Government, as the agent of the public in regulating pollution, may respond to environmental dilemmas with a range of regulations. Formal approaches include quantity- and technology-based instruments, such as effluent standards and best available technology criteria, and market-based incentives, such as charges, credits, and tradable permits.

In some cases, however, formal regulations may prove problematic or disappointing in fully correcting poor environmental performance. In these cases, informal regulation through demands by community groups for compensation, social ostracism of a firm s employees, threats and/or boycotts of companies and their products, and monitoring and publicizing of industrial emissions can be effective.(1)

Government regulators have a clear incentive to mobilize market and community forces when formal regulations are ineffective or inappropriate. Many governments have begun to use information-based approaches, such as factory disclosure ratings, public and voluntary agreements with industry for pollution reduction, and technical training, to encourage nongovernmental influence on industry performance. Encouraging such informal regulation can help governments deal with time lags between identification of a problem and implementation of a formal regulation(2).

Companies may, of course, voluntarily implement environmental information sharing and public disclosure themselves as a best practice. Either way, information disclosure can be an important tool for improving industrial environmental performance. Discussed below are both mandatory government programs and voluntary practices.

Information disclosure policies mandated or promoted by government regulators are not intended to set specific performance or compliance criteria. Rather, they keep the numerous affected parties communities, employees, and investors informed of industry s environmental performance and encourage but do not require appropriate industry action. These policies take many forms, including Pollutant Release and Transfer Registries (PRTRs), reputational incentive programs, ecolabeling, and Freedom of Information (FOI) policies.

PRTRs catalog releases and transfers of potentially harmful or toxic chemicals. They include information on the types, amounts, and nature of chemical releases from such point sources as industrial operations and government installations(3) and sometimes nonpoint agricultural and transportation releases. Regulators collect data at regular intervals, analyze them using sets of common identifiers and methodologies to facilitate comparison, computerize them to ease their use, and, most important, actively disseminate them to policymakers, civic and business leaders, and the general public.

International attention has focused on PRTRs largely due to the apparent success of the U.S. Toxics Release Inventory (TRI). A key component of the 1986 Emergency Planning and Community Right-to-Know Act, TRI requires all federal facilities and private operations with ten or more employees to disclose publicly the type and quantity of toxic chemicals released.

TRI is the first on-line, publicly accessible computerized data base mandated by U.S. federal law for public provision of government-collected information.(4) It has resulted in measurable responses from investors, employees, community groups, facility managers, and even competitors. Affected parties use TRI data with other publicly available information at both the national and state levels.

For example, nongovernmental organizations (NGOs), such as OMB (Office of Management and Budget) Watch and the U.S. Public Interest Research Group, have used TRI data to compile and publish nearly 100 state and local reports and another thirty national reports on industry s environmental impacts(5). Industry itself has used TRI information to commit publicly to voluntary emissions reductions, notably Monsanto Corporation s 1989 pledge to reduce air emissions 90 percent by 1992. Educators and researchers use the data to conduct a variety of research and audit projects. And the media has gained a useful and credible investigative resource.

Federal and state governments use TRI data in a variety of innovative pilot programs. For example, the state of Louisiana, launched the Environmental Leadership Pollution Prevention Program, which, using 1992 data as a baseline, seeks to reduce statewide emissions by 45 percent by 1997. Nationally, TRI data analysis has provided the impetus for passage of pollution prevention laws in many states, created the basis for polluter pays facility fees, and led to passage of the federal Clean Air Act Amendments of 1990.(6)

Since the Rio Earth Summit, several United Nations and other international agencies have held a series of meetings and workshops and such such countries as Canada, the Netherlands, Australia, the United Kingdom, Egypt, the Czech Republic, and Mexico have launched PRTR-type programs.(7)

