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PII:

European Management Journal Vol. 20, No. 2, pp. 159171, 2002

2002 Elsevier Science Ltd. All rights reserved
Printed in Great Britain
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0263-2373/02 $22.00 + 0.00

Adopting Corporate
Environmental
Management Systems:
Motivations and Results of
ISO 14001 and EMAS
Certification
DAVID MORROW, UBS Asset Management, Zurich
DENNIS RONDINELLI, Kenan-Flagler Business School, University of North Carolina at
Chapel Hill

Multinational and domestic corporations around

the world are adopting environmental management
systems (EMS) and certifying them by international
standards. ISO 14001 is becoming the dominant
international standard for assessing environmental
management processes and in Europe many firms
are also registering their EMS according to the EcoManagement and Audit Scheme (EMAS). Yet, relatively few studies have explored the motivations of
firms adopting and certifying EMS and even fewer
have examined the results or impacts on the companies that do so. The few empirical analyses and case
studies that have been done on corporate EMS provide insights into motivations and results primarily
for large multinational corporations in the United
States and Europe. We compare these findings with
those of five in-depth case studies of smaller domestic energy and gas companies in Germany. 2002
Elsevier Science Ltd. All rights reserved.
Keywords: Environment, Environmental management, ISO 14001, EMAS, EMS, Energy, Gas

European Management Journal Vol. 20, No. 2, pp. 159171, April 2002

Introduction
The adoption of environmental management systems
(EMS) as frameworks for integrating corporate
environmental protection policies, programs, and
practices is growing among both domestic and multinational companies around the world. Many companies that adopt an EMS follow industry standards,
such as Responsible Care in the chemicals sector,
or international guidelines such as ISO 14001 or the
European Eco-Management and Audit Scheme
(EMAS).
The growth of EMS as a process for integrating corporate environmental policies and programs has
been quite rapid over the past decade. The concept
of external certification expanded with the introduction of the British Standard 7750 in the early 1990s,
followed by the development of EMAS in 1993, and
the promulgation of the ISO 14000 series in 1996. By
mid-2001 more than 30300 organizations worldwide
had their EMS certified under ISO 14001 guidelines
established by the International Organization for
Standardization in Switzerland. In Europe, nearly
4000 companies have registered under EMAS guide159

ADOPTING CORPORATE ENVIRONMENTAL MANAGEMENT SYSTEMS

lines (Peglau, 2001). Other companies are adopting

major components of industry or international standards for environmental management without formally certifying them. Eli Lilly (1999), the international pharmaceutical company, for example, uses
the ISO 14001 framework to allow each of its international sites to develop an EMS and then decide if
it should seek official certification.
Many multinational corporations have designed, certified, and implemented environmental management
systems under ISO 14001 because it provides a harmonized standard for managing a corporations
environmental impacts (Tibor and Feldman, 1996).
ISO 14001 is a set of guidelines by which a facility
a single plant or a whole organizationcan establish
or strengthen its environmental policy, identify
environmental aspects of its operations, define
environmental objectives and targets, implement a
program to attain environmental performance goals,
monitor and measure effectiveness, correct
deficiencies and problems, and review its management systems to promote continuous improvement
(Weaver, 1996).
An increasing number of multinational corporations
(MNCs) have adopted and certified their EMS. The
Ford Motor Company was one of the first MNCs to
embrace ISO 14001 series guidelines for all of its
manufacturing facilities. By 1998, Ford had certified
all 140 of its manufacturing plants in 26 countries,
and by 1999 it was requiring that all its suppliers and
manufacturing facilities worldwide also adopt and
certify an EMS as a condition for continuing to do
business with Ford (Wilson, 2001). General Motors,
Daimler-Chrysler, Toyota and other automobile
manufacturers are also requiring all of their manufacturing facilities around the world to adopt EMS and
to certify them by international standards and
encouraging and assisting their suppliers to do the
same (Sabatini, 2000). In 1997, IBM (2000) received
the first single worldwide ISO 14001 certification that
covered corporate headquarters and 11 of its 28
plants that manufactured microelectronic technology,
data storage systems, personal systems, servers and
networking hardware. IBM certified the EMS of its
17 other sites in 1998 and added facilities in Thailand
and Ireland in 1999. The Royal Dutch/Shell Group
(2000) certified 90% of its major installations under
ISO 14001 by 1999. Pharmaceutical company BristolMyers Squibb (2000) had 19 of its plants worldwide
certified according to ISO 14001 standards by 2000
and now Bristol-Myers Squibb, Germany, informs
hospitals how to implement ISO 14001-type environmental standards at their facilities. By 2000, more
than 100 U.S. companies in the electronics and semiconductor industry had their EMS certified by ISO14001 registrars (Sissel, 2000).
As more corporations consider the possibilities of
adopting an EMS and as they, government agencies,
and environmental interest groups consider the
European Management Journal Vol. 20, No. 2, pp. 159171, April 2002

implications of doing so, several questions arise for

which answers are only beginning to emerge. First,
is an EMS only a management tool that only large
multinational corporations have the resources and
incentives to adopt or can smaller domestic firms also
benefit from developing and certifying an EMS?
Second, what motivates corporationslarge or small,
domestic or multinationalto adopt an EMS and voluntarily comply with external standards for designing and implementing it? Third, do corporate motivations for adopting EMS vary from country to
country? And, fourth, what are the results of
implementing an EMS and how are companies
impacted by certification?
This article explores these questions by reviewing the
literature on corporate environmental management
systems and the relatively few empirical studies that
have been done of their adoption and certification.
We compare these findings with those of five indepth case studies of energy and gas companies in
Germany that are implementing environmental management systems. Investigation of the German companies in the energy and gas industry offers insights
into why small- and medium-sized domestic German
firms adopt and certify an EMS and the results they
obtain from doing so. Germany was selected because
of its large number of EMAS and ISO 14001 certifications. The energy and gas sector was chosen for
study because of its major environmental impacts.

