Have Trends in Corporate Environmental Management Influenced Companies’ Competitiveness? Henning Madsen and John P. Ulhøi The Aarhus School of Business, Denmark
l Corporate greening l Environmental management
Over the past two to three decades, corporate environmental management has gradually developed into a more mature discipline. Many companies have incorporated environmental considerations into their activities in order to eliminate or reduce the impact of these activities on the natural environment. The question is, however, whether managers perceive corporate environmental initiatives as a challenge leading to new strategic options and, eventually, increased competitiveness, or whether they regard it as yet another burden. Based on a number of surveys, this paper discusses contemporary trends in the implementation of environmental management systems in Danish industry up to the beginning of the new millennium in an attempt to identify any related effects on competitiveness.
Henning Madsen has an MSc in mathematical economics from the University of Aarhus and a PhD in business economics from the Aarhus School of Business. He is currently involved in research projects on environmental management, social networks and entrepreneurship, and trends in managerial and organisational development.
John P. Ulhøi has a Chair in organisation and management theory, and his publications include areas such as environmental management, innovation and change management, and entrepreneurship. He is co-founder of three inter-institutional research centres and heads a Danish inter-institutional PhD educational network in organisation and management. Dr Ulhøi is a member of several editorial and scientific boards.
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© 2004 Greenleaf Publishing
l Stakeholder influence l Perceived environmental impact l Environmental initiatives l Environmental improvements l Environmental attitudes l Competitiveness
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Department of Information Science, The Aarhus School of Business, Fuglesangs Allé 4, DK-8210 Aarhus V, Denmark
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[email protected]
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Department of Organisation and Management, The Aarhus School of Business, Haslegaardsvey 10, DK-8210 Aarhus V, Denmark
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[email protected]
www.asb.dk
www.asb.dk
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henning madsen and john p. ulhøi
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he last decade or so has seen an increase in concern about
environmental issues, especially in the West, where the many unpleasant side-effects of industrial production have captured the headlines more and more often. This, in turn, has led to an increasing public and political focus on the negative consequences of present production and ways of life, which could threaten conditions for future generations. This has resulted in a spate of environmental legislation and agreements at international, regional, national and local levels, as well as voluntary initiatives. Business organisations tend to regard this either as yet another burden or as a new challenge. It is now almost a decade since mainstream industrial economists, such as Porter and van der Linde (1995a, 1995b), strongly opposed the reactive view that environmental regulations were just another burden that could erode competitiveness. Rather, they argued, by constantly looking for innovative solutions to increasing environmental regulation, companies would be able to tackle the challenge proactively, which could make them more, not less, competitive. The concept of corporate environmental management was introduced more than a decade ago to help managers handle this new situation. The application of this concept has been described in terms of strategic advantages (see, for example, Welford and Gouldson 1993; Welford 1995; Ulhøi 1993), which may lead to increased competitiveness. However, interest in implementing the principles behind corporate greening seems to have slowed of late, in part because of the perceived decreasing influence of various stakeholders, including customers (Madsen and Ulhøi 2001). In other words, the market mechanism does not seem to motivate companies to take environmental initiatives beyond those strictly required by legislation. Put another way, they seem to be less motivated to adopt attitudes and positions that may give them a competitive advantage. The question is, therefore, whether there have been any substantial changes in the adoption of corporate environmental management in recent years that can reverse this negative impression. That is, have companies discovered the strategic advantage of being ahead of environmental regulations or avoiding environmental regulation costs by adopting an innovative attitude? This paper addresses the question of strategic importance based on evidence from a number of surveys of Danish industrial companies carried out during the last decade. The paper is organised as follows. The next section outlines the background and theoretical context of the study, followed by an introduction to the methodological approach used. The research findings are then discussed and discussions and implications of the findings are presented. The last section offers a conclusion to the paper.
