Environmental management system: The internal and external impact of ISO 14001 implementation on the manufacturing companies

Abstract

The activities of manufacturing companies are closely related to the environmental damage that occurs. It gives an imprint on the environmental damage from the production process until the community consumes the product . However, many manufacturing companies have tried to reduce the damage to nature by implementing an environmental management system. Being certified to ISO 14001 is the actual action of a manufacturing company in implementing an environmental management system. This study explores the impact of implementing an environmental management system that is ISO 14001 certified to the company internally and externally. Using a purposive sampling technique to the manufacturing companies listed on the IDX from 2017 - to 2020, 327 manufacturing companies were obtained as a sample of this study. The results of hypothesis testing using Panel Data Regression shows that the environmental management system has a significant positive effect on manufacturing cost, raw material cost, the number of outstanding shares, market value-added, and sales growth. Furthermore, an environmental management system is proven to significantly impact the company because it increases the number of outstanding shares, provides company value, and increases the company’s sales growth.