By what incentives are European subcontractors driven to adopt CO
2emission reporting and reduction practices?
A comparative case study of the Netherlands and the United Kingdom
-November 2008
By:
Renske Kleinsmann
Email:
s1360302@student.rug.nl
University of Groningen
Faculty of Economics and Business
MSc International Business and Management
3
By what incentives are European subcontractors driven to adopt CO
2emission reporting and reduction practices?
- A comparative case study of the Netherlands and the United Kingdom -
ABSTRACT
This research empirically examines the extent to which incentives to subcontractors to adopt CO2 emissions reporting and reduction practices differ between the Netherlands and the United Kingdom. The results show that significant differences exist. Subcontractors in the Netherlands are mainly driven by regulatory compliance and energy costs, and are negatively influenced by implementation costs, whereas subcontractors in the UK are driven by energy costs, environmental awareness, relationship building and reputation building. Implementation costs are no disincentive to UK subcontractors to measure and reduce CO2 emissions. These outcomes add to the development of an approach to implement an environmental management system throughout a product chain.
KEYWORDS
TABLE OF CONTENTS
LIST OF ABBREVIATIONS ... 6
TABLES and FIGURES... 7
1. INTRODUCTION... 8
2. THEORETICAL FRAMEWORK ... 11
2.1 ISO 14001 and EMAS... 12
2.2 EMS throughout the supply chain... 13
2.3 Incentives regarding EMS adoption ... 15
2.4 Influence of country of origin on EMS adoption ... 17
3. HYPOTHESES... 19
3.1 Energy Costs (EC) ... 22
3.2 Implementation Costs (IMPC)... 23
3.3 Reputation Building (RPB) ... 24
3.4 Relationship Building (RLB) ... 25
3.5 Environmental Awareness (EA)... 26
3.6 Regulatory Compliance (RC) ... 26
3.7 Country of Origin (COO) ... 27
3.8 ISO 14001 Certification (ISO 14001)... 28
3.9 EMAS Registration (EMAS) ... 29
4. METHODOLOGY... 29
4.1 Dependent and independent variables... 30
4.2 Sample ... 31
4.3 Survey ... 32
4.4 Data analysis ... 32
4.4.1 One-sample t-test... 33
4.4.2 Independent samples t-test... 34
5. RESULTS... 35
5.1 Results one-sample t-test regarding hypotheses 1-6... 35
5.2 Results independent samples t-test regarding hypotheses 7-9 ... 39
5
REFERENCES... 46
APPENDICES ... 51
APPENDIX A: Overview of the most relevant studies regarding implementation of environmental management systems ... 51
APPENDIX B: Questionnaire used for interviews ... 57
APPENDIX C: Test for internal consistency; Cronbach’s Alpha ... 60
APPENDIX D: One-sample Kolmogorov-Smirnov Goodness of Fit test ... 63
APPENDIX E : Calculation of the test value per variable, per country... 64
LIST OF ABBREVIATIONS
CO2 Carbon Dioxide
CSR Corporate Social Responsibility
EA Environmental Awareness
EC Energy Costs
EMAS Eco-Management and Audit Scheme
EMN European Mail Network
EMS Environmental Management System
GHG Greenhouse Gas
IMPC Implementation Costs
ISO International Organization for Standards
RC Regulatory Compliance
RLB Relationship Building
RPB Reputation Building
SME Small- and Medium-sized Enterprises
7
TABLES and FIGURES
Tables:Table 1: Determinants of EMS adoption per geographical domain……… 18 Table 2: Definitions of dependent variables……….. 21 Table 3: Definitions of independent variables………... 22 Table 4: Results regarding incentives to EMS adoption decision of Dutch subcontractors.. 36 Table 5: Results regarding incentives to EMS adoption decision of UK subcontractors….. 36 Table 6: Results reg. differences between incentives of Dutch and UK subcontractors……40 Table 7: Overview of hypotheses 1-9 and their outcomes………. 42 Figures:
1. INTRODUCTION
A worldwide trend can be observed of voluntary adoption of environmental management systems (EMSs) by firms in order to improve their environmental performance and make it transparent. Yet, the implications of implementing an EMS throughout the entire product chain has received relatively little interest. This research seeks to understand which factors influence the adoption decision of subcontractors in the Netherlands and the United Kingdom (UK) to measure and reduce carbon dioxide (CO2) emissions in cooperation with their contractor. The purpose of this research is twofold. On the one hand are studied what factors are of influence on the adoption decision by subcontractors in The Netherlands and the UK. On the other hand the differences between subcontractors in the two countries with regard to their incentives to adopt CO2 emission reporting and reduction practices are examined.
Scientific proof exists that the growing CO2 emissions imply a serious and irreversible risk (Metz et al., 2007). Companies play an important role in these developments; they are part of the problem; they should be part of the solution.1 Whereas initially companies were resistant towards environmental initiatives and only acted upon existing legislation, they are currently shifting towards more proactive voluntary environmental practices (Khanna and Anton, 2002; Gunningham, 2007). Companies find their financial performance improved by investment in environmental initiatives (Margolis and Walsh, 2001; Orlitzky et al., 2003; Hill et al., 2007), which has caused the definition of competitiveness to become more dynamic. The new paradigm of competitiveness does not only involve outstanding efficiency resulting in profit generating operations, but also involves superior achievements in the area of corporate social responsibility (CSR).
CSR consists of many facets. KLD Research & Analytics, inc. provides social ratings in four areas of CSR; Environment, Social, Governance and Controversial Business Involvement.2 There are multiple ways in which CSR can create value for a company. Activities can result in cost savings, reputational benefits and/or dissuasion of future action by government and other regulatory bodies (Bird et al., 2007). As the environment is receiving much attention, companies can improve their corporate image by minimizing their pollution of the environment. Whereas companies were initially focusing on implementing a firm-structured EMS, currently an increasingly strong tendency is developing towards implementation throughout the whole supply chain (Cramer, 2000). A company that outsources a substantial part of its operations can still be held responsible for the emitted CO2 related to activities of its subcontractors. “Improving
9
environmental performance extends beyond the direct activities of an organization” (Gascoigne, 2002). However, it is questionable if subcontractors are actually experiencing an equal urge towards voluntary initiatives regarding environmental practices as the contractor is. This has not yet been extensively investigated. The subcontractors in this empirical study are smaller courier firms, which might not have similar incentives as the much larger contractor TNT has, because they are not as receptive to public scrutiny and do not have an equal profusion of financial resources to divert to environmental objectives (Biondi et al., 2000).
