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1 23 Journal of Business Ethics ISSN 0167-4544Volume 105Number 3 J Bus Ethics (2012) 105:307-319DOI 10.1007/s10551-011-0967-x Measurement Issues in Environmental Corporate Social Responsibility (ECSR):Toward a Transparent, Reliable, and Construct Valid Instrument Noushi Rahman & Corinne Post 1 23 Your article is protected by copyright andall rights are held exclusively by SpringerScience+Business Media B.V.. This e-offprintis for personal use only and shall not be self-archived in electronic repositories. If youwish to self-archive your work, please use theaccepted author’s version for posting to yourown website or your institution’s repository.You may further deposit the accepted author’sversion on a funder’s repository at a funder’srequest, provided it is not made publiclyavailable until 12 months after publication. Measurement Issues in Environmental Corporate SocialResponsibility (ECSR): Toward a Transparent, Reliable,and Construct Valid Instrument Noushi Rahman • Corinne Post Received: 30 October 2010/Accepted: 27 June 2011/Published online: 12 July 2011 Ó Springer Science+Business Media B.V. 2011 Abstract One of the major roadblocks in conductingEnvironmental Corporate Social Responsibility (ECSR)research is operationalization of the construct. ExistingECSR measurement tools either require primary datagathering or special subscriptions to proprietary databasesthat have limited replicability. We address this deficiencyby developing a transparent ECSR measure, with anexplicit coding scheme, that strictly relies on publiclyavailable data. Our ECSR measure tests favorably forinternal consistency and inter-rater reliability, as well asconvergent and discriminant validity. Keywords Environmental governance Á Environmental credibility Á Environmental performance Á Measurement transparency Á Measurement validity Á Measurement reliability Á Environmental corporatesocial responsibilityEnvironmental corporate social responsibility (ECSR) is animportant and distinct part of the overarching concept of corporate social responsibility (CSR). High levels of CSRdo not necessarily equate to high levels of ECSR. Forexample, Baughn et al. report that ‘‘[w]hile firms in the USscore well on the CSR measures, they score better thanwould be expected relative to country wealth in social CSR,and lower than would be expected on environmental CSR’’(2007,p. 201). According toMazurkiewicz (2004), ECSR is ‘‘the duty to cover the environmental implications of thecompany’s operations, products and facilities; eliminatewaste and emissions; maximize the efficiency and produc-tivity of its resources; and minimize practices that mightadversely affect the enjoyment of the country’s resources byfuture generations’’ (p. 2). Others have defined ECSR asenvironmentally friendly actions that go beyond the com-pliance of legal requirements by privately providing forpublic goods or internalizing negative externalities (Lyonand Maxwell2008; Portney2008). Broadly, ECSR focuses on firm-specific activities, both compliant and preventative,that limit the adverse environmental impact of these firms.Kolk and Mauser (2002) offered an extensive review of the evolution of environmental management moving fromsimple stage-based models to complex performance-basedmodels. Early ECSR studies tried to operationalize the con-struct in light of dimensions and ordered scaling (Berry andRondinelli1998; Callens and Wolters1998; Elkington1994; Halme and Huse1997; Karna2003; Roome1992; Scallon and Sten1996).Thesestage-based modelsofECSRare oftenarbitrarily developed (e.g., for a particular industry) and donot fit real data as well as expected. ‘‘Although the concep-tually based environmental management typologies do seemto provide a rough understanding of the responses that firmsare making with respect to the natural environment, theweaknesses in the models become evident when operation-alization is attempted’’ (Hass1996, p. 66). Stage-basedmodels view ECSR as a monolithic concept, precludingfurther understanding of ECSR components. This deficiencynecessitated the development of composite metric measuresthat would recognize the variegated nature of ECSR. N. Rahman ( & )Department of Management, Lubin School of Business,Pace University, One Pace Plaza, W-411, New York,NY 10038, USAe-mail:
[email protected]. PostDepartment of Management, College of Businessand Economics, Lehigh University, 621 Taylor Street,RBC 474, Bethlehem, PA 18015, USAe-mail:
