based and market-based scope 2, or counting a supplier's emissions twice through two options.
- Ignoring option interactions. Efficiency reduces the load that renewable contracts must cover; costing both on the full load overstates the abatement.
- Trusting negative-cost options. They are real sometimes, but often hide transaction, management or split incentive costs.
- Picking by cost per tonne when the question is a target. The cheapest set to reach a threshold can include a more expensive option per tonne.
- Treating a voluntary standard as a law, or a law as voluntary. State which is which, with the version and date.
- Assuming customers pay for green. Willingness to pay must be measured; surveys overstate it.
- Writing about values instead of decisions. Graders want a target, a plan, a cost and owners.
Reading list
| Week | Reading | Why |
|---|---|---|
| 1 | Porter and van der Linde (1995); Porter and Kramer (2011) | Theories of when sustainability pays |
| 1 | Hart (1995) | The natural-resource-based view |
| 2 | Khan, Serafeim and Yoon (2016) | Materiality and returns |
| 3 | GHG Protocol Corporate Standard and Scope 3 Standard (sections on boundaries and categories) | How the inventory is defined |
| 4 | Bolton and Kacperczyk (2021) | How investors price carbon risk |
| 5 | SBTi Corporate Net-Zero Standard Version 2.0 (structure and criteria) | Current voluntary target rules |
| 7 | Eccles, Ioannou and Serafeim (2014) | Long-run effects of sustainability policies |
Self-test questions
- State the Porter and van der Linde hypothesis in one sentence and one criticism of it.
- What did Khan, Serafeim and Yoon (2016) find about material and immaterial sustainability issues?
- Name two transition risks and two physical risks for an outdoor-gear retailer.
- Compute the cost per tonne of an option with capital cost 1.00, life 10 years, savings of 0.10 a year and abatement of 200 tCO2e a year at 9%.
- Why must renewable contracts be costed after efficiency options on a MACC?
- In the mini-case, why is AB-07 chosen over AB-03 for the scope 1 and 2 target?
- What is the green premium per tonne of the recycled jacket, and what does it tell you?
- Until when can companies set targets under SBTi Version 1.3.1, and from when must new submissions align with Version 2.0?
- What does Bolton and Kacperczyk's finding imply for the cost of capital of high-emitting companies?
- Give two claims Northfield must not make on the strength of renewable contracts or offsets alone.
My notes and next steps
| Date | Session or task | Key idea | Open question | Next step |
|---|---|---|---|---|
| Example: YYYY-MM-DD | Session 6, cost curve | Cheapest per tonne is not cheapest to a target | How do suppliers verify abatement? | Read the supplier engagement section of mba/mba-supply-chain-guide |
| [YYYY-MM-DD] | [ ] | [ ] | [ ] | [ ] |
Sources and further reading
Primary works:
- Porter, M. E. and van der Linde, C. (1995). Toward a new conception of the environment-competitiveness relationship. Journal of Economic Perspectives, 9(4), 97-118.
- Hart, S. L. (1995). A natural-resource-based view of the firm. Academy of Management Review, 20(4), 986-1014.
- Porter, M. E. and Kramer, M. R. (2011). Creating shared value. Harvard Business Review, January-February 2011.
- Eccles, R. G., Ioannou, I. and Serafeim, G. (2014). The impact of corporate sustainability on organizational processes and performance. Management Science, 60(11), 2835-2857.
- Khan, M., Serafeim, G. and Yoon, A. (2016). Corporate sustainability: first evidence on materiality. The Accounting Review, 91(6), 1697-1724.
- Bolton, P. and Kacperczyk, M. (2021). Do investors care about carbon risk? Journal of Financial Economics, 142(2), 517-549.
Official pages for dated facts (checked 2026-10-30):
- Science Based Targets initiative. Corporate Net-Zero Standard, Version 2.0, and the transition from Version 1.3.1, https://sciencebasedtargets.org/net-zero.
- Science Based Targets initiative (11 June 2026). The SBTi releases Corporate Net-Zero Standard V2.0 to accelerate corporate climate action, https://sciencebasedtargets.org/news/the-sbti-releases-corporate-net-zero-standard-v2-0-to-accelerate-corporate-climate-action.
- BDO Australia (21 July 2026). SBTi releases final Corporate Net-Zero Standard 2.0 (secondary summary of the categories and requirements), https://www.bdo.com.au/en-au/insights/esg-sustainability/sbti-releases-final-corporate-net-zero-standard-2-0.
- World Resources Institute and World Business Council for Sustainable Development. The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (revised edition, 2004); GHG Protocol Scope 2 Guidance (2015); Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011). https://ghgprotocol.org/standards.
Textbooks and books (further reading, by name only): Esty and Winston, Green to Gold; Henderson, Reimagining Capitalism in a World on Fire; Gates, How to Avoid a Climate Disaster (on the green premium idea).
Open resource: OpenStax, Principles of Management (CC BY-NC-SA 4.0), https://openstax.org.
Answer key
- Well-designed environmental regulation can trigger innovation that offsets compliance costs, because pollution signals wasted resources. Criticism: the offsets are not general; many regulations impose net costs, and the evidence is mixed by industry.
- Better performance on industry-material issues is associated with better future stock returns; performance on immaterial issues is not.
- Transition: a carbon price or border measure passed on by suppliers; a shift in customer preferences to lower-carbon products. Physical: floods at the distribution centre; heat stress at supplier mills disrupting supply.
- Equivalent annual capital cost
=PMT(9%,10,-1)= 0.1558; net annual cost 0.0558; cost per tonne 279.10 USD (=(PMT(9%,10,-1)-0.1)*1000000/200). - Efficiency lowers the electricity that remains to be covered; costing renewable contracts on the full load would count the same tonnes twice.
- AB-07 alone reaches the 70% target (76.4%) and costs 0.2185 a year against 0.3136 for AB-03; the lower cost per tonne of AB-03 does not matter because the target needs only 130.1 more tonnes and either option provides them.
- USD 640 per tonne (
=3.2/0.005). Carbon prices near USD 100 cannot justify the switch on their own; the case depends on customers paying a higher price without a volume loss above 0.98%. - Version 1.3.1 until 31 January 2028; from 1 February 2028 all new submissions must align with Version 2.0 (validation under Version 2.0 starts in Q1 2027). Check the SBTi page for changes.
- If investors demand higher returns for carbon risk, high-emitting companies face a higher cost of equity, so a credible reduction plan can lower the cost of capital as well as the emissions.
- That its products or operations are "carbon neutral" or "net zero" today; that its scope 2 is zero without showing the location-based figure alongside.
Revision history
| Version | Date | Author | Change summary |
|---|---|---|---|
| 0.1 | YYYY-MM-DD | [Your name] | First pass through the guide and the mini-case |
| 0.2 | YYYY-MM-DD | [Your name] | Example: Re-checked SBTi transition dates and added my syllabus |
Standard and licence note
Based on the primary works listed above, the GHG Protocol corporate standards and the SBTi Corporate Net-Zero Standard Version 2.0 as described on the SBTi's official pages, with category details from a named secondary summary, all checked on 2026-10-30. The text, the mini-case, the numbers and the exercises are original; no standard, textbook or published case is copied or paraphrased, and Northfield Outdoor Co., its people and every factor and cost in this guide are fictional or illustrative. The template is independent and not affiliated with or endorsed by the SBTi, the GHG Protocol, the IFRS Foundation, any business school or publisher. Check the current official texts and a qualified professional before you rely on them for a target, a disclosure or an investment. Template licence: MIT.
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