RESEARCH BRIEF: Heightened attention to environmental management among European firms is shown to spark innovation

Takeaway: Implementation of environmental management systems (EMS) and other environment-related managerial activities are associated with environmental sustainability innovations in processes and products. The learning process that takes place during an EMS implementation may yield opportunities for market differentiation and cost-savings related to innovative approaches to environmental sustainability.

Suggested audience: Executives considering implementing EMS or other environment-related activities, corporate citizenship leaders making a case for the business value of environmental initiatives

This study examines whether environmental management systems (EMS) and related managerial activities to reduce negative environmental impacts have a positive influence on the probability of firms to develop new ideas, behavior, products and processes, apply or introduce them, and; contribute to a reduction of environmental burdens or to ecologically specified sustainability targets. Product innovations are defined as environmentally-sound product design, and process innovations are defined as process-integrated environmental technologies.

Key findings

• EMS implementation has a significant positive effect on both product and process innovations but is stronger for process innovations.
• Researchers observe that EMS implementation likely triggers more systematic search processes for environmental innovation and seems to lead to learning.
• Managerial behaviors such as carrying out market research on green products; informing consumers about environmental effects of products and processes; and making use of eco-labeling, have a positive effect on a firm's propensity to carry out an environmental product innovation, with the strongest effect from market research.
• Market research also has a positive effect on process innovations.
• The strongest positive effects for process and product innovations of country of origin were in Germany, where there is more stringent environmental regulation.
• The strongest negative effects of country of origin were in Hungary, Switzerland, and the United Kingdom.
• Firm size has no effect on the probability of a firm carrying out environmental product or process innovations.

 If citing, please refer to the original article, “Empirical influence of environmental management on innovation: Evidence from Europe”, Ecological Economics, 2008, Marcus Wagner, Université Louis Pasteur