The Role of Economic and Social Factors in Mitigating ...

Proceedings of the 15th Annual Conference of the Association for Chinese Economics Studies Australia (ACESA)

The Role of Economic and Social Factors in Mitigating

Attitudes toward Environmental Management within

Western Pacific-rim Countries

Lorne S. Cummings1#

Macquarie University

Abstract This study presents results of the attitudes of corporate managers and managerial

students across three western Pacific-Rim countries, Australia, China and Indonesia,

toward 18 key contemporary environmental management issues. The study sought to

explore whether individual nation state initiatives on the environment, and economic

and social characteristics which may effect environmental initiatives, mirror attitudes

of the respective country respondents in the survey. Results from 676 respondents

indicate that contrary to expectations, Australian respondents were more cautious of

supporting a forthright view on environmental issues, whilst Chinese respondents

favoured a more centralised approach to decision making regarding the environment.

The results lend marginal support to a developmental model, based on economic and

social characteristics, to possibly explain and predict attitudes toward environmental

management, but also to the radicalisation of environmental issues as a possible

influence on respondent beliefs.

1 The author would like to acknowledge helpful comments of participants made at The 2003 Fourth Annual Global Conference on Environmental Taxation Issues, Experience and Potential, held in Sydney Australia 5-7th, 2003. # Correspondence to: Lorne S. Cummings, PhD,CPA Department of Accounting and Finance Macquarie University Sydney, NSW 2109 AUSTRALIA E-mail: [email protected] Phone: +612 9850 8531 Fax: +612 9850 8497 Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 1 -

mailto:[email protected]


Introduction The objective of this paper is to use the characteristic of development to explore one

specific area of stakeholder and universal concern; attitudes toward environmental2

management. The paper presents a series of 18 questions3 (see Table X) that solicit

respondent attitudes toward important development based environmental issues in the

three countries under study; Australia, China and Indonesia. The environment is an

important issue within the Asia-Pacific region, given the increasing focus on

industrialisation and urbanisation, and the increasing role the private sector is playing

in it, and this paper will seek to explore whether attitudes toward key environmental

management issues mirror selected economic and social development statistics. That

is, does a more developed society, result in respondents of that country embracing

more progressive attitudes toward environmental issues? It is expected that

respondents in China and Indonesia, countries that are less developed than Australia,

will be less likely embrace progressive attitudes toward the environment than their

Australian counterparts.

Such a study is important given the increasing role the private sector is playing in

national development, through privatisation, and outsourcing of government services.

The ability to deal with and respond to economic and social issues, which face both

the private and public sector, requires greater attention to be given to participants in

the decision-making process, and their views toward key environmental issues. The

successful adherence to, and implementation of, environmental policies, resolutions

and standards passed by national and international bodies, requires an understanding

and commitment by organisational managers. Examination of the attitudes of

managers and managerial students toward environmental issues, who act as current

and future primary decision-makers within organisations, is vital in understanding the

likely success of these agreements.

2 Reference to the environment encompasses the natural biological conditions in which an organism lives, including the land, air and sea. This is distinct from an organisational environment, being the social context or conditions under which an organisation operates. 3 The individual environmental questions themselves were selected by the author, based on contemporary issues in the popular press and evidence from research studies in academic journals. They were not subject to any pre-testing other than through a pilot study.

Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 2 -


Economic developmental characteristics4 that may effect attitudes toward

environmental management, include levels of income, the environmental stringency

of a country, the consideration of carbon taxes and subsidy reductions on fossil fuels,

levels of CO2 emissions, and enforcement of trade sanctions. Social developmental

characteristics that may effect attitudes toward environmental management include

the extent to which a country commits with international environmental agreements

and pronouncements, and the extent to which voluntary organisational environmental

standards (ISO14000) are adopted. Other social characteristics include the extent to

which a country enacts broad-ranging domestic environmental laws, levels of

deforestation and nationally protected environmental areas, encourages organisational

democracy on environmental issues, recognises a broader fiduciary duty by the

corporation, undertakes environmental reports and endorses equal environmental

standards between domestic and foreign organisations.

Development and Environmental Management Greater attention has been given at the local, national and international level, toward

establishing laws and requirements regarding the environment. Community based

environmental groups have been formed to restore and upgrade local wetlands and

urban areas. State and provincial based environmental protection agencies have been

established to monitor and enforce statutory regulations. For the past 30-years, we

have witnessed the emergence and proliferation of transnational environmental groups

that seek to promote global environmental awareness. These have included non-

government organisations (NGOs), both profit and non-profit oriented. However,

unlike in developing and totalitarian states, environmental management in western

societies has often developed within a much broader paradigm, linked inextricably

with an environmental movement, often characterised by its own vibrant political

agenda, which has helped to ensure a high degree of transparency in environmental

management.

A recent Asian Development Bank report has identified a marked deterioration in

environmental quality throughout the Asia-Pacific region despite there being an array

4 The economic and social statistics used for the study were chosen and grouped by the author according to economic and social data in leading international statistical publications (refer tables). Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 3 -


of environmental regulations. The bank attributed the driving forces underlying

patterns of poor environmental quality and extensive environmental degradation in the

Asia and Pacific region to include (see, Asian Development Bank, 2001, p.24): (1) A

growing population that demands more energy, materials, and ecosystem services, (2)

Extensive urbanisation and industrialisation, (3) Income growth, unequal distribution

of wealth, and widespread poverty, (4) Use of technologies that are based on

inefficient energy and material use and that generate and release excessive waste, (5)

Lack of participation of civil society and the private sector, and forms of governance

that exclude the majority of stakeholders, and (6) Weak institutions and inappropriate

policies that promote inefficiencies and fail to capture the externalities of economic

activity5.

Income

Hartman et al., (1997) on examining the determinants of pollution abatement in

Bangladesh, India, Indonesia and Thailand, state that communities whose citizens

were economically or educationally poor, or were members of marginalised minority

groups, may have little ability to use the available channels of ‘informal regulation’,

or seek empowerment. Research undertaken on Indonesian firms (Pargal and

Wheeler, 1995) has found that manufacturing facilities in poorer less educated areas

were over 15 times more pollution-intensive than plants in educated areas.

Furthermore, multinationals were less pollution-intensive than private domestic firms

were. This lends credence to the case that the monetary and financial aspects of

development are significant factors in mitigating pollution. This has also been

supported by research on community income and pollution abatement in China, where

environmental based complaints by citizens were lower in least-developed, and less-

educated region’s (Dasgupta and Wheeler, 1996). Furthermore, due to a lack of

financial resources, it has also been found that environmental treaty ratifications are

activated predominantly by developed industrialised nations6. Whilst China and

5 Furthermore, weak compliance and enforcement were attributed to: (1) lack of public support and participation in monitoring, detecting and reporting violations; (2) poor environmental monitoring; (3) inadequate training and monitoring of inspection staff; (4) lack of accountability for environmental mismanagement, and (5) ill-informed and non-transparent judiciary systems (ibid, p.17). This in turn seriously impedes the ability of current generations to sustain and enhance national eco-systems. 6 (Sand, 1999, p.273) notes that “at the 1991 Geneva meeting of the Conference of the Parties to the Migratory Species Convention (No. 22), which then had a fairly balanced membership of 18 industrialised and 19 developing countries, there was an official participation of delegations from 14 industrialised and only 6 developing countries”. As noted by Sand (1999, p.274): “On the whole, the participation of developing countries in existing environmental agreements and instruments may be said to have been influenced by a combination of factors, including the



Indonesia have undertaken initiatives to tighten up on environmental management,

developmental factors significantly impede the ability to successfully manage the

environment. Anderson and Drake-Brockman (1996, p.147) state that empirical

evidence indicates that as per capita incomes rise (up to an upper middle income

level), individuals tend to demand better environmental quality. Xu (1998) examined

the effect of environmental regulations on the international competitiveness of

domestic industries. Using the GDP figure from several countries to achieve an

environmental stringency ranking (Table I), Xu’s proposition was that technology,

rather than the environment, is the most significant determinant of the international

competitiveness of environmentally sensitive industries.

