Do Voluntary Programs Reduce Pollution? Examining ISO 14001's Effectiveness across Countries

Voluntary environmental programs have emerged as important instruments of environmental policy. Despite considerable scholarly scrutiny, there remain debates about whether they reduce pollution among participants, and their overall impact at the country level. We present a cross-national analysis of the efficacy of ISO 14001, the most widely adopted voluntary environmental program in the world. While several single country studies have explored the effect of ISO 14001 participation on pollution reduction at the facility level, this is the first article to assess (i) national level pollution reduction effects of ISO 14001 participation levels, (ii) across a large number of countries, and (iii) across two pollutants. We examine whether all else equal, the national level uptakes of ISO 14001 are associated with reductions in air emissions (sulfur dioxide, SO2) and water pollution (biochemical oxygen demand, BOD). Because firms, regulators, and environmental groups tend to focus more on visible types of pollution than less visible ones, we hypothesize that ISO 14001 uptake will be associated with more pronounced reductions in air pollution (visible) in relation to water pollution (less visible). Our analyses of pollution levels for a panel of 138 (72 for BOD) countries for the 1991‐2005 period suggest that a 1 percent increase in aggregate levels of ISO 14001 adoption is associated with about a 0.064 percent reduction in SO2 emissions, all else equal. In contrast, we do not find a statistically significant relationship between ISO 14001 adoption levels and changes in water pollution (BOD).

[1]  Resolving Information Asymmetries in Supply Chains: The Role of Certified Management Programs , 2005 .

[2]  Nicole Darnall,et al.  Greener and cleaner? The signaling accuracy of U.S. voluntary environmental programs , 2005 .

[3]  James T. Hamilton,et al.  Noncompliance in Environmental Reporting: Are Violators Ignorant, or Evasive, of the Law? , 1996 .

[4]  John W. Kingdon,et al.  Agendas, Alternatives, and Public Policy. , 1985 .

[5]  A. Mani,et al.  Democracy, visibility and public good provision , 2007 .

[6]  Jieun Chung.  Measuring Corporate Environmental Performance: The Trade-Offs of Sustainability Ratings , 2012 .

[7]  Thomas P. Lyon,et al.  Self-Regulation and Social Welfare: The Political Economy of Corporate Environmentalism , 1998 .

[8]  Tanja A. Börzel,et al.  Governance without a state: Can it work? , 2010 .

[9]  M. Vandenbergh.  The New Wal-Mart Effect: The Role of Private Contracting in Global Governance , 2007 .

[10]  A. Martinuzzi,et al.  ISO 14001 – experiences, effects and future challenges: a national study in Austria , 2007 .

[11]  A. Prakash,et al.  Racing to the Bottom? Trade, Environmental Governance, and ISO 14001 , 2006 .

[12]  Jorge Rivera.  Business and Public Policy: Responses to Environmental and Social Protection Processes , 2007 .

[13]  R. Blundell,et al.  Initial Conditions and Moment Restrictions in Dynamic Panel Data Models , 1998 .

[14]  Patrick Paul Walsh,et al.  New tools in comparative political economy : the database of political institutions , 2001 .

[15]  L. Dosier,et al.  Academy of Management Best Paper Proceedings , 1997 .

[16]  Chris Hendrickson,et al.  Environmental Management Systems and ISO 14001 Certification for Construction Firms , 2004 .

[17]  Richard D. Morgenstern,et al.  Reality Check : The Nature and Performance of Voluntary Environmental Programs in the United States, Europe, and Japan , 2007 .

[18]  J. Boyce,et al.  Income, inequality, and pollution: a reassessment of the environmental Kuznets Curve , 1998 .

[19]  Peter Grabosky,et al.  Smart Regulation: Designing Environmental Policy , 1999 .

[20]  Roger Frost,et al.  International Organization for Standardization (ISO) , 2004 .

[21]  P. May,et al.  Motivation for Compliance with Environmental Regulations , 2001 .