What are Environmental Management

Systems?
Although corporations in most industrialized countries have adopted environmental protection practices required by government agencies since the early
1970s, these regulations largely focus on control of
water and air emissions and waste disposal. Government regulations usually require companies to
reduce or eliminate their toxic air and water pollution
by using technologies that control or clean emissions
at the end of the pipe (Rondinelli, 2001). During the
1970s and 1980s many corporations, attempting to get
ahead of complex, costly, and rapidly changing
environmental regulations, began to adopt voluntary
pollution prevention practices that sought to reduce
or eliminate from manufacturing processes the
sources of pollutants, rather than controlling them
after emission.
As more companies began to use pollution prevention techniques and to recognize the relationships
among them, some firms started to integrate their
environmental management practices into more comprehensive systems. Industry associations and
government and international organizations saw the
advantages of setting standards that corporations can
use as guidelines. The two most frequently used
161

ADOPTING CORPORATE ENVIRONMENTAL MANAGEMENT SYSTEMS

guidelines for EMS design and certification are the

international standard, ISO 14001, and the European
standard, EMAS. ISO 14001 provides guidelines by
which corporations or other organizations design
and implement an EMS that identifies the organizations environmental policy, the environmental
aspects of its operations, legal and other requirements, a set of clearly defined objectives and targets
for environmental improvement, and a set of
environmental management programs (Jackson,
1997).
ISO 14001 also requires a system of implementation
and operation, including a clear structure of responsibility for environmental management, programs for
training, awareness and competence among all
employees of the facility, internal and external communication of the EMS, a system of environmental
management documentation, a documentation control system, procedures for operational controls of
environmental impacts, and emergency preparedness
and response. ISO 14001 includes provisions for creating a system of checking and corrective action that
includes monitoring and measurement, reporting
non-conformance and taking corrective and preventative action, and record-keeping with regard to
environmental management. It calls for EMS audits
and a management review process through which
senior management reassesses the suitability, effectiveness, and adequacy of the environmental management system at appropriate intervals to assure
continuous improvement.

with environmental regulations and stipulations on

continuous environmental improvement. ISO 14001
elicits commitment to environmental improvement,
but does not stipulate the extent to which performance must be improved.
In brief, ISO 14001 and EMAS have different aims.
ISO 14001 provides guidelines that can be
implemented by almost any type of organization in
any country and was designed primarily to improve
management. EMAS, on the other hand, is designed
to bring about changes in environmental performance.

Motivations Adopting Corporate

Environmental Management Systems
Advocates of environmental management systems
and international standards for EMS certification
claim many benefits that should motivate corporate
executives to adopt an integrated system of environmental management.
Proponents claim that integrated programs of pollution prevention can save companies money by
improving efficiency and reducing the costs of
energy, materials, fines, and penalties and that development and certification of EMS can increase investor
confidence in a company and give it international
competitive advantages (Kirkpatrick and Pouliot,
1996). Adopting an EMS not only focuses a companys attention on negative environmental impacts
but also ensures that responsibility is appropriately
assigned for maintaining high environmental standards throughout the organization.

The Eco-Management and Audit Scheme (EMAS) is

similar to ISO 14001 in its components and requirements (Sulzer, 1999). A main difference between ISO
14001 and the European standard, until recently, was
that EMAS was applicable only at the site level, while
ISO can be applied at the facility, company or organizational levels. EMAS was revised in April 2001 and
now can be applied across entire organizations.
Nevertheless, important distinctions between the two
standards remain. Unlike ISO 14001, EMAS requires
organizations to produce an environmental statement; it is more rigorous in mandating reductions in
environmental impacts to levels not exceeding those
corresponding to economically viable applications of
best available technology; and it requires organizations to make much more information publicly available, thereby enhancing a facilitys transparency.

Clark (1999) points out that many multinational companies are adopting EMS to satisfy customer pressures and to ensure that their suppliers are operating
in environmentally and socially responsible ways.
Some are doing so in response to peer pressure as
more corporations adopt environmental management systems and require their second and third tier
suppliers to do so as well. Growing interest among
corporate stakeholderswithin and outside of the
firmis also driving more corporations to adopt
EMS and to certify them.

