Green HRM and Environmental Performance in Qatar's Oil and Gas Sector

Introduction

Environmental management has been a concern for many companies today (Guerci et al., 2016). This has led companies to invest heavily in their environmental management systems (EMS) in order to improve their environmental performance and, eventually, enhance their reputation and overall performance (Wagner, 2013). With regard to such benefits, the literature suggests that the increased implementation of EMSs by companies — such as ISO 14001 certification — will lead to pollution prevention, waste minimization, and reduced environmental release (Paille et al., 2014), and hence may assist in enhancing the economic performance of companies (Abdel-Maksoud et al., 2016; Wehrmeyer, 1996).

From the environmental management perspective, scholars assert the close linkage between green Human Resource Management (HRM) and environmental performance (Paille et al., 2014; Renwick et al., 2013). Green HRM is generally defined as HRM work practices that facilitate proactive environmental management for the firm (O'Donohue and Torugsa, 2016). In their review on environmental management and HRM literature, Renwick et al. (2013) showed the need to integrate environmental management and HRM. Moreover, they identified a set of HRM practices that are emerging as one organizational response to environmental degradation. For example, in the selection process, companies concerned with environmental management often rely on green criteria to select job candidates and recruit employees who are environmentally aware. They also use green performance indicators in the performance appraisal process. The review finds considerable evidence that green HRM practices promote ability, motivation, and opportunity in addition to enhancing environmental performance. However, the authors noted that studies on the impact of a green HRM system — as a whole rather than as individual practices — on either environmental outcomes or broader organizational performance are rare.

Accordingly, considerable uncertainty remains regarding the role of green HRM in achieving environmental performance and improving organizational performance (Guerci et al., 2016). This suggests that this study is timely and has considerable empirical implications for green HRM practices. The study has three main purposes.

First, although contextual factors have been considered in previous research examining green practices, they have not been broadly considered in research about green HRM practices (e.g., Guerci et al., 2016). To address this gap, this study concentrates on two important organizational factors that serve as possible antecedents of adopting green HRM: support of top management and internal environmental orientation (hereafter referred to as environmental orientation). As argued by Daily and Huang (2001), top management support can encourage the adoption of green HRM practices. This is especially important since there is no empirically verifiable work confirming the validity of top management support as a factor that encourages the adoption of green-based HRM practices. Environmental orientation, which reflects the degree to which employees are committed to protecting the natural environment (Paille et al., 2014), was proposed as a second determinant of green HRM. Both factors complement each other by showing support for green-based HRM practices at different levels in the firm — employees and management. In particular, high levels of management support and environmental orientation are expected to lead to implementing effective green HRM within the company through, for example, placing greater importance on environmental issues and attracting, developing, and retaining employees who are environmentally aware.

Second, the study examines the mediating role of green HRM on the links between top management support and environmental orientation on one side, and environmental performance on the other. Although scholars have addressed the important role of HRM practices in improving environmental performance over the last three decades (e.g., Hart, 1995; Jabbour and Santos, 2008; Paille et al., 2014), there are still calls for more empirical work in this area (e.g., Renwick et al., 2013). Moreover, to date, few empirical works have addressed the extent to which management support and environmental orientation enable organizations to improve their environmental performance through enhanced green HRM. As a response to these calls, this study addresses a knowledge gap by examining the mediating role green HRM plays in the link between both management support and environmental orientation, and environmental performance. It is important to note that the current study focuses on "actual" rather than "intended" green HRM practices. Nishii and Wright (2008) identified intended HRM practices as practices formulated by the HRM department, whereas actual HRM practices are those implemented at all levels by managers and employees. As recommended by Khilji and Wang (2006), this study targets managers at all levels to provide their views about implemented green HRM practices.