Table I: Environmental Stringency Rank Measured by GDP per Capita

Country GDPPC Rank Country GDPPC Rank Country GDPPC Rank

Norway 21,615 1 Italy 13,949 11 Korea 3,615 21

Japan 20,954 2 Australia 13,197 12 Malaysia 2,025 22

Denmark 20,158 3 Britain 12,663 13 Mexico 1,775 23

Sweden 19,559 4 New

Zealand

11,050 14 Chile 1,742 24

United States 18,973 5 Hong Kong 9,461 15 Thailand 1,050 25

Finland 18,653 6 Singapore 8,656 16 Philippines 603 26

France 16,608 7 Spain 7,956 17 Indonesia 468 27

Canada 16,010 8 Taiwan 5,507 18 Sri Lanka 414 28

Netherlands 15,129 9 Greece 4,829 19 India 346 29

Germany 14,699 10 Portugal 4,438 20 China 272 30

Note: GDPPC stands for GDP per capita in 1988 (constant prices, US$ 1987). The ranking is

calculated on the basis of GDPPC.

Source: World Development Indicators 1997, World Bank.

availability of financial resources, technical and scientific assistance, and pressure by parliamentarians, non-governmental organisations, industries, the press and the general public”.



Environmental stringency represents the strictness of environmental policies and is

calculated as an index on the basis of an economy’s level of development, which is

measured by GDP per capita in 1987 U.S. dollars. The index number runs from one

(strict) to thirty (tolerant). Xu argued that developed countries have less of a tendency

to compromise environmental standards in order to achieve international

competitiveness, and that “the appropriate development strategy for a developing

economy, therefore, is one of economic development that takes environmental

standards into account rather than economic development based on lax environmental

standards” (ibid, p.38).

However, more stringent environmental standards often involve a commitment to

greater capital expenditure on modern plant and equipment, along with the necessary

education and training for employees and management; a significant cost to the

organisation. Given that developed countries have a greater ability to absorb these

costs, this study will examine whether there are differences between country

respondents with respect to attitudes that:

− “Mandatory environmental education be given to employees whose work has a significant

impact on the environment” (Question 1); and that

− “Manufacturing organisations should have a separate environmental committee”

(Question 2).

Given a greater developed status economically, Australian respondents are more

likely to espouse organisational responsibilities beyond that of merely profit

maximisation, and as such will more likely support mandatory environmental

education and separate environmental committees. The establishment of separate

environmental committees reflects a greater commitment to corporate governance

within an organisation, similar to an audit committee, or health and safety committee.

Environmental committees often have the specific task of reviewing an organisations

compliance with environmental management systems, environmental statute

requirements, and external environmental audits.



The Introduction of Carbon Taxes and the Abolition/Reduction of

Resource Subsidies Economic initiatives such as the introduction of environmental or carbon taxes7, as a

means by which to reduce greenhouse gases, a part of the polluter pays principle

(PPP), and the reduction of subsidies on fossil fuel resources such as coal and oil, can

significantly effect environmental management. Carbon taxes and subsidy reductions

on fossil fuels have been advocated by federal governments both here and overseas,

and by many environmental groups, as a means by which to combat global warming.

Carbon taxes reduce the burden on the conventional tax base by switching revenue

activities to corporate pollutants.

Reports by Australian Federal Government bodies during the 1990’s highlight the

seriousness with which Australia considered the Carbon Tax scheme. For instance,

James (1996) in a report commissioned by the Federal Department of the

Environment, Sport and Territories, simulated a carbon tax model as a means by

which to reduce fossil fuel consumption. That same year, a federal and state

“Greenhouse Working Group” launched the National Greenhouse Response Strategy,

which included such measures as: (1) an increase in fuel levies to combat vehicle

emissions; and (2) the provision of incentives for business to use greenhouse-friendly

transport8.

Whilst carbon taxes have yet to be widely implemented in their full context, continued

debate as to their merit within Australia and parts of The United States9 and Europe10,

do indicate the seriousness that many, within developed countries, view such

measures11. Such a tax has not yet been considered in either China or Indonesia,

despite the high levels of carbon dioxide emissions as seen from Table II.

7 The goal of environmental/carbon taxes is to correct market failures by internalising economic externalities, enabling the price of goods and services to reflect full social and environmental costs. 8 A tax on carbon dioxide discharge of A$1.25/tonne was considered. Both proposals were eventually rejected on the basis that it would disadvantage the international competitiveness of Australian mineral processing companies. 9 Responding to a request for possible new energy and environmental taxes by The State of Maryland in 1991, the Centre for Global Change constructed a State Carbon Tax Model, which uses data from the Federal Energy Department. Details can be found at the Center for Renewable Energy and Sustainable Technology (REPP-CREST) website http://solstice.crest.org/ 10 As far back as 1990, the European Commission has considered a carbon tax on oil and other fossil fuels as a major initiative in curbing greenhouse gases. However, differences between EU member states to date have resulted in a failure to implement such taxes, despite the Kyoto agreement on climate control which requires the EU to cut its greenhouse gas emissions to a total of 8 per cent below 1990 levels by 2000 (Vig and Axelrod, 1999, p.90). 11 To date, five Scandinavian countries (Denmark, The Netherlands, Norway, Finland and Sweden) have introduced such taxes, with positive environmental effects on air and water quality (European Environmental Agency, 1996, p.23). Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 7 -

http://solstice.crest.org/


Table II: Environmental Indicators for CO2 Emissions

Indicator Australia China Indonesia

CO2 Emissions 1990-

91

(10,000 Mt) (1)

71,457 694,154 46,525

CO2 Emissions 1992

(2)

TONS

RANK

268

9

2668

2

185

12

CO2 Emissions (3)

1980 (millions tons)

1995

202.8

289.8

1476.8

3192.5

94.6

296.1

Source: (1) United Nations, 1995; (2) Gale, 1997; and (3) World Bank, 1998.

The sacrificing of resource subsidies can help to shift emphasis away from fossil fuel

consumption (a major contributor of greenhouse gasses). Porter (1996) outlines five

adverse environmental effects through subsidies: (1) overcapitalisation into that

particular industry; (2) a technology effect which makes it more attractive to an

industry to use technologies that have greater impact on the environment than

alternative technologies; (3) resource inefficiency effect, whereby lower prices results

in greater use of the subsidised resource; (4) overconsumption effect; and (5) public

resource deprivation effect whereby overuse by private organisations results in

depletions of the resource for the public good. Reductions in rebates on such fuels as

diesel and oil indicate a willingness by governments to place emphasis on non-

traditional sources of energy. Whilst energy subsidisation occurs in both developing

and developed countries, the adverse affect of subsides is greater in developing

countries12. Developed countries such as Australia have a greater financial ability to

change to alternate sources of fuel, and have a more informed debate surrounding

carbon tax initiatives. This study will examine whether there are differences between

country respondents with respect to environmental attitudes that;

12 A study by Larsen and Shah (1994) calculated that energy subsidy elimination in non-OECD countries can reduce CO2 emissions by 20% immediately and by 10% over a 20-year period. This is 7% of worldwide emissions. For non-OECD countries, emission reductions can be approximately 25%. In the United States, removal of subsidies would reduce CO2 emissions by only 4% (Source: De Moor, 1996: http://www.ecouncil.ac.cr/econ/subsidies/). Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 8 -


− “Carbon taxes are an important way of achieving reductions in greenhouse gases”

(Question 3); and that

− “Governments should reduce resource subsides as a way of conserving natural resources

and maintaining the environment” (Question 4).

