It is frequently hypothesized that incorporation
of environmental issues in corporate practices may improve
a firm's environmental performance. Whether or not this
hypothesis is true is important from the perspective of
environmental proactiveness, as are the questions relating
to the relevant issues: (1) What are the relevant environment
performance indicators for a facility's environmental proactiveness?
(2) How is it measured? and (3) Which specific determinants
trigger corporate practices and environmental performance?
Based on ample empirical evidence for the Indian grossly
polluting units, this paper addresses these issues on the
basis of parametric inference tests, viz., Chi-square testing
and, later, ANOVA, that explicitly take into account the
argument that the decision on corporate environmental management
practices within a facility may be correlated to the decision
on selection of firm-specific determinants. The empirical
results indicate that there are six primary Environmental
Performance Indicators (EPIs), viz., environmental policy,
environment department, regulatory compliance, environmental
audit, EMS certification and environmental cost management
that may reflect the level of incorporation of environmental
issues in business practice. The authors have tried to
measure this level of integration by applying quantitative
scores and termed this as `Environmental Performance Score
(EPS)'. Furthermore, the authors find that size and nature
of the unit may explain a firm's environmental proactiveness.
In contrast to conventional business practices,
corporate environmental management provides a number of
economic benefits from environmental considerations. A
more effective use of raw materials in production results
in diminishing costs for example, and a greener corporate
image leads to an increase in market share. New market
opportunities might also be created in the form of new
products and technology (Bostrum and Poysti, 1992; Taylor,
1992; Gladwin, 1993; Welford and Gouldson, 1993 and Bhattacharya,
2004). In addition to providing typical positive spillovers
of R&D activities, corporate environmental management
may reduce negative environmental externalities of production.
Although there may be market-based incentives to improve
environmental performance, such as cost savings created
by process improvements, the public good character of corporate
environmental management may require governmental intervention
for their stimulation. For this reason, it is essential
to analyze the variety of measures, including regulatory
and market-based instruments that may provide sufficient
incentives to spur corporate environmental management within
firms.
For India, very few empirical efforts
have been spent on identifying the characteristics, determinants,
and obstacles of corporate environmental management and
business practices at the firm level, focusing on the role
of different environment performance indicators (Gupta
and Goldar, 2003; Chakrabarti and Mitra, 2005 and Pahuja,
2006). In the early 1990s, firms began to implement individual
Environmental Management Systems (EMSs), including environmental
reports and plans for continuous improvements in production
processes and environmental performance. Since then, the
voluntary adoption of international norms, such as the
standards of the International Standards Organization (ISO)
14001, has become a vital supplement to mandatory environmental
policies based on regulation and legislation, involving
the monitoring of environmental performance and the assessment
of achievements. |
