“Bluewashing” the Firm? Voluntary Regulations,Program Design,and Member Compliance with the United Nations Global Compact

Voluntary programs have emerged as important instruments of public policy. We explore whether programs lacking monitoring and enforcement mechanisms can curb participants’ shirking with program obligations. Incentive‐based approaches to policy see monitoring and enforcement as essential to curb shirking, while norm‐based approaches view social mechanisms such as norms and learning as sufficient to serve this purpose. The United Nations Global Compact (UNGC), a prominent international voluntary program, encourages firms to adopt socially responsible policies. Its program design, however, relies primarily on norms and learning to mitigate shirking. Using a panel of roughly 3,000 U.S. firms from 2000 to 2010, and multiple approaches to address endogeneity and selection issues, we examine the effects of Compact membership on members’ human rights and environmental performance. We find that members fare worse than nonmembers on costly and fundamental performance dimensions, while showing improvements only in more superficial dimensions. Exploiting the lack of monitoring and enforcement, UNGC members are able to shirk: enjoying goodwill benefits of program membership without making costly changes to their human rights and environmental practices.     

Is Greener Whiter Yet? The Sustainable Slopes Program after Five Years

This study focuses on two basic questions: Are voluntary programs effective in promoting higher environmental performance by participant firms? If so, which distinct areas of environmental performance are more likely to be improved by firms joining a voluntary environmental program? We address these questions by assessing the environmental effectiveness of the ski industry’s Sustainable Slopes Program in the western United States between 2001 and 2005. We found no evidence in our five-year analysis to conclude that ski areas adopting the SSP displayed superior performance levels than nonparticipants for the following areas of environmental protection: overall environmental performance, expansion management, pollution management, and wildlife and habitat management. SSP participants only appear to show a statistically significant correlation with higher natural resource conservation performance rates. For policymakers, these results suggest that caution is needed before a priori assuming that strictly voluntary programs can be effective in promoting comprehensive superior environmental performance.     

AGGLOMERATION EXTERNALITIES,PRODUCTIVITY, AND TECHNICAL INEFFICIENCY*

ABSTRACT Agglomeration externalities can have positive effects on both the production possibility frontier and technical inefficiency of firms. Increased levels of localized knowledge spillovers and substitution of internal inputs with external inputs may lead to fewer errors in decision‐making and execution of production tasks, thus causing firms to become technically more efficient relative to the production frontier. When we estimate a stochastic frontier production model on a large panel of salmon aquaculture farms, we find econometric support for positive agglomeration externalities on both the production frontier and technical inefficiency.     

Stakeholder Involvement in the Design of U.S. Voluntary Environmental Programs: Does Sponsorship Matter?

Voluntary environmental programs (VEPs) promise to provide firms and facilities additional flexibility in managing their environmental affairs while increasing internal efficiencies and improving their public image. Although stakeholder input is thought to improve program development, little is known about the extent that stakeholders are involved in the VEP design process. Based on a survey of 61 program managers, this research distinguishes between the intensity and diversity of stakeholder involvement and uses these two concepts to assess VEP development relative to government, industry, and third-party sponsorship. Even in the absence of a mandate, all three sponsors include a variety of stakeholders in program design. Although there is evidence that collaborative relationships are developing between sponsors and a range of stakeholder groups, variations in the intensity of involvement among sponsors suggest that some stakeholders may have disproportionate levels of influence in the design of VEPs.     

Industrial clusters,organized crime,and productivity growth in Italian SMEs

We examine whether organized crime affects firms’ performance (defined using Total Factor Productivity growth) both directly and indirectly, by downsizing the positive externalities arising from the geographic concentration of (intra‐ and inter‐industry) market‐related firms. The analysis uses a large sample of Italian small‐ and medium‐sized manufacturing firms over the period 2010–2013. The results highlight the negative direct effects of organized crime on firms’ productivity growth. Any positive effect derived from industrial clustering is thoroughly debilitated by a strong presence of organized crime, and the negative moderation effect of organized crime on productivity growth is greater for smaller than for larger firms.     

Are Members of Business for Social Responsibility More Socially Responsible?

