Does Self-Regulation Reduce Pollution? Responsible Care in the Chemical Industry

51 Pages Posted: 12 Feb 2010 Last revised: 2 Mar 2012

See all articles by Shanti Gamper-Rabindran

Shanti Gamper-Rabindran

University of Pittsburgh - Graduate School of Public and International Affairs

Stephen R. Finger

affiliation not provided to SSRN

Date Written: December 17, 2011

Abstract

Self-regulation programs, in which industry associations set membership codes beyond government regulations, are prevalent despite scarce evidence on their effectiveness. We examine Responsible Care (RC) in the US chemical manufacturing sub-sector, whose membership codes include pollution prevention, using our author-constructed panel database of 3,278 plants owned by 1,759 firms between 1988 and 2001. We instrument for a plant’s parent firm’s self-selection into the program, using: (i) the characteristics of other plants belonging to the same firm in our multi-plant sample; and (ii) firm participation in the industry association before the establishment of RC and industry level RC participation in our full sample. We find that on average, plants owned by RC participating firms raise their toxicity-weighted pollution by 15.9% relative to statistically-equivalent plants owned by non-RC participating firms. This estimated increase is large relative to the yearly 4% reduction in pollution among all plants in our sample between 1988 and 2001. Moreover, RC raises plant-level pollution intensity by 15.1%. These results caution against reliance on self-regulation programs modeled on the pre-2002 RC program that did not require third party certification and in those sectors that lack independent third party certification.

Keywords: Corporate Social Responsibility, self-regulation, voluntary programs, self-selection, greenwash, chemical industry

JEL Classification: Q53, Q58, L51, L65, D21

Suggested Citation

Gamper-Rabindran, Shanti and Finger, Stephen R., Does Self-Regulation Reduce Pollution? Responsible Care in the Chemical Industry (December 17, 2011). Available at SSRN: https://ssrn.com/abstract=1550994 or http://dx.doi.org/10.2139/ssrn.1550994

Shanti Gamper-Rabindran (Contact Author)

University of Pittsburgh - Graduate School of Public and International Affairs ( email )

Pittsburgh, PA 15260-0001
United States
(412) 648-8266 (Phone)
(412) 648-2605 (Fax)

HOME PAGE: http://www.pitt.edu/~shanti1/

Stephen R. Finger

affiliation not provided to SSRN

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