Higher environmental management performance may improve employee productivity

A study from the UCLA Anderson School of Management and the University of Paris Dauphine suggests that companies that have adopted environmental standards enjoy higher labour productivity than firms that have not adopted such standards.

The study is based on a survey of French companies which includes responses with detailed employee characteristics from 5220 firms. It used ISO 14001, organic labeling or fair trade as indicators of attention paid to environmental management.

The authors make the case that adoption of environmental standards is associated with increased employee training and interpersonal contacts, which in turn contribute to improved labor productivity. They argue that increased communication among workers with diverse capabilities can lead to knowledge transfer and innovation. This is consistent with the innovation literature, which shows that the integration of divergent thoughts and perspectives enables teams to solve problems and leverage opportunities, and is a critical antecedent of innovation and productivity. They also make the case that the data show that enhanced interpersonal contacts can lead to an improved work environment and increased productivity.

While the results of this study are limited to the French experience, and in other ways, the authors do argue that policymakers and supporters of voluntary standards can emphasize these benefits in order to encourage firms to adopt environmental standards. They state that their findings suggest new ways of achieving the Porter hypothesis’ promise of a positive relationship between environmental practices and financial performance. They indicate that a firm’s social orientation may not only lead to environmental improvements but can also act as an enhancement tool designed to improve work systems.

The full study can be found in the Journal of Organizational Behavior at http://onlinelibrary.wiley.com/doi/10.1002/job.1827/abstract by clicking on the Article tab.


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