Management and the environment in the UK and Germany: A comparison

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European Manqemmt Journal Vol. 12, No. 2, pp. 216-225, 1994 Copyright Q 1994 Elsevier Science Ltd

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Management and the Environment in the UK and Germany: A Comparison KEN PEATTIE, Lecturer in Strategic Management, Cardiff Business School, UK; ANJA RINGLER, Doctoral Candidate, Curdif Business School, UK

Environmental performance will be an increasingly important factor in determining the competitive success of companies in the new Europe as we move towards the next century. The demands of the environmental or green challenge will require changes to both the hardware and software organisations, as they attempt to respond to an ever-tightening web of environmental legislation and to the needs of a new generation of more environmentally aware consumers, investors and employees. This article explores the organisational dimensions of the response to the green challenge among German and British companies, who are often presented as representing the opposite poles in the spectrum of green responses. The results reveal a surprisingly strong wave of enthusiasm for ‘greening’ among British companies reflected in a wide variety of organisational changes. If these are complemented by substantial improvements in the ‘hard’ dimensions of products and technologies, they could place British companies in an unex- pectedly promising competitive position within the emerging green markets of Europe.

Introduction There is general agreement that, in the face of growing evidence of serious global environmental degradation, the ‘green challenge’ will be one of the key strategic issues for businesses as the turn of the century approaches. This challenge is composed of two halves. The first involves changing our production systems to move towards more environmentally sustainable economic growth, as envisaged in the Brundtland Report (1987). This will involve creating many new products and new production processes which consume fewer resources and produce less, and less harmful, waste. The second half of the equation, is that to create and implement such cleaner technologies, we must

create greener organisations with the will and the skills to rise to this challenge.

To date, the green debate has tended to concentrate on issues of organisational hardware rather than software. This is not surprising since issues of resource consumption or pollution are tangible, relatively straight- forward and can be tackled from the basis of a mature body of knowledge within the environmental sciences. Green organisational issues are less tangible and measurable, and our understanding of them is em- bryonic, to say the least. This does not make such issues less important than those of environmental technologies. Typically, it is the implicit organisational barriers to ‘greening’, such as managerial conservatism or lack of skills or information, which are more significant than the more explicit objections voiced by companies concerning costs and technological difficulties.

Research into the response of European companies to the green challenge provides some heartening evidence of change. Vandermerwe & Oliff (1990) found that among a sample of European multinationals 92 per cent had responded by changing their products, 85 per cent had changed their production systems and 50 per cent had changed their packaging and labelling. However, research covering softer issues has shown that changes to an extended marketing mix (including production processes) are not being matched by organisational change. Peattie & Ring (1993) found that among the largest UK firms, the majority had significantly changed their products, public relations activities, policies and operating procedures. However in terms of more fundamental changes to corporate strategies and management responsibilities, at least 70 per cent had made little or no adjustment. The Green Strategy Iceberg model (Figure 1) visualises the current situation, where the extended marketing mix, which includes production

216 EUROPEAN MANAGEMENT JOURNAL Vol12 No 2 June 1994

MANAGEMENT AND THE ENVIRONMENT IN THE UK AND GERMANY

systems, has crossed the threshold at which it needs to be changed to respond to the green challenge (Green ‘C’ level on the figure). The submerged part of the iceberg which has yet to undergo significant change includes the organisational dimensions which equate to Peters & Waterman’s (1983) famous ‘S’ factors.

This article seeks to explore the level of organisational ‘greening’ among European companies through a sur- ve!. of major companies drawn from Germany (more specifically former West Germany) and the UK. With its ‘Blue Angel’ green labelling scheme dating back to 1978, and its controversial ‘Green Dot’ recycling scheme, Germany is generally perceived to be among the leaders in the green race. This is reflected in a dotninance in many export markets for green technology. German companies hold an estimated 37 per cent of the European market for pollution control and cle,m-up technology, and 70 per cent of the US air pollution control market.

For a variety of reasons the UK has retained its ‘Dirty Man of Europe’ image (Porritt & Winner, 1988), and has generally been perceived to be lagging behind countries like Germany in all respects. Touche Ross in their 1990 survev ‘European ~an~~ern~~ Affifudes to Environmental Issties’, concluded that UK industry was not prepared to meet the green challenge in Europe and that many companies will be unable to meet the ‘environmentally friendly requirements of countries like Germany and The Netherlands’. The results of our survey will allow these preconceptions to be tested, and to explore how environmental concern is being translated into organisational change in both countries.

