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Environmental Management Systems: Do Formalized Management Systems Produce Superior Performance?

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Environmental management systems (EMSs) have been promoted as an innovation to improve environmental performance, and many environmental agencies are now encouraging EMS adoption, both by policy and by technical assistance, compliance incentives, and enforcement actions. However, there are as yet few systematic data on factors motivating facilities to adopt such systems, nor on how these motivations affect EMS characteristics, environmental performance, and compliance; nor on the effectiveness of government or other incentives that either assist or coerce EMS adoption.
The objectives of this project are (1) to determine whether there are systematic differences between the EMSs and subsequent environmental performance of facilities that adopt EMSs for self-initiated reasons, or with government assistance or other incentives, or under coercion from enforcement actions or corporate or customer mandates, and (2) to evaluate changes in EMSs over time and their implications for EMS commitments to continual improvement. We hypothesize that different incentives may lead to fundamentally different types of EMSs and, consequently, different levels and kinds of environmental performance improvements, depending also on the characteristics and other motivations of the implementing facilities.

Approach: The study will collect data on EMS content, organizational characteristics, and post-EMS environmental performance from a sample of facilities implementing EMSs under (a) self-initiation, (b) government assistance or other public policy incentives, or (c) coercive pressure from government, from corporate mandates or from customer directives. We will use survey and interview protocols derived and abbreviated from those already developed, peer-reviewed, and pilot tested by the National Database on Environmental Management Systems. Protocol data collection will be followed by telephone interviews, to seek clarification and add greater detail for a smaller sample of facilities. Primary data will be supplemented with information from existing government and business databases. We will then use statistical methods to compare EMS characteristics and performance outcomes of self-initiating implementers with those receiving government assistance and those implementing EMSs under government, corporate, and/or customer mandates.

Expected Results: The results of this research will provide clearer understanding of the contributions of EMS adoption to environmental performance improvement, and particularly of potential differences in such contributions between facilities whose EMSs are influenced by incentives such as government assistance, government or corporate or customer coercion, or self-initiated adoption. If the expected results are achieved, they will allow state and federal agencies to make more cost-effective allocation of their environmental protection resources, both for technical assistance and incentive programs and for enforcement strategies and priorities. They will also provide useful information to the interested public as to what performance results can be expected from EMS adoption, and will help businesses to determine the most effective ways to use EMSs to improve their environmental performance. Finally, they will provide a valuable public database resource to assist other researchers investigating environmental management decision making and environmental performance improvement.

Metadata

EPA/NSF ID:
R829440-01
Principal Investigators:
Andrews, Richard N.
Amaral, Deborah
Technical Liaison:
Research Organization:
North Carolina at Chapel Hill, University of
Funding Agency/Program:
EPA/ORD/Valuation
Grant Year:
2001
Project Period:
November 19, 2001 to November 18, 2003
Cost to Funding Agency:
$340,000
Project Status Reports:
For the year 2002

Objective:
Many major businesses recently have mandated the introduction of environmental management systems (EMSs) by their subsidiaries and suppliers, and government agencies also have begun to promote such systems with public recognition and incentives. Two key unanswered questions are: What differences in actual environmental performance are associated with the introduction of such systems? Do such systems produce positive changes in performance and other benefits when they are mandated or encouraged by external incentives?

The objective of this research project is to determine what similarities and differences in environmental performance result from the implementation of EMSs, and what differences in organizational characteristics, motivations, and decision-making are associated with these differences. Specifically, we seek to determine whether there are systematic differences in EMSs themselves and in resulting environmental performance, between businesses that adopt EMSs for their own organizational reasons ("self-initiated"), or with government assistance or other incentives, or under coercion from enforcement actions or corporate or customer mandates. Both public policymakers and businesses themselves will benefit from better information on the consequences of EMSs for environmental performance, and on their associated benefits and costs.

