Environmental Performance Measurement Research Articles

How do powerful CEOs influence corporate environmental performance?

This study investigates how powerful chief executive officers (CEOs) affect their firm’s environmental performance. Based on a sample of 5222 U.S. firm–year observations, we find that such CEOs positively influence environmental performance and that this effect is more prevalent in profitable firms. This result suggests that powerful CEOs are influential in creating sufficient resources to enhance their firms’ environmental performance. They are also typically well established and enjoy the quiet life that predisposes them to prioritize environmental projects. Our results also show that, although firms in polluted industries have lower environmental performance, they are able to mitigate this negative effect when they have powerful CEOs or are more profitable. Our results are robust to a variety of econometric models, alternative measures of environmental performance, and controlling for endogeneity issues.

National culture's influence on environmental performance of countries: A study of direct and indirect effects

AbstractThe effect of national culture on country environmental performance has received attention during the past few years. However, previous studies considered a subset of cultural dimensions, focused on diverse environmental performance measures, provided contrasting results, and did not adequately investigated the mediating effects of socio‐economic variables. In this study, we investigate the impact of all cultural dimensions (power distance, individualism, masculinity, uncertainty avoidance, long‐term orientation, indulgence) on three environmental performance measures at the country level: the environmental performance index and its two main overarching objectives. Both direct and indirect effects, through three socio‐economic variables (population growth, education, income), are tested using a sample of 62 countries. Results show that the effect of cultural dimensions may vary based on the specific cultural dimension and the type of environmental performance measure considered. Masculinity and indulgence directly impact on environmental performance. Power distance has no influence on environmental performance measures. The other dimensions affect environmental performance through the mediating effect of socio‐economic variables.

Corporate environmental performance–financial performance relationship in India using eco-efficiency metrics

PurposeThe purpose of this study is to attempt to empirically examine the impact of disaggregate, eco-efficiency-based measures of corporate environmental performance (CEP) on corporate financial performance (CFP) of Indian companies. Further, recent theories contending a bidirectional causality between them is also explored.Design/methodology/approachSecondary data of 224 Indian S&P 500 companies from 2002 to 2011 are used to run panel data regression models for examining the impact of CEP measures on accounting-based CFP measures.FindingsThe empirical results are statistically significant and provide evidence for a positive association of eco-efficiency-based CEP metrics on CFP metrics, thereby supporting Porter's win–win hypothesis. Further, the results evidence a positive bi-directional causality between CEP and CFP for one period time lag signalling possibility of mutual reinforcement in CEP–CFP relationship.Research limitations/implicationsThe study has used data for the period 2002–2011 and eco-efficiency metrics – energy, water and material efficiencies due to availability.Practical implicationsThe results have implications to both corporate managers as well as policymakers across all industries for emphasizing on eco-efficiency-based (proactive) environmental sustainability initiatives to enhance both financial and environmental bottom lines.Originality/valueThe study contributes to scarce empirical literature analysing the impact of CEP on financial performance. To the best of authors's knowledge, event studies, portfolio studies and perceptual data-based empirical studies exist in India. This study is unique in that it examines long run effect of eco-efficiency-based CEP metrics which is pertinent in a rapidly growing emerging market – India, where, eco-efficiency is considered quintessential for sustainable development.

Global climate impacts of agriculture: A meta-regression analysis of food production

