This paper was presented at the April 1995 annual conference of the International Academy of Business Disciplines in Redondo Beach, California. It is a heavily abridged version of a longer paper (17 pages), and appeared in Business Research Yearbook: Global Business Perspectives, volume II, 1995. It has been edited slightly for readability.
American business agrees: the environmental issue will not go away but will be an important concern as civilization approaches the 21st Century. Business is changing its practices, and how it approaches responsibilities to its stakeholders.
Corporations are addressing the environmental issue head-on, adopting policies to protect the environment through responsible action and improved non-polluting business practices. Business accepts the dictum: "Words are hostages to performance." This paper is based on a national survey that examined whether businesses "practice what they preach," or whether philosophy and practice collide.
Corporate environmental policies primarily have been created by high-level committees; most have been formalized through board action. But the adoption rate has decreased since April 20, 1990, the 20th anniversary of the Earth Day.
Earth Day 1990 was a watershed in the public's collective environmental psyche. Consumers expressed concern about the planet, targeting the group they held responsible for environmental problems -- American business.
A 1990 poll showed 78% of Americans believed major efforts are needed to improve environmental quality, and that large companies cause environmental problems and should solve them. Most said government had not gone far enough to pass laws protecting the environment. (Georgeson, 1990)
Environmental damage was rated the most serious business crime in a 1990 Arthur Little survey. Three of four said corporate executives should be held personally liable for their company's actions. (Wildlife Digest, 1991) Many firms now accept the charge that these problems are theirs to solve. (Fischer, 1993)
Some companies adopted environmental policies based on responsible action and improved business practices. They decided to take action, managing these responsibilities as they did the rest of their business. (Buchholz, 1993)
A good environmental policy statement can go a long way toward communicating a company's commitment to being environmentally responsible in its practices and actions, persuade suppliers that this environmental responsibility will give them a competitive edge, and win new business. (Harrison, 1993)
Only by implementing deeply valued environmental policies can business develop environmentally sound products and services. (Ottman, 1993)
A company's integrity and consumer perceptions about its products and services hinge on its policies and practices, whether it affects the environment, the raw materials it uses, or the social consciousness of its customers. A corporation's environmental policies count as much as honesty, ethical behavior, dependability and value. (Kolluru, 1994)
Words are hostages to performance, and at the least, a corporate environmental policy demonstrates in-depth commitment. (Coddington, 1993)
As America approaches the 21st Century, business has focused on environmental policy and its stewardship of the nation's resources. This study was conducted to investigate the "green" philosophy and the process, and to provide some insight into corporate environmental policy.
A national survey was conducted, using a sample of large U.S. corporations -- specifically, the "Fortune 500" (Fortune magazine's 500 largest industrial companies), and the "Forbes 500s" (Forbes magazine's 500 largest companies in various categories).
A questionnaire was sent on April 22, 1995 (return deadline May 19) to the chief executive officer of each corporation by name, via first class mail, accompanied by a stamped, addressed return envelope and a memorandum explaining the project. A repeat mailing of 931 questionnaires was sent June 25 (return dealdine August 25) to those who had not responded to the first mailing
Of 1,015 questionnaires mailed, 238 were returned (23.4%). This low response rate is not unusual for surveys of America's largest corporations. A 1992 study on mutual distrust between business and the news media, conducted by the Freedom Forum First Amendment Center, pulled a 23.4% response. (Haggerty, 1994). A Fortune 500 study of issues management mediation by San Diego State University resulted in a 24.4% response. (Lauzen, 1994)
Most of the respondents were middle managers. About 18.5% were senior management -- senior vice-president and above.
The greatest number of returns came from utility and power corporations (16.0%), followed by financial-banking and general manufacturing (6.7% each), chemicals (5.0%), electrical and electronics (4.6%), and metals and mining (3.8%).
About a third are headquartered in the Midwest, followed by East (25.6%), West (21.9%) and South (18.5%).
Respondents said the environment is an important issue for business today. The more senior respondents were less likely to agree. Fewer respondents -- not a significant number -- said the environmental issue will continue to grow in importance during the 1990s. Vice-president and "other-title" respondents believe that environmental issues will grow in importance in the 1990s. CEOs, on the other hand, are less sure about the importance.