Progress Summary:

As anticipated, most of Year 1 was devoted to identifying key sectors and developing a sampling design for facilities for study, designing and pretesting the survey instrument, and determining the availability and quality of U.S. Environmental Protection Agency (EPA) environmental performance data sets for subsequent linked comparisons. We also have nearly completed development of a database for the data we are about to collect; completed a research bibliography of more than 200 journal articles, reports, and other empirical studies on EMSs; and completed an additional year of longitudinal data collection on the National Database on Environmental Management Systems (NDEMS) pilot facilities to investigate changes in EMSs and related environmental performance over time.

We now have completed the design of the survey instrument and identified specific contact information for a sample of 3,709 U.S. manufacturing facilities to which it is ready to be sent, in four Standard Industrial Classification (SIC) subsectors: Metal Coatings and Allied Services (3479), Chemical Preparations (2899), Motor Vehicle Parts and Accessories (3714), and Plastics Products (3089). These sectors were chosen to include a high number of certified environmental management systems, strong supplier relationships to the automotive sector (which has mandated supplier EMSs), and significant environmental impacts based on EPA's Toxics Release Inventory (TRI) data. The sample includes facilities that have adopted EMSs with and without external pressures or incentives to do so, as well as controls that have not adopted formal EMSs at all. The survey will be sent to plant managers, with the request that it be completed either by the plant manager or by another knowledgeable senior manager. We have pretested the survey in four manufacturing facilities similar to those we are targeting, and it has been refined with the assistance of survey research experts in the University of North Carolina's Odum Institute for Research in the Social Sciences and approved by the University's Institutional Review Board for human subjects research.

The survey is designed to collect data regarding four main characteristics: (1) the presence of environmental management activities and motivation for adopting them; (2) the objectives of those activities; (3) performance change in the past 3 years, including environmental performance measures as well as costs and benefits of EMS activities; and (4) characteristics of the facility, including number of employees, involvement in the automobile industry, and status as a privately held or publicly traded business.

In a closely related though separately funded project, we have just completed the final report of the NDEMS Pilot Program (PP), which provides a foundation for many of the design considerations and propositions we are testing in the current study. Among other conclusions, the NDEMS/PP project-based on longitudinal data for 83 facilities in 20 sectors-found that the introduction of an EMS can be expected to be at least somewhat beneficial to the environmental performance of most facilities, as well as to their operating and management efficiencies, and in some cases to their regulatory compliance patterns. These results were more likely for facilities that were subsidiaries of publicly traded corporations, owing to their greater access to management capabilities, resources, and assistance from their parent organizations, but they occurred in privately held and government facilities as well. We also found that facilities that anticipated business benefits from EMS adoption-marketing potential, competitive advantage, increased revenues, or support of other professionals-showed significantly higher aggregate scores for improvement in their environmental performance indicators than others. The report is listed below, and is available on our Web Site. The current project is designed both to extend this pilot investigation to a far larger statistical sample of facilities, and to investigate more systematically the similarities and differences between pilot-program volunteers and facilities that adopt environmental management practices under positive or negative incentives.

Future Activities:

During the second year of this research project, we will send out the survey, follow-up twice to nonresponding facilities, and code, quality check, and enter the responses received into the database. We also will collect and link the relevant environmental performance data from EPA's IDEAS and TRI databases, and begin analyses of the results. Finally, we plan to conduct telephone follow-up interviews with a smaller subsample of high-change facilities, as proposed. The processes of instrument design and sample selection took somewhat longer than we had initially anticipated, owing in part to changes in data availability from one of the principal databases we had intended to use for sample selection, but that now has been resolved through the use of an alternative and more comprehensive database. The project is now moving forward essentially as proposed. We anticipate requesting a no-cost extension of the project period for a third year to complete the analyses and prepare, present, and publish papers based on the results, to extract the full value from the data we now are ready to collect, and we have budgeted accordingly.

