Do voluntary environmental programs matter? Evidence from the EPA SmartWay program

Abstract

There is mixed evidence on the effectiveness of voluntary environmental programs. We evaluate a voluntary program aimed at reducing transportation emissions, that is, the U.S. EPA SmartWay Program. We construct a novel database of the physical assets used by firms before and after they joined SmartWay and compare changes in the age of their assets with that of firms that did not join SmartWay. Our results show that firms that participated in SmartWay operate substantially newer (i.e., cleaner) trucks compared with non‐SmartWay participants, indicating that SmartWay participation is a credible signal of a firm's reduced emissions footprint emanating from truck operations. After the start of SmartWay, firms that joined invested in newer trucks relative to firms that did not, with about a year reduction in average truck age several years after the program began. SmartWay had a larger effect on firms that own their trucks compared with firms that outsource ownership, and sustained participation increased the program's effectiveness. We estimate that the SmartWay Program has reduced commercial transportation emissions from operations by 25.2 million metric tons of CO2 by increasing the incentive to invest in newer, cleaner trucks. Our study provides insight into factors that make voluntary environmental programs effective.

Competitive actions and supply chain relationships: How suppliers' value‐diminishing actions affect buyers' procurement decisions

“…To this end, we convert the continuous S_DiminishActions count variable to a binary treatment indicator where observations with one or more supplier value‐diminishing actions are coded as “1,” and records with zero supplier value‐diminishing actions are coded as “0” (Khanna & Guler, 2022). We then implement a coarsened exact matching (CEM) procedure (e.g., Scott et al, 2023) to identify a subsample of observations that differ in terms of the treatment but are exact‐matched on buyer–supplier industries, defined at the respective three‐digit NAICS levels, and comparable in terms buying firm size ( B_Sales ) and supplier size ( S_TotalAssets [lagged] ). This procedure yields a set of 7142 matched observations.…”

Consumer reactions to environmentally irresponsible sourcing practices: An intentionality and motive perspective

“…It is not clear, however, which intervention strategy can most effectively address consumer concerns (Piehler et al, 2019). Prior research suggests that the effectiveness of each strategy depends on various factors that should be carefully considered before implementation (Scott et al, 2023). As such, the literature is ambiguous about the impact that either voluntary or mandatory programs can have on firms (e.g., Arag on-Correa et al, 2020).…”

“…This research attempts to ease this tension by comparing consumer reactions to mandatory and voluntary actions initiated by the firm involved in the environmental incident. In this study's context, mandatory corrective actions refer to actions that suppliers are obligated to implement, while voluntary actions are not compulsory but are to some extent anticipated (Arag on-Correa et al, 2020;Scott et al, 2023). Using signaling theory, it is proposed that a buyer's corrective action signals that the firm is capable of rectifying previous signals of transgression.…”

The Limited Influence of Voluntary Environmental Partnerships on Increasing the Saliency of Freight Emissions in Corporate Sustainability Strategy

“…ISO 14001, a set of standards companies must meet when implementing an environmental management system for their operations and supply chain, is the most widely adopted and among the most frequently studied VEPs in the world (Baek 2017;deLeon and Rivera 2010;Prakash and Potoski 2012). SmartWay, a VEP launched by the EPA, has also gained research attention (Bynum et al 2018;Ellram and Golicic 2016;Scott et al, 2023). SmartWay is a government-sponsored initiative among freight shippers, carriers, logistics firms and other stakeholders that supports the advancement of sustainability initiatives in companies by measuring, benchmarking, and improving freight transportation efficiency, with shipper firms being required to measure and report transportation emissions within a tool developed by SmartWay to maintain membership (SmartWay 2019).…”

“…The challenge is in achieving economic business goals while concurrently reducing environmental impact (Christmann 2000; Larson, Elias, and Viafara 2013; Lieb and Lieb 2016). Given finite resources, the environmental issues that a company chooses to prioritize are a source of uncertainty and risk, as various economic and non‐economic actors in the supply chain attempt to influence a company’s sustainability strategy (Tachizawa and Wong 2014; Scott et al 2023).…”