Given a greater developed status economically, Australian respondents are more

likely to support the belief in carbon taxes as a mechanism for greenhouse gas

reduction, and that resource subsidy reductions are a way of conserving the

environment.

The Use of Trade Sanctions

Whilst third party arbitration remains the most practical way of resolving

environmental disputes, at times a breach of international environmental standards

leads to the imposition of trade sanctions on offending countries. Trade sanctions are

a last but often necessary resort in upholding the goals of environmental agreements.

Such measures already exist within Article 171 of the European Community (EC)

Treaty, a 1993 provision that allows for the imposition of a financial penalty upon

member states who are in breach of EC obligations (Vig and Axelrod, 1999, p.152).

Furthermore, certain parties to the Convention on International Trade in Endangered

Species (CITIES), to which Australia and China are a party, have on a number of

occasions, imposed trade sanctions against both members and non-members, albeit

temporarily13.

Trade sanctions can be imposed regardless of whether such conduct is legal under the

laws of the offending country14 (McDorman, 1991, p.484). Similar embargoes exist

under the North American Free Trade Agreement (NAFTA) and the World Trade

Organisation (Rueda, 2000). Sanctions that have been threatened to be imposed in the

13 Examples include the temporary banning of wildlife imports, to complete trade prohibitions by the United States and European Union on the following countries: Indonesia, Italy, Singapore, Taiwan and Thailand (Sand, 1999; pp.152-154). Similarly, because of the excessive use of drift-net fishing, the United States has since 1996, instituted import embargoes under its Marine Mammal Protection Act (1972) against Mexico, Venezuela, Colombia, Panama, Vanuatu, Belize, Costa Rica, Italy and Japan (Zarin and Dechert, 1999). 14 These sanctions are not embraced to the same degree within international agreements such as General Agreement on Tariffs and Trade (GATT), which to date has not recognised the role of sanctions as a means by which to promote environmental measures. Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 9 -


past with regard to fisheries have led to policy reform within the offending nation15.

Developed countries are more likely to instigate trade sanctions against offending

countries. This study will examine whether there are differences between country

respondents with respect to the environmental attitude that;

− “Trade sanctions should be imposed on countries not complying with international

environmental requirements” (Question 5);

It is anticipated that Australian respondents are more likely to support the use of trade

sanctions as a means of enforcement of environmental requirements.

Commitments to International Environmental Resolutions and

Standards Australia has also been by far the most prominent of the three countries in the study, in

adopting or ratifying actual international environmental agreements. Australia to 2000,

has adopted or ratified 41 international environmentally related agreements, compared

to China and Indonesia at 19 and 21 respectively (Boer et al. 1998, pp. 221-280: Law

Libraries of Congress, 2001).

Guidance by international promulgation’s in the absence of national requirements

signals a greater intention to comply with universal ethical considerations, rather than

within the constraints of a domestic political agenda. Kildow (1992, p.1077) and

Mische (1989; p.394) have stated however that national sovereignty is one

impediment to environmental reform. This study will examine whether there are

differences between country respondents with respect to environmental attitudes that;

− “A country should be willing to subordinate or abrogate international environmental

concerns to national concerns” (Question 6); and that

15 The United States had threatened sanctions on Denmark, Norway and the then West Germany for continued high seas salmon fishing in breach of a ban promulgated by the International Commission for the Northwest Atlantic Fisheries (McDorman, 1991). Trade sanctions have also been imposed on countries that have breached arms control treaties (Pakistan), engaged in unauthorised development of weapons of mass destruction (Iraq), and restricted imports of certain agricultural products (USA against the EU on the issue of bananas). Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 10 -


− “Organisations should use international standards for environmental performance when

there are no national requirements” (Question 7).

It is anticipated that Australian respondents will be less likely to support the

subordination of international environmental concerns of national concerns given that

Australia is a signatory to more international environmental treaties than China or

Indonesia, but that it will be more likely to support the use of international standards

when no domestics laws are in place.

One major worldwide program has been the introduction of the ISO14000 standard

series, aimed at enhancing environmental management systems within, and

competitiveness of, organisations worldwide16. Table III indicates that Australia has

been more prominent in establishing Eco-Labelling Schemes, than China or

Indonesia.

Table III: ISO 14000 Eco-Labelling Schemes


Scheme (1) Environmental

Choice Australia*

China

Environmental

Labelling Scheme

Eco-Labelling

Scheme Indonesia

Establishment

Date (1)

1991 1994 1993

No. of Companies

Registered with

ISO14001 (2)

1485

1024

229

Source: (1) Conway, 1996, p.47; and (2) Peglau, 2003.

* Environmental Choice Australia has been superseded by the Australian Environmental

Labelling Association Inc (http://www.aela.org.au/), an independent environmental scientific

research and assessment organisation that operates on a non-profit basis. However the

labelling scheme still retains the “Environmental Choice Australia” label as part of its

labelling system.

16 The ISO14000 standard series was published in 1996, and is a voluntary set of standards and guideline reference documents that seek to provide a coordinated framework of controls over environmental management systems within organisations. The standards cover a wide range of environmental topics such as environmental policy, performance evaluation, life cycle assessment, eco-labelling and environmental auditing. Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 11 -


Research on ISO14001 certifications17 indicates that as of March 2003, 1485

Australian companies had registered themselves as being in compliance with the

standard, compared to 1024 Chinese and 229 Indonesian companies. However, the

reasoning underlying the adoption of such standards is critical in understanding the

motivations for environmental management. Is there an underlying ethical

commitment to protecting the environment, or is the prime motivation the financial

benefits and legitimacy such standards provide to organisations? A United Nations

International Development Organisation (UNIDO) survey in 1996 on the views of

trade associations in 31 developing countries, of the trade implications of the

ISO14000 standard series, found that the three main reasons for implementing

ISO14000 were: (1) to help demonstrate conformity to environmental legislation; (2)

to meet overseas consumer demand; and (3) to reduce costs of mandatory standards.

This indicates that the pressures to comply with ISO14000 were perceived as external

rather than domestic (Davey, 1997, p.170). Organisations in developing countries do

not have the necessary regulatory requirements or technical and procedural aspects in

place to be able to implement environmental controls. This study will examine

whether there are differences between country respondents with respect to the

environmental attitude that;

− “The primary benefits of ISO14000 are the financial benefits they bring to organisations”

(Question 8).

It is anticipated that Australian respondents are less likely to view the benefits of

ISO14000 as immediately financial, and will be more likely to see such standards as

an overall organisational process of quality development.

Commitment to National Environmental Laws Australia has an array of laws on the environment. As seen from Table IV, there are

nearly 35 federal acts covering the environment, including world heritage,

biodiversity, ozone and hazardous waste, the marine environment and the Antarctic18.

17 See http://www.ecology.or.jp/isoworld/english/analy14k.htm (March 3, 2003). 18 See (http://www.ea.gov.au/about/#environment) for an overview of environmental legislation in Australia. Date Accessed Jan 14/2003. Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 12 -

http://www.ecology.or.jp/isoworld/english/analy14k.htm

http://www.environment.gov.au/corporate/legislation.html


Australia’s laws represent a highly developed framework of environmental

governance at the federal level dating back nearly eighty years.