Germany and the UK Compared Pressure on companies to improve their environmental pertormance is present in both countries, but the source and nature of this pressure varies, reflecting underlying differences between the two. There are a number of areas where we can draw a comparison to provide a context for the survey.

ferences in opportunity rather than interest. For example, while 44 per cent of the German consumers participated in national schemes for returnable medicines and chemicals, the UK had no such schemes. A 1985 study sponsored by the housewares firm Addis concluded that 94 per cent of UK ‘housewives’ (their term) were willing to sort out their domestic rubbish to aid recycling. The particular issues which consumers responded to with their purchasing behaviour also varied between the two countries, While phosphate-free washing powders accounted for 90 per cent of the market in Germany, they accounted for only 2 per cent in the UK at the time of the study. The UK, by contrast produced three times as much organic food as Germany, with much wider availability. Overall the interest in the environment appears to be quite similar. A 1987 OECD study revealed that while 50 per cent of German consumers placed environmental protection above economic growth as a national priority, the figure for the UK was roughly comparable at 48 per cent.

Pollution Levels Table 1 contrasts output levels by four key pollutants. It is curious to note that under the EC acid rain directive, Germany has been set proportionally tougher pollution reduction targets (see Table 2).

Legislative/Political Environment Janicke (1992) contrasts the relative success of German and UK environmental policies. He concludes that although the UK was relatively pioneering in the institu- tion~isation of ecological concern in the sixties and early seventies, the approach adopted since compares poorly with Germany. Germany has developed ‘harsh environmental protection legislation covering every sector of the environment’ (Kromarek, 1991); and their range of institutions involved in environmental matters is much broader than in the UK (Boehmer-Christianssen, 1990). Although Germany has a stronger tradition of an active

Table 1

Emissions per head, kg: Germany UK

Public Opinion sulphur dioxide 36 88 nitrous oxide 27 79

In the UK the proportion of people viewing environ- carbon monoxide 97 250 mental protection as an urgent problem rose from 67 per cent in 1988 to 82 per cent in 1992. In Germany the

non-methane hydrocar~ns 13 81

rise was from 84 per cent to 88 per cent (Euro~aromefe~, Source: Business comparisons: An analytical and statistical 1992). survey of Europe and the USA, Feb. 1991.

Consumer Behaviour Fiori (1989) contrasted the interest of consumers in Table 2 different European countries over a range of green issues, noting that ‘devotion to the green cause and Emission % reduction over

green consumption is the norm in Germany’. The Emissions ceilings 1980 emissions

clearest contrast between Germany and the UK was in 1980 1993 1998 2003 7993 1998 2003

consumers’ post-purchase green behaviour related to Germany 2225 1335 890 668 -40 -60 -70 recycling. While UK consumers recycle about 20 per cent UK 3883 3106 2330 1553 -20 -40 -60 of the bottles they use, German consumers recycle 40 per cent. However, the differences may reflect dif- Source: Doctor (1391), Environmental Yearbook.

EURC)PEAN MANAGEMENT JOURNAL Vol 12 No 2 June 1994 217


green influence on the political process, the absorption of the environmental agenda by the mainstream parties and the attention given to issues of reunification has diffused this somewhat in recent years. It is interesting to note that 14.5 per cent of the UK electorate used the 1989 European elections to register their concern about the environment by voting green, compared to 8.4 per cent in Germany.

Legislative Co~pZiunce

For individual companies and citizens within Germany there is a much greater emphasis on legislative compliance than in Britain whose 1990 Environmental Protection Act was criticised for a lack of ‘teeth’ and a lack of resources for enforcement. However, at a national level, in terms of correctly transposing and applying (although not necessarily implementing) EC legislation, the UK actually outperformed Germany during the late 1980s (see Table 3).

Environmental Expenditure Although directly comparable figures on relative environmental expenditure are difficult to find, OECD figures suggest that during the mid 1980s while Germany spent US$ 79 per capita on pollution control, the UK spent US$ 39 per capita.

Characteristics of Corporate Environmental Commitment The discussion of the relative environmental performance of different companies inevitably revolves around the environmental impact of their technology. Companies tend to be classified as ‘clean’ or ‘dirty’ in terms of how and what is manufactured. From an environmenta standpoint this makes sense because it concentrates the debate around those companies and industries whose environmental performance has the greatest room for improvement. From a management standpoint, it is perhaps more interesting to lay aside issues of technology, and study why it is that different organisations (perhaps even those sharing common technologies) achieve different levels of environmental performance.

