Coming Clean: Information Disclosure and Environmental Performance

1. Information Disclosure and Environmental Performance

1 Information Disclosure and Environmental Performance By all accounts, industrial corporations today take their environmental performance seriously. Increasingly, corporate managers believe that people care about the way companies affect the environment, and they recognize the need to show due regard for the health of the communities in which they have a facility. As a result, many companies of widely varying size and across every industrial sector regularly tout their green credentials in print advertisements and television commercials. Many of them also highlight their environmental achievements and aspirations on company Web sites and in annual reports to shareholders. The popular press has reported favorably on these developments, often celebrating the greening of industry in general and the environmental accomplishments of companies whose green credentials have been seen as particularly impressive, including General Electric, S.C. Johnson, Johnson Controls, Duke Energy, DuPont, and Wal-Mart. At the community and state levels, the media similarly report on environmental milestones of local businesses, such as the use of cleaner methods of production, reduction in hazardous waste that is produced, improved energy efficiency, reduced greenhouse gas emissions, and the creation of “green jobs” through the manufacture or installation of products such as wind turbines and solar photovoltaic panels. Skeptics are quick to charge that much of the new green promotion is “greenwashing,” or a corporate public relations gimmick, while business as usual continues. Yet recent years have brought a palpable shift in corporate environmental behavior that merits serious consideration.1 Consistent with these new beliefs and commitments, corporations release a great deal of technical information that documents their environmental performance and meets new public expectations for transparency and social responsibility on the part of corporate managers. At least some of that information can help to inform surrounding communities 2 Chapter 1 of public health and other risks associated with the activities of manufacturing facilities. By coming clean in these ways, the facilities’ managers not only acknowledge the pollution associated with their manufacturing activities but stand to learn from the process, possibly finding new ways to reduce their environmental footprints while improving their economic bottom line. In this book we seek to understand just how this process of information disclosure works and the effects that it has on environmental performance within companies and on the communities within which their facilities are located. The potential for information disclosure or provision to achieve these lofty goals is of special interest at a time when public and corporate confidence in conventional regulation has waned.2 For nearly four decades, environmental protection policies in the United States have required that industrial facilities meet certain targets for release of chemicals to the air, water, and land. Many of these policies have mandated the use of specific technologies and forced industry to achieve the maximum improvement possible, and more than a few have specified in exceptional detail which chemicals were to be managed and how. The goal was to provide a degree of certainty that businesses would indeed achieve the new standards and that the implementing agencies, particularly the U.S. Environmental Protection Agency (EPA), would not have so much discretionary authority that they could thwart the will of Congress. By one recent account, some 15,000 pages of federal regulations are needed to provide instructions for companies and other entities covered by the laws, and “an elaborate system of reporting, inspections, and penalties exists to make people follow the rules” (Fiorino 2006, 1). This description applies to all of the major national environmental protection policies: the Clean Air Act, Clean Water Act, Resource Conservation and Recovery Act, Safe Drinking Water Act, Toxic Substances Control Act, Comprehensive Environmental Response, Compensation, and Liability Act (Superfund), and Federal Insecticide, Fungicide, and Rodenticide Act—and their later amendments. In some cases, Congress made those amendments, such as the 1984 revision of the Resource Conservation and Recovery Act, even more detailed and demanding than the original statutes because it grew increasingly distrustful of the EPA (and the White House) and sought to ensure that the agency would proceed on course. The collective reach of the laws is astonishing and their implementation is a daunting task. The total number of facilities whose environmental performance has been regulated by the federal government or Information Disclosure and Environmental Performance 3 the states in the 1990s and 2000s includes an estimated 40,000 stationary air sources, 90,000 facilities with water permits (which cover...