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STAR Studies Corporate Environmental Behavior
Monday, April 7, 2003
NCER Staff Writer
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What factors determine a corporation's behavior toward environmental protection and how should these guide government policies? Are voluntary or information programs less costly or more effective than regulation? |
WASHINGTON (NCER) - As government agencies attempt to deliver services more cost-effectively, they need to understand how to best interact with corporate America. For EPA to allocate resources where they will do the most good, we need to know what motivates companies to become environmental stewards, what types of regulations and implementation strategies have a positive influence on corporate behavior and environmental performance, and how voluntary initiatives can best be designed to enhance environmental protection.
A 1999 workshop to identify the responses of regulated entities to regulations and enforcement evolved into a Science To Achieve Results (STAR) program called Corporate Environmental Behavior. This new program broadened its research focus to consider corporate behavioral responses to all possible types of government intervention - regulations and enforcement, voluntary programs, information and technical assistance.
In 2002, the EPA's National Center for Environmental Research, with the EPA's National Center for Environmental Economics, interviewed staff from EPA's program and regional offices to determine what research was needed to understand the corporate role in – and response to -- environmental rules and policies. Staff from these two centers were somewhat surprised to find that, at the top of most regulatory programs' lists, was a desire to better understand how corporations or individuals made compliance decisions and what factors motivated their behavior.
The EPA's Environmental Economics Research Strategy notes that, "There are substantial data gaps in the social science knowledge base on which the selection and evaluation of environmental policy is founded. It is critical that these gaps be filled…" STAR-funded scientists have worked to meet this challenge, with research that focuses on understanding how regulated firms make decisions that affect their location decisions or waste disposal practices, the most effective and efficient government interventions to protect environmental quality, the effectiveness of voluntary approaches to environmental management work, and others important focus areas.
According to Jay Benforado, Director of EPA's National Center for Environmental Innovation, EPA is now operating with two different environmental management approaches. At a STAR-sponsored workshop, he spoke about the traditional compliance-oriented system of standards, regulations, permits, inspections, and enforcement. The second system is a new and evolving set of programs such as the 33/50, Indoor Air, Energy Star, and Performance Track programs, all of which rely on non-EPA initiatives and responsibilities to a greater extent than in the past.
Benforado listed four reasons why he thought a second system is emerging. First, the focus of environmental protection is changing, including the need to tackle nonpoint source pollution. Second, EPA has a new array of tools it can use, such as information and market-based instruments. Third, roles are changing, with increased responsibilities not only in business but in regional, state, and local governments as well as with communities and citizens. Fourth, the environmental protection paradigm is shifting toward the concepts of pollution prevention and sustainable development.
Although the STAR research program on corporate environmental behavior
is relatively new, results are already available. Work led by Dr.
Andrew King of Dartmouth University evaluates the performance of the
chemical industry's Responsible
Care 
program of environmental self-regulation. His results raise issues about
the effectiveness of results in the absence of sanctions on performance.
Dr. Madhu Khanna and colleagues at the University of Illinois worked to understand the motivation behind corporate environmental policies and why some firms developed effective environmental management systems. They found several significant factors including the threat of future enforcement and the liabilities associated with environmental cleanup. Also important to corporations were any opportunities to win customer and investor goodwill and resulting market share.
Research led by Dr. John Horowitz of the University of Maryland found that sewage treatment, chemical manufacturing, and pulp and paper plants appeared to be complying beyond the level required by federal, clean water rules. Researchers found that this apparent overcompliance was rooted more in the practical realities of waste treatment than in a desire to exceed pollution control regulations. The implications are that the standard "command-and-control" rules which have dominated the environmental protection scene for decades may attain more environmental improvement than anticipated.
Will a new kind of environmental management, relying more on self-regulation, eventually prevail and be as successful as the compliance-oriented approach has been? Answers to this question are in their early stages, and results suggest that each approach to environmental protection has its appropriate role. There is a need for enforcement, market forces, voluntary programs, and information systems. Through the STAR program, continuing research will lead to better strategies about how to use policy tools to achieve the most cost-effective environmental results.