Businesses maintain green initiatives despite economic crisis

Danish business have continued to focus on the environment and the climate despite the economic crisis. However, research from Aarhus University shows that legislation is still the main driver of further initiatives.

2013.07.02 | Andreas G. Jensby

Every four years since 1995, researchers from Aarhus University have studied the extent to which pressure from external stakeholders on the approx. 300 industrial companies in Denmark has had on the priority given to environmental concerns by managers. The latest study is from 2011, and the subsequent analysis shows that the development in corporate green initiatives has actually increased slightly since 2007 in spite of the long-term economic crisis.

According to Henning Madsen, professor with special responsibilities (MSO) at the Department of Business Administration at Aarhus University, who is responsible for the research together with two colleagues, the widespread and enduring trend can be ascribed to the fact that environmental considerations have become a natural and integrated part of the management and strategy work of many businesses instead of being relegated to little projects. As a result, the area is not hugely affected by the unfavourable economic conditions.

Legislation still necessary
However, trees don’t grow to the sky, according to Henning Madsen. In his view, by far the majority of Danish businesses have picked the lowest-hanging fruit in terms of introducing environmental improvements, but the larger and longer-term green investments will not be made unless there is further legislation within the area.

“Many business leaders are still concerned that new environmental initiatives will negatively affect their competitiveness, and therefore refrain from doing more than what is prescribed by law. In other words, market forces are throttling green initiatives, particularly so in the current economic climate. Legislation creates a level playing field for everyone, and consequently does not impede one company more than another,” says Henning Madsen.

He points out that Denmark is still leading the way with respect to the strictness of its environmental legislation, advice from the public authorities and the level of cooperation with companies compared to other countries.

More focus on SMEs and service businesses
While the pollution from and the environmental impact of large businesses is in the limelight because of their size, Henning Madsen wants to shift the focus to smaller companies and the service sector. Small and medium-sized enterprises actually account for approx. 80% of the Danish economy, and therefore equate to about 80% of the environmental impact.

“On their own, small and medium-sized companies pollute considerably less, but together their environmental impact is often considerable and often overlooked. However, they are under greater pressure financially, and perhaps more inclined to think that they do not pollute when they have so few employees,” says Henning Madsen, adding:

“This is particularly true for many service companies. They do not ‘produce’ as such, but in terms of, for example, their electricity, water and paper consumption and transport as well as their choice of business partners, their environmental impact is not insignificant. Yet their perception of themselves as service companies means that they do not attach much priority to protecting the environment.”

The latest research results from the project are being presented with two contributions at the International Strategic Management Conference, which is being held in Riga, Latvia, on 27-29 June 2013.

Facts:

  • Researchers have performed the same study every four years since 1995.
  • Approximately 300 randomly selected industrial businesses with more than ten employees have participated in the study each time.
  • The researchers have looked at areas such as environmental policy, environmental strategy, specific environmental targets, the allocation of responsibility for environmental management, environmental reporting and auditing, environmental certification (EMAS and ISO 14001), product life cycle assessment, membership of various environmental networks etc.
  • While the CSR concept is most frequently used today, there was more focus on environmental considerations in the 1990s. In order to compare the respective four-year studies, the researchers have thus continued to concentrate on the environment.

 

Further information

Henning Madsen, professor with special responsibilities (MSO)
Department of Business Administration
Aarhus University, School of Business and Social Sciences

Telephone: +45 8716 4935
Email: hem@asb.dk

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