organizational structure and effective environmental management

Business Strategy and the EnvironmentBus. Strat. Env. 9, 108–121 (2000)

ORGANIZATIONALSTRUCTURE AND EFFECTIVEENVIRONMENTALMANAGEMENT

Simon Atkinson1, Anja Schaefer2 and Howard Viney*,3

1 Salford University, Manchester, UK, 2 King’s College, London, UK,3 Middlesex University, London, UK

Success in ‘greening’ a businessorganization is likely to depend on anappropriate environmental managementstructure being developed in accordancewith the general structure of theorganization and then receiving theappropriate support from senior andmiddle management. The failure toassure such a relationship may providean explanation of the development ofgaps between policy and practice. Thisarticle explores differing choices in thestructure of the environmental functionin a number of UK regional electricitycompanies and how these choices impactupon the management of environmentalissues, producing different outcomes.The paper argues that the environmentalstructure that is, either consciously or bydefault, adopted by a company wouldseem to have some impact on howenvironmental issues are perceived anddealt with by that company. Therefore,such a decision has the capacity to shapeenvironmental strategy in its

implementation and possibly even itsconception. Copyright © 2000 JohnWiley & Sons, Ltd and ERPEnvironment.

Accepted 7 September 1999

INTRODUCTION

Increasingly the environmental manage-ment literature is moving its focus awayfrom what companies ought to be doing,

to consider how the environment can be inte-grated into the normal strategic processes oforganizations (Hutchinson, 1996; Lamming,1996). This shift in emphasis results partlyfrom a recognition of gaps between environ-mental policy and environmental perfor-mance (Hutchinson, 1996; Bansal andHoward, 1997). In essence the problem hasbeen captured by the ‘Green Wall’ debate(Shelton, 1996; Miller, 1998) resulting from theArthur D. Little survey of US organizationswhich located an ‘intramural barrier’ betweenan organization’s environmental function andthe other operational functions with which itwas intended to interact (Shelton, 1996). Thispaper examines the contribution that environ-mental structures can make to strengtheningor breaking down such barriers.

It is generally recognized that organiza-tional structure has an important inter-relationship with strategy and this is likely to

* Correspondence to: Howard Viney, Middlesex UniversityBusiness School, The Burroughs, Hendon, London NW4 4BT,UK.

Copyright © 2000 John Wiley & Sons, Ltd and ERP Environment.

ORGANIZATIONAL STRUCTURE

be the case in environmental strategy asin any other aspect of corporate strategy.Indeed, the need to develop appropriateorganizational structures to support environ-mental management was recognized fairlyearly in the development of the literature onenvironmental management and organiza-tional greening (e.g. Hunt and Auster, 1990;Greeno, 1991; Newman and Breeden, 1992;Welford, 1992; Winsemius and Guntram,1992; Shrivastava, 1994; Stead and Stead,1994; Shrivastava and Hart, 1995; Maxell etal., 1997). The relationship between organiza-tional structure and environmental manage-ment is, however, rarely explored in detailand we have not encountered any publica-tions dedicated specifically to this issue.

The purpose of this paper is therefore tolook specifically at organizational structure inthe context of environmental management.To this end we study how the environmentalfunction has been organized within the over-all corporate structure in a number of compa-nies within the UK electricity industry, andhow differing structural alignments can inter-act with the management of the environmen-tal function and produce different outcomes.We acknowledge that interactions with qual-ity and safety functions may complicate theissue, but we focus solely on environmentalresponsibilities for the sake of clarity.

THE UK ELECTRICITY COMPANIES

The UK electricity industry makes an inter-esting study for four main reasons. (i) Thecompanies are large enough (in terms of per-sonnel, business diversity and geographicalarea) for complex group structures to emerge.(ii) The industry has a very real impact uponthe environment. These environmental im-pacts are both direct – e.g. pollution duringthe electricity distribution process – and in-direct – e.g. resource use in the generationprocess. (iii) The recent privatization and lib-eralization of the industry has provided thebusiness researcher with an almost uniqueopportunity to observe the strategic develop-ment and adaptive processes of companies

coming to terms with new operating condi-tions. Consequently, the industry provides atightly constructed sample frame for such anexamination. Recent research has identifiedthe development of a variety of differentiatedstrategic positions being adopted by thesecompanies (James et al., 1997; Ghobadian etal., 1998). The effect of mergers on consumers(via prices) and on competition has also beenexamined (Kennedy, 1997), but effects on en-vironmental management seem to have re-ceived less attention. (iv) A variety oforganizational structures has developed inthe industry, thus providing a good samplefor our study. These four factors provide uswith a unique opportunity to examine theinteraction of strategy, structure and environ-mental management.

