Bolstering Private-Sector Environmental Management.

A new approach to environmental policy advocated by state agencies and by the U.S.
Environmental Protection Agency is to create "tracks" of environmental performance.
The philosophy behind performance track programs is simple: distinguish strong
environmental performers from weak ones and give strong firms special recognition
and rewards such as enforcement forbearance and flexibility. The implementation of an
environmental management system, or EMS, is one criterion agencies are using to
determine which companies deserve special treatment. In this paper, the authors raise
questions about whether the mere presence of an EMS is an appropriate metric for
differentiating among firms. Policymakers should bear in mind that the EMS tool by
itself is not necessarily sufficient for firms to create superior environmental
improvement. Improvements may depend much more on how effectively and
ambitiously an EMS is implemented, how well the organization is managed overall, and
how committed the managers are to seeing that the firm achieves real and continuous
improvement. These factors will always be harder for public agencies to assess.
Reduced regulatory oversight may actually weaken the EMSs that firms implement,
because incentives for using EMSs aggressively to achieve positive outcomes may be
reduced. An agency mandate for broad EMS adoption might lead to a variety of
responses from firms, including the adoption of systems with trivial environmental
goals. Instead, policymakers should consider providing technical assistance to firms
interested in EMS implementation and recognizing EMS firms with certificates of
participation, product labeling, or government-sponsored publicity.