This study examines the association between corporate social performance (CSP) practices and membership in Business for Social Responsibility (BSR) between 1992 and 2006. BSR is a business association that seeks to help its members adopt enhanced CSP practices. While there is an emerging literature examining voluntary initiatives as alternative policy mechanisms to regulations, most research is focused on initiatives that emphasize environmental protection. Further, studies suggest that membership in strictly voluntary initiatives tends to be associated with lower environmental performance because of “free‐riding” behavior by participants. BSR differs along two dimensions when compared with other voluntary initiatives examined in the literature. First, it is a comprehensive voluntary social initiative that helps firms from diverse industries address multiple CSP issues simultaneously. Second, it might limit opportunism by not offering blanket certification to its participants. Our results indicate that BSR members exhibit greater levels of positive social impacts without demonstrating significantly different levels of negative social impacts. This suggests that participation in voluntary initiatives that avoid granting blanket certifications may be associated with the adoption of new corporate social responsibility practices but not linked to the shedding of entrenched routines that produce negative externalities.     

Voluntary Environmental Programs in the Public Sector: Evaluating an Urban Water Conservation Program in California

Solving conflictual environmental policy problems is increasingly falling under the purview of local governments and public agencies. Nonregulatory approaches, such as the development of voluntary environmental programs (VEPs), could offer a useful policy alternative as they often have greater political traction and flexibility. However, there has been little work examining the use of VEPs in the public sector. This article uses a new dataset from California to examine how political institutions affect decisions by local governments and public agencies to participate in a voluntary urban water conservation program and whether this program has improved the water conservation performance of its members. The results show that special district governments, private utilities, and water suppliers dependent on purchased water are more likely to participate in the program and to join early. However, urban water agencies that have joined the program have not reduced their per capita water use more than those that have not. These results underscore the influence of political institutions in public‐sector decision making and demonstrate that, as in the private sector, commitment to a VEP by local government and public agencies does not guarantee implementation or environmental improvements. While voluntary programs offer political and administrative advantages, in order for VEPs in the public sector to be effective they must be accompanied and supported by credible enforcement mechanisms, performance standards, and rigorous monitoring programs.     

Environmental Public Voluntary Programs Reconsidered

Environmental “public voluntary programs” (PVPs) involve government offers of positive publicity and technical assistance to firms that reach certain environmental goals. A growing body of empirical work suggests these programs generally have little impact on the behavior of their participants. A natural policy conclusion would be to eliminate PVPs, but we argue that such a conclusion is premature. Many PVPs are best viewed as information diffusion programs, so identifying their effects econometrically is difficult because information is likely to diffuse to nonparticipants. Thus, after the early phases of even a successful PVP, it may well be impossible to detect a difference in the performance between participants and nonparticipants. We argue that new estimation approaches are needed to identify the effects of PVPs. We also explore the design of PVPs in detail, showing how PVPs can potentially enhance the diffusion of cost‐effective techniques for pollution abatement.     

Willingness to Pay for Multifunctional Megaprojects: A Stated Preference Analysis Among Firms in the Amsterdam Zuidas Area

Urban (re-)development projects may generate various positive and negative spatial externalities to employers. The assessment of such benefits is fraught with many methodological and empirical problems. This study aims to assess the order of magnitude of expected net benefits for incumbent employers that may accrue from a large-scale development project in the Zuidas area in the South-Western part of Amsterdam, the Netherlands. This development project is planned to transform the area into a large multifunctional urban agglomeration. We employ a specific stated preference method (namely, a willingness-to-pay method) to gauge the project's net socio-economic benefits for the current firms in the area concerned, paying special attention to the benefits associated with multifunctionality.     

Voluntary Environmental Programs: A Canadian Perspective

In light of the increasing number of environmental problems necessitating government's attention and the limited scope and budget for addressing these issues, environmental protection has, and continues to evolve as more flexible approaches to regulation are being sought and embraced by governments throughout the world. Voluntary environmental programs (VEPs) are a pragmatic response by both governments and business to find a more flexible way to protect the environment. We discuss the theoretical motivations for firms to adopt VEPs in general and examine Canada's experience with three types of VEPs, public, negotiated, and unilateral agreements, to assess whether the motivating factors are present. We then argue that the institutional, political, and regulatory framework governing environmental policy in Canada does not provide the conditions necessary to effectively promote superior corporate environmental protection across jurisdictions. Despite the lack of government‐directed VEPs, there has been considerable interest by both the private sector and civil society who have taken the lead by developing unilateral agreements. Using existing literature and our current research, we examine the factors that motivate firms in Canada to participate in unilateral agreements and the characteristics of firms with the higher environmental performance and suggest some policy implications.     

