tim bartley, vogel on corporate social r

8/10/2019 Tim Bartley, Vogel on Corporate Social R

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Saving the Environment?

Environmental Policies of Japanese Firms andTheir Effectiveness


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Dilemma of Risk Society

Retreat of the state Neoliberalism, degregulation, and privatization Rhetoric?: retrenchment Regulatory capacity either shrink or did not increase in line with the

increase risks

Expansion of the corporate domain Corporations as both producers and managers of environmental

risks Shareholder value movement -> Short-term profit orientations

leading to perverse incentives to take excessive risks

Limitations of a command-and-control approach toenvironmental regulation


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Self-Regulatory Mechanisms

Internal self-regulation structures and personnel Environmental offices and executives

Transparency Environmental reports, accounting, and auditing

Environmental management systems ISO 14001 international standards makers

Environmental certifications Eco-labels

Market-based mechanisms Socially responsible investors

International organizations UN Global compact


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Issues

Decoupling

External regulatory and normative pressures lead to symboliccompliance (Edelman 1992; Dobbin and Sutton 1998)

Relative performance

Variation across different self-regulatory mechanisms

On which environmental outcomes? Choose and focus (or ignore)


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Japan

Growing regulatory and global normative pressures

But with few coercive compliance mechanisms

Emerging corporate environmental activism Beyond energy-savings from the 1970s

Diffusion of environmental self-regulatorymechanisms


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Regulatory Shifts since the 1990s

The New Basic Environment Law (1993)

Law Concerning the Promotion of the Measures to

Cope with Global Warming (2001)

Revisions of Energy Conservation Law (1993, 1998[top runner approach], 2002, 2005, 2008)


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Global Pressure

Kyoto Protocol to the UN Framework Convention onClimate Change (UNFCCC)

Adopted by 37 member countries including Japan

Ratified in 2002 and entered into force in 2005

The government pledged to reduce greenhouse gas emissionsby 6% against the levels in 1990 by 2012

The government decided not to participate the Kyoto Protocolextension in 2011


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Normative Pressures upon Business

Legal mandates for central and local governments toproduce and execute energy-saving plans

Voluntary cooperation by businesses Need to demonstrate good faith

Corporate social responsibility (CSR)

Plethora of voluntary compliance measures


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Diffusion of Environmental Offices & Reports

0

50

100

150

200

250

300

350

400

450

500

#Firms

Env. Office

Env. Report

New Basic Environment Law (1993)

Kyoto Protocol (1997)


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Environmental Office and Executive, 2006-2012

0%

10%

20%

30%

40%

50%

60%

2006 2007 2008 2009 2010 2011 2012

%Firms

Env. Office

Env. Executive


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Environmental Report, Accounting, and Auditing

0%

10%

20%

30%

40%

50%

60%

70%

80%

2006 2007 2008 2009 2010 2011 2012

%Firms

Env. Report (Third

Party Consultation)Env. Report (No ThirdParty Consultation)

Env. Accounting

Env. Audit


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Environmental Management System (EMS)

0%

10%

20%

30%

40%

50%

60%

70%

80%

2006 2007 2008 2009 2010 2011 2012

%Firms

ISO 14001

Firm's Own


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Eco-Labels

0%

2%

4%

6%

8%

10%

12%

14%

16%

2006 2007 2008 2009 2010 2011 2012

%Firms

Type 1

Type 2

Type 3


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Socially Responsible Investment (SRI) Index

0%

1%

2%

3%

4%

5%

6%

7%

8%

2006 2007 2008 2009 2010 2011 2012

SRI Index (Global)

SRI Index (Domestic)


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UN Global Compact

0%

2%

4%

6%

8%

10%

12%

14%

2006 2007 2008 2009 2010 2011 2012

%Firms


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CO2 Emissions, Japan

1,000,000.00

1,050,000.00

1,100,000.00

1,150,000.00

1,200,000.00

1,250,000.00

1,300,000.00

ThousandMetricTons


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Do these various corporateenvironmental self-regulation

measures lead to substantiveenvironmental commitment by

companies?


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Data

Sample 1,000 major publicly-traded Japanese firms

Unbalanced panel data from 2006 to 2012 (5,001 firm-years; onaverage 5 observations for each firm)

Data source: Toyo KeizaisCSR database

Environmental expenditures Facilities

Water

Management system R&D

Social activities

Conservation


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Control Variables

Explanatory variables

14 indicators of corporate CSR and environmental practices

Control variables Total assets, fixed assets, profitability

32 industry dummy variables

6 Year dummy variables


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Method

Heckman selection model

To deal with sample selection bias (not all firms reportenvironmental expenditures)

Robust standard error To deal with dependence among observations from the same

firm

Facilities Water Mgt. Sys. R&D Social

Activities

Conserva

-tion

Non-Censored

2,100 1,845 2,082 1,843 1,956 2,141

Censored 2,901 3,156 2,919 3,158 3,045 2,860


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Environmental Expenditures

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2006 2007 2008 2009 2010 2011 2012

100MillianY

en Facilities

Water

Env. Sys. Mgt.