Background and theoretical context Contemporary corporate environmental and resource management theory is inspired by the concept of environmental sustainability, which is basically concerned with how the quality and quantity of raw materials can be indefinitely maintained without degrading the soil, disrupting natural habitats, polluting watercourses, deteriorating the absorptive capacity of the environment and so on. As the Brundtland Report puts it: ‘How can we meet the needs of the present generation without compromising the ability of future generations to meet their own needs?’ (WCED 1987). However, as pointed out by Welford (1995), strategies are needed to translate this conceptual idea into practical reality. Corporate environmental management can be considered as an attempt to translate the concept of environmental sustainability into an operational tool for company man76
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agers, since it is concerned with how companies analyse, handle and solve their environmental problems (see, for example, Ulhøi 1993). But, as Welford (1995) points out, it is only a first step towards more universal sustainable attitudes and behaviour. Nonetheless, it is an important step, since it enables companies to go from reactive pollution prevention (end-of-pipe solutions) to a more proactive platform, where environmental issues are more or less integrated in all functional areas (clean-at-source solutions). Adopting the principles of corporate environmental management includes the formulation of an environmental strategy, which has clear relations to other strategic issues, such as corporate goals and product positioning. In other words, it must be considered as an element that can influence a company’s competitive position. Reactive pollution prevention normally implies extra production costs: that is, a negative influence on competitiveness. On the other hand, a proactive attitude normally indicates an innovative climate. The result could be cost savings or improvements in a product’s value, which in turn will make the company more competitive (Porter and van der Linde 1995a). However, it is important to note that the temporary adoption of a proactive environmental approach will not necessarily give a competitive advantage (AragónCorrera and Sharma 2003). A proactive environmental attitude requires continuous and dynamic development centred on organisational learning processes for new innovations to defend or improve the competitive position (Ulhøi 1997). Another way of looking at the environment–competitiveness relationship is to compare a company’s environmental performance with its economic performance. This has been discussed frequently in recent years, and many valuable contributions have been presented (see, for example, the overview and discussion in Wagner and Wehrmeyer 2002 and Schaltegger and Synnestvedt 2002). However, an applicable formulation of such a relationship still has hurdles to overcome. There are several unresolved challenges. First, factors other than environmental performance may contribute to economic performance, and with it competitiveness. A proactive environmental strategy may not always be linked to a positive competitive advantage, but depends on other factors in the general business environment (AragónCorrera and Sharma 2003). This means that the effect of environmental performance must be isolated from other factors influencing economic performance (Schaltegger and Synnestvedt 2002). Second, while it may be relatively easy to develop an expression for economic performance, it is less straightforward to measure the interaction between business activities and the environment, that is, a company’s environmental performance. One way is to construct standardised indicators to facilitate comparison (see, for example, the overview and discussion in Olsthoorn et al. 2001). However, there are many diverging approaches to environmental indicators at company level, measuring different aspects of the business environmental interaction. In addition to different ways of measuring the environmental consequences of business activities, it is not at all certain that we can isolate these consequences from the natural variation in the environment (Ulhøi et al. 1996a). Furthermore, as indicated by Olsthoorn et al. (2001), the time dimension must also be considered, since some environmental impacts cannot be observed immediately. Finally, in light of the societal dimension involved, it is debatable whether we can rely solely on company information when evaluating environmental performance. Shifting the focus to sustainable performance does not diminish the importance of this question. However, companies do not carry on their business activities in a vacuum. As described by Freeman (1984), they are embedded in a web of stakeholders representing different and often conflicting interests. It has even been hypothesised that adopting stakeholder principles and practices results in a better economic performance (Donaldson and Preston 1995). Therefore, relationships with stakeholders ought to be included in a general evaluation of corporate environmental performance (see, for example, Lober
