Can Firms Do Well by Doing Environmental Good? Cost-Benefit Analyses of Amazon’s Climate Pledge Friendly Program

Junhong Chu|Xukun Long|Shanfeng Zhang

Mar 19. 2025

Key Takeaways

This study investigates the financial viability of corporate environmental initiatives through cost-benefit analyses of Amazon’s Climate Pledge Friendly (CPF) program. In collaboration with a leading Amazon seller, it finds that for nearly all participating products, the additional profit generated from the CPF badge was insufficient to offset the certification cost and yield a significant net benefit, largely due to the attitude-behavior gap in green consumption.
Using consumer responses across various stages of the purchase funnel, the study evaluates the benefit of participation in the CPF program. It finds the CPF badge led to a 5.44% increase in product page visits, signaling heightened consumer interest. However, this increase did not translate into a proportional increase in orders, which rose only by 3.46%, causing a 0.2-percentage-point or 3.3% decline in the conversion rate. This finding highlights the attitude-behavior gap in sustainable consumption.
Analysis of consumer reviews using large language models (LLMs) indicates the increased awareness of the eco-friendly feature contributed to the heightened interest in CPF products. However, the perceived price increase and perceived quality decrease of CPF products led to a smaller increase in order placement, which created the gap.
Incorporating data on annual certification costs and profit margins, cost-benefit analyses demonstrate the CPF program could not bring a significantly positive financial impact to nearly all participating products. However, over 70% of products would not only break even, but also generate substantial gains in the absence of the gap.
The findings provide actionable insights to all stakeholders for improving financial viability, enhancing the impact of sustainability initiatives, and fostering an environment where sustainable practices are both viable and rewarding.

Source Publication:

Chu, J., Long, X., & Zhang, S. (2025). Can Firms Do Well by Doing Environmental Good? Cost-Benefit Analyses of Amazon’s Climate Pledge Friendly Program. Available at SSRN 5128446.

Background and Research Questions

As environmental concerns reshape business strategies, firms increasingly engage in sustainability programs. However, research has found that although consumers report caring about the environment, a wide gap exists between their attitudes and behavior. Given the substantial costs of manufacturing and certifying products that meet ESG standards, a fundamental question persists: Can firms achieve financial success by aligning their operations with environmental initiatives? This study explores whether firms can reconcile environmental responsibility with profitability by conducting cost-benefit analyses of Amazon’s CPF program.

Data and Methodology

The study leverages proprietary data from a leading Amazon seller spanning January 1, 2023, to January 31, 2024. This dataset includes granular product-level details such as page visits, orders, revenue, price promotions, reviews, and CPF program participation status.

To assess the company’s benefit from participating in the CPF program, the researchers estimate the causal impact of the CPF program on consumer behavior. They employ a synthetic difference-in-differences (SDID) approach to compare the outcomes of products before and after obtaining the CPF badge, between CPF products and synthetic products generated from the control group. Additionally, LLM-driven analysis of customer reviews helps uncover the underlying drivers of consumer decision-making. Using data on annual certification costs and profit margins, the researchers conduct cost-benefit analyses to evaluate the financial viability of the CPF program.

Findings and Discussion

The CPF badge successfully increased product page visits by 5.44%, indicating heightened consumer interest. However, the corresponding rise in orders was only 3.46%, leading to a net decline of 0.2 percentage points or 3.3% in the conversion rate. This gap between consumer interest and actual purchase behavior aligns with prior research on the attitude-behavior gap in green consumption.

Analysis of consumer reviews reveals the increased awareness of the product’s eco-friendly feature contributed to the heightened consumer interest in CPF products. However, consumers perceived CPF products to be higher priced and of lower quality, which explains why consumer interest in sustainable products failed to translate into proportionate actual purchases.

Figure 1: Annual Net Benefit of the CPF Program by Product

Note: (1) Products are sorted by the size of the annual net benefit. (2) The vertical error bars represent the 95% confidence intervals for each estimate. (3) The dashed red line indicates a zero-effect baseline for reference.

The financial viability of Amazon’s CPF program for participating firms is essential for its long-term sustainability. Further cost-benefit analyses show that, for nearly all products, joining the CPF program did not generate sufficient profits to offset the certification costs and deliver significant financial benefits to the company, due to the attitude-behavior gap. However, over 70% of products would not only break even, but also generate substantial gains of 10,244,523 USD (9.2% revenue) in the absence of the gap.

Policy and Market Implications

The findings offer actionable implications for firms, platforms, and policymakers to enhance the effectiveness and appeal of sustainability programs. Firms should address consumer misperceptions by improving product descriptions. The platform can boost the CPF program’s effectiveness by increasing the visibility of CPF-labeled products and providing sellers with guidelines to better communicate sustainability attributes. Policymakers can provide support through financial incentives and educational campaigns to raise consumer demand. Only through collaborative efforts from all stakeholders can environmental programs ensure long-term success.