Table IV: Australia’s National Environmental Laws to 2000

Pollution Control and Natural Resource Conservation Laws enacted since 1974

Year

Removal of Prisoners (Territories) Act 1923 Australian Antarctic Territory Acceptance Act 1933 Heard Island and McDonald Islands Act 1953 Australian Antarctic Territory Act 1954 Meteorology Act 1955 Antarctic Treaty 1960 States Grants (Nature Conservation) Act 1974 Captains Flat (Abatement of Pollution) Agreement Act 1975 Australian Heritage Commission Act 1975 Great Barrier Reef Marine Park Act 1975 Historic Shipwrecks Act 1976 Environment (Financial Assistance) Act 1977 Environment Protection (Alligator Rivers Region) Act 1978 Antarctic Treaty (Environment Protection) Act 1980 Environmental Protection (Sea Dumping) Act 1981 Antarctic Marine Living Resources Conservation Act 1981 Koongarra Project Area Act 1981 Wildlife Protection (Regulation of Exports and Imports) Act 1982 Sea Installations Act 1987 Sea Installations Levy Act 1987 Hazardous Waste (Regulation of Exports and Imports) Act 1989 Ozone Protection Act 1989 Great Barrier Reef Marine Park (Environmental Management Charge-Excise) Act

1993

Great Barrier Reef Marine Park (Environmental Management Charge-General) Act

1993

National Environment Protection Council Act 1994 Wet Tropics of Queensland World Heritage Area Conservation Act 1994 Ozone Protection (Licence Fees-Imports) Act 1995 Ozone Protection (Licence Fees-Manufacture) Act 1995 Hazardous Waste (Exports & Imports) Amendment Act 1996 Natural Heritage Trust of Australia Act 1997 National Environment Protection Measures (Implementation) Act 1998 Environmental Protection and Biodiversity Conservation Act 1999 Environmental Reform (Consequential Provisions) Act 1999 Product Stewardship (Oil) Act 2000

Source: Environment Australia 21/1/2001,

[http://www.ea.gov.au/about/legislation.html#legislation]


http://www.ea.gov.au/about/legislation.html


This legislation does not include the various state-based legislative arrangements for

environmental management. China in turn, has implemented over sixteen (16)

national laws (see Table V) that flow from Article 26 of the Constitution of the

People’s Republic of China that declares that “the state protects and improves the

living environment and the ecological environment, prevents and controls pollution

and other hazards” (Boer et al., 1998, p.219). Primary responsibility for the

environment is the function of the state, as distinct from a broader consultation based

approach under the Australian system.

Table V: China’s Environmental Laws to 1999

Pollution Control and Natural Resource Conservation Laws enacted since

1979

Year

Environment Protection Law 1979

Marine Environment Protection Law 1983

Water Pollution Prevention and Control Law 1984

Grasslands Law 1985

Fisheries Law 1986

Mineral Resources Law 1986

Land Administration Law 1987

Air Pollution Prevention and Control Law 1988

Water Law 1988

Wildlife Protection Law 1989

Solid Waste Prevention Law 1996

Noise Pollution Control Law 1997

Water and Soil Conservation Law 1997

Energy Conservation Law 1998

Flood Prevention Law 1998

Forestry Law 1998

Source: Boer et al., 1998, p.219.

Similar to China, Indonesia’s environmental legislation and policies are subject to

five-year plans. Initial development toward an environmental policy framework was

the responsibility of the Environmental Impact Management Agency (BAPEDAL). As

seen with Table VI, there have been a number of decrees.



Table VI: Indonesia’s Environmental Decrees to 1997

Decree Number Decree Name

Kep-20/1990 Management of Water Pollution

Law No. 5, Year 1990 The Conservation of Living Natural Resources and Their

Eco-system

Kep-252/KPTS-II/1993 The Criteria and Indicators for Sustainable Indonesian

Natural Production Forests

Government Regulation

No. 51 Year 1993

Environmental Impact Analysis

Kep-12/MENLH/3/1994 General Guidelines for Environmental Management

Procedures and Environmental Monitoring Procedures

Kep-13/MENLH/3/1994 Guidelines for Membership and Working Procedures for

AMDAL Commissions

Kep-14/MENLH/3/1994 General Guidelines for the Preparation of Environmental

Impact Assessments

Kep-15/MENLH/3/1994 Establishment Of An Environmental Impact Assessment

Commission For Integrated/Multisectoral Activities

Kep-250/M/SK/10/1994 Technical Guidelines for the Reporting of Containment of

Impacts on Living Environment in the Industrial Sector

Kep-42/MENLH/3/1994 General Guidelines for the Implementation of environment

audits

Kep-39/MENLH/8/1996 Activities Needing Environmental Impact Analysis

Certificates

Law No. 23 Year 1997 Management of Environment

Source: Tarmidi (1998)

Indonesia has open, consensus based approach to environmental policy formation.

Boardman and Shaw (1995) note that whilst many senior Indonesian government

officials were educated at universities in the United States and therefore embody

western priorities, the Indonesian approach to policy formulation has been accused of

being narrowly defined (Boardman and Shaw, 1995, p. 101) and bureaucratic in

nature. The courts have also been reluctant to enforce environmental laws19. Reasons

19 Since implementation of the Basic Provisions for the Management of the Living Environment Act of 1982, only 12 of the 100 investigated cases of environmental non-compliance have actually been brought to court. Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 15 -


given for the lack of enforcement were the limited resourcing of federal authorities,

including few inspectors. This has contributed to the large rate of deforestation20. The

effects of cronyism and lack of government enforcement of environmental regulations

has led to individual corporations being immune from the effects of public pressure.

This study will examine whether there are differences between country respondents

with respect to the environmental attitude that;

− “The national government should maintain central control over environmental regulations

and requirements” (Question 9).

It is anticipated that Australian respondents are less likely to favour the national

government maintaining central control over environmental regulations, given that

government’s in developing countries embrace a more command-and-control

approach to environmental management.

The Extent of Reduction in Transboundary Pollution Fires in Indonesia in 1999 resulted in their Parliament approving 15-year jail

terms and fines of up to five billion rupiah ($1.04 million) for company

officials guilty of clearing land by fire (Straits Times [The], Sep 8 1999); yet

widespread clearing continues.

Table VII: Social Indicator of Deforestation


Annual Deforestation

1980-90 sq. km

(% change)

0

(0)

8,800

(0.7)

12,100

(1.1)

Nationally Protected

Areas 1994

Number

As % of Land Area

889

12.3

463

6.2

168

10.2

Source: World Bank, 1997, pp.24-25.

20 According to a report by Professor Bunasor Sanim at the Bogor Agriculture Institute, urban development and industrial and infrastructure development have caused a one million-hectare loss in Indonesian farmland in the last



As can be seen by Table VII, both China and Indonesia have widescale annual

deforestation. This has been exacerbated by the low amount of nationally protected

areas within China, which has contributed toward wide-scale deforestation compared

to that of Australia. The 1995 ASEAN Co-operation Plan on Transboundary

Pollution, has emphasised the need between member countries, to “harmonise

standards, share information, and engage in co-operative training programmes” (Boer

et al., 1998, p.233). However, both agreements lack effective enforcement

mechanisms. This transboundary pollution problem is specific within the Australasian

region (The Monash Group, 1996, pp.22-26). The 1997 forest fires in Indonesia are a

case example, with projected pollution costs of more than $1.3 billion to Southeast

Asian nations21. This study will examine whether there are differences between

country respondents with respect to the environmental attitude that;

− “Pollution in one country will have direct financial and social effects in another country”

(Question 10).