Third, the study examines the link between environmental and organizational performance in the Qatari oil and gas sector, where studies on both the country and the sector are scarce. The oil and gas sector in Qatar constitutes the backbone of the Qatari economy, accounting for more than 50% of Qatar's GDP. The state-owned Qatar Petroleum (QP) controls all aspects of Qatar's upstream and downstream oil and natural gas sectors, including exploration, production, transport, storage, marketing, and sales activities. Companies operating in this sector have been exposed to increasing pressure to preserve the environment. Since one of the main four pillars of Qatar Vision 2030 is environmental development, all companies in the sector apply environmental management processes, mainly in the form of ISO 14001 certification. To the authors' knowledge, no studies examining the link between green HRM and environmental performance exist in the GCC region, which represents another clear contribution of this study.

Rationale for Green HRM and Study Significance

In the modern corporate world, there is a need to balance environmental, economic, and social performance as part of a responsibility to society. Moreover, with the growing concern for green strategies in an effort to combat global warming, increasing green awareness is forcing companies and firms to shift toward sustainability. As a result, practitioners, academics, and political decision makers are paying increasing attention to strategies and solutions adopted by firms for environmental management, with the goal of improving a wide range of environmental performance indicators (Wagner, 2013; Longoni, Luzzini, and Guerci, 2016). A review of the literature suggests that environmental management strategies should be deployed in a cross-functional approach, with a specific focus on independent functional systems.

For firms, the adoption and utilization of green strategies — including in their human resource management — is not only a way of promoting environmental responsibility across a broad spectrum of operations, but also an avenue for enhancing brand value and profitability. According to Nejati, Rabiei, and Jabbour (2017), the adoption of green environmental management systems in HRM promotes an environmentally conscious culture, particularly when the top management of the organization is involved. Research interviewing human resource managers in Italian companies concludes that green human resource management has an effect on both financial and environmental performance (Guerci and Carollo, 2016). These benefits are realized jointly once the organization begins implementing green HRM strategies.

Financially, green HRM helps an organization gain competitive advantage. Specific to the oil and gas industry, green HRM promotes the brand through environmental principles and values across production, processing, and supply chain management functions (Wagner, 2015). With increasing information sharing and environmental protection consciousness, consumers are keen to avoid oil companies that engage in environmentally unfriendly strategies. For example, an oil spill that leads to destruction of marine life damages the social image of an oil processing company. Conversely, green HRM will promote the social image of a company, thereby increasing its competitive advantage. In addition, green HRM increases human resource output. Increased competitive advantage and human resource output are both likely to boost organizational profits, making green HRM an attractive proposition.

Drilling technology is shifting toward cheaper, more efficient, and eco-friendly solutions. Directional drilling methods have enabled numerous deviated wells drilled from one site to reach widely dispersed hydrocarbon-carrying formations (Jabbour et al., 2013; Fayyazi et al., 2015). Technologies used in oil extraction can greatly diminish surface effects linked to drilling operations, allowing production from reservoirs not accessible through ordinary vertical drilling due to environmental constraints. A critical aspect of reducing environmental footprint is connected with cuttings and exhausted mud disposal generated as a result of drilling operations. In land-based drilling activities, waste may be accumulated in a sump dug for that purpose, which may be refilled upon drilling operation completion.

Fossil fuels, compared to other sources of energy such as solar and electric power, are environmentally unfriendly. This presents one of the challenges facing green HRM, as many people assume the green concept cannot be applied to oil and gas production and processing companies. However, the extraction and processing phases can be conducted using green strategies (Fayyazi et al., 2015; Nejati et al., 2017). Environmental management literature frequently cites the argument that, since firms represent the chief source of environmental degradation, they must also contribute the most to tackling environmental management issues. As a result, one can now witness the launch of a broad array of environmental initiatives by companies and their executives. With regard to corporate sustainability, this implies a need to perform well financially, environmentally, and socially.

This study is therefore of vital significance, as it not only demonstrates how oil and gas companies can be environmentally friendly, but also provides top management with a strategy for increasing competitive advantage, human resource output, and financial income simultaneously (Jabbour et al., 2013; Wagner, 2013). Green HRM is therefore a welcome development for the oil and gas industry which, despite being environmentally intensive, plays vital roles in running economies and has no equivalent substitute at the present time.

