TEL  Vol.7 No.7 , December 2017
Environmental Management Systems and Financial Performance: The Case of Listed Companies in Mauritius
ABSTRACT

The objective of this paper is to examine the relationship between environmental management practices adopted by listed firms on the Stock exchange of Mauritius and their impact, if any, on their financial performance. A content analysis of annual reports of the listed companies over the period 2011 to 2014 to determine the level of environmental management systems (EMS) is implemented by the local firms. For the purpose of this research, the environmental management practices were classified into 6 categories namely pollution control, waste reduction, recycling, cutting use of energy, cutting paper consumption and carbon footprint reduction based on extant literature. The study reveals that there is an insignificant relationship between environmental management practices and financial performance except for cutting use of energy which generated a significant relationship. The results are in line with studies by [1] who found that companies tend to be more environmentally conscious due to compliance rather than a voluntary basis or to reap corporate benefits. In addition, [2] states that since the reduction of waste water, air emission and other pollution cannot be detected and measured, it is difficult to assess the relationship between these two variables.

Cite this paper
Neeveditah, P. , Karishma, A. and Nitoosheeka Devi, R. (2017) Environmental Management Systems and Financial Performance: The Case of Listed Companies in Mauritius. Theoretical Economics Letters, 7, 2054-2069. doi: 10.4236/tel.2017.77139.
References
[1]   Coglianese C. and Nash, J. (2001) Resources for the Future. Washington DC, 82-104.

[2]   Wong, C.W.Y., et al. (2012) Green Operations and the Moderating Role of Environmental Management Capability of Suppliers on Manufacturing Firm Performance. International Journal of Production Economics, 140, 283-294.
https://doi.org/10.1016/j.ijpe.2011.08.031

[3]   Porter, M.E. and van der Linde, C. (1995) Green and Competitive: Ending the Stalemate. Harvard Business Review, 119-134 (September-October 1995).

[4]   Delmas, M.A. and Toffel, M.W. (2003) Institutional Pressures and Environmental Management Practices. 11th International Conference of the Greening of Industry Network San Francisco, 12-15 October 2003.

[5]   Earnhart, D. and Lizal, L. (2007) Effect of Pollution Control on Corporate Financial Performance in a Transition Economy. European Environment, 17, 247-266.
https://doi.org/10.1002/eet.447

[6]   Ngniatedema, T. and Li, S.H. (2014) Green Operations and Organizational Performance, Vol. 5, No 3.

[7]   McCrea, B. (2010) Why “Green” Equals Good Business.

[8]   Kleindorfer, P.R., Singhal, K. and Van Wassenhove, L.N. (2005) Sustainable Operations Management. Production and Operations Management, 14, 482-492.
https://doi.org/10.1111/j.1937-5956.2005.tb00235.x

[9]   Rothenberg, S., Pil, F.K. and Maxwell, J. (2001) Lean, Green, and the Quest for Superior Performance. Production and Operations Management, 10, 228-243.
https://doi.org/10.1111/j.1937-5956.2001.tb00372.x

[10]   Aragon-Correa, J.A. (1998) Strategic Proactivity and Firm Approach to the Natural Environment. Academy of Management Journal, 41, 556-567.
https://doi.org/10.2307/256942

[11]   Walls, J.L., Berrone, P. and Phan, P.H. (2012) Corporate Governance and Environmental Performance: Is There Really a Link? Strategic Management Journal.

[12]   Jabbour, C.J.C., Santos, F.C.A. and Nagano, M.S. (2008) Environmental Management System and Human Resource Practices: Is There a Link between Them in Four Brazilian Companies? Journal of Cleaner Production, 16, 1922-1925.
https://doi.org/10.1016/j.jclepro.2008.02.004

[13]   Donnelly, K., Beckett-Furnell, Z., Traeger, S., Okrasinski, T. and Holman, S. (2006) Eco-Design Implemented through a Product-Based Environmental Management System. Journal of Cleaner Production, 14, 1357-1367.
https://doi.org/10.1016/j.jclepro.2005.11.029

