Is Ignorance a Bliss in Sustainability?
Evaluating the Perceptions of Logistics Companies’ Self-Assessment
in Environmental Performance
Oskari Lähdeaho and Jyri Vilko
LUT University, Tykkitie 1, Kouvola, Finland
Keywords: Logistics, Environmental Sustainability, Performance Measurement, Case Study.
Abstract: Effective management of any company relies on awareness of surroundings and ability to appropriately
measure and control the operations. As sustainability issues have emerged as central concern in societies,
companies are also aiming to improve their performance in this regard. Therefore, sustainability related
measurements are required for companies looking to manage their sustainability. Qualitative multiple case
study data reveals some inconsistencies between companies’ environmental performance and associated self-
evaluation and reporting. The case studies are analyzed with focus on management capabilities in informed
environmental sustainability related decision-making. It seems that companies are eager to take first steps
towards environmental sustainability. However, overconfidence from initial successes can hinder further
advances in environmental sustainability. Cognitive capabilities in self-evaluation seem to have implications
for organizations in addition to individuals. While vital for advances in environmental sustainability,
improvements should be reflected with critical view to avoid false sense of security. Companies’
environmental communications are often overexaggerated due to illusory superiority. Self-awareness in
context of companies’ environmental performance should be further studied.
Sustainability of business operations is a growing
concern within societies, industries, and academia.
Companies carry special responsibility in
sustainability challenges, as their decision-making
often impact not only their own operations, but
surrounding environment and various external
stakeholders. Logistics and supply chain management
have extended influence towards environmental
sustainability due to the high environmental impact of
transportation (Solaymani, 2019). Therefore, supply
chain management is facing pressure towards
sustainability from governmental legislation as well
as societal demand (Seuring and Müller, 2008). In
European Union, transportation is subject to massive
decarbonization targets (European Commission,
2021; Haas and Sander, 2020). Moreover, in Finland
these targets are taken further from the baseline
legislation provided by European Union (Finnish
Government, 2020).
Informed decision-making in supply chain
management requires adequate knowledge, which in
turn stems from correct measurements and analytical
tools (Vilko et al., 2014). Same holds for decisions
and optimization towards more sustainable
transportation systems (Kelle et al., 2019). In other
words, for companies to acquire environmental
awareness of their operations, they need to recognize
the challenges and their own shortcomings in that
context. Thereafter, it is possible to understand
causalities related to sustainability related decisions.
This impact of their operations must be then
appropriately measured to allow management of
sustainability through various control mechanisms.
The aim of this paper is to study companies’
ability to self-evaluate their environmental
performance, and how their knowledge and
capabilities influence these assessments and affect
their decision-making. The chosen research area is
logistics industry, which faces pressure to increase its
environmental sustainability. The research focuses on
impact of cognitive biases, management knowledge
and capabilities, and decision-making uncertainty in
self-assessment of companies. By doing this, the
Lähdeaho, O. and Vilko, J.
Is Ignorance a Bliss in Sustainability? Evaluating the Perceptions of Logistics Companies’ Self-Assessment in Environmental Performance.
DOI: 10.5220/0010907200003117
In Proceedings of the 11th International Conference on Operations Research and Enterprise Systems (ICORES 2022), pages 244-250
ISBN: 978-989-758-548-7; ISSN: 2184-4372
2022 by SCITEPRESS Science and Technology Publications, Lda. All rights reserved
article instigates discussion on environmental self-
awareness of logistics industry actors.
This research employs qualitative multiple case study
approach. The chosen method was used to create
holistic view on the studied logistics industry,
including different actors in the industry with varying
roles, position in network, transport modes,
ambitions, and maturity regarding environmental
performance. Moreover, specific company level
perspectives are attainable via case studies, which
allows critical evaluation of larger company
networks. Qualitative approach enables explorative
lens on the complex issue of sustainability in
logistics, which is required to study the characteristics
and inner-workings of a multimodal-transportation
Primary data gathering was carried out with semi-
structured interviews. This method was seen
appropriate to preserve the exploratory nature of the
research. Informants for the interviews were chosen
based on their experience and their organization’s
position in Finnish logistics system. In addition to
transportation companies and logistics service
providers (LSPs), infrastructure and regional logistics
developers were included in the pool of informants to
gain perspectives from higher level logistics
planning. Described selection process resulted in
twelve interviewees, as presented in Table 1. The
semi-structured interviews followed predefined
interview protocol with main themes related to
interviewee company’s technological, business, and
system level maturity regarding environmental
sustainability of their operations. However, the
interview protocol was used lightly, and the
interviewees were given the liberty to somewhat steer
the discussion. This way, relevant information and
themes that were not strictly determined in the
protocol were able to emerge in the interviews. In
addition to open ended questions on environmental
sustainability, the interviewees were also asked to
grade their companies’, as well as their network
partners’ perceived importance of environmental
sustainability. Grading was on Likert scale from 1 to
5, where 1 stands for “not important”, while 5 is for
“extremely important”. Since some of the companies
were not comfortable on grading with whole
numbers, they were given the chance to use fractional
numbers (e.g., 3.5 out of 5). Each interview took from
45 minutes to 1 hour.