Social capital, environmental health and collective action: a Hamilton, Ontario case study

This article explores the relationships among environmental health, social capital and collective action in the industrial city of Hamilton, Ontario, Canada. Survey results from 512 households are used to document intra-urban variation in levels of social capital (defined as norms, networks and trust) and collective action in the context of environmental health issues, and specifically air quality. Despite real differences between areas in terms of socio-demographic characteristics, little variation in either social capital or collective action by area was observed. Further, while social networks and community involvement were significant predictors of collective action, indicators of norms and trust were not. Hence, the conception of social capital as a unitary construct that produces place-specific benefits is not reflected in the example explored here.     

Dimensions of State Environmental Policies

States have developed an array of environmental programs in response to a variety of political and environmental factors. This article examines three state clean air programs—setting ambient standards, ambient monitoring, and enforcement—and shows how each program has a distinct set of empirical determinants, reflecting the programs' diverse purposes. States' ambient standards policies allocate resources among competing claimants, and consequently they reflect the balance of environmental politics in each state. Ambient monitoring programs reflect the degree to which states need and can process information about air pollution problems. The level of states' enforcement programs reflects the scope of the environmental problem in each state.     

Enforcing Emissions Trading Programs

Combining an analysis of the compliance incentives faced by firms in an emissions trading program, a comprehensive review of the enforcement strategies employed in Sulfur Dioxide Allowance and the Regional Clean Air Incentives Market (RECLAIM) programs, and a review of the compliance performance of these programs thus far, we are able to propose several practical guidelines for enforcing emissions trading programs. We stress the importance of prevailing market prices for emissions permits in determining compliance incentives, the importance of accurately measuring firms' emissions, and the importance of implementing enforcement strategies that remove the incentives firms may have to falsify emissions reports.     

ENERGY: GOVERNMENT POLICY OR MARKET RESULT?

From the Truman presidency through that of Carter, the United States worked fitfully toward the development of an energy policy. Now, consistent with the “free market — get government off the backs of the people” philosophy of the Reagan Administration, the 1981 National Energy Policy Plan proposes that “individual choices” and “reliance on market decisions” replace regulations and subsidies in the nation's strategy for energy. This paper starts from the assumption that the Spring, 1982 oil “glut” may turn out to be a rather temporary thing. If one therefore wants to pursue a policy strategy that will protect us in the case of sudden short-term supply disruptions and also work toward long-term energy supply diversification, how far will market reliance carry us? What is a range of policies and programs that might usefully supplement the market? What are the externalities for which compensatory actions may still be needed if one would like to employ the market strategy as a basic thrust? The scope of the paper includes contingency planning, synthetic fuel development, renewables (especially solar energy), conservation, equity issues, environmental externalities, and the conceptualization of policies differentiated as “energy,”“environmental,” or “economic.”     

Motivations for Voluntary Environmental Management

This article examines the motivations for firms to participate in voluntary environmental programs and to adopt environmental management practices using data gathered from a survey conducted in 2005 of facilities located in Oregon operating in six industrial sectors. It is one of the first studies of voluntary environmental management to include small‐, medium‐, and large‐sized facilities as well as to include both privately and publicly owned facilities. In particular, we examine the effects of both external factors such as regulatory, consumer, and investor pressures, and internal factors such as technical and resource capacity, in influencing voluntary environmental behavior. The intent is to describe potential influences that have implications for designing and implementing private and public policies that foster effective voluntary environmental management by firms. We find that larger facilities are more likely to participate in more voluntary environmental programs, but are likely to adopt more environmental management practices only if environmental issues are of significant concern to them. Presence of an R&D department stimulates the adoption of more environmental management practices, particularly if environmental issues are of significant concern to the facility, but does not have a statistically significant impact on participation in voluntary programs. We also find that while regulatory pressures are significant in motivating participation in voluntary programs and adoption of environmental management practices, competitive pressures are only important in motivating the former. Pressure from final good consumers or from investors in publicly traded facilities is not found to have a significant influence on voluntary environmental behavior of facilities in this study.     