In contrast to PRTRs, government ranking schemes inform the public of companies relative position based on environmental performance data. Indonesia s National Pollution Control Agency (BAPEDAL), faced with the dilemma of weak formal regulation, turned to community and reputational incentives to improve industrial environmental performance. Its Program for Pollution Control, Evaluation, and Rating (PROPER), launched in 1995 (see box [X]), rates industrial operations based on successive color grades. Nonexistent pollution control earns a black rating, failing pollution control earns a red rating, blue indicates compliance with national regulatory standards, green marks a discharge 50 percent of the national standard, and gold, the top achievement, marks discharges of 5 percent of the national standard. As with PRTRs, community NGOs, the international community, government institutions, and the general public rely on PROPER information to monitor industry performance. The Indonesian Stock Exchange, for example, will not list any firms for trading unless they have earned at least a blue rating.

Ecolabeling informs consumers and the public about the environmental attributes of products and/or their producers. Labeling programs fall into six categories: Seals of approval identify products or services that are less harmful to the environment than other products. Single attribute labels indicate third party validation of a single environmental claim (e.g., dolphin-safe ). Report card labels offer information in several categories (e.g., energy consumption). Information disclosure marks provide facts the producer would normally not provide (e.g., nutrition information). Hazard warning labels carry information about the product s adverse impacts. Publications on the environmental attributes of products and processes, although not a program, yields much of the same information and results as the previous five.

The information conveyed by ecolabels either (a) promotes the product s benefits, (b) warns of hazards or problems, or (c) simply reports specific product characteristics such as energy efficiency data. Mandated labels tend to stress negative information, whereas voluntary labels tend to convey positive.(8) Many countries have ecolabeling programs that mix the above categories and classifications. For example, Taiwan s Green Mark affirms that a company (a) was not the target of an environmental protection action in the year prior to its application, (b) has achieved remarkable results in reducing wastes from its operations, and (c) meets effluent standard specifications stipulated by Taiwan s Environmental Protection Administration.

Freedom of information (FOI) codes differ from the approaches discussed above in how information is provided. In contrast to the above proactive approaches, FOI actions are passive; interested parties, not the provider, must seek out and disclose the information. But at the same time, the provider must often go to great pains to gather and produce the material.

For example, Thailand s environmental impact assessment process assures that all its information is made public and available for comment before a project decision is made. The European Union s voluntary Eco-audit and Management Scheme requires participating firms to publish validated public environmental statements and make information available on policies, programs, and environmental management systems.(9)

Government regulators may play an important function in mandating industry disclosure of environmental information, but voluntary corporate disclosure also has its merits. A growing number of firms voluntarily communicate the range of their environmental practices and impacts by publishing corporate environmental reports, forming green alliances with environmental and community NGOs, and developing broad outreach programs.

Some benefits of voluntary disclosure for companies are clear, for example, the impact of positive reports on stock values and investor relations; others are less tangible, for example, enhanced community standing and eased relationships with regulators. Externally, reporting environmental performance data may improve a firm s relationship with the variety of stakeholders and parties affected by its industrial operations. Internally, release of information can ease labor concerns regarding health and safety of working conditions, provide evidence of environmental concern at all management levels, and outline the firm s future environmental plans.

Stakeholders may support such disclosure practices in many ways. For example, fourteen states now have audit laws offering blanket privileges or penalty immunities for companies voluntarily disclosing and correcting violations. USEPA s Environmental Leadership Program promotes regulatory overcompliance by providing incentives to businesses to disclose and correct violations voluntarily. A study of media and stock market reactions to the 1989 TRI indicated that the more environmental information a company had earlier provided (presumably voluntarily), the less likely journalists and investors were to overreact to new information released.(10)

Corporate environmental reporting entails communicating a range of environmental activities to a variety of stakeholders. Central to this process is the corporate environmental report, which includes health and safety information. U.S. reports generally include information on (a) releases (usually TRI data), (b) use of water and energy resources, (c) third party verification of the report s truthfulness, (d) the environmental division s organizational structure, (e) environmental awards received, (f) and any company management approaches, strategies, policies, and/or commitments to, for example, Design for the Environment or Total Quality Environmental Management.(11) Today, more than 150 companies, representing 16 percent of Fortune 500 companies, issue some kind of environmental report.