It is anticipated that Australian respondents are more likely to support the notion that

pollution will have direct financial and social effects on other countries, given that

developed countries are less exposed to the problem and effects of transboundary

pollution because of greater education programs, and more stringent environmental

requirements.

Organisational Democracy and Community Participation Zazueta (1995, p.5) states that there are three keys to success to community

participation in environmental policy: (1) the political will to support these

initiatives; (2) a policy framework that builds capacities among disadvantaged people

to foster their involvement in the design and implementation of policies, programs,

and projects affecting them; and (3) resources to support community efforts.

five years. In particular, 50 to 60 percent of the development has occurred in the farming areas of Java (Connectivity, Vol. 1 No 6, 1997). Original Source: Central News Agency (Taiwan). 21 For a full report see the “Economy and Environment Program for Southeast Asia” website at http://www.eepsea.org/publications/research1/ACF62.html Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 17 -

http://www.eepsea.org/publications/research1/ACF62.html


In Australia, environmental regulation has a greater degree of community input. In

July 1997 the Federal Government instituted the National Pollutant Inventory (NPI),

an organisational monitoring mechanism22. To date, only Australia, Canada, The

Netherlands, the U.K and U.S have instituted such toxic release inventories (TRI’s).

In 1992, the first international Earth Summit convened in Rio De Janeiro, to address

urgent problems of environmental protection and socio-economic development. A

five year review in 1997 (“Earth Summit +5”) by the United Nations General

Assembly, sought to determine how well countries, international organisations and

sectors of civil society responded to the challenge of the Earth Summit. What

emerged from this review (through reports by signatory countries) was that of the

three countries under study, Australia had by far, been the most progressive on

environmental issues23. Apart from Australia incorporating the valuation of natural

assets and expenditure on the environment protection into the system of national

accounts, it made mention in its report of a far greater input from stakeholders

(NGO’s) in environmental decision making. Environment Australia also administered

a program of grants to voluntary conservation organisations. Indonesia has stated that

“environmental NGOs have more or less been active in providing input to the

government on sustainable development issues particularly in sustainable resource

management and community participation”, in particular “the planning and

implementation of activities related to CBD such as sustainable management of

national parks, formulation of regulations on biosafety and marine resources

conservation”.

According to the U.S Embassy Beijing (1997), there are currently three “grass roots”

environmental NGO’s in China, being (1) The Friends of Nature (approx. 600

members), (2) The Global Village Cultural Center (approx. 1000 members), and (3)

Green Earth Volunteers (over 1000 members). China does not however, financially

support NGO’s. Furthermore, the inflexible political, legal and administrative

processes within developing countries such as China, and the lack of transparency,

contribute to this process. Of China, Wild (1996, p134) states:

22 It sought to provide the community, industry and government with information on the types and amounts of certain chemicals being emitted to the environment. Organisations with industrial facilities exceeding a specified amount of chemical usage listed in the NPI have been required to estimate emissions since 1 July 1998. State and territorial governments collect the data on emissions from smaller companies.



“The administration of project approvals and environmental regulation

is fraught with secrecy and there is very little opportunity for

administrative review of the exercise of executive discretionary

powers, which is now commonplace in most Western countries”.

Greater participation in environmental governance by community groups and NGO’s,

allows an organisation to “respond more effectively to local voices and local

concerns”, thereby allowing a “bottom-up approach to democratisation that

emphasises participation, rather than the more narrow notion of liberal representative

democracy” (Elliot 1998, p.118-119). This study will examine whether there are

differences between country respondents with respect to environmental attitudes that;

− “Organisations should procure the views of local communities when making decisions

affecting the environment” (Question 11);

“Managers should compromise with stakeholder groups on environmental policy and

process decisions” (Question 12);

− “Responsibility for implementing environmental management should rest entirely with

senior managers” (Question 13); and

− “Manufacturing organisations should be required to maintain a register of statistical data

on the levels of pollution emissions” (Question 14).

It is anticipated that Australian respondents are more likely to support the notion that

local communities be consulted, that organisations compromise with stakeholder

groups, and that statistical data should be kept. However they will be less likely to

support the notion that environmental management rest entirely with senior managers.

23 see http://www.un.org/esa/earthsummit/asia-cp.htm for an online version of an appraisal of the implementation of Agenda 21 [Online] Available: [23/5/2001]. Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 19 -

http://www.un.org/esa/earthsummit/asia-cp.htm


Implementation of Stakeholder Statutes Stakeholder statutes are a legislative initiative that have been adopted by a number of

U.S states to broaden the fiduciary duty of the corporation to stakeholder groups other

than shareholders. They provide a new corporate governance model based on a more

equitable distribution of director duties. Directors are therefore able to consider the

interests of a broader range of stakeholders without the fear of legal recourse from

certain interests such as shareholders and creditors24.

The legal structure in Australia, including the system of common law, leaves open the

possibility for consideration of interests other than that of the investors. However, in

China the operation of civil law prevents judicial precedent from enshrining rights of

individual stakeholders who require state endorsement. Therefore a ruling in one case

will not act as precedent in another hearing, unlike in Australia which is subject to

English Common Law. Even in Indonesia, which is subject to Roman-Dutch law, the

sources of law are statutory legislation, presidential instructions, and official

compilations of Islamic law25. As such, stakeholder rights are subject to authorisation

by the state. Under such a system, stakeholders are not subject to the same flexibility

as under common law and as such non-traditional organisational stakeholders may be

less prominent in non-common law countries. This study will examine whether there

are differences between country respondents with respect to the environmental

attitude that;

− “Legislation should be enacted to give managers the right to consider interests other than

shareholders in organisational decisions” (Question 15).

Given their common law tradition, it is expected that Australian respondents will be

more supportive of the right to consider interests other than shareholders in

organisational decisions.

24 Within Australia, the Corporations Law as it currently stands, does not prevent directors from taking into consideration the interests of constituents other than shareholders. The fiduciary duty of directors is owed to the corporation as a whole, as distinct from a shareholder. Sec 232(2) & (4) of the law requires a director to act honestly and exercise care and diligence in the discharge of his or her duties in the corporation’s circumstances. 25 This information was obtained from the Islamic Family Law website at the Emory University School of Law, which outlines the 'official' legal systems, and legislative and judicial aspects of Islamic-based countries. http://www.law.emory.edu/IFL/legal/indonesia.htm, [Online] Sept 19,2000. Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 20 -

http://www.law.emory.edu/IFL/legal/indonesia.html


Environmental Reports Environmental Reports are an important way of communicating, and providing

accountability for the organisation’s approach toward the environment. Whilst there is

little evidence that examines the extent to which social and environmental disclosure

is undertaken in Asia, a study undertaken on Hong Kong corporations (Lynn, 1992),

has indicated that it had one of the lowest social disclosure rates worldwide. Bedi

(1991, p.113) raises concerns “that business in Asia today is what it was in the west a

century ago...where executives are not aware of, or don’t care about the social

consequences of corporate philanthropy”. This study will examine whether there are

differences between country respondents with respect to the environmental attitude

that;

− “Whether organisations in manufacturing and natural resource industries, should publish

a separate environmental report to accompany financial statements” (Question 16); and

− “Whether organisational environmental performance should be subject to independent

verification by auditors” (Question 17).

Given that organisations in developed countries are more active in reporting on

environmental matters in both the annual report and in separate environmental reports,

it is expected that Australian respondents will be more supportive of organisations

publishing separate environmental reports, and that environmental performance be

subject to independent verification by auditors.

