Money Cannot Be Green: Performance Incentives, Attention to Money, and Organizational Sustainability.

Environmental sustainability is one of the most pressing problems of our time, but the progress towards it has remained stagnant. The current work identifies performance incentives as a critical barrier that prevents organizational decision-makers from supporting sustainability initiatives. Across two laboratory experiments (n = 702) and one large-scale panel dataset on executive compensation, corporate annual reports, and firm-level environmental performances (n = 14,126), we show that people whose pay is more contingent on performance are less likely to support the sustainability initiatives of their organization. We also provide evidence for a novel mechanism whereby performance incentives create attentional fixation on money, which further reduces support for organizational sustainability. This effect persists even in the absence of evidence that these initiatives are in fact more costly than their less-sustainable alternatives. Together, our findings suggest that one of the most common types of incentives might be inadvertently undermining the pursuit of one of the most urgent organizational changes. [ABSTRACT FROM AUTHOR]