Green practices as a path towards the sustainability: Evidence from Portuguese companies

Alves, Wellington; Silva, Ângela; Rodrigues, Helena Sofia Article Green practices as a path towards the sustainability: Evidence from Portuguese companies Business Systems Research (BSR) Provided in Cooperation with: IRENET - Society for Advancing Innovation and Research in Economy, Zagreb Suggested Citation: Alves, Wellington; Silva, Ângela; Rodrigues, Helena Sofia (2020) : Green practices as a path towards the sustainability: Evidence from Portuguese companies, Business Systems Research (BSR), ISSN 1847-9375, Sciendo, Warsaw, Vol. 11, Iss. 2, pp. 7-20, https://doi.org/10.2478/bsrj-2020-0012 This Version is available at: https://hdl.handle.net/10419/318724 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ 7 Business Systems Research | Vol. 11 No. 2 |2020 Green Practices as a Path towards the Sustainability: Evidence from Portuguese Companies Wellington Alves Escola Superior de Ciências Empresariais, Instituto Politécnico de Viana do Castelo; ALGORITMI Research Centre, University of Minho; Escola de Engenharia, Depto Produção e Sistemas, Campus de Azurém, Portugal Ângela Silva Escola Superior de Ciências Empresariais, Instituto Politécnico de Viana do Castelo; Centro de Investigação em Organizações, Mercados e Gestão Industrial (COMEGI), Lusíada University, Portugal Helena Sofia Rodrigues Escola Superior de Ciências Empresariais, Instituto Politécnico de Viana do Castelo; Center for Research and Development in Mathematics and Applications (CIDMA), University of Aveiro, Portugal Abstract Background: In the last years, the concept of sustainability has been receiving global attention from academics, the public sector and practitioners. The high level of industrialization has contributed to the increase of environmental impacts on the environment and the society. To give a sustainable answer to the industrial sector, more strategies aimed at reducing the environmental and social impacts should be considered. Objectives: This research aims to evaluate the level of environmental practices in a set of companies from the northern region of Portugal. Methods/Approach: In order to achieve the objective of this research, several steps were taken, and approach is mainly based on an online questionnaire administered in a set of companies. Results: The initial results show that companies are progressing when it comes to the implementation of measures and practices related to sustainability. Conclusions: The study resulted in suggestions for consulted companies, namely the need for effective mechanics to ensure compulsory but expedite environmental procedures along with procedures control, which is a key factor in ensuring sustainable and green practices. Keywords: green practices, sustainability, Portugal, statistical analysis JEL: L16 Paper type: Case Study Received: Jan 30, 2020 Accepted: Jul 6, 2020 Citation: Alves, W., Sila, Â., Rodrigues, H. S. (2020), “Green Practices as a Path Towards the Sustainability: Evidence from Portuguese Companies”, Business Systems Research, Vol. 11, No. 2, pp. 7-20. DOI: 10.2478/bsrj-2020-0012 8 Business Systems Research | Vol. 11 No. 2 |2020 Introduction At the heart of sustainable development, is the need to build-up initiatives, measures, assessment and monitoring production processes that may cause environmental, social and economic impacts on society. The contribution to the reduction of these impacts could increase the prominence of sustainability in the industrial sector (Khandokar et al., 2009). Over the last decade, the concept of sustainability has been receiving global attention from academics, public sector and practitioners. Yet, the industrial sector has a long path to go on achieving sustainable process in their industrial processes (Varela et al., 2019). In response to the urgent for sustainability, strategies for environmental and social impacts must be considered. According to OECD (2010, p.4) sustainable strategies are usually based “on the identification and evaluation of criteria that expose potential impacts on the three dimensions of sustainable development, namely, social, economic and environmental”. Towards sustainability, sustainable practices have been increasing attention as a powerful driver to achieve sustainaible development. These practices are related to the development of initiatives and policies to guide companies to improvements in their operations. Despite the relevance of the integration of sustainable practices into traditional operations to increase sustainable performance, it is still a barrier for small and medium-sized companies. It is the case of Portugal, the country is characterized by a large amount of micro, small and medium enterprises (SMEs). Over the last years these companies have increasing awareness of the needs to implementation of sustainable strategies. However, there are still many SMEs which lack resources and capabilities or suffer from inertia in this field, it has been contributing to discourages the intentions to develop sustainable practices. The case of companies operating in the Northern region of Portugal is particularly relevant since studies showing (see Pereira & Leitão, 2013; European Commission, 2020) that small-scale companies operating is a major issue in the region (PORDATA, 2020). Despite the contribution of these companies for the region, the implementation of sustainable practices persists as a challenge task for these companies (Moreiras, 2010). Connecting company's activities to their environmental, social and economic impacts, rise the need to create sustainable strategies to decrease its impacts. This paper aims then to answer the following question: Which environmental practices have been adopted by companies operating in the northern region of Portugal? Then, the research aims