An Example of a Case-Study

Explaining Variation in Corporate Environmental Performance

Robert A. Kagan, Neil Gunningham, & Dorothy Thornton

Context: The Amoral Calculator v. The Greening of Industry

• Regulated business corporations take costly measures to improve their environmental performance only when they believe that legal non-compliance is likely to be detected and harshly penalized.

• Yet there is now considerable evidence that some companies do more for the environment than the law requires.

So...

• Why do some companies but not others choose to move beyond compliance?

• What social policy tools are likely to prove most effective in achieving improved corporate environmental performance?

Sample - Case studies can have a sample size of more than 1

• 14 pulp and paper manufacturing mills with a similar technology in 4 jurisdictions.

• Selection criteria: Australia, New Zealand, and the US states of Georgia and Washington - tried to include all facilities.

• Selection criteria: in British Columbia, Canada, chose 4 out of 14 facilities based on reputation, company, convenience

Qualitative Data

• Lengthy on-site, semi-structured interviews with environmental managers, (and in most cases) with mill managers, corporate environmental managers, regulators, and activists familiar with the mill.

• Interviews were designed to elicit pollution control histories, and probed for specific examples.

Qualitative Data: Developing a measure of Environmental Management Style

• Developed Five Ideal Types:

1. Laggards

2. Reluctant Compliers

3. Committed Compliers,

4. Environmental Strategists

5. True Believers

Quantitative Data

• Environmental Performance: pollutant loads in water discharges: (1) conventional pollutants BOD, TSS and (2) toxic pollutant: AOX (think of as a proxy for dioxin)

• Economic Data: sales and income for parent corporation

Findings: Compliance, Declining Pollution, Narrower Differences Over Time

Figure 1: Annual Average BOD (lb/day) at TS and JF

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TS An. Av. BOD JF An Av BOD

Findings: Still Significant Contemporary Variation

BOD TSS AOX

Jurisdiction Mill kg/day Jurisdiction Mill kg/day Jurisdiction Mill kg/ton

Br. Col. SH 993 Br. Col. AK 2349 GA RF 0.10Br. Col. PW 1000 Br. Col. SH 2484 WA SH 0.31

WA TS 1271 WA TS 3147 WA VL 0.34NZ IK 1600 WA VL 3487 Br. Col. RC 0.46WA VL 1996 Br. Col. PW 3525 NZ AT 0.54

Br. Col. AK 2302 GA PG 3637 Br. Col. AK 0.58GA PG 2367 Br. Col. RC 4282 Br. Col. PW 0.60

Br. Col. RC 2549 WA CB 5846 WA TS 0.91WA CB 3848 GA IG 7178 WA JF 3.49GA IG 4663 WA JF 7212 WA CBWA JF 4726 NZ IK 7900 NZ IKNZ AT 4917 NZ AT 8070 GA PGGA RF GA RF GA IG

AUZ MA AUZ MA AUZ MA

Regulatory Regime Does Not Explain Facility-Level Environmental Performance

Figure 2: BOD Discharges by Jurisdiction

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Jurisdiction: 2=BC, 3=GA, 4=NZ, 5=WA

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Contemporary Economic Indicators Do Not Explain Environmental Performance

Earlier Economic Indicators are Correlated with Current Environmental Performance

98-99 98-99 98-99 98-99 98-99 98-99BOD TSS AOX Obj Tech Subj Tech Mgmt Style

Corp. income-sales ratio1990-1994 Not Sig Not Sig -0.96 0.84 0.63 -0.62

Corp. income1990-1994 -0.61 -0.65 Not. Sig 0.77 0.55 Not Sig

Social Pressures Do Partially Explain Beyond Compliance Environmental Performance

• "We have to continuously convince the public we have a right to exist.”

• “The EPA is such a monolith it can’t adapt. It takes a decade to get something to happen. The environmental community is really setting the tone. It’s done far more to make companies accountable for pollution. It does more to keep me on my toes...”

But the most powerful explanatory variable is Environmental Management Style

Management StyleEnvironmentalPerformance True Believer Env. Strategist Committed Complier Reluctant ComplierBOD (kg/day) 1288 2304 3607 4726TSS (kg/day) 4510 3439 6155 7212AOC (kg/ton) .44 .46 .57

The License Model of Corporate Environmental Performance

EXTERNAL FACTORS

Social License

Legal License

EconomicLicense

Environmental Management

Style

INTERNAL FACTORS

HistoryCulture

Personneletc.

Environmental Performance

Without the use of the case-study methodology we would not have discovered:• The importance of social license • The importance of interactions between

economic, legal/political, and social spheres• The importance of corporate management

style• Nor would we have been able to develop the

license model.