Competitiveness Implications of Environmental Regulations: Case Studies (1992- 1997)

Paper Number: EE-0045, EE-0214A-L, EE-0229B

Document Date: 01/01/1992 to 01/01/1997

Author(s): Management Institute for Environment and Business, A Program of the World Resources Institute

Subject Area(s): Economic Analysis, Economic Impacts, Cost Analysis, Competitiveness

Keywords: Economic Analysis, Economic Impacts, Cost Analysis, Competitiveness

Abstract:

This collection of reports is part of a series of case studies designed to examine Michael Porter’s hypothesis that innovative companies responding to environmental regulation can create competitive advantage through lower costs or higher sales.

In 1993, the authors conducted studies of six global industries to understand how environmental regulation was influencing competition. In 1994 and 1995 they conducted five additional industry studies, as well as three individual company studies. These studies complemented five earlier company studies looking at the competitive opportunities of ‘beyond compliance’ investments. Finally, in 1996 they conducted financial assessments of two industries and an additional company to look at the financial and stock market impact of environmental performance. All this work has focused more or less on the relationship between business performance and environmental stewardship.

This work reveals highly varied outcomes. The authors found ample indication that environmental pressures can increase or decrease the value of a business, and often have no material impact on value. In many cases business outcomes are negative; environment adds cost, forces unproductive investment, closes markets, or eliminates technology options. However, in many instances the results are very positive; environmental pressure forces management attention to environmental issues and results in reduced cost, superior product performance, new markets, and more robust business health.

The series consists of the following individual publications:

BMW: A Proactive Approach to Vehicle Recycling, part of Field Study Series on Environment and Industrial Competitiveness (1992)
Alternative Fuels and US Automobile Manufacturers, part of Field Study Series on Environment and Industrial Competitiveness (1992)
Competitive Implications of Environmental Regulation: A Study of Six Industries (1994) The six industries studied were paint and coatings, pulp and paper, computers and electronic components, refrigerators, batteries and printing inks.
Competitive Implications of Environmental Regulation in the Polyvinyl Chloride (PVC) Industry (1996)
Competitive Implications of Environmental Regulation in the Metal Finishing Industry (1996)
Competitive Implications of Environmental Regulation: A Case Study on Carolina Power and Light (CPL) (1996)
Competitive Implications of Environmental Regulation in the Electric Utility Industry (1996)
Competitive Implications of Environmental Regulation: A Case Study on Dow Chemical Company and 1,1,1 (1996)
Competitive Implications of Environmental Regulation in the Laundry Detergent Industry (1996)
Competitive Implications of Environmental Regulation in the Recovered Paper Industry (1996)
Competitive Implications of Environmental Regulation: A Case Study on IKEA (1996)
The Financial Impact of Environmental Events and Issues on the Forest Products Industry (1997)
The Financial Impact of Environmental Events and Issues on the Property and Casualty Insurance Industry (1997 not available).
Environmental Performance and Strategy at Weyerhaeuser (1997)
Competitiveness Project Summary (1997)

This paper is part of the Environmental Economics Research Inventory.

