Pro-environmental motivations of small businesses – Do indirect environmental impacts matter?

A large body of literature examines the managerial aspects of sustainability transition at the firm level. One of the key factors of pro-environmental intervention in companies is the role of the leader, their commitment, capabilities, and motivations. Management's determination towards pro-environmental interventions has been linked to various enterprise characteristics. Previous studies have also examined whether these motivations vary among economic sectors or industries, described by direct environmental impacts. Yet, indirect emissions, depicting life-cycle ecological impacts of the industry, have not been assessed in light of pro-environmental motivations and decision context of companies. Our analysis aims to investigate environmental motivation towards adopting sustainability measures in small and medium enterprises (SMEs) through a representative sample of Hungarian companies. We found no clear evidence of sectoral indirect emission levels influencing the ethical or business motivation of the managers in Hungarian SMEs. The industry's emissions are exclusively associated with the motivations of specific groups of companies, especially those more environmentally focused. Nevertheless, pro-environmental motivations depend on external factors, i.e. the region of operation, manager's age and awareness of the. The quality of environmental management relies on the leader's skills and the firm's circumstances. One of our findings is alarming: SMEs with higher sectoral indirect emissions, among those communicating their environmental progress intensely, tend to agree more on the institutional boundary approach of ecological impacts as it comes to responsibility issues. This attitude may manifest in false allegations or even greenwashing. Limited feelings of responsibility for the firm, energy prices, and the importance of the company's profits frequently occur among the claims related to sectoral emission levels. Therefore, making embodied environmental impacts visible to managers and the market may have some effect. • Management's pro-environmental motivation is not associated with the industry. • Emissions affect motivation in the case of environmentally focused firms exclusively. • Higher indirect emission of a sector correlates with a higher risk of greenwashing.