The executives believe that business has a responsibility to the general public to be environmentally responsible in its activities.
Most executives also advocate environmental policy adoption, but many were neutral or in disagreement, indicating a more conservative approach to policy adoption vis-a-vis recognition of responsibility, and indicating that an absence of formal environmental policies does not mean companies will not fulfill their responsibilities in environmental stewardship.
Not surprisingly, most respondents agreed that business should set a good example by adopting "environment-friendly" practices such as recycling and buying non-polluting products. And, a comparable number of respondents also agreed that their companies use "environment-friendly" materials and/or encourage material recycling.
Companies more than ever are "cleaning up their act" -- reducing consumption, reusing materials, recycling, saving energy through efficient equipment, and improving interior environments. (Carson, 1991)
Although 93% of the corporate executives said business should encourage its employees to be environmentally responsible on the job, slightly fewer (89.9%) of the companies actually do this.
Employees often hear proclamations about the environment from top management, but need help translating that commitment to their own jobs. Most successful companies have charged every employee with adhering to policy and meeting established goals. (Makower, 1993) All of the vice-presidents agreed that business should encourage environmental responsibility on the job.
While respondents agreed that business should encourage environmental responsibility by employees on the job, it is another matter when it comes to encouraging employees to exhibit like responsibility away from work (the degree of agreement dropped drastically). Executives apparently believe they should exhibit caution, tread softly, and perhaps even stay out of their employees' private lives, even as they recognize that employees should act in an environmentally responsible manner away from work.
The more senior executives were more skeptical about encouraging environmental responsibility outside of the business setting, but this rank-philosophy correlation did not hold true when the corporate executives were asked if their companies encouraged their employees.
There is a marked difference regarding communication of environmental policies to a business' interested publics. Although 78.9% advocated policy communication, only 67.7% said their companies have adopted this practice.
There is a fair consensus in the general philosophy that business should change manufacturing and ordering specifications in order to be more environmentally responsible. While a nearly three-fourths said they believe companies should encourage environmental responsibility from their suppliers, only about half actually "practice what they preach." There seems to be considerable reluctance on the part of business to impose their environmental philosophies upon their suppliers -- even more-so than on their reluctance to impose this philosophy on their employees outside of the workplace. CEOs were least likely to agree that business should encourage suppliers to be environmentally responsible.
About 83% of the responding corporations have environmental policies in effect; the rest do not. Most companies lacking an environmental policies expect to have one within two years, if not eventually.
Of the companies with environmental policies, 93% said they were official policies formally adopted by the company's board of directors or top management.
Thirteen companies' environmental policies were informal.
Four out of five respondents helped draft their company's environmental policy. The high level of participation is not unusual. In many companies, environmental input comes from very high levels -- vice-president and above. (Buchholz, 1993)
The approach of Earth Day's 20th anniversary saw adoption increase among corporations. Of the 199 companies with environmental policies, 47.2% adopted their policies before April 20, 1990, dating as far back as the 1960s and earlier. The balance (52.8%) adopted their policies on April 20, 1990 or later. Most environmental policies were adopted in the late 1980s (45.4%) in anticipation of the anniversary, and in the early 1990s (41.2%) in reaction to the anniversary.
This phenomenon becomes even more evident when compared to the period of 1990 (both pre- and post-Earth Day) to 1994 (August 31). More policies (42) were adopted in 1990 than any of the five-year periods preceding. Policy adoptions peaked in 1990 (42), and have declined steadily in the years since (due to the shrinking universe of corporations that still had not adopted such policies).
What does it all mean? Business is market-driven, reacting to stimuli from its customers. The environmental issue is emotional, requiring constant dynamics to keep it in the mainstream of American consciousness. The environment is becoming "everyday news." Without public outcry, business may put off correlating its philosophy with practice -- and policy adoption.
As America moves toward the 21st Century, continued study will determine whether the environmental philosophy of America's business is as deep-rooted as its executives have indicated, or whether it is merely "politically correct."
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