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Business and environmental protection: An introduction

December 2004
Human Ecology Review 11(3):230-234

December 2004
11(3):230-234

Authors:

Jorge Rivera

George Washington University

Magali A. Delmas

University of California, Los Angeles

This special issue of the Human Ecology Review presents research papers and opinion pieces that seek to improve the understanding of the interaction between business and the natural environment in different parts of the world. From all the research manuscripts submitted, we selected three papers for publication. We also present in the Forum section the opinion pieces of six recognized academic and industry leaders in the business and natural environmental field. Finally, we include a review of the book Corporate Environmentalism and Public Policy (Lyon and Maxwell 2004).

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230 Human Ecology Review, Vol. 11, No. 3, 2004

This special issue of the Human Ecology Review pre-

sents research papers and opinion pieces that seek to improve

the understanding of the interaction between business and the

natural environment in different parts of the world. From all

the research manuscripts submitted, we selected three papers

for publication. We also present in the Forum section the

opinion pieces of six recognized academic and industry lead-

ers in the business and natural environmental field. Finally,

we include a review of the book Corporate Environmentalism

and Public Policy (Lyon and Maxwell 2004).

Development of the Field

In the 1990s, research on business and environmental

protection focused, for the most part, on identifying a posi-

tive link between corporate environmental performance and

profitability arguing that it can pay to be green (Starik and

Marcus 2000; Porter and van der Linde 1995). This research

stream positioned itself in opposition to the traditional view

that improvements in environmental performance are associ-

ated with increased costs (Walley and Whitehead 1994;

Palmer et al. 1995). The proponents of a win-win environ-

mental management paradigm argued that green strategies

could enhance firms’ competitive advantage by attracting en-

vironmentally aware consumers (Hart 1995; Sharma and Vre-

denburg 1998; Shrivastava 1995a; Reinhardt 1998; Stead and

Stead 1995). They posited that the development of pollution

prevention technologies, as opposed to end-of-pipe technolo-

gies, could allow companies to increase the productivity and

quality of their manufacturing process (Porter and van der

Linde 1995; Corbett and Van Wassenhove 1993; Reinhardt

2000; Shrivastava 1995b; Nehrt 1996; Stead and Stead 1994;

Majumdar and Marcus 2001; Rondinelli and Berry 2000) and

help firms generate technological and organizational innova-

tions that would give companies a competitive edge (Roome

1994; Shrivastava 1995b; Russo and Fouts 1997; Hart 1995).

They also proposed that companies that have adopted a pro-

environmental strategy could also impose a cost on their

competitors by influencing regulators to adopt more stringent

regulations (Vogel 1995; Christmann 2000) and reduce liabil-

ity risks (Shrivastava 1995b; Reinhardt 2000).

However, empirical studies on the link between environ-

mental and financial performance have shown conflicting ev-

idence (Margoliss and Walsh 2001; Russo and Fouts 1997;

Konar and Cohen 2001, Hart and Ahuja 1995; Klassen and

McLaughlin 1996; King and Lenox 2002; Rivera 2001; Khan-

na 2001). This may be explained in part by the difficulty of

measuring environmental and financial performance (Mar-

goliss and Walsh 2001; Koehler and Cram 2001; Toffel and

Marshall 2004; Johnston and Smith 2001) and by the empiri-

cal difficulty of assessing the causality between financial and

environmental performance (Koehler and Cram 2001; King

and Lenox 2001; Margolis and Walsh 2001). An additional

challenge to researchers is that corporate environmental man-

agement efforts may be only indirectly related to profitability.

More recent streams of research have identified addi-

tional motivations for proactive corporate environmentalism

such as institutional pressures and managers’ motivations.

Researchers within the institutional theory paradigm empha-

size the role of social and cultural pressures imposed on or-

ganizations that influence the adoption of environmental or-

ganizational practices and structures beyond the profit-mak-

ing rationale (Hoffman and Ventresca 2002; Hoffman 1999;

Delmas and Toffel 2004; Rivera 2004). Empirical studies in

the neo-institutional stream point out the key role played by

government agencies, the media, industry associations, and

environmental groups to pressure corporations to adopt

proactive environmental management practices (Hoffman

1999; Delmas 2002; King and Lenox 2000; Rivera and

deLeon 2004; Darnall 2003).