Equality in Local/Foreign Requirements Organisations, especially those of a multi-national nature, ought to be seen to be

applying the same level of due diligence in their social affairs in countries where

there exist limited laws governing environmental management. With regard to

enforcement in China, foreign shareholders are treated more harshly than their local

counterparts and are subject to greater scrutiny and stricter enforcement of

environmental laws. In some special economic regions, local operators are not

required to comply with more stringent standards (Wild 1996, p.136).



A study by Wheeler and Afsah (1996) found that on a survey of 350 factories

participating in the “Proper Prokasih” program in Indonesia, international multi-

national companies were more likely to have factories or businesses that: (1) utilised

environmental impact management efforts to achieve better than standard results;

and (2) complied with all environmental regulations. However, “foreign corporations

can be easy targets for prosecution on environmental grounds in many countries. In

Asia, environmental regulations are often used as a method for governments to

extract a pound of flesh from foreign nationals” (Shaffer, 1993, p.41). Statistics also

indicate a distinction between these nations based on the perceptions of bribery

among a number of surveys of business people26. This study will examine whether

there are differences between country respondents with respect to the environmental

attitude that;

− “Local companies should be exposed to the same degree of environmental compliance

requirements as foreign companies in my country” (Question 18).

Given that in developing countries there is a greater perception of bribery among

officials, it is expected that Australian respondents will be more supportive of the

need to have the same degree of environmental compliance between countries. Based

on the above discussion of expected attitudes by respondents toward environmental

management issues that are contained within the questionnaire to the study, the null

hypothesis is that;

H0a – There will be no significant difference between Australian, Chinese and

Indonesian respondents regarding a willingness to embrace progressive attitudes with

respect to environmental issues.

26 Given that a perfect score of 10.00 would indicate a totally corruption-free status, Gale (1996, pp.484-485) indicates that the 1996 (1995) ranking’s of the perception of bribery for the three countries were Australia 8.6 (8.8), China 2.43 (2.16) and



Data Collection For the sample, 200 management students enrolled in management programs at four

educational institutions27, and 200 managers in public and private corporations

nationwide were selected in Australia, China and Indonesia ([200x3] +

[200x3]=1200). The survey was carried out via a questionnaire physically distributed

by the author to students in a classroom format for respondents in the above

educational institutions, and via the postal service for the managers in public and

private corporations. The questionnaires were distributed throughout the period

October to December 1999 in each of the three countries. The 18 questions were

translated from English into both Mandarin and Bahasa Indonesian, for use in China

and Indonesia respectively.

In order to avoid the perspective of cultural bias, the Indonesian translation was

undertaken by a Senior Lecturer in Indonesian Studies at the University of Sydney,

and a Chinese research assistant at the Asia Pacific Research Institute at Macquarie

(APRIM) University undertook the Chinese translation. Both translators sought to

translate based on the meaning of the questionnaire as distinct from an actual ‘word

for word’ translation. For example, the word ‘stakeholder’ (from Question 12) does

not have a direct translation into Chinese or Indonesian, and it is only relatively recent

terminology in western nations. Therefore terminology similar to ‘groups affecting an

organisation’ were used to convey the actual meaning. Post exit interviews of

respondents indicated there were no problems in conveying the meaning of the actual

stakeholder groups. For example, managerial students understood what a supplier and

an employee were, and their relationship to the organisation.

The measure used to determine differences in attitudes on environmental management

was Likert Scaling. Tests for significant differences between these scores were

examined between countries overall based on a multi-variate test, and then via a test

of between subject effects on each of the eighteen questions. Responses were through

an interval response scale, on a 1-to-5 rating scale for a particular question where: 1 =

strongly unfavourable to the concept, 2 = somewhat unfavourable to the concept, 3 =

Indonesia 2.65 (1.94). There is therefore a greater perception amongst Chinese and Indonesian managers of bribery within their societies, than from Australian managers. 27 The educational institutions were the (1) Macquarie Graduate School of Management – Macquarie University (Australia), (2) Guanghua School of Management – Peking University, Beijing, China, (3) University of Indonesia, Jakarta, and (4) Institut Pengembangan Manajemen Indonesia, Jakarta, Indonesia. Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 23 -


undecided, 4 = somewhat favourable to the concept, and 5 = strongly favourable to

the concept. Fourteen (14) questions were posed in the positive construct (issues

managers should support) and four (4) in the negative (issues managers should not

support) regarding issues affecting the environment28.

In each of the three countries, some of the students were full-time and others engaged

in a combination of full-time work and part-time study (Full-time Manager/Part-Time

Student)29.

Managers of corporations were selected from three main sources30. The sample was

predominantly selected from those organisations within the manufacturing and natural

resources industries, including industrial chemicals, fisheries, food production,

mining, pharmaceutical’s, plastics, and textiles. Envelopes were addressed to the

name of the general manager stated in the source book.

Results Although 200 questionnaires for managerial students in each country were initially to

be obtained, there were in fact actually 192 Chinese respondents and 205 Indonesian

respondents who were management students, and 200 Australian respondents. Results

for the mailout indicated a low response rate in particular for Chinese and Indonesian

managers31. 12 out of the 200 Chinese Managers mailed returned completed

questionnaires, a response rate of only 6%, indicative of previous Chinese studies32.

This can be partially attributable to the continuous organisational change being

undertaken in China, where inefficient state-owned enterprises are being closed, as

28 Questions 1, 2, 3, 4, 5, 7, 10, 11, 12, 14, 15, 16, 17, 18 were framed in the positive construct, whilst questions 6, 8, 9, 13 were framed in the negative construct. 29 Whilst the sample consisted primarily of managers and managerial students, chosen because of their current or future role in being the focal point for implementing an organisation’s environmental objectives, the respondents in this study were actually classified into five categories because some respondents were both a manager and a student. First, were owners of organisations, second were full-time managers, third were both full-time managers and part-time students, fourth were full-time students, and fifth were ‘other’ respondents. 30 In Australia, corporations were selected from the text Duns Asia/Pacific Key Business Enterprises 1998/99 (Dun & Bradstreet, 1998), whilst in China and Indonesia, corporations were selected from The China Phone Book and Business Directory – 1999 (China Phone Book Company Limited), and the Key Business Directory of Indonesia/Philippines and Thailand: 1997/98 Edition (Dun & Bradstreet, 1997) respectively. 31 To test for non-response bias, a one way analysis of variance (ANOVA) test was undertaken (not shown graphically) to analyse for differences between managers who had sent back questionnaires both before and after two weeks following the initial mailout. The null hypothesis of no significant difference was not rejected at the 0.05 level, signifying that early and later respondents did not significantly differ in responses. 32 A 1996 research study (Wang and Newman, 1997) on “Environmental Management and Attitudes of Chinese Managers and Accountants” involving mailed questionnaires undertaken by the China Research & Development Centre of the State Council (CRDC) on 50 public and 450 non-public enterprises in China, yielded a response rate of 12%. Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 24 -


China makes the transition toward a market-based economy. As a result, some of the

organisations in the mailed sample may have ceased to exist at the time of survey. In

Australia, 36 of 200 managers (18%) returned completed questionnaires, whilst in

Indonesia the response rate was 33/200 (16.5%)33. In total, descriptive statistics (see

Table VIII) indicated that the Australian sample had a higher proportion of

respondents in a full-time or part-time managerial position (77.6%), than China

(58.5%) and Indonesia (48.3%). Furthermore, the Australian sample had a higher

proportion of respondents who were 35 years and above (51.7%), than China (5.4%)

or Indonesia (31.9%) giving credence toward a more conservative Australian sample.