[14]   Cole, M.A., Elliott, R.J.R. and Shimamoto, K. (2006) Globalization, Firm-Level Characteristics and Environmental Management: A Study of Japan. Ecological Economics, 59, 312-323.
https://doi.org/10.1016/j.ecolecon.2005.10.019

[15]   Atasu, A., Sarvary, M. and Wassenhove, L.N.V. (2008) Remanufacturing as a Marketing Strategy. Management Science, 1-6.
https://doi.org/10.1287/mnsc.1080.0893

[16]   Lai, K.H. and Wong, C.W.Y. (2012) Green Logistics Management and Performance: Some Empirical Evidence form Chinese Manufacturing Exporters. Omega, 40, 267-282.
https://doi.org/10.1016/j.omega.2011.07.002

[17]   Guide, V.D.R.J. and Vassenhove, L.N. (2001) Managing Product Returns for Remanufacturing. Production and Management, 10, 142-155.
https://doi.org/10.1111/j.1937-5956.2001.tb00075.x

[18]   Kleiner, A. (1991) What Does It Mean to Be Green? Harvard Business Review, 69, 38-47.

[19]   Gray, R. and Bebbington, J. (2001) Accounting for the Environment. Second Edition.

[20]   Klassen, R.D. and McLaughlin, C.P. (1996) The Impact of Environmental Management on Firm.

[21]   Buttel, F.H. (2000) Ecological Modernization as Social Theory. Geoforum, 31, 57-65.
https://doi.org/10.1016/S0016-7185(99)00044-5

[22]   Hindo, B. and Arndt, M. (2006) Everything Old Is New Again. Business Week, 3999, 65-70.

[23]   Barack, B. (2010) 31 Ways to Reduce Paper Usage.

[24]   Walser, M. (2014) Carbon Footprint. http://www.eoearth.org/view/article/150926

[25]   Smale, R., Hartley, M., Hepburn, C., Ward, J. and Grubb, M. (2006) The Impact of CO2 Emissions Trading on Firm Profits and Market Prices. Climate Policy, 6, 31-48.
https://doi.org/10.1080/14693062.2006.9685587

[26]   Ngwakwe, C.C. and Msweli, P. (2013) Carbon Emission Reduction and Firm Performance: Example from 3M Company. Environmental Economics, 4.

[27]   Busch, T. and Hoffmann, H.V. (2011) How Hot Is Your Bottom Line? Linking Carbon and Financial Performance. Business and Society, 50, 233-265.
https://doi.org/10.1177/0007650311398780

[28]   Darnall, N. (2003) Motivations for Participating in a Voluntary Environmental Initiative; The Multi-State Working Group and EPA’s EMS Pilot Program. In: Sharma, S. and Starik, M., Eds., Research in Corporate Sustainability, Edward Elgar Publishing, Boston, 123-154.

[29]   Konar, S. and Cohen, M.A. (2001) Does the Market Value Environmental Performance? Review of Economics and Statistics, 83, 281-289.
https://doi.org/10.1162/00346530151143815

[30]   Meyer, J. and Rowan, B. (1977) Institutionalized Organizations: Formal Structure as Myth and Ceremony. American Journal of Sociology, 83, 340-363.
https://doi.org/10.1086/226550

[31]   Scott, W.R. (2001) Institutions and Organizations. Sage Publications, Thousand Oaks.

[32]   Earnhart, D. and Lizal, L. (2010) The Effect of Corporate Environmental Performance on Financial Outcomes—Profits, Revenues, and Costs: Evidence from the Czech Transition Economy.

[33]   Telle, K. (2006) It Pays to Be Green—A Premature Conclusion? Environmental and Resource Economics, 35, 195-220.
https://doi.org/10.1007/s10640-006-9013-3

[34]   Salama, A. (2005) A Note on the Impact of Environmental Performance on Financial Performance. Structural Change and Economic Dynamics, 16, 413-421.
https://doi.org/10.1016/j.strueco.2004.04.005

[35]   Palmer, K., Wallace, O. and Paul, P. (1995) Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm? Journal of Economic Perspectives, 9, 119-132.
https://doi.org/10.1257/jep.9.4.119

[36]   Filbeck, G. and Gorman, R. (2004) The Relationship between the Environmental and Financial Performance of Public Utilities. Environmental and Resource Economics, 29, 137-154.
https://doi.org/10.1023/B:EARE.0000044602.86367.ff

[37]   Portney, P. and Stavins, R. (2000) Public Policies for Environmental Protection. 2nd Edition, Resources for the Future, Washington DC.