An abundance of literature is available regarding motivational studies in the field of environmental management system implementation and environmental certification3 (Bellesi et al. 2005; Biondi et al., 2000; Brody et al., 2006; Nakamura et al., 2006; Quazi et al., 2001; Yiridou et al., 2003; Zeng et al., 2003). Past studies have made use of samples consisting of mostly large companies in countries such as Japan, the U.S., Canada, Israel, Singapore, China and multiple European countries. The most important incentives found are the need to comply with legal requirements (Biondi et al, 2000; Quazi et al., 2001; Yiridoe et al., 2003), the need to satisfy customer requirements (Biondi et al., 2000), the desire for good public relations (Brody et al., 2006; Zeng et al., 2003), environmental beliefs (Nakamura et al., 2006) and improvement of competitive position (Biondi et al, 2000; Zeng et al., 2003). The most important disincentive found is the financial burden that comes along with the implementation of an EMS (Nakamura et al., 2006; Quazi et al., 2001; Zeng et al., 2003).
Recent studies conducted in the field of EMS adoption involving multiple European countries are scarce; Germany, the Netherlands, Spain and the UK are studied by Bellesi et al. (2005) and Belgium, Denmark, France, Italy, Ireland, Germany, Greece, the Netherlands, Portugal, Spain, Switzerland and the UK by Biondi et al. (2000). The results of these studies show that companies from European countries are a relatively homogeneous group, compared to companies from non-European countries. Biondi et al. (2000) draw conclusions regarding European countries as a whole; the need to comply with legislations, increase of competitive advantage and meeting customer demands being the main driving factors to adopt an EMS. Bellesi et al. (2005) also draw conclusions for European countries as a homogeneous group with emphasis on motivations for certain countries, such as environmental awareness in Germany and regulatory compliance in the Netherlands. There is no research that focuses on differences between European countries.
3 International certifications (ISO/EMAS) exist which, when obtained by a company, confirm that it is operating in a
This research tries to provide in-depth information in addition to existing literature about incentives to adopt an EMS. While Bellesi et al. (2005) and Biondi et al. (2000) focus on incentives of European countries as a homogeneous market, this research focuses on possible differences between incentives of two European countries. Three aspects add to the originality of this research. Firstly, the companies studied are companies in the role of subcontractors, which implies they are operating and emitting CO2 by order of a contractors’ obligation to another contract. Previous studies exclusively reflected on EMS adoption within a company, not within a supply chain. An extra dimension is given by focusing on the incentives to subcontractors to cooperate with their contractor on the implementation of environmental practices. Secondly, the incentives to only two specific items of an EMS are studied; reporting of CO2 emissions and reduction of CO2 emissions. According to Khanna and Anton (2002) an EMS requires a system that tracks emission generation. A third contribution to past studies is the fact that a comparison is made between the Netherlands and the UK. Instead of approaching European countries as homogeneous regarding their incentives towards EMS adoption, this research focuses on the differences.
The outcome of this research can add to the development of an approach to involve subcontractors in a contractors’ EMS. It is studied if subcontractors of The Netherlands and The UK can indeed be approached as a homogenous market. The main question leading this research will be:
“To what extent do subcontractors’ incentives to adopt CO2 emission reporting and reduction practices differ between the Netherlands and the UK?”
11
In order to answer the main question, interviews are carried out with TNT’s subcontractors in the Netherlands and the UK. TNT is a worldwide leading transport company, which is also active in several European countries4.The interviews are conducted in August 2008 and are guided by a questionnaire containing 30 statements regarding the 6 (dis-) incentives. Respondents can show their level of agreement using a Likert-scale from 1 to 5. Questions are analyzed by use of Cronbach’s Alpha, in order to determine if internal consistency exists between the questions. After verifying if the required assumptions are met, a one-sample t-test is performed to compare average outcomes per variable to a calculated test value. If a variable is found to significantly deviate from the test value, the variable is stated to be an incentive. An independent samples t-test is the basis of an analysis regarding differences between the incentives to adopt CO2 emission reporting and reduction practices to subcontractors under the influence of country of origin, ISO 14001 certification or EMAS registration.
The remainder of this paper is organized as follows. The next section will give a theoretical background to this research, followed by a section that describes 9 hypotheses leading the research. In the fourth section the methodology is explained, including the independent and dependent variables, sample, survey and data analysis. The fifth section contains the results and analysis. The last section delivers the conclusion and discussion. It is concluded that subcontractors in the Netherlands are primarily driven by energy costs and environmental legislations, and are negatively influenced by implementation costs, whereas subcontractors in the UK are driven by energy costs, environmental awareness, relationship building and reputation building. They are not at all restraining from implementing an EMS due to initial implementation costs.
2. THEORETICAL FRAMEWORK
The environmental performance of a firm is acknowledged by international standards such as ISO 14001 and EMAS (Eco-Management and Audit Scheme). Next to their own performance, these standards require the participating firms to reflect upon the role subcontractors play regarding environmental aspects and to manage those effects (Gascoigne, 2002). An ISO 14001 or EMAS compatible EMS can be institutionalized in an organization for various reasons, which can often be traced to a competitive dimension. 71% of factors that are of influence on the EMS adoption decision, summarized by Grolleau et al. (2007) contain a competitive element. Based on a review of existing literature it is determined which factors are known to be of influence in order to
determine which factors can possibly motivate subcontractors and should be included in this research. Previously confirmed incentives are concisely depicted in general and per country.
2.1 ISO 14001 and EMAS
The environmental performance of firms can be evaluated and acknowledged by an ISO certification or an EMAS registration. ISO (International Organization for Standards) develops and publishes international standards and is situated in 157 countries − its central secretariat being located in Geneva. As a non-governmental organization it bridges the gap between the public and private sector. Since 1947, it has developed over 16.500 International Standards, varying from standards for the agriculture, construction and mechanical engineering industry, to medical devices and information technology developments.5 In 1993 the ISO established a Technical Committee to develop unified, voluntary standards for environmental management, which could be accepted and implemented worldwide. One of these standards is ISO 14001, which helps organizations worldwide to contribute to sustainable development and operate in an environmentally friendly manner. It describes the main requirements for setting up, implementing, maintaining and evaluating an EMS (Quazi, 2001). Next to this international standard, the European Union established a similar standard; the Eco-Management and Audit Scheme (EMAS). EMAS is an instrument for firms to evaluate, report and improve their environmental performance, and is comparable to ISO 14001. EMAS asks for one extra requirement; a validated statement of environmental performance (Glachant et al., 2002). Both ISO 14001 and EMAS aim to provide good environmental management systems (Grolleau et al., 2007). Although these two standards are relatively equal, the actual impact on environmental performance also depends on the implementation which occurs at heterogeneous organizations (Yin and Schmeidler, (2008). Figure 1 demonstrates that the United Kingdom is a front runner regarding ISO certifications and EMAS certifications compared to the Netherlands. Furthermore it can be seen that the level of ISO 14001 participation is higher than EMAS participation in both countries.
13
Figure 1: Number of EMAS and ISO 14001 participants in the Netherlands and the UK - april 2000 0 200 400 600 800 1000 1200 Number of participants
The Netherlands United Kingdom EU member states
EMAS ISO14001
(Source: Glachant et al., 2002)
One aspect of ISO 14001 and EMAS is monitoring and measuring environmental performance. Core performance indicators, such as CO2 emissions, are used to report on a firm’s energy usage. By measuring and reporting on the emitted CO2, the trend in energy usage can easily be determined6.
