Costs, Benefits, and Motivations for ISO 14001 Adoption in China and Around

Abstract

In an attempt to overcome barriers to trade posed by numerous and often contradictory national-level enveironmental requirements, the International Orgnaization for Standardization (ISO) has created a voluntry set of uniform environmental management system guidelines for firms, formally known as ISO 14001. Firms may decide to implement an ISO 14001 environmental management system (EMS) and become third-party certified in order to improve their environmental management and to increase their marketability. This study examines the relative costs, benefits, and motivations for ISO 14001 certification for China compared to other economically developing and developed countries. These comparisons allow us to better understand the ways in which the unique economic and political conditions within China affect the incentives for Chinese firms to join in voluntary self-regulatory measures. Survey results indicate that ISO 14001 certified firms in China and experiencing benefits equal to or greater than their peers in other countries. Benefits to environmental management appear to be significant and they generally outweigh the costs of implementation and certification. However, as with most voluntary standards, the potential for abuse remains. Therefore regulators and policy makers are advised not to grant regulatroy relief or reduced inspections except on a case-by-case basis.