Companies seeking EMAS registration (which is

done by a State authority) must report environmental
effects and legal requirements at the site, while ISO
makes certification (by a private registrar) voluntary.
ISO 14001 certification allows the company to decide
how to have its EMS verified and what information
it should disclose. EMAS requires internal system
compliance and performance audits, and external
verification must be conducted at least once every
three years. ISO only suggests system audits against
internal benchmarks. EMAS requires compliance

Advocates of ISO 14001 claim that an international

standard assists corporations to simplify and integrate their environmental protection programs into a
more coherent framework (Cascio, 1994). An international standard makes it easier for corporations to
develop voluntary EMSs and for shareholders,
government regulatory agencies, insurance companies, and financial institutions to assess a companys
commitment to improving environmental performance and reducing risks (Donaldson, 1996). Adoption
of an EMAS registered- or ISO 14001-certified EMS

162

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ADOPTING CORPORATE ENVIRONMENTAL MANAGEMENT SYSTEMS

helps companies reduce their environmental incidents and liabilities, increase efficiency of operations
by removing waste from production and distribution
processes, increase awareness of environmental
impacts of operations among all employees, and
establish a strong image of corporate social responsibility (IISD, 1996). Unlike regulation, ISO 14001s voluntary approach gives companies the flexibility to
develop EMSs that are appropriate to their operations, characteristics, location, and levels of risk
(Rondinelli and Vastag, 1996).

tenance, ensure conformance to policy, and better

meet vendor requirements.
An international survey of 33 companies in the business and institutional furniture industry indicated
other reasons why they would seek ISO 14001 EMS
certification (Ruddell and Stevens, 1998). Among the
strongest motivations (83% each) were to prevent
potential negative environmental impacts, improve
employee environmental awareness, and respond to
customer demand. More than 65% were motivated
by the prospect of improving corporate image and
about 50% by the hope of gaining market access.

Much of the information about actual corporate

motivations for adopting and certifying an EMS is
anecdotal. AlliedSignal Aerospace, for example, used
Interviews of executives in six printed circuit board
an ISO 14001-certified EMS to integrate its total qualcompanies in Hong Kong also reveal the motivations
ity management system (already certified under ISO
for seeking EMS certification in that industry. Chin
9000) with its environmental
and Pun (1999) found that
Among the high adopters manufacturers were driven
management system. WarnerLambert Corporation sought ISO
mainly by external pressures
14001 certification to drive day- commitment to environmental improving company image,
to-day environmental expertise
demands from customers and
improvement was the
and responsibility down to the
regulatory agencies, and the
plant level, identify costpressures of environmental
strongest motivator
reduction opportunities, and
laws and regulationsand the
keep the CEO out of jail as reguanticipation of cost savings to
latory demands become more complex and timeadopt an EMS and certify it to ISO 14001 standards.
consuming (Victory, 1997:100). SGS-Thomson
The Hong Kong companies were also motivated by
Microelectronics (1996), a global semiconductor comthe desire to stay ahead of environmental legislation
pany, certified its facilities according to both ISO
by adhering to international standards.
14001 and EMAS to maintain its competitive position
in the United States and Europe and to help ensure
A study by the Multi-State Working Group of 50
that suppliers and contractors maintain strong
private and public facilities that developed EMS as
environmental standards. Baker Petrolite, a specialty
pilot projects in the United States found that 89% of
chemicals corporation, committed to ISO 14001 certithe publicly-traded corporations and 67% of the prification all of its facilities in order to integrate its corvately-owned businesses adopted EMS because they
porate-wide environmental, health and safety manwere mandated or encouraged to do so by their paragement systems (Kreuzer, 2001).
ent organizations (UNC-ELI, 2001). Companies in the
sample reported strong motivations for adopting an
EMS arising from expectations of improving regulatIn one of the few in-depth analyses of the motivory compliance or achieving regulatory benefits.
ations and impacts of certifying an EMS by ISO 14001
Many reported customer pressures from domestic
standards, Rondinelli and Vastag (2000) found sevand international buyers to adopt and certify their
eral reasons why executives of Alcoas Mt. Holly
EMS. The strongest motivators, however, were
aluminum plant in South Carolina sought certifiinternal: to integrate pollution prevention programs,
cation. The plants managers, who registered the
improve environmental capability, and enhance
plants quality management system under ISO 9002
employee participation in environmental managein 1992, saw an ISO 14001-certified EMS as an extenment activities.
sion of its system for quality improvement. They
believed that ISO 14001 certification would demonstrate publicly the companys commitment to protectIn one of the few large-scale surveys of companies
ing the environment and gaining competitive advanadopting EMS and pollution prevention practices,
tage with both domestic and international customers.
Florida and Davidson (2001) asked executives of 214
They expected that the programs developed in the
manufacturing companies in Pennsylvania what motEMS could help conserve materials and energy and
ivated them to do so. They found that among the
perhaps facilitate obtaining permits from local and
high adopters commitment to environmental
state government agencies, improve industryimprovement was the strongest motivator (91.9%),
government relations and, possibly, obtain regulatfollowed by the opportunity to attain corporate goals
ory relief. The Mt. Holly plant managers expected the
and objectives (88.7%), economic benefits and
EMS to help reduce costs, eliminate incidents that
improved business performance (87.1%), State and
resulted in liabilities, contribute to developing and
federal regulatory climate (85.5% and 83.9) and
sharing new environmental solutions, improve mainimproved community relations (85.5%).
European Management Journal Vol. 20, No. 2, pp. 159171, April 2002

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ADOPTING CORPORATE ENVIRONMENTAL MANAGEMENT SYSTEMS

Benefits of Implementing EMS

A growing concern is whether or not the adoption
and implementation of EMS delivers tangible benefits to companies. Again, much of the evidence is
anecdotal. Ford Motor Company claims to have
saved millions of dollars and reduced substantially
its environmental impact as the result of having
adopted ISO 14001-certified EMS for its plants worldwide (Wilson, 2001). In its 40-year-old, 2.4 million
square foot engine plant in Lima, Ohio, for example,
Ford claims to have involved all its employees in the
implementation of the EMS that reduced water consumption by nearly 757,000 liters a day, eliminated
its production of boiler ash, and increased the use of
returnable packaging from 60% to 99%.

safety incidents significantly, developed and

enforced contractor-training requirements, and substantially reduced costs associated with environmental incidents. Moreover, this Honda plant recorded
noticeable improvements in environmental performance in the areas of waste and wastewater generation,
recycling, improved lighting control, and adoption of
reusable packaging. The plant saw substantial savings from improvements in waste production and
energy consumption.