There is a variety of approaches that can be taken to the study of organisations’ environmental commitment and performance. Elkington (1990) developed a prescriptive

Tabie 3

Correct application Deficit % Deficif No. of directives

Germany 52 13 20

UK 55 10 15.38

Source: 8th Annual Report to the European parliament concerning the control of the application of Community law, Official Journal 31 December 1991, C338 in European Environmental Law Review, October 1992, p. 113.

approach towards environmental commitment. He identifies ten steps as requirements for any company to attain ‘environmental excellence’ (which can also be turned around to act as a checkIist for diagnosis):

1. 2.

3.

4. 5. 6. 7.

8.

9.

10.

develop/publish an environmental policy; develop an environmental action programme to implement the policy; appoint a board-level director with formal responsibility; establish an environmental budget; invest in environmental science and technology; create education and training programmes; monitor, audit and report on the company’s environmental performance; monitor the evolution of the constantly changing ‘green agenda’; make donations of capital or seconded staff to environmental programmes; and build bridges with various interest groups, i.e. the community, government and environmental groups.

Elkington’s excellence checklist approach provides more guidance on what a green company should be doing, rather than on how the improvement could be achieved. A more means-orientated approach comes from focusing on how a company operates, particularly in terms of the management systems it uses.

The British Standards Institute has recently enshrined its own concept of an ‘environmental management system‘ in the new standard BS 7750. Ledgerwood et

al. (1992) predict that ‘this standard may well form the basis for a similar standard by the International Standards Organisation (ISO)’ and ‘this approach will no doubt serve as an important international prototype in coming years’.

Grayson (1992) points out that this standard ‘does not lay down specific environmental or operational targets’ but rather it aims to protect the environment by assum- ing that the use of improved managerial means, will lead to an improvement in the environmental ends.

In order to attain the voluntary certification under BS 7750 the organisation must:

1. commit to the establishment of an environmental management system;

2. conduct an initial review and assessment of the organisation’s environmental position concerning its environmental policy and adherence to environmental standards;

3. formulate an environmental policy in the form of a corporate environmental programme. This will be the basis for a statement of targets and objectives towards which the environmental management system will strive;

4. complete an inventory of the organisation‘s activities, and an assessment of their environmental impact, in relation to the stated policy;



5. study the pertinent regulations and requirements to ensure compliance;

6. develop an environmental management plan and a supporting manual which details all the relevant aspects of the system;

7. apply the management plan in both the company‘s operations and record-keeping; and

8. maintain a cycle of audits of the company’s performance to test whether objectives and targets are being met.

Usmg the Elkington checklist or the BSI standard criteria to diagnose an organisation’s environmental commitment both encourage a rather insensitive and potentially misleading ‘pass/fail’ approach to classifying companies as “clean or dirty’. Another approach is to consider the development of organisational commitment from a lifecycle perspective. Hunt & Auster (1991) put forward the idea of companies moving through a progression of environmental commitment and management responses. This progression includes areas such as the mindset of m‘magers, resource commitment, and support and involvement by top management, and goes through five distinct phases:

Phfrse

1. fjeginner

2. Fire Fighter

3. Concerned Citizen

4. Pragmatist

5. Proactivist

Characteristics

Low financial commitment, no involvement of top management; no environmental programme; management sees no need for environmental programmes;

Ad hoc project funding; minor top management involvement; no formal environmental programmes but attempts made to resolve issues as they arise;

Small consistent budget, top management theoretically involved; management believes environmental policy worthwhile; policies show corporate responsibility;

Sufficient funding; top management theoretically involved; management believes environmental management is important; policies attempt to minimise firm’s environmental impact;

Open ended funding; active involvement of top management in environmental policy setting; policies attempt to include active management of environmental issues.

The findings of Polonsky et al. (1992) tend to contradict Hunt & Auster’s lifecycle approach and they challenge the notion that ‘an organisation is in one stage of environmental management at one time’. Their

Questionnaires were mailed to the 150 largest firms on the basis of turnover in the United Kingdom and the 200 largest companies in the Federal Republic of Germany (the different sample sizes were chosen with the expectation of a different response rate to a piece of British-based research and with the aim of generat- ing 50 responses from each country). The questionnaire was in English, but the German version was mailed out with an explanatory covering letter in German.

