Forthcoming in Law & Society Review
57 Pages Posted: 23 Feb 2002
It is widely assumed that national and subnational differences in regulation and regulatory enforcement account for differences in environmental performance by regulated businesses. Against this "regulatory regime" assumption, however, one can pose a counter-hypothesis: by the beginning of the 21st Century, particularly in economically advanced democracies, differences among regulatory regimes have narrowed sharply, and local social pressures, market incentives, and corporate environmental management are the chief determinants of variations in firm-level environmental performance. This article tests the "regulatory regime" and the counter-hypothesis, drawing on a study of 14 pulp and paper manufacturing mills in Australia, New Zealand, British Columbia, and the states of Washington and Georgia in the U.S. 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 significant firm-level differences in pollution control still exist. Relying on 1998-99 effluent data, we find that regulatory jurisdiction does not account for differences in environmental performance across facilities. Just as salient in explaining those differences are variables such as corporate profitability, pressures by local communities and environmental activists, and especially corporate environmental management style although no single set of variables is determinative. A broader historical perspective on our data, however, indicates that regulation still matters, since large improvements in corporate environmental controls have been associated with tightening regulatory requirements and intensifying political pressures.
Suggested Citation: Suggested Citation
Kagan, Robert A. and Gunningham, Neil and Thornton, Dorothy, Explaining Corporate Environmental Performance: How Does Regulation Matter?. Forthcoming in Law & Society Review. Available at SSRN: https://ssrn.com/abstract=299239 or http://dx.doi.org/10.2139/ssrn.299239
By Peter May
By David Spence