Good management requires proper measurement, yet little is known about anthropogenic climate effects of agriculture. To remedy this, a precise measurement of negative externalities is urgently needed. Therefore, the authors of this article describe the heterogeneity of results from previous studies on climate effects and – focusing on the agricultural sector – identify reasons for this phenomenon. The authors conduct a meta-regression analysis, based on 53 primary studies that cover the period between 1951 and 2015. All countries or country groups are included in the 1345 reported results on emitted amounts of CO2e and SO2e. Our findings confirm the well-known result that an increase in livestock quantities corresponds with a significant increase in emission levels. By integrating culture-related country data, the authors conclude that the level of “humane orientation” and the amounts of emissions follow opposite courses. Furthermore, studies conducted while the first author of this study was working for an NGO, report significantly higher emissions. Based on an adaptation of a meta-regression analysis to the field of environmental performance measurement, we are able to provide new insights about the influence of the change of individual drivers on the emission level. Examples of these insights include a one-third increase in cattle stock is associated with an increase in emissions of 29.45 t/km2. We also find that publications where the first author works for an NGO reported an emission level 87.04 t/km2 higher than other publications. These findings enable the identification of the main drivers of emissions, while helping to explain the heterogeneity of existing studies. Based on the findings of this study, companies can take reliable measures to reduce the external climate effects of their products.

Wise managers think about circular economy, wiser report and analyze it. Research of environmental reporting practices in EU manufacturing companies

Today, economic activity is predominantly characterized by a linear transformation of natural resources to production, consumption, and (ultimately) to waste. The Circular Economy (CE) seeks to overcome this by promoting reduction, reuse, recycling, and recovery, but its reflection in the environmental reporting of manufacturing companies remains unclear. By applying neo-institutional theory, we seek to explain how institutional pressures affect environmental reporting from CE perspective. Qualitative content analysis and statistical methods (ANOVA and PCA) were employed to provide original empirical evidence from 226 large manufacturing companies from different industries in the European Union. We found that manufacturing companies, as might be not expected, seek to legitimate their own position and actions by reflecting institutional logics that are centered on normative factors and best practices rather than legislative requirements. We believe this is an important observation particularly for the standard settlers and professional bodies as sustainability reporting guidelines and third-parties assurances may act as facilitators of translating circular business practices into companies‘ reports. The results obtained can also be applied to corporate decision-making processes regarding creating or redesign of environmental performance measurement and the improvement of external reporting. Practitioners can compare the prevailing profiles of CE environmental reporting in the analyzed companies with the disclosure strategies they are applying. By improving reporting on CE, manufacturing companies can gain more legitimacy among others, shareholders, employees and society as a whole.

A Warehouse Social and Environmental Performance Metrics Framework

To improve the supply chain performance in all three aspects of sustainability (social, economic, and environmental), a comprehensive sustainable performance measurement system that captures all the supply chain partners’ efforts and commitments is required. Warehouse, as the second largest logistics source of environmental pollution in the supply chain has been almost completely overlooked and ignored in the past studies. To fill this gap, a warehouse performance metrics framework for environmental and social performance measures was proposed using a novel Fuzzy Delphi and Best-worst methodological approach. The method is less time-consuming than the Analytic Hierarchy Process or Analytic Network Process, it does not address whether criteria are dependent or independent, requires fewer comparisons of criteria, but still produces reliable and credible results. The presented framework consists of 32 equally formulated environmental and social performance indicators, including formulas and measurement units. The 14 most important indicators are ranked according to the requirements of different stakeholders.

Human Capital and Environmental Sustainability

Human capital has been shown as an important determinant of environmental performance at the firm and province levels. We try to identify the impact of human capital on environmental performance at the country level. To address potential endogeneity and measurement errors regarding human capital, we use the primary school enrollment rate a century ago as an instrument for today’s human capital stock. The instrumental variable estimation, based on a sample of 72 countries, shows that human capital has a statistically significant effect on the Environmental Performance Index, a composite measure of national environmental performance, primarily through improving biodiversity, habitat, and sustainable agriculture, all of which are the indicators related to environmental sustainability. These findings from cross-country analysis are broadly consistent with those of firm-level or province-level studies, emphasizing the role of human capital in enhancing the awareness of and compliance with environmental regulations, thus leading to an improvement in environmental performance.