2.2 EMS throughout the supply chain
The Greenhouse Gas Protocol has defined three scopes for greenhouse gas (GHG) accounting and reporting objectives. Scope 1 refers to GHG emissions which are directly generated by operations which are owned or controlled by the company. Scope 2 refers to GHG emissions which physically occur at the electricity generating facility, although they are purchased and consumed by the company. Scope 3 refers to indirect GHG emissions. These are results of activities of the company, while the operations are not owned or controlled by the company.7 The third scope includes emissions of company cars, business travel and subcontractors. Whereas initially companies were concentrating on their own operations, the focus is currently shifting towards reporting and improving environmental performance throughout the whole product chain.
Scope 3 implies that involvement of subcontractors is required in a contractor’s objective of incorporating emission measurements in management practices. Zeng et al. (2003) confirm that, when implementing an EMS, enhancing environmental awareness of subcontractors is important if they are responsible for a significant part of operations. Bellesi et al. (2005) state that an EMS is an important factor that is more frequently taken into consideration when choosing partner companies to do business with. Yiridoe et al. (2003) conclude that 63% of Canadian companies surveyed demand or recommend their clients/customers to get ISO 14001 certified.
Subcontracting companies are often smaller companies than their contractor, who often don’t have as much financial leeway as their contractors have (Gascoigne, 2002). In July 2008 the European Commission suggested to modify EMAS by reducing the administrative burden and costs in order to increase the involvement of small and medium enterprises.8 Multiple studies concluded that firm size is positively related to the EMS adoption decision (Bansall and Hunter, 2003; Grolleau et al., 2007; King and Lenox, 2001; Nakamura et al., 2001). Harter and Homison (1999) however, are the only source that found firm size not to be a significant factor. Bansall and Hunter (2003) found in their research that larger firms that already have environmental legitimacy and strong international presence are likely to adopt an EMS to reinforce their position and strengthen their competitive advantage. Krut and Gleckman (1998) argued that the reason for this was the fact that participating in an EMS as a large company, gave them the opportunity to tailor the system to their needs in the developing phase. Also, because larger firms are more receptive to public scrutiny (Ruiz-Tagle, 2006), a registration for a certified EMS is more likely to occur at larger than at smaller firms. Furthermore, there are sufficient financial resources available to realize environmental commitment (Grolleau et al., 2007).
Larger companies can use their power and position as an importance force for promulgating the diffusion of EMSs (Biondi et al., 2000; Grolleau et al., 2007). Although it improves the overall environmental performance, implementing an EMS throughout the entire chain is very complicated as many actors are involved. It implies a larger range of organizational interests to be satisfied (Cramer, 2000). Carter (1999) found that a certain level of control over subcontractors is required to exert influence to implement an EMS and organize chain responsibility. Cramer (2000) claims that this goal can be achieved when communication and negotiations with all actors involved is initiated by the company at an early stage. In this way a solution can be found which satisfies all interests. Carter (1999) acknowledges this and adds that clarity over plans and actions, and strong communication lines between key persons are important
8
15
for the success of integrating an EMS. In 1999 however, Ford and General Motors both declared that all their suppliers worldwide had to be ISO 14001 certified by 2003 (Bansal and Bogner, 2002). In this way suppliers were obliged to adopt environmental practices in order to maintain doing business with contractors Ford and General Motors. Cramer (2000) studied a company where, due to a decentralized structure, it was difficult to positively influence refusing suppliers to change their packing materials. Griffith (2008) proposed internalizing a code of conduct for suppliers, although rapid changes are impossible in this way.
It is likely that a partnership approach towards subcontractors to adopt environmental practices voluntarily works better than a dictatorial approach (Gascoigne, 2002). In order to determine which approach is most suitable to influence subcontractors in their adoption decision, insight is required in the incentives that drive them to actually cooperate on an EMS. There is little empirical evidence though about incentives to subcontractors or other players throughout a supply chain.
2.3 Incentives regarding EMS adoption
Several studies have been conducted concerning the motivation of companies to work in an environmentally sustainable way. The implementation of an EMS according to ISO 14001 or EMAS is a proxy of working in an environmentally sustainable way (Bellesi et al., 2005; Biondi et al. (2000), Darnall (2003), Grolleau et al. (2007), King and Lenox (2001), Nakamura et al. (2006), Quazi et al., 2001; Yiridoe et al., 2003; Zeng et al., 2003). Appendix A displays an overview of the most relevant studies, of which the main conclusions are described below.
(Dis-)incentives to companies to incorporate environmental management systems can be classified into internal and external factors. Internal factors include operational efficiency, working environmental safety and employee motivation. Externally driven factors comprise corporate image, customers’ and stakeholders’ demand, regulatory compliance and competitive advantages (Frondel et al., 2008; Yiridoe et al., 2003). Little empirical evidence exists on incentives to companies in the specific role of subcontractor.
Studies in China, Germany, Japan and Singapore (Zeng et al. 2003; Frondel et al., 2008; Nakamura et al., 2001; Quazi et al. 2001) confirm the fact that increasing costs due to implementation and maintenance of an EMS can function are a disincentive with regard to the adoption decision. Although these studies confirm a negative correlation between EMS adoption and cost savings, they only refer to costs associated with EMS adoption integrally. They do not draw conclusions regarding costs split into general (production) costs and implementation costs. A study in Canada, which studied the value of increasing production efficiency9 to companies, concluded this factor was ranked to be important by only 23% of respondents (Yiridoe et al. 2003). Other than in Germany, costs as a (dis-)incentive are not studied in further depth in other European countries. Casadesús et al. (2008) found in his worldwide study, that previous experience with the ISO 9000 standard has a positive influence on the implementation of ISO 14001, which is also confirmed by Perkins and Neumayer (2008). This is explained by the fact that implementation can be less costly as the two standards are complementary.
The existing literature does not give an unambiguous standpoint regarding the influence of external factors on the EMS adoption decision. In the Chinese construction industry it has been found that 70% of the non-certified firms researched claimed that they would only seek certification if clients had such requirements (Zeng et al., 2003). None of the respondents of certified firms were at the time of certification motivated by need to satisfy client’s requirements. Zeng et al. (2003) claim that ISO 14001 is not so much consumer-driven, as it is more driven by stakeholders, the community and/or regulators. This is confirmed by a research in Canada (Yiridoe et al., 2003) and two studies in The United States (Brody et al., 2006; Darnall, 2003). Biondi et al. (2000) however, who studied small- and medium sized European enterprises, found that satisfying customer requirements was among the most prominent drivers, which is also found by a study of Nakamura et al. (2001) in Japan.