[email protected] 123 J Bus Ethics (2012) 105:307–319DOI 10.1007/s10551-011-0967-x Performance-based metrics of ECSR are especiallyimportant because they enable cross-firm comparisons andprovide decision-makers and stakeholders with more reli-able, consistent, and accurate information (Ilinitch et al.1998). However, Ilinitch et al. (1998, p. 399) lament that while ‘‘composite scores may simplify cross-companycomparison, the criteria used to assign relative scores areoften unclear.’’ They argue that ‘‘[b]y demonstrating howexisting environmental performance measurement mayresult in unnecessary complexity, confusion, and publiccynicism, [their] research makes a case for systems that areclear, reliable, and valid’’ (1998, p. 404).In recent years, several performance-based models havebeen introduced to the literature (Clarkson et al.2008; Joseand Lee2007). Clarkson et al. (2008) developed an ECSR instrument that is totally transparent because data sourcesand scoring criteria are made fully explicit. Also, byinvolving a GRI specialist in the development of theirinstrument, they have ensured its content validity. Clarksonet al. (2008), however, did not report on the constructvalidity or on various forms of reliability of their instru-ment. Jose and Lee (2007) clearly identify the dimensionsand components of ECSR, but they do not make theircoding criteria explicit. This compromises the transparencyof their proposed instrument. While they reported on someeffort to ensure inter-rater reliability, they did not report onconstruct validity. For an ECSR instrument to be adoptedwidely by environment sustainability scholars, it is criticalto formally test and confirm the instrument’s validityand reliability. Data sources and data coding criteria needto be made fully explicit to ensure easy adoption of theinstrument.Simply integrating extant ECSR measures will invari-ably lead to a measurement that is too complex to be usefulfor researchers, practitioners, and investors. Moreover,proprietary databases (e.g., KLD) do not make explicit allthe necessary information to replicate those scores. Forinstance, while information on the ECSR dimensions andcoding criteria are made available by KLD, the datasources used for each dimension to apply the coding cri-teria are not revealed (Chatterjee et al.2009, p. 138). Thedescribed procedure for collecting the subscription-baseddata is at best vague, raising serious concerns of transpar-ency and replicability. An effective ECSR measure wouldnot only integrate strong attributes of existing measures,but also strike a balance with public availability of data onthose attributes and ensure transparency regarding the uti-lization of those publicly available data by specifying datasources and coding schemes. The contribution of this paperis an ECSR measurement instrument that captures the mostrelevant features of ECSR and passes the hurdles of con-vergent validity, discriminant validity, internal consistencyreliability, and inter-rater reliability. Moreover, all the dataused in the instrument can be compiled from publiclyavailable information, for which data sources have beenspecified and coding schemes have been delineated, toensure complete transparency.We divide the paper into five sections. The first sectionreviews ECSR as a concept and construct. The reviewhighlights the strengths and limitations of extant ECSRmeasures and offers guidance on how to refine ECSRmeasurement so that it can be uniformly adopted. In thesecond section, building on the review of existing ECSRmeasurement tools, we develop an explicitly detailedECSR measurement tool. All the data inputted in ourinstrument are extracted from publicly available informa-tion. The third section explains the methodology for testingthe validity and reliability of our measurement tool. Wereport our results in the fourth section. Finally, we discussthe theoretical and applied contributions of the proposedECSR measurement tool, recognize the limitations of ourstudy, and list avenues for future research. ECSR: Concept and Construct Extant definitions of ECSR in the literature suggest that theconcept is multidimensional. When defining ECSR,scholars have generally focused on six different dimen-sions: governance (Jose and Lee2007; Marshall and Toffel2005; Matthews et al.2004; Onkila2009; Williamson et al. 2006), credibility (Bansal and Roth2000; Christmann 2004; Gilley et al.2000; Guenther et al.2007; Jose and Lee 2007; Matthews et al.2004), environmental performance (Bansal and Roth2000; Gilley et al.2000; Guenther et al. 2007; Henri and Journeault2008; Jose and Lee2007; Leon and Moon2007; Punte et al.2006; Stanwick and Stanwick 1998; Van Buren1995, Williamson et al.2006; Young and Welford1998), environmental vision and strategy(Christmann2004; Cramer2005), environmental spending (Guenther et al.2007; Van Buren1995), and internal environmental initiatives (Gilley et al.2000). In Table1, we summarize a representative selection of ECSR defini-tions and the ECSR dimensions they directly address.As Table1suggests, scholars have viewed ECSR inmany different ways. Some have argued that the lack of acommon ECSR framework has led to differing interpreta-tions of the concept (Lyon and Maxwell2008; Mazur-kiewicz2004). Research findings about ECSR, interpretedand measured in different ways, cannot serve as a solidstepping stone to advance the state of knowledge. Thus,there is an acute need for a widely available ECSR mea-surement instrument with acceptable validity, reliability,and transparency.Some ECSR studies have used proprietary databases(e.g., CEP, Fortune’s Most Admired Companies, FRDC, 308 N. Rahman, C. Post 123 Table 1 ECSR conceptualization and underlying dimensionsSources Conceptualizations of ECSR ECSR DimensionsBansal and Roth(2000)‘‘Corporate ecological responsiveness [is] a set of corporate initiatives aimed at mitigating a firm’simpact on the natural environment. These initiatives can include changes to the firm’s products,processes, and policies, such as reducing energy consumption and waste generation, usingecologically sustainable resources, and implementing an environmental management system.