The UK electricity industry was privatizedin 1989. This resulted in the creation of anumber of independent companies. Thesecompanies are regulated by the Director Gen-eral of Electricity Supply who heads theagency OFFER – the Office of Electricity Reg-ulation. In England and Wales the industryalso saw industrial de-integration, wherebyeach of the principal activities within the in-dustry (generation, transmission, and distri-bution and supply) were allocated to separatecompanies with the aim of developing a com-petitive market for electricity. This article fo-cuses mainly on the Regional ElectricityCompanies (RECs), which distribute and sup-ply electricity in a number of service areaswithin England and Wales. The situation inScotland and Northern Ireland is different asvertically integrated companies were created.Since privatization, the UK Government hasrelinquished its final ownership of these com-panies, with the expiration of its GoldenShare. As a direct consequence, there hasbeen considerable merger and acquisition ac-tivity within the industry, with several com-panies passing into American ownership(James et al., 1997). Two companies alsomerged with the water and sewerage compa-nies in their region, thus creating two re-gional multi-utility companies in Englandand Wales.

Copyright © 2000 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 9, 108–121 (2000)

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RESEARCH BACKGROUND

This article integrates knowledge from threedifferent studies of this sector, which givedifferent perspectives on organizational struc-ture. One of these looks into the processes bywhich a number of regional electricity compa-nies (RECs) have adapted to the new situationcreated by privatization, using a multiple casestudy approach to highlight emergent busi-ness strategies. The study also focuses uponchanges to organizational and managementstructures, and the effects of changing owner-ship within the industry.

The second study is an in-depth case studyof the environmental management in oneREC, largely based on participant observationmethodology over a period of two and a halfyears from 1996 to 1998. During this periodthe researcher was able to observe some of thestructural changes described in this paper atfirst hand while assisting the company inestablishing an environmental managementsystem.

The third study1 also uses a multiple casestudy approach, looking at the environmentalstrategy and management of six companies inthe UK electricity distribution and water andsewerage sectors. The study focuses in partic-ular on agents and processes of organizationalchange with respect to environmental strategyand management, taking into account the ef-fects of regulation, organizational structureand the way in which environmental strategyand management is embedded in overall cor-porate strategy and management.

Each of the projects shared a common inter-est in the effect of structure upon strategyformulation and implementation: project 1from a general strategy perspective, andprojects 2 and 3 from a specifically environ-mental perspective. This article, therefore, at-tempts to synthesize observations drawn fromthe three projects and develop an exploratoryconceptual framework of the environmentalstrategy/structure relationship within organi-zations. It is intended that this initial ex-ploratory research will be followed by later

confirmatory research within other publicutility and non-public utility industries.

All three researchers were granted rela-tively easy access to the case study companiesbut on the understanding that companynames would not be revealed in any subse-quent publications. We do not believe thatthis distracts significantly from the conclu-sions to be drawn in this article as ourpurpose is to show general patterns of envi-ronmental management structure, not particu-lar achievements or shortcomings of individ-ual companies. The examples given in theremainder of the article are drawn mainlyfrom five different companies. We havenamed these Electricity Company A, Electric-ity Company B (part of Multi-Utility 1), Elec-tricity Company C, Electricity Company D(part of Multi-Utility 2) and Electricity Com-pany E.

ORGANIZATIONAL STRUCTUREAND ORGANIZATIONAL STRATEGY

Organizational structure is a framework thatallows corporate strategy to be pursued. Itrefers to the relationship of the various com-ponents of the organization with each otherand impacts very considerably on the strate-gies that a company finds itself able to pursuesuccessfully. Miles and Snow (1978) identifythe relationship between strategy and struc-ture as being of vital importance, as inconsis-tencies between the two will lead todifficulties in the application of strategy.There is some controversy on the precise na-ture of this relationship. Authors within the‘classical’ school of corporate strategy (seeWhittington, 1993), which sees strategy as adeliberate, top down activity, tend to arguethat organizational structure should beadapted depending on the strategic goals ofthe company. On the other hand, authorstaking a more process-oriented view of corpo-rate strategy have argued that in reality it ismore likely that existing structures frame thekinds of strategy that a company could andwould adopt (Mintzberg, 1983, 1990). It is notwithin the remit of this article to advance the

1 Funded by the Economic and Social Research Council GlobalEnvironmental Change Programme.


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argument on the precise relationship betweenstrategy and structure. Rather, we hold that,despite these ongoing arguments, authors ofdifferent persuasions agree that there is asignificant interaction between strategy andstructure in general and, consequently, thatthe interaction between environmental struc-ture and strategy merits some attention.

