The Relation between Environmental Management Systems and Environmental and Financial Performance in Emerging Economies

Cosmina L Voinea,Hammad Bin Azam Hashmi,Cosmin Fratostiteanu,Bas-Jan Hoogenberg

doi:10.3390/su12135309

Cosmina L Voinea, Hammad Bin Azam Hashmi + Show 2 more

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https://doi.org/10.3390/su12135309

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Journal: Sustainability	Publication Date: Jul 1, 2020
Citations: 28	License type: CC BY 4.0

Affiliation: Open University in the Netherlands

Abstract

This study pursues to clarify the effect of environmental management systems (EMS) comprehensiveness on environmental performance and financial performance using an extensive quantitative dataset obtained in Brazil over an eight-year period. It is recognized that the implementation of environmental management differs per company varying in how many environmental practices are adopted and hence how comprehensive the EMS is. The relationship between EMS comprehensiveness, environmental performance, and financial performance proves to be complex. First of all, the overall negative effect of environmental performance on financial performance may indicate that the resources needed to realize an improved environmental performance do not outweigh the cost reductions resulting from eco-efficiency or improved reputation. The effect of EMS comprehensiveness on financial performance is in line with that, indicating that an above average EMS comprehensiveness results in lower financial performance, which may correspond to high environmental management- and overhead costs. Across sectors, the companies operating in sector industries have high quality EMS comprehensiveness, while the companies in agriculture, commerce, and services exhibit a lower EMS.

Highlights

The advanced industrialisation of society has resulted in a large metamorphosis of the emerging economies
These two extremes result in a 2% lower increase in net revenue per year, or calculated relatively; an almost 50% lower financial performance compared to the average Environmental Management System (EMS) comprehensiveness scores
The objective of this study was to investigate the relationship between the comprehensiveness of the environmental management systems, the environmental performance and the financial performance of multinational corporations (MNCs) in emerging economies

Summary

Introduction

The advanced industrialisation of society has resulted in a large metamorphosis of the emerging economies. Though living standards may have increased, another effect is without a doubt a strong impact on the environment. Greenhouse gas emissions, the use of natural resources, and the disposal of waste and toxic substances are all thought to have a strong effect on climate change. A growing population and expectations for further improvements in welfare may result in an even higher demand for the world’s resources. A growing awareness of this unsustainable state of exponential growth and excessive consumption of resources led to a more conscious policy regarding the environmental footprint. The resulting effect is stronger focus on the environment and sustainable resource usage, by governments, citizens, and industry [1]

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