ABSTRACT
Since the early days of industrialism, laws and other forms of regulation, such as codes of practice, have attempted to make firms accountable for the pollution and other negative externalities they produce. Although they have been effective to a certain extent, the complexity of regulatory rulebooks, enforcement costs and rigidity have limited the effectiveness of such methods of pollution prevention and control (Borck & Coglianese, 2009; Fiorino, 2006; Prakash & Potoski, 2012). As a result, in trying to avoid compliance costs altogether, many corporations have looked for pollution havens – countries with more relaxed regulatory frameworks or weak enforcement capabilities (Antweiller, Copeland, & Taylor, 2001). Large-scale disasters in the 1980s, most notably the explosion of the Bhopal
plant of Union Carbide in India, challenged this logic. In addition, the Exxon Valdez oil spill in Alaska placed issues of pollution in the USA in the public consciousness. Distinct sectors of the business community and non-profit organizations responded to growing public demand for better corporate environmental management with the release of a series of voluntary initiatives, in the form of codes of conduct, environmental guidelines, charters and programmes (Nash & Ehrenfeld, 1997). Self-regulation also appealed as an ethical framework within which companies could represent their actions as responding to public concerns about the safe management of chemicals (King & Lenox, 2000; Prakash, 2000). Similar initiatives, emerging from civil society organizations (CSOs), have also become known as ‘civil regulation’ (Zadek, 2006). These initiatives share the common objectives of assisting business to implement environmental programmes and communicating them to the general public. Such voluntarism acted to deflect governments from imposing more restrictive regulations. A new mode of regulation started to emerge and a new phase of industry-governments relationship gradually gained ground (Howes, Skea, & Whelan, 1997). Prakash and Potoski (2006) group such voluntary initiatives under the umbrella
title of Green Clubs. Such clubs help firms to manage their reputation, especially where their operations have caused reputational damage through accidents or local pollution. By becoming members of Green Clubs corporations presumably will improve their environmental performance. The improvements, however, depend on the constituency of Green Clubs: often, the more demanding clubs were founded by a CSO,2 which aimed at gathering a wide range of stakeholders. Sector-specific Green Clubs, on the other hand, tend to be initiated by industrial
