Chapter 3 carries out a critical review of environmental strategies, from reactive postures, such as pollution control, to the most proactive and advanced ones, such as pollution prevention and product stewardship. In doing so, the literature review shows the main theoretical streams used to frame different environmental strategic positionings, such as the institutional theory, the natural resource-based view, a new stakeholder theory or the microfoundations of strategy. To carry out a critical review of existing typologies of environmental strategies, they are deconstructed into their main features and dimensions following two research traditions: strategy (defenders, prospectors, analysers and reactors) and innovation (exploitation, exploration and ambidexterity). We conclude that these conventional approaches can be catalogued as ‘business-as-usual’ environmental strategies and finally present a disruptive alternative called the regenerative strategy.

An environmental strategy is an integrated set of choices about how a company should interact with the environment and its environmental stakeholders. A first step is identifying how a company impacts the environment and the stakeholder demand for improving those impacts. Stakeholders demand depends on the co-benefits they receive from environmental improvements and the resources they are able to deploy in pursuit of those improvements. A second step is identifying the market and nonmarket channels through which stakeholders can transfer value to the company in return for producing an environmental improvement. A third step is ensuring credibility – how can its stakeholders ensure that the environmental improvements are genuine and that each side will follow through on its promises in the exchange? A final step is to identify how the environmental strategy fits with the company’s competitive strategy. An environmental strategy can enhance a company’s market and nonmarket strategies in ways that are difficult for competitors to mimic, thus creating new sources of sustainable competitive advantage.

There are as many ways for companies to improve their environmental performance as there are stakeholders who are calling upon them to do so. If companies make the right choices, they can satisfy their stakeholders, enhance their financial position, and improve environmental conditions. The wrong choices invite stakeholder scorn and risk wasting valuable resources. This chapter outline the environmental strategy framework that can guide a company’s choices and help achieve wins across the triple bottom line. Effective environmental strategy (1) identifies which dimensions of environmental performance improvements can create business value; (2) establishes channels for transferring value from appreciative stakeholders; (3) ensures the company and its stakeholders have credibility with each other; and (4) positions the company for capturing sustainable financial value from its environmental improvements. This framework can help companies choose when and how to implement environmental improvements and scholars to identify the conditions under which companies’ environmental improvements are financially sustainable.