Economic considerations as key drivers for EMS adoption have been identified in many industry sectors (Miles et al. 1999; Florida 1999; Fresner 2000; Corbett and Kirsch 2000; CEC 2005). Cost cutting achieved from recycling or input reductions (Corbett and Kirsch 2000), can lead to increased profitability (Florida 1999), enhanced revenues (CEC 2005) and other economic benefits (Bird and Bushman 2005) as a consequence of EMS implementation. Improvement to overall business performance and efficiency (Florida 1999; Strachan et al. 2003) achieved by enhancement of internal business processes (Cassells et al. 2008) is another commonly reported outcome of EMS implementation.
Marketing considerations such as the prospect of gaining premium prices, market access, additional market share or other competitive advantage form further financial considerations for EMS adoption (see for example, Biondi et al. 2000; Corbett and Kirsch 2000; Gunningham 2002; and Strachan et al. 2003). An EMS can provide data on specific environmental outcomes for use in marketing, can assist in
identifying market-focused environmental risks, and manage specific actions to deal with market-relevant environmental issues. However, Strachan et al. (2003) observed that over time, any market advantage from EMS use will diminish, as more and more businesses start to implement an EMS, and expectations grow that a business will have an ISO 14001 certified EMS, simply to remain in the market.
The use and number of certification schemes for agribusinesses is growing rapidly (Albersmeier et al. 2009; Gawron and Theuvsen 2009). In the past, these often had a focus on food safety and food quality, however, the recognition and reward for environmental management, as part of the overall ‘quality picture’ has recently grown. Gawron and Theuvsen (2009) in their discussion of the use of certification schemes in the European agri-food sector noted that certification acts as a ‘quality signal’ and can reduce buyer uncertainty regarding quality. In the same way, the use of EMS in agriculture is seen by many to assure consumers that environmental matters have been addressed, theoretically increasing the attractiveness of produce from farms with an EMS. Schulman et al. (2000) noted that the use of ISO 14001 (with its focus on record keeping and a whole-system approach) provided the capacity to implement a life-cycle auditing regime more easily. They believed that this would support the development of eco-labels and thus assist in product
promotion and marketing. Anthony (1996) reported that customer pressure was a driver for the early UK attempts to implement EMS on farms. Marketing advantages specifically accruing to EMS adopters in agriculture have also been considered by Toyne et al. (2004), Cary et al. (2004), Twyford-Jones et al. (2005), Pahl et al. (2007), Sallur et al. (2007), Seymour et al. (2007) and Cassells et al. (2008).
ISO 14001 certification itself, however, does not provide a product labelling scheme. At present, there are few mechanisms that are well understood by consumers that allow for product differentiation for goods produced using an EMS. The distinction between EMS use and marketing goods was not made in the studies of Cary et al.
investigating EMS adoption, in reality assessed the willingness of consumers to pay a premium for environmentally assured products. Thus, the outcomes of these studies reflect willingness to pay for ‘green’ goods, rather than willing to support
management practice changes amongst farmers.
Market and/or customer location is another factor that appears to operate in the decision to adopt ISO 14001 (Anton et al. 2004) and is often related to market access. Several authors (Corbett and Kirsch 2000; Corbett and Kirsch 2001; Bansal and Hunter 2003; Potoski and Prakash 2004; Chang and Kristiansen 2006) all reported links between EMS certification and product destination and/or export market propensity. Mech et al. (2003) and Pahl et al. (2007) noted that Australian producers regarded the international recognition of ISO 14001 as an attractive feature in EMS adoption. Similarly, Knowles and Hill (2001) reported access to EU wine markets as a major driver for South African wineries engaging in EMS adoption. Anton et al. (2004) noted that ‘firms that produce final goods and are in closer contact with consumers are likely to feel greater pressure or benefit more from improving their environmental friendliness”, with Halkos and Evangelinos (2002) reporting a similar finding. However, Grolleau et al. (2007a) reported that customer location was only ‘almost significant’ as a factor in adoption decisions. For
agriculture, it is likely that customer location could act in two ways. Long distance consumers are more likely to rely on credible verification processes such as
certification to recognised standards to provide ‘assurance’ of sustainable practices, while local consumers are more likely to be interested in the ‘green story’ that an EMS can support and verify through assessment against stated objectives and targets, and monitoring data.
Another market consideration is that of maintaining EMS throughout the supply chain. Large customers (especially multi-national businesses and global
corporations) may require their suppliers to implement an EMS as a way of management of the overall environmental impacts (Miles et al. 1999; Biondi et al. 2000) and corporate image of their business. This has been the case for businesses operating in Australia (Gunningham 2002), Mexico (Wells and Galbraith 2000), the UK (Hillary 1997; Strachan et al. 2003), the USA (Andrews et al. 2001; Florida and Davison 2001; Nash and Ehrenfeld 2001; Gunningham 2002) and Sweden
use of an EMS can be “a precondition for contractor bids to be considered” in both the USA and Canada for works commissioned by governments. Strachan et al. (2003), in their study of gas and oil companies in the UK, observed that use of ISO 14000 had become a de facto requirement for remaining in business. Anton et al. (2004) also noted the financial benefits that accrued from the potential to reduce future liabilities, often achieved through the reduction of risk factors (CEC 2005). 5.2.2 Peer pressure and industry stewardship
Adoption decisions have been reported to be influenced by peer pressure in some cases, in response to norms set by other firms in the same industry (Florida and Davison 2001; Nash and Ehrenfeld 2001; Grolleau et al. 2007a; Black 2010) or by co-located businesses (Ammenberg et al. 2000). The CEC (2005) and Grolleau et al. (2007a) reported that in some cases, use of EMS was a requirement of membership for various trade associations. Ammenberg et al. (2000), in their study of 30 SMEs in Sweden, observed that working with peers provided a cost-effective mechanism to develop, implement and maintain an EMS, and provided the basis for both business and environmental results in a wider area than could be achieved by individual businesses. Bird and Bushman (2005) reported the significant role that farm organization leadership can play in adoption of EMS and EMS-like programs. 5.2.3 Previous experience with management systems
Corbett and Kirsch (2000) also observed that previous use of ISO 9000 often meant that many of the systems elements for ISO 14001 had already been addressed, smoothing the development of an EMS. Corbett and Kirsch (2001), Vastag (2004), and Grolleau et al. (2007a) all reported that previous ISO 9001 certification was often a good predictor of ISO 14001 use and/or certification status. Vastag (2004, p.267) suggested in part this was due to a potential reduction in EMS establishment costs, as many of the elements of ISO 9001 are common to ISO 14001, providing “companies a relatively low-cost route to better corporate image”, thus providing a competitive advantage. Farmers who had previous experience with prior formal environmental management experience were more likely to use EMS (Bird and Bushman 2005). In contrast, Kirkland and Thompson (1999) and Grolleau and Thomas (2007) remarked that the commitment to EMS can wane over time, as
move through the process. Thus, it appears that, in some cases, previous systems experience may serve as an encouraging factor for EMS adoption, while in other circumstances, prior experience may act as a disincentive. It is likely that positive past experience and outcomes will encourage, and negative past experience discourage, EMS adoption.