[38]   Campbell, D. (2000) Legitimacy Theory or Managerial Reality Construction? Corporate Social Disclosure in Marks and Spencer Plc Corporate Reports, 1969-1997. Accounting Forum, 24, 80-100.
https://doi.org/10.1111/1467-6303.00030

[39]   Aras, G., Aybars, A. and Kutlu, O. (2010) Investigating the Relationship between Corporate Social Responsibility and Financial Performance in Emerging Markets. International Journal of Productivity, 59, 229-254.

[40]   Karagiorgos, T. (2010) Corporate Social Responsibility and Financial Performance: An Empirical Analysis on Greek Companies. European Research Studies, 11.

[41]   Saleh, M., Zulkifli, N. and Muhamad, R. (2011) Looking for Evidence of the Relationship between Corporate Social Responsibility and Corporate Financial Performance in an Emerging Market. Asia-Pacific Journal of Business Administration, 3, 165-190.
https://doi.org/10.1108/17574321111169849

[42]   Uadiale, O.M. and Fagbemi, T.O. (2012) Corporate Social Responsibility and Financial Performance in Developing Economies: The Nigerian Experience. Journal of Economic and Sustainable Development, 3.

[43]   Ramasamy, B., Ting, H.W. and Yeung, M.C.Y. (2007) Does It Pay to Be Good in Developing Countries? The Relationship between CSR and Financial Performance in Malaysia. Asian Academy of Management Journal of Accounting and Finance, 3, 21-36.

[44]   Krippendorff, K. (2004) Content Analysis: An Introduction to Its Methodology. 2nd Edition, Sage, Thousand Oaks.

[45]   Skrivanek, S. (2009) The Use of Dummy Variables in Regression Analysis.
https://www.moresteam.com/WhitePapers/download/dummy-variables.pdf

[46]   Frota, S. and Vigário, M. (2005) Subjects, Objects and Intonational Phrasing in Spanish and Portuguese. Studia Linguistica, 59, 110-143.

[47]   Iqbal, N., Ahmad, N., Basheer, N.A. and Nadeem, M. (2012) Impact of Corporate Social Responsibility on Financial Performance of Corporations: Evidence from Pakistan. International Journal of Learning and Development, 2.
https://doi.org/10.5296/ijld.v2i6.2717

[48]   Artiach, T., Lee, D., Nelson, D. and Walker, J. (2010) The Determinants of Corporate Sustainability Performance. Accounting and Finance, 50, 31-51.
https://doi.org/10.1111/j.1467-629X.2009.00315.x

[49]   Kariuki, S.N. and Ochiri, G. (2017) Strategic Succession Planning Strategies on Organizational Productivity: A Case of Githunguri Dairy Cooperative Society. International Academic Journal of Human Resource and Business Administration, 2, 179-200.

[50]   Lysons, K. and Farrington, B. (2006) Purchasing and Supply Chain Management. 7th Edition, Prentice Hall, London.

[51]   Hart, S. and Ahuja, G. (1996) Does It Pay to Be Green? An Empirical Examination of the Relationship between Emission Reduction and Firm Performance. Business Strategy and the Environment, 5, 30-37.
https://doi.org/10.1002/(SICI)1099-0836(199603)5:1<30::AID-BSE38>3.0.CO;2-Q

[52]   Fisher-Vanden, K. and Thorburn, K. (2011) Voluntary Corporate Environmental Initiatives and Shareholder Wealth. Journal of Environmental Economics and Management, 62, 430-445.
https://doi.org/10.1016/j.jeem.2011.04.003

 
 
Top