Study: 250 businesses have gone green for financial reasons

Research will be presented for 1st time at an eco-innovation conference on Wednesday at Tel Aviv University.

February 2, 2010 06:25
4 minute read.
environmentalism 88

environmentalism 88. (photo credit: )


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In a rare, positive look at Israeli industry and environmental compliance, a new study has found that 250 companies have gradually improved their pollution levels over the past two decades.

Dr. Nir Ben-Aharon conducted the study, titled “Eco-Innovation in Industrial Firms,” for The Jerusalem Institute for Israel Studies’ Center for Environmental Policy. The study will be presented for the first time at the Institute’s eco-innovation conference on Wednesday at Tel Aviv University.

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Based on his doctorate, Ben-Aharon did a statistical analysis of 250 companies and 370 environmental projects. He found that over the years, factories have reduced their pollution and implemented more environmental projects. He also found that if, 20 years ago, the main motivator was compliance with laws and regulations and a fear of incurring penalties, today other factors are just as much at play, such as financial considerations, customer demand and reputation.

Ben-Aharon separated his analysis into two types: eco-innovation and conventional environmental projects.

“Eco-innovation would be taking particles emitted during the production process and reusing them in the manufacturing process. Assigning an employee to collect and stack boxes to return to the distributor for reuse or putting water-saving devices on faucets would be a conventional project,” Ben-Aharon told The Jerusalem Post Monday.

“If a factory implemented a technology that had not been in use in Israel before, that’s eco-innovation. To use a tried-and-true technology, already in place in a lot of other factories in Israel, is not,” he explained.

Ben-Aharon also analyzed Environmental Protection Ministry enforcement techniques to see if they hindered or helped eco-innovation.

“It was found that actions taken by the Ministry of Environmental Protection – such as making business licensing conditional on the fulfillment of environmental requirements, issuing hazardous substances permits and providing grants for hazardous waste minimization projects – assisted the development of eco-innovation.

“On the other hand, enforcement activities tended to lower eco-innovation: firms that were subject to environmental enforcement by the Ministry of Environmental Protection – through the dispatch of warnings, holding of hearings or issuance of orders – tended to conduct fewer eco-innovation projects than similar firms not subject to enforcement procedures.

“Firms under enforcement could not allow themselves to be exposed to any further risks after being legally targeted by the ministry, even if eco-innovation could have benefited them economically and strategically. Therefore, they chose to solve their environmental problems in conventional rather than innovative ways,” according to an English abstract of the new study provided by Ben-Aharon.

Ben-Aharon found that pollution rates from industry from 1990 to 2004 went down overall.

“Some factories even had lower pollution rates in 2004 than in 1990,” he noted.

In recent years, firms were likely to innovate for a number of reasons, Ben-Aharon found.

“Out of the total number of firms that participated in the research, 12 firms underwent an in-depth review, and case studies were developed which describe their eco-innovation. The case studies underlined some of the profiles of innovating firms: 1) firms whose international parent companies asked them to continually improve their environmental performance and implement eco-innovation; 2) firms that encountered environmental problems and whose search for a solution led them to create an organizational unit that subsequently became the catalyst for eco-innovation projects; 3) firms that implemented eco-innovation due to economic pressures and the need for greater business efficiency; 4) firms that initiated eco-innovation projects as a result of the establishment of a new firm or the relocation of an existing firm to a new site,” he wrote.

If in the past, fear of penalty was the main motivation, other reasons have since come to the fore.

“The findings of the research demonstrate that the factors that influence eco-innovation are layered in a kind of pyramid: at its base, legal requirements, in the middle, economic/business requirements (such as the possibility of reducing expenses or requirements by clients, which leave the firm with limited flexibility and are influenced by the environmental benefit of innovation to the firm), and at the top level, reputation and environmental awareness – allowing for maximum flexibility by the firm."

There was also a market failure created by the reliance on emissions standards. While companies were penalized for exceeding the standards, they were not rewarded for achieving rates below the standard, which in turn encouraged them merely to meet the requirements through conventional projects rather than exceed them with eco-innovation projects, which would be more efficient and healthier.

Moreover, while business permits and hazardous materials permits did lay down regulations to be followed, they are issued too late, Ben-Aharon wrote. He recommended that the environmental enforcement authorities make contact with factories and companies much earlier in the process of building a new factory. If the authorities provided the guidelines while the factory was still in the planning stages, companies could factor compliance into the building plans, he argued.

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