R&D

Social Activities

Conservation

Table 2. Environmental Expenditure, Heckman Selection Models, Robust Standard Erros


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Outcome Equat ions Facilit ies Water Env. Mgt . Sys. R&D Social Activities Conservat ion

Environment Office 0.240 -0.320 .767*** 0.428 0.044 .554***

(0.157) (0.371) (0.142) (0.352) (0.203) (0.160)

Environment Executive .237* 0.192 -0.007 .700*** -0.018 0.120

(0.104) (0.226) (0.108) (0.194) (0.160) (0.090)

Environmental Report 0.914 1.443* 0.135 0.519 0.753 0.230

(Third Party Consultation) (0.480) (0.601) (0.408) (1.152) (0.482) (0.423)

Environmental Report 0.783 1.228* -0.175 0.608 0.528 0.122

(No T hird P arty Consultation) (0.478) (0. 575) (0.396) (1. 138) (0.470) (0. 422)

Environmental Accounting 0.459 2.018 1.314*** 0.260 -0.798 1.639***

(0.447) (1.186) (0.316) (1.117) (0.487) (0.407)

Environmental Auditing -0.165 0.536 .848* 0.501 -0.381 -0.069

(0.208) (0.503) (0.341) (0.637) (0.375) (0.238)

EMS: ISO14001 0.364 0.436 .567* 0.311 -0.107 0.229

(0.242) (0.513) (0.289) (0.352) (0.442) (0.256)

EMS: Firm's Own 0.498 -0.729 0.595 -0.048 -0.699 0.210

(0.276) (0.905) (0.397) (0.464) (0.565) (0.293)

Eco-Label, Type 1 -0.051 .740* 0.049 0.460 -0.068 0.162

(0.130) (0.290) (0.115) (0.250) (0.183) (0.111)

Eco-Label, Type 2 -0.189 0.324 0.163 0.370 -0.107 -0.165

(0.133) (0.249) (0.116) (0.259) (0.140) (0.116)

Eco-Label, Type 3 .589* 0.758 .608** 0.036 0.240 0.305

(0.237) (0.492) (0.197) (0.366) (0.235) (0.214)

SRI Index (Global) .263* 0.278 .234* .718** 0.160 .213*(0.106) (0.234) (0.097) (0.220) (0.158) (0.098)

SRI Index (Domestic) .194* 0.452 0.183 0.454 0.200 .325**

(0.099) (0.244) (0.099) (0.234) (0.160) (0.109)

UN Global Compact -0.017 0.447 .248* 0.080 .373* 0.009

(0.124) (0.285) (0.117) (0.296) (0.165) (0.126)

Controls

Total Assets .816*** .362* .642*** .701*** .769*** .792***

(0.096) (0.177) (0.072) (0.147) (0.103) (0.079)

Property, Plant, and Equipment 0.103 0.142 0.040 0.025 0.013 0.032

(0.057) (0.110) (0.043) (0.078) (0.040) (0.052)

ROA -2.181** -0.443 -1.347 2.453 0.763 -0.904(0.835) (1.563) (0.764) (2.068) (0.934) (0.708)

Intercept -6.213*** -5.384* -7.041*** - 9.066*** - 5.988*** - 5.429***

(0.994) (2.149) (0.796) (2.272) (1.539) (0.836)

32 Industry Dummy Variables (Included) (Included) (Included) (Included) (Included) (Included)

6 Year Dummy Variables (Included) (Included) (Included) (Included) (Included) (Included)

Rho 0.026 0.437 0.092 -0.011 -0.370 0.023

Sigma 1.079 2.018 0.011 1.925 1.402 1.026

Log Likelihood -4,162.284 -5,001.894 -4,101.149 -4,899.424 -4,538.595 -4,206.290

N. Company Years 5,001 5,001 5,001 5,001 5,001 5,001

N. Uncensored Company Years 2,100 1,845 2,082 1,843 1,956 2,141

N. Companies 999 999 999 999 999 999


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Environmental Report

-50%

0%

50%

100%

150%

200%

250%

300%

350%

Third PartyConsultation

No Third Party


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Environmental Accounting & Auditing

-100%

0%

100%

200%

300%

400%

500%

600%

700%

Env. Accounting

Env. Audit


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SRI Index

0%

20%

40%

60%

80%

100%

120%

Global

Dometic


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UN Global Compact

-10%

0%

10%

20%

30%

40%

50%

60%

Facilities Water Env. Mgt. Sys. R&D SocialActivities

Conservation


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Summary

Facilities Water Mgt. Sys. R&D SocialActivities

Conserva-tion

Env. Off. + +

Env. Exe. + +

Env. Rep.(third Party)

+

Env. Rep (NoThird Party) +

Env. Acc. + +

Env. Audit +

ISO 14001 +

Firms OwnEMS

Eco-Lab. (T1) +

Eco-Lab. (T2)

Eco-Lab. (T3) + +

SRI (Global) + + + +

SRI (Dom.) + +

UNGC + +


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Conclusion

Substance or symbolism? Some promising outcomes but mostly less than what has been

promised

Self-regulation or self-serving?

Corporate environment spending for the sake of maintainingenvironmental management systems

Need for public monitoring of private self-regulation

Challenges ahead (e.g., financial and fiscal crisis)

tim bartley, vogel on corporate social r

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