Do Corporate Social Responsibility Practices Raise Employee Productivity?

A professor at UCLA’s Anderson School of Management and a researcher at the University of Paris-Dauphine have found that companies which follow international environmental standards have employee productivity that is 16 percent higher than companies which don’t.

The study, called, 'Environmental Standards and Labor Productivity'  tested three hypotheses:

Hypothesis 1: The adoption of environmental standards is associated with greater labor productivity.

Hypothesis 2: Training mediates the relationship between the adoption of environmental standards and greater labor productivity.

Hypothesis 3: Interpersonal contacts mediate the relationship between the adoption of environmental standards and greater labor productivity.

The authors, Magali A. Delmas of UCLA and Sanja Pekovic of the University Paris-Dauphine, looked at a 2006 employee-employer survey of 5200 private French firms with 20 or more employees, and compared the answers against a database of companies that had received ISO 14001 certifications. They threw in another database to help determine employee productivity.

ISO 14001, says Wikipedia, “is a family of standards related to environmental management that exists to help organizations (a) minimize how their operations (processes, etc.) negatively affect the environment… (b) comply with applicable laws, regulations, and other environmentally oriented requirements, and (c) continually improve the above.” The standards are set by the ISO, but the audits and certification are performed by third-parties.

Delmas and Pekovic controlled for age, gender, wages, education, and a number of other variables.

When all the models were completed and the math was done, Delmas and Pekovic found that the green firms are positively associated with markedly higher labor productivity than non-green firms. Likewise, the study demonstrated that when companies which adopted environmental standards of the sort measured in ISO 14001, were associated with greater employee training and interpersonal contacts.

Those of you with a logical frame of mind are probably think, ‘Sure, this is fine, but does it prove that adopting ISO 14001 standards will make a company more productive?’ The answer is no.

It could certainly be that better managed companies are more environmentally aware and more likely to manage for employee productivity. That is, it’s too soon to say which way the causation arrows are pointing.

That said, even though causation hasn’t been shown, part of being a manager is dealing with incomplete and imperfect information.

In fact, this may represent a kind of Pascal’s wager.

Blaise Pascal was a 17th century French mathematician and rationalist, who reasoned that there was more to be gained from living as though God existed than living as if he didn’t. That's Pascal at the left.

If companies adopted ISO 14001 standards hoping for increased employee productivity, but got none, the world as a whole is still better off.

Labels: , , , , ,