to analyze the implementation level of practices related to environment in a set of companies from the North of Portugal. To accomplish the objective of the study, it has conducted a review of the relevant literature relevant to sustainability and environmental practices. Then, the case of companies operating in the Northern region of Portugal was taken as a sample. In summary, taking into consideration that researches addressing sustainable practices in SMEs in the Northern region of Portugal have not been addressed, this paper aims to contribute to new insights on how these companies have been implementing sustainable practices towards sustainability, as well which practices are already implemented. The paper is organized into five main sections. Pertinent literature focusing on the relevance of the research, discussing sustainability and environmental practices was conducted in Section 2. Then, the research design and methodology chosen are presented in order to assess the environmental management practices in the North of Portugal, in Section 3. Section 4 presents and discusses the main results; highlighting aspects such as enterprise category (micro, small, medium or large) environmental 9 Business Systems Research | Vol. 11 No. 2 |2020 policies were analysed. Section 5 presents conclusions and identifies directions for future works. The paper has been presented at SOR 2019 conference (Silva et al., 2019). Literature overview As one of the key document within the scope of sustainability the Bruntland Commission Report defines sustainable development as the capability of the presentday generations to meet their needs without compromising the capacity of the forthcoming generation achieving their needs (World Commission on Environment and Development, 1987). The discussion around sustainability are mainly integrated within companies that already perceived sustainability as important aspects to be taken into account ias a strategy to improve performance (Alves et al., 2018). In the last few years, sustainability has been seen as a key subject for organizations worldwide; it has been supporting industries towards addressing economic, social and environmental strategies int their production processes, towards sustainable practices (Ching et al., 2014). Yet, environmental practices have been posted as a key driver for organizations to the development of sustainability. For instance, a work developed by Rashidi and Cullinane (2019) has investigated the role of sustainability on improving operational logistics performance of companies from diferrent countries. Also, Dey et al. (2011) investigated the development of initiatives towards sustainability in the field of supply chain operations, the work identified opportunities for companies regarding the accomplishment of sustainable practices in logistics. In this context, due to the complexity of supply chains, sustainability has been jumped in the green agenda for all industrial sectors. The need for incorporating sustainable practices focusing on, for instance, the reduction, or even elimination of the negative impacts generated by products and operational processes on the environment has become imperative for all companies worldwide (Bahr and Sweeney, 2019). The synergy between green practices and sustainability has been driving forces to implementation of sustainable practices in several industrial sectors. The implementation of these initiatives has the potential to increase sustainable results in in industries (Dües et al., 2013). According to Thorlakson et al. (2018) global supply chain plays a critical role in pressing environmental, social and economic stress struggles identified by the United Nations’ Sustainable Development Goals (SDGs). The 17 Sustainable Development Goals (SDG) develop by the United Nations, which aims at fostering global sustainable development through economic, environmental and social level, also established that thre is a need for call attention of supply chains to develop sustainable practices, it due to its considerable influence on sustainable development (Thorlakson et al., 2018; Brockhaus et al., 2019). Yet, environmental and social impacts, such as increasing exhaustion of resources, environmental pollution and global warming are increasing the concerns of government, communities and companies to develop actions towards reductions of ecological and social problems (Yildiz Çankaya & Sezen, 2019). Responding to calls from the global community, industries have been paid to the environmental impacts originated from their processes and products. Yet, over the last decades, the connection between sustainable development and green business, has gained increasing importance in the literature in the last years. Nonetheless, the dialogue about environmental strategies in small-medium size industrial activities has not yet gained ground. For instance, the work developed by Aldakhil et al., (2018) examines the key determinants of integrated supply chain management for green business growth for BRICS countries (Brazil, Russia, India, and China), considering some 10 Business Systems Research | Vol. 11 No. 2 |2020 aspects such as economic growth and environmental policies, the worked showed that those companies (small-medium size industrial) face several challenges, suc as lack of qualified works and financial support when implementing environmental practices. According to Sharma (2016) green practices serve as a springboard to develop environmental initiatives towards sustainability, also to contribute to competitive advantage for the industrial sector. The authors defend that sustainability has been one of the most important issues for the manufacturing and development of new products. The reduction of environmental impact has been considered as one of the key principle for governments and society (Alves, et