Investigating supportive conditions for participation in voluntary environmental programs

Abstract

Voluntary environmental programs (VEPs) are commonly construed as contracts between industry and government that encourage businesses to voluntarily mitigate their environmental impacts beyond legal requirements. This research explores conditions under which polluting firms are likely to participate in VEPs. We analyze 34 comparable VEPs whose shared goal is to reduce greenhouse gases emissions, with focus on the alleged influences of three factors drawn from existing scholarship: government supervision; economic instruments; and public disclosure of participants' environmental records. The statistical results show a greater effect from government supervision than complete voluntarism and the positive effect of financial subsidies on firms' participation in VEPs. Although recent debates over regulatory reform have been oriented towards vesting greater discretion in regulatees to better address environmental harms, the findings imply that even in a highly privatized form of regulation, government oversight and assistance are necessary for promoting this new mode of environmental regulation.