Many people think that when a company adopts environmental practices it negatively affects its bottom line. A new study shows the opposite. Employees of companies which adopt environmental practices are 16 percent more productive, according to the study. The study, conducted by UCLA professor Magali Delmas and Sanja Pekovic from France’s University Paris-Dauphine, is the first on how a company’s environmental commitment affects its productivity. Titled, Environmental Standards and Labor Productivity: Understanding the Mechanisms That Sustain Sustainability, the study was published online on September 10 in the Journal of Organizational Behavior.
For the study, Delmas and Pekovic collected data from a survey of employees at 5,220 French companies, and then randomly selected two employees from each company. They identified companies as “green” that adopted international standards and eco-labels such as “organic” or “fair trade.”
Delmas didn’t expect such an increase in productivity. “It’s truly a big difference between firms that have adopted these practices and firms that haven’t,” Delmas said. “I expected a contrast, but not such a strong, robust jump in productivity.”
Calling it a “virtuous cycle,” Delmas says companies “attract the best people” and then adopt sustainable practices, which leads to attracting “even better people, and this continues to feed itself.” Companies which adopt sustainable policies “tend to be better.” Delmas speculates that “it could be they were better to start with, but there are mechanisms built into these policies that mean they continue to get better.”
Delmas sites two examples: The sports clothing company, Patagonia, known for being a company that practices sustainability, receives an average of 900 applicants for every job opening. At the Ambrose Hotel, a boutique hotel in Santa Monica, CA, employees were happier and healthier after adopting “wide-ranging sustainability measures.” For example, housekeeping workers reported less headaches, allergies and sick days after switching to non-toxic cleaning products.
“Adopting green practices isn’t just good for the environment,” Delmas said. “It’s good for your employees and it’s good for your bottom line. Employees in such green firms are more motivated, receive more training, and benefit from better interpersonal relationships. The employees at green companies are therefore more productive than employees in more conventional firms.”
Delmas hopes that managers look at the study and “see the potential for their firms and employees.” She adds, “Socially responsible investors say green practices are a proxy for good management. It’s also important for regulators to see that some voluntary practices can have beneficial effects.”
Photo: Flickr user, aflcio