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The Promise of Different Types of Environmental Management Systems (EMSs) for Voluntary Governance

The Promise of Different Types of Environmental Management Systems (EMSs) for Voluntary Governance . June 12, 2009. George Mason University . Younsung Kim, Nicole Darnall . Paper Prepared for presentation at Environmental Policy:

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The Promise of Different Types of Environmental Management Systems (EMSs) for Voluntary Governance

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  1. The Promise of Different Types of Environmental Management Systems (EMSs) for Voluntary Governance June 12, 2009 George Mason University Younsung Kim, Nicole Darnall • Paper Prepared for presentation at Environmental Policy: • A Multinational Conference on Policy Analysis and Teaching Methods and The Association of Public Policy Analysis and Management, • Seoul, Korea, June 2009

  2. What are EMSs? • EMSs are systems of management processes that enable organizations to continually reduce their environmental impact • Most EMSs involve implementing written environmental policy, training employees, implementing internal audits, and setting environmental performance indicators and goals • All EMSs are not designed similarly • Three types of EMSs: Complete EMS, Certified EMS, and Self-Designated EMS

  3. Research Gaps in Previous EMS literature • Mixed results about the effectiveness of EMSs • Positive (Arimura, Hibiki, & Katayama, 2008, Potoski&Prakash, 2005a, 2005b; Russo, 2002) • Negative (Dahlstrom, Howes, Leinster, & Skea, 2003; King, Lenox, & Terlaak, 2005) • The focus of analysis on the ISO-14001 certified EMS rather than uncertified generic EMSs • However, most governments endorse a more generic EMS, not certified EMSs • Studies assessing EMS effectiveness in numerous medium and an international setting are lacking

  4. Research Objective • To assess firms’ environmental performance across five areas of environmental impacts – natural resource use, solid waste generation, discharge of wastewater effluent, local and regional air pollution, and global pollutants • To explore different types of EMSs and their relationship towards improved environmental performance of EMSs

  5. EMSs & Environmental Performance • EMSs can help organizations ensure that their management practices conform to environmental regulations by improving their internal operations and achieving greater efficiencies for pollution prevention. • EMSs can encourage organizations to adopt more proactive environmental strategies. • Hypothesis 1: Organizations that adopt an EMS (of any sort) are more likely to improve environmental performance.

  6. Certified EMSs & Superior Environmental Performance • Certified EMSs require third-party audit process • Seeking certification can be costly • Actual costs of certification can range from $29-$88 per employee • Certification enhances visibility for organizations’ environmental practices • Hypothesis 2:Organizations that adopt certified EMSs are more likely to improve their environmental performance than organizations that adopt non-certified EMSs.

  7. OECD Data • Survey of manufacturing facilities in 7 OECD countries (Canada, France, Germany, Hungary, Japan, Norway, and the USA) • Collected using a modified Dillman (1978) method • Mailed to environmental mangers within facilities • Two follow up reminders • Response rate 24.5%, n=4,187 • Consistent with previous studies of firms’ environmental practices (e.g., Christmann 2000; Melnyk, Stroufe,& Calantone 2003)

  8. Measuring Environmental Performance • Survey asked the facility: • Reduced its environmental impacts in the last 3 years • Use of natural resources • Solid waste generation • Wastewater pollution • Local or regional (neighboring countries) air pollution • Global air pollution • Self-reported measures are coded as binary • 1= Decreased significantly / Decreased • 0 =No change /Increased / Increased significantly

  9. Measuring EMS Adoption • Self-Designated EMS • Survey asked facility managers whether their facilities actually implemented EMSs • 1 (=Yes), 0(=No) • Complete EMS • Implemented 4 different environmental practices: written environmental policy, training program, internal audits, environmental indicators • 1 (=Yes in all four practices), otherwise 0 • Certified EMS • Whether or not facilities’ EMS was certified to ISO 14001 • 1(=Yes), 0(=No)

  10. Control Variables • Regulatory stringency • Asked facilities to describe whether the environmental regime to which they are subject to is stringent or not • Facility size • The natural logarithm of the number of employees in a facility • Industry dummies • The chemistry sector was the omitted sector dummy • Country dummies • The U.s. was the omitted country dummy variable

  11. Model Development • Two-stage bivariate probit • model (15 estimation models ) • But… • Unobservable factors may be correlated with both EMS adoption and environmental performance therefore explain their relationship STAGE 1 STAGE 2 • Motivations for EMS Adoption • Stakeholder pressures • Regulator • Parent company • Environmental interest • group • Local government assistance program • Controls • Market scope, Market concentration, Publicly traded, facility size, Country & Industry dummies

  12. Key Results (1) • Stage 1- Local government assistance programs and parent company pressures increase the probability of all types of EMS adoption (p<.01) • Stage 2 - Complete, self-designated, & ISO-14001 certified EMS adoption were associated with positive environmental impacts (p<0.1-.10) (In support of Hypothesis 1) • Regulatory stringency was positively related with environmental performance (p<.01-.10)

  13. Key Results (2) • Comparing marginal effects of certified & complete EMSs showed that • Certified EMS adoption is associated with a 5.3% greater reduction in natural resource uses • Complete EMS adoption reduces local air pollutants by 8.2% • Reductions in wastewater effluent, solid waste generation, and global air pollutants were similar in both EMSs • (little evidence in support of Hypothesis 2)

  14. Discussion & Conclusions • This study offers support for EMSs as voluntary governance options • While regulatory stringency showed positive relationships with environmental performance, it is uncertain whether facilities will be motivated to adopt EMS (of any sort) in the absence of traditional regulatory pressures • Therefore, some reflexive policies and programs, like those that encourage EMS adoption, may achieve equivalent environmental outcomes

  15. Discussion & Conclusions • Since externally accredited EMSs are not always related to greater environmental performance, facilities may not need to certify their EMS • Therefore, governments have greater confidence in their approach in that they encourage generic type of EMSs • Some governments may consider grants and technical assistance to promote EMSs adoption in facilities that have limited complementary resources and capabilities

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