Supply Chain Sustainability—Drivers, Inhibitors, Solutions - Technology Management for Sustainable Production and Logistics - page 65

Similarly Brännlund and Lundgren ( 2010 ) have found evidence that eco-
regulation, in the form of a CO 2 tax, reduced the profitability of most Swedish
firms, especially those in energy intensive industries.
In the USA, Dean and Brown ( 1995 ) have found that environmental regulations
discourage entry of new firms in several industrial sectors, reducing the competi-
tiveness of the whole branch.
Filbeck and Gorman ( 2004 ) have looked at 24 USA electrical utilities firms and
have found that regulatory compliance tends to lead to lower financial returns.
Gray and Shadbegian ( 2003 ) have found that greater abatement efforts tend to
reduce productivity.
Triebswetter and Hitchens ( 2005 ) have found that in the German manufacturing
industry the cost of environmental compliance relative to turnover incurred by the
firms is likely to be a negative function of the productivity level.
Problems concern also non-financial aspects. Many years after the introduction
of the ISO 14000 series for environmental management systems, many companies
still face the challenge of strict sustainability demands (Nunes and Bennett 2010 ).
New technologies developed as an alternative to growing environmental problems
often have to face a regulation which is not suited to their diffusion, as this regu-
lation was developed in the framework of existing in the past “traditional” tech-
nologies (Leitner et al. 2010 ). Consequently the environmental regulations can
reduce innovation efforts. The deterministic nature of regulation limits strategic
choice of possible investment projects and does not leave enough scope for firms
to innovate. Many managers, mainly from heavy industry, conceive regulation as
interference of their common activity. This depends on the operational approach
that if the staff has to comply with lots of regulations they are less likely to spend
time innovating and that they are likely to move their plants away from regions
with more regulations. In effect worries about declining competitiveness of the
European industry compared to their American and Asian competitors lead policy
makers to reduce the regulatory burden on industry (Leitner et al. 2010 ). The other
option is looking for such solutions which give positive effects without reduction
of competitiveness.
3.4 Conditions of Positive Effect of Regulations
The management guru Porter has argued that environmental regulations can
positively influence performance. It was argued that properly designed environmental
regulations, coupled with a proactive attitude of managers to environmental
management, would yield innovation that allowed the regulations to be met, and
should encourage dynamic change and greater efficiency in the use of resources
(Porter 1991 ). A competitive advantage might be achieved in terms of strict
environmental regulation, which diffuses internationally later on. If there has been
a development of technologies in response to strict environmental standards,
manufacturers might be able to compete in the demanding markets. There is evidence