Released August 19, 2009
CORVALLIS, Ore. – A business is more likely to "over-comply" with environmental regulations if its senior management believes in protecting the environment and that it makes financial sense in the long term, according to a new study by an economist at Oregon State University.
The study, published online in the Journal of Environmental Management and accepted for publication in its print version, examined why some firms violate environmental regulatory standards while others exceed them. It used data from a survey that 689 businesses in Oregon answered.
The study's author, OSU professor JunJie Wu, said the results could be useful to policymakers when developing strategies to reduce environmental violations and encourage firms to do more than regulations require.
"The results suggest that a narrow strategy to promote environmental over-compliance may not fare well," Wu said. "For example, offering technical and financial assistance to reduce compliance costs may be offset if these policies reduce competitive pressures. It's apparent that policymakers must avoid a one-size-fits-all approach and be innovative when designing environmental policies."
Among key findings of the study:
"It's surprising that management's attitude toward environmental stewardship plays such a large role," Wu said. "Historically, economists believe that profit drives business decisions, but we've found that management's attitude affects a firm's decision about its compliance level. This doesn't mean, however, that profits don't play a role.
"It's also surprising that executives are willing to think beyond next quarter's earnings and spend money to adopt some environmental policies that might not benefit the company until perhaps much later."
The study is titled "Environmental Compliance: The Good, the Bad, and the Super Green." The survey that it was based on questioned firms that employed at least 10 workers and operated in six sectors: food manufacturing, wood product manufacturing, construction of buildings, truck transportation and hotels.
The survey included questions that asked what environmentally friendly practices they had implemented, which factors influenced their environmental management the most, and whether they had been sanctioned for environmental infractions.
The survey also asked them to rate their level of compliance with regulatory standards for water pollution, solid waste, toxic and hazardous waste, and hazardous air emissions. The study considered a facility to be in violation if it did not meet standards in at least one of these areas. It was considered in compliance if it did just enough to meet standards in all four areas. It was over-complying if it did more than the regulation required in at least one area and met standards in all other areas.