Quazi et al. (1999) claim export opportunities are the most important reason to operate in an environmentally sustainable way in the electronic and chemical industry in Singapore. This advantage regarding export is not found to be a significant factor of influence in Japan (Nakamura et al., 2001). Competitive advantage in a national context is confirmed to be a motivation to get environmentally certified in Canada, China, The United States and several European countries (Yiridoe et al., 2003; Zeng et al., 2003; Biondi et al., 2000; Bellesi et al., 2005).
Companies in the Netherlands and the UK are obliged to follow environmental legislation formulated by the European Union. Both countries manage and monitor that these legislations are
17
followed through nationally. 10 Hence, environmental legislations are comparable in the Netherlands and the UK, as they are based on equal European statutes. Compliance with the existing environmental legislation is found to be a factor of influence on the adoption decision by studies in Europe, Singapore, Canada and the United States (Bellesi et al., 2005; Biondi et al., 2000; Darnall, 2003; Grolleau et al., 2007; Quazi et al., 2001; Yiridoe et al., 2003). However, when legal enforcements are inadequate and immature, they can also function as a disincentive (Zeng et al., 2003).
2.4 Influence of country of origin on EMS adoption
The majority of existing documentation regarding incentives to adopt an EMS focused on a single country. The previous section shows that these studies in several countries result in different outcomes. However, these differences can also be attributed to other influences, such as the size of firms or the industry of firms surveyed. Table 1 displays the main incentives to EMS adoption found in the existing literature, classified per geographical region.
Only two studies involved multiple countries. Bellesi et al. (2005) and Biondi et al. (2000) both studied European countries, among others. It was found that the European market is more environmentally conscious than other industrialized parts of the world, as European countries lead the world in EMS registration and implementation. Of companies in Spain, the UK, Germany and the Netherlands the following percentages of firms had implemented an EMS in 2005; 47%, 52%, 57% and 67% respectively. This is compared to 23% in the U.S. and 32% in Japan (Bellesi et al., 2005). Biondi et al. (2000) approach Europe as a homogeneous market and found three main driving factors for small and medium sized firms; the need to comply with legislations, increase of competitive advantage and meeting customer demands. Two other studies have been performed which focus on one European country, i.e. Germany and France (Frondel et al., 2008; Grolleau et al., 2007). Nevertheless, within Europe a minimum amount of differences regarding incentives have yet been discovered.
Bellesi et al. (2005) do distinguish between European countries, although only the most remarkable differences are cited. Customers of German firms are found to be environmentally aware and German and Dutch firms confirm to require an EMS certification due to policies within the European Union. Frondel et al., (2008) did not involve regulatory compliance as an incentive; Grolleau et al. (2007) confirm however that this factor is found to be of influence in France. For Europe integrally, Bellesi et al. (2005) confirm the outcome of Biondi et al. (2000), being that
competitive advantage is a motivational factor in the adoption of an EMS or ISO 14001 certification. For subcontractors in the transport industry this competitive advantage can be split in two factors. On the one hand, subcontractors can be motivated by a competitive advantage towards the contractor in order to strengthen the relationship. On the other hand, a competitive advantage can be achieved, implying a reinforcement of the environmental reputation towards customers.
Table 1: Determinants of EMS adoption per geographical domain
This table exhibits an overview of incentives related to EMS adoption that were found to be significant by relevant existing studies. As a proxy of EMS adoption are used: actual EMS adoption, EMAS registration or
ISO 14001 certification
Canada China Europe Japan Singapore United States
Regulatory compliance + (1) NI + (3) – (1) + (1) + (2) / NS (1) Competitive advantage + (1) + (1) + (2) + (2) NS (1) + (1) Continual improvement capability/previous experience NI NI + (1) + (1) NI + (3) Customer demand – (1) – (1) + (3) + (1) NS (1) NI Environmental awareness/capabilities NI + (1) + (1) + (1) NI – (2) Export advantage NI NI NI NS (1) + (1) NI Financial burden NI + (1) NI + (1) + (1) – (1) Polluting industry/firm NI NI NI NI NI + (1) Production/energy efficiency + (1) NI NI NS (1) NI + (1) Relationship Building NI NI NI NI NI + (1) Reputation building (stakeholders) + (1) + (1) + (1) NI NI + (2) Top management concerns NI NI NI NI + (1) NI Working environment safety + (1) + (1) NI NI NI NI
+: (dis-)incentive, -: no (dis-)incentive, NS: No significance, NI: No information, (X): Number of studies that confirmed this outcome.
3. HYPOTHESES
costs negatively influence a firm’s commitment to an EMS. By knowing which influence different types of costs have on subcontractors’ attitudes towards EMS adoption, a contractor can develop a suitable approach and consider to bear part of the costs if necessary, in order to nevertheless involve subcontractors.
The following section displays nine hypotheses that are leading this research. Six hypotheses concern possible (dis-)incentives to subcontractors, drawing from the existing literature and information obtained through conversations with TNT employees. Three hypotheses will lead to conclusions regarding differences between incentives to subcontractors in the Netherlands and the UK, and subcontractors who are and who are not ISO 14001 or EMAS certified. Figure 2 shows the conceptual model that gives a schematic view of the hypotheses.
Figure 2: Conceptual model
This conceptual model shows the relations that are tested in this research. The right box displays the relations between the six variables EC, IMPC, RPB, RLB, EA and RC and the variable AD. All relations are hypothesized to be positive, except the relation IMPC – AD, which is hypothesized to be
negative. At the left side the variables COO, ISO14001 and EMAS are shown, which are tested to be of influence on to the six variables.
COO: Country of Origin; ISO 14001: ISO 14001 certification; EMAS: EMAS Registration; EC: Energy Costs; IMPC: Implementation Costs; RPB: Reputation Building; RLB: Relationship Building; EA: Environmental Awareness; RC: Regulatory Compliance;AD: Subcontractor’s adoption decision of CO2 emission reporting and reduction practices
The right box of figure 2 displays the relationships between possible incentives and the adoption decision (AD) of subcontractors regarding CO2 emission reporting and reduction practices. The variables tested to be incentives are Energy Costs (EC), Implementation Costs
21
(IMPC), Reputation Building (RPB), Relationship Building (RLP), Environmental Awareness (EA) and Regulatory Compliance (RC). The definitions as used in this paper can be found in table 2.