EURCPEAN MANAGEMENT JOURNAL Vol 12 No 2 June 1994 27

Australian-based research suggests that organisations can be in more than one stage of environmental management at one time, often because there is not necessarily a consonance between the commitment to environmental policies and the commitment to implement those policies. Green actions, in other words, may tend to lag behind the green corporate intentions and pronounce- ments. Polonsky et al. contend that there may be factors which enable some organisations to progress more rapidly towards improved environmental performance than others, and that ‘it is essential that these characteristics be determined and attempts be made to incor- porate these basic management characteristics with all organisations to ensure that they too reach a higher level of behaviour’. They suggest a number of characteristics which ‘might provide landmarks of differentiation across organisations in this regard’, concerning five key areas:

1.

2.

3. 4.

5.

the existence and implementation of formal environmental policies; the structural manifestations of policy implementation, including board level representation; the use/conduct of environmental audits; the extent of environmental considerations in performance evaluation; and the adoption of environmental considerations in new investments and new ventures.

These areas cover several of the fundamental ‘S-factors’ including issues of strategy, structure and systems. They also consider the question of whether the environment is considered when a company is spending money - a crucial test of real commitment to any issue. The succinct but significant nature of Polonsky et al.‘s five factor model prompted the authors to follow a similar approach for their own research.

The Survey The survey aimed to compare the extent of corporate environmental commitment among large companies in the UK and Germany. Large companies were selected as the area to study for two main reasons. First, in a parallel to Schumacher’s (1973) ‘small is beautiful’ argument, large is frequently ugly in terms of the environmental impact. Second, large companies act as opinion leaders within the business community in terms of management practices, and through their own purchasing power they can apply substantial pressure to smaller firms further down the supply chain.


Replies were received from 57 German and 51 UK companies, representing a 28.5 and 30 per cent response rate respectively. Of the total responses, three quarters came from a manager with specific (although not necessarily full-time) responsibility for environmental issues, i.e. an environmental (affairs) manager or environmental coordinator (made up of 43 per cent from the UK and 32 per cent from Germany). The selection of companies covered a wide range of major suppliers of consumer goods and services in the private and public sector. The UK sample consisted of 60.7 per cent manufacturing and 39.2 per cent service industries, compared to 59.6 and 40.4 per cent for Germany.

Survey Results The questionnaire included 34 questions, grouped into five main areas. The first section included questions about the company responding, and how they perceived the importance of green issues, the driving forces behind the green challenge. The other four sections roughly equated to four out of five of Polonsky et al.‘s factors. Early indications that companies often did not use, or wish to commit themselves on the issue of using, environmental considerations when evaluating company performance prompted their exclusion. The questionnaire included both bivariate and Likert scaled questions, and provided space for respondents to make comments.

1. Attitudes to the Green Challenge and Key Driving Forces Figure 1 demonstrates the differences in perception of the importance attached to the green challenge both now and in the future. According to Newman & Breeden (1992) ‘today most executives agree that environmental issues are extremely important to their companies.’ Figure 2 tests whether such a consensus actually exists in each country by contrasting those respondents strongly agreeing that green issues are important with those who, to some extent, disagree. Figure 3 shows the relative importance of four key driving forces. The importance scores for each driving force are created by subtracting the ‘disagree’ or ‘strongly disagree’ totals from the ‘agree’ or ‘strongly agree’ totals. The result is a very simple visual indication of sample skew. Full numerical details of these results are contained in Appendix 1.

The consensus that green issues are important did exist, but was more strongly expressed by the UK sample, with both countries anticipating a significant increase in their importance in future. The only real disagree- ment came from three German companies, all in services markets. This reinforces the findings of Peattie & Ring (1993) and Polonsky et al. (1992) that environmental concern is lowest amongst service companies. Perhaps surprisingly, there was greater emphasis on the environment among UK companies, which may suggest the

Green C-level

Staff and skills Corporate strategy

Organtsational structure Shared cultural values and

Figure 1 The Green Strategy Response Iceberg

r

Figure 2 Are Green Issues Important?

r

80

Figure 3 Influences on Environmental Performance

ending of a ‘honeymoon period’ for German companies in relation to the green challenge.

