Industry Market Trends

Award-Winning Research Proves Green Companies Are More Productive

Sep 17, 2013

productiveTwo professors from the U.S. and France are the first-time recipients of an award recognizing research on the impact of sustainability on businesses and managers. Their work shows how environmental management systems (EMS) can boost productivity at large and small businesses.

Magali Delmas of UCLA and her collaborator, Sanja Pekovic of University Paris-Dauphine, are the inaugural winners of the Research Impact on Practice Award. The award is sponsored by the Network for Business Sustainability (NBS), which provides research-based resources for managers; and the Organizations and the Natural Environment (ONE) Division of the Academy of Management, a professional organization for sustainability researchers.

Their research shows that implementing an EMS such as ISO 14001 can increase employee productivity by 16 percent. The effects are largely driven by the training required in implementing such systems, the researchers conclude. This training drives improved interpersonal contact among employees across all levels. 

Delmas and Pekovic surveyed 10,663 employees from 5,220 French companies. To determine each company's productivity, the researchers took a logarithm of its value added (revenue minus costs), divided by the number of employees, which produced the average value of production per employee. The results showed a one standard deviation greater productivity in firms that voluntarily adopted environmental standards. That translates to a 16 percent improvement over the average.

While training turned out to be a key factor, similar results were not seen with the implementation of other standards, such as ISO 9000, which certifies a production process for consistent quality output. "This is consistent with other studies that found that ISO 9000 has no explanatory power on productivity and that this standard could potentially reduce employees' flexibility and impede creativity because of it's formal procedures," the authors write.

Anecdotal claims abound that workers are more engaged and productive at companies with strong sustainability and corporate social responsibility (CSR) policies. But this is the first empirical study to find a direct correlation between environmental standards and productivity.

"Employees may be more committed to firms that have adopted environmental standards, but ... such standards might also result in organizational changes, such as more training and better interpersonal contacts... may also contribute to labor productivity," the study states.

The award, presented last month at the Academy of Management's annual meeting in Orlando, Fla., seeks to better publicize and share research that has the opportunity to change business.

"Sustainability requires collaboration by managers and researchers," said Tima Bansal, executive director of NBS. "Managers can identify important problems for research, and academic researchers can provide the answers."

Runners up for the award included a study that finds green labels need to be simple for customers to understand. Swiss researchers Stefanie Heinzle and Rolf Wuestenhagen of thte University of St. Gallen studied a proposal to change European Union energy efficiency labels from a 7-point A-G rating scale by adding new classes: A+, and A++. The changes led consumers to abandon energy-efficient products, they found.

Another runner up discovered that while 99 percent of professionals in Canada's oil and gas industry agree that the climate is changing, there is little agreement on the cause and best course of action. The study, conducted by Lianne Lefsrud of University of Alberta and Renate Mayer of Vienna University of Economics and Business, surveyed 1,000 engineers and geologists, many of whom work on Canada's oil sands. It identifies a range of perspectives and a potential way to unify them.