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1996). And companies’ impact on the environment has become increasingly important to most of the key stakeholders: for example, consumers, regulators, politicians and NGOs (Madsen and Ulhøi 2001). Companies themselves are aware of this, although some observers argue that much of their environmental rhetoric represents ill-concealed attempts to control the direction, if not the content, of the debate/dialogue on environment and sustainability with their stakeholders (Welford 1997). Despite suspicions of the degree of altruism underlying corporate environmental actions and pronouncements, the fact remains that businesses, particularly in industry, have been the target of vast amounts of environmental regulation, with which they have generally been forced to comply. But the general impression of the greening of industry leaves much to be desired. Many companies seem to be at pains to go beyond compliance (see, for example, Madsen and Ulhøi 1995), claiming that they are deeply conscious of the environmental problems facing society, and gladly adopt and champion the use of concepts such as sustainability and sustainable development, but often without previous analysis of the wider implications involved, including the competitive advantages. Any evaluation of the rate of adoption of corporate environmental management, including its potential impact on competitiveness, must be based on the elements involved in the adoption process. Of primary interest here are the drivers that force management to take the environmental challenge seriously and introduce corporate environmental management into their company. One example is the influence of various stakeholders on initiatives related to environmental issues in order to improve the company’s environmental performance. However, it is important to stress that, when information is collected from companies directly, it is the influence as perceived by managers that is important. Column 1 in Table 1 shows the various relevant stakeholders who can potentially influence a company’s decisions regarding environmentrelated initiatives. As suggested by Madsen and Ulhøi (2001), the influence of these stakeholders can be categorised into three groups: namely, stakeholders with a direct influence on companies’ decision processes, stakeholders with whom companies have a market-based relationship and stakeholders with only a very indirect and limited influence. A second element is the stage at which the decision to adopt and implement corporate environmental management has been taken. In order to determine where initiatives should be taken, a company audit is normally carried out in order to identify the company’s own impact on the environment. This is important for raising awareness of why initiatives are needed, and is also normally a first step towards implementing one of the known certification schemes, such as ISO 14000 or EMAS. Column 2 in Table 1 shows a list of potential sources of the impact of a company’s business activities on the natural environment. Two final elements concern the actual actions (initiatives) taken and the results (improvements) achieved, and as such these are the factual cores of corporate environmental management. Details of environmental initiatives are generally industryspecific. However, it is possible to list a number of potential areas that should be valid across industries. These are shown in column 3 of Table 1. Thus, an evaluation of the adoption of corporate environmental management must include four main topics: t Influence from various stakeholders to take environmental initiatives, as perceived
by managers t Impact of the company’s business activities, as perceived by managers t Initiatives related to environmental issues t Improvements resulting from actual initiatives
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1. Stakeholders
2. Impact areas
Employer and industrial associations (1999 only)
t
t
Distributors
t
t
Owners/shareholders
t
Business networks (1999 only)
t
The company’s own production process
t
Unions (1999 only)
t
t
Financial institutions
The company’s total logistics
t
Use of the company’s products
t
t
Consumer organisations
t
R&D institutions
t
International regulations
t
Competitors
t
Customers
t
Suppliers
t
Local regulations
t
Employees (1999 only)
t
Employees/unions (1995 only)
t
Environmental organisations
t
National regulations
t
Press and media
t
t
Extraction of raw materials
3. Areas for initiatives and improvements t
Reduction of waste
t
Soil protection
t
Reduction of discharges
t
Reduction of water consumption
t
Reduction of airborne emissions
t
Noise reduction
t
Reduction of energy consumption
Discharge of the company’s products
t
Reduction or substitution of raw materials
Recycling of the company’s products
t
Improvements in the working environment (the internal environment)
Suppliers’ production processes
Table 1 details of the elements considered in relation to the four main topics (basis for the measurement scales)
This approach is what Olsthoorn et al. (2001) characterise as management indicators. Though not an ideal way to analyse the environmental performance of companies in more exact terms, it provides an opportunity to evaluate the situation as perceived by management in order to identify the awareness of competitive advantages. Thus, by analysing the adoption of corporate environmental management in Danish industry, we can evaluate the extent to which the competitive advantages advocated by Porter and van der Linde (1995a, 1995b) have been recognised.
Methodology Information on the adoption of corporate environmental management in Danish industry has been collected in regular surveys over the last decade. The survey instrument used is a structured questionnaire primarily based on the four topics mentioned above. In addition to a pilot survey in early 1994, two full-scale surveys have also been carried out, one in late 1995 and another in late 1999. In all surveys, samples of industrial companies with more than ten employees were drawn randomly from an electronic database. For the purpose of this paper, only data from the two full-scale surveys are compared.
