Environmental Management and Profitability

International research indicates that environmental management leads to profitability and competitive advantage in a firm. The lack of supporting empirical evidence begs the question whether environmental management does indeed increase a firm’s profitability. The study delineates environmental management and profitability and examines the causal relationship between the two factors. Data is collected from ten industries in South Africa and the research model tested using confirmatory factor analysis and path analysis with latent variables. The model supports the hypothesis that environmental management increases a firm''s competitive advantage. Environmental management however is limited to the minimization of natural resource consumption. The work is informative to executive and senior managers responsible for the implementation of environmental management systems; to economists industrial and chemical engineers; and students in the field of statistics.