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Article Excerpt
Introduction
Governments are increasingly realizing that they cannot achieve their domestic environmental goals without the cooperation of their neighbors. At the same time, trends toward smaller government, market-based incentives, and "green" consumerism have changed the ways in which regulation occurs. In combination, these trends have resulted in environmental improvements coming from unlikely places--even from industry itself. Public and private organizations are beginning to join forces to create the international institutions necessary to facilitate complicated networks of interaction on issues such as trade and the environment. In the absence of a supranational authority having the power to enforce laws at the international level, many of these international institutions take the form of voluntary agreements. While imperfect instruments, these voluntary agreements are often the only feasible solution to common problems and conflicts that require coordination and cooperation between national-level actors.
This study provides a detailed case study that examines the dilemmas and responses of national-level regulators as they try to develop appropriate responses to the rise of international and "voluntary" management regimes. Regulators and lawmakers worldwide are struggling to craft effective policies that create adequate incentives for environmental protection on the part of firms, in the face of decreasing budgets and an increased demand for the use of market-based incentives. This study will provide needed information to these decision makers, as they struggle to understand how to create an effective balance of market-based incentives, voluntary/beyond compliance regimes, and command-and-control mechanisms.
To accomplish these goals, this article compares the public policy responses of governments around the world to one such voluntary international environmental regime: ISO 14001. ISO 14001 is a form of industry self-regulation in response to market forces calling for harmonization in environmental management and as a result of consumer and trade-partner demands. This study examines the relationships between regulators and the regulated in order to understand if ISO 14001 certified firms are receiving regulatory relief or other forms of public policy/regulatory benefits as a result of their certification. It will also examine these impact that government incentives (or their absence) are having on the certification decisions of firms around the world. This information helps us to begin to understand how the trends toward smaller government and voluntary environmental regimes are affecting one another.
Additionally, this examination allows us to better understand the incentive structures that public policies provide--structures that can encourage or discourage desired behaviors on the part of individual actors (i.e., companies, in this case), while also encouraging or discouraging the creation and robustness of these regimes. As institutions are becoming harmonized (meaning more similar) across countries, it is important to understand that even identical institutions can create differing outcomes, due to national level differences in governance structures and political-economic factors. This study uses data collected from surveys of 133 ISO 14001 certified companies in 16 different countries.
What is ISO 14001 and Why is it Significant for Public Policy?
The International Organization for Standardization (ISO) has created ISO 14001 in an attempt to create common environmental management systems (EMSs) that will assist firms in their efforts to meet increasingly stringent national and subnational environmental requirements, while simplifying the process of product export through the evolution of uniform requirements for environmental management systems (see Lamprecht, 1997; Mesler, 1997; Murray, 1997; Raines, 2002; Wilck, 1997).
ISO 14001 is the dominant international environmental management system standard and certification is rapidly becoming a requirement for international trade. Many large corporations, such as General Motors, Ford, and Home Depot require their subcontractors to be ISO 14001 certified. Some government, including the EU are giving preference in contracting to ISO 14001 certified companies. For many companies, certification has become a term of trade, and many others fear that it will become so (Raines, 2002, 2003; Raines & Haumesser, 2002). Therefore, governments in some countries are trying to encourage ISO 14001 certification on the part of their domestic firms so that they do not suffer a competitive disadvantage. However, implementing and certifying an ISO 14001 EMS can be quite expensive, and some firms may simply not be able to afford it. This has been a particularly strong concern among developing countries and for small and medium-sized enterprises (SMEs) everywhere.
There has been some concern that developing countries may be disadvantaged by ISO 14001. When negotiations on this standard began, leading to the formation of what would become the permanent body to create and edit the standards--Technical Committee 207 (TC 207), only two developing countries were originally present: Cuba and South Africa (Arriaza, 1996). The high costs of attending the ISO committee meetings made it impossible for many representatives from developing countries to attend. While only South Africa and Cuba were included in the formulation of ISO14001, representatives from six developing countries were present for the vote to approve the standards (UNCTAD, 1996, pp. 21-38). Although this is not likely the result of a conspiracy designed to keep poor countries poor, it makes sense that an international institution crafted with minimal input from developing countries, may be received less enthusiastically by developing country policymakers. Interestingly, the findings of this study indicate that certified firms in developing countries are reporting more benefits from certification than are most firms in developed countries.
So what is an environmental management system? Environmental management systems help companies to track their environmental impacts and plan ways to improve them. It provides the information necessary to make improvements and chart progress toward environmental goals. One criticism of ISO 14001 is that it can provide the tools necessary for environmental improvements at the firm level, but there is no guarantee that all firms will fully use the information provided by the EMS to actually improve their environmental performance. (2)
Environmental management systems are designed with a focus on process rather than output, meaning that firms are supposed to continually monitor and improve their environmental impacts through a thorough examination of the entire production-distribution process. An EMS is not a product standard. Product standards often conflict with World Trade Organization rules, making them unworkable at the international level.
With ISO 14001, firms are not required to reduce their pollution production below specified levels nor are they required to use specific pollution control technologies. Firms must simply take stock of their environmental impacts and demonstrate a commitment to improvement. The 14001 standard does not require continual improvements in environmental performance, but it does require continuous improvements in the EMS itself. This is so confusing, that many consultants and auditors are under the false belief that companies must show continual environmental improvements in order to become certified and to renew certification. For those who wanted a more stringent standard, this misunderstanding is not necessarily bad. However, it seems logical that if the EMS is getting better and better, there should be related improvements in environmental performance.
It is important to point out that firms do not have to be in compliance with .applicable regulations, but they must declare a commitment to the goal of compliance. This means that auditors needs to be knowledgeable about the regulations to which a facility is accountable and conscientious auditors should not certify facilities that are making little or no progress toward coming into compliance with regulations. However, ISO 14001 audits are generally done by consulting firms that have a vested interest in developing their reputations and receiving word-of-mouth referrals. No published data exists concerning the percentage of firms...
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