Have you ever stopped to wonder about the environmental impact of your favorite everyday items? Perhaps they have a positive effect on the environment. Maybe that’s even why you chose to buy them.

But let’s imagine for a moment that’s not the case and your favorite things aren’t actually so great for the environment. What if their production, or use, was actually threatening the ecosystem? Or worse, what if your consumption might even threaten the existence of your favorite things altogether?

You might be thinking, “It can’t be. None of my favorite things threaten the sustainability of our ecosystem.” But it turns out there are several goods that are either being produced unsustainably, endangering resources, or negatively impacting the environment. 

Consider the following examples:

Sustainable Business Strategy

How would you react to discovering these realities? Quite frankly, you have two options:

  1. Boycott the products or brands causing the alleged harm and find an alternative, sustainable way of getting your fix; or,
  2. Carry on with what Sustainable Business Strategy Professor Rebecca Henderson calls, “business as usual.” After all, your boycotting the product won’t make a large enough impact to make a difference anyway.

The trade-off you’ve just experienced is the dilemma brought on by the Tragedy of the Commons. This economic theory was first conceptualized in 1833 by British writer William Forster Lloyd and, in 1968, was coined the “Tragedy of the Commons” by Garret Hardin in Science magazine. This theory explains how individuals make the best decisions for their personal situation, regardless of the negative impact on others. What this means when facing the use, or potential overuse, of a common or public good is that individuals will act with their short-term best interest in mind, disregarding what this might mean for the public.

To put this in terms of our previous examples, you can see how continuous coffee consumption and constant overfishing of already endangered Pacific bluefin tuna are threatening the longevity of our ecosystems for short-lived indulgences and profits.

But what does the Tragedy of the Commons mean for us in practice?

The Tragedy of the Commons shows us how, without some sort of regulation or public transparency of choices and actions associated with public goods, there is no incentive for individuals to hold themselves back from “taking too much.” In fact, individuals may even have a “use it or lose it” mentality, which means if they’re aware of the inevitability that the good itself will be depleted, they may think, “I better get my share while I still can.”

     Related: What Does "Sustainability" Mean in Business?

Let’s put this idea to the test: In which of the following cases would you hold yourself back from overusing?

  1. During a drought, your town regulates the days and times you’re allowed to water your lawn. How likely are you to disregard these parameters?
  2. Your local grocery store, which has always encouraged the use of reusable bags, has started to charge for each paper or plastic bag. How likely are you to start bringing your own bags?

Let’s dig a little deeper into these options:

  1. If everyone in your community is abiding by the town’s lawn-watering regulations, you're most likely going to abide by them as well. You don’t want a Kelly green lawn while the rest of the towns’ lawns are brown, do you?
  2. Who wants to pay a premium for something that will likely be thrown away or used as a trash bag? Charging for grocery bags has upped the stakes, because you’ve now got some skin in the game. Chances are you’re much more likely to start keeping a reusable bag in your car just in case you need to stop at the grocery store on the way home.

These examples show how, when faced with a public good, individuals can be motivated to cooperate through monetary or moral incentives or penalties. What’s truly fascinating is that this also holds true on a larger scale. 

Remember one of our original examples of luxury fashion brands burning their surplus? Well, Burberry—having heard their customers’ reactions to the burning of their inventory, regardless of how sustainably their products were disposed—has now pledged to stop burning their clothes and even stop using real fur.

Are you interested in learning more? Explore Professor Rebecca Henderson’s Sustainable Business Strategy course to discover how you can make a difference and become a purpose-driven leader.

Alexandra Spiliakos

About the Author

Alexandra is a member of the Harvard Business School Online Course Delivery Team, currently working on the Sustainable Business Strategy, Economics for Managers, Disruptive Strategy, and Negotiation Mastery courses. Alexandra holds a Bachelor of Arts degree from Wellesley College where she studied Economics and Anthropology. In her spare time, Alexandra enjoys exploring her passions for language, dance, and expanding her understanding of intercultural connectivity.