The Impact of Environmental Management Plans on Firms’ Compliance with Governmental Regulations and Environmental Laws

Abstract

Many developed and developing countries have enacted environmental laws and regulations to control water quality and the environment. However, human activities, such as agriculture, urban and industrial development, mining, and recreation, significantly alter the quality of natural environments and their potential use. The compliance of firms with environmental laws is of great concern to scientists, governments, and regulatory agencies. The presence of hazardous chemicals in water resources even in small amounts may cause massive environmental damage. Thus, governments pass environmental laws and regulations to monitor human activity and enforce compliance with environmental standards. This study investigates the potential to improve firms’ compliance with environmental standards by implementing an environmental management plan (EMP) within a public firm and a private firm in South Africa. EMP implementation is required to mitigate and manage environmental risk. This study asks the following research question: To what extent does EMP implementation enhance a firm’s compliance to environmental laws and regulations? Further, to what extent are the specific characteristics of a firm associated with various EMP categories? The study used methods of inspection, observation, impact assessment, implementation, and monitoring to answer the research question. In both firms under study, the results showed no compliance with environmental law during initial site inspection and impact assessment. However, the implementation of EMPs in both firms improved compliance with environmental laws to nearly one hundred percent. As a result, EMPs were successfully implemented and monitored, improving the firms’ compliance with environmental laws and reducing negative environmental impacts to an insignificant level.