Handy (1985) has identified a small numberof basic managerial structures. These struc-tures reflect the characteristics of the organi-zation, in relation to five possible diversities:regional diversity – the extent to which anorganization operates in more than one area,region, country or continent; market diversity– the extent to which an organization operatesin more than one market; product diversity –the extent to which an organization producesa range of products; technological diversity –the extent to which an organization uses avariety of technologies in its production activ-ity – and goal diversity – the extent to whichan organization has a single set of goals, or aportfolio of goals.

In response to this diversity, a companywill inhabit one of a variety of structures thatbest fulfils the demands of the unique set ofpressures experienced by the organization.These were identified by Weinshall (1971) asthe following: (i) entrepreneurial structure, ex-hibiting informal practices in its pursuit ofbusiness goals, and hence goal oriented, buta high degree of centralized control; (ii)functional structure, with a clearly definedhierarchy, formalized management controlpractices and centralized leadership and man-agement functions; (iii) decentralized, productfocused structure, grouped around products,and (iv) decentralized, geographically focusedstructure, grouped around geographical divi-sions. A further two forms of structure havelatterly been distinguished: (v) the holdingcompany structure and (vi) the matrix struc-ture, a hybrid representing an attempt tomarry the most effective aspects of centralizedand decentralized structures. Our assessmentof the evolving organizational structures ofthe RECs will refer back to Handy’s andWeinshall’s models.

ENVIRONMENTAL MANAGEMENTSTRUCTURE

Much of the environmental management liter-ature focuses on the need to develop an orga-nizing framework to translate corporatecommitment to the environment and an envi-ronmental policy into initiatives, and to in-tegrate environmental concerns throughoutthe organization (Hunt and Auster, 1990;DeChant and Altman, 1994; Zeffane et al.,1995). These authors argue that appropriateorganizational structures to support the envi-ronmental goals of the company are a com-mon feature shared by companies that havesuccessfully managed environmental issues.They also point out that such a structure wascritical to foster change and promote integra-tion and co-operation across lines and levels.

The literature generally also agrees on theimportance of appointing a ‘good’ environ-mental manager in order to co-ordinate thecompany’s efforts to develop a more compre-hensive environmental strategy and manage-ment (Greeno and Robinson, 1992; Newmanand Breeden, 1992; Winsemius and Guntram,1992). Such an environmental manager is seento perform a number of tasks. Firstly, he/shemay be charged with ensuring the implemen-tation of an organization’s formal environ-mental policy. Secondly, he/she may becharged with ensuring the organization’scompliance with all aspects of environmentallegislation that applies to the organization.These two responsibilities may, of course,overlap. A third role is often to raise theawareness of the environment among all lev-els of employees within an organization. Afourth role involves providing support tofunctional managers who are managing envi-ronmental programmes of their own, or whoare seeking to integrate environmental consid-erations into their own business practices.

MODELS OF ENVIRONMENTALMANAGEMENT STRUCTURE

Since privatization UK RECs have developedin a number of different strategic directions,


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some continuing to focus mainly on electricitydistribution, others trying to build significantgeneration capacity or entering overseas mar-kets (Ghobadian et al., 1998). Parallel to, andpartly in consequence of, this diffusion instrategy a variety of different structural pat-terns have emerged. In part, these differingstructures can be seen as a consequence of thewidespread merger activity that has occurredwithin the industry as well as a change inmanagement thinking, with less traditionalmanagement approaches imported from theprivate sector after privatization. Within theseoverall group structures we have observed avariety of sub-structures that assign environ-mental roles and responsibilities across thegroup.

In the following we present five models ofenvironmental structures observed in the UKelectricity industry. In each case the organiza-tion of the environmental function, as far as itexists, can be seen to correspond to the overallstructure of the organization. These modelsshould not be taken to represent any onecompany exactly. By necessity they are sim-plifications of actual organizational complexi-ties and are perhaps best regarded as a kindof ‘ideal type’ in the Weberian sense.