In their study of Alcoas Mt. Holly plant, Rondinelli

and Vastag (2000) found that three years after ISO
14001 certification, managers identified four sets of
positive impactsimprovements in employee awareness, operational efficiency, managerial awareness,
and operational effectiveness. The most significant
impact of the ISO 14001 process was in improving
IBM reports that the worldwide registration of its
the environmental awareness of managers and workEMS helped the corporation to validate the abilities
ers, and in clarifying everyones responsibility for
of all of its manufacturing and design facilities to
environmental improvements. Employee training
meet consistently and effectively the requirements of
programs increased awareness of the importance of
the corporate EMS and the
reduction throughout the
One SWL manager noted waste
chances
for
continual
plant and encouraged many
improvement. The EMS gave
departments to track and monithat EMAS certification was tor their waste. The process of
IBM disciplined tools with
which to pursue environmental
developing the EMS for ISO
improvements and to assess something that would enable 14001 certification also genertheir value (Balta and Woodated procedural improvements.
side, 1999). The process made
the CEO to sleep better at
In developing and certifying
environmental
management
the EMS, managers were
system dependent rather than
required to improve existing
night
person dependent by improvpractices for processes, equiping documentation of important requirements, proment, and areas of the plant that could increase emiscedures, and processes. IBM discovered that ISO
sions. The Environmental Department had to
14001 certification increased the awareness and pardevelop and maintain environmental management
ticipation in environmental activities by employees
manuals for wastewater management, cooling water
and contractors who did not previously know much
treatment, waste management, chemical manageabout the corporations environmental policy or their
ment, air quality control, storm water pollution
role in supporting it.
prevention, spill prevention, control and countermeasure plans, and emergency preparedness and
ABB Automationwhich received ISO 14001 certifiresponse. The EMS required more and better record
cation of its Columbus, Ohio, plant in 1998reported
keeping and documentation, which led to improved
that implementation of its EMS helped the company
controls in several of the plants departments.
reduce costs of energy and of hazardous waste handling and disposal (OConner, 2000). Certification
In an early survey of the perceived impacts of ISO
allowed the company to communicate more effec14000 in 1997before many companies had actually
tively its environmental achievements to its current
certified their EMSMontabon et al. (2000:16) and his
and prospective customers and to adopt environmenassociates found that among 116 manufacturing comtally beneficial procedures earlier than originally
panies of all sizes in the United States that were curplanned. ABB Automation also saw increased
rently
implementing
or
had
successfully
employee morale from the companys commitment
implemented an ISO 14001-certified EMS, most
to protecting the environment.
reported that it had a positive and significant impact
on perceived efficiency and effectiveness of performThe Honda Transmission Manufacturing of America
ance on all dimensions except operational lead-times,
facility in Ohio, which certified its EMS in 1997,
which were slightly negatively impacted. The
reports both immediate and long-term benefits
authors conclude that those firms that have
(McManus and Sanders, 2001). Honda educated its
attained this level of certification are not only more
entire staff on the importance of the organizations
environmentally responsible but also more efficient
environmental objectives and raised the priority of
(and potentially better suppliers).
environmental improvements. As a result of EMS
implementation, Honda reduced environmental and
In their study of high-adopting firms of EMS and pol164

European Management Journal Vol. 20, No. 2, pp. 159171, April 2002

ADOPTING CORPORATE ENVIRONMENTAL MANAGEMENT SYSTEMS

lution prevention practices in Pennsylvania, Florida

and Davidson (2001) found that these respondents
reported major sources of in-plant improvement,
including increased pollution prevention, recycling,
reduction or elimination of air emissions, worker
health and safety, and solid waste reduction or elimination. These plants also reported much higher levels of information sharing, community relationship
activities, use of the Internet to provide environmental information, and citizen surveys than companies
that were not high adopters. Similarly, the study of
printed circuit board manufacturers in Hong Kong
also found that managers perceived positive impacts
of adopting and certifying EMS, including costs savings through reduction of waste and energy consumption, improved environmental performance,
and reduced legal consequences and economic losses
(Chin and Pun, 1999).

EMS Adoption in the German Energy

and Gas Industry

some combination of private energy companies and

municipal governments. MEAG is owned by the German energy giant RWE (52.5%), as well as IsarAmperwerke (12%) and a holding company comprised of eastern German municipalities from the
States of Sachsen-Anhalt and Thueringen (35.5%).
MEAG has a 40% stake in SWL and a 20% stake in
EVH. The other 60% of SWL is owned by Leipziger
Versorgungs- und Verkehrsgesellschaft, which in
turn is owned 100% by the city of Leipzig. EVH is
also owned by Stadtwerke Halle (60%), RWE (16.7%),
and Isar-Amperwerke (3.3%). The city of Du sseldorf
owns 80% of SWD, while RWE owns the remaining
20%. VNG is owned by eight foreign and domestic
companies. The largest shareholders are Ruhrgas AG
(35%), Wintershall Erdgas Beteiligungs-GmbH (16%),
and a holding company comprised of 14 eastern German towns and municipal distributors (14%), including Leipzig and Halle.

