Determinants for the adoption of ISO 14001: the case of Portuguese firms

Abstract

Climate change and the consequent increase in society's environmental awareness have triggered new forms of pressure on companies and the way they face environmental sustainability. Hence, either by legal imposition or by other types of pressures, companies must incorporate the environmental impact of their activities into their responsibilities, without compromising their financial viability. Environmental certification is a common procedure for firms to improve their environmental performance, as well as increase their reputation and image. Notwithstanding, determinants for environmental certification are still poorly understood. Therefore, the present study aims to assess, from a sample of 1,917 Portuguese companies of various sectors and dimensions, the influence of some factors on the probability of a firm adopting the ISO 14001 certification. Results showed that the different variables used as measures of profitability of the firm have a positive impact on its probability of adopting ISO 14001. Other factors with the same effect include the participation of the firm in the stock market and the firm's size. This can be justified by a greater need for large firms to improve their reputation or to have access to some markets where this kind of certification is an obligation. However, it is also possible to observe a certain variation in results depending on the measures of profitability used. Another conclusion is that the fact that a firm is an exporter does not influence its probability to be certified in any of the specifications, something contrary to what has been found in the literature.

Keywords

• environmental sustainability
• environmental certification
• iso 14001
• firms' behavior
• binary logit estimation