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The initial sample consisted of 517 companies in 1999 and 562 in 1995, approximately 10% of the companies in the population. The sampled companies were initially contacted by telephone for the purpose of identifying the person responsible for environmental matters and obtaining his or her consent to participate in the survey. Some respondents did not wish to participate in the survey, so 440 questionnaires were sent to the remaining companies in 1999 and 498 in 1995. In 1999, a total of 308 completed questionnaires were returned, equivalent to a response rate of 70.0% compared with the number sent and 59.6% compared with the original sample. The figures in 1995 were 54.7% and 48.4%, respectively. This can be considered to be a quite satisfactory result regarding the validity of the analyses. For each of the four basic topics in the questionnaire a measurement scale was constructed based on the items included in each topic (see Table 1). The responses were given on a five-point Likert scale, so that questions could be answered by expressing either the degree of agreement/disagreement or the level of perceived impact or influence. Various statistical techniques have been used to analyse the data. For the purpose of this paper, the primary technique used is the so-called profile analysis, which is a special version of a multivariate analysis of variance (see, for example, Johnson and Wichern 1992). By means of this technique, it is possible to identify differences in responses to the same topic in two surveys. The three basic hypotheses in this model (parallel profiles, coincident profiles and level profiles) will all be tested at a 5% level of significance. Any differences identified will be further evaluated by means of simultaneous confidence intervals based on the Bonferroni principle, at an identical level of significance. In this way, the individual items causing the differences can be identified and described.
Results General trends In order to compare the general development in adoption of corporate environmental management in Danish industry from 1995 to 1999, the responses to the individual items within each topic have been compressed into an index from 0 to 10. This enables the overall development to be visualised even if the measurement scales for the individual topics include an unequal number of items. The results are presented in Figure 1. As can be seen from Figure 1, in 1995, perceived stakeholder influence was higher than perceived own impact, which in turn was higher than the level of initiatives. On the other hand, the level of achieved improvements was approximately the same as perceived own impact. In 1999, the perceived influence from stakeholders was still higher than perceived own impact. But in 1999, the level of initiatives was remarkably higher than in 1995, and the level of achieved improvements also increased. The level of initiatives was even higher than the achieved improvements in 1999. However, it should be noted that the overall level in both 1995 and 1999 fluctuates around 3.5, which indicates a relatively low level. The dual tendency of the observed fluctuations is confirmed by a profile analysis, since the profiles are not parallel. This is because the development in perceived influence from stakeholders and initiatives taken were both significant, but in opposite directions. The former decreased significantly from 4.13 to 3.66, whereas the latter increased significantly from 3.19 to 4.36. Perceived own impact and achieved improvements do not differ significantly, even where changes in the absolute values can be observed. However, the increase in achieved improvements is almost significant.
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4.5
1995
4.0
1999
Index (0–10)
3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0
Influence
Impact
Initiatives
Improvements
Figure 1 general tendency in the development of perceived stakeholder influence, perceived own impact, reported initiatives and reported improvements
Stakeholder influence As noted above, the perceived influence from stakeholders regarding environmental initiatives decreased significantly from 1995 to 1999. Details of this development are presented in Figure 2. Obviously, stakeholders can be split into two groups according to the perception of their influence. The first group consists of stakeholders such as owners/shareholders, employees, customers and various kinds of regulation. The perceived influence from stakeholders in this group fluctuates around a level equal to 3. The other group consists of the remaining stakeholders, and the perceived influence fluctuates around a level equal to 2. But perceived influence in general decreased from 1995 to 1999. The two exceptions are local regulations and competitors. As can be seen in Figure 2, the 1999 survey included two new stakeholders: employer/ industrial associations and business networks. Furthermore, in the 1995 survey, employees and unions were treated as a single stakeholder, whereas they were split into two separate stakeholders in 1999. When comparing the combined perceived influence in 1995 with individual perceived influence in 1999, it is worth noting the differences in perception of influence between employees and unions. A profile analysis of the perceived stakeholder influence makes it possible to conclude that the profiles in 1995 and 1999 are not parallel. This is basically due to a significant decrease in the perceived influence from four stakeholders: distributors (from 2.16 to 1.79), consumer organisations (from 2.35 to 1.99), press and media (from 2.31 to 2.00), and research and development institutions (from 2.17 to 1.88). Furthermore, the decrease in perceived influence from international regulations is almost significant (from 3.11 to 2.81). However, as mentioned above, there are two exceptions to the general decreasing tendency. For local regulations, there is a significant increasing tendency (from 2.69 to 3.53), whereas the increasing tendency for competitors is almost significant (from 2.05 to 2.28). The change in perceived influence from the remaining stakeholders confirms the decreasing tendency, although none of them is significant.