Although standards for these reports do not exist, some industry associations now include disclosure requirements or protocols for their members, signatories, or certified parties. The International Organization for Standardization (ISO), Coalition of Environmentally Responsible Economies, and Public Environmental Reporting Initiative specifically call for some level of information disclosure. Other groups that encourage the folding of environmental considerations into corporate culture and practices include the World Business Council for Sustainable Development, the Global Environmental Management Initiative, the World Industry Council for the Environment, and the International Chambers of Commerce.

Some national trade associations also issue corporate reporting requirements. In India, the Confederation of Indian Industry s Environment Management Division assists Indian firms in becoming increasingly ecoefficient and discharging environmental obligations effectively. The division plays a role both as a project catalyst and facilitator by issuing its Environmental Guidelines for Industry.

In 1988 the Chemical Manufacturers Association (CMA), in light of strong negative public regard for the industry, developed its Responsible Care program. This initiative promotes improvements in health, safety, and environment among its members. Every CMA member is expected to improve community awareness, emergency response, employee health and safety, process safety, and product stewardship, prevent pollution, and reduce emissions and transportation risks.

A few firms began disclosing information well before establishment of formal industry disclosure projects. For example, in the Philippines, San Miguel Corporation, a leader in the beverage, food, and agribusiness industries, publishes both annual and semiannual corporate environmental reports without any external incentive.

Companies have also been able to tap the professional and research resources of NGOs to tackle their environmental problems. These partnerships team business with organizations to address a range of issues.

The Environmental Defense Fund (EDF), for example, approached McDonald s Restaurants in 1989 to discuss the fast-food chain s environmental impacts. EDF and McDonald s established a task force, which proposed a six-month study of the company s waste generation. By November 1990 McDonald s discontinued the use of its famous clamshell packaging in favor of quilted wrapping paper. The task force s final report contained forty-two pilot programs for reducing, reusing, and recycling wastes.

Green alliances are not limited to the service sectors. This year, Oregon-based Portland General Corporation, parent of Portland General Electric, and Houston-based ENRON Corporation signed a memorandum of understanding with thirteen environmental, natural resource, and public interest groups. In the memorandum, the NGOs publicly endorsed the merger of the two utilities, petitioned the Oregon Public Utilities Commission and the Federal Energy Regulatory Commission to approve the merger, and dictated the NGOs expectations of the utilities duty to the environment.(12)

In some cases, the NGO-business relationship need not represent a cooperative agreement. The Council on Economic Priorities (CEP) Campaign for Cleaner Corporations is designed to harness public pressure to convince companies to implement CEP s recommendations in much the same way as PROPER. The campaign identifies environmental offenders through a comparative analysis of industry. Following further study and face-to-face meetings between CEP and the firm, the company is provided practical recommendations for improving its environmental performance. Few companies protest or ignore the proceedings, and most actively participate. Many firms have implemented CEP s recommendations and been delisted. (13)

Outreach and public relations are the least well defined of the tools used by corporations in disclosing environmental information. These efforts generally target the public or the parties directly affected by construction or operation of plants and facilities.

After local opposition forced Du Pont to withdraw from the Lukang project in Taiwan in 1988, the company submitted a second proposal in 1989 for a plant located in Kuan Yin, in Tao-yuan County. After obtaining approval to begin construction, the company adopted a bottom-up approach to local pressures and worked through outreach programs and face-to-face discussions with local leaders; established a community committee of local scientists, environmentalists, and businessmen; and voluntarily made the plant s environmental impact assessment public.(14)

Environmental community activism is not limited to environmental NGOs. In South Korea, the Young Men s Christian Association (YMCA) and Catholic Church promoted community-based programs such as recycling drives and neighborhood cleanup efforts. In their protests against the military regime in power, YMCA staff walked a fine line between protest and education as they advocated changes to reduce industry manufacture of phosphorous detergents. As a result, many leading Korean corporations, such as Samsung and Daewoo, adopted environmental philosophy charters and practices as well as environmental outreach programs.(15)

