Saving the Environment? Environmental Policies of Japanese Firms and Their Effectiveness

In the past decade, a new framework has gained popularity that firms, which aim to make profits, should also address broader social issues, such as environmental protection, human rights, and labor standards. It is no coincidence that this framework of corporate social responsibility (CSR) has become popular under the anti-regulation logic of neoliberalism. Instead of bringing the state back in, the CSR framework grants corporations a way to pre-empt state regulations, by claiming that market mechanisms through corporate voluntarism is more effective in resolving social issues than state mechanisms through bureaucratic supervision. Thanks in part to the promotion by international organizations (e.g., the United Nations), various CSR policies have been widely adopted across advanced industrial societies. Their effectiveness, however, has been largely unknown, raising serious concerns that adoption of such policies amounts to mere symbolism. In this paper, we examine environmental policies of major Japanese firms and their impact on corporate environmental performance, using panel data on Japanese firms between 2006 and 2013. During the period, under the increased global institutional pressures for CSR, Japanese firms have adopted a broad range of environmental initiatives, such as environmental auditing and labeling. But there is little research on whether and under what conditions such initiatives lead to substantive changes. Our findings suggest that without other complementary mechanisms such as government regulations or other third party monitoring, corporate voluntarism alone is unlikely to achieve corporate environmental responsibility and may instead result in corporate carte-blanche.