Research in Human Ecology

Business and Environmental Protection: An Introduction1

Jorge Rivera

Department of Strategic Management and Public Policy

George Washington University

2125 G. Street, NW

Washington, DC 20052 USA2

Magali Delmas

Donald Bren School of Environmental Science & Management

Donald Bren Hall 3422

University of California

Santa Barbara, CA 93106 USA3

Human Ecology Review, Vol. 11, No. 3, 2004 231

Scholars that rely on theories from organizational psy-

chology have also provided important contributions to the re-

search on business and environmental protection. This stream

of research highlights how top managers’ environmental be-

liefs, values, and attitudes — used to assess firms’ competi-

tive alternatives and their outcomes — play a critical role in

determining corporate environmental management choices

(Cordano and Frieze 2000; Egri and Herman 2000; Anderson

and Bateman 2000; Egri 2000; Winn and Angel 2000). Pro-

environmental attitudes and commitment by top managers

also appear to positively affect the environmental behavior of

middle and lower-level employees (Ramus and Steger 2000;

Egri and Herman 2000).

Most recently, another research stream has concentrated

on studying voluntary programs that promote the adoption of

environmental management systems and encourage the cre-

ation of partnerships between profit and non-profit stake-

holders. These include, for example, environmental manage-

ment systems (EMS) such as the international environmental

management standard ISO 14001, voluntary agreements be-

tween firms and regulatory agencies or NGOs, and industry

self-regulation. This body of work has analyzed firms’ moti-

vations to voluntarily adopt such practices or to participate in

these new relationships with stakeholders.

Empirical studies suggest that firms adopt ISO 14001

mostly in response to pressures from regulators, customers,

and the civil society (Andrews et al. 2003; Coglianese and

Nash 2001; Bansal and Bogner 2002; Christmann and Taylor

2001; Delmas 2002; Kollman and Prakash 2002), although

some evidence shows that EMS could also improve firm

efficiency and competitive advantage (Delmas 2001; Sroufe

2003).

Research on voluntary environmental programs has fo-

cused on understanding business motivations to adopt such

initiatives (Delmas and Terlaak 2001; Marcus, Geffen, and

Sexton 2002). It has been identified that these programs can

provide tangible benefits to their participants, including en-

hanced reputation and price premiums (Arora and Gangopad-

hyay 1995; Rivera 2001), technical assistance (Wu and Bab-

cock 1999; Khanna 2002; Delmas and Terlaak 2001) regula-

tory flexibility, and preemption of regulations (Segerson and

Micelli 1998; Lyon and Maxwell 2004; Delmas and Terlaak

2001; Rivera 2002). However, the use of voluntary environ-

mental programs as alternative environmental policy instru-

ments introduces fundamental challenges to the ways in

which corporations and non-profit organizations think about

the institutions that society has developed to resolve environ-

mental problems (Hoffman et al. 2002). Voluntary initiatives

can be marked by high transaction costs and significantly af-

fected by free-riding behavior (Marcus, Geffen, and Sexton

2002; Delmas and Mazurek 2004; Delmas and Keller 2004;

King and Lenox 2000; Rivera and deLeon 2004). These chal-

lenges vary across institutional contexts and may be serious

enough to make these initiatives unattractive to policy mak-

ers and corporations (Delmas and Terlaak 2002).

Empirical evidence exploring the link between the adop-

tion of voluntary programs and higher corporate environmen-

tal performance is still thin, pointing to the need for more

work in this area. Until now, some seminal studies suggest ei-

ther no correlation or a negative association between corpo-

rate environmental performance and participation in volun-

tary initiatives (Khanna and Damon 1999; Anton et al. 2004;

King and Lenox 2000; Rivera and deLeon 2004). These neg-

ative results may be explained by the absence of mechanisms

to reduce free-riding behavior by voluntary programs such as

performance-based standards, third-party monitoring, and

sanctions (King and Lenox 2000; Rivera and deLeon 2004;

Reinhardt 1998).

Finally, it is important to highlight that despite the

booming of emerging market economies in Asia and to a less-

er degree in Latin America, very little research on corporate

environmental management has studied the behavior of cor-

porations in developing countries (Rivera 2002; Utting 2002;

Christmann and Taylor 2001; Wehrmeyer and Mulugetta

1999). The literature remains almost exclusively focused on

understanding the behavior of manufacturing firms in indus-

trialized nations (Rivera 2002; Rivera 2004; Starik and Mar-

cus 2000)

The conventional wisdom in emerging market econo-

mies is that given the economic limitations of businesses,

governments, and consumers, the trade-off between environ-

mental protection and competitiveness is more significant

than in industrialized nations. For policy makers and business

managers, this “conventional wisdom” generally implies that

the enactment of mandatory environmental regulations

should be postponed until a more advanced level of econom-

ic development has been achieved (Wheeler 1999). Not sur-

prisingly, the majority of firms operating in these countries

exhibit poor environmental management practices. We are

very pleased that this special issue contributes towards filling

this important gap in the corporate environmental manage-

ment literature by including research articles and forum pa-

pers focused on voluntary initiative in both developing and

developed countries.