Motivations for Adopting an EMS

Are smaller domestic companies driven by the same

Insights into why German companies of different
sizes in a cross section of industries participate in
motivations as large multinational companies to
adopt and certify EMS, and do small companies achiEMAS come from a comprehensive study of 1264
registered sites in 1998 and 1999 by the German Fedeve the same benefits and impacts as larger companies? To explore these questions, Morrow carried out
eral Environmental Agency (Umweltbundesamt,
2000). Table 1 (below) indicates that among the most
in-depth case studies of five energy and gas companies in Germany that had registered their EMS under
important reasons that German companies registered
their EMS was to achieve continuous improvements
EMAS or ISO 14001.1 Germany is a good location for
in environmental performance,
examining the motivations and
impacts for EMS adoption
By June 2001, Germany identify weaknesses and potential uses of energy sources,
because it is a country that has
been enthusiastic about both had 2666 of the 3937 EMAS motivate employees, improve
their image, and increase legal
ISO 14001 and EMAS certificertainty. Companies were also
cation, so much so that it has
registered sites in Europe
motivated to improve their
been called EMAS Land
internal organization and docu(Freimann, 1999). By June 2001,
mentation, detect and minimize environmental and
Germany had 2666 of the 3937 EMAS registered sites
liability risks, and reduce specific environmental
in Europe. In addition, German organizations had
impacts.
received 2400 ISO 14001 certifications, almost 1000
more than those in the United States. As of mid-2000,
24 regional or municipal electric utilities had facilities
In the five German energy and gas companies that
with EMAS certification.
we studied, the motivations for adopting or certifying an EMS were not much different from those
reported by the study of the broader sample of comOf the five companies with EMS that we studied, the
panies in Germany. The employees interviewed in all
Municipal Utility of Leipzig (Stadtwerke Leipzig or
five German energy and gas companies reported that
SWL) had one EMAS-certified facility; the Energy
improved documentation and increased efficiency
Provider of Halle (Energievorsorgung Halle GmbH,
were primary motives for developing and registering
or EVH) certified all of its facilities through EMAS
their EMS (See Table 2 below).
and had a company-wide certification through ISO
14001. Two firms, Verbundnetz Gaz (VNG) and the
Municipal Utility of Du sseldorf (Statwerke Du sselPrior to the adoption of the EMS at SWD, for
dorf or SWD), were ISO 14001 certified. The Middle
example, managers had no way of knowing which
Germany Energy Provider (MEAG) had a non-certiregulations the company had to comply with, or if it
fied EMS.
could fulfil them. ISO 14001-certification of its EMS
was seen as a way SWD could minimize risk and
liability. VNG executives saw EMS certification as a
The German energy and gas companies we studied
way to make the firms documentation on environwere of mixed ownershipthey were owned by
European Management Journal Vol. 20, No. 2, pp. 159171, April 2002

165

ADOPTING CORPORATE ENVIRONMENTAL MANAGEMENT SYSTEMS

Table 1

Why German Companies Participate in EMASa

Motivation
To
To
To
To
To
To
To
To
To
To
To

Rating

achieve continuous improvement of environmental performance

identify weaknesses and potential use of energy sources
motivate employees
improve company image
increase legal certainty
improve internal organization
detect and minimize environmental and liability risks
reduce company specific environmental impacts
achieve cost savings
respond to customer and other pressure group demand
enhance process and product environmental innovation

8.7
8.3
8.3
8.0
8.0
7.8
7.8
7.2
6.8
4.9
4.7

N=1264, Rating: 0=unimportant, 5=reasonably important, 10=important. Source: Umweltbundesamt, 2000.

Table 2 Comparison of Motivations Among Five German Energy and Gas Firms for EMS Implementation
and Certificationa
Motivation

SWL

Regulatory compliance and legal

certainty
Improve documentation
Increase efficiency
Enhance employee awareness
Improve environmental
performance
Image
Regulatory relief
Cost savings
Competitive advantage

Primary

EVH

Primary
Primary
Primary

Primary
Primary

Secondary
Secondary
Secondary
Secondary

Primary
Primary
Primary

SWD

VNG

MEAG

Primary

Primary

Primary

Primary
Primary
Secondary
Primary

Primary
Primary
Secondary

Primary
Primary

Primary
Secondary
Secondary
Primary

Secondary

Primary
Secondary
Primary

Source: Compiled by authors.

mentally-related material and personnel expenditures more comprehensive. At MEAG record-keeping

was decentralized to the department level and each
facility kept different sets of records. One manager
noted, prior to implementation of the EMS, we
couldnt know everything was in order. The EMS
would help MEAG standardize environmental procedures for data collection and record-keeping and
allow uniformly reported information to flow back to
the companys environmental coordinator.
Four of the five companies reported that regulatory
compliance and legal certainty were primary motivators. Environmental managers at SWL, for example,
were concerned that gaps existed in their knowledge
of environmental laws and problems and that EMAS
certification would enable the company to avoid noncompliance with German federal, state and local
laws. One SWL manager noted that EMAS certification was something that would enable the CEO to
sleep better at night. The most significant motivation
for implementing an EMS at MEAG was to achieve
and maintain regulatory compliance. An EMS would
provide some assurance that MEAG would be able
to integrate new requirements into its existing system
effectively, rather than be forced to reassess and
166