Moving towards sustainability: A theoretical design of environmental performance measurement systems

We develop and explain how environmental performance measurement systems (EPMS) can be designed to overcome some key design issues identified from extant EPMS research. We take an interdisciplinary approach integrating science and sustainability theories into accounting research to theoretically develop six key design principles for a valid decision-useful EPMS framework. Our theoretical framework, comprising established theoretical and causal links between the organization’s summary sustainability measure and its drivers, provides insight into how management decisions at the operational level influence economic and environmental sustainability value created for the organization, thus supporting sustainability-related decision making. We test the framework in an irrigated agriculture setting using simulation modeling. Measured parameter values for key sustainability measures theoretically derived from the design principles are compared with optimal values to identify production processes for improvement. The empirical results showed significant simultaneous improvement in water and economic sustainability performance, resulting from a change in one targeted production practice. While our model demonstrates how the quality of sustainability-related information and decision making can be improved within a specific organizational setting, it also provides a generalizable tool for resolving the wicked problems of sustainable natural resource use.

A supply chain practice-based view of enablers, inhibitors and benefits for environmental supply chain performance measurement

Organisations face ever increasing pressure to deliver triple-bottom-line performance results in their supply chains. Yet despite the importance and complexity associated with environmental supply chain performance measurement (ESCPM), organisations struggle to achieve this. The purpose of this paper is to identify the important enablers, inhibitors and benefits to implementing ESCPM as a practice in firms. Data were collected from three focus groups and an industry survey of 388 UK supply chain professionals in a three-phase empirical study. Eighteen enablers, seventeen inhibitors and eleven benefits were identified and ranked in importance. A supply chain practice-based view was utilised as an overarching theoretical lens to conceptualise the study’s findings and propose nineteen antecedents, arranged in a hierarchical framework, to enable practitioners to make effective ESCPM decisions. This paper provides an up-to-date review of the factors which influence ESCPM practice, addressing the need for additional research in this area.

The product‐market performance benefits of environmental policy: Why customer awareness and firm innovativeness matter

AbstractResearchers have widely studied the nexus between corporate environmental (“green”) policy and its green performance and firm financial performance, but with mixed findings. A potential explanation for these mixed findings is the focus of extant studies on the direct and immediate impact of environmental performance on financial performance to the exclusion of firm‐specific boundary conditions. Furthermore, all prior research study the effect of environmental performance on either stock market‐based performance measures (i.e., stock return) or accounting‐based performance measures (i.e., return on assets). A missing third dimension of firm performance, product–market‐based performance (i.e., market share), has so far remained unexplored despite representing a crucial objective when innovating. Using Newsweek's annual green ranking as a novel measure of environmental performance for a panel of U.S. firms from 2010 to 2015, this paper attempts to fill these voids in the literature. The results show a positive relationship between firms' environmental performance and market share as a measure of product–market‐based performance. The findings further demonstrate that this relationship is positively moderated by the level of customer awareness and innovativeness of the firm: The higher the level of awareness of a firm's environmental credentials and innovativeness, the stronger the effects of environmental performance on market share. Our results are robust against endogeneity concerns and alternative measures of firm financial and environmental performance.

Does it pay to be green? A disaggregated analysis of U.S. firms with green patents

AbstractThe objective of this paper is to investigate the relationship between environmental performance and financial performance on a sample of 361 U.S. firms over the 2007–2016 period. We contribute to the literature by considering firms active in sustainable innovations by obtaining green patents. We also contribute to the literature by using disaggregated measures of environmental performance collected from the Bloomberg ESG database, including environmental disclosure score, greenhouse gas emissions, waste emissions and water use. Panel data regressions' results show that environmental transparency positively influences current accounting and stock market performance, but negatively influences the return on capital employed. Furthermore, lower pollution emissions tend to improve the current return on assets, while being harmful for the efficiency of long‐term capital employment at the same time. The empirical results also indicate that the Global Financial Crisis (2007–2010) increased the environmental transparency of firms with green patents but negatively impacted their price to earnings ratio. At the same time, lower waste disposal diminishes stock valuation while the opposite is true with water use. Taken together, our results suggest that environmental transparency and greenhouse gas emissions generally appear to be the most important environmental variables influencing financial performance, with increasing importance attributed to them by the market after the global crisis period.