Description of the Papers

Included in this Special Issue

In their article, “How Do Public Disclosure Pollution

Control Programs Work? Evidence from Indonesia,” Black-

man, Afsah, and Ratunanda shed light on the incentives for

pollution reduction provided by one of the most innovative

Rivera and Delmas

232 Human Ecology Review, Vol. 11, No. 3, 2004

public disclosure programs established in the developing

world: the Program for Pollution Control, Evaluation and

Rating (PROPER). Their findings suggest that in concert with

stakeholder pressures, the information about environmental

management opportunities provided by PROPER auditing

process is a critical driver of pollution-reduction efforts

among participants. These results contribute to the literature

on public disclosure programs that views external institution-

al pressures as a key incentive for enhanced environmental

performance. In developing countries where institutional

pressures are weak and environmental expertise is scarce,

voluntary disclosure programs can be more effective if they

provide technical assistance to participants.

The article by Bruce Paton entitled “Two Pathways to

Energy Efficiency: An Energy Star Case Study” evaluates the

mechanisms within the Energy Star labeling program that are

used to promote energy savings. It identifies two different

mechanisms: a converging mechanism that pushes all firms

within an industry to adopt a similar level of environmental

performance and a separating mechanism that drives only

some firms within the industry to differentiate their products

based on their environmental performance. The paper sug-

gests circumstances in which each type of mechanism may be

more feasible and more desirable to create. In particular, it

highlights that regulatory threats and government procure-

ments may facilitate the success of converging mechanisms.

Firms will have incentive to innovate and differentiate their

product if they can protect their innovation from imitation.

In “A Comparative Institutional Approach to Environ-

mental Regulation: The Case of Environmental Degradation

Along the U.S.A.-Mexico Border,” Bryan Husted develops a

transaction-cost framework that considers the differences in

countries’ socio-economic contexts when selecting instru-

ments of environmental regulation. Using the case of Mexico

and the United States, the manuscript highlights the impor-

tance of avoiding a joint environmental policy that ignores

the stark discrepancies in political support and administrative

capacity enjoyed by environmental agencies on both sides of

the border.

The Forum section of this special issue presents the

opinion essays and commentaries from six path breakers in

the business and environmental protection field. In his essay

“The Sustainability Generation: Preparing Future Leaders,”

Garry Brewer discusses the challenges and opportunities cre-

ated by environmental concerns to management education.

He describes the need for education programs that bring to-

gether business management and environmental science

skills. He elaborates on the many challenges that academic

institutions face to prepare future leaders for the transition to

a more sustainable future and describes pioneering efforts

within academic institutions in the U.S. Alfred Marcus’man-

uscript “Reviving Regulation,” explores how altruism, profit-

seeking, and regulations drive companies to become more en-

vironmentally sustainable. He argues that incentive-based

regulations are key to deal comprehensively with the complex

environmental problems confronting society.

In “Innovation, Global Change and New Capitalism: A

Fuzzy Context for Business and the Environment,” Nigel

Roome argues that environmental sustainability is based on a

strategic connection between innovation and corporate social

responsibility accomplished in collaboration with a wide

range of other actors. He proposes that as businesses con-

front interconnected environmental social, cultural, and eco-

nomic issues, a new dialectic is established worldwide

around competing models of the role of business in society.

Focusing on the lifestyle of environmental researchers and

professionals, Mark Starik’s essay, “Holistic Environmental

Leadership: Living Sustainably Beyond 9-to-5,” provides an

interesting guide for researchers and other professionals to

engage in pro-environmental behavior.

Richard Welford’s “Business and Environmental Protec-

tion: A View from Asia” highlights the acute environmental

problems produced by the economic boom in China, India

and other Asian countries. His essay stresses that to effec-

tively solve these problems, policy makers need to rely on

multiple environmental policy instruments (direct regula-

tions, economic incentives, voluntary initiatives, and interna-

tional standards) tailored to the unique socio-economic con-

text of these countries. Finally, in “Certification: A Catalyst

for Partnerships,” Chris Wille illustrates in detail the innova-

tive collaborative strategy implemented by Rain Forest Al-

liance to promote corporate environmental and social respon-

sibility by auditing the behavior of timber and agricultural

companies in both developed and developing countries.

