Evaluation of corporate environmental management approaches: A framework and application

International Journal of Production Economics

Volumn 43, Issue 2-3, 1996, Pages 193-211

  Vastaga, Gyula ^a   Kerekes, Sándor ^b   Rondinelli, Dennis A ^a  

^a UNIVERSITY OF NORTH CAROLINA   (United States)

^b BUDAPEST UNIVERSITY OF TECHNOLOGY AND ECONOMICS   (Hungary)

Author keywords

Environmental management; Environmental risks; Survey

Indexed keywords

ECONOMIC AND SOCIAL EFFECTS; ENVIRONMENTAL IMPACT; ENVIRONMENTAL PROTECTION; RISK ASSESSMENT; SUPERVISORY PERSONNEL; SURVEYS; TECHNOLOGY;

ENVIRONMENTAL MANAGEMENT; ENVIRONMENTAL RISKS;

MANAGEMENT;

EID: 0030173565     PISSN: 09255273     EISSN: None     Source Type: Journal    
DOI: 10.1016/0925-5273(96)00040-0     Document Type: Article

References (26)

1. Fischer, K. and Schot, J. (Eds.), 1993. Environmental Strategies for Industry: International Perspectives on Research Needs and Policy Implications. Island Press, Washington, DC.
2. Porter, M.K., 1991. America's Green Strategy. Scientific American, Vol. 264, No. 4 and Welford, R. and Gouldson, A., 1993. Environmental Management and Business Strategy. Pittman, London.
3. Porter, M.K., 1991. America's Green Strategy. Scientific American, Vol. 264, No. 4 and Welford, R. and Gouldson, A., 1993. Environmental Management and Business Strategy. Pittman, London.
4. Simmons, P. and Cowell, J., 1993. Liability for the environment - lessons from the development of civil liability in europe, in: T. Jackson (ed.). Clean Production Strategies. Lewis Publishers, Boca Raton, FL, pp. 345-364; Vari, A. and Tamas, P. (Eds.), 1993. Environment and Democratic Transition: Policy and Politics in Central and Eastern Europe, Kluwer, Boston, pp. 120-145.
5. Simmons, P. and Cowell, J., 1993. Liability for the environment - lessons from the development of civil liability in europe, in: T. Jackson (ed.). Clean Production Strategies. Lewis Publishers, Boca Raton, FL, pp. 345-364; Vari, A. and Tamas, P. (Eds.), 1993. Environment and Democratic Transition: Policy and Politics in Central and Eastern Europe, Kluwer, Boston, pp. 120-145.
6. Price, K.S., 1992. What gets measured gets done - the criminalization of technical decision-making. Proc. 47th Ind. Waste Conf. Lewis Publishers, Boca Raton, FL, pp. The penalties resulting from criminal law procedures in the United States against managers of companies with violations of environmental regulations have reached tens of millions of dollars a year. In 1992, for example, penalties of more than $38 million were imposed, not counting the $125 million in fines and more than 37 years in prison sentences levied against those found responsible for the Exxon Valdez incident. As these penalties have grown, however, so too have the debates over their legitimacy. Bartman reflects a widely shared opinion in pointing out that "... the standard for imposing criminal liability on an individual employee or officer and on a corporation for environmental offenses is low, requiring proof only that the employee intended to place a drum of waste where he placed it, not that the employee knew the law was being violated, nor that the waste was regulated." Even an employee's negligent discharge of a nonhazardous pollutant into a waterway can be criminally prosecuted and officers of the corporation can be held liable for employee error. Richard Harris, President of KPMG Environmental Services, concluded after the Bata Industries case was decided in Canada that "the public has become less tolerant of environmental misdeeds, and regulators . . . are increasingly looking for ways to make examples of corporate polluters." Considering these circumstances, Harris concluded that managers had only one option and that was to protect themselves against environmental risks. "Company owners, directors and managers need to show that they have exercised all reasonable care to prevent any environmental problem from occurring." He argued that every company will have to establish a system of environmental management that provides the documentation needed to defend the company's executives against government prosecution. See T.R. Barthman, Dodging Bullets. Fortnightly, Vol. 131, Issue 18 (October 1993): 21-25, quote at p. 21, and Richard Harris, ignoring the Environment is Bad for Business. Canadian Manager, Fall 1993, quote at p. 21.
