EXAMINING THE CORRELATION BETWEEN WASTE MANAGEMENT AND PROFITABILITY IN MANUFACTURING FIRMS

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The production and management of waste is a strategic issue for all countries, since it has social, economic and environmental implications. It would be desirable to combine responsible social behaviour, economic feasibility and environmental sustainability, but various parties are involved (citizens, firms, public administrations), often with conflicting needs. This article deals with Italian companies operating in the collection, treatment and disposal of municipal solid waste (MSW). The aim is to analyse the profitability of these companies and try to understand whether this is related to waste management "best practices", in particular separate collection (SC). European Directives 2006/12 and 2008/98 encourage member countries to base their own legislation on control of the entire waste cycle, from production to disposal, applying the socalled “hierarchical principle”, which identifies prevention of negative environmental impacts deriving from waste production as the primary objective, followed, in order of priority, by reuse, recycling, recovery of another type (such as energy production) and, lastly, disposal. It will therefore be attempted to identify whether greater environmental sustainability can produce positive effects on the economic-financial results of companies operating in said sector. The article is organised as follows: the first paragraph analyses the literature on the issue in question; the third paragraph outlines the research method; the fourth paragraph analyses the results of the empirical analysis performed; the final paragraph contains the conclusions.

1.2 Statement of Research Problem

There are numerous studies analysing the relationship between environmental manage-ment and company performance, but they almost never examine companies operating in the MSW sector. There are many articles in the literature that examine the issue in general terms, but they rarely refer to a specific production sector. Contributions on this issue tend to support the existence of a positive relationship be-tween environmental sustainability and economic-financial performance. In particular, certain studies claim that a greater focus on the environment produces competitive advantages and therefore improves company profitability (Klassen and McLaughlin 1996; Sharma and Vredenburg 1998). Despite the difficulties linked with identifying the economic-financial effects produced by more responsible environmental management, which therefore risk being underestimated, certain authors claim that adopting pollution prevention systems can help to improve a company's operational efficiency and profitability (Russo and Fouts 1997). They verify their research hypothesis, based on the resource-based view, by using the return on assets (ROA) as the dependent variable. The results show that the best environmental performances are associated with the highest economic-financial performances and that the posit

1.3 Aim and Objectives

The aim of the study is to assess manufacturing firms participation in domestic solid waste management in Kaduna south Local Government Area, Kaduna State and the effect on the profitability of the organization. This would be achieved through the following objectives:

1. To identify agencies involved in the management of solid waste in the study area;

2. To assess level of participation of manufacturing firmss in the management of solid waste in the study area; and

3. To examine correlation between waste management and profitability in manufacturing firms in the study area

4. To examine prospects and challenges of manufacturing firms participation in solid waste management in the study area.

1.4 Hypothesis

H01: There is no significant relationship between the profit level of respondents and the types of wastes generated in the study area

H02: There is no significant relationship between the profit level of respondents and the volume of wastes generated in the study area

1.5 Scope of the Study

This study focuses on the assessment of the Manufacturing firms participation in domestic solid waste management in Kaduna south Local Government Area. The assessment Covered Rapid appraisal which involves the frequency of waste generation as well as waste

collection and quality assessment of services rendered in relation to sustainable solid waste

management strategies. The spatial coverage