To conclude, we would like to recognize the anonymous

reviewers whose assistance was key in developing this spe-

cial issue. Many thanks to all of them for kindly providing

their time and knowledge to carefully evaluating the manu-

scripts submitted. We are also grateful to Linda Kalof, the ed-

itor of HER,who provided us with invaluable support and

guidance.

Endnotes

1. Both guest editors contributed equally to the special issue and to this

introductory manuscript.

2. Author to whom correspondence should be directed:

E-mail: jrivera@gwu.edu

3. E-mail: delmas@bren.ucsb.edu

Rivera and Delmas

Human Ecology Review, Vol. 11, No. 3, 2004 233

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"THE NEW CORPORATE ENVIRONMENTALISM AND GREEN POLITICS,"

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Jun 2018

The main aim of this paper is to show the extent to which environmental proactivity is able to generate competitive advantages in a firm in order to improve their economic-financial performance by introducing the role of managerial perception into the analysis. This study focuses on Spanish wineries and their environmental practices and covers a total of 4598 wineries with a sample of 142 valid responses during the month of November 2015. The results can be summarized as follows. Firstly, there is positive environmental proactivity in terms of obtaining both cost-based and differentiation-based competitive advantages. Likewise, this proactivity has a positive impact on the manager’s perception of performance. Secondly, obtaining differentiation-based competitive advantages has a positive impact on the manager’s perception of performance although a negative impact on performance itself. There is, however, no significant evidence of the impact of cost-based competitive advantages on financial performance nor on the perception of performance itself, nor the impact of environmental proactivity on financial performance.

The Essence, Challenges and Opportunities for the Right to Healthy Environment as Human Rights: The Case of Oromia Regional State

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Jan 2018

Wekgari Dulume

Ever since Stockholm conference on human environment, environmental concern became equal priority as human right in the world. However, environmental dimensions are rarely discussed in general academic treatments of human rights law, though there is no debate on their relationship. Environmental problem directly impacts the life, health, private life, and property of individual human than other states or the environment in general. Because of this, environmental right has direct relation with human rights. This paper aims to analyze opportunities as well as challenges of integrating economy and ecology as human right in the move towards sustainable development in Ethiopia; with particular focus on Oromia regional state. To achieve its goal, qualitative research method which includes review of relevant literatures, assessing legal documents as well as government commitment towards Sustainable Development Goals (SDGs) is made. The findings shows existence of good opportunities as the matter could be promoted on the bases of different laws. But challenged by prevalence of economy first development view; inexistence of different manuals, regulations and environmental standards, limited procedural participation in decision making, lack of political commitment and failure to take necessary measures on polluting factories. High government commitment to promote social and environmental dimension of sustainable development, enhancing good governance, and genuinely pursue SDGs commitment is recommended to bring about real protection of human right and healthy environment.

Protection of Environment during Armed Conflicts

Article

Jun 2018

T. L. Aimée Murphie

Environmental protection during the armed conﬂicts is rarely considered as a prioritized concern. Due to the concept of state sovereignty, this is especially problematic when examining interference of warfare and environmental protection in non-international conflicts. Not only it is challenging to find any exhaustive and explicit legal provisions regulating the matter, but this issue has also been forgotten by international legal scholars. Therefore, in this article, the author reviews are written and customary norms laid down in documents of different branches of international law, such as human rights law, international humanitarian law, environmental law and international criminal law, which directly or by way of interpretation may favour environmental protection during the internally armed conﬂict. This is to be done in order to gather information about the sufficiency of the legal framework on the preservation of the environment during the non-international armed conﬂicts. After doing this research, a few possible means to improve current legal framework are suggested. The author suggests to impose civil liability, enact new comprehensive document, initiates changes in international criminal law and other.

Banking sector of Bangladesh: How to go green

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Jun 2013

Md. Rashidul Islam

The main objective of the paper is to explore the potential green banking initiatives, which can be taken by the banking sector of Bangladesh to ascertain sustainable development. To do this remarkable job, current working initiatives throughout the world have shown here, which can give guidelines for green banking practice in Bangladesh. Green banking guarantees the protection of environment and maintenance of social responsibility, which is essential for our existence. In this new age environmental security and awareness mixed with sustainable development, climate change and ecological balance is well-known to all and most of the banks of world is considering to include these issues in their banking operation policy. The paper roots through the past literary works to construct a framework.