It should also be noted that environmentalmanagement structures in the companies’studies did not appear to be particularly sta-ble or long lasting. During the time of ourvarious studies we observed considerable fluxin the environmental structures of a numberof companies. This was partly due to rapidlychanging corporate structures, induced by thehigh incidence of mergers and take-overs. Onthe other hand, companies were experiment-ing with different environmental structures,

which was part of an ongoing learning pro-cess as environmental issues were increas-ingly incorporated into their managementpractices. Thus, in a period of little more thanthree years one company moved first from afunctional product-focused structure (model2) to a divisional structure with strong groupcentre (model 4) in order to co-ordinate envi-ronmental management better across the com-pany, and to take account of a significantincrease in generation activity. It then movedto a decentralized divisional structure (model3) following a take-over by an American com-pany and a separation of generation from thedistribution and supply business. Similarrapid changes took place in other companies.

Model 1: regionally based structure (prior toprivatization)

Prior to and shortly after privatization thestructures of the RECs were typically region-ally based, with a number of disparate busi-nesses having joint management in eachregion (see Figure 1). This corresponds toWeinshall’s decentralized geographically fo-cused structure. No examples of this structuresurvive today. We have, therefore, not beenable to observe this type of structure at firsthand. However, many managers we spoke tohad been in the company before privatizationand were able to give us some idea of envi-ronmental management at that time. Priva-tization of the electricity industry in the UKcoincided with a rapid growth in societal andcommercial awareness of environmental is-sues. Thus, it only became common to havedesignated environmental managers after1990. Prior to that, arising environmental

Figure 1. No designated environmental manager.


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issues were normally dealt with in an ad hocway according to the judgement, knowledgeand commitment of local engineers and man-agers. This could result in quite differentpractices being adopted in different regionson issues such as waste management and oilhandling.

Managers in the companies varied in theiropinions as to whether this lack of an identifi-able environmental function meant that envi-ronmental issues were not usually considered.Some felt that environmental issues had al-ways been taken seriously by the company’sstaff even without the existence of formalenvironmental management procedures or adesignated environmental management func-tion. The following comment from the direc-tor of the systems division at one RECillustrates this feeling.

Certainly if you talked to some of ourengineers, yes, they were concerned aboutputting underground cables where wecan, and as I say we were doing trench-less excavation long before the environ-ment became the issue in society that it isnow. So it’s been a development over timeand it is not something that suddenly hascome along and we thought: Oh, we’dbetter get environmentally friendly. Ourengineers are environmentally friendly,anyway (Director, Systems Division, Elec-tricity Company C).

At the same time, most respondents feltthat a designated environmental function hadan important role to play in raising the profileof environmental issues across the company,in acquiring and disseminating environmentalinformation and in acting as a kind of ‘envi-ronmental conscience’ for the company. Thisis illustrated in the following comment:

I think it is like any issue, you need to beprofessional in that . . . we need environ-mental professionals, it’s as simple as that.We need some environmental profession-als. And you need the specialists in theactual engineering area to apply that envi-ronmental legislation and requirements

(Performance Standards Managers, Sys-tems Division, Electricity Company A).

This feeling seems to have had widespreadcredence in the companies shortly after priva-tization as all subsequent structures we iden-tified contain an identifiable environmentalfunction, albeit it different forms and at differ-ent levels in the company hierarchy.

Model 2: functional product-focused structure

After privatization many of the RECs adopteda structure that, instead of persisting withregional management, introduced manage-ment of the various businesses across thewhole REC. This structure has elements ofWeinshall’s functional classification as it has amore centralized leadership and more formal-ized controls, but it is also product focused asit allows managers to specialise in distributionsupply, appliance retail etc. In Handy’s termsit aimed at overcoming problems associatedwith market, product and technological diver-sity. It was into this type of structure thatmany of the first environmental managerswere placed, often located closest to the prin-cipal environmental impact. This would bethe distribution business (see Figure 2) as, in atraditional REC, most of the environmentalrisk would be here.

This follows the viewpoint put forward byLent and Wells (1992) among others that, tobe effective, environmental managers must benear to the execution of operational policy.

However, the manager will also be ex-pected to direct environmental policy in theother divisions of the organization and thisarrangement risks bias towards the distribu-tion business. This is perhaps less of a concernwhen other impacts are limited, but might bemore of a concern if they are substantial, forinstance if a REC develops substantial genera-tion capacity.

