Preventing Pollution Benefits Firms and the Environment

Manufacturing plants can improve their performance and help the environment by investing in environmental technologies. However, if given the choice between remediating pollution or preventing it at the source, the latter was more related to corporate profits. Indeed, this study shows that corporate profits actually decreased as increasing investments were made in end-of-pipe solutions and remediation.

Background

Few numerical studies support the idea that investments can benefit both the environment and performance. The relationship between environmental management, technology implementation and performance is unclear. This article investigates how different approaches to environmental technologies influences environmental performance, manufacturing performance and corporate profits.

Findings

• As firms invested more in preventing pollution (e.g. changes to products or processes), the cost, speed and flexibility of their manufacturing performance improved. Quality did not change.

• However, manufacturing performance worsened when firms aimed to merely control through end-of-pipe technologies or remediation.

• Preventing pollution improved environmental performance, but controlling it through end-of-pipe technologies or remediation did not.

Implications for Managers

• Merely controlling pollution after it is created will not pay off in the long term.Fixing pollution once created does not help the environment-nor does it make manufacturing cheaper, faster or more flexible.

• Prevention technologies can create competitive advantage, if you have the management and expertise to back it up.

• Invest in preventing pollution in uncertain times.Because most pollution prevention technology is knowledge-driven, the likely advantage is where uncertainty is prevalent e.g. new regulations are being introduced, or customers are moving towards more environmentally sustainable products.

Implications for Researchers

New research can explore market or technological factors that affect the adoption of environmental technologies. Since this research is not new, it would be useful to examine whether the interplay of strategic resources in relation to environmental outcomes and technologies is changing.

Methods

The authors surveyed U.S. furniture manufacturing plants. Managers were asked to allocate 100 points across subcategories of environmental technologies based on the use of capital, operating and managerial resources in the preceding 2 years. This data, along with archival data, was used to test the relationship between investment in different types of technologies and plant performance using hierarchical linear regression.

Klassen, R.D., & D.C. Whybark. (1999). The impact of environmental technologies on manufacturing performance. Academy of Management Journal, 42(6): 599-615.