Environmental Accounting: Techniques and Limitations

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Jan 1991

Ralf Christopher Buckley

Environmental accounting is potentially a very valuable tool in planning, public resource management, pollution control and policy analysis. Its main limitations are as follows: 1. Valuation techniques for environmental goods and services are imperfect and shadow prices are only partial valuations. This applies to both deductive and interrogative techniques. 2. Social values for environmental goods and services are uncertain and change very rapidly. 3. Non-economic values are also important in political processes. 4. Aggregation of individual preferences may not yield a meaningful net social preference. 5. Economic values are marginal and incremental, not absolute and total 6. Reliable industry data are not readily available. 7. Assumptions underlying standard economic theory and analytical models are often not met. Existing data on the costs and benefits of environmental protection measures to industry and to national economies are reviewed, as are misconceptions relating to: market prices and utility; hypothetical valuation and social values; willingness to pay or to accept compensation; private property rights in environmental goods and services; and discount rates in economic analysis.

THE RELATIONSHIP BETWEEN CORPORATE ENVIRONMENTAL PERFORMANCE AND CORPORATE FINANCIAL PERFORMANCE – USING THE FRAMEWORK OF CORPORATE ENVIRONMENTAL POLICY IMPLEMENTATION

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Oct 2013

Cosmos Afagachie

The relationship between environmental performance and corporate financial performance has been a subject of academic, regulatory and industry debate for over 30 years and yet no universally conclusive finding has been established. Researchers have approached this subject matter from either empirical or theoretical angle using variety of techniques to ascertain the nature of the relationship but still came out with different findings. This study however used an integrated approach, with a blend of qualitative and quantitative techniques to validate findings of each method in establishing the nature of the relationship between environmental performance and financial performance. The research found out that the operations of most multinational manufacturing companies have adverse environmental impacts; hence companies have implemented corporate environmental policies as a framework for improving their environmental performance. They are motivated beyond regulatory compliance to cost saving potential in the form of reduced raw material and energy consumption with reported benefits confirming these motivations. A significant positive relationship was also established between corporate environmental and financial performance with high technological use, size and geographical location of company influencing it. This study thus support the view that companies stand to accrue financial benefits for implementing corporate environmental management practices as that incite innovation to transform operations and save cost.

Business and Public Policy: Responses to Environmental and Social Protection Processes

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Jun 2007

Jorge Rivera

This book advances neo-institutional work that has traditionally portrayed protective public policies as easily enforced-exogenous constraints followed by businesses. We propose that businesses show increasing resistance as the protective policy process moves from initiation to selection and growing cooperation thereafter. We also contribute to neo-institutional theory by positing that this inverted U-shaped policy process-business response relationship is moderated by a country's level of democracy, policy network style, regulatory approach, and national economic income.

DOES IT PAY TO BE GREEN IN THE DEVELOPING WORLD? PARTICIPATION IN A COSTA RICAN VOLUNTARY ENVIRONMENTAL PROGRAM AND ITS IMPACT ON HOTELS' COMPETITIVE ADVANTAGE.

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Aug 2001

Jorge Rivera

This paper studies the competitive implications of hotels' participation in a Costa Rican voluntary environmental program established by the government and identifies institutional factors that motivate participation in this initiative. By studying service industry firms in a developing country, this research offers the opportunity to compare the conclusions obtained by previous empirical work on voluntary environmental initiatives, nearly all of which have focused on manufacturing firms operating in developed countries. The main theoretical perspectives on the relationship between corporate environmental management and competitiveness offer contradictory conclusions. In general, the environmental economics perspective argues that there is a trade-off between environmental and competitiveness goals. On the other hand, the proactive environmental management perspective posits that appropriate environmental protection strategies can enhance firm competitiveness.This study approaches this controversy by using resource-based theory and institutional theory. The RBV argues that participation in voluntary environmental programs can generate differentiation advantages for firms operating in environmentally sensitive markets because these programs allow firms to develop credible 'green' reputations that are rare, difficult to create, costly to imitate, and that provide enhanced value to environmentally aware consumers. Additionally, the paper proposes that participation in voluntary environmental initiatives is not only the result of competitive economic rationality but is also affected by institutional factors. Cross-sectional data were collected for a sample of 164 hotels operating in Costa Rica. Environmental performance data were obtained from the voluntary Sustainable Tourism Certification Program (STC Program). The results indicate that hotels with higher performance in the STC Program gain differentiation advantages that result in significant price premiums. It was also found that participation in the STC Program was not only motivated by economic rationality, but also by institutional factors such as trade association membership and level of regulatory oversight.

Reinventing Environmental Regulation

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