Electricity Company B had used this type ofstructure until quite recently, before the entirecompany was restructured following a mergerwith a water and sewerage company to formMulti-Utility 1. Opinions regarding the meritsof this structure varied. Some respondentsimplied that the environmental manager waslargely invisible in this structure and thus had


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Figure 2. Environmental manager based in one functional business unit.

limited opportunity to influence the environ-mental strategy of the company as a whole.

If you see an old organogram of [REC 2],and you see where [the environmentalmanager] used to work from [. . . ] there isno recognisable group centre . . . Lots ofpeople hanging on the washing line all atthe same level, and they were all firstamong equals [. . . ] but there was norecognisable central focus at that level. Soyou find that a lot of what was running at[the water and sewerage company] atgroup level, to try and provide some strat-egy and direction, wasn’t there. It wasembedded and hidden down in the opera-tions manager’s part of the operations di-rectorate. So [the environmental manager]historically was down here, was just hid-den somewhere under safety, didn’t evenfigure in the organogram. And what theywere trying to do was to influence thewhole span of the organization from deepdown within the organization. Which isdifferent from the organization [in the wa-ter and sewerage company] where youhad a recognisable group centre at the top,who had some form of power to influenceacross the divisions (HSE Manager, Multi-utility 1).

While this implied a feeling that influencingthe entire organization from deep down in thestructure would be difficult, the environmen-tal manager in question seemed less con-cerned about this, suggesting that a simplefunctional structure like this could actuallymake it easier to get decisions made.

We simply had a Chairman, and thenthere was a board of directors, who wereall executive directors, there was no groupstructure with divisions or similar. All de-cisions were made at the executive com-mittee, which could be useful if youwanted to get a decision made, becauseyou only had to go to the board meetingsor that group of people and there was nofurther, lower structure that you had toget on your side (Environmental Advisor,Multi-utility 1, former EnvironmentalManager of Electricity Company B).

Company E switched to this type of envi-ronmental structure after using a more cen-tralized approach. General environmentalresponsibility for the whole group now lay inthe distribution business whilst company-wide responsibility for energy efficiency lay inthe supply business. The company was notstudied after this change so the outcomes arenot known, but the switch shows that changeis not unidirectional. Grand evolutionarytrends are not in evidence.

Model 3: decentralized divisional structure

As many RECs developed quite considerablebusiness interests outside their traditionalfield of electricity distribution and supply,mostly in generation or international activi-ties, they often saw the need to reflect this inthe corporate structure. Consequently theydeveloped formal divisional structures whereseparate business units tended to developtheir own teams to address operational issues,


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including environmental issues (Figure 3):hence, a decentralized product focused struc-ture (Weinshall, 1971), aimed at overcomingmarket diversity (Handy, 1985). This trendwas accelerated in the RECs by the fact thatsupply and distribution businesses were splitand regulated separately by the industry reg-ulator (OFFER). This has led to an arrange-ment where each of the separate divisions hasan environmental manager who is chargedwith managing the environmental impact ofthat unit alone.

Several examples of this type of structureexist among the RECs. In Electricity CompanyC a group environmental function was splitinto separate teams for distribution and sup-ply businesses after the generation businesswas split from the rest of the company by thenew US owners. The restructuring of the envi-ronmental function was thus in line with thegeneral restructuring of the company. Clearly,the reasons for this restructuring had little todo with environmental issues but were to befound in the overall strategic direction of thecompany, following the take-over. All thesame such a restructuring, undertaken for dif-ferent reasons, is likely to affect the workingsof the environmental function and pre-sumably the effectiveness of environmentalmanagement. At the time when our studieswere conducted there was not yet any evi-dence as to the relative merits – or otherwise– of the newly re-established decentralizeddivisional structure compared to the previous,more centralized structure. It would certainlybe interesting to go back to the company aftersome time to see what, if any, effects therestructuring has had on environmentalmanagement.

The decentralized divisional structurewould seem to redress the problem of lowerlevel impacts being ignored, which was iden-tified as a possible danger of the functionalproduct-focused structure, but it raises otherconcerns. For such an arrangement to be ef-fective adequate staffing and financial re-sources would seem to be needed for each ofthese separate divisional environmental func-tions. Unless environmental issues have highpriority in a company these resources may notalways be provided, making environmentalmanagement highly dependent on the com-mitment and goodwill of divisional manage-ment. This in turn may lead to a lower levelof environmental engagement than would bethe case in other structures where an influen-tial environmental group centre existed. Divi-sional environmental managers, without thesupport of a strong group centre, may wellfind that they lack the authority to influencedecisions taken on purely operationalgrounds.

