Do Voluntary Programs Matter? AnEmpirical Examination of ISO 14001 Adoption and Firms’ EnvironmentalPerformance.

Voluntary programs are an important development in the environmental governance arena. Such programs promise a virtual panacea for governments by lowering the costs of monitoring and enforcing environmental regulations. Arguably, to achieve their wide-spread adoption, governments need to provide incentives for joining voluntary programs, such as environmental audit laws that require regulators to be lenient with firms’ self-disclosed regulatory violations. However, skeptics argue that because profit-seeking firms may tend to skirt costly regulations, only strictly monitored and enforced regulations can compel compliance. Further, firms may interpret environmental audit laws enacted to encourage self-policing as licenses to pollute and end up hurting the environment. ISO 14001 is a non-governmental code that requires firms to establish environmental management systems and have them audited by external auditors. Its adoption rates have varied across U.S. states. We expect ISO 14001 certified facilities should have lower pollution emissions than non-certified facilities, and versus their pre-certification levels. Moreover, certified facilities’ performance improvements should be even more pronounced where governments have enacted environmental audit laws that provide confidence to firms to invite external auditors to assess their environmental management systems. One criteria for evaluation voluntary programs such as ISO 14001 is pollution reduction. Our paper contributes to the literature on voluntary self-policing programs by examining how ISO 14001 (a key self-policing program) influences firms’ environmental performance. Building on our previous work, the research design for this paper centers on a panel of study of several thousand large facilities in the US. The analyses will compare the environmental performance (as reflected in TRI emissions) comparing facilities that have received ISO 14001 certification with those that have not, and comparing of ISO 14001 certified facilities’ emissions pre and post certification. Given the conflictual climate of environmental governance in many jurisdictions, an emphasis on voluntary programs raises important issues about the prospects for their efficacy. Our research should inform both academic and public dialogues about whether and when voluntary programs and public policy can improve firms’ environmental performance. [ABSTRACT FROM AUTHOR]