Table VIII: Descriptive Statistics

Characteristic Attribute Australia (236)

China (204)

Indonesia (238)

# % # % # % Sex Male 176 74.6 150 73.6 174 73.1 Female 60 25.4 54 26.4 64 26.9 Age Under 25 2 0.8 8 3.9 20 8.4 25-34 years 112 47.5 185 90.7 142 59.7 35-44 years 79 33.5 7 3.4 59 24.8 45-54 years 35 14.8 4 2 12 5 55+ years 8 3.4 0 0 5 2.1 Birth Australia 158 66.9 0 0 0 0 China 4 1.7 204 100 0 0 Indonesia 2 0.8 0 0 234 98.3 Other 72 30.6 0 0 4 1.7 Cultural Anglo/Euro 194 82.2 0 0 1 0.4 Background Chinese 16 6.8 204 100 55 23.1 Native Indonesian 1 0.4 0 0 174 73.1 Other 25 10.6 0 0 8 3.4 Education High School 22 9.3 1 0.5 1 0.4 Obtained Tech Certificate 13 5.5 2 1 0 0 PhD 2 0.8 1 0.5 1 0.4 Masters 60 25.4 106 52 85 35.9 Bachelors 126 53.4 90 44.1 147 62 Other 13 5.6 4 1.9 4 1.3 Occupation Owner 14 5.9 3 1.5 14 5.9 Full-Time Manager 100 42.4 20 10 55 23.1 FT Manager/PT

Student 83 35.2 98 48.5 60 25.2

FT Student 26 11 39 19.3 91 38.2 Other 13 5.5 44 20.7 18 7.6 Multinational Yes 21 8.9 39 19.1 60 25.2 Employment No 88 37.3 80 39.2 101 42.4 Status N/A 127 53.9 85 41.7 77 32.3

33 Combined responses for the managerial students and the mailed questionnaire indicated a sample of 236 (200 + 36) Australian respondents, 204 (192 + 12) Chinese respondents, and 238 (205 + 33) Indonesian respondents, on which to base the analysis. Cummings, L., ‘The Role of Economic and Social Factors in Mitigating Attitudes Toward Environmental Management within Western Pacific-rim Countries’. - 25 -


Cumulative results from the individually questionnaires were obtained directly from

the SPSS statistical software. The survey yielded varied statistical results. Overall, as

Table IX indicates, multivariate tests including Pillai’s trace, Wilks’ Lambda,

Hotelling’s trace and Roy’s GCR, revealed significant differences between the three

countries with regard to environmental attitudes. The significant differences were on

the results of all environmental questions.

Table IX: Multivariate Test – Environmental Attitudes Overall

Effect Value F Hypothesis df Error df Sig.

Intercept Pillai's Trace .992 4262.979 a 19.000 624.000 .000

Wilks' Lambda .008 4262.979 a 19.000 624.000 .000

Hotelling's Trace 129.802 4262.979 a 19.000 624.000 .000

Roy's Largest

Root

129.802 4262.979 a 19.000 624.000 .000

Country Pillai's Trace .576 13.300 38.000 1250.000 .000

Wilks' Lambda .505 13.353 a 38.000 1248.000 .000

Hotelling's Trace .818 13.405 38.000 1246.000 .000

Roy's Largest

Root

.489 16.071 b 19.000 625.000 .000

a Exact statistic

b The statistic is an upper bound on F that yields a lower bound on the significance level

c Design: Intercept+Country

However greater insight is obtained when an analysis is undertaken of the ‘mean

environmental scores’ between the three countries on each of the 18 questions (Table

X). Most respondents supported the questions, and there were significant differences

between all three countries combined on 15 of the 18 questions, with the exception of

Qns 7, 13, and 16. A further ‘Test of Between Subject Effects’ indicates that

significant differences did exist between paired countries on 15 of the 18

environmental issues, with the exception of Question 3 (whether environmental or

carbon taxes are an important way of reducing greenhouse gases), Question 4

(whether governments should reduce resource subsidies as a way of conserving



natural resources), and Question 7 (whether international standards for environmental

performance should be used as a benchmark in the absence of national requirements).


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29 -

Proc

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30 -

Proc

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c-rim

Cou

ntrie

s’.

-

31 -


Analysis through Scheffe’s test of difference indicated that there were significant

differences ( ) between Australia and Indonesia (A/I) on 9 questions, whereas

between Australia and China (A/C) there were 12 significant differences. Between

China and Indonesia (C/I) there were 11 significant differences. Greater distinction

was therefore made between Chinese respondents against both Australian and

Indonesian respondents. The H0a null hypothesis of no significant difference between

Australian, Chinese and Indonesian respondents, appears to be rejected if the results

of Table X are taken into account, but not in the direction anticipated.

With regard to overall scores (see Table X), Australian respondents were the most

prominent in expressing a desire to have trade sanctions imposed on countries not

complying with international environmental agreements (Qn.5), and to have local

companies exposed to the same degree of environmental compliance as foreign

companies (Qn.18). On the questions posed in the negative construct (6, 8, 9, 13), as

anticipated, Australian respondents were the least supportive of the belief that the

primary benefit of environmental standards are financial (Qn.8), and the National

Government should maintain central control over environmental regulations (Qn.9).

This is significant in the sense that there is a deeper recognition of the adverse effects

of multinational behaviour in countries where environmental standards are not as

stringent as in Australia. Against what was expected, Australian respondents overall

were the least prominent in supporting a progressive attitude toward environmental

management. They were the least prominent in supporting mandatory environmental

education for relevant employees (Qn.1), and a more regulatory approach to the

environment with respect to carbon taxes (Qn.3), an interesting outcome given the

Australian Government’s rejection of a carbon tax in 1995. They were also least likely

to support compromising with stakeholder groups on environmental policy decisions,

and the requirement for organisations to keep statistical data on pollution emissions

(Qn.14), and legislation to enshrine stakeholder rights (Qn.15).

Chinese respondents were more prominent in supporting the notion that there be

mandatory environmental education for relevant employees (Qn.1), and that

manufacturing organisations have a separate environmental committee (Qn.2). They

were more in favour of having companies publish a separate environmental report



(Qn.16). On questions in the negative construct, they were however more supportive

of international environmental concerns being subordinate to national concerns

(Qn.6), and that the national government should maintain central control over

environmental regulations (Qn.9). This reflects a more nationalistic and centralised

perspective on environmental accountability. They also preferred to have

responsibility for environmental management rest entirely with senior managers

(Qn.13), although they were more willing to have them compromise with stakeholder

groups on environmental policy (Qn.12). Of the four questions posed in the negative

construct for a development based approach (Qns. 6, 8, 9, 13), Chinese respondents

were more supportive of all four than Australian and Indonesian respondents,

indicating a less progressive approach.

Indonesian were more prominent in supporting carbon taxes as a means by which to

reduce greenhouse gases (Qn.3) and reducing resource subsidies (Qn.4), and using

international standards as benchmarks (Qn.7) when no national standards exist. They

were particularly supportive of managers’ rights to support stakeholder concerns

without fear of litigation (Qn.15), and having corporate environmental performance

being subject to independent verification by auditors (Qn.17). For questions in the

negative context they were the least supportive of international concerns being

subordinate to national concerns (Qn.6), and of not having environmental

management resting entirely with senior managers (Qn.13).