The interviews were recorded and then
transcribed. Transcribed records were coded to
identify central topics in the interview data.
Table 1: Overview of the studied organizations.
Case or
anization Informant’s
osition in the com
erience in the current
Railroad operato
Key Account Manage
11 years
Terminal operato
Sales directo
2 years
Transportation LSP Chief Development Office
5 years
LSP (4PL) CEO 9 years
Regional development company Sales manage
2 years
Logistics development company Project manage
1 yea
Transport infrastructure agency (road) Development manage
8 years
Regional logistics association Acting manage
7 years
Inland waterway infrastructure agency Regional manage
15 years
Shipping and stevedoring company Internal audito
2 years
Passenger road transportation company CEO 10 years
Regional passenger logistics planne
Public transport coordinato
3 years
Is Ignorance a Bliss in Sustainability? Evaluating the Perceptions of Logistics Companies’ Self-Assessment in Environmental Performance
To study companies’ ability in measuring and
evaluating their environmental performance, unit of
analysis for this study is the companies’ own
environmental sustainability. Based on this,
comparative company analysis is made with regards
to differences in the studied companies’ used
transport modes, role in logistics network, and
maturity of environmental sustainability in their
operations. Moreover, the interplay between these
companies in common networks must be considered.
Among individual people, cognitive bias can be
found where individuals with lower capabilities tend
to self-evaluate that skill higher, in contrary to skilled
individuals being more modest and accurate in the
evaluation (Dunning, 2011; Feld et al., 2017).
Because organizations consist of individuals, similar
bias can sometimes be found in companies (e.g., in
external communications or reporting). As the
amount of information is constantly growing
intensively, companies struggle to use the tide of
information in meaningful ways (Ge and Brewster,
2016). Moreover, mere existence of vast amount of
gathered information on specific topic (e.g.,
environmental sustainability) can falsely convince
companies that the information is properly used to
solve and manage the related challenges (Ge and
Brewster, 2016). In construction project cost
estimations, overconfidence on lacking capabilities
acts as one of the factors for possible cost overruns
(Ahiaga-Dagbui and Simon, 2014).
Environmental awareness and ability to make
informed decisions towards improved environmental
sustainability can be attributed to the management’s
ability in measuring environmental sustainability of
operations. Drawing from theoretical framework on
risk management and decision-making by Vilko et al.
(2014), we have synthesized a framework describing
different levels of environmental awareness and its
effect to sustainability related decision-making in
companies. The framework in question have not been
used in environmental context before, which this
study aims to do. In progress the research aims to
bring decision-making and environmental
management theories in logistics closer together. In
other words, this study synthesizes theories from
different fields of science to examine a contemporary
phenomenon. This framework is presented in Table
The different columns in this framework represent
various levels of understanding or certainty related to
sustainability issues in supply chain management. On
the right side is radical uncertainty (hypothetical
situation where management has absolutely no
knowledge on the topic; Loasby,1976). From there
on, the consciousness of management increases
gradually going to left, ending up to absolute certainty
(once again, hypothetical situation where
management knows everything related to the topic) .
Table 2: Levels of uncertainty in sustainability decision-making (modified from Vilko et al., 2014).
Absolute certaint
Parametric certaint
Radical uncertaint
The knowledge deci-
sion-maker holds re-
lated to the decision
Every piece of
relevant knowledge is
The future states and the
structure of the decision
situation are known.
Impact of each
sustainability action is
objectively known.
The structure of future
is known. The impact
parameters of
sustainability actions
are not certain.