Table 2: Definitions of dependent variables
This table exhibits the definitions of the dependent variables as they are interpreted in this research
Dependent variables Definition of dependent variables
Adoption Decision (AD) The decision to cooperate with the contractor and implement a system to measure CO2 emissions and/or to reduce CO2 emissions
Energy costs (EC) Costs spend on fuel, gas or electricity. It is assumed that energy costs decrease due to energy savings after
implementation of CO2 emission reporting and reduction practices
Implementation costs (IMPC)
Costs that arise due to implementation of CO2 emission reporting and reduction practices, such as costs involved with the coordination of activities, training of employees and the process of structuring and improvement
Reputation building (RPB)
The strengthening of a firm’s corporate image in the area of environmental sustainability
Relationship building (RLB) The strengthening of a firm’s relationship with a contractor by cooperating on transport-related as well as environmental levels
Environmental awareness
(EA) The mindset concerning the awareness of the need to operate in an environmentally sustainable way Regulatory compliance (RC) The compliance with existing national and continental
regulations in the environmental area
Table 3: Definitions of independent variables
This table exhibits the definitions of the independent variables as they are interpreted in this research
Independent variables Definition of independent variables
Country of Origin (COO) Country from which the subcontractor originates ISO 14001 certification
(ISO)
Certificated alignment of a firm’s operations with the environmental standard 14001 of the International Organization for Standards
EMAS registration (EMAS) Registered alignment of a firm’s operations with the environmental Eco-Management and Audit Scheme
3.1 Energy Costs (EC)
It has been empirically researched that companies find their financial performance improved by investments in CSR initiatives (Hill et al., 2007; Klassen and McLaughlin, 2001; Margolis and Walsh, 2001; Orlitzky et al., 2003). Influence of the financial performance of a firm occurs through revenue and costs pathways (Klassen and McLaughlin, 2001). Firms can gain a competitive advantage and increase revenue by displaying strong environmental performance as consumers increasingly prefer environmentally oriented firms (Rosewicz, 1990). On the other hand, the adoption of a high quality EMS can reduce costs in three ways. Costs of compliance with environmental regulations can be reduced, as well as the expected costs of potential environmental liabilities. A company that operates in a heavily polluting industry is likely to gain more from adopting an EMS (Khanna and Anton, 2002). A third way in which costs can decrease is by taking into account the cost-savings through energy savings which can lead to an increase in profit (Bird et al., 2007). The effect of energy savings is confirmed by Black et al. (2007) who state that, for environmental management systems in particular, measurement of and eventually a reduction in CO2 emissions can imply a reduction in fuel consumption, thus in energy costs.
23
orders. When these methods are applied throughout a company which is at any given moment responsible for hundreds of trucks on the road, the energy savings can be significant. Therefore, when subcontractors realize a relationship exists between reducing CO2 emissions and decreasing energy costs, it is argued that the latter are likely to be a factor that induces subcontractors to adopt CO2 emissions reporting and reduction practices. This leads to the first hypothesis:
H0: Energy costs are no incentive to subcontractors to adopt CO2 emissions reporting and reduction practices.
H1: Energy costs are an incentive to subcontractors to adopt CO2 emissions reporting and reduction practices.
3.2 Implementation Costs (IMPC)
Certain hesitancy exists towards the implementation of an EMS. It is likely to impose costs on firms because it requires greater coordination of activities within the firm and imposes costs of employee training, audits, product and process improvement (Khanna and Anton, 2002). Biondi et al (2000) state that costs involved when implementing an EMS are costs spend on new technology, the adaptations needed to inventory, the process of structuring and implementation, the technical expertise needed to perform analysis and evaluation of the effects and management time (Biondi et al., 2000). Initially the focus of managers is on the short term; as they only see the increase of costs, many companies are sceptic about implementing an EMS. However, the increase of costs is only of significant size in the introductory phase of an EMS. Yiridoe et al (2003) state that internal costs ranged from CND$17.000 to CND$42.000, for firms with respectively less than 100 and more than 500 employees.
implementing an EMS far outweigh the costs in the long run. In a study on the Chinese construction industry 30% of subcontractors have a negative attitude towards getting ISO 14001 certified. The main reason is the fact that a large amount of financial input is required, while no short-term tangible benefits are expected (Zeng et al., 2003). This leads to the second hypothesis:
H0: Implementation costs are no disincentive to subcontractor to adopt CO2 emission reporting and reduction practices.
H2: Implementation costs are a disincentive to subcontractors to adopt CO2 emission reporting and reduction practices.
3.3 Reputation Building (RPB)
Implementing, monitoring and disclosing environmental information through annual reports, contributes significantly to the development of an environmental reputation (Toms, 2002). Many companies are succumbing in the face of social pressure and don’t want any damage to their image done. Corporate environmental management of SMEs is also driven by winning the goodwill of the public (Khanna and Anton, 2002)
Johannson (1995) conducted a motivational study on ISO 14001 certifications. She showed that a company that gets certified enhances its image and market share, by maintaining a good relation with the public. Grolleau et al. (2007) found that customers use an EMS or ISO 14001 certification as a screening device in their choice of suppliers. A Gallup poll conducted in 1990 concluded that 52% of respondents stop purchasing products from companies with a poor environmental image (Quazi, 2001). These studies confirm the importance to companies of displaying a good corporate image in the area of environmental sustainability.
25
Bellesi et al. (2005) who state that suppliers who are certified are perceived as a well-managed business, which is ethically responsible. The above reasoning leads to the third hypothesis:
H0: Improving the reputation in the area of environmental sustainability is no incentive to subcontractors to adopt CO2 emission reporting and reduction practices.
H3: Improving the reputation in the area of environmental sustainability is an incentive to subcontractors to adopt CO2 emission reporting and reduction practices.
3.4 Relationship Building (RLB)
In the Netherlands an increasing number of companies aim to integrate CSR initiatives throughout the product chain. When this initiative however, is rejected by players in the product chain, the relationship will be at stake (Cramer, 2008). In the UK retail sector, a developing trend has been signalled towards trust-based buyer-supplier relationships, which can be realized by joint forecasting and planning, and joint performance management (Free, 2008). Although Zeng et al. (2003) found that none of the respondents claim ‘ the improvement of their relationship with subcontractors through getting certified’ to be a main motivation, subcontractors are deemed to be willing to strengthen the relationship with their contractors through cooperation in doing business in an environmentally sustainable manner. The reason for this has been found to be that collaboration among businesses increases cooperation, fosters trust and allows for a more effective outcome (Brody et al., 2004). When subcontractors are more amalgamated with a company, they can add value to the operations and cooperate on innovations (Eriksson et al., 2007). Therefore, it is plausible that subcontractors perceive relationship building to be an incentive to cooperate on environmental programs, as it is likely that this will increase their business in the future. It is important that subcontractor and contractor are working towards the same objectives, also in the field of environmental issues (Lord, 1993). The above reasoning leads to the fourth hypothesis:
H0: Strengthening the relationship with the contractor is no incentive to subcontractors to adopt CO2 emission reporting and reduction practices.
3.5 Environmental Awareness (EA)
According to Nemcsicsné Zsóka (2008) environmental awareness consists of five components: environmental knowledge, environmental values, environmental attitudes, revealed willingness to act and actual behaviour. This study shows that environmental knowledge is important in order for a company to behave adequately, though not as important as favourable attitudes and willingness to act in an environmentally sustainable way.
Zeng et al. (2003) found low environmental awareness of subcontractors to be an obstacle in the Chinese construction industry, as 63% of respondents argued low environmental awareness is a reason for negative environmental impact, such as pollution by harmful gases and liquid wastes. A trade-off between environmental awareness and economic aspects exists. When reading and studying on the topic of environmentally awareness, one has to take into account the social desirability. Companies want to take care of the environment, though only few companies take action out of ideology, regardless of costs (Porter and van der Linde, 1995). However, Bellesi et al. (2005) found that the European market proves to be more environmentally conscious than those in other industrialized parts of the world.
