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Environmental standards and labor productivity: Understanding the mechanisms that sustain sustainability

Firms that have adopted environmental standards such as ISO 14001 have significantly more productive workers than other firms. This is the key finding of this paper published this month in the Journal of Organizational Behavior. The paper, which is based on a study of 5220 French firms and their employees, also demonstrates that employees at companies following environmental standards tend to be better trained and have a greater degree of interpersonal contact at work, factors that can improve labor productivity.

I’ve written before that some companies believe their embrace of sustainability helps engage employees in the company’s broader mission. Firms see a prominent sustainability program as an aid to employee recruitment and retention and a way of enhancing employee productivity. Indeed, the paper found that companies that had adopted environmental standards enjoyed labor productivity 16% to 21% greater than companies that had not implemented such standards. Why do green companies have more productive employees? The study points out that implementing environmental standards requires an investment in employee training, which tends to lift productivity. It also notes that environmental management projects and processes often involve cross-functional teams and require collaboration of employees at different levels in the corporate hierarchy. Increased communication among workers with diverse capabilities can lead to knowledge transfer and innovation, the study argues. And enhanced interpersonal contacts can lead to an improved work environment and increased productivity. Both of these stances are supported by prior literature on innovation and organizational dynamics.

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