Imperfect knowledge of
the structure the future
can take. Limited view
of the parameters related
to the sustainability
Limitations of decision-
maker’s cognitive
abilities to
unambiguously pursue
objectives given the
available information.
All pieces of
knowledge are
imperfect, sometimes
even comes close to
The knowledge of the
probabilities of
possible states of the
world, possible
actions, and
Complete knowledge. Objective knowledge of
Subjective degrees of
beliefs as to the
probabilities of events
and the consequences
of sustainability
Subjective beliefs of the
effect of environmental
Incomplete knowledge
about effect of
environmental actions.
No knowledge at all.
Implications to
sustainability decision-
Complete certainty
about the
sustainability actions
and environmental
Assumed implicit
foundation for
sustainability decision-
Sustainability effect
probabilities are
difficult to quantify.
The structure of
sustainability actions
and their environmental
effect are difficult to
formulate and perceive
Severely restricted
ability to identify and
perceive sustainability
actions and their
environmental effect.
Complete uncertainty
about the sustainability
actions and
environmental effects
of actions.
Implications to
sustainability analysis
analysis is not
Sustainability parameters
(likelihood and impact)
of environmental effect
can be measured and
assessed with certainty.
parameters (likelihood
and impact) of
environmental effect
cannot be objectively
Sustainability actions
and their causalities
cannot be objectively
Sustainability actions,
their causalities and
environmental effects of
actions are not fully
known and assessable.
Sustainability actions,
environmental effects
of actions and related
parameters cannot be
ICORES 2022 - 11th International Conference on Operations Research and Enterprise Systems
The rows in this framework describe the decision-
makers knowledge, understanding of surroundings
and causalities of taken actions, implications of made
decisions, and lastly the analytical capabilities based
on the possessed knowledge. For studying real
companies, the focus should be directed to the middle
states of certainty. This allows the assessment of
companies’ capabilities to conduct informed
sustainability related decision-making and self-
evaluation of sustainability performance.
When a company’s management has procedural
uncertainty, they lack required knowledge to conduct
informed decision-making. In this situation, the
consequences of company’s actions are not
considered, leaving that company prone to unwanted
outcomes realized from otherwise benevolent
decisions (Dosi and Egidi, 1991). This is due to the
incapability to recognize sustainability related issues,
counteractions, their benefits, and disadvantages.
Furthermore, since the knowledge is inadequate, the
decisions cannot be backed by data, i.e., necessary
measurements and analysis is impossible to carry out.
Under structural uncertainty, the management
has an idea about the parameters of sustainability
related decision-making, e.g., what kind of
technologies can be implemented in operations to
reduce environmental impact. However, choosing the
appropriate actions is hindered by the lack of
knowledge on all available courses of action. When
the appropriate courses of actions are clear to
management, the degree of certainty is parametric
uncertainty. Here the management can perceive
different appropriate decision paths but
understanding of their impacts and related
probabilities are unknown (Langlois, 1984). In other
words, the different pathways for the company are
visible, but capability to choose the best one is
Parametric certainty is the next step. When
management can reach this degree of certainty, their
decision-making is informed, backed up by data. Here
the circumstances, available actions, probabilities,
and possible outcomes are known by the decision-
All the studied companies have dedicated some focus
to environmental issues in their operations. Mostly
the shift towards environmental awareness has been
happening lately, within past few years. Spark for the
change is due both governmental and societal
demand. In other words, regional and national
legislation has become stricter in terms of
environmental performance of companies. At the
same time, customers, consumers, and society at large
have become more vocal in their demands for
corporate sustainability in Finland. Since
environmental focus is a new direction for
companies, especially those in logistics sector, which
is known for characteristics such as traditional and
rigid, vast advances in environmental friendliness
cannot possibly be expected yet. Indeed, most of the
environmental advances in the studied companies
have been incremental. As such, the related
performance measurements are at basic level and lack
coordination with strategic goals (procedural
uncertainty). Therefore, management is not supplied
with proper data to support their decision making.
While the direction is correct for improved
environmental performance, strategic
implementation of environmental practices and
technologies is needed to create meaningful results
and simultaneous benefits in terms of environmental
sustainability, societal approval, and economic profit.
When the strategic objectives for companies are
recognized, only then it is possible to measure correct
things in operations (i.e., ascension to structural
uncertainty and beyond). Furthermore, this also
enables management of sustainability and appropriate
control mechanisms.