revamp its environmental management activities in

the light of every statutory change.
Three of the five companies sought competitive
advantage through EMS adoption. EVH saw EMAS
certification as a way to enhance its competitiveness
by showing that its plants were certified as environmentally-friendly, and thereby hoped to convince
people to switch from coal heating to district heating.
Enhancement of the companys image as a socially
responsible firm was a primary motivator in two
companies and a secondary motivator in two companies, as was the prospect of regulatory relief. VNGs
managers were interested in certification because
above all, it would benefit our image. We are an
environmentally friendly company. The certification
would show that we place a lot of value on safety.
Managers at EVH believed that EMAS would serve
as a symbol of the companys commitment to protecting the environment.
None of the companies saw cost savings as a primary
motivator although it was identified as a secondary
motivation in three companies. SWDs managers
hoped that EMS certification and implementation
would help the company develop a clearer idea of
European Management Journal Vol. 20, No. 2, pp. 159171, April 2002

ADOPTING CORPORATE ENVIRONMENTAL MANAGEMENT SYSTEMS

Table 3

Benefits German Companies Gained from Participating in EMASa

Benefit

Rating

Better organization and documentation

Increased legal certainty
Improved image
Greater employee motivation
Reduced resource use
Enhanced plant safety
Opportunity to set the example for suppliers
Optimization of process flows
Improved cooperation with authorities
Positive market effects
Cost savings
Competitive advantages/safeguard of the site
More favorable insurance/loans
Opportunity to use public funds for development purposes

7.7
7.1
6.9
6.6
5.8
5.7
5.0
4.9
4.5
4.3
4.2
4.0
2.3
2.1

N=1264 Rating: 0=not applicable, 5=partially applicable, 10=fully applicable. Source: Umweltbundesamt, 2000.

how much money was being spent on environmental

management and to identify the potential for cost
savings. Only one company reported enhanced
employee awareness as a primary motivator and in
two companies it was a secondary motivator. SWDs
managers saw certification of its EMS as a way to
heighten employee awareness, particularly of
environmental management responsibilities that
remained at the plant level.

Impacts and Results of EMS Adoption

and Certification
The German Federal Environmental Agencys study
of 1264 companies participating in EMAS also provided insights into the benefits or results that they

achieved from EMS development and registration.

The most applicable benefits perceived by these companies were better organization and documentation
of their environmental activities, increased legal certainty, improved image, and greater employee motivation. They considered reductions in resource use,
enhanced plant safety, the opportunity to set an
example for suppliers, and optimization of process
flows as partially applicable. Less applicable benefits
included improved cooperation with authorities,
positive market effects, cost savings, competitive
advantages, or more favorable insurance rates. (See
Table 3.) Managers interviewed in the five German
energy and gas companies reported mixed results
from their implementation of EMS. (See Table 4.)
Although they perceived strong impacts in some
areas that motivated them to adopt EMS originally,
not all of their expectations were met.

Table 4 Comparison of Impacts in Five German Energy and Gas Firms of EMS Implementation and
Certificationa
SWL

EVH

SWD

VNG

MEAG

Regulatory
Compliance and
Legal Certainty
Documentation
Efficiency
Employee
awareness
Environmental
Performance
Image
Regulatory Relief

Improvement

Improvement

Improvement

Improvement

Improvement

Improvement
Improvement
Improvement

Improvement
Improvement
Improvement

Improvement

Improvement
Improvement
Improvement

Minor Improvement

Not related to EMS Minor improvement Not related to EMS Improvement

Not related to EMS

Unclear
Significant

Unclear
None

Improvement
None

Cost Savings
Competitive
Advantage

Significant
None

Insignificant
Insignificant

Insignificant
In winning some
proposals

Improvement

Some improvement
Relief below
expectations
Insignificant
Not applicable until
2001

Source: Compiled by authors.

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ADOPTING CORPORATE ENVIRONMENTAL MANAGEMENT SYSTEMS

Like the cross-section of German companies surveyed by the Federal Environmental Agency, all five
of our energy and gas case companies reported
improvements in regulatory compliance and legal
certainty, as the result of developing and registering
their EMS. EMS implementation served two main
functions for these companies. First, it gave companies a reason to take the time to comb through Germanys complex and extensive environmental laws
and regulations (some public utilities have as many
as 2000 pieces of applicable environmental legal
requirements to fulfill) in order to determine their
stance on compliance. For example, prior to EMS
implementation, SWDs managers did not know if
the firm was violating laws or regulations because it
had never taken the time to check. Second, the
knowledge gained by going through the process of
coming to terms with applicable laws and regulations
enabled environmental managers to more easily
adapt to the relatively frequent changes that occur in
German environmental regulations.

the regulatory compliance process did. Thus, EMS

did not increase bureaucracy, as some critics believe.
Companies with EMAS certifications, SWL and EVH,
had the most transparent environmental documentation: they were the only companies willing or
able to provide detailed documentation and copies of
their environmental statements for this study.
The same companies reported improvements in
employee awareness. Considerable resistance to EMS
implementation was encountered at each certified
company. SWL, SWD, and VNG had hoped that an
EMS would increase employee awareness of environmental issues. Each certified company did indeed
report substantial improvement in employee awareness, and attributed such improvement to EMS
implementation and certification. Universal EMS
acceptance has not yet been achieved, however, at
every company. SWL and SWD in particular noted
that they are still in the process of overcoming resistance, which has been heightened to a certain extent
by deregulation of the industry in Germany, and by
the consequent focus on cost reduction in the electricity sector.