Using traffic simulation to quantify performance improvement due to vehicular traffic reduction at a university campus

The purpose of this study is to quantify the benefits of reducing vehicular traffic at a university campus resulting from adopting sustainable transport modes to travel to campus. To this end, a traffic simulation model was developed to estimate improvements in several traffic and environmental performance measures. A total of 11 traffic scenarios were simulated and their results were compared. These scenarios varied from a baseline situation, i.e., the current AM peak-hour traffic, to a variety of traffic-reduction scenarios ranging from 5% to 50% with an increment of 5%. The results showed considerable improvements in traffic flow and air-pollution performance measures. All performance measures witnessed steady improvement as more traffic reduction occurred; nevertheless, traffic measures have seen more improvement as opposed to environmental measures. Statistical significance tests showed that 5% traffic reductions did not show significant impacts on performance, 10% reductions will improve traffic flow, whereas 20% traffic reductions will improve both traffic and air emissions.

A Holistic Sustainable Finance Model for the Sustainable Capital Market

This paper, has systematized the literature review, and with its critical view towards international and especially European sustainable finance policy and methodologies, has marked three important problems that affect up until today the design and implementation of environmental, social and sustainable policies in the sustainable financial performance of capital market. Environmental, social and sustainable performance measures, as well as the taxonomy system, the evaluation and notification of information that are related to the consequences of sustainable policies, represent a modern challenge for creating a completer methodology in the field of sustainable finance. In a practical level the challenge still remains: 1) if the policies, methodologies and researches in this category, allow researchers and financial stakeholders, as well as firms managers to follow and to evaluate sustainable finance in a reliable manner, 2) if the sustainable policies of firms are successful and recognized by the capital market. As every new scientific field, so “Sustainable Finance” must be framed with theories that should define the efficient operation of “Sustainable Market Capital” and get new holistic “Sustainable Finance model” created. The purpose of this paper is to define the theory of Sustainable Capital Market and the Holistic Sustainable Finance Models.

Empirical Analysis on Environmental Regulation Performance Measurement in Manufacturing Industry: A Case Study of Chongqing, China

Abstract In recent years, China’s environmental pollution is serious, manufacturing industry has become one of the main targets of government environmental regulation. This paper uses the SBM model to calculate efficiency value of 29 manufacturing industries from 2008 to 2017. The results show that the overall performance of environmental regulation in manufacturing industry is high (the average efficiency value is 0.7806), but it shows a declining trend. The efficiency of environmental regulation also varies widely. The government should consider focusing on the 11 industries with low SBM value in the next step to improve the performance of environmental regulation.

The conceptual framework of IoT based decision support system for life cycle management

Since the impact of manufacturing industries towards the global environmental issues such as climate change is significant, it is required to adhere to stringent environmental performance measures to survive from different pressure groups in the global markets. To improve the environmental performances of the manufacturing sector, it is essential to consider the entire life cycle of products to identify environmental hotspots mitigated through Life Cycle Management(LCM) by subsequent product designs as eco-design. It is required to have adequate and timely information about the entire product life cycle of the product and processes it manufacture and typically it is a time-consuming and costly operation. This issue can be eased some extent through the Internet of Things (IoT) which is tracking data real time. To manage a product life cycle, it is required to evaluate many alternatives scenarios which is impossible to carry out manually. Therefore, this study develops an IoT base Decision Support tool for LCM.

Environmental and Financial Performance: Review of Selected Studies

The main objective of this paper is to examine selected literature on the relationship between environmental performance and financial performance on firm-level. Specific objectives are defined in accordance with the observed group of environmental performance measures. We decided to investigate environmental performance measured that refer to pollutant emissions, waste, and environmental disclosures. Examined studies cover different periods, regions, and companies. In observed literature, we found mixed results. The results depend on many factors such as the used environmental measures, the financial performance measure, the control variables, the industry type, and the characteristics of companies.