Some of the studied logistics companies possess
naturally advantageous position in environmental
sustainability (e.g., railway operators have access to
environmentally sound transportation when
compared to road transportation companies).
However, some of the mentioned companies are not
actively reinforcing their position regarding
environmental sustainability. In other words, some
logistics companies do not recognize competitive
advantages in environmental sustainability, and
furthermore take for granted the most likely
temporary advantageous position. The position can be
described as temporary since some of the other
studied companies (without inherent advantage in
environmental sustainability, e.g., road
transportation) are actively strategically thriving a
position of forerunner regarding environmental issues
in logistics industry.
While it is reasonable to assume that some of the
distortion in environmental self-evaluation and actual
performance is due to the lacking capabilities in
environmental sustainability or “meta-ignorance”,
possible impact of external influence should also be
entertained. For example, in Finland, utilizing
biodiesel in road transportation is subject of high-
profile marketing and is also recommended by
Is Ignorance a Bliss in Sustainability? Evaluating the Perceptions of Logistics Companies’ Self-Assessment in Environmental Performance
government through various programs and legislation
(e.g., Finnish Tax Administration, 2020). However, it
is debatable how beneficial for overall environmental
sustainability of transportation these biofuels are.
Nevertheless, many of the studied companies have
been introducing biofuels, especially biodiesel, to
their operations. Based on the interviews, it seems
that these same companies lull in a feeling of
achieved environmental sustainability after changing
to biodiesel. At the same time, the environmental
impact of these companies’ operations is lowered
only marginally if at all.
The self-evaluation grades (1-5) of value for
environmental sustainability in companies’ operation
and that in their network is presented in Figure 1.
When considering both company’s and their
network’s score, it is possible to divide the
interviewee companies to four different categories.
Top left (high importance of environmental
sustainability in network, low inside organization) is
for reactionary companies who act upon changes in
their direct business surroundings and are not prone
to proactive decisions. Bottom left (low network and
organizational importance) is for companies acting in
networks that have not recognized value in
environmental sustainability. Bottom right (low
network, high organizational importance) is for
companies positioned as forerunners in
environmental sustainability: their network is not
pushing for environmental performance, but they
proactively act towards that. Lastly, top right (high
network and organizational importance) contains
companies operating in networks which recognize
value in environmental sustainability.
Majority of studied companies are positioned to
top right, to environmental focused companies among
others, according to their self-evaluation. Second
largest group can be categorized as environmental
forerunners according to their assessment, locating in
the bottom right. While none of the companies
position themselves on the categories represented on
left side of the matrix, two are on the edge. Inland
waterway infrastructure agency sees themselves as
moderately focused to environmental sustainability,
while admitting that their network values that highly.
Similarly, Logistics development company evaluates
themselves as moderate on environmental issues but
assesses surrounding network as not particularly
focused on environment. According to some of the
companies, environmental measurements and related
communications lack standardization. These
interviewees claim that it is extremely difficult to
benchmark environmental sustainability of logistics
operations between the companies. Lack of industry
standards in environmental measurements and
reporting is one factor explaining the relatively high
grading in self-evaluation for the studied companies.
It seems that none of the companies except one rated
their network’s focus on environment higher than
their own: a sign of the studied companies
overestimating their own alignment towards
environmental issues.
Figure 1: Evaluation for o
rganizational and network position
environmental sustainability.
ICORES 2022 - 11th International Conference on Operations Research and Enterprise Systems
This research continues from the previous scientific
discussion (Vilko et al., 2014; Dunning, 2011) by
synthesizing on uncertainty and biases in decision-
making in sustainability context. Informed decision-
making in supply chains under uncertainty requires
adequate cognitive abilities (Vilko et al., 2014).
Similarly, decisions towards environmental
sustainability in supply chains require specific
knowledge to understand causalities, impacts, and
outcomes of those decisions (Kelle et al., 2019).
The multiple case study on intermodal logistics
system reveals that most of the studied companies
have taken some substantial steps towards improving
their environmental sustainability. In most cases, this
can be boiled down to implementing some
incremental advancements on top of the existing
operations, e.g., using biodiesels in road
transportation instead of conventional fuels.