The micro-politics of implementing and resisting principal-agent relations in a weak state

ABSTRACT

To understand why quality of government (QoG) varies, scholars have drawn on two theoretical approaches: principal-agent and collective action theories. The literature tends to bifurcate these two theories, and focuses on the national scale and the structural conditions under which collective action and principal-agent problems arise. This article highlights how principal-agent relationships and collective action problems shape the implementation of decentralisation policy in two subnational governments in Papua New Guinea. It is argued that pathways to QoG are contextual, and determined by both principal-agent and collective action relationships. In the case of PNG, these relations are shaped by history, culture and the agency of elites and citizens.     

The Institutional Collective Action Framework

Institutional collective action (ICA) dilemmas arise from the division or partitioning of authority in which decisions by one government in one or more specific functional area impacts other governments and/or other functions. The focus on externalities of choice in fragmented systems integrates multiple research traditions into a conceptual system to understand and investigate collective dilemmas ubiquitous in contemporary governance arrangements. The mechanisms for mitigating ICA dilemmas are classified according to their scope and enforcement. Incentives to participate in a mechanism are hypothesized to favor mechanisms that provide the greatest gain for the least cost under different conditions of collaboration risk as determined by the nature of the underlying ICA problem, the compositions of affected jurisdictions, and institutional contexts. After reviewing empirical applications of the framework, an agenda to advance the theoretical and empirical development of the ICA approach is advanced.     

How Do Different Types of Local Governments' Sustainability Programs Relate to Their Environmental Outcomes

Local governments worldwide have developed a suite of sustainability programs to improve environmental conditions within their jurisdictions. However, critics suggest that local governments' sustainability programs are more symbolic than substantial in that they are often developed to create the appearance of addressing environmental issues rather than actual environmental performance outcomes. Despite the skeptics, as yet, we have little empirical understanding of the environmental impact of local sustainability programs. This paper bridges the gap by considering how the design of 102 county governments' individual sustainability programs relates to improvement of their ozone quality between 2003 and 2013. After controlling for the spatial dependence of ozone quality among neighboring counties, this paper offers the evidence that local sustainability programs are related to improved environmental conditions. Moreover, the sustainability programs that are designed more comprehensively across environmental issues appear to have greater policy efficacy compared to those focusing on a few environmental issues. These findings provide optimistic views about the local, non-regulatory policy effort for improving collective environmental quality. This implication is particularly salient given the lack of strong national and international environmental regulatory regimes.     

Cooperation without Trust: Overcoming Collective Action Barriers to Endangered Species Protection

Mutual trust among individuals is frequently cited as an important factor in encouraging collective action, particularly in environmental policy settings. Yet the precise role of trust in the collective action process remains uncertain. This article explores the hypothesis that trust is overrated as a cause of cooperation. It initially tests this hypothesis through two case studies of voluntary collective action in a new context: the creation of multiactor Habitat Conservation Plans to protect endangered species. The two cases suggest that institutional mechanisms and political leadership can play an important role in encouraging collective action without relying on trust among cooperators. Besides their theoretical implications, the results suggest policymakers might spend more energy on creating incentives and assurance mechanisms to encourage collaboration, rather than the potentially fruitless task of building of social capital among rival stakeholders.     

An Introduction to Spatial Discounting

Research on the valuation of environmental externalities shows that decision makers tend to discount not only over time but across space. Just as time discounting has implications for intergenerational equity, geographical or spatial discounting has implications for intragenerational equity. Similarly, just as positive time discount rates are warranted by positive net rates of growth of the capital stock, positive spatial discount rates may be warranted by the fact that enviironmental (or other external effects of economic activity are diffused at positive rates. This paper introduces the notion of spatial discounting and explores its welfare implications through a simple diffusion model.