[22]  Madhu Khanna,et al.  Incentives for Environmental Self-Regulation and Implications for Environmental Performance , 2004 .

[23]  Rafael Reuveny,et al.  Democracy and Environmental Degradation , 2006 .

[24]  Ted Robert Gurr,et al.  Polity IV, 1800-1999 , 2002 .

[25]  Paul Leinster,et al.  Environmental management systems and company performance: assessing the case for extending risk‐based regulation , 2003 .

[26]  John W. Maxwell,et al.  Environmental Public Voluntary Programs Reconsidered , 2007 .

[27]  Jorge Rivera,et al.  Is Greener Whiter? Voluntary Environmental Performance of Western Ski Areas , 2004 .

[28]  Meilanie Buitenzorgy,et al.  Does Democracy Lead to a Better Environment? Deforestation and the Democratic Transition Peak , 2011 .

[29]  Nicole Darnall,et al.  Which Types of Environmental Management Systems are Related to Greater Environmental Improvements? , 2011 .

[30]  Petra Christmann,et al.  Globalization and the Environment: Determinants of Firm Self-Regulation in China , 2001 .

[31]  Eitan Naveh,et al.  Standardization and Discretion: Does the Environmental Standard ISO 14001 Lead to Performance Benefits? , 2006, IEEE Transactions on Engineering Management.

[32]  Cary Coglianese,et al.  Regulating from the inside , 2001 .

[33]  Kathleen Segerson,et al.  Voluntary Environmental Agreements: Good or Bad News for Environmental Protection? , 1998 .

[34]  T. Panayotou.  Economic Growth and the Environment , 2000 .

[35]  Walter Mattli,et al.  Setting International Standards: Technological Rationality or Primacy of Power? , 2003 .

[36]  D. Koehler,et al.  The Effectiveness of Voluntary Environmental Programs—A Policy at a Crossroads? , 2007 .

[37]  Cary Coglianese,et al.  Regulating from the Inside: Can Environmental Management Systems Achieve Policy Goals , 2010 .

[38]  S. Iyengar.  Is anyone responsible? How television frames political issues. , 1991 .

[39]  M. Nerlove,et al.  Biases in dynamic models with fixed effects , 1988 .

[40]  Kathleen Segerson,et al.  Assessing Voluntary Programs to Improve Environmental Quality , 2002 .

[41]  R. Dunlap.  International Attitudes Towards Environment and Development , 1994 .

[42]  Toshi H. Arimura,et al.  Is ISO 14001 a Gateway to More Advanced Voluntary Action? The Case of Green Supply Chain Management , 2010 .

[43]  G. David Roodman.  PRACTITIONERS' CORNER A Note on the Theme of Too Many Instruments Å , 2009 .

[44]  James A. Stimson.  Public Opinion In America: Moods, Cycles, And Swings, Second Edition , 1999 .

[45]  F. Windmeijer.  A Finite Sample Correction for the Variance of Linear Two-Step GMM Estimators , 2000 .

[46]  I. Lange.  Evaluating Voluntary Programs with Spillovers: The Case of Coal Combustion Products Partnership , 2008 .

[47]  Benjamin I. Page,et al.  Effects of Public Opinion on Policy , 1983, American Political Science Review.

[48]  Jorge Rivera,et al.  Is Greener Whiter? The Sustainable Slopes Program and the Voluntary Environmental Performance of Western Ski Areas , 2006 .

[49]  J. A. Baird.  Trading up. , 1998, Fund raising management.

[50]  R. Elliott,et al.  In Search of Environmental Spillovers , 2009 .

[51]  Michael J. Lenox,et al.  Industry Self-Regulation Without Sanctions: The Chemical Industry's Responsible Care Program , 2000 .

[52]  Denise Howel,et al.  Public views on the links between air pollution and health in Northeast England. , 2003, Environmental research.

[53]  Daniel J. Fiorino.  The New Environmental Regulation , 2006 .

[54]  C. Coglianese,et al.  Voluntary Environmental Programs: Assessing Their Effectiveness , 2009 .