Another problem may arise in the co-ordination of environmental management be-tween divisions. Divisional environmentalmanagers may find it difficult to share infor-mation, ideas and initiatives. In many compa-nies there is now considerably less co-operation between supply and distributionbusinesses than prior to privatization. Underthe decentralized divisional environmentalstructure this can easily lead to relatively littleco-operation between the environmental func-tions of the different divisions. The publica-tion of a group-wide environmental per-formance report would also seem to be madeharder. As we shall see in the next model,co-ordinating the environmental management

Figure 3. Environmental manager based in all business units.


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activities of different divisions and depart-ments and fostering communication betweenenvironmental staff in different parts of thecompany is seen as one of the more importanttasks of a central environmental function.

Model 4: divisional structure with strongergroup centre

The structural arrangement described in thissection (Figure 4) seeks to overcome some ofthe problems evident in the preceding struc-ture, particularly those arising from a man-ager’s isolation within a functional division.The organization’s structure is again a decen-tralized, product-focused structure, aimed atovercoming market diversity. Arguably, suchcompanies are moving towards complex ma-trix structures. In this structure there is somegroup level influence upon environmentalmanagement by setting group environmentalpolicy, stipulating levels of environmental en-gagement expected of the divisions andproviding support to the environmental man-agers in each functional division. This maycome in the form of consultation, co-ordinat-ing joint programmes or adding the headoffice seal of approval to initiatives, thusstrengthening their potential for widespreadacceptance. External reporting may also beundertaken at this level.

This type of structure was used in a num-ber of companies. For instance, it was thestructure developed in Multi-Utility 1 afterthe merger of Electricity Company B with theregional water and sewerage company, when

the entire group was re-structured on a divi-sional basis, including the separation of elec-tricity supply and distribution. The newlycreated group environmental function set aframework environmental policy which re-quired divisions to write and implement theirown more detailed policies. Working groupsaddressed cross-divisional issues and a groupenvironmental performance report was pro-duced. The group centre environmental func-tion saw its task as providing overall directionbut not in guiding the environmental manage-ment of individual divisions closely.

So that is the structure now, that we havea clearly recognizable HSE team at thegroup centre. The question is what do wedo? The role of the group centre [. . . ] isvery clearly [. . . ] not a group of peoplewho will do things. It sounds terrible tosay that, but they are not detailed doers.They are there to provide overall direc-tion, strategy, policy, philosophy and toprovide the bridge across all of these (HSEManager, Multi-Utility 1).

After giving a large degree of autonomyto the divisions, the group environmentalfunction had limited influence over the im-portance that the divisions placed on environ-mental management. Two divisions withlower environmental burdens acceleratedtheir process of environmental engagementcompared to activities before merger (whichwere very low). This increased activity on

Figure 4. Environmental managers in each unit but group has consulting role.


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issues such as procurement. Conversely, thepace of engagement in the distribution busi-ness was slower than pre-merger. The changein structure from model 2 to model 4 movedthe one full time environmental manager togroup level. Distribution business manage-ment did not consider a full time environmentprofessional to be justified, despite the bulk ofthe environmental burden of the former RECresiding there. The combined effects of thestructure and the attitudes of divisional man-agement were at least as influential as thegroup policy.

Both Electricity Company A and ElectricityCompany C had adopted a similar structureprior to take-over by American companies(when company structures changed again toabsorb the companies into the world-widestructure of their respective new parents). Inboth cases the group environmental managerswere striving for a situation where divisionswould automatically take environmental con-siderations into account and could be left toimplement environmental policy and developenvironmental management activities on theirown.

It would be wonderful if you couldthink . . . that in 15 years time . . . Iwouldn’t be here anymore, that peoplelike me didn’t exist. I mean it would bewonderful (Group Environmental Man-ager, Electricity Company A).

Yet, to varying degrees these managers alsofelt that for the time being their hands-oninvolvement was needed to move environ-mental management in the divisions forward.

Which varies, it varies from the strategic,in terms of discussing with directors andmanagers what kind of environmental ob-jectives targets we should have, but insome areas my job has actually been quitespecific. It’s been very on the ground, onthe level, dealing with waste managementon a particular site, because there has notbeen the knowledge and expertise withinthe company (Group Environmental Man-ager, Electricity Company A).