Environmental information disclosure policies can and do play a legitimate role in improving a firm s environmental performance, whether through government-encouraged or voluntary action. Companies have found that good data and information are needed for effective community relations and can only be collected when they adopt some level of environmental management, measured by sets of environmental performance indicators.(16) Internationally, the success of environmental management systems, such as ISO standards, will likely rely in part on disclosure of best practices. ISO 14000 may, therefore, quite possibly have its greatest impact as an international lingua franca for achieving global consensus on environmental performance and practices.(71)

In the final analysis, by publicly disclosing environmental information, firms demonstrate their competence and commitment to environmental improvement. They also devote fewer resources to defensive actions and litigation, which do little for the environment and more to learning and directly beneficial action. (18)

1. Pargal, Sheoli, Hemamala Hettige, Manjula Singh, and David Wheeler. 1995. Formal and Informal Regulation of Industrial Pollution: Comparative Evidence from Indonesia and the United States. Working Paper. Washington, DC: World Bank.

2. Davies, J. Clarence. 1993. Environmental Regulation and Technical Change: Overview and Observations. In Myron F. Uman, ed., Keeping Pace with Science and Engineering: Case Studies in Environmental Regulation,Washington, DC: National Academy Press.

3. U.N. Institute for Training and Research (UNITAR). 1996. Implementing a National Pollutant Release and Transfer Register (PRTR) Design Project: A Guidance Document. #96D019. Training Programs in Chemicals and Waste Management. Geneva: UNITAR.

4. U.S. Environmental Protection Agency. 1996. 1994 Toxics Release Inventory, Public Data Release. Office of Pollution Prevention and Toxics. Washington, DC: USEPA

5. OMB Watch. 1994. Where the Wastes Are. Washington, DC: Offie of Management and Budget U.S. Public Interest Research Group (USPIRG). 1993. Troubled Waters: Major Sources of Toxic Water Pollution. Washington, DC: USPIRG.

6. OMB Watch. 1992. Progress Report: Community Right to Know. Washington, DC: OMB.

7. UNITAR, Implementing a National PRTR.

8. U.S. Environmental Protection Agency. 1993. Status Report on the Use of Environmental Labels Worldwide. Office of Pollution Prevention and Toxics. Washington, DC: EPA.

9. National Institute for Standards and Technology (NIST). 1997. ISO Environmental Management Standardization Efforts. Office of Standards Services. Gaithersburg, MD: NIST.

10. Hamilton, James T. 1995. Pollution as News: Media and Stock Market Reactions to Toxics Release Inventory Data. Journal of Environmental Economics and Management 28: 98-113.

11. Lober, Douglas J. and Mark D. Eisen. 1995. The Greening of Retailing: Certification and the Home Improvement Industry. The Journal of Forestry 93 (4): 38 41.

12. Business Wire. 1997. Public Interest and Community Service Groups Support Continued PGE and ENRON Programs.

13. Hilton, Paul A. and Alice Tepper Marlin. 1996. The Role of the Nonprofit in Rating environmental Performance. Corporate Environmental Strategy (3: 21-30).

14.Business International. 1992. Asia/Pacific and the Environment. Hong Kong: Business International Asia/ Pacific Ltd.

15. Eder, Norma. 1996. Poisoned Prosperity. Armonk: M.E. Sharpe, Inc.

16. Ditz, Daryl and Janet Ranganathan. 1996. Corporate Environmental Performance Indicators: Bridging Internal and External Information Needs. Paper presented at the Fenner Conference, Sidney, Australia, October 1997.

17. Woodside, G. and J. J. Prusak. 1996. ISO 14000: A Plan for Implementing an Environmental Management System. Paper presented at WEFTEC 96, Dallas, Texas, October. Alexandria, Va.: Water Environment Federation.

18. Nash, Jennifer and John Ehrenfeld. 1996. Code Green: Business Adopts Voluntary Environmental Standards. Environment (January/February): 16-45.