Supplemental Keywords:

risk management, pollution prevention, public policy, socioeconomic, social science, ISO 14000, Multi-State Working Group, MSWG, supplemental environmental projects, cleaner production/pollution prevention, enforcement impact, environmental compliance, environmental decision-making, environmental impact comparison, environmental management systems, EMS, environmental performance, environmental policy, government regulatory costs, policy analysis, policymaking, statistical methods, valuation, voluntary programs, business, industry, social science, voluntary agreements, green track. , Economic, Social, & Behavioral Science Research Program, RFA, Scientific Discipline, Sustainable Industry/Business, Corporate Performance, Economics & Decision Making, Economics and Business, Environmental Engineering, Environmental Statistics, Market mechanisms, New/Innovative technologies, Social Science, Sustainable Environment, Technology for Sustainable Environment, cleaner production/pollution prevention, decision-making, EMS, decision making, enforcement impact, environmental Compliance, environmental decision making, environmental impact comparison, environmental management systems, environmental management systems (EMS), environmental performance, environmental policy, government regulatory costs, policy analysis, policy making, pollution prevention, risk management, social sciences, socioeconomics, statistical methods, valuation, voluntary programs

Relevant Websites:

http://ndems.cas.unc.edu/ exit EPA

For the Year 2003
Objective:
The overall objective of this research project is to determine what similarities and differences in environmental performance result from the implementation of environmental management systems (EMSs), and what differences in organizational characteristics, motivations, and decisionmaking are associated with these differences. The specific objective of this research project is to determine whether there are systematic differences in EMSs and in resulting environmental performance among businesses that adopt EMSs for organizational reasons (“self-initiated”), or with government assistance or other incentives, or under coercion from enforcement actions or corporate or customer mandates. Both public policymakers and businesses will benefit from better information on the consequences of EMSs for environmental performance, and on their associated benefits and costs.

Many major businesses recently have mandated the introduction of EMSs by their subsidiaries and suppliers, and government agencies also have begun to promote such systems with public recognition and incentives. A key unanswered question is what differences in actual environmental performance are associated with the introduction of such systems, and specifically whether such systems produce positive changes in performance and other benefits when they are mandated or encouraged by external incentives.

Progress Summary:
During Year 1 of the project, we targeted key sectors for investigation, developed a sampling design, designed and pretested the survey instrument, secured approval from the University of North Carolina at Chapel Hill’s Institutional Review Board, developed a database for the data we were to collect, completed an extensive research bibliography, and determined the availability of U.S. Environmental Protection Agency (EPA) environmental performance data sets for subsequent linked comparisons. In short, we completed essentially all of the preparatory work for the data collection phase of the project, and were about to begin data collection. Our sample targeted plant managers of 3,709 U.S. manufacturing facilities in four Standard Industrial Classification subsectors: Metal Coatings and Allied Services (3479), Chemical Preparations (2899), Motor Vehicle Parts and Accessories (3714), and Plastics Products (3089). These sectors were chosen to include a large number of certified EMSs, strong supplier relationships to the automotive sector (which has mandated supplier EMSs), and significant environmental impacts based on EPA’s Toxics Release Inventory (TRI) data. The sample included facilities that had adopted EMSs with and without external pressures or incentives to do so, as well as controls that have not adopted formal EMSs at all.

During Year 2 of the project, which we have just completed, the research project has continued essentially as proposed and as anticipated in our Year 1 annual report. From our original sample of 3,708 facilities, we discarded approximately 500 because of facility closures, relocation, and incorrect mailing addresses, and sent the survey to plant managers of more than 3,200 facilities, with follow-up reminders as planned. From these, we received 617 responses, a response rate of 20 percent, well distributed among the industries sampled. We coded and quality checked the data, entered them into the database, and now are well along in analyzing the data as planned.

Initial analyses of the survey results using chi-square and Fischer’s exact tests were reported at a national conference on management-based environmental incentive strategies in Washington, DC, in July 2003, cosponsored by Harvard University and Resources for the Future, and this paper subsequently was developed further into a peer-reviewed chapter that has been accepted for publication in a book to be published by Resources for the Future Press.