Research has put forward many organizational and environmental factors as determinants of green practices adoption. While these factors are both internal and external, top management holds the primary role through its support (Nejati et al., 2017; Longoni et al., 2016). The support of top management in green HRM is considered an important factor in the implementation of green practices in organizations. Specifically, the success of environmental management initiatives is largely dependent on executive support through promoting change and employee empowerment, developing disciplinary procedures, and communicating environmental information throughout the organization.

Theoretical Background and Hypotheses Development

Qatar is a high-income economy, supported by the world's third-largest natural gas and oil reserves (Ibrahim and Harrigan, 2012). Since its independence in 1971, Qatar has witnessed rapid economic growth. The country has the highest per capita income in the world and is classified by the United Nations as a country of very high human development (Charfeddine et al., 2016). This has led to improvements in societal well-being, which is mainly attributed to the country's main natural wealth in the oil and gas sector.

This important sector currently accounts for about 55 percent of the country's gross domestic product (GDP) and provides about 70 percent of the Qatari government's revenue. It is forecast to support GDP growth in the coming years, even given the decline in oil and gas prices that began in 2015 (Ministry of Development Planning and Statistics, 2016).

The country's development vision, as described by Qatar National Vision 2030, rests on four pillars: economic, social, human, and environmental development. Although the oil and gas sector plays a major role in attaining Qatar's 2030 vision, it faces major challenges. For example, while Qatar has undertaken the responsibility of ensuring environmental sustainability as stated under its environmental sustainability pillar, oil and gas production is considered a major contributor to environmental deterioration (Charfeddine et al., 2016). Qatar is known to have high levels of CO₂ emissions per capita, largely associated with the activities of the oil and gas sector (Richer, 2014). This is particularly challenging in light of upcoming mega sporting events such as the 2022 FIFA World Cup. Given this reality, Qatar has sought to address this problem by adopting a set of initiatives and programs aimed at ensuring real progress toward environmental sustainability. Oil and gas companies are making significant efforts to balance operational growth against the environmental impacts of their operations (Richer, 2014). Similarly, in order to achieve corporate sustainability, companies seek to develop and implement environmental policies and programs such as EMS and to meet the criteria for the ISO 14001 standards, which focus on the human resource factor through green HRM (Daily and Huang, 2001). Moreover, oil and gas companies are expected to disclose information related to environmental performance in their published annual reports (AlNaimi et al., 2012).

Researchers have proposed many organizational and environmental factors as determinants of green practices adoption (e.g., Abdel-Maksoud et al., 2016; Gadenne et al., 2009; Henriques and Sadorsky, 1999). Environmental factors include the level of environmental uncertainty, regulatory pressure, and customer pressure. Organizational factors include company size and managerial support (Lopez-Gamero et al., 2008; Lin and Ho, 2011).

Although these factors have been considered in previous research on green practices, they have not been broadly considered in research on green HRM, with a few exceptions (e.g., Guerci et al., 2016). This study contributes to filling this research gap by examining possible organizational determinants of green HRM adoption in the oil and gas sector, namely top management support and environmental orientation.

Top management support has been considered an important factor in the implementation of green practices in organizations (Daily and Huang, 2001). The success of environmental management initiatives is largely dependent on executive support through promoting change and employee empowerment, developing disciplinary procedures, and communicating environmental information throughout the organization (Zoogah, 2011). Miles and Covin (2000) argued that managers significantly influence the commitment of employees toward environmental practices. Daily et al. (2007) argued that top managers could serve as champions of change to help the company implement EMS.

The support provided by top managers toward EMS implementation is needed to build an organizational culture that supports change initiatives (Daily and Huang, 2001). An organizational culture that supports change, facilitates employee involvement and participation, and promotes desired behaviors is necessary to advance environmental issues and practices. Accordingly, we propose that top management support positively influences green HRM.