Zeng and Wang (2001) found that environmental awareness of the plant manager is the main motivational factor to implement ISO 14001. Quazi et al. (2001) drew the same conclusion in their research. Cramer (2000) agrees on the fact that key managers can be the main drivers for implementing environmental applications and finding new environmental solutions. This is confirmed by several other studies (Flynn et al., 1995; Hunt and Auster, 1990; Berry and Rondinelli, 1998). It seems that next to the organization which drives the implementation of an EMS, environmental awareness of individual managers also plays an important role. The above reasoning leads to the fifth hypothesis:
H0: Environmental awareness is no incentive to subcontractors to adopt CO2 emission reporting and reduction practices.
H5: Environmental awareness is an incentive to subcontractors to adopt CO2 emission reporting and reduction practices.
3.6 Regulatory Compliance (RC)
27
companies that become environmentally certified. These options are not available to the same extent to companies in the UK (Glachant et al., 2002).
Frondel et al. (2005) found in their study on 7 OECD countries that regulatory compliance, together with the prevention of incidents, is the most important motivation to adopt an EMS. However, two years later their own conclusion is refuted in their study on German manufacturing firms, when it is found that no strong correlation exists between compliance with environmental regulations and EMS adoption (Frondel et al., 2008). Khanna and Anton (2002) state that regulatory incentives are not as strong as market-based incentives, as long as the benefits from increasing input-efficiency are larger than the costs of adoption of an EMS.
Other studies in Canada, Europe, France and the United States have concluded an influence of regulatory compliance on the adoption of an EMS exists (Biondi et al., 2000; Darnall, 2003; Grolleau et al, 2007; Yiridoe et al, 2003). It seems there are quite some differences between previous results. However, companies in European countries seem more motivated by regulatory compliance than companies in non-European countries. The above reasoning leads to the sixth hypothesis:
H0: Existing regulations regarding CO2 emission reporting and reduction are no incentive to subcontractors to adopt CO2 emission reporting and reduction practices.
H6: Existing regulations regarding CO2 emission reporting and reduction are an incentive to subcontractors to adopt CO2 emission reporting and reduction practices.
3.7 Country of Origin (COO)
Although, aside from the differences validated by Bellesi et al. (2005), no extensive empirical research has yet been performed in Europe, it is plausible that differences between incentives to CO2 emission related practices exist between companies originating from various countries. Perkins and Neumayer (2008) state differences regarding environmental certifications11 can be explained by domestic attributes such as the level of wealth and democracy of a country. Even countries as Denmark, Finland and Sweden − which are relatively similar regarding culture, level of wealth and level of democracy − differ considerably in e.g. their strategies regarding and awareness of significance of sustainable environmental development (Clement, 2004). The attention given within a country to environmental topics differs, which results in different levels of environmental awareness between countries (Gutowski et al., 2005). The above reasoning leads to the seventh hypothesis.
H0: No difference exists regarding incentives to adopt CO2 emission reporting and reduction practices between subcontractors of the Netherlands and the UK.
H7: There is a difference regarding incentives to adopt CO2 emission reporting and reduction practices between subcontractors of the Netherlands and the UK.
3.8 ISO 14001 Certification (ISO 14001)
The percentages of companies that are ISO 14001 certified strongly differs between countries, with European countries clearly leading the world (Bellesi et al., 2005). Among the most important factors for companies that influenced the adoption of ISO 14001 certification was the establishment of a positive environmental image and regulatory compliance (Yiridoe, 2003; Quazi, 2001). This implies that congruence might exist between getting ISO 14001 certified and the incentives reputation building and regulatory compliance. As subcontractors are relatively smaller companies with few financial resources, there might be a negative relation between getting ISO 14001 certified and the disincentive implementation costs. The confirmed differences between incentives under the influence of ISO 14001 certification lead to the eighth hypothesis.
H0: No difference exists regarding incentives to adopt CO2 emission reporting and reduction practices between subcontractors who are ISO14001 certified and subcontractors who are not ISO14001 certified
11 The study of Perkins and Neumayer (2008) was based on the - to EMAS comparable - environmental standard
29
H8: There is a difference regarding incentives to adopt CO2 emission reporting and reduction practices between subcontractors who are ISO14001 certified and subcontractors who are not ISO14001 certified
3.9 EMAS Registration (EMAS)
Eco-Management and Audit Scheme (EMAS) is based on a European act. An EMAS registered company is independently tested on its environmental reporting system, including the environmental performance of a company. EMAS and ISO 14001 are comparable, because they share the same objective: ‘to provide good environmental management systems’ (Grolleau et al., 2007). While a few differences exist, EMAS and ISO 14001 can be regarded as substitutes. Recent literature stated though that both internationally and within the European Union, ISO 14001 is a more popular standard to comply with than EMAS is (Casadesús et al., 2008). However, as firms still have the option of certifying for one or both standards, we take both standards into account. Therefore, the same hypothesis can be stated for EMAS as is done for ISO 14001, which leads us to the last hypothesis.
H0: No difference exists regarding incentives to adopt CO2 emission reporting and reduction practices between subcontractors who are EMAS registered and subcontractors who are not EMAS registered.
H9: There is a difference regarding incentives to adopt CO2 emission reporting and reduction practices between subcontractors who are EMAS registered and subcontractors who are not EMAS registered.
The next chapter describes how these hypotheses are tested.
4. METHODOLOGY
4.1 Dependent and independent variables
Hypotheses 1-6 form the first part of this research and test if the variables Energy Costs (EC), Implementation Costs (IMPC), Reputation Building (RPB), Relationship Building (RLP), Environmental Awareness (EA) and Regulatory Compliance (RC), are of influence on the adoption decision (AD) of subcontractors in the Netherlands as well as the UK regarding CO2 emission reporting and reduction practices. Equation 1 displays the tested relation represented by these hypotheses integrally.
AD = (β · EC) + (β · ΙΜPC) + (β · RPB) + (β · RLB) + (β · ΕΑ) + (β · RC) (1) In the relationships tested, EC, IMPC, RPB, RLB, EA and RC are the independent variables that can be of influence on the dependent variable AD. AD is not a binary variable, as either the actual adoption decision, the future adoption decision or the decision not to adopt is taken into account. It is assumed the results will be valid in all situations. When a subcontractor does not want to adopt an EMS, it will add to the results of this research in the sense that no incentives are found − only disincentives.
Hypotheses 7-9 form the second part of this research, where hypothesis 7 answers the main question. It is tested if differences exist between the impacts of EC, IMPC, RPB, RLB, EA and RC on the adoption decision, under the influence of Country of Origin (COO), ISO 14001 certification (ISO) or EMAS registration (EMAS). COO, ISO and EMAS are binary variables. Equations 2, 3 and 4 exhibit the relations presented by hypotheses 7-9 respectively.