However, at the same time the pursuit for
environmental sustainability seems to be limited to
these incremental changes companies are hesitant to
make strategic and structural changes to existing
operations to improve their environmental
While most of the companies describe their
actions towards environmental sustainability as
conservative, most still evaluate their own
environmental sustainability and that of their
immediate networks highly. This represents an
obvious mismatch in actions and communications
related to environmental sustainability. The situation
can also be interpreted as companies having illusory
superiority. First initial decisions towards reducing
environmental burden of operations are made, tying
investments, time, and work to environmental
challenges. This in turn could create a feeling of
radical improvement, especially since rigid
benchmarking in environmental context between
companies is lacking. Therefore, it is relatively for
companies to evaluate their environmental focus as
exceptionally high. Organizations with longer
experience in environmental advances, however, hold
more informed view on environmental decision-
making and desired outcomes. For example, the
studied fourth-party logistics service provider, which
has carried out numerous environmental programs for
its customers (logistics companies), can be seen
possessing a more informed view on the matter.
While they rank themselves high in environmental
sustainability, they see their network performing
below average on the matter. Similarly, the studied
logistics development company, which intends to
create modern, competitive regional logistics, sees
the surrounding logistics industry as immature when
it comes to environmental sustainability.
However, it is not fair assessment to attribute the
high grades solely on illusory superiority. For
example, the studied transportation LSP company has
been positioning themselves as a forerunner in
environmental issues for decades already. In their
case, environmental sustainability has been lifted as
part of their strategy and they believe that this
direction will grant them prolonged competitive
advantages. Business processes have been coupled
with measurements, and appropriate data on
sustainability goals reaches the management. In other
terms, they can be seen as reaching for parametric
certainty in sustainability related decision-making.
Therefore, they rightfully grade themselves high in
environmental sustainability while at the same time
assessing their network as low on the matter.
Interestingly, the studied railroad operator
assesses themselves exceptionally high, with full
score. Indeed, railway transportation in Finland,
where most of the tracks are electrified and
hydroelectricity is preferred power source, can be
considered as environmental alternative for
transportation. However, during the interview with
this company, it was evident that they are not
strategically pursuing to improve their position
regarding environmental sustainability in logistics
industry. In other words, they seem to feel secure in
their current position, and are not actively trying to
improve environmental sustainability of their
operations. In future, this could lead to other actors in
the industry in taking over parts of the market which
values environmental sustainability. In worst case
scenario, inaction now could lead to lost market
position in the future, stemming partly from illusory
superiority. Especially as some of the other studied
companies are more aggressively redefining their
businesses to become more environmentally sound.
So, is (unintentional) ignorance a bliss in the context
of environmental sustainability in the studied
industry? In short term, it is easier to implement
sustainability superficially to company’s strategy
with ambiguous measurements and reporting.
However, if improvements in this regard are not
made, it can be costly for the company in future.
Long-term planning is not an easy road to travel: the
more is known, the more the required work for
meaningful sustainability actions becomes apparent.
Is Ignorance a Bliss in Sustainability? Evaluating the Perceptions of Logistics Companies’ Self-Assessment in Environmental Performance
There are also scientific implications for this
research. It seems that psychological phenomena,
such as illusory superiority, are not extensively
considered in organizational studies. According to the
authors best knowledge, only a few studies consider
such bias in research which relies on informant
companies’ self-evaluation. In addition, as corporate
sustainability is still emerging topic in academia as
well as in practice, biases in self-assessment manifest
easily due to the lack in long-term experience. The
proposed framework helps in structuring
sustainability related decision-making and
understanding causalities and possible outcomes. It
offers a way to evaluate the current situation of a
company, as well as what is needed to improve in
informed environmental decision-making.
This study offers several managerial implications.
Firstly, the multiple case study of a multimodal
logistics system presents a snapshot on how
environmental sustainability is regarded in such
business environment. Secondly, the empirical study
shows that all the companies in the given industry are
shifting their focus to environmental challenges.
Some do so more actively than others, but the overall
notion is that there is growing value in environmental
sustainability in logistics. Lastly, the used certainty
framework illuminates some pitfalls in environmental
decision-making, and that false sense of superiority
could be detrimental to a company’s long term overall
performance. As a major takeaway, companies
should thrive to carry out meaningful measurements
to enable informed decision-making based on data
and knowledge.
Limitations of this research make it difficult to
justify the experienced effect in sustainability related
self-assessment as wide scale phenomenon. This
multiple case study focuses on a single industry in a
specific geographical location. However, further
studies can be extended to multiple industries in a
wider geographical scale. In addition, further research
should aim to gather quantitative data on the
phenomenon to investigate how wide the self-
assessment bias is in companies.
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