7. Price, K.S., 1992. What gets measured gets done - the criminalization of technical decision-making. Proc. 47th Ind. Waste Conf. Lewis Publishers, Boca Raton, FL, pp. The penalties resulting from criminal law procedures in the United States against managers of companies with violations of environmental regulations have reached tens of millions of dollars a year. In 1992, for example, penalties of more than $38 million were imposed, not counting the $125 million in fines and more than 37 years in prison sentences levied against those found responsible for the Exxon Valdez incident. As these penalties have grown, however, so too have the debates over their legitimacy. Bartman reflects a widely shared opinion in pointing out that "... the standard for imposing criminal liability on an individual employee or officer and on a corporation for environmental offenses is low, requiring proof only that the employee intended to place a drum of waste where he placed it, not that the employee knew the law was being violated, nor that the waste was regulated." Even an employee's negligent discharge of a nonhazardous pollutant into a waterway can be criminally prosecuted and officers of the corporation can be held liable for employee error. Richard Harris, President of KPMG Environmental Services, concluded after the Bata Industries case was decided in Canada that "the public has become less tolerant of environmental misdeeds, and regulators . . . are increasingly looking for ways to make examples of corporate polluters." Considering these circumstances, Harris concluded that managers had only one option and that was to protect themselves against environmental risks. "Company owners, directors and managers need to show that they have exercised all reasonable care to prevent any environmental problem from occurring." He argued that every company will have to establish a system of environmental management that provides the documentation needed to defend the company's executives against government prosecution. See T.R. Barthman, Dodging Bullets. Fortnightly, Vol. 131, Issue 18 (October 1993): 21-25, quote at p. 21, and Richard Harris, ignoring the Environment is Bad for Business. Canadian Manager, Fall 1993, quote at p. 21.
8. Price, K.S., 1992. What gets measured gets done - the criminalization of technical decision-making. Proc. 47th Ind. Waste Conf. Lewis Publishers, Boca Raton, FL, pp. The penalties resulting from criminal law procedures in the United States against managers of companies with violations of environmental regulations have reached tens of millions of dollars a year. In 1992, for example, penalties of more than $38 million were imposed, not counting the $125 million in fines and more than 37 years in prison sentences levied against those found responsible for the Exxon Valdez incident. As these penalties have grown, however, so too have the debates over their legitimacy. Bartman reflects a widely shared opinion in pointing out that "... the standard for imposing criminal liability on an individual employee or officer and on a corporation for environmental offenses is low, requiring proof only that the employee intended to place a drum of waste where he placed it, not that the employee knew the law was being violated, nor that the waste was regulated." Even an employee's negligent discharge of a nonhazardous pollutant into a waterway can be criminally prosecuted and officers of the corporation can be held liable for employee error. Richard Harris, President of KPMG Environmental Services, concluded after the Bata Industries case was decided in Canada that "the public has become less tolerant of environmental misdeeds, and regulators . . . are increasingly looking for ways to make examples of corporate polluters." Considering these circumstances, Harris concluded that managers had only one option and that was to protect themselves against environmental risks. "Company owners, directors and managers need to show that they have exercised all reasonable care to prevent any environmental problem from occurring." He argued that every company will have to establish a system of environmental management that provides the documentation needed to defend the company's executives against government prosecution. See T.R. Barthman, Dodging Bullets. Fortnightly, Vol. 131, Issue 18 (October 1993): 21-25, quote at p. 21, and Richard Harris, ignoring the Environment is Bad for Business. Canadian Manager, Fall 1993, quote at p. 21.
9. Business International and Arthur D. Little Inc., 1992. Managing the Global Environmental Challenge. Business International, New York.
10. The case of Bata Industries in Canada generated a strong public debate in 1993 over the environmental responsibilities of senior management. At one extreme, some lawyers argued that company directors should become totally proficient in all matters relating to Ontario regulations on air and water standards. Others countered that in order to comply with Canadian law every director would have to have a strong science background to understand the environmental implications of the company's operations. Still others asserted that directors should personally review for accuracy and completeness the environmental audits routinely conducted for Canadian corporations. Although these obligations have never been formally imposed on directors, either before or after the Bata case, the courts demanded that directors "understand what due diligence means and establish policies and systems to ensure the corporation remains in compliance with environmental laws." (See E. Rovet, Making Sense of Due Diligence. CA Magazine, Vol. 126, Issue 9 (October 1993): 55-57, quote at p. 55.
