This study discusses the establishment of environmental assessment departments and the officials in charge of the same as one standard used by Japanese businesses to tackle environmental management. Establishing a full-time department with dedicated staff comes with a cost. Therefore, when evaluating the seriousness of a business toward environmental management, this is an appropriate consideration.
Approximately 80% of companies in Japan have environmental management departments, of which only 45% are fully dedicated. This figure can be interpreted as implying that businesses are actively tackling environmental issues; however, very few companies hire dedicated staff to run these departments, and most officials in charge hold concurrent rather than dedicated positions. In this study, companies with dedicated departments and fully or partially dedicated staff are considered “proactive in environmental management,” a fact that is supported by their high rate of environmental indicator publications. The findings indicated that businesses with a fully-dedicated environmental department and staff had higher rates of environmental indicator publications. Conversely, those businesses that neither had a fully dedicated environmental department nor staff produced few or no publications.
Furthermore, the findings indicated that companies that actively engaged in environmental management had more favorable financial data. The majority of financial data for companies considered in this study as being proactive concerning environmental management (i.e., those featuring a department and partially or fully dedicated staff members) differed significantly from the data from other business groups. These companies are improving environmental efficiency and making progress in terms of environmental measures.
In terms of risk management, it was clear that environmental management by businesses in terms of EV (Enterprise Value), market capitalization, and sales may reduce future risks. The results demonstrated a fixed degree of reduction in indicators, such as return on assets and return on equity. This indicates that environmental management positively impacts business value in terms of risk management.
This study carefully examines the real-world management situation to observe whether the cost of environmental measures corresponds to its business value (i.e., return). Managers must use decisive reasoning and consider environmental management from a long-term perspective. The current situation indicates that environment is a factor that business management cannot ignore. Therefore, environmental management contributes to a company's performance and business value.
