Abstract
Numerous empirical studies have examined how voluntary environmental adoption and financial performance are related in enterprises from industrialized countries; little attention has been paid to Taiwanese enterprises. This work empirically explores how ISO14001 environmental management systems (EMS) influences the financial performance of Taiwan Stock Exchange (TSE) and over the counter (OTC) listed adopted companies in Taiwan. Based on a sample of 369 ISO14001 certified firms and 706 non-certified firms, the regression results showed that firm age and scale influence firm decisions regarding whether to acquire ISO14001 certification. Measures of profitability, productivity and Research and Development (R and D) competence do not indicate any significant differences between ISO14001 certified and non-certified companies in terms of their financial performance. Since the institutional forces such as greening supply chain pressures have become the major driver of the moves of Taiwanese firms towards more environmentally responsible operations, the estimation results demonstrate that Taiwanese firms regard the ISO14001 standard as an acceptable means of seeking legitimacy, establishing trust and long-term relationships with a wide range of stakeholders, and deflecting the scrutiny and interest of watchdog agencies and other interested parties worldwide; thus, no significant correlation exists between environmental and financial performance. Key words: Certification, environmental performance, financial performance, greening supply chain, ISO14001.
Highlights
In an era defined by accelerated population growth and dwindling non-renewable resources, balancing the pursuit of economic growth with environmental conservation is becoming increasingly important in firm policy making
Regarding indicators for measuring financial performance, the formulas and implications differ from traditional analyses of financial statements and public manuals that classify financial ratios as financial structure, the ability to pay off debt, operational ability, profitability and growth, in that traditional analyses and public manuals are not entirely appropriate for this study
In implementing the International Organization for Standardization (ISO) 14001 environmental management system, enterprises work towards fulfilling their environmental duties, but can reduce production costs and resource consumption as well as eliminating international trade barriers and doing business in a more “green” fashion
Summary
In an era defined by accelerated population growth and dwindling non-renewable resources, balancing the pursuit of economic growth with environmental conservation is becoming increasingly important in firm policy making. Development has promoted its Agenda 21, inducing nations to device specific policies addressing sustainable development. To achieve the integration and standardization of international environmental management systems, the International Organization for Standardization (ISO) announced the ISO 14000 family of international environmental standards on 1 September 1996. The ISO 14001 environmental management system standard identifies environmental aspects of products, activities, or services of organizations with various types and sizes. The purpose of the ISO in designing the ISO 14001 system is to establish a basic international standard (currently, nations frequently follow their own environmental management systems, for example, the BS 7750 in the U.K., the EMAS in the E.U., Z-750 in Canada, and so on), and establishment of an international standard can avoid the formation technical barriers to trade (TBT), which could hurt both trade and business. The ISO aims to promote a responsible attitude among individuals in the “global village.”
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