From Employee-Owners to Environmental Champions
When employees become owners, companies achieve measurably stronger environmental performance. Here’s how this ownership model drives sustainability excellence.
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Employee-owned companies achieve significantly better environmental performance than traditionally structured businesses. Research shows that for every $83,571 of company stake allocated per employee, companies improve on one additional environmental indicator. When employees become owners, they transform from workers into environmental champions, driving initiatives from waste reduction to renewable energy adoption through enhanced engagement and shared accountability.
A North Carolina engineering company slashed its waste to near-zero levels thanks to the active involvement and support of its employees. An Indiana consulting firm pioneered eco-friendly business practices, driven by the commitment and engagement of its employees. In Rhode Island, a local coffee shop enhanced its sustainability practices from bean to cup, and a restaurant group transformed hospitality waste into community resources, with employees playing a key role in both cases.
Behind these environmental achievements lies an important organizational catalyst: All four companies are 100% employee-owned.
Employee ownership has received growing attention recently as an alternative ownership model that could help address societal wealth inequity. What is less well understood is the effect that this model of ownership has on a company’s achievement in addressing environmental issues. When employees are not merely workers but owners with a direct stake in a company’s success, such organizations are able to unlock a powerful model of business engagement in environmental sustainability.
A new study I coauthored that was recently published in the journal Business & Society identifies a powerful link between employee ownership and environmental excellence. In our study, we compared the performance of U.S. public companies that have employee share ownership programs with those that don’t, using a number of environmental indicators, including adopting clean tech; reducing toxic emissions, packaging, and carbon emissions; implementing environmental management systems; and conserving water. We found that when employees become owners, companies achieve measurably stronger environmental performance: For every $83,571 of company stake allocated per employee, one additional indicator of environmental performance improves significantly. Surprisingly, the impact of employee ownership on a company’s environmental performance surpasses that of CEO ownership impact by 11%, even though executives typically drive corporate sustainability agendas. These findings hold across diverse ownership structures and withstand rigorous causality testing.
Why Employee Ownership Drives Sustainability
What transforms employee-owners into environmental champions? Researchers have uncovered useful clues that point to a relationship between ownership culture and environmental stewardship.
Research on employee ownership consistently shows that when employees hold a financial stake in their company, they align their personal values with organizational objectives and become more motivated to contribute to corporate goals and performance, participate in decision-making, share information, and report a positive workplace culture.
