What Determines Chinese Firms’ Decision on Implementing Voluntary Environmental Schemes?

Abstract

Understanding why firms choose to implement voluntary environmental schemes in a large polluted country like China is important for both environmental economists and policy makers. In this paper, we utilize unique plant-level survey data of 270 Chinese firms in manufacturing industry to identify the key determinants of their decisions on certifying ISO 14001 environmental management standard and the Chinese Environmental Label. The empirical results exhibit that while there are a number of factors (e.g., ownership, firm size, target market, and the number of rivals) having similar effects on the certification decisions between the two examined programs, the unique factors that only affect the decision of certifying one program (i.e., ISO 14001 or the Chinese Environmental Label) are also observed.