Supply-Chain Dynamics, Environmental Issues, and Manufacturing Firms

Abstract

Concern about environmental issues and pressure on manufacturing firms to decrease their environmental impact have both intensified since the early 1980s. At present legislation is the most significant source of environmental pressure on firms, but it is the government's intention that voluntary nonlegislative measures will play a much greater role in the future. Pressure through the supply chain is one possible mechanism for achieving this objective, although relatively little is known about its environmental role or importance for manufacturing firms. The author outlines the supply-chain concept, and examines its current significance as a source of environmental pressure. The nature of any supply-chain pressure experienced by a cross section of manufacturing firms in Yorkshire and Humberside, and their actual responses to it, are considered. This investigation reveals that, because of their economic importance, environmental pressure from customers has the potential to be significant. However, in practice such pressure only tends to affect chemical firms and those firms in the consumer-goods sectors which have experienced green consumer pressure directly. Industrial customers, with the exception of a minority of large firms and multinational corporations, generally show little interest in the environmental implications of their sales and purchasing. Environmental legislation is confirmed as by far the most important pressure forcing firms to mitigate their environmental impact. The policy implications of these findings for any move away from reliance on environmental legislation towards voluntary controls are explored.

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