Hypothesis 1: Top management support has a significant positive influence on green HRM.

Environmental orientation reflects the recognition and practice of ethical values by organizational actors as a commitment to the natural environment (Banerjee, 2002). Nair and Ndubisi (2015) describe environmental orientation as a "corporate state of mind" that both influences and is influenced by every business activity. According to Banerjee (2002), environmental orientation can be internal, whereby managers and employees shape and recognize values about the importance of protecting the natural environment. External environmental orientation, on the other hand, concerns the company's relationship with its external stakeholders (Banerjee et al., 2003).

Previous research suggests that promoting a well-communicated environmental policy provides greater clarity for organizational direction toward environmental sustainability (Ramus and Steger, 2000). Moreover, the implementation of an effective EMS that integrates company programs and policies is reported to lead to improved environmental performance (Theyel, 2000). The provision of an environmental corporate culture consisting of an environmental values system throughout the organization will therefore have a positive impact on environmental performance (Nair and Ndubisi, 2015). There is strong evidence to suggest that environmental orientation leads to improved environmental performance.

We argue that environmental orientation can help organizations develop concern for environmental issues and hence drive implementation of green HRM practices. It promotes an effective environmental value system within the company and helps employees understand the importance of environmental issues, which could serve as an enforcement mechanism for implementing green HRM practices. Paille et al. (2014) indicated that the degree to which people in organizations are concerned about environmental issues is an important condition for implementing green HRM. When organizations emphasize environmental values as a critical component of their corporate culture, they are more likely to hire employees who are sensitive to environmental issues and more willing to engage in environment-related activities such as green HRM (Guerci et al., 2016). If people are more oriented toward protecting the natural environment, they will be more committed to the values enforced to protect it. In other words, environmental orientation encourages employees to engage in green behaviors such as green HRM practices.

Hypothesis 2: Environmental orientation has a significant positive influence on green HRM.

For a firm to obtain proper green contributions from its workforce, modification of the HRM function to become green is essential. Traditionally, HRM departments manage a wide range of functions such as recruitment and performance appraisal. Going green with any HRM function requires practices, policies, and procedures that guarantee appropriate green contributions and job performance. In an ideal scenario, all functions can be made green. For instance, the employee recruitment function can foster effective environmental management by ensuring that newly recruited individuals share the company's environmental ideals and understand its environmental culture (Opatha and Arulrajah, 2014). Training on green issues is now widespread and is used to heighten employees' awareness of the environmental impact of their organization's activities (Renwick et al., 2013). It can also be used to train employees on core green-related skills, such as how to collect relevant waste data (May and Flannery, 1995). With respect to pay and reward systems, some previous research has provided evidence that paying for environmental management performance is effective, particularly at the CEO compensation level (e.g., Fernandez et al., 2003). Finally, providing green opportunities through employee participation in environmental issues is often seen as crucial to successful outcomes (Renwick et al., 2013).

Although the broader HRM literature acknowledges a relationship between specific HRM practices — such as personnel engagement — and positive business outcomes (e.g., Hunton-Clarke et al., 2002), the literature on green HRM is marked by assertions and counter-assertions (e.g., Jabbour et al., 2008; Jabbour and Santos, 2008). There is also a lack of empirical research connecting distinct HRM practices across the many levels or steps of green HRM implementation. However, Renwick et al.'s (2013) review of green HRM corroborated that numerous HRM practices have a positive relationship with environmental performance. In particular, "green hiring" (hiring people possessing environmental proficiencies and general environmental sensitivity), green engagement and training (cultivating environmental capabilities and ensuring the workforce engages in green conduct), and green compensation and performance management (appraising and rewarding green conduct) have all been found to link with environmental performance (Guerci et al., 2016). Similarly, Guerci et al. (2016) reported a significant positive effect of green training and involvement, green performance management, and compensation functions on environmental performance.

