Researchers and policymakers are divided over which approach to use in order to effectively change corporate behaviors so they uphold laws. Some believe that punishment will deter organizations from violating rules, while others believe that financial incentives and self-monitoring are more effective. These issues are particularly important when creating policies to reduce pollution and increase energy efficiency. Should the government enforce standards and punish violators or should companies monitor their own behaviors and be encouraged through incentives?
Paul B. Stretesky and colleagues assess whether criminal prosecution or self-monitoring lead to greater reductions in industrial pollution. They use EPA data on regulated toxic chemical releases from the late 1980s, as well as corporate self-policing reports and cases filed by the U.S. Attorney’s Office about natural resource and pollution crimes, to trace changes in pollution levels and policy actions.
The authors find that both legal actions and self-monitoring are associated with declines in the release of toxic chemicals, although there was a larger impact from criminal punishment. However, when the authors accounted for broader economic conditions — measured by GDP and total number of industrial facilities — neither type of policy had an impact on the amount of pollution. The economy itself, particularly the rate of growth, was the largest factor in how much a company pollutes — as GDP increased, so did the amount of toxics.
The authors argue that new policies are needed that get companies to redesign production so it is cleaner and more efficient, rather than just limiting the emission of particular chemicals. The findings suggest that environmental regulations alone will not reduce public health and environmental hazards from chemical pollution; instead, policymakers need to be thinking about addressing broader economic growth and overhauling production methods to make them greener.