al., 2018). It has led companies to go green and reduce the environmental effect caused by its operations, as well meeting sustainability principles (Bathmanathan & Hironaka, 2016). As the resources depletion has taken place in the agenda of the modern societies, to meet the society needs but at the same time to minimize the environmental and social impact caused by the industrial sector, it is imperative to companies develop initiatives focusing on green and eco-friendly strategies (Pradeep & Kuckian, 2017). Due to the possibility to support companies to address environmentally friendly strategies on producing goods and services, green initiatives have been increasing attention within industrial sector. According to Bathmanathan and Hironaka (2016), the use of green practices such as environmental management, development of eco-friendly products, implementation of environment policy and implementation of certification ISO 14001, are some examples of practices which have been supporting companies to shift their business, towards the sustainable agenda. The concept of green business is not new, but over the last decade has led to the emergence of the development of green practices to meet sustainability. These practices include different areas such as ecological, social and economic. There are several practices that can be followed in a green approach, for instance, 4R’s that focus on Reduction, Reuse, Recycle and Recovery; energy saving; green packing; eco-cleaning; eco-labelling; use of renewable resources are examples of green practices adopted by companies towards sustainability (Ahmad, 2016; Čekanavičius, Bazytė & Dičmonaitė, 2014; Ghisellini et al., 2016). In spite of all these concerns, a key challenge related to sustainability in the industrial sector remains to the difficulty of applying this concept on their activities, and at the same time, sdemonstrate to managers its contribution for the company, and also for the environment and social aspects. Thorlakson et al. (2018) defend that despite companies have been seen as a source of environmental problems as a result of their production processes, the development of initiatives towards a green supply chain emerges as an alternative to build environmental-friendly practices in the context of the industrial sector. Under such a background, this paper aims to investigate the level of environmental practices implemented by a set of Portuguese companies, which could contribute to understand the actual scenario of sustainable practices in these companies. Methodology In order to achieve the objective of this research several stages were considered. Figure 1 summarizes the main stages carried out in this research, namely (1) an analysis of the current literature on green and sustainable practices; (2) based on the literature review a questionnaire was designed to addressing issues related to sustainable practices; (3) a case study was chosen as strategy to asses a set of companies focusing on the 02 companies consulted through an online questionnaire (the sample was defined for convenience, due to time and budget constraints) (4); then a 11 Business Systems Research | Vol. 11 No. 2 |2020 statistical analysis was performed, and the main results draw, finally conclusions and directions for future works are presented (5). Figure 1 Methodological approach Source: Authors’ work This research was inspired in a previous work developed by Jabbour et al., (2013), where the authors present a survey to asses relationship between lean and green practices in the automobile industry. Here, this research focus on the use of a quantitative method, firstly to asses environmental practices adopted by companies operating in the northern region of Portugal and secondly, to assess its level of implementation. Then, aiming to validate the questionanrire, a fisrt attempt was made, and a pretest with 10 companies was carried out. Then, an initial sample was defined by convenience and comprised by 700 companies. After screening the intial sample, a an online questionnaire was sent for the 700 companies of our database, and 102 answered with the completely filling, it was taken as a final sample for this research, which mean that the percentage rate is near of 15%. Table 1 Practices of "Environmental Management" analyzed Item Description EM1 Clear environmental management policy EM2 Environmental training for all employees EM3 3Rs (Reduction, Reuse and Recycling applied in water, electricity and paper) EM4 Development of products with lower environmental impacts EM5 Development of productive process with lower environmental impacts EM6 Selection of suppliers based on environmental criteria EM7 Environmental management system (ISO 14001 or others) EM8 Voluntary disclosure of environmental performance information Source: Authors’ work The questionnaire is divided into two parts: the first one related to the companies' characterization, with questions related to the dimension of the company, number of 12 Business Systems Research | Vol. 11 No. 2 |2020 employees; and the second one concerning to measurement of environmental practices as described in Table 1. For the second part, a five-point Likert scale was adopted as a tool to assess the company’s performance. The scale comprises five levels of agreement, ranging from (1) “Not implemented” to (5) “Completely implemented”. The main findings in this research are discussed in the next chapter. Statistical analysis has been conducted using IBM SPSS version 24. Results and discussion Preliminary analysis The proposed questionnaire was developed through the Google Docs platform, in order to be available for the selected companies answer it. The sample (see Table 2) comprise 32.4% of micro-companies, 25.5% of small companies, 16.7% of medium size, and 25.5% of large companies. Regarding the number of works