What makes polluting firms clean up their act?

I was kind of psyched about Arora & Cason 1996, which does what it says on the tin: the title is "Why Do Firms Volunteer to Exceed Environmental Regulations?"

This paper looks at what types of firms choose to enroll in the EPA's 33/50 program, a voluntary program that assists firms in making cutbacks to toxic releases. The program provides assistance for firms that sign up to attempt to meet its goals of reducing releases of certain pollutants. The program goals are more stringent than what actually regulation requires, so the firms are in some sense agreeing to go above and beyond. So it seems like an interesting question: what types of firms make that decision; in other words, what makes companies choose to be good?

Sadly, academia is a land of disappointment. The answer doesn't reveal any miraculous strategies for getting polluting firms to voluntarily clean up their act.

First off, a major nitpick: reading the article, it turns out that some of the toxic substances covered in the program are ozone depleting substances that are subject to caps by the (at the time) new Montreal Protocol restrictions. Thus, while firms that worked cleaning their act up with regard to these substances were indeed technically exceeding what regulation at the time required them to do, they were facing impending caps on these releases, making those actions less voluntarily motivated than they look. I couldn't find a clear statement in the article of how much of the target population that was true of.

Beyond that, they reasons don't end up being all that interesting. Firms that spend more on advertising were more likely to enroll; that makes sense, since firms that spend on advertising are (essentially by definition) sensitive about their public image. Bigger firms were more likely to enroll; that makes sense, since bigger firms have more resources and more public exposure. Firms that emit more pollution (in absolute terms AND per employee) are more likely to enroll; that makes sense, since they're the ones who need help figuring out how to clean up their act. Firms that don't emit much pollution have no reason to sign up for a reduction program. (Theoretically, if the program had some big payoff but required action the firms really didn't want to take, we might see firms sorting the other way - big polluters steer clear so they don't have to spend, while small polluters enroll to cash in on the payoff without having to do much. But the program doesn't really have such a payoff; all you get from it as far as I can tell is stuff like training and workshops. So there isn't much incentive to try to game the system - those that sign up seem to be those that actually need and want the program.)

Oh well, negative findings are important too. Anyway, the takeaway is that the EPA's 33/50 program doesn't seem to teach us anything particularly exciting about eliciting firm cooperation on pollution clean-up. Regulation and public pressure are the things that do the trick.