Is ISO 14001 a Gateway to More Advanced Voluntary Action? A Case for Green Supply Chain Management

Abstract

Using Japanese facility-level data, we estimate the effects of ISO 14001 certification on the promotion of more advanced practices, namely green supply chain management (GSCM). Our results show that ISO 14001 promotes GSCM practices, in that facilities with environmental management systems (EMS) certified to ISO 14001 are 40 percent more likely to assess their suppliers' environmental performance and 50 percent more likely to require that their suppliers undertake specific environmental practices. Further, we find that government approaches that encourage voluntary EMS adoption indirectly promote GSCM practices, in that the probability of facilities assessing their suppliers' environmental performance and requiring them to undertake specific environmental practices increases by 9 percent and 10 percent, respectively, if a government assistance program exists. Combined, these findings suggest that there may be significant but previously unnoticed spillover effects of ISO 14001 and government promotion of voluntary action.

Keywords: voluntary actions, positive spillover, environmental management systems, ISO 14001, green supply chain management, government assistance programs, environmental impacts, discrete choice model, endogeneity

JEL Classification: C35, Q53, Q58