Among the green driving forces listed in Figure 3, legislation had a comfortable lead over customers as the most important source of pressure for change in both countries. This confirms the findings of Peattie & Ring

220 EUROPEAN MANAGEMENT JOURNAL Voll2 No 2 June 1994


(1 th fo

Z st IS CE

hc 01

G cc th Ll in

Z cc

a1 dj re hc

993) that the legislative stick is, as yet, mightier than me customer carrot. Among the secondary driving lrces there is a substantial difference between the two juntries, with German companies being much less in- .renced by pressure from shareholders or internal akeholders. This finding was surprising in view of the WO Touche Ross survey which revealed that only 9 per nt of UK respondents felt under pressure from share- 3lders to change to environmentally superior products . processes. Although no figures were produced for ermany, this compared poorly to the other Continental juntries such as Belgium and the Netherlands where me figure was 20 per cent, and in Denmark and urembourg some 70 per cent of managers felt under [vestor pressure to improve. Internal stakeholders >parently have a much stronger influence in the UK. he figures show a marked difference between the two )untries, perhaps reflecting a more paternalistic >proach to ‘greening’ among German companies. The ifference in shareholder influence may also reflect the hlative difference in the power of institutional share- olding between the two countries.

F t1

;: 4’ fi

::

igure 4 contrasts the responses of companies in viewing ie environment as an opportunity or threat. There was more polarised response among UK companies with 7 per cent seeing it strongly as an opportunity, while 1 per cent view it to some degree as a threat. German rms were generally cautiously optimistic, with only 16 er cent viewing it as either a strong opportunity or any )rm of threat.

2 . Green Audits Ir I both Germany and the UK it is apparent that a good d eal of importance is ascribed to environmental ai uditing, with virtually all the companies conducting S( )me form of green audit. Such audits were described a: s at least ‘important’ by 82 and 68 per cent of the UK ai nd German companies respectively. Table 4 sum- rr iarises the responses of the companies to questions e: xploring the nature of their use of green audits. Audits u Fere generally conducted regularly, but the majority of C( lmpanies were not yet intending to link it to the EC

A THREAT 7 1

UK QERMANY

igure 4 Green Issues Opportunity or Threat?

Table 4 The Nature and Role of Environmental Audits

UK Germany Yes % No % Yes % No %

Involves external consultants 52.9 41.2 31.6 68.5 Involves internal specialists 92.2 3.9 78.9 19.3 Is an infrequent exercise 27.5 72.5 21 71.9 Is company-wide 90.2 9.8 71.9 24.6 Is functions/divisions specific 11.8 84.3 35.1 61.4 Covers social issues 41.2 51.0 52.6 47.4 Is for internal circulation only 68.6 27.5 31.6 64.9 Is linked to EC Eco-audit 15.7 66.7 31.6 68.4

Eco-audit scheme. The key differences were in the scope of the audits, with UK companies favouring more holistic company-wide audits while German companies conducted more audits focused on a specific function or division, sometimes in addition to a corporate audit. This may reflect the more general difference in the style of strategic management within the two countries revealed by Horovitz (1978), who found that German companies developed much more technically detailed strategic plans compared to UK companies whose plans had a wider scope and a less detailed focus. UK companies made greater use of external consultancy to support their auditing and surprisingly made slightly greater use of internal specialists. German firms also showed a greater tendency to include social issues within their green audits.

Openness of information has recently become an important issue on the green agenda. Irvine (1990) discussed the use of ‘commercial confidence’ loopholes to minimise the environmental information disclosure of UK companies. Although environmental information can be disclosed by a variety of media, a company’s annual report is the ‘single most important source of company information’ (Harte & Owen 1991). A 1991 sample of 670 UK companies’ annual reports analysed by Company Reporting revealed only 3 per cent highlighting environmental information (most of which was described as ‘meaningless’). Harte & Owen (1991) also concluded from a study of UK companies annual reports that ‘most environmental reporting is still at a very general level’. In Germany the level of environmental disclosure was found by Roberts (1991) to be the highest among five Continental nations, with around half of German companies disclosing environmental information on products and research & development. However, the level of detail disclosed found across all countries was described as ‘generally low’.

The explanation of the failure of environmental audit results to find their way into companies’ external communications probably reflects the compliance driven nature of current auditing activity. Hillary (1992) in a study of 495 UK firms found that while half were compliance orientated, under 10 per cent cited growing public awareness as a motivation for their auditing

EUROPEAN MANAGEMENT JOURNAL Vol12 No 2 June 1994 221


activities. The failure to provide the public with sufficient information about their environmental impact will have to be addressed by companies in future under the terms of the EC directive 90/313, Freedom of Access to Information on the Environment.

