Corporate culture key to environmental initiatives

Cambridge, USA (GLOBE-Net) – Corporate participation in voluntary environmental programs is largely determined by internal company culture, rather than by the initiatives’ costs and benefits, say the authors of a new Harvard University study. The report’s findings may be important lessons for government agencies as they decide how to encourage better environmental performance by more companies, the study concludes. According to “Beyond Compliance: Business Decision Making and the U.S. EPA’s Performance Track Program,” it is still unclear if voluntary government programs such as the U.S. EPA’s National Environmental Performance Track encourage companies to do more than they would normally do to improve their environmental behaviour.

“What we’ve found is that it’s not so much what the EPA does, but what certain companies need - some companies have a propensity to seek this kind of recognition,” said Jennifer Nash, a co-author of the study and the director the Kennedy School of Government’s Regulatory Policy Program. “They may not be the best performers, but it’s a certain sort of extroversion that makes an individual or company go for the gold star.”

The Harvard researchers focused on the 7-year-old EPA program to answer why companies join voluntary government programs and whether such programs improve the company facilities’ environmental performance. Performance Track recognizes and rewards private and public facilities that demonstrate strong environmental performance beyond current requirements, the agency says.

“Program partners are providing leadership in many areas, including some that are not currently regulated, such as energy use, greenhouse gas emissions, and water consumption,” EPA notes on the program’s Web site.

Denver International Airport, Johnson & Johnson’s World Headquarters and Coca Cola’s Columbus, Ohio, plants are among more than 400 U.S. facilities enrolled in the program. Such facilities must have an environmental management system in place and demonstrate continuous improvement, among other things, to be accepted into the program. In return, EPA publicly recognizes such facilities as industry leaders and offers regulatory and administrative incentives, such as low-priority status for routine federal environmental inspections.

Few applicants

While EPA estimates that as many as 5,000 facilities meet at least some of the program’s eligibility requirements, the agency averages fewer than 50 applications during its biennial enrolment cycle, according to the report.

To gauge why owners of such facilities enrol in the EPA program, the Harvard researchers sent surveys to 3,900 companies - including every facility that had applied for Performance Track since 2000, as well as a random sample of facilities from the chemicals, paper, transportation and electronics sectors.

Based on 678 responses to the survey conducted in late 2005, researchers found that facilities with more employees and support from top-level management reported a greater receptivity toward voluntary programs like Performance Track. So too did facilities that expected more stringent regulations to affect them in the future and facilities that were most likely to seek out approval from environmental groups and the broader community, the study found.

That is not to say that such companies sought out Performance Track to burnish their “green” image among investors, consumers and other influential groups, noted Cary Coglianese, Nash’s co-author of the study.

“A company might be able to gain in its reputation through Energy Star, for example,” added Coglianese, a law professor at the University of Pennsylvania. “The EPA, though, has well over 50 voluntary programs, and my guess is that the ordinary consumer knows about relatively few of these.”

Attracting ‘joiners’

Rather, Coglianese said he suspects such programs tend to attract “joiners” - companies that may not be the best environmental performers in their sector but, nevertheless, tend to enrol in several voluntary environmental compliance programs.

“These programs may not always be selecting the true and distinguished environmental leaders … but rather there are good environmental performers who are not in this program or other programs,” he added.

Key barriers causing many companies to shun such programs, Coglianese suspects, are the tradeoffs between the costs and rewards of voluntary participation. That is, inherent constraints make it difficult, if not impossible, for regulatory agencies to offer “significant rewards” for participation and set “low-cost and pragmatic” requirements.

The survey results found that companies find it burdensome to fill out the 29-page application and a nine-page annual progress reports that EPA requires. What’s more, the survey found that as the level of reward increases, so does the stringency of entry requirements such that adding rewards actually reduces overall participation.

“Fewer firms want to assume the increased costs associated with gaining entry to programs with higher stringency, even when they promise greater standards,” the report concluded.

Responses to the survey were kept confidential. The report also did not make specific recommendations, such as whether making voluntary compliance programs mandatory would improve facilities’ environmental performance, Coglianese noted.

  • Read Beyond Compliance: Business Decision Making and the U.S. EPA’s Performance Track Program (PDF)

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