associated, the results showed that that mostly of the consulted companies have more than three workers. The results also showed that a great number of companies had a turnover (by year), more than 5 million euros (36.3%). Table 2 Technical record of participating companies Dimension on the company (number of employees) % Number of employees associated with logistics % Turnover (in euros) % Micro (< 10) 32.35 [0;3) 34.31 [0;100k) 13.7 Small (10-50) 25.49 [3;6) 20.59 [100k; 250k) 10.8 Medium (50-250) 16.67 [6;9) 5.88 [250k 500k) 9.8 Large (>250) 25.49 [9;12) 9.80 [500k; 1M) 10.8 [12;15) 1.96 [1M; 5M) 18.6 15 or more 27.45 5M or more 36.3 Source: Authors’ work Regarding environmental impacts, it was one of the most important issues related to the production process in the industrial sector. In this direction, green practices are considered as key instruments to ensure the minimization of these impacts (Alves et al., 2019). The results presented in Table 3 summarizes the descriptive statistics associated with eight environmental practices proposed in this research. Results showed that all items were answered using the entire scale, meaning that the level of implementation of the environmental practices from the consulted companies are presented in different stages. These values are in line with the results obtained by Jabbour et. al (2013), where the measures less implemented are the last ones. The results also showed that the lowest averages are related to environmental management system (EM7) and the selection of suppliers based on environmental criteria (EM6). These values can be explained by the fact that these measures imply more financial for business. The standard deviation does not present great discrepancies between items. Through the alpha analysis of Cronbach, it was obtain values greater than 0.7, which indicates a good internal reliability of the questionnaire. 13 Business Systems Research | Vol. 11 No. 2 |2020 Table 3 Descriptive statistics and reliability for environment management practices Item Min Max Mean St. Dev. Sk Kurt Cronbach’s alpha EM1 1 5 3.45 1.087 -0.698 0.031 0.895 EM2 1 5 3.28 1.146 -0.540 -0.393 EM3 1 5 3.40 1.017 -0.649 0.262 EM4 1 5 2.77 1.342 -0.154 -1.411 EM5 1 5 2.78 1.302 -0.193 -1.265 EM6 1 5 2.51 1.391 0.193 -1.416 EM7 1 5 2.45 1.558 0.455 -1.406 EM8 1 5 2.61 1.415 0.236 -1.330 Source: Authors’ work Following this analysis, the results showed in Figure 2 present the intervals of 95% of confidence for the average answers of the companies. The circle refers to the mean value, and the interval represents 95% of the probability that the calculated interval from some future experiment encompasses the true value of the mean of the population. These results confirm the results from Table 3, showing that the first measures have a higher level of implementation, while the latter is still starting. Figure 2 Confidence interval for environment management practices Source: Authors’ work Correlation and Principal Component Analysis Table 4 shows the correlation between environmental practices. For the cases of EM4 and EM5, they achieved the highest correlation coefficient (0.816). These relationships are considered as important measures for companies, it because if the company take into account environmental concerns in the design of product/service, the production process could take into account green practices. For the case of EM1 and EM2, the results also show a high correlation (0.778). It can be justified due to the fact that these companies have a clear environmental policy in place, also because the employees are involved in the company’s policies. For the environmental practices, 14 Business Systems Research | Vol. 11 No. 2 |2020 the results showed that in order to develop strategic/finance policies, including green practices, it is considered as an important dimension to be addressed by companies,. Table 4 Matrix correlation between environment management practices Item EM1 EM2 EM3 EM4 EM5 EM6 EM7 EM8 EM1 1.000 EM2 0.778 1.000 EM3 0.578 0.674 1.000 EM4 0.403 0.467 0.553 1.000 EM5 0.468 0.565 0.619 0.816 1.000 EM6 0.436 0.548 0.497 0.635 0.662 1.000 EM7 0.621 0.570 0.390 0.385 0.380 0.372 1.000 EM8 0.425 0.478 0.558 0.511 0.620 0.615 0.350 1,000 Source: Authors’ work In this section, a Principal Component Analysis was carried out (see Table 5). Table 5 Principal Component Analysis Item Communalities Loadings (Varimax rotation) KMO Measure Bartlett’s test Component 1 Component 2 EM1 0.837 0.256 0.878 0.855 0.000 EM2 0.811 0.404 0.805 EM3 0.633 0.594 0.530 EM4 0.759 0.848 0.201 EM5 0.833 0.873 0.266 EM6 0.692 0.788 0.268 EM7 0.670 0.169 0.801 EM8 0.617 0.738 0.269 Source: Authors’ work The Kaiser-Meyer-Olkin (KMO) and the Bartlett sphericity test indicated that the adequacy of the data for the accomplishment of the factorial analysis (Kline, 2011), since the first result is close to 1, and the Bartlett test lead to the significance level lower than 0.05. Regarding the communalities (after extraction), the analysis showed all variables have values greater than 0.5, which is recommended by Field (2005). Only the first two components have eigenvalues over 1.00, explaining over 70% of the total variability in the data. The factor loadings were greater than 0.5 for all items, suggesting a good representation of their attributes. Analysing the loadings of each component, it is possible to confirm that items EM4, EM5, EM6 and EM8 are best represented by component 1, that can call by product and process issues. The items EM1, EM2 and EM4, related to training of the employees. The item EM3 is equal represented in both components; this could be explained by the fact that the 3Rs policy can be considered as part of the environment management system already settled, meaning that they have the system but could not be certificated by the standard ISO 14001.