Four companies saw significant improvements in

their environmental documentation and a fifth company saw minor improvements. Each EMAS and ISO
14001-certified company saw certification as a conNevertheless, most companies reported significant
firmation from an independent third party that the
improvements, and indeed this is one area in which
company was doing a successresults of EMS implementation
ful job of understanding and
Even if the EMS did not and certification exceeded exaddressing applicable Euroante
expectations.
During
pean, German, State, and local
EMS
implementation,
many
affect someone directly, it
environmental laws and reguemployeeswere consulted and
lations. Furthermore, certifieducated on environmental
typically affected everyone
cation provided each company
issues. Additionally, the EMS
with an extra sense of security
became accessible to all
indirectly
that it had not overlooked
employees. Even if the EMS did
something important that could eventually lead to a
not affect someone directly, it typically affected
major violation.
everyone indirectly by virtue of its general goals,
such as continual environmental improvement,
All of the companies had inadequate environmental
increased recycling, and waste reduction. Each certidocumentation prior to EMS implementation. Inadfied company introduced more consistent training
equate documentation led to a lack of consistency in
and audits that served not only to remind employees
terms of when and how environmental activities
about environmental issues, but also to encourage
were conducted. Lack of comprehensive docuimprovement. EMS certification was important in
mentation made it difficult to identify problems,
that it gave more weight to each companys emphasis
because each employee had a different perception of
on environmental management. Because of the
how the environment was managed at the company.
inclusion of a third-party auditor, employees have
Before firms could write an environmental handbook
been more likely to take the EMS more seriously.
or more detailed procedures, however, they were forWith the exception of SWD, no company in this study
ced to improve the fundamental flaws in their
had been highly motivated to implement an EMS by
environmental management processes. SWL, EVH,
the expectation that its environmental performance
SWD, and MEAG each made substantial strides in
would improve substantially. Although each comcentralizing and systematizing their activities during
pany reported environmental improvements after the
this phase. For VNG, centralization meant combining
adoption of the EMS, only EVH thought ex post that
environmental, safety, and quality management into
an EMS had improved its environmental performone department. Once processes and responsibilities
ance. The consensus was that investment in modfor tasks were clearly defined, SWL, EVH, and SWD
ernizing power plants and grids resulted in the most
were then able to write comprehensive environmensignificant environmental improvements, and that
tal handbooks describing these processes and
these investment decisions were made on the basis of
responsibilities in detail. Detailed environmental
economic and regulatory rather than environmental
handbooks have also led to an increased level of
considerations. Clearly, environmental improveorganizational security in much the same way that
168

European Management Journal Vol. 20, No. 2, pp. 159171, April 2002

ADOPTING CORPORATE ENVIRONMENTAL MANAGEMENT SYSTEMS

ments were recognized as important secondary

effects.
Unlike the cross section of German companies that
reported improved image as an applicable benefit,
the energy and gas companies were uncertain of the
impacts of EMS certification on their image. SWL and
EVH perceive that their image has improved through
the increased transparency of their operations. Public
response to these overtures has been disappointing,
however. SWL and EVH have received numerous
inquiries about their environmental statements, but
most of these inquiries have come from academics,
students, and other companies, rather than from customers. Other studies have found this to hold true for
many other German companies (Gerlin, 1995). Thus,
EMAS certification does not seem to be making much
impression on the intended audience. This is
especially important because both SWL and EVH
were motivated to certify their EMSs to demonstrate
their environmental accomplishments to their customers in increasingly competitive retail markets.
Thus, this is an area in which certification has not
met expectations. Perhaps the recent revision of
EMAS guidelines, which now allow the use of an
EMAS logo in advertising, will rectify the situation.
Like other German companies, the energy and gas
firms saw relatively weak impacts on competitive
advantage, although most had hoped for such an
advantage prior to EMS certification. Only one company in this study, SWD, reported that ISO 14001 certification had resulted in an advantage in winning
contracts. Again, each of the certified companies had
expectations for some form of regulatory relief prior
to undertaking the certification process. No acrossthe-board relief has resulted from certification, however, because no European or German federal relief
initiatives have been generated. VNG was exempt
from a new requirement that firms covered by the
EU Accident Ordinance have to draft and submit a
safety concept to the EU. Strictly speaking, however,
this relief was not related to VNGs EMS, but rather
to its Integrated Quality Management System.
Of the companies in this study, SWL was the major
winner in terms of regulatory relief. In Germany,
States are free to decide how companies must report
environmental data to them. The State of Saxony
chose to require all power plants to report their data
via real-time monitoring. Because of lobbying from
the Environmental Alliance of Saxony, however, this
requirement was not applied to facilities with EMAS
certification. As a result, SWL has been able to save
between DM 250,000 and DM 300,000. Because the
data reporting requirement decision is left open to
the States, however, firms in other States could not
expect such relief. The Environmental Alliance of
Saxony-Anhalt, for example, to which EVH belongs,
has not been as successful in persuading State
officials to agree to such exemptions.
Cost savings were not really an important motivating
European Management Journal Vol. 20, No. 2, pp. 159171, April 2002

