Facilitating sustainability control in SMEs through the implementation of an environmental management system

Abstract

This paper explores the characteristic type and use of sustainability control in small to medium sized enterprises (SMEs) through the implementation of an environmental management system, formally certified to ISO 14001. Through a qualitative study of 18 SMEs and seven auditors operating in Northern Europe, the paper draws on the theoretical framework of sustainability control as an analytical tool to explore the interplay between the formal design of control instruments and the operational use of these in practice for the studied SMEs. The study finds that both the formalised control instrument design and operational use of these controls by employees are characteristically formal and procedure based for ISO 14001 certification. Nevertheless, environmental management in daily tasks is also achieved by engaging non-managerial employees through their passionate interests and intrinsic motivations. In extension to previous sustainability control research, the findings emphasise that local level operator knowledge is not only the product of formalised control system design, and that external factors are also important for guiding employee behaviour in situ. This proposes that daily working tasks are achieved through a combination of organisational and extra-organisational individual values and beliefs about sustainability. Particularly, engaging non-managerial employees in SMEs through a combination of extrinsic and intrinsic rewards appears valuable for sustainable futures. Therefore, in addition to compliance-driven controls, SME owner-managers should ensure supportive structures where employees are given the autonomy to be creative and innovative.

The means to substantive performance improvements – environmental management control systems in ISO 14001– certified SMEs

“…They have the intended effect of making targets understandable and/or relatable to individual employees at the operational level in the SMEs through building on extrinsic and/or intrinsic motivations. This contrasts previous research which suggests that target-setting can hinder the intrinsic motivation of employees towards meeting environmental objectives (Virtanen et al , 2013), whilst building upon recent sustainability control research that suggests intrinsic factors are increasingly important for system success (Grubnic et al , 2015; Johnstone, 2021).…”

“…While who conducts the internal audit and why are not the focus of this study, participation in the internal audit may be the result of both structural [i.e. assigned roles and work tasks to be part of the audit and/or personal interpersonal desire to be part of the auditing process through sharing problems and solutions (Johnstone, 2021)] factors.…”

“…Through its amended clauses, ISO 14001 therefore aims to embed the “spirit of the management system” throughout the organisation and the people within it. Johnstone (2021) furthers that the professional and moral input of non-managerial operators is vital for EMS success. Here, informal controls, in terms of open communication between organisational members sharing both problems and solutions (Laguir et al , 2019), are important.…”

“…This growth arguably stems from critiques on the ability of reporting and disclosure studies, prevalent in social and environmental accounting research, in addressing internal sustainable changes (Cho and Patten, 2013; Milne and Gray, 2013). It may also come down to the increasing adoption of international frameworks, guidelines and reference standards that require annual substantive performance improvements (Johnstone, 2021).…”

“…ISO 14001) in the development of sustainability controls in SMEs is an emerging stream of research. Some find that the implementation of a certifiable environmental management system (EMS) leads to increasingly standardised, documented and compliance-driven controls in SMEs, which are primarily formal and/or prescriptive in nature (Groen et al , 2012; Johnstone, 2021). Framing EMS–SME research through control system frameworks is important for various reasons.…”