Our results suggest that UK firms generally disagree with the concept of society’s ‘right to know‘ about environmental performance, and instead agree with the International Chamber of Commerce’s view of environmental auditing as a ‘purely internal tool whose findings are for the exclusive use of company management’ (Harte & Owen, 1991). One company described published audits as ‘counter-productive, inhibiting the turning over of stones that need to be turned over, and the frank discussion of results’. Another suggested that environmental audits are ‘not necessarily a good public tool . . . real issues are driven underground to produce politically correct statements’. Such statements challenge the practical benefits of the concept of ‘openness of information’ which has become an increasingly important component of environmentalists’ campaigns and EC policy. However, problems of disclosure may be concentrated in the early stages of a company’s ‘greening’ process, as reflected in the 100 Group of Finance Directors Statement of Good Practice on Environmental Reporting. Companies such as Norsk Hydro who have gone fully down the road of public environmental disclosure indicate that it eventually brings a wide range of benefits (Spiers, 1993).

3. Structural Issues Table 5 illustrates the changes of a structural nature made in response to the green challenge. At the operational level roughly two-thirds of the firms in both samples had appointed a manager dealing primarily with environmental issues, but UK companies were more than twice as likely to contain an environmental department. Surprisingly, the UK sample contained more board-level directors with formal environmental responsibility, who were more likely to have allocated their own budgets to environmental issues, and to have made greater use of internal ‘green’ committees. The UK sample also made greater use of external advisory bodies than the German companies, a result which is consistent with the research of Jakob & Hope (1993).

4. Environmental Policies Table 6 shows how environmental concern was reflected in changes to specific corporate policies and policy documents. In terms of policy changes between 60 and 75 per cent of both samples had amended their mission statement and purchasing guidelines to reflect environmental concern. A surprising difference came in the greater number of green training programmes being run by UK companies, especially since Shaw & Doyle’s (1991) comparison between British and German companies highlighted a greater emphasis on management training by German companies as a key difference. There was also greater use made by the

Table 5 Structural Manifestations of Environmental Commitment


A Board level director 82.4 17.6 43.9 54.4 An environmental manager 70.6 29.4 70.2 28.1 An environmental department 51 .O 47.1 21 .l 71 .O A ‘green’ internal committee 72.5 25.5 38.6 56.1 An external advisory body 29.4 68.6 17.5 80.7 An environmental budget 47.1 49.0 38.6 56.1 New reportina reauirements 80.4 19.6 40.1 49.1

Table 6 Inclusion of Environmental Issues in Corporate Policies


Greening of Mission Statement 66.7 29.4 59.6 36.8

Information in annual reports 76.5 19.6 59.6 36.8 Green Purchasing Policies 74.5 19.6 54.4 28.1

Environmental training programmes 52.9 41.2 31.6 68.4

Green Charitable donations 82.4 13.7 56.1 43.9

British sample of the Annual Company report for environmental reporting. UK companies also made greater use of green charitable donations, but donations are not necessarily a good proxy measure for environmental concern because they may simply reflect corporate affluence and can indicate a tendency towards lip-service and tokenism.

5. Investment Decisions UK companies have been criticised for failing to include environmental criteria within acquisition investment decisions (Lees, 1992), however, our findings reflect increasingly formal green screening of acquisitions, more so in the UK than in Germany. The environmental credentials of the companies and funds in which corporate cash balances are invested is a relatively obscure green issue, but one that can catch organisations out. The World-wide Fund for Nature was badly mauled in the media for investing funds in a range of environmentally hostile businesses. German companies show much greater awareness of the need to back up a green image with an environmentally sound investment policy than their UK counterparts. Capital projects and new product development investment are both made with reference to green criteria by over 70 per cent of companies in Germany and over 90 per cent in the UK. This perhaps reflects the tendency to place greater emphasis on financial control mechanisms for strategies among British firms compared to their German counterparts, as noted by Horovitz (1978).



Table 7 Environmental Screening Usage in Investment Decisions


Major investment decisions (e.g. acquisitions) 60.8 33.3 21.1 73.7

Capital Projects 74.5 13.7 63.2 29.8 New Product Development 90.2 7.8 70.2 24.6 Investment of liquid funds 90.2 7.8 73.7 22.8

Discussion Contrary to the authors’ expectations, the findings of thus survey suggest that, in organisational terms, major UK companies do not lag behind their German counterparts in their environmental commitment. There are se\.eral factors that could help to explain these findings.