factor for German energy and gas firms to implement

and certify an EMS. For three of the five companies,
ex post analyses showed cost savings were insignificant. SWL had tried to do a cost-benefit analysis prior
to EMS implementation, but was unsuccessful
because it was unable to usefully quantify expected
benefits such as improved efficiency and organizational security. Except for SWL, which was spared
from having to implement a costly real-time emissions monitoring system, cost savings have not been
measurable. Environmental management systems
have broadly increased efficiency, but these benefits
remain difficult to quantify. EMS implementation
costs for SWL and EVH, the only companies
reporting such information in detail (and the only
two EMAS certified firms in this study), were substantial but not higher than expected in either case.
EVH spent approximately DM 260,000 ($115,000) on
EMS implementation alone. The costs associated with
certification, including continuing personnel costs of
training, added about DM 88,000 ($39,000). SWL
spent 169 man-days on EMS implementation and certification, not including DM 55,000 ($24,000) in consultants fees. VNG reported partial costs of DM
25,000 for EMS implementation and DM 13,000 for
an auditor for certification.

Conclusions
In brief, a review of the relatively sparse body of
anecdotal information, case studies, and survey
research on environmental management systems
indicates that several factors motivate companies to
implement and certify EMS. Among multinational
and large corporations in the United States, the desire
to integrate environmental, health and safety management with total quality management systems, the
requirement of parent corporations to improve
environmental performance, the preference for getting beyond regulatory compliance, and finding costcutting opportunities are frequently mentioned as
motivators to adopt EMS. Large multinational companies, especially in the chemical, electronics and
automobile industries, also seem to be motivated by
the desire to extend environmental management
standards to their suppliers. Among companies
operating in international markets, especially in the
United States and Europe, ISO 14001 or EMAS certification is an indicator of environmental responsibility and is often seen as a way of developing competitive advantage.
The German Federal Environmental Agencys surveys of German companies participating in EMAS
identify the desire to improve environmental performance, make better use of energy sources, motivate employees, improve company image, increase
legal certainty, and upgrade environmental documentation as leading motivators. The small- and
medium-sized energy and gas companies that we
169

ADOPTING CORPORATE ENVIRONMENTAL MANAGEMENT SYSTEMS

studied had similar motivations but somewhat different priorities. They were primarily motivated by the
desire to improve documentation, ensure regulatory
compliance, and increase the efficiency of their operations.
Although, in general, the motivations of companies
in the United States and Germany are similar, differences in priorities may be due to the more specific
concerns of small- and medium-sized companies
with organizing themselves more comprehensively
and effectively to deal with environmental regulations and domestic competition. Because gas and
energy industries in Germany are undergoing
deregulation, they are especially motivated to find
ways of cutting costs and improving efficiency in
order to enhance their competitiveness. None of the
five companies we studied expected significant
environmental performance improvements from the
EMS because they had adopted, or were in the process of switching to, cleaner and more sophisticated
technology and equipment.
Most of the case studies and surveys show that it
is difficult to attribute environmental improvements
directly to the adoption and certification of EMS.
Environmental management systems seem to be
instrumental, however, in bringing about a variety of
impacts. The studies indicate that EMS implementation and certification do help companies to integrate their environmental, health and safety management systems and in some cases their environmental
and quality management systems. Perhaps because
EMS certification requires strong employee participation and environmental training programs, many
firms report increased employee awareness of the
environmental aspects of their jobs and of their
responsibilities for reducing negative impacts. ISO
14001-certified companies also report environmental
performance improvements, especially in the areas of
waste recycling, air and waste emissions reductions,
materials reuse, energy and water conservation, and
environmental and safety incidence reduction.
German firms participating in EMAS that were surveyed by the German Federal Environmental Agency
thought that the most applicable benefits were better
organization and documentation of their environmental management activities, increased legal certainty, improved company image, and greater
employee motivation. The five German energy and
gas companies that we studied similarly reported
improvements in regulatory compliance and legal
certainty, improved documentation, improvements
in employee awareness, and some degree of
improvement in efficiency as the result of
implementing and certifying their environmental
management systems.
Much more research needs to be done on a broader
sample of companies to determine whether or not the
motivations for adopting and certifying environmen170

tal management systems are fulfilled by the benefits

and impacts of doing so. Anecdotal information, and
the relatively few case studies and surveys of companies participating in ISO 14001 and EMAS seem to
indicate that companies both perceive benefits and
experience positive impacts from implementing
environmental management systems, and that these
benefits generally meet ex ante expectations. Those
benefits tend to focus on management improvements, employee awareness, systematic and integrated documentation and procedures, and selected
environmental performance improvements. Documenting cost savings, increased competitive advantage, regulatory relief, and operational improvements
is more difficult, both in large multinational corporations and small- and- medium sized domestic companies.

Note
1. Interviews in the German energy and gas companies were
carried out by David Morrow over a nine-month period in
2000. A written questionnaire was used to determine the
content and extent of each companys environmental management activities, as well as to obtain information on
capacity variables that can affect certification. The questionnaire was translated into German and crosschecked
with native German speakers. In addition, on-site interviews were conducted with three to four environmental
managers, chief executives, and upper level managers in
each company. The survey and interviews were supplemented with archival data from each company.

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DENNIS RONDINELLI,
Kenan-Flagler
Business
School, University of North
Carolina at Chapel Hill,
275593490, USA. E-mail:
dennis rondinelli@unc.edu
Dr. Rondinelli is the Glaxo
Distinguished International
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UNCChapel Hill. His
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He is author of more than 200 journal articles and has
edited or authored 16 books.

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