New research reveals which factors influence a company's decision to adopt EMAS - the European Eco-Management and Audit System, a scheme designed to improve corporate responsibility practices. According to the findings, larger, more financially stable companies and, intriguingly, those with smaller profit margins, are more likely to participate. EMAS was set up in 2001 to encourage companies in the EU to improve their environmental performance. Participation in EMAS is entirely voluntary and as such is influenced by a range of factors including a company’s size and financial stability. However, exactly how these factors influence a company's decision to participate has not been previously explored. Most research on corporate environmental responsibility focuses on Japanese and US companies participating in other programmes.
The Belgian study is the first to examine characteristics of green companies in Europe, and their participation in the EMAS scheme in particular. The study reveals that large companies with high financial stability and labour costs (wages) are more likely to participate in the programme. Around half of the companies surveyed were based in the UK. However, participation in EMAS is low in the UK (around 5 per cent) and companies in other member states where EMAS is actively encouraged are far more likely to participate - particularly companies in Finland, Germany, Spain, Italy and Austria. Furthermore, and perhaps somewhat counter intuitively, companies with larger profit margins are less likely to join the scheme.
The researchers reached their conclusions following a study of 436 companies, all with over 500 employees, from the Dow Jones STOXX 600 Monthly Selection list of November 2005. Just 38 (9 per cent) of the companies on the list were EMAS participants. Organisations subscribed to the scheme are required to carry out environmental audits and put in place company-wide environmental management systems. Therefore, the cost of taking part has to be justified by the benefits to the company, which might include increased operational efficiency and goodwill from consumers and regulators.
The researchers offer possible explanations for some of the patterns that emerge in their findings. They suggest larger companies may be better suited to participation in the scheme as they are more likely to be experienced in implementing management standards. Companies with higher paid staff are more likely to have a highly educated workforce who may therefore be more concerned with environmental issues. However, it is surprising that larger profits reduce the likelihood of subscribing to EMAS, as these organisations have more spare resources. The researchers suggest that this trend may be due to companies with lower profit margins using EMAS to differentiate themselves from competition by demonstrating their environmental credentials.
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