Analysis between occupations (not shown) indicated significant differences between

certain occupations only. For those differences that did exist, they were predominantly

between Managers and Students, and Manager/Students and Students on 9 of the 18

questions34. With respect to the environmental attitudes between occupations, of the

18 questions posed, there were significant differences between managers and

managers/student or students on 9 questions. However, overall, “managerial student”

respondents were no more willing to adopt both broader and positive attitudes toward

environmental issues than “full-time managers/managerial students” alike.

34 Further analysis through Scheffe’s test between occupation via country (not shown graphically) revealed that these managers and students who differed were predominantly Chinese Managers, Manager/Students, and Students.



Implications of the Results Differences were predominantly between Australian and Chinese, and Chinese and

Indonesian respondents. Chinese respondents exhibited a tendency toward

centralisation with respect to environmental attitudes, favouring national control over

environmental regulations, and Australian respondents were the least prominent in

supporting most of the environmental attitudes. Indonesian respondents favoured

more tighter restrictions on corporations, as evidenced by their support for the

subordination of national environmental concerns to international concerns,

companies being subject to environmental performance audit, and a reduction in

resource subsides; initiatives that will add a greater cost to an organisations business.

However, all three countries favoured most of the environmental issues, although

Chinese respondents were stronger in their support. Of the 18 questions asked,

Australian respondents were more prominent than the other two countries in 4 of the

questions, China on 6 of the questions, and Indonesia on 8 of the questions (inclusive

of the reverse scoring).

China tended to be more positive on all environmental issues, contrary to expectations

based on a developmental approach. One reason could be the greater proportion of

post-graduate education by Chinese respondents (52.5%) compared to their Australian

(26.2%) and Indonesian (36.3%) counterparts, and thus a greater willingness to

embrace environmental initiatives presented in a classroom format. Another reason

could include the desire for changes to environmental practices in China. As statistics

have shown, China has the highest degree of CO2 emissions of the three countries and

has a lower economic base in which to combat environmental pollution. However an

important factor maybe the radicalisation of environmental issues in many developed

democratic countries. The perceived militancy of many environmental groups, against

both public and private organisations, and the political aspects of many environmental

movements, have contributed toward a negative impression of many environmental

claims in the public sphere.

Developmental factors can explain, to a degree, respondent attitudes toward

environmental issues. A strong pattern has not emerged however, as most

respondents, regardless of country, were similar in their attitudes on environmental



issues. Although Australian respondents were not as prominent in endorsing non-

traditional perspectives on a range of environmental issues, they did support most of

the questions asked. They were forthright in supporting international trade sanctions

to enforce environmental agreements, of not supporting central control over

environmental regulations, and of having multinational corporations subject to the

same requirements in all countries. The reluctance to be as prominent as Chinese and

Indonesian respondents in supporting government initiatives such as a carbon tax, is

contrary to expectations, but may reflect the perception that embracing progressive

environmental attitudes comes at a cost to the consumer, inhibiting investor wealth.

The collection of statistical data on the social and environmental issues, and

subsequent valuations, albeit based on tentative assumptions, has been undertaken by

western corporations in one form or another for over 30 years beginning with the

value-added statement which was prominent in the 1970’s, to the environmental

reports produced by energy and resource companies today. Much of this has been

voluntary and in response to public pressure over accountability, rather than a serious

attempt at measurement of externalities. Similar public pressure has not been placed

on organisations within China or Indonesia.

As mentioned, extreme positions on environmental issues often characterise the

environmental debate in Australia, and in other western countries with a democratic

setting. Many western countries have green political parties, which form part of the

national and state political infrastructure, and are perceived, by some sections of the

community, in particular business organisations, as being an impediment to economic

growth. Such groups can use their minority numbers in a parliamentary setting to stall

support for the sell-off of government entities, force costly changes to existing

legislation, and impose restraints on business operations in a particular geographical

area. Therefore despite not being at the mainstream of the political debate, their ability

to change the political landscape remains potent, unlike in China and Indonesia where

the political effect of the environmental movement is muted. There has in China, and

until very recently in Indonesia, been a greater control by government over dissenting

opinions, and the activities of non-government organisations. Australian respondents

may therefore be able to perceive each of the environmental questions in a more

political context than their Chinese or Indonesian counterparts, which may adopt a

more largely ‘pure of heart’ approach to each issue, given their limited exposure to the



political aspects of environmental issues. The similarity in scores between Australia

and Indonesia merits further analysis, but could be a reflection of the older age

bracket constituting the Australian and Indonesian respondents.

The questions in the study do not represent the entire framework on which attitudes

toward the environment are formed, and questions on other environmental issues may

have indicated a different pattern of responses. Also, the extent of attitudes toward the

environment in this study does not act proxy for organisational action. Whilst attitudes

by individual respondents, in particular managers and managerial students, do reflect

potential current and future organisational attitudes, organisational values themselves

are the result of transactional dynamics and extensive interplay between

organisational participants to arrive at a collective decision. Therefore, the results do

not represent organisational attitudes per se or actual actions toward the environment.

However, managerial and managerial student attitudes are important in that it is these

respondents who are primarily responsible for defining and carrying out current and

future organisational activities.

Another limitation of the study is the low response rate for managers who had been

mailed questionnaires. This was particularly evident in China where only 12 out of

200 mailed managers responded (6%). In Australia, the response rate was higher at

18% (36 out of 200). Also, the study was not time-series and respondents were only

solicited for their views at a particular point in time (October to December 1999). This

period coincided with tumultuous change within both China and Indonesia. Following

the Asian economic crisis, China has undertaken unprecedented economic change.

The transition toward a market-based economy has resulted in the closure of

inefficient state-owned enterprises, which may have occurred during the period of the

data collection. Some of these organisations may have ceased business from the time

of publication of “The China Phone Book and Business Directory - 1999” in late 1998

to the time of data collection in November of 1999. Furthermore, Chinese managers

may have been cautious about responding to requests for their attitudes, given the

non-democratic nature of the society. This may have been partially responsible for the

low response rate for Chinese managers.



With respect to Indonesia, the response rate was somewhat higher at 16.5% (33 out of

200) for mailed managers. Data collection was undertaken however, at a sensitive

time for the country, given the intervention of INTERFET (the United Nations

International Forces in East Timor) troops in East Timor35. The researcher clearly

identified himself as a researcher from Macquarie University in Australia. This may

have impacted upon the results in that it may have created apathy in the respondents,

which in turn may not have resulted in answers that would have been forthcoming

under normal conditions.

Future research could undertake empirical work across different geographical

locations and cultural contexts. Research can also examine the extent to which

organisations actually implement environmental policies, rather than the attitudes

managers’ display toward them. Furthermore, researchers may wish to undertake case

studies on particular organisations, and solicit the attitudes of stakeholders themselves

as to their relationship with organisations. Research on the mediums used to

communicate stakeholder concerns, along with factors other than economic and social

criteria to explain stakeholder prominence, can also be used.

These environmental questions represent to a degree the claims which underlie one

particular stakeholder, that being environmental groups. Given that strong

relationships were not observable between countries, further research is needed.

Different environmental questions could be asked in the survey, and a time series

analysis could be undertaken to determine whether respondent viewpoints changed

over time. Environmental groups themselves could be solicited as to the issues they

consider to be the most important, and these issues could be included in the study and

the strength of the results compared with the perceived prominence of the group itself.

Attitudes toward environmental issues, whilst partially attributable to developmental

factors, may ultimately reflect the geo-political nature of much of the environmental

debate.

35 These forces were led predominantly by Australia, which strained relations between Australia and Indonesia at the time. This may have led some respondents not to undertake the questionnaire seriously in protest. In fact one respondent wrote an expletive on the questionnaire. However, the researcher believes the seriousness of this notion is limited in respect to its overall impact on the results.



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