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Business networks
Average response
Employer associations 1995 Consumer organisations 1999
Press and media R&D institutions Financial institutions Environmental organisations Competitors Suppliers Distributors Customers Local regulators International regulators National regulators Union Employee Employee/union Owner/shareholder
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Figure 2 development in perceived influence of a range of stakeholders on environmentrelated initiatives (average responses, originally measured on a 5-point likert scale, ranging from 1 = no influence to 5 = very high influence)
Own impact As can be seen in Figure 3, the general perception is that the companies do not have a major environmental impact. The level ranges from an average of 2 to 3 for the individual items included in the measurement scale, equivalent to the response options ‘very little’ and ‘little’ impact, respectively. Even if differences can be observed between the perception of environmental impact in 1995 and 1999, these differences are not significant when the development is evaluated using a profile analysis. In other words, the profiles are not only parallel but they are also coincident. But the profiles do not level. The significant differences between the levels of the individual scale items are obvious from Figure 3.
Reported initiatives In the general overview above (see Fig. 1), initiatives on environmental issues in the companies was the only topic showing a significant increase from 1995 to 1999. The details of this development are presented in Figure 4. As can be seen in the figure, an increasing tendency can be observed within all areas included in the measurement scale. In general, initiatives related to the working environment show the highest level,
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Recycling of products
Average response 1995 1999
Removal of products
Use of products
Logistics
Own product procurement
Suppliers’ product procurement
Extraction of raw materials
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Figure 3 respondents’ perception of the environmental impact of their own company due to its business activities (average responses, originally measured on a 5-point likert scale, ranging from 1 = no impact to 5 = very high impact)
followed by reductions in energy consumption. Reductions in water consumption, noise and waste come next. There are only a few initiatives directly related to soil protection. The profile analysis reveals that the situation in 1999 is identical to that in 1995, but at a significantly higher level, i.e. the two profiles are parallel but not coincident. This result supports the visual impression of Figure 4. However, it turns out that the result is due to a significant increase in the number of initiatives in only four out of the nine areas. These four areas are: reduction in water consumption (from 2.33 to 2.96); reduction in discharges (from 2.00 to 2.47); reduction in consumption of raw materials (from 1.96 to 2.41); and reduction in energy consumption (from 3.14 to 3.53). The change in initiatives concerning noise reduction is almost significant (from 2.68 to 3.00). In other words, the changes in initiatives concerning the working environment and reduction of solid waste are positive but not significant.
Reported improvements The level of improvements achieved does not fully match the level of initiatives taken, as a comparison of Figures 4 and 5 shows. The situation in Figure 5 looks very much the same as in Figure 4, only at a lower level. The general insignificant tendency between 1995 and 1999 is partly confirmed by a profile analysis based on the individual areas included in the measurement scale. Parallel profiles can be accepted, but at a level of significance less than 0.05 (0.027). If the hypothesis of parallel profiles is accepted, it is possible to accept that the profiles are
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Improved work environment
Average response 1995
Reduction of raw materials 1999 Reduction of energy
Reduction of noise
Reduction of airborne emissions
Reduction of water emissions
Reduction of discharges
Protection of soil
Reduction of waste
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Figure 4 reported level of initiatives on environmental issues within a number of areas (average responses, originally measured on a 5-point likert scale, ranging from 1 = no impact to 5 = very high impact)
coincident too. But they do not level. A detailed interpretation of this result shows that there is a significant increase in improvements in the reduction of water consumption (from 2.35 to 2.81) and the reduction in raw materials consumption (from 1.99 to 2.35). Furthermore, almost significant increases can be found in improvements in the reduction of discharges (from 2.08 to 2.37) and the working environment (from 3.49 to 3.75).
