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

Author

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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)

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.

Suggested Citation

  • Cosmina L. Voinea & Bas-Jan Hoogenberg & Cosmin Fratostiteanu & Hammad Bin Azam Hashmi, 2020. "The Relation between Environmental Management Systems and Environmental and Financial Performance in Emerging Economies," Sustainability, MDPI, vol. 12(13), pages 1-21, July.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:13:p:5309-:d:378782
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    References listed on IDEAS

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    2. Nader Alber & Amr Saleh, 2022. "Environmental Compliance Reactions to R & D Practices and Intellectual Capital: A Worldwide Evidence," International Business Research, Canadian Center of Science and Education, vol. 15(4), pages 103-103, April.
    3. Petra C. M. Neessen & Cosmina L. Voinea & Els Dobber, 2021. "Business Models of Social Enterprises: Insight into Key Components and Value Creation," Sustainability, MDPI, vol. 13(22), pages 1-22, November.
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    6. Zhao‐Yong Sun & Meng‐Jie Li & Dongdong Li, 2023. "Carbon performance and corporate financial performance: The moderating role of consumer awareness of corporate social responsibility," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 663-670, January.
    7. Alla Kasych & Petr Suler & Zuzana Rowland, 2020. "Corporate Environmental Responsibility through the Prism of Strategic Management," Sustainability, MDPI, vol. 12(22), pages 1-29, November.
    8. Oksana Seroka‐Stolka & Kamil Fijorek, 2022. "Linking stakeholder pressure and corporate environmental competitiveness: The moderating effect of ISO 14001 adoption," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1663-1675, September.
    9. Agus Joko Pramono & Suwarno & Firdaus Amyar & Renny Friska, 2023. "Sustainability Management Accounting in Achieving Sustainable Development Goals: The Role of Performance Auditing in the Manufacturing Sector," Sustainability, MDPI, vol. 15(13), pages 1-13, June.
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