*2.2. The Role of ERP Technologies and the Perspective of the CDR*

Digital transformation generates both opportunities and threats, and these effects are closely connected with problems dealt with in this paper, including the fact that new technologies can impede as well as enhance energy efficiency and environmental impact [49]. An example of opportunity is that digital transformation can theoretically lead to the inclusion of many disadvantaged societal groups [50], but the COVID-19 pandemic has shown that unequal access to the digital world is already a reality [51]. In synthesis, innovative technology brings with it new social issues and heightened responsibilities, especially for corporations [52]. These new responsibilities have recently been termed CDR [19–21]. In 2021, academics and professionals collaborated in setting out the manifesto on CDR, defining it as "a set of practices and behaviours that help an organisation use

data and digital technologies in ways that are perceived as socially, economically, and environmentally responsible" (https://corporatedigitalresponsibility.net/cdr-manifesto) (accessed on 29 September 2022). CDR will likely become a differentiator for organisations, allowing them to gain and maintain stakeholder trust and competitive advantage, and, therefore, firms will begin to formulate practices for developing and implementing a CDR strategy [53]. The goal of such a strategy should not only be to prevent the potential negative consequences but also to leverage the advantages of information communication technologies (ICTs) for the common good [54,55].

The ERP system is an integrated set of programs that provides support for core organisational activities such as manufacturing and logistics, finance and accounting, sales and marketing, and human resources. An ERP system helps the different parts of the organisation share data and knowledge, reduce costs, and improve the management of business processes [56]. However, the implementation of ERP is not only a technological challenge. It is a socio-technological endeavour that demands the modification of existing applications and the redesigning of critical business processes to facilitate ERP implementation. Research has indicated the necessity of realising effective changes in management strategies so that firms can implement ERP systems successfully [56,57]. The characteristic ability of ERP to redesign, automate, and integrate business processes and operations performs an important role from a CDR perspective, as it paves the way for organisations to have a business process, especially in terms of the supply chain, that is environmentally friendly. Al-Mashari et al. point out that a supply chain system can be re-engineered within, and, indeed, go beyond, the firm's organisational scope by applying the ERP scheme to the existing system [58]. Hervani et al. created a framework for studying, designing, and evaluating a green supply chain [59]. Their studies were based on experience, case studies, and literature reviews. The integration of supply chain management and ERP is illustrated in research work by Koh et al. since these two approaches were known to render one another more complete [60]. This study indicates that a close relationship between suppliers and the centralised system will lead to successful integration. Manufacturers should establish green supply chain systems which are able to document all of the environmental information at each stage of a supply chain. In order to fulfil this objective, an integrated information system is required to track every detail due to the environmental impact of the supply chain system. To achieve this, one possible strategy is the implementation of an ERP system since ERP integrates every aspect of the production system. ERP systems might also be useful as support for environmental accounting instruments, and according to the European Commission ([61], p. 53), environmental management holds a key role within the concept of CSR in the manufacturing sector. Environmental improvement measures have to be identified, analysed, managed, and controlled with respect to financial and environmental effects. New targets have to be set on a regular basis within a management cycle in order to achieve continuous improvement. Within such a management cycle, information from different company units has to be gathered and consolidated. These are typical controlling tasks, but they all focus on environmental data, so they are usually carried out by the environmental management unit. The environmental manager edits environmental information and makes it available to a variety of company officers as a basis for decision-making. New interfaces for environmental information flows emerge, which require systematisation and integration into the organisational structure of the company [62]. A prerequisite to ensure these functions is the availability of relevant information on the environmental performance and environmental aspects of the enterprise. Nowadays, such an information system can be implemented by means of software, and this facilitates the consolidation and aggregation of environmental information such as indicators of resource and energy consumption, waste disposed and emitted wastewater, and air pollution. The literature shows that today's ERP systems provide functionalities that can be used relatively easily to implement IT-based Environmental Accounting Instruments [63,64]. Given that the use of ERP may help a firm to achieve better environmental performance, we hypothesise that:

**H2.** *Firms generally have better environmental outcomes when they make more use of ERP systems.*

Finally, we consider the combined effects that may derive from a higher quota of independent board members and from simultaneous increased use of ERP systems in the context of the firm. These effects are considered to be added to those already hypothesised because of the characteristics of board independence in itself (as in Hypothesis 1). Therefore, we suppose that:

**H3.** *The positive effect of board independence on the environmental performance of a firm increases when the use of ERP systems by that firm also increases.*

#### **3. Method**

### *3.1. Sample Selection*

We analysed data from the Sustainability Reports of all the companies listed on the Italian Stock Market in Milan for the 2014–2018 period. There were 339 companies, but only 83 of them reported detailed environmental data relevant to the subsequent analyses for each of the 5 years. We particularly needed each firm's yearly detailed data on its greenhouse gas emissions. Since 2017, Italian law (254/2016 legislative decree) has made it obligatory for certain types of companies to deposit a non-financial declaration which includes the information that listed companies already communicated in their Sustainability Reports. However, listed companies enjoy wide margins of autonomy when deciding what information and which indicators of non-financial performance to include in their Sustainability Reports, and consequently, disclosure of information on greenhouse gas emissions is still only voluntary. The fact that complete information on emissions of greenhouse gasses for the 2014–2018 period was only available for 83 firms forced us to continue with the empirical analysis for just these firms and exclude other listed firms. These 83 companies mostly belonged to the sectors indicated in the literature as having a great environmental impact (49 cases out of 83, corresponding to 59%) [9]. These sectors include Electricity, Gas, and Waste Water (SIC codes 4900–4999), Iron and Steel Manufacturing (Iron and Steel Manufacturing SIC codes 3300–3399), Chemicals, Pharmaceutical, and Plastics Manufacturing (SIC codes 2800–3099), Coal Mining and Oil and Gas Exploration (SIC codes 1200–1399) and Metal Mining (SIC codes 1000–1099). A short questionnaire was sent to each of the 83 firms identified, asking them to indicate, for each year of the 2013–2017 period, the sum of their expenditure on ERP technologies, both in terms of their acquisition and their implementation within the firm. Only 53 firms returned the completed questionnaires, and therefore, they constituted the final sample of firms we analysed. Most of the firms (37 out of 53) belonged to sectors with great environmental impact, and they showed a greater willingness than the others to compile and return the questionnaire, demonstrating that firms in environmentally sensitive industries disclose more environmental information than others [65–67].