So there is a change in emphasis from oneperson who is an expert, if you like, anadvisor in the group, to one who is co-ordinating risk assessment and flows ofinformation and management. So, my roleis basically one of overseeing what is go-ing on within the group and attempting torate the whole of the effects that we have.[. . . ] there is a bit hands-on, but thattends to be when people are in trouble. So,I, for instance, at the moment have got awaste working group together, because ofthe landfill tax and its implications andwe were not satisfied with the way thatwas working. And then there are otherissues, more important issues, that requirein-depth treatment (Group EnvironmentalManager, Electricity Company C).

Model 5: complex structures after merger

To date mergers have created three multi-utilities, comprising water and electricitycompanies. Water and sewerage and electric-ity distribution and supply pose quite differ-ent environmental problems and the twoindustries face very different levels of envi-ronmental legislation and regulation so a divi-sional approach with group co-ordination, asthe one described in the previous section forMulti-Utility 1, has advantages.

The constituent businesses of the multi-utilities 1 and 2 serve roughly the same re-gional markets but this is not always the case.While newly formed groups may want todevelop a unified structure to unite the wholecompany, in practice geography or other fac-tors may lead to the adoption of separateenvironmental management structures. Figure5 shows the sort of arrangement that mayemerge in a merged utility operating in twoor more geographically separate areas. Suchstructures are decentralized, geographicallyfocused, but also resemble matrix forms(Handy, 1985), to accommodate all aspects ofoperational diversity, including goal diversity(Weinshall, 1971).

Eventually, it is possible that holding com-pany structures could emerge along theselines, especially where a foreign-based owner


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Figure 5. Merged companies with separate management.

is in place. A tendency to separate out the(environmental) management of individualbusiness units may occur where the holdingcompany wishes to incorporate parts of thenewly acquired company into its existingmanagement structure but where regulationnecessitates separate management of differentbusinesses.

Merged companies may show quite a vari-ety of structural arrangements, depending ontheir geographical spread and the extent towhich the two businesses are to be integratedinto one function. In both Multi-Utility 1 andMulti-Utility 2 the REC and the water andsewerage companies both served roughly thesame geographical market. However, whileMulti-Utility 1 had adopted a unified divi-sional structure with central environmentalfunction (model 4), Multi-Utility 2 had so farkept most management aspects of the twoconstituent businesses apart. This includedthe environmental function, which was han-dled independently by the water and sewer-age and by the electricity business (model 3).

DISCUSSION AND CONCLUSION

In the early years after privatization, the vastmajority of a REC’s environmental concernrested with its distribution network. Althoughupstream power stations and downstreamend-use energy efficiency may have hadlarger impacts, the RECs had little control

over these impacts within the constraints oftheir commercial and regulatory environment.Hence, it was appropriate to concentrate onaspects of the distribution business, whicheither posed a direct risk to the company orpresented the opportunity for cost savings.This changed with liberalization and the ensu-ing opportunity to develop other business in-terests, such as generation. As the companieswidened their business interests and as vari-ous take-overs and mergers with other com-panies took place, organizational structureschanged, and became increasingly complex, toaccommodate new businesses or to combinevarious business units of two or more mergedcompanies. This generally affected the way inwhich environmental management was struc-tured and organized. The organization ofthe environmental function was generallybrought in line with the overall structure ofthe company, i.e. if a company went over to adivisional structure, then the environmentalfunction would also be structured on a divi-sional basis. Likewise, a company with a gen-erally centralized structure would normallyalso have a centralized environmental func-tion, whereas the environmental function in adecentralized company would also bedecentralized.

A broadening of the companies’ businessinterests through organic growth, merger ortake-over, and the changing organizationalstructures that went hand in hand with them,could have further impacts on the ways in


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which environmental issues were perceivedand managed. Companies now perceived dif-ferent and more varied environmental im-pacts. One possible consequence of this isthat, by spreading environmental aspects andrisks among different divisions, single divi-sions may no longer perceive their environ-mental impacts to be high enough to warrantserious attention. An advantage of the struc-tures shown in Figures 4 and 5 is that thecentralized environmental function has anoverview of the whole group’s impact andcan press for appropriate action. On the otherhand, a centralized group function may nothave the necessary detailed operational exper-tise to assess environmental impacts and de-cide on appropriate levels of engagement inindividual divisions. If common levels of en-vironmental engagement are stipulated bygroup for all divisions then progress may beaccelerated in some divisions (probably thosewith lower environmental impact) whilst de-celerated in other divisions. Of course, a deci-sion to seek group-wide certification toISO14001 forces all divisions to adopt a highlevel of environmental engagement.

