Industry, Environmental Policy, and Environmental Outcomes

Abstract

This chapter reviews recent literature assessing the impacts of regulatory policies on the environmental performance of manufacturing firms. After showing substantial industry and national variation in resource consumption and pollution impacts, the review examines the role environmental policy instruments play in changing industry's burdens on the environment. Policies clearly shape industrial impacts, although the effect seems to be diminishing. Moving to uncouple economic and environmental performance, the review examines how regulations affect competitiveness, innovation, and capital flight. Similarly, corporate environmental voluntarism promises—and sometimes delivers—improved environmental performance; however, meaningful indicators are still few and far between. The article concludes with a call for research that further explains why some sectors perform better than others, and what lessons policy makers can draw upon, especially to move firms toward the best performance that is technologically possible and environmentally sustainable.