Explaining Corporate Environmental Performance: How Does Regulation Matter?

Abstract

How and to what extent does regulation matter in shaping corporate behavior? How important is it compared to other incentives and mechanisms of social control, and how does it interact with those mechanisms? How might we explain variation in corporate responses to law and other external pressures? This article addresses these questions through an study of environmental performance in 14 pulp and paper manufacturing mills in Australia, New Zealand, British Columbia, and the states of Washington and Georgia in the United States. Over the last three decades, we find tightening regulatory requirements and intensifying political pressures have brought about large improvements and considerable convergence in environmental performance by pulp manufacturers, most of which have gone “beyond compliance” in several ways. But regulation does not account for remaining differences in environmental performance across facilities. Rather, “social license” pressures (particularly from local communities and environmental activists) and corporate environmental management style prod some firms toward better performance compliance than others. At the same time, economic pressures impose limits on “beyond performance” investments. In producing large gains in environmental performance, however, regulation still matters greatly, but less as a system of hierarchically imposed, uniformly enforced rules than as a coordinative mechanism, routinely interacting with market pressures, local and national environmental activists, and the culture of corporate management in generating environmental improvement while narrowing the spread between corporate leaders and laggards.

Integrating biodiversity conservation into forestry: an empirical analysis of institutional adaptation

“…In some cases, environmental regulation has triggered industrial organizations to pursue this kind of progressive greening; accompanied with strategic development of competences that allow conserving the environment beyond what is formally required (Halme 2002, Kagan et al 2003, Mickwitz 2003b, Gunningham et al 2004, Mikkilä et al 2005). With such strategies, organizations can infl uence future regulation and contribute to the greening development in their organizational fi eld.…”

“…As the forest sector organizations are facing multiple demands from a growing range of constituents (Kennedy et al 2001, Niskanen et al 2008, their investments in new competences and their practices can be expected to develop accordingly -that is, if they adapt. The organizations could, if they were forerunners, infl uence the entire organizational fi eld by generating expectations for progressive conservation behavior (Kagan et al 2003, Gunningham et al 2004). This would require a combination of aggressive demand and political and regulatory threat (Kagan et al 2003, Langpap and Wu 2004, Cashore and Howlett 2007.…”

“…Even more directly reliant on their reputation, forest industry organizations have been found to adapt their behavior with changes in policy and social demand for increased conservation (Cashore and Vertinsky 2000). In this vein, it could be expected that the forestry organizations would take the conservation challenge as an opportunity, and strategically develop conservation competences to outcompete other organizations, even by exceeding the formal responsibilities (Kagan et al 2003). However, the adaptation to arising conservation demands among forestry organizations has generally been described as uniform and incremental (Farrell et al 2000, Kennedy and Koch 2004, Cubbage and Newman 2006, Dekker et al 2007).…”

Constructing and Contesting Legitimacy and Accountability in Polycentric Regulatory Regimes

“…139 There has been very little sustained research on how either governmental or non-governmental regulators respond to competing accountability and legitimacy claims, and even less on how these responses may be affected by their relationship with other regulators in polycentric regulatory regimes. 140 There is a considerable body of research investigating the responses of regulatees: both on the reasons for their non-compliance, 141 and why they 'go beyond' compliance: why firms develop environmental policies which extend beyond regulatory requirements, 142 or why they comply with non-legal codes of conduct relating to corporate governance, for example. 143 There has also been research on the narrower question of the impact of new public management reforms in some European countries, in particular in health, education and local government.…”

The Role of Sustainability Resources of Large Greenhouse Gas Emitters: The Case of Corporations in Alberta, Canada

“…There are companies that have made a significant reduction and went beyond environmental compliance while we have companies in carbon intensive sectors that are yet to commit to any meaningful reduction that matches the magnitude of the problem. These differences in corporate behavior have been previously discussed in the literature while focusing on legal factors, social controls, economic factors and individual characteristics in management [2][3][4][5][6][7]. circumstances in such a way that it is superior to what can be done by the competitors.…”