Environmental Management and Profitability

Professor Hannelie Nel is a Senior Engineer with the BIE Group, Inc and serves as Extraordinary Associate Professor in the Faculty of Engineering North-West University, South Africa. She has 17 years experience in both industry and academia; and her work spans strategy development, business management systems, quality costing and innovation.

International research indicates that environmental management leads to profitability and competitive advantage in a firm. The lack of supporting empirical evidence begs the question whether environmental management does indeed increase a firm s profitability. The study delineates environmental management and profitability and examines the causal relationship between the two factors. Data is collected from ten industries in South Africa and the research model tested using confirmatory factor analysis and path analysis with latent variables. The model supports the hypothesis that environmental management increases a firm's competitive advantage. Environmental management, however, is limited to the minimization of natural resource consumption. The work is informative to executive and senior managers responsible for the implementation of environmental management systems; to economists, industrial and chemical engineers; and students in the field of statistics.