Corporate incentives for participation in voluntary environmental agreements: electric utility companies and the Climate Challenge Program

Voluntary environmental agreements (VEAs) are agreements among the corporate, government and/or non-profit sectors, which are not required by legislation, that aim to improve environmental quality and the utilisation of natural resources.1 VEAs have been adopted in the European Union (EU), United States (US) and other regions. The corporate sector faces a number of incentives to participate and implement VEAs. Although participation incentives can be similar to implementation incentives, it is also possible that these two types of incentive differ. For example, consumer demand may induce company participation, while the existence of a monitoring system may encourage proper implementation. This chapter focuses on the incentives that induce company participation in VEAs and examines the decision of US electric utility companies to participate in the US Climate Challenge Program.