Given the small body of empirical research examining mediating effects of green HRM (Henri and Journeault, 2010), it can be argued that, for this relationship to hold, possible contextual factors serve as prerequisites for adopting effective green HRM (Lopez-Gamero et al., 2011). For example, Chinander (2001) proposed that top management's commitment toward environmental issues can affect employees' perception of the link between their green behaviors and environmental outcomes. We propose that top management support is necessary to effectively adopt green HRM, which in turn has a positive influence on environmental performance. Top management support can encourage the adoption of green HRM practices that increase employees' ability to address environmental issues and promote environmentally aware behavior throughout the company (Daily and Huang, 2001).

Similarly, if companies are committed to protecting the natural environment, they need to ensure a better fit between the green HRM practices implemented and the values enforced to protect the environment. The implementation of green HRM practices encourages employees to engage in green behaviors that enhance environmental performance — behaviors that are reinforced and encouraged by environmental orientation.

Hypothesis 3: Green HRM mediates the relationship between both (a) top management support and (b) environmental orientation, and environmental performance.

The link between green HRM and environmental performance strongly relates to the broader relationship between environmental and organizational performance (Wagner, 2013). Scholars have argued that the implementation of effective EMS will lead to improved economic performance (Abdel-Maksoud et al., 2016; Jacobs et al., 2010). Ambec and Lanoie (2008) argue that the adoption of proactive environmental management offers the potential for improved financial performance through increased revenue via improved green products and services, as well as through improved cost management via reduced costs of production, materials, labor, and capital. Jackson and Seo (2010) further argued for positive financial outcomes when employees' ability, motivation, and opportunity to contribute to the company's shared vision of environmental sustainability are improved, enabling the company to raise revenue and enhance cost management.

Previous literature examining the environmental performance–financial performance link provides mixed results (Henri and Journeault, 2010). On the one hand, some literature argues that environmental performance can be negatively related to financial performance (Palmer et al., 1995; Lankoski, 2000; Wagner et al., 2002). This argument is based on the premise that adding constraints on the firm with respect to meeting environmental standards will not result in increased profit. Another stream of research, on the other hand, argues for the positive consequences of environmental performance on financial outcomes (e.g., De Burgos-Jimenez et al., 2013; Fujii et al., 2013; Clarkson et al., 2011). These authors claim that synergies exist between reducing environmental impact and improving financial returns. Financial gains can be improved through cost reduction and revenue enhancement. Cost reduction can be achieved through improved efficiency in the use of resources and reduction of environmental incidents, while revenue enhancement is accomplished through improvements in company reputation and image, better access to markets, and increasing product quality (De Burgos-Jimenez et al., 2013).

Some empirical research has found evidence for the positive link between environmental performance and organizational performance (e.g., Alvarez-Gil et al., 2001; Aragón-Correa et al., 2008; Guenster et al., 2011). Chang's (2015) study, which examines the effect of environmental performance on financial performance using panel data from heavy-pollution industries in China, found a positive effect. Fujii et al. (2013) indicate that environmental performance increases return on assets (ROA) through both returns on sales and improved capital turnover. Similarly, De Burgos-Jimenez et al. (2013) empirically found a positive link between environmental performance and organizational performance.

This study follows the stream of research arguing for a positive link between environmental performance and organizational performance for two reasons. First, arguments supporting this positive link are more robust and are supported by many empirical works, as discussed above. Second, the current study adopts the balanced scorecard perspective developed by Kaplan and Norton (1992) for measuring organizational performance (e.g., Elbanna, 2012). This approach measures four different perspectives of organizational performance rather than focusing solely on financial performance measures. The notion of strategic HRM illustrates the need to achieve fit between different HR practices and organizational strategic objectives (Barton and Kempling, 2011). This could be attained by concentrating on different performance measures. For example, to improve customer satisfaction, HRM practices and policies must enhance positive customer relations.

Hypothesis 4: Environmental performance has a significant positive impact on organizational performance.