[55]  Xun Cao,et al.  Trade Competition and Domestic Pollution: A Panel Study, 1980–2003 , 2010, International Organization.

[56]  Richard Locke,et al.  Does Monitoring Improve Labor Standards?: Lessons from Nike , 2006 .

[57]  Kathryn Harrison,et al.  Talking with the Donkey: Cooperative Approaches to Environmental Protection , 1998 .

[58]  Michael W. Toffel,et al.  Resolving Information Asymmetries in Markets: The Role of Certified Management Programs , 2005 .

[59]  Madhu Khanna,et al.  Non-mandatory Approaches to Environmental Protection , 2002 .

[60]  Eric Neumayer,et al.  Do Democracies Exhibit Stronger International Environmental Commitment? A Cross-country Analysis , 2002 .

[61]  David Roodman.  How to do Xtabond2: An Introduction to Difference and System GMM in Stata , 2006 .

[62]  E. Neumayer,et al.  Environmentalism, democracy, and pollution control , 2005 .

[63]  A. Prakash,et al.  Covenants with weak swords: ISO 14001 and facilities' environmental performance , 2005 .

[64]  L. Ganesh,et al.  A study on the ISO 14000 certification and organizational performance of Indian manufacturing firms , 2008 .

[65]  M. Arellano,et al.  Another look at the instrumental variable estimation of error-components models , 1995 .

[66]  M. Toffel,et al.  How Firms Respond to Being Rated , 2009 .

[67]  A. Türk.  The benefits associated with ISO 14001 certification for construction firms: Turkish case , 2009 .

[68]  John Braithwaite,et al.  Responsive Regulation: Transcending the Deregulation Debate , 1992 .

[69]  S. Iyengar.  Is Anyone Responsible , 1991 .

[70]  Michael V. Russo,et al.  INSTITUTIONAL CHANGE & ORGANIZATIONAL STRATEGY: ISO 14001 AND EMISSIONS IN THE ELECTRONICS INDUSTRY. , 2002 .

[71]  Michael W. Toffel,et al.  Coming Clean and Cleaning Up: Does Voluntary Self-Reporting Indicate Effective Self-Policing? , 2011, The Journal of Law and Economics.

[72]  F. Windmeijer.  A Finite Sample Correction for the Variance of Linear Two-Step GMM Estimators , 2000 .

[73]  Arturo A. Keller,et al.  Free riding in voluntary environmental programs: The case of the U.S. EPA WasteWise program , 2005 .

[74]  Karen Bickerstaff,et al.  PUBLIC UNDERSTANDINGS OF AIR POLLUTION: THE LOCALISATION OF ENVIRONMENTAL RISK , 2001 .

[75]  María J. Montes-Sancho,et al.  An Institutional Perspective on the Diffusion of International Management System Standards: The Case of the Environmental Management Standard ISO 14001 , 2007 .

[76]  Nicole Darnall,et al.  Predicting the Cost of Environmental Management System Adoption: The Role of Capabilities, Resources and Ownership Structure , 2006 .

[77]  David Roodman,et al.  A Note on the Theme of Too Many Instruments , 2008 .

[78]  William M. Modrow.  Yearbook of International Organizations , 2013 .

[79]  鳥居 泰彦,et al.  世界経済・社会統計 = World development indicators , 1998 .

[80]  Charles P. Koerber,et al.  Is Greener Whiter Yet? The Sustainable Slopes Program after Five Years , 2006 .

[81]  Ans Kolk,et al.  Economics of Environmental Management , 1999 .

[82]  Madhu Khanna,et al.  EPA's Voluntary 33/50 Program: Impact on Toxic Releases and Economic Performance of Firms , 1999 .

[83]  M. Arellano,et al.  Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations , 1991 .

[84]  E. Neumayer.  Are left-wing party strength and corporatism good for the environment? Evidence from panel analysis of air pollution in OECD countries , 2003 .

[85]  Toshi H. Arimura,et al.  Is a voluntary approach an effective environmental policy instrument , 2008 .