Discussion and implications Individuals often tend to overestimate their own performance. In order to deal with such a potential bias, it would be necessary to check each participating company to see whether the respondent’s statement matched actual performance. This would not only be very time-consuming and expensive, but probably also generate resistance to participating in the study in the first place. Given that the present study is entirely based on the self-perception of the respondent, therefore, it cannot be said to be free from bias; that is, the results reported in the previous section may give too optimistic an impression. The general tendency observed in the adoption of corporate environmental management in Danish industry over the last decade indicates a positive development, due to
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Improved work environment
Average response 1995
Reduction of raw materials 1999 Reduction of energy
Reduction of noise
Reduction of airborne emissions
Reduction of water emissions
Reduction of discharges
Protection of soil
Reduction of waste
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Figure 5 reported level of improvements achieved within a number of areas (average responses, originally measured on a 5-point likert scale, ranging from 1 = no impact to 5 = very high impact)
the increase in initiatives taken and improvements achieved (cf. Fig. 1). However, it is possible that this development has just removed a burden from managers so they do not feel the same influence from stakeholders any more, and that improvements actually have reduced the company’s own impact. Furthermore, as noted in relation to Figure 3, no significant difference between 1995 and 1999 can be observed concerning the perception of the companies’ own impact. There are two possible interpretations of this result. Either the increase in initiatives has not yet produced a reduction in the environmental impact of the companies, or the initiatives do not have a significant effect. As could be observed from Figure 5, the major change in achieved improvements is related to cost reduction. This seems to indicate that many initiatives focus on ‘picking the low-hanging fruit’: for example, as an immediate reaction to the increase in taxes on water and energy consumption and charges on waste deposits introduced by the government and local authorities. However, as mentioned by Porter and van der Linde (1995a), this has an impact both on competitive position and environmental performance. On the other hand, it could indicate that companies avoid taking more serious and costly initiatives, which only pay in the longer term, as also mentioned above. With regard to stakeholder influence, it is interesting to note the development between 1995 and 1999, since it is in contrast to expectations expressed in 1995. When asked about the expected future influence of the stakeholders included in Figure 2, the general response in 1995 was that it could be expected to increase (Madsen and Ulhøi 1996b). But the perception in 1999 does not seem to confirm this. However, in 1999,
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the majority of respondents generally expected an increase in stakeholder influence in the future. One possible explanation for this is that managers always think they are under the influence of various stakeholders. The fact that legislation still seems to be one of the major drivers of environmentrelated initiatives is a negative development as regards competitiveness. This has been reported in several surveys over the years (e.g. Fineman and Clarke 1996; Ulhøi et al. 1996b; Madsen and Ulhøi 1996a). But two positive aspects can also be identified. First, the perceived influence from competitors seems to have increased. This could indicate an increasing market-based influence, even if the influence from customers has not changed. Second, there is an increase in the perceived influence from local regulations. This may be a particularly Danish phenomenon, since environmental control functions are normally handled by local authorities in Denmark (city or county). Recently, these authorities have taken a more proactive approach, rejecting the traditional control function and adopting a more dialogue-based contact with companies. This new approach is in line with the rationale of stakeholder management (see Madsen and Ulhøi 2001) and the call for more flexibility in regulations (Porter and van der Linde 1995a). Moreover, the presence of a statutory health and safety scheme, which is compulsory for many industrial companies, may also influence perceptions. Even though this scheme focuses on the working environment, there are clear derived effects on the natural environment. Furthermore, it underlines the observation by Donaldson and Preston (1995) that employees are considered important stakeholders in many European countries. However, as it is compulsory, compliance with the statutory health and safety scheme may not, in itself, result in a competitive advantage. Though there are differences in the sampling procedure used, it is possible to compare trends in environmental initiatives with a similar survey from Switzerland (Baumast and Dyllick 2001). In contrast to the increasing tendency in environmental initiatives in Danish industry (cf. Fig. 4), the Swiss result indicates a decline from 1997 to 2001. This could indicate different stages in the adoption of corporate environmental management in the two countries, but it might also be due to differences in industrial structure or managerial attitudes, for example. However, there is insufficient information for a more detailed evaluation of this difference. There are several implications from the results of this survey. First, it seems obvious that political initiatives—for example, regulations—are still needed, since market forces do not seem to play an influential role. However, regulation is typically an all ‘stick’ approach to changing behaviour, which leaves the competitive situation unchanged. The challenge for politicians, therefore, is to introduce initiatives with a strong ‘carrot’ element, which can really change the attitude and behaviour of customers and consumers as well as managers. What is needed, therefore, is more flexibility in regulations, as called for by Porter and van der Linde (1995a) and by Aragón-Correra and Sharma (2003). More flexible regulations might provide the basis for continuous improvements that will influence the competitive situation, unlike rigid compliance with strict regulations. Business managers increasingly need to recognise the potentialities for competitiveness of introducing corporate environmental management. When they are forced—one way or another—to focus on short-term results, they lack the motivation to introduce more costly initiatives leading to more long-term and lasting effects, but which do not pay back immediately. This echoes the remark by Donaldson and Preston (1995) that response to social and ethical considerations is often consistent with long-run increases in profit and value. Clearly, both market mechanisms and political initiatives play an important role in changing this situation.
