Corporate Voluntary Environmental Programs Backfire, Study Shows

The Environmental Protection Agency—the largest sponsor of environmental programs—contributed $69 million, or 1.6 percent of their budget, to funding Voluntary Environmental Programs (VEPs) last year. Yet according to research by Nicole Darnall, assistant professor of environmental science and policy at Mason, and doctoral student Stephen Sides, these programs do not appear to boost environmental performance. In the study of more than 30,000 firms, companies that did not participate in VEPs performed 7.7 percent better than participants.

The way these programs are monitored also appears to affect performance. Companies that are self-monitored—as opposed certified by an external third party—appear to do even worse in their overall environmental goals. Nonparticipating companies outperformed companies participating in self-monitored VEPs by 24 percent.

"Design deficiencies, specifically the absence of third-party oversight of performance monitoring, invite 'free ridership' on the part of some participants," says Darnall. "Companies are taking part in these programs and receive credit for doing so, but some aren’t really adhering to the goals."

The disappointing performance results also appear to relate to weak VEP goals. Darnall says that "While other companies may be meeting program requirements, nonparticipating companies may have stronger goals. Specific and challenging goals result in a higher performance."

Darnall and Sides aggregated results found from nine previous studies from 1999-2007. They defined environmental performance as an objective quantitative change in pollution or conditions contributing to the same such as degree of recycling, pollution prevention and time out of compliance.

More than 200 VEPs exist in the United States at the regional and national levels, and even more operate within states and localities. VEPs include programs such as the 33/50 Program, which asked companies to reduce certain emissions, discharges and waste streams by 33 percent in 1992 and 50 percent in 1995; the Climate Challenge Program, sponsored by the Department of Energy to reduce carbon dioxide emissions; the ISO 14001, an externally regulated program; Responsible Care, adopted by the American Chemistry Council; and the Sustainable Slopes Program for ski areas.

"It is important to ask, 'What is the role of these programs?' If VEPs are designed for the single purpose of encouraging participants to improve the environment to a greater degree than companies that don’t participate, then they are failing," Darnall says.

However, she points out that VEPs could have other roles. VEPs can explore innovative environmental policy ideas. “Such ideas can be tested and evaluated before they are implemented across the regulated community.”

The study was published in the February issue (Vol. 36, No. 1) of Policy Studies Journal.