Is Environmental Governance Substantive or Symbolic? An Empirical Investigation
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The emergence of environmental governance practices raises a fundamental question as to whether they are substantive or symbolic. Toward that end, we analyze the relationship between a firm’s environmental governance and its environmental management as reflected in its ultimate outcome, environmental performance. We posit that substantive practices would bring changes in organizations, most notably in terms of improved environmental performance, whereas symbolic practices would portray organizations as environmentally committed without making meaningful changes to their operations. Focusing on a sample of environmentally sensitive firms, results are consistent with environmental governance mechanisms being predominantly part of a symbolic approach to manage stakeholder perceptions on environmental management, having little substantial impact on organizations. Statistical analyses show mostly that there is no relation between environmental governance mechanisms and environmental performance, measured in terms of regulatory compliance, pollution prevention, and environmental capital expenditures. However, there is some indication that environmental incentives are associated with pollution prevention. Interviews with corporate directors shed further light on these results by underlining that environmental governance mechanisms are employed at the board level to protect the organization from reputational and/or regulatory harm, but are not necessarily intended to proactively improve environmental performance.
KeywordsEnvironmental performance Environmental regulation Governance Substantive management Symbolic management
Chief Executive Officer
Corporate Environmental Performance Database
Environmental capital expenditure
Generalized least squares
Ordinary least squares
Property, plants, and equipment
Research and development
Resource Conservation and Recovery Act
Return on assets
U.S. Securities and Exchange Commission
Standard Industrial Classification
U.S. Sarbanes–Oxley Act
Socially Responsible Investing
We would like to thank Emilio Boulianne, Nola Buhr, Denis Cormier, Giovanna Michelon, Den Patten, and participants in parallel sessions of the 2012 Annual Meeting of the American Accounting Association, the 34th Congrès de l’Association Francophone de Comptabilité, the 33rd European Accounting Association Annual Congress in Istanbul, the 21st International Congress on Social and Environmental Accounting Research in Saint Andrews, the 2010 and 2011 North American Congress on Social and Environmental Accounting Research (CSEAR Summer Schools in North America) in Orlando and Montreal for their comments and suggestions on previous versions of the paper. Financial support from the Social Sciences and Humanities Research Council of Canada, the Ordre des Comptables Agréés du Québec, the Lawrence Bloomberg Chair in Accountancy (Concordia University), the RBC Professorship in Responsible Organizations (Concordia University), and the École de comptabilité and the Faculté des Sciences de l’Administration of Université Laval is gratefully acknowledged. Also special thanks to our informants who generously donated their time for this study.
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