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Conclusion Corporate environmental management has been available to managers for a number of years. But, as the results of the survey presented in this paper demonstrate, the rate of adoption does not seem to be convincing. Positive trends can be observed, but a breakthrough in reducing the environmental impact of industrial business activities still seems to be elusive. Could it be that we just haven’t seen the full effect of the increase in initiatives observed between 1995 and 1999? Or could it be that managers do not acknowledge the competitive advantage of corporate environmental management? One plausible explanation for the recent decrease in corporate greening is that managers generally have to focus on core/bottom-line issues. In other words, besides environmental issues, the general business climate also has to be taken into account. Another reason may be that, in the first wave of corporate greening, companies experienced a fast return on their investment. This means that many companies have already ‘picked the low-hanging fruits’: that is, implemented all the environmental initiatives with a fast payback potential. The next level of corporate greening activities is likely to require a longer payback time, since it will involve the implementation of more advanced or expensive cleaner technologies and be increasingly difficult and expensive to improve waste sorting and treatment. Finally, the managerial mind-set is proving to be a major brake on the speed of corporate greening. The question is whether managers have realised the full potential of the environment as a key strategic factor, which, in order to achieve a dynamic and innovative organisation, and with it a competitive advantage, needs to be implemented from the design phase of product development through each link in the overall business process. Managers seem to have to constantly focus on short-term results. This is not conducive to the long-term perspective needed for more serious environmental initiatives. The important question is, therefore, are we able to change our behaviour and attitudes in daily life in order to promote and motivate a change in managerial behaviour? Do we have to rely on politicians alone, or do we also have a responsibility ourselves, one which we do not take seriously? In other words, who is to blame for the slow progress—or are we overreacting?
References Aragón-Correra, J.A., and S. Sharma (2003) ‘A Contingency Resource-Based View of Proactive Corporate Environmental Strategy’, Academy of Management Review 28.1 (January 2003): 71-88. Baumast, A., and T. Dyllick (2001) ‘Umweltmanagement-Barometer Schweiz: Erste Ergebnisse zur Befragungsrunde 2001’, in A. Baumast and T. Dyllick (eds.), Umweltmanagement-Barometer 2001 (IWÖ-Diskussionsbeitrag nr. 93; St Gallen, Switzerland: Institut für Wirtschaft und Ökologie, Universität St Gallen): 35-44. Donaldson, T., and L.E. Preston (1995) ‘The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications’, Academy of Management Review 20.1 (January 1995): 65-91. Fineman, S., and K. Clarke (1996) ‘Green Stakeholders: Industry Interpretations and Response’, Journal of Management Studies 33.6: 715-30. Freeman, R.E. (1984) Strategic Management: A Stakeholder Approach (Boston, MA: Pitman). Johnson, R.A., and D.W. Wichern (1992) Applied Multivariate Statistical Analysis (Englewood Cliffs, NJ: Prentice Hall, 3rd edn). Lober, D.J. (1996) ‘Evaluating the Environmental Performance of Corporations’, Journal of Managerial Issues 8.2 (Summer 1996): 184-205. Madsen, H., and J.P. Ulhøi (1995) ‘The Greening Situation of Danish Companies’, in R. Wolff and B. Ytterhus (eds.), Environmental Management: Where do we Stand? (Oslo: Cappelen Akademisk Forlag). —— and —— (1996a) ‘Environmental Management in Danish Manufacturing Companies: Attitudes and Actions’, Business Strategy and the Environment 5.1: 22-29.
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