BMW: A Proactive Approach to Vehicle Recycling, part of Field Study Series on Environment and Industrial Competitiveness (1992) (pdf) (5.88 MB, 01/01/1992, EE-0229A)
This is one of a number of company case studies designed to examine Michael Porter’s hypothesis that innovative companies responding to environmental regulation can create competitive advantage through lower costs or higher sales.
Alternative Fuels and US Automobile Manufacturers, part of Field Study Series on Environment and Industrial Competitiveness (1992) (pdf) (244.2 KB, 01/01/1992, EE-0229B)
This inquiry examines the development of alternative fuels technologies by US automobile manufacturers in order to suggest answers to three overriding questions: What are the characteristics of the US technology developments? What are the factors influencing these programs? How important are alternative fuels development programs to US manufacturers as a business strategy?
Competitive Implications of Environmental Regulation: A Study of Six Industries (1994) (pdf) (1.39 MB, 01/01/1994, EE-0045)
Industry studies were conducted in 1993 and 1994 to examine the role that environmental regulations play in determining competitive advantage. The six industries studied were paint and coatings, pulp and paper, computers and electronic components, refrigerators, batteries and printing inks. The study concludes that environmental pressures can create opportunities for companies to gain competitive advantage in domestic and international markets.
Competitive Implications of Environmental Regulation in the Polyvinyl Chloride (PVC) Industry (1996) (pdf) (140.87 KB, 06/01/1996, EE-0214A)
This study explores the vinyl industry response to environmental pressures, including regulation, and pays particular attention to innovation and substitution as outcomes of pressures. To provide context, this study first examines the vinyl chloride product, use, industry dynamics, manufacturers, production process and the environmental pressures the industry faced.
Competitive Implications of Environmental Regulation in the Metal Finishing Industry (1996) (pdf) (92.08 KB, 06/01/1996, EE-0214B)
This report examines the competitive implications of environmental regulations in the metal finishing industry. It discusses industry structure, environmental, health and safety pressures, innovation by the industry in response to environmental pressures, competitive positioning of innovating firms, and the effect of environmental innovation on the industry.
Competitive Implications of Environmental Regulation: A Case Study on Carolina Power and Light (CPL) (1996) (pdf) (62.71 KB, 06/01/1996, EE-0214C)
Carolinia Power and Light (CPL) is a utility in southeastern US, which faced decisions with new Clean Air Act amendments of 1990. The study explores potential impacts of legislation on existing power plants which used coal for a fuel, and effects on CPL's plans to build new generating capacity.
Competitive Implications of Environmental Regulation in the Electric Utility Industry (1996) (pdf) (157.81 KB, 06/01/1996, EE-0214D)
This study examines the response by the electric utility industry to the Clean Air Act Amendments of 1990, focusing primarily on the sulfur dioxide provisions of the Act. It explores the competitive forces that developed among the providers of air pollution control technologies and vendors of natural gas turbine systems, the main clean alternative to coal for power generation presently available.
Competitive Implications of Environmental Regulation: A Case Study on Dow Chemical Company and 1,1,1 (1996) (pdf) (54.3 KB, 06/01/1996, EE-0214E)
This is one of a number of company case studies designed to examine Michael Porter’s hypothesis that innovative companies responding to environmental regulation can create competitive advantage through lower costs or higher sales.
Competitive Implications of Environmental Regulation in the Laundry Detergent Industry (1996) (pdf) (64.1 KB, 06/01/1996, EE-0214F)
This report examines the competitive implications of environmental regulations in the laundry detergent industry. It discusses industry structure, environmental, health and safety pressures, innovation by the industry in response to environmental pressures, competitive positioning of innovators, and the effect of environmental innovation on the industry.
Competitive Implications of Environmental Regulation in the Recovered Paper Industry (1996) (pdf) (68.25 KB, 06/01/1996, EE-0214G)
The authors believe that in the pulp and paper industry, a confluence of public pressure, regulation, and market economics brought the use of recovered wood fiber to an unprecedented level, even as the process technology, industry supply structure, and regulatory framework were still developing. This report examines the forces that affected the use of recovered fiber, and looks at the implications for future policy decisions.
Competitive Implications of Environmental Regulation: A Case Study on IKEA (1996) (pdf) (156.1 KB, 06/01/1996, EE-0214H)
This is one of a number of company case studies designed to examine Michael Porter’s hypothesis that innovative companies responding to environmental regulation can create competitive advantage through lower costs or higher sales. In 1993, the authors conducted studies of six global industries (see items in chart below marked with *) to understand how environmental regulation was influencing competition.
The Financial Impact of Environmental Events and Issues on the Forest Products Industry (1997) (pdf) (115.16 KB, 01/01/1997, EE-0214J)
This paper examines the relationship between environmental performance and financial performance in the forest products industry using three methodologies: I. Two event studies of capital market performance, II. An analysis of possible relationships between operating/financial performance and environmental performance at the firm level, and III. A three company case study.
Environmental Performance and Strategy at Weyerhaeuser (1997) (pdf) (79.46 KB, 01/01/1997, EE-0214L)
This is one of a number of company case studies designed to examine Michael Porter’s hypothesis that innovative companies responding to environmental regulation can create competitive advantage through lower costs or higher sales.
Competitiveness Project Summary (1997) (pdf) (88.51 KB, 01/01/1997, EE-0214I)
his is a summary report on a series of case studies designed to examine Michael Porter’s hypothesis that innovative companies responding to environmental regulation can create competitive advantage through lower costs or higher sales. In 1993, the authors conducted studies of six global industries (see items in chart below marked with *) to understand how environmental regulation was influencing competition.