The Relation between Environmental Management Systems and Environmental and Financial Performance in Emerging Economies

Cosmina L. Voinea, Bas-Jan Hoogenberg, Cosmin Fratostiteanu and Hammad Bin Azam Hashmi
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Cosmina L. Voinea: Faculty of Management, Open University of the Netherlands, 6419 AT Heerlen, The Netherlands
Bas-Jan Hoogenberg: Faculty of Management, Open University of the Netherlands, 6419 AT Heerlen, The Netherlands
Cosmin Fratostiteanu: Faculty of Management, Open University of the Netherlands, 6419 AT Heerlen, The Netherlands
Hammad Bin Azam Hashmi: Faculty of Management, Open University of the Netherlands, 6419 AT Heerlen, The Netherlands

Sustainability, 2020, vol. 12, issue 13, 1-21

Abstract: This study pursues to clarify the effect of environmental management systems (EMS) comprehensiveness on environmental performance and financial performance using an extensive quantitative dataset obtained in Brazil over an eight-year period. It is recognized that the implementation of environmental management differs per company varying in how many environmental practices are adopted and hence how comprehensive the EMS is. The relationship between EMS comprehensiveness, environmental performance, and financial performance proves to be complex. First of all, the overall negative effect of environmental performance on financial performance may indicate that the resources needed to realize an improved environmental performance do not outweigh the cost reductions resulting from eco-efficiency or improved reputation. The effect of EMS comprehensiveness on financial performance is in line with that, indicating that an above average EMS comprehensiveness results in lower financial performance, which may correspond to high environmental management- and overhead costs. Across sectors, the companies operating in sector industries have high quality EMS comprehensiveness, while the companies in agriculture, commerce, and services exhibit a lower EMS.

Keywords: environmental management systems; environmental performance; financial performance; emerging economies; Brasil (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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