Do Voluntary Programs Matter? An Empirical Examination of ISO 14001 Adoption and Firms` Environmental Performance.

Voluntary environmental programs are codes of progressive environmental conduct that firms pledge to adopt. This paper investigates whether ISO 14001, a voluntary program with a weak sword ? a weak monitoring and sanctioning mechanism, can mitigate shirking and improve participants? environmental performance. Our analysis of over 3,000 facilities regulated as major sources under the U.S. Clean Air Act suggests that ISO 14001 certified facilities reduce their pollution emissions more than non-certified facilities. This result persists even after controlling for facilities? emission and regulatory compliance histories as well as addressing potential endogeneity issues between facilities? environmental performance and their decisions to join ISO 14001. [ABSTRACT FROM AUTHOR]