[The] concept of corporate ecological responsiveness refers not to what a firm should do, but tothe initiatives that reduce the firm’s ‘ecological footprint’’’ (pp. 717–718)EnvironmentalperformanceCredibilityChristmann (2004) ‘‘Studies of determinants of environmental conduct have operationally defined environmentalconduct as a unidimensional construct, using variables such as environmental commitment(Henriques and Sadorsky1996), overall environmental strategy (Sharma2000), or adoption of voluntary environmental initiatives such as the ISO 14001 environmental management system(Christmann and Taylor2001)’’ (p. 748)Vision and strategyclaimsCredibilityCramer (2005) ‘‘Corporate social responsibility … requires the development of new shared values, norms andattitudes, as well as a strategic embedding within the organization of the three pillars ‘people’,‘planet’ and ‘profit’’’ (p. 257)Vision and strategyclaimsGilley et al. (2000) ‘‘[P]rocess-driven [environmental] initiatives include changes to organizational processes, as wellas changes to the materials used in production’’ (p. 1203)‘‘[P]roduct-driven [environmental initiatives] occurs in two ways: (1) when firms create new typesof environmentally sound goods or services, or (2) when they reduce the environmental impact of their existing goods or services’’ (p. 1203)Internal initiativeEnvironmentalperformanceCredibilityGuenther et al.(2007)Individual aspects of ECSR include ‘‘liabilities for disposal or environmental investments asmonetary information and emissions into water or air as non-monetary information’’ (p. 9)Environmental management systems, like EMAS and ISO 14001, broadened environmentalreporting by focusing on the whole value chain instead of specific aspects of it. CERES startedthe GRI project to infuse social, environmental, and biological concerns into business decisions.These environment management systems strive to bring together the two streams of reporting andsustainability (pp. 9–10)EnvironmentalperformanceEnvironmentalspendingCredibilityJose and Lee (2007) ‘‘[T]his research analyzes the content of corporate environmental disclosures with respect to thefollowing seven areas: environmental planning considerations, top management support to theinstitutionalization of environmental concerns, environmental structures and organizing specifics,environmental leadership activities, environmental control, external validations or certificationsof environmental programs, and forms of corporate environmental disclosures’’ (p. 307)GovernanceCredibilityEnvironmentalperformanceLeon and Moon(2007)Government policies pertaining to ECSR involve ‘‘pollution control methods that include market-based mechanisms (e.g. emission trading), information-based mechanisms (e.g. toxic releaseinventory) and voluntary programs (e.g. Green Lights)’’ (p. 480)EnvironmentalperformanceMarshall and Toffel(2005)‘‘Eco-efficiency refers to optimizing economic and environmental goals; fair trade refers toeconomic activities conducted with particular attention to social consequences; andenvironmental justice refers to social equity with respect to environmental protection. Becausethese objectives are important to society, advocates argue that companies should consider themdaily decisions’’ (p. 674)GovernanceMatthews et al.(2004)‘‘Environmental management systems (EMSs) are tools intended to help organizations meetenvironmental goals. … Typically, an EMS includes a cycle of planning, implementation, review,and improvement in addition to documented procedures and reports, training, and communicationwhich help to meet regulatory compliance as well as to support continuity of the system’’(p. 1927)GovernanceCredibilityOnkila (2009) ‘‘It has been stressed that environmentally ethical behavior and morally acceptable environmentalactions are being demanded of corporations. … Stakeholders are assigned a dominant role asdemanders of environmental responsibility … ’’ (p. 285)GovernancePunte et al. (2006) ECSR is referred to as resource and energy efficiency. For example, the Gas Emission Reductionfrom Industry in Asia Project (GERIAP) helps companies to assess what steps they can take touse energy and resources efficiently (p. 42)EnvironmentalperformanceStanwick andStanwick (1998)‘‘[E]nvironmental performance of the organization is represented by the level of pollutionemissions released by the organization’’ (pp. 196–197)EnvironmentalperformanceVan Buren (1995) ‘‘Investors are, therefore, pressing companies to address environmental issues proactively ratherthan reactively. Proactive environmental policies reduce waste, costs, and liabilities and make forsmoother, more effective management of a company’s operations’’ (p. 53)EnvironmentalperformanceSpendingMeasurement Issues in Environmental Corporate Social Responsibility (ECSR) 309 123