∆ (VAR): VAR_NL ≠ VAR_UK (2)
∆ (VAR): VAR_ISO ≠ VAR_NON_ISO (3)
∆ (VAR): VAR_EMAS ≠ VAR_NON_EMAS (4)
31
Figure 3: Schematic overview of relation between dependent and independent variables
This figure shows the dependency of variables in hypothesis 1-6 and 7-9. It is shown that the independent variables EC, IMPC, RPB, RLB, EA and RC in hypotheses 1-6, are the dependent
variables in hypotheses 7-9.
ª VAR: EC, IMPC, RPB, RLB, EA and RC.
VAR: Variables; AD: Subcontractor’s adoption decision of CO2 emission reporting and reduction
practices; COO: Country of Origin; ISO 14001: ISO 14001 certification; EMAS: EMAS Registration; EC: Energy Costs; IMPC: Implementation Costs; RPB: Reputation Building; RLB: Relationship Building; EA: Environmental Awareness; RC: Regulatory Compliance;
4.2 Sample
The sample consists of the subcontractors of TNT’s European Mail Network (EMN) in the Netherlands and the UK. EMN’s subcontractors are courier firms which are responsible for transport and distribution activities. The size of a sample depends on two factors; the heterogeneity of the population and the desired accuracy. 25 respondents are commonly the minimum amount for a t-test (Baarda and de Goede, 2001). In this situation it was only possible to conduct 17 interviews in the Netherlands and 15 interviews in the UK. The reason for this is the fact that TNT wished not to negatively affect the existing relationships with subcontractors. Currently, fuel prices are sharply rising and margins are fairly tight, which exerts significant pressure on the relationship with subcontractors. As TNT was expecting subcontractors to be hesitant towards this research, it was only allowed to approach a minimum number of subcontractors. The heterogeneity of subcontractors interviewed is fairly low, as they all execute transport and distribution activities by order of TNT and other larger transport companies and are of equal size regarding number of employees.12 There are no perceptible factors that can explain differences between outcomes of subcontractors of one country, besides actual differences between their views and opinions. The accuracy of the
outcomes might be influenced by the relatively small sample size. The smaller a sample size, the more excessive the influence of a variable must be to be detected. Although this research is limited by a small sample size, the homogeneity of the samples takes care of being able to draw valid conclusions.
EMN consists of eight European countries. As this research is a pilot which serves as a first step towards involvement of subcontractors in TNT’s environmental management system, only two countries are studied.
4.3 Survey
In consultation with TNT’s management, it is decided to collect the required data through interviews by phone. The subject of the interviews can be difficult to understand at times, especially since respondents are not familiar with the topic. To avoid any misunderstandings and to obtain most reliable answers interviews are conducted by phone based on a questionnaire. The questionnaire contains 2 closed questions, 1 open question and 30 statements about possible incentives. The closed questions inquire on ISO 14001 certification and EMAS registration and can be answered with ‘yes’ or ‘no’. The open question inquires on measures already taken to reduce CO2 emissions. There are 5 statements per possible incentive, with which a respondent can agree or can not agree. The level of agreement can be displayed by use of a Likert-scale from 1 to 5 (1 meaning ‘strongly disagree’ and 5 meaning ‘strongly agree’). To minimize response bias all questions will be mixed-up throughout the questionnaire (Quazi, 2001). The questionnaire can be found in appendix B. It is pre-tested on two subcontractors, after which questions and statements are simplified.
The companies to be interviewed are prepared by local account managers, who explain the research, stretch the importance of it and ask for their cooperation. In this way the non-response rate is kept to a minimum. The start of every interview is an explanation of the goal and set-up of the interview. Interviews take no longer than 15 minutes. In august 2008, 32 interviews are conducted; 17 interviews with Dutch subcontractors and 15 interviews with English subcontractors. All respondents were owners or directors of the courier firms.
4.4 Data analysis
33
Netherlands and the UK. 0,70 is considered to be a reliable coefficient in most research situations, in addition to an inter-item correlation higher than 0,200 (Kiewiet, 2001). If a coefficient below 0,70 or an inter-item correlation below 0,200 is found, further analysis is required to determine if adjustments to the questionnaire have to be made to increase internal consistency.
4.4.1 One-sample t-test
In order to draw conclusions for hypotheses 1-6, a one-sample t-test is performed which compares the mean score of a sample to a required test value (T) (Moore and McCabe, 2002). When the average value of a variable deviates significantly positively from the test value, the null hypothesis is rejected. Three assumptions have to be met to perform a one-sample t-test; respondents must be chosen randomly (1), respondents must be independent of each other (2) and variables must be normally distributed (3) (Baarda and de Goede, 2001).
Assumption 1 and 2 are met as all 32 respondents are chosen randomly by TNT and are not related to each other. The third assumption required comprising variables being normally distributed is tested by use of a Kolmogorov-Smirnov test. It is tested if the distribution of data used in this research deviates significantly from a theoretical normal distribution. The Kolmogorov-Smirnov Z-value is calculated by multiplying the largest absolute difference by the square root of the sample size. The largest absolute difference refers to the largest positive or negative difference between the sample distribution and the theoretical normal distribution for data with the same parameters, i.e. mean and standard deviation.13 As an estimate of significance the Exact estimate is chosen, because this does not face the limitations of a small sample, which Asymptotic and Monte Carlo estimates of significance do14. A significant difference implies that the distribution is not normal. When all assumptions are met the one-sample t-test can be conducted to test which variables are of influence on the adoption decision of subcontractors regarding CO2 emission related practices.
For this research the expected mean does not suffice as a test value, because this would indicate all statements are answered neutrally. Therefore the test value should be higher than the expected mean of 3. In order to critically examine the influence of variables a test value is calculated by use of formula 5:
13 http://faculty.chass.ncsu.edu/garson/PA765/kolmo.htm
T =
µ
+ (Z.05 ·σ
x) (5) T = test valueµ = expected mean Z.05 = Z-value for α =.05
σ
x = standard deviation of population mean (Carter and Williamson, 1996)The sign of the t-value and the significance per variable per country display if the population mean deviates significantly positively from the test value and is perceived to be an incentive. The outcomes are tested at three significance levels, i.e. 10%, 5% and 1%. When a negative t-value is found to be significant, it is confirmed that this variable is no incentive. Note that this does not imply that the variable is a disincentive. Furthermore, the fact that it is hypothesized that variable IMPC has a negative influence on AD, does not imply that it is aimed to find a population mean that is significantly lower than the test value, i.e. for IMPC it is also hypothesized that
µ
> test value. Therefore, the questions regarding variable IMPC are proposed in a reversed way.4.4.2 Independent samples t-test
To be able to draw conclusions regarding hypothesis 7, 8 and 9, a comparison of data of the Netherlands and the UK is made. An independent sample t-test compares the mean scores of two groups on given variables. Four assumptions are required to be met in order to obtain valid results. The two samples must be chosen randomly (1) and must be independent of each other (2), the dependent variables must be normally distributed (3) and the two groups must have an approximately equal variance on the dependent variable (4) (Baarda and de Goede, 2001).