11. In the United States, "to attain a high level of environmental compliance (recognizing that the breadth and complexity of environmental compliance requirements make 100% compliance unattainable for most utility and industrial companies), their [companies'] efforts must proceed beyond what is specifically required," one legal expert argues. See Barthman, "Dodging Bullets," quote at p. 22.
12. Unsigned article, How to make lots of money, and save the planet too. The Economist, June 3rd 1995, pp. 57-58.
13. North, K., 1992. Environmental Business Management: An Introduction. International Labor Organization. Geneva, Switzerland.
14. See, for example, British Standard (BS 7750 for Environmental Management Systems, described in Smith, J. and Watts, G., 1993. A framework for Environmental Management. Focus on Physical distributions and Logistics Management, 12: 2-5.
15. Barthman, Dodging Bullets, p. 22.
16. Juhasz, J., Vari, A. and Tolgyesi J., 1993. Environmental conflict and political change: Public perception on low level radioactive waste management in hungary. in A. Vari and P. Tamas (Eds.). Environment and Democratic Transition. Kluwer, Boston, pp. 227-248.
17. Wynne, B., 1993. Uncertainty and environmental learning - reconceiving science and policy in the preventive paradigm, in: Jackson, T. (Ed.) Clean Production Strategies. Lewis Publishers, Boca Raton, FL, pp. 63-84, quote at p. 73-74.
18. Wynne, Uncertainty and Environmental Learning, p. 72.
19. An issue that became critical after the Bhopal accident, for example, was "whether the Union Carbide affiliate was operating with equivalent procedures, safeguards, and equipment to those at comparable facility in the United States." But even if Union Carbide had implemented the American standards in India it would have been inadequate because of the lower levels of education of the workers, less developed infrastructure, and other factors creating higher exogenous environmental risks for a chemical company operating in this region of India. To lower the environmental risks of the Bhopal plant, Union Carbide would have had to adopt a more stringent and constraining environmental management strategy than in its American plants in order to compensate for the differences in infrastructure and education levels in India. The education level and training of people living around a plant are at least as important as the internal operations of the company in determining environmental risks. The Bhopal accident or the Chernobil incident in the former Soviet Union would have caused much less damage if the neighboring population had been more concerned about environmental hazards and better trained in emergency procedures. For the quotation see Union Carbide Fights for its life. Business Week, December 24, 1984.
20. Newman, J.C. and Breeden, K.M., 1992. Managing in the environmental era: Lessons from environmental leaders. The Columbia J. of World Bus., 27: 210-221; Schmidheiny, S. and the Business Council on Sustainable Development, 1992. Changing Course: A Global Business Perspective on Development and the Environment. MIT Press, Cambridge, MA.
21. Newman, J.C. and Breeden, K.M., 1992. Managing in the environmental era: Lessons from environmental leaders. The Columbia J. of World Bus., 27: 210-221; Schmidheiny, S. and the Business Council on Sustainable Development, 1992. Changing Course: A Global Business Perspective on Development and the Environment. MIT Press, Cambridge, MA.
22. The stereotype of managers from third world or formerly communist countries as being oblivious to or unconcerned about the dangers of environmental degradation arises from the belief that the government and the private sector continue to avoid the costs of environmental protection and cleanup. Although Hungary's economy is just emerging from a long period of stagnation and its GNP per capita ranks only 52 among the 173 countries for which the United Nations Development Program provides comparative economic statistics, its human development index (the combination of GNP per capita, adult literacy rate, average number of years spent in school and life expectancy at birth) ranks 28, higher than some Western European countries. Because education levels and environmental awareness are correlated, the concern for a clean environment should be relatively high in a country like Hungary. Given Hungary's human development index and its desire to become a member of the European Economic Community, its corporate executives should be willing to adopt higher environmental standards as quickly as possible.
23. McKinsey and Company, 1991. The Corporate Response to the Environmental Challenge: Summary Report. McKinsey and Company, Amsterdam, the Netherlands.
24. Vastag, G., Rondinelli, D.A. and Kerekes, S., 1995. How corporate executives perceive environmental issues: Hungarian and global companies. J. Euromarketing, 5(3).
25. Peterson, R.A., 1994. A Meta-analysis of Cronbach's coefficient alpha. J. Consumer Res., 21: 381-391.
26. Brieman, L., Friedman, J., Olshen, R. and Stone, C., 1984. Classification and Regression Trees. Wadsworth, Pacific Grove, CA.