1. Issues of Scaling. It could be argued that since Germany as ,a society is further down the ‘green learning curve’, thcsy will have a different (and more rigorous) concept of what constitutes good environmental performance. This may be true as a general point, but it does not necessarily explain the results, which mostly measure the presence or absence of factors like an environmental budget or an environmental manager. However, a question exploring whether or not an environmental audit involves ‘internal specialists’ might be answered differently, depending on the respondents interpreta- tion of the word ‘specialists’. It would certainly be interesting for further research to go beyond issues of presence and absence to explore how large those environmental budgets were and how many environmental managers are employed, as this might reveal a greater depth of ‘greening’ among German companies as compared to their UK counterparts. There are cer- fainly indications that among UK companies conducting environmental audits, for example, many are using a very basic form of audit (Hunt, 1991). Measuring the depth, as opposed to the nature and extent, of ‘greening’ in the two countries could provide a useful direction for future comparative research.

2. Vafional versus lnfernafional Perspectives. It may be that by contrasting the largest companies from the two countries, the sample has concentrated on large UK companies which are international in scope and may not be particularly representative of the majority of companies which are small or medium sized enterprises. Research conducted among small UK companies at the Cr,mfield Management School in 1990 found that half of them were effectively ignoring the environment as an issue. However, it is worth bearing in mind that the Touche Ross survey which pointed to the unreadiness of UK managers to meet the green challenge included 32 of the UK’s largest chemical manufacturing and consumer companies.

3. The End of the German ‘Honeymoon Period’. The subtext

of some of the comments from the German sample was a developing weariness about environmental issues. The controversies regarding the ‘Green Dot’ scheme, the media scandals involving the export of environmentally harmful waste by German companies and the tightening mesh of legislation seem to be combining to produce an atmosphere of battle-weariness among some German companies. This is perhaps most prevalent in the German chemicals industry. German chemicals companies spent $45 million during the late 1980s on an education programme aimed at developing a greener image. They also incur at least 20 per cent more in compliance costs than their EC rivals due to their stringent national legislation. But their green image has been tarnished and the legislative net is expected to tighten further following a string of recent chemical plant ‘mishaps’ (Templeman, 1993). The comments from the UK companies, who are perhaps less far down the green learning curve, were, by contrast, generally more positive. This would be in keeping with the green issue attention lifecycle proposed by Downs in 1972. In Downs’ model, a burst of media and environmental response euphoria within society, creates pressure for change and leads to new legislation being enacted. The post legislation phase involves counting the cost of change, and a ‘getting back to business’ spell of quiescence and consolidation, before the next perceived environmental crisis starts the whole cycle off again. The differences in outlook between the two countries could well relate to them occupying different positions in their current pass through the issue lifecycle.

4. A Difference in Focus. The fact that this study put technology aside perhaps explains the reversal of the expected outcome. German management is renowned for its technological focus, and it is perhaps indicative of the differences in the approach to management in the

Gloomy prognosis

t

Quiescence I

w Consolldatlon

t Courhg the costs +-Law and reforms

t Pressure gioup actlon

t Media attentkon j Euphond reactlon

t Alarming disclosures

t Debate by informed insiders +--Gloomy prognosis

Figure 5 Down’s Environmental Issue Attentlon Lifecycle

EURZEAN MANAGEMENT JOURNAL Vol 12 No 2 June 1994 223


two countries that the German response appears to be stronger in terms of technical and practical issues, while their UK counterparts are concentrating more on managerial and organisational change. While the comments from the UK sample generally emphasised policies, audits and structural changes, the comments from the German sample were characterised by more concrete and detailed examples of their env~onmental commitment such as ‘Environmental awareness is demonstrated by cutting paper and utility costs’; ‘Our new headquarters building is environmentally friendly, with cost savings through natural cooling/heating, etc.‘; ‘We finance assistants annually who work on the national park system’; and ‘We finance an annual award system to recognise companies which develop non- polluting and recycling systems’.

The survey results also suggested that although enthusiasm for the environment as an issue is widespread, there are major variations in the response made by different companies to date. The comments made by the UK sample in particular showed a relatively distinct split between those for whom action is begin- ning, planned or imminent, and those for whom the whole issue is old news. From the first group came comments like - ‘Annual report, policies, training and donations - all soon‘; ‘Early days yet’; ‘Still at the review and pilot project stage’; ‘Purchasing policies are being developed‘; and ‘We are in the early stages of implementation’. From the second group came comments like - ‘We had these long before the environment became flavour of the month‘; ‘Have carried out environmental auditing since the early 1970s’; and ‘Our environment team celebrates its 20th year’. These comments provide an interesting example of the extremes of Hunt & Auster’s awareness lifecycle in operation.

