What is Corporate Waste Management?
Corporate waste management involves companies’ strategies and practices to manage waste produced during their operations. This encompasses initiatives focused on reducing waste, reusing materials, recycling, and ensuring proper disposal, all with the primary goal of minimising environmental impact and promoting sustainability. Recent academic literature (e.g., Batista, 2021) suggests that waste management, in the corporate context, refers to the systematic processes of collecting, transporting, processing, and disposing of waste materials to reduce environmental impact and ensure compliance with legal regulations. This includes waste sorting, recycling reusable materials, and the responsible disposal of non-recyclable waste.
Why do we need to pay attention to Corporate Waste Management?
According to recent estimates, global firms produced approximately 37 million tonnes of plastic waste in 2021, with projections indicating an increase to 60 million tonnes by 2027 due to rapid industrialisation. Additionally, total global solid waste generation amounted to approximately 2.24 billion tonnes in 2020 and is anticipated to surpass 3.4 billion tonnes by 2050 (World Bank, 2022). With the growing recognition of the profound effects of climate change, governments and organisations are increasingly prioritising efforts to reduce greenhouse gas emissions and mitigate the release of toxic chemicals generated from waste. Concurrently, socially responsible investors are exerting greater influence by advocating for stronger corporate measures to address climate change and enhance sustainability practices. Landfilling of solid waste generated by corporate entities remains a significant contributor to rising greenhouse gas emissions, global temperature increases, and biodiversity loss (Prado-Lorenzo & Garcia-Sanchez, 2010). Thus, waste management initiatives are crucial for environmental management.
What affects Corporate Waste Management?
Recent studies have revealed that various factors influence the effectiveness of environmental initiatives like waste management. For example, Gull et al. (2023) have found that diversity on corporate boards significantly reduces waste generation and boosts recycling efforts. Similarly, Ahsan et al. (2023) highlight that good corporate governance improves the transparency of companies’ waste disclosures, covering both hazardous and non-hazardous waste. Furthermore, Gull et al. (2024) discovered a notable connection between having a sustainability committee and waste generation, although its impact on recycling rates is minimal.
Is Product Market Competition a Killer?
Product market competition (PMC) refers to the competitive dynamics among firms operating within the same market, offering similar products or services. Companies seek to gain market share by differentiating their offerings through various factors, including product features, pricing strategies, quality enhancements, and marketing initiatives. This competition is fundamentally driven by the objective of attracting and retaining customers within a specific product category.
Using a global sample of 42 countries from 2002 to 2020, our research finds a positive association between PMC and corporate waste generation. This suggests that companies tend to generate more waste as competition in the product market intensifies. Conversely, there is a negative association between PMC and corporate recycling activities. Increased competition appears to correlate with a decrease in firms’ recycling efforts. The research identifies that heightened PMC adversely affects a company’s profitability and cash flow. This financial strain reduces investment in waste management initiatives, particularly waste recycling. Therefore, PMC is a negative force for corporate waste management.
Conclusion and Policy Implications:
The findings suggest that companies may prioritise short-term financial performance over sustainable waste management practices as they face more intense competition. This tendency can lead to increased environmental degradation due to higher waste production and lower recycling rates. As such, our insights are valuable for regulators, investors, and policymakers, emphasising the need to consider competitive pressures when devising and implementing corporate environmental policies.
References
Ahsan, T., Albitar, K., Gull, A. A., & Hussainey, K. (2024). Does climate governance affect waste disclosure? Evidence from the US. Applied Economics, 56(43), 5146-5162.
Batista, M., Caiado, R. G. G., Quelhas, O. L. G., Lima, G. B. A., Leal Filho, W., & Yparraguirre, I. T. R. (2021). A framework for sustainable and integrated municipal solid waste management: Barriers and critical factors to developing countries. Journal of Cleaner Production, 312, 127516.
Gull, A. A., Atif, M., & Hussain, N. (2023). Board gender composition and waste management: Cross-country evidence. The British Accounting Review, 55(1), 101097.
Gull, A. A., Carvajal, M., Atif, M., & Nadeem, M. (2024). The presence and composition of sustainability committee and waste management practices. International Review of Financial Analysis, 93, 103111.
Prado-Lorenzo, J. M., & Garcia-Sanchez, I. M. (2010). The role of the board of directors in disseminating relevant information on greenhouse gases. Journal of Business Ethics, 97, 391–424.
World Bank. (2022). Solid waste management. https://www.worldbank.org/en/topic/urbandevelopment/brief/solid-waste-management. (Accessed 21 October 2023).
Cite this article as: Atawnah, N., Hossain, M. Z., Al Mamun, M., & Badarin, L. (2024). Does product market competition affect corporate waste management? International evidence. International Review of Economics & Finance, 95, 103483.