In the second stage of data analysis, the researchers have developed and fitted several regression models to the data, adding exogenous variables from EPA’s IDEAS database to examine the potential influence of regulatory pressure as well (number of inspections, number of noncompliances, and the amount of fines at each facility during the 3 years prior to the study period). To control for potential regional differences, we also added dummy variables based on the EPA region in which each facility was located. Currently, we are drafting two papers reporting the results of these analyses, one focusing on environmental performance outcomes (to be submitted to a leading public policy journal) and the second focusing on reported costs and benefits of environmental management activities to business outcomes (to be submitted to a leading management research journal).

Finally, the researchers have been invited to present preliminary information about this research project, as well as findings from the final report of our prior EPA cooperative agreement (several supplemental tasks of which also were funded by this grant), to a number of national audiences of federal, state, and business policymakers. These included EPA’s Innovation Action Council, the annual EPA-State Environmental Innovations Symposium, the annual national conference of the Multi-State Working Group on Environmental Management Systems, and the annual research conference of the Association for Public Policy Analysis and Management. We also participated (by invitation) as one of several researcher perspectives in an EPA-sponsored conference on the use of EPA databases, and in developing recommendations for making them more accessible and useful for research.

Future Activities:
The researchers will continue to incorporate additional measures of environmental performance outcomes from EPA’s TRI, as planned, and have obtained valuable advice on this from other scholars who have used these data extensively. The results of this analysis will be incorporated into the first of the two papers described above. We will complete these analyses, manuscripts, and the final project report by late summer 2004.

As anticipated, we are requesting confirmation of a no-cost extension of the research project period through November 14, 2004, to complete the analyses and prepare, present, and publish papers based on the results so that we can extract the full value from the data we have collected. We have budgeted accordingly.

As an additional benefit of this research project at no cost to the grant, the researchers also have begun to collaborate on comparative analyses using this instrument to survey facilities in the same sectors in two other rapidly industrializing countries that export to U.S. business customers: Thailand and Mexico. Faculty colleagues in the business school of Chulalongkorn University have translated our survey into Thai, administered it to managers of several hundred facilities in the same sectors in Thailand, and now are analyzing the results. We anticipate a further paper comparing the results for United States and Thai facilities later in 2004. Research assistant Andrew Hutson also is using our survey instrument to develop comparable research on facilities in the same sectors in Mexico as his dissertation project; many of these facilities also export to U.S. business customers, and thus will provide an additional and valuable comparison. We hope and anticipate that these comparisons may shed valuable light on similarities and differences in environmental management practices between supplier facilities within the United States and their overseas competitors.

Supplemental Keywords:
risk management, pollution prevention, public policy, socioeconomic, social science, International Organization for Standardization, ISO, ISO 14000, Multi-State Working Group, MSWG, supplemental environmental projects, sustainable industry, sustainable business, corporate performance, economics and decisionmaking, economics and business, environmental engineering, environmental statistics, market mechanisms, new technologies, innovative technologies, technology for sustainable environment, cleaner production, pollution prevention, enforcement impact, environmental compliance, environmental decisionmaking, environmental impact comparison, environmental management systems, EMS, environmental performance, environmental policy, government regulatory costs, policy analysis, policymaking, statistical methods, valuation, voluntary programs, Economic, Social, and Behavioral Science Research Program, , Economic, Social, & Behavioral Science Research Program, RFA, Scientific Discipline, Sustainable Industry/Business, Corporate Performance, Economics & Decision Making, Economics and Business, Environmental Engineering, Environmental Statistics, Market mechanisms, New/Innovative technologies, Social Science, Sustainable Environment, Technology for Sustainable Environment, cleaner production/pollution prevention, decision-making, EMS, decision making, enforcement impact, environmental Compliance, environmental decision making, environmental impact comparison, environmental management systems, environmental management systems (EMS), environmental performance, environmental policy, government regulatory costs, policy analysis, policy making, pollution prevention, risk management, social sciences, socioeconomics, statistical methods, valuation, voluntary programs

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