ISO-14001 Standard and Firms' Environmental Performance: Evidence from the U.S. Transportation Equipment Manufacturers

Manufacturers have been increasingly relying on environmental management systems (such as ISO 14001 based ones) to comply with government regulations and reduce waste. In this paper, we investigated the impact of ISO 14001 certification on manufacturers’ toxic release by release level. We applied the censored quantile instrumental variable estimator (CQIV) to data on the U.S. transportation equipment manufacturing subsector facilities. Results show that ISO 14001 had a negative and statistically significant effect on the top 10% manufacturing sites in terms of on-site toxic release, but it did not reduce off-site toxic release. Therefore, one should not expect ISO 14001 to have a uniform impact on manufacturing sites’ environmental performance. For large firms, encouraging voluntary adoption of ISO 14001 might be an effective government strategy to reduce on-site pollution. However, for small firms and for the purpose of reducing off-site pollution, other economic incentives or regulations are warranted.