JSPES, Vol. 41, No. 1 (Spring 2016)
pp. 34–50

Effect of ISO 14000 Certification on Sustainability: Evidence from the Indian leather industry

Sandeep Kumar Gupta
Uday S. Racherla

Department of Industrial & Management Engineering,
Indian Institute of Technology
Kanpur, Kanpur, India 208016

Corresponding author: udays@iitk.ac.in

Industrialization across major economies of the world has led to various economic, social, and environmental opportunities as well as challenges. Thus, the need to monitor and control economic activities keeping sustainability of system as the long-term goal has evolved. During the last few decades, the policy makers have developed many guidelines or standards and measurement frameworks to promote the concepts of sustainability across various industrial domains. Among them, ISO 14000 certification is the most commonly adopted Environment Management System (EMS) by business enterprises around the world. However, as literature suggests, the process of ISO certification is entirely voluntary and non-governmental, this study has been designed to empirically test the influence of ISO certification on sustainability performance of leading states of the Indian leather industry. The findings reveal that, except economic sustainability, Uttar Pradesh (UP) has performed the best among the selected states, which could be attributed to its higher proportion of ISO certified leather firms. However, it was found, using firm-wise unit data analysis, that there is insignificant difference in performance between certified and not certified firms in all the selected states. The field study supports this anomaly with the reason that firms acquire the certification under the pressure of overseas customers to meet the requirement of environmental compliance on paper only. Thus, though the Govt. of India has taken correct step by subsidizing 75% expense of certification for MSMEs, it failed to monitor its effectiveness among the leather processing firms.