Conclusions There is little doubt that the growing environmental

crisis will continue to deepen in the foreseeable future, and that env~onmental performance will become an

increasingly important issue for companies when it comes to winning business, attracting investment and staying within the law. The development of the Single European Market, the increasing priority being given to environmental issues by the EC and the development of distinctive European green segments in markets for products such as cars, detergents, batteries and washing machines makes the development of green strategies very much a European issue. Partly for this reason, companies in the UK have already been presented with stern warnings about the dangers that Continental rivals with a green competitive edge could pose (Rock, 1989). The results of our survey suggest that, whatever the situation regarding the relative environmental merits of the products and technologies involved, UK companies may be at no real competitive disadvantage to their German counterparts in terms of their organisational commitment to greening. This is a significant finding, since an organisation’s software is generalIy much harder to change than its technical hardware. The situation is reminiscent of Dale’s (1992) research into preparations for the SEM. He found that, despite all the public doom and gloom about the UK’s response, the differences in the level of preparedness between German and UK companies across four different industries were relatively slight.

However, there is a danger that with the desire to attain BS7750, British companies are focusing their attention too strongly on issues of systems, procedures, audits and manuals. This could result in the ‘greening’ of the software of organisations without an accompanying improvement in the environmental performance of their hardware. The response to the green challenge is still largely legislation and compliance driven, and British companies have been dealt a ‘Get Out Of Jail Free’ card with the ‘Best Available Technology Not Entailing Excessive Cost’ principle in the 1990 Environmental Protection Act. This could result in British companies

Appendix: Corporate Perceptions of the Green Challenge

UK Responses (%) Germany Responses (%) 1 2 3 4 5 I 2 3 4 5

Green issues . _ . 1. Are important now - - 2 41.2 56.9 - 5.3 7 59.6 28.2 2. Will be jmpo~ant in future - - 2 31.4 66.7 - 3.5 1.8 50.9 43.9 3. Provide opportunities - - 9.8 52.9 37.3 1.8 10.5 17.5 50.9 15.8 4. Pose a threat 7.8 21.6 25.5 33.3 7.8 24.6 19.3 31.6 15.8 - 5. Mean environmental audits are imp~~ant - 17.6 25.5 49 5.9 5.3 26.3 33.3 33.3 1.8

Green Pressure Comes From: 5. Customer demand 6. Legislation 7. Shareholders 8. Internal Stakeholders

2 27.5 17.6 49 2 3.5 14 33.3 43.9 7 - 9.8 7.8 68.6 11.8 - 14 15.8 43.9 22.8 3.9 21.6 45.1 25.5 - 17.6 42.1 28.1 7 - 3.9 9.8 29.4 45.1 9.8 12.3 38.6 24.6 14 1.8

Notes: 1. 1 = Strongly Disagree; 5 - Strongly Agree 2. The difference between the total for any question and I~XWI represents the number of non-respondents to that question



finding themselves outclassed in international markets by companies from countries like Germany with more rigorous green legislation, who approach ‘greening’ as a holistic process in which the organisation’s software and hardware are inextricably linked.

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Ken Peaffie is a Lecturer in Sfrafegic Management within the Marketing and Strategy Group at the Curdiff Business School, which he joined in

I I 1986. Before becoming a lecturer he worked as a systems

and business analyst for an American paper mulfi- national, and as a strategic planner within the UK [electronics industry. He is the author of Green Marketing (Pifman 2992), and has published widely lln different aspecfs of marketing, strategic management and management education. His main research interests focus on the impact of environmental concern (In marketing and corporate strategies and on innovations in sales promotion.

.- -

KEN PEATTIE, Curdiff Business School, Aberconway Building, Colum Drive, Curdiff CFl 3EU, UK.

ANJA RINGLER, Cardiff Business School, Aberconway Building, Colum Drive, Curdiff CFl 3EU, UK.

Anja Ringler is a graduate in Business Administration from the Cardiff Business School where she is now a Doctoral Sfudenf, researching info the investment processes of German companies. Her other

research interests cenfre upon the comparative responses to increasing environmental concern among German and British companies.

EUROPEAN MANAGEMENT JOURNAL Vol 12 No 2 June 1994 225

Documents

Management and the environment in the UK and Germany: A comparison