35
5. RESULTS
In order to test the internal consistency of the questions per variable, Cronbach’s Alpha is computed. The results can be found in appendix C. The coefficient for variable EC (0,651) is found to be below 0,70, entailing low consistency. Further analysis reveals that one item displays low correlation with the other four items and is therefore deleted. Although the coefficient of variable IMPC (0,754) is higher than 0,70, the inter-item correlation of one item with the other four items is low or even negative, and is therefore deleted. The internal consistency of variables RPB, RLB, EA and RC is acceptable regarding Cronbach’s Alpha and inter-item correlation.
To perform a one-sample t-test and an independent samples t-test, it is verified by use of the Kolmogorov-Smirnov Z-value whether the variables tested are normally distributed. The results can be found in appendix D. The distribution of none of the variables in the Netherlands and the United Kingdom deviates significantly from the theoretical normal distribution. This implies that all variables are normally distributed and the assumption is met.
5.1 Results one-sample t-test regarding hypotheses 1-6
Table 4: Results regarding incentives to EMS adoption decision of Dutch subcontractors
This table exhibits the outcomes of the one-sample t-test, which measures whether significant differences exist between the mean and the test value. Factors found to be significant, are of influence
on the adoption decision of subcontractors to report and reduce CO2 emissions. The second, third and fourth column display the mean, standard deviation and calculated test value. The limiting values of
the mean are 1 and 5. The four columns at the right side show the results of the one-sample t-test. These are the lower and upper bound of the 95% confidence interval, the t-value and the level of
significance. The star(s) (*|**|***) indicate the level of significance of the respective results.
95% Confidence Interval of Difference COO:
The Netherlands Mean
Std. Deviation Test Value Lower Upper t Sig. (2-tailed) EC 3,9118 ,85669 3,3418 ,129 1,010 2,743 ,014(**) IMPC 3,8088 ,95414 3,3807 -,062 ,919 1,850 ,083(*) RPB 3,2118 1,02096 3,4073 -,720 ,329 -,790 ,441 RLB 3,6118 ,78572 3,3135 -,106 ,702 1,565 ,137 EA 3,2941 ,90586 3,3614 -,533 ,398 -,306 ,763 RC 4,3294 ,38692 3,1544 ,976 1,374 12,521 ,000(***)
*|**|*** indicate significance at the 10%, 5%, 1% level, respectively
Table 5: Results regarding incentives toEMS adoption decision of UK subcontractors
This table exhibits the outcomes of the one-sample t-test, which measures whether significant differences exist between the mean and the test value. Factors found to be significant, are of influence
on the adoption decision of subcontractors to report and reduce CO2 emissions. The second, third and fourth column display the mean, standard deviation and calculated test value. The limiting values of
the mean are 1 and 5. The four columns at the right side show the results of the one-sample t-test. These are the lower and upper bound of the 95% confidence interval, the t-value and the level of
significance. The star(s) (*|**|***) indicate the level of significance of the respective results.
95% Confidence Interval of Difference COO: The UK Mean Std. Deviation Test Value Lower Upper t Sig. (2-tailed) EC 4,3500 ,54935 3,2333 ,812 1,421 7,873 ,000(***) IMPC 3,1500 1,17565 3,4993 -1,000 ,302 -1,151 ,269 RPB 3,7733 ,65843 3,2797 ,129 ,858 2,904 ,012(**) RLB 3,8000 ,64143 3,2724 ,172 ,883 3,186 ,007(***) EA 4,3467 ,66102 3,2808 ,700 1,432 6,245 ,000(***) RC 3,2000 ,53452 3,2270 -,323 ,269 -,196 ,848
37
H1: Energy costs are an incentive to subcontractors to adopt CO2 emissions reporting and reduction practices, is found to be supported for both the Netherlands and the UK, though not at the same level of significance. The means for the variable energy costs both deviate significantly positively from the test value at an alpha level of respectively 5% and 1%. This entails that energy costs are an incentive to subcontractors in both countries to adopt CO2 emission reporting and reduction practices. The incentive is slightly stronger for subcontractors in the UK. The positive relation found implies that subcontractors in both countries comprehend that a relation exists between adopting CO2 reporting and reduction practices and reduction of energy costs. While the pressure on the environment is alleviated, costs can decrease by reducing energy consumption.
H2: Implementation costs are a disincentive to subcontractors to adopt CO2 emissions reporting and reduction practices, is found to be supported for subcontractors in the Netherlands, although only at a 10% significance level. The average score deviates significantly positively from the test value, which displays that subcontractors attach value to not let costs increase due to implementation of CO2 emission related practices. This implies that implementation costs are is a disincentive towards cooperation on CO2 reporting and reduction practices with a contractor. As fuel prices are currently strongly rising, subcontractors will not want to bare any additional increases in their costs due to environmental management systems. In the UK no significance is found. The negative, insignificant t-value displays that Implementation Costs are no disincentive to subcontractors in the UK. Although no firm would want their costs to increase, these results do entail the fact that implementation costs do not keep UK’ subcontractors from adopting CO2 emission related practices.
revealed that, especially on the long term, subcontractors in the UK argue negative effects such as loss of customers can be avoided by operating in an environmentally sustainable way.
H4: Strengthening the relationship with the contractor is an incentive to subcontractors to adopt CO2 emission reporting and reduction practices, is not found to be supported for the Netherlands, though is found to be supported for the UK. As the positively deviating mean is not significant, the relation with a contractor is no incentive to subcontractors in the Netherlands to cooperate on CO2 related practices. The results for the UK display that the mean is significantly positively deviating from the test value at a significance level of 1%. Hence, subcontractors value the relationship with their contractor and are strongly influenced by this in their adoption decision. The interviews shed light on the fact that contractor TNT puts effort into elucidating that the environment is of great importance to them. With this in mind, subcontractors realize that their cooperation on measuring and reducing CO2 emissions can positively influence their relationship with the contractor. TNT in the Netherlands propagates their vision regarding the environment to a lesser extent towards their subcontractors. This causes the subcontractors to not realize they can strengthen their relationship with a contractor by collaborating on environmental issues.
H5: Environmental awareness is an incentive to subcontractors to adopt CO2 emission reporting and reduction practices, is not found to be supported for the Netherlands, though is found to be supported for the UK. In the Netherlands the mean is insignificantly negatively deviating from the test value. Subcontractors do not attach value to operating in an environmentally sustainable way as they are not intrinsically motivated by the wellbeing of the environment. The significant positive t-value found in the UK at a significance level of 1%, implies that environmental awareness is a very strong incentive to subcontractors to adopt CO2 related practices. Subcontractors realize their operations impact the life of future generations. Many subcontractors already display CO2 reduction practices and are well aware of the opportunities to realize this.