Biomimetic adaptive building skins: Energy and environmental regulation in buildings

Both organisms and adaptive building skins (ABS) respond to changing environmental conditions. There have been several systems developed through the synthesis of biomimetics and ABS to reduce energy demand or improve comfort in buildings. This paper presents the definition, characterisation and a comparative analysis of existing applications in the field of biomimetic adaptive building skins (Bio-ABS). We evaluate current uptake in the field, present an overview of the state-of-the-art and undertake a meta-analysis of fifty-two Bio-ABS applications to determine performance trends, opportunities and challenges. We found that current development in the field of Bio-ABS is limited. 53.8% of all published Bio-ABS remain at a conceptual stage of development, resulting in a gap between theoretical and real-world uptake. In addition, there is little quantitative analysis in terms of environmental or energy performance measurements, with only 44.2% of the projects considering these performance metrics. Of those that do, 78.2% demonstrate either thermal or visual comfort analysis while only five, 21.7%, include energy analysis. A further conclusion drawn is that the majority of Bio-ABS are monofunctional, only controlling a single environmental parameter. Very little attention is paid to multifunctionality, with only 13.4% of the published projects controlling more than one parameter. Multifunctionality in Bio-ABS needs further study to address multiple contradictory functional requirements of buildings regarding energetic and environmental performance.

Diffusion of green products in industry 4.0: Reverse logistics issues during design of inventory and production planning system

Under the paradigm of Industry 4.0, the present research attempts to model the reverse logistics and examine how product diffusion dynamics in the market affect the economic and environmental performances of an inventory and production planning (I&PP) system. We use the classic Bass (1969) model of diffusion of innovation to capture the returns of a single-generation of a product under the proposed architecture of systematical deployment of information-sharing strategies and I&PP policies under the notions of Industry 4.0 components. The key feature of Industry 4.0 characterized by virtualization of factory operations is captured using the simulation model. For the analysis, using the Taguchi experimental design framework, we present valuable managerial insights. Our findings suggest the relevant adoption patterns based on the combination of information-sharing and I&PP policies for the tradeoff between environmental and economic performance. An extensive sensitivity analysis shows the robustness of the model. Further, the managerial decisions on the environmental and economic performance measures reveal that in spite of the presence of Industry 4.0 technology capabilities, a close attention should be paid to operational parameters and their related costs when socially influenced green product adoption with the parameters such as size of end-user market and collection investment are governing the returns of the product to the reverse logistics system. Accordingly, the model exhibits a real-time decision support tool for the sustainable reverse logistics system in Industry 4.0 environment at large.

Environmental Performance, Customer Satisfaction, and Profitability: A Study among Large U.S. Companies

The academic community has been advocating for companies to focus on improving their environmental performance. While companies are increasingly taking environmental action driven mainly by top management commitment, there is interest in understanding whether by contributing to the sustainability of the natural environment companies can gain the satisfaction of their other stakeholders and in a manner that facilitates their competitiveness. With the use of partial least squares structural equation modeling among a sample of large U.S. publicly traded companies, this study investigates the role of customer satisfaction in driving an effect of companies’ environmental performance on their long-term oriented profitability. The results show that customer satisfaction positively affects the long-term oriented profitability of companies. However, customers are generally not satisfied with companies’ environmental performance. An opportunity, therefore, exists for companies to adopt new approaches to their environmental performance that are particularly focused away from reducing the use of environmental resources. An opportunity also exists for guidance to companies on environmental performance measurement metrics that reflect their involvement in the promotion of the sustainability of the natural environment.

Perceptions of local population on the impacts of substitution of fossil energies by renewables: A case study applied to a Spanish rural area

Using the perceptions of a sample of 231 people from a Spanish region as a case study, this paper aims to respond to the increasing demand for measurement of economic, social and environmental performance of renewables implementation. First, from this information, the paper analyzes the willingness to pay of the rural community for the complete replacement of fossil fuels with clean ones throughout the region. Second, it explores this rural community’s perceptions in order to determine the most outstanding outputs, outcomes and impacts for the whole renewable energy penetration.