Such issues need to be addressed alongsideother considerations when a company is de-veloping its environmental managementstructure. Any one structure can be used indifferent ways with different splits of respon-sibility between group and divisional environ-mental managers (Beveridge, 1996). Seniormanagement will often determine the level towhich an organization’s environmental per-formance will aspire. However, they mustalso be aware of the difficulties that couldarise in implementing that policy if appropri-ate environmental management processes andresponsibilities are not clearly defined andappropriate for the whole of the organiza-tion’s structure.

These considerations suggest that the envi-ronmental structure that is, consciously or bydefault, adopted would seem to have someimpact on how environmental issues are per-ceived and dealt with, i.e. it has the capacityto shape environmental strategy in its imple-mentation and possibly even its conception.Environmental structure is thus not neutraland its influence on the environmental strate-

gies that are possible or likely to emerge de-serves further consideration by managers andresearchers. The interrelationships betweenenvironmental, safety and quality structuresthat complicate these matters also meritinvestigation.

It seems difficult to draw any conclusionsregarding which of the organizational formswe have identified could be said to be themost appropriate for a utility organization toadopt. This may, to a large extent, accuratelyreflect the fact that best practice in the electric-ity industry has yet to be established for envi-ronmental management. We do not claim thatthere is a natural evolution between the dif-ferent types of structure. It may well be thecase that there is no single best environmentalstructure; different structural arrangementsare appropriate for different companies at dif-ferent times, given that business structuregenerally tends to be a function of historicalcircumstance as well as the five factors identi-fied by Handy (1985) and discussed above.

The group structure of RECs and other util-ities may be atypical of wider industry. Theregional nature of their businesses and envi-ronmental impacts, and their public sectorhistory, may lead them towards decentralizedgeographically focused structures perhapsplacing them closer to local authorities than tosite-based process industries. Also, the regula-tory split of the distribution and supply busi-nesses has pushed RECs towards some degreeof product focus as in models 3 and 4. Never-theless, an array of group structures exist orhave existed since privatization, most ofwhich will be familiar to large companies inother sectors. As competition and liberaliza-tion increased RECs became less distinct fromother industries. Moreover, this paper’s focusis on how environmental sub-structures arecreated within wider group structures. Theapproach of the electricity industry is likely tobe distinct more in terms of pace of changethan in results. In this respect the findingsfrom our three studies should be no less gen-eralizable than those drawn from any casestudy.

It is possible to hypothesize to some extentabout potential future developments. Wewould argue that the increasing diversification


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of activity among companies notionally withinthe same group will lead to the developmentof very different environmental burdens, andwould call for differing degrees of environmen-tal management. It would appear appropriatetherefore for a divisional structure to operatepolicy management on a divisional basis; thatis each unit will possess its own environmentalmanagement team, and its own environmentalpolicy.

This does not eliminate the need for a groupenvironmental centre. It is possible to speculatethat any such role could comprise of five mainelements. Firstly, the group responsibilitycould be to set the general parameters, orvision, which defines the policy. Secondly, itmay choose to stipulate specific levels of envi-ronmental engagement expected of divisions.Thirdly, it may choose to provide consultingexpertise to the divisions to help them developdivisional policies and procedures. Fourthly, itmay produce group performance reports andpromote a positive external image of the com-pany. Fifthly, it may facilitate joint projectsacross and between divisions and encouragesharing of information and experience.

In such an arrangement, each operationalunit would be able to develop the appropriateenvironmental response to its unique impact,as well as the method by which to ensure thatthat response is adequately implemented. Thegroup centre could encourage such an au-tonomous approach, whilst maintaining a com-pany-wide strategic perspective that ensuresthat environmental impacts receive a level ofattention proportionate to their significance,whether contained in one division or commonacross the whole group.

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BIOGRAPHY

Simon Atkinson is a PhD student at the De-partment of Environmental Resources at the

University of Salford. His research interestscentre upon environmental management andenergy policy.

Anja Schaefer is Lecturer at the Manage-ment Centre of King’s College London. Herresearch interests include ‘business and theenvironment’ and ‘consumer behaviour’.E-mail: [email protected]

Howard Viney is a Research Fellow in En-vironmental Management at Middlesex Uni-versity Business School. His research interestscentre upon corporate strategy formulation inprivatized utilities, and environmental man-agement. Contact: Howard Viney, MiddlesexUniversity Business School, The Burroughs,Hendon, London NW4 4BT, UK.E-mail: [email protected]


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