Vol. 13 No. 11 (November 2003)

SHADES OF GREEN: BUSINESS, REGULATION, AND ENVIRONMENT by Neil Gunningham, Robert A. Kagan, and Dorothy Thornton. Stanford: Stanford University Press. 2003. 210pp. Cloth $49.50. ISBN 0-8047-4806-3. Paper $21.95. ISBN 0-8047-4852-7.

Reviewed by Francine Sanders Romero, Department of Public Administration, University of Texas at San Antonio. fsromero@utsa.edu.

SHADES OF GREEN is a valuable, finely written investigation of determinants of the varying degree to which corporations comply—or even over-comply—with environmental regulations. This complicated question is approached through a study of 14 paper pulp manufacturing mills in four nations (US, Canada, Australia, New Zealand), utilizing various environmental indicants in combination with interviews of managers. The three authors of this work are associated with Resources, Environment, and Society (Gunningham), and Law and Society (Kagan and Thornton) disciplines.

Overall, the findings provide significant and intriguing suggestions as to why some firms are “greener” than others. In particular, the authors make a compelling case for the key influence of management style on environmentally sound performance. If a minor weakness of the book is that, in the end, some readers may be left wanting more, this simply speaks to the excellent job the authors have done in piquing our interest in the topic.

This is a fairly short, tightly organized analysis that moves easily through the classic steps of research design. Chapter One begins with an overview of the topic and quickly provides evidence of the authors’ remarkably clear and cogent writing style. Of course, all scholarly books should be well written but in fact they are frequently stiff, dizzying, and/or boring, especially when the topic veers into highly technical fields. SHADES OF GREEN begins with an educational, interesting, and painless discussion of some very technical aspects of the paper pulp industry, and this welcome accessibility continues throughout. We learn through this introduction that paper pulp mills have historically and globally been among the worst polluters, with the discharge of waste water into steams and rivers leading to increased levels of the carcinogen dioxin and severely impacting aquatic life. A great deal of progress has occurred in the last twenty years or so, but within this trend there also exists substantial variation, with some mills improving much more rapidly than others.

Following a useful literature review in Chapter Two that points out the rather narrow basis of similar existing studies, the authors progress to the heart of the matter – the various potential determinants of improved environmental impact. The first step is to consider three distinct categories of a plant’s “license”– regulatory, social, and economic pressures/edicts to adopt (or not) more environmentally sound practices. After a two chapter (Chapters Three and Four) analysis of, respectively, the extent to which these licenses are consistent or variable in their influence on performance, the authors move in Chapter Five to what they believe is a key intervening variable – management style. In short, these three chapters as a whole lay out the argument that the licenses, while influential in their own right, are mediated by the corporations’ overall attitude toward balancing profit and environmental responsibility. Different types of management styles are basically conceptualized through a five-category model consisting of laggards, reluctant compliers, committed compliers, environmental strategists, and true believers.

I found this core discussion of potential determinants and their inter-relationships illuminating in two distinct ways—one conceptual and one substantive. First, and most powerfully, it provides crucial frameworks through which to think about corporate environmental compliance. The license approach acknowledges the real snarl of pressures that corporations must face, while at the same time sorting them out a bit to allow consideration of each in clarified detail. Without this simple but effective model, the discrete yet interdependent effects of regulatory mandates, public pressures, and (usually working in the opposite direction) profit motives would not be nearly as accessible to readers. In the same way, the categorical approach to management styles is well thought out and nicely presented through examples that highlight the significant but sometimes quite subtle differences among them. An example of the authors’ effective use of language and metaphor to convey difficult concepts throughout this work is their explanation that their ideal types should not be envisioned as “distinct” so much as “nested.”

The second strength of these chapters is their findings of evidence (or at least suggestions of trends) that advance our substantive knowledge of the field. Let me highlight just a few of these insights. Perhaps of most interest to legal scholars are the persuasive conclusions regarding the impact of regulations. This study concludes that, despite all the theoretical reasons why it should not, regulation matters a great deal in the paper pulp industry. For example, when a government mandates a drastically lower threshold of a particular chemical effluent, levels in that nation will in turn be dramatically reduced in comparison to nations that did not adopt a similar limit. But, the authors also show that there is a great deal of variation within each regime’s implementation process – any given regulation will likely be applied with notable flexibility.

Also of interest is the partially tangled relationship between social and economic license. Although some work in this area simply stresses the role of public pressure overall without distinction by type, this book clarifies that, because of the primacy of profit motives, national or global consumer boycotts tend to be far more effective means of eliciting responsible corporate behavior than local community activism. Corporations may want to be good local citizens, but aggregate sales figures almost always trump this desire.

Finally, the interview-based evidence of the utility of the authors’ ideal management types provides incomparable insight into the management decisions that attenuate the influence of regulatory, social, and economic license. One illuminating aspect in particular was how management style interacts with the matter of regulatory flexibility. A general, ongoing debate in this area concerns whether or not strict regulation inhibits development and adoption of innovative, environmentally friendly technology. These interviews suggest that it does not, as some of the managers in the more environmentally conscious categories sought out new technology even when the regulatory regime did not especially encourage it. By the same token, the lower scoring managers seem unlikely to partake of this opportunity even if it was made more amenable to them. Given the existence of these “laggards” and “reluctant compliers,” the continuation of strict guidelines seems wise.

Although all readers will appreciate the conceptual frameworks and evidentiary suggestions SHADES OF GREEN provides, some may feel that the analysis is, at times, too limited. For there are sections of this book where the authors do not venture as far as they might in attempting to answer their own questions, particularly in regard to the influence of the three licenses on performance. One example is the discussion of the varying effects of social license, in particular the inconsistent impact, or even existence, of local citizen pressures on pulp mills. All of the evidence of this premise comes in the form of a comparison of two mills in their study – one facing strong citizen pressure and the other only minimal levels. As expected, the former has displayed a responsible “beyond-compliance” environmental performance, while the latter has not. Although illustrative, this demonstration does not move beyond the evidentiary status of an anecdote.

While the authors straight-forwardly acknowledge that “we could neither find nor devise any systematic, objective measures of the degree of social pressure on each mill” (p.89) that would make a more rigorous test possible, perhaps a bit more effort could have been expended on this and other questions. For example, in the comparative discussion of the two mills, they mention that the one subject to minimal social demand was also the city’s primary employer. Indeed, this employment dominance variable might have functioned as at least a rough surrogate for the likely presence or absence of public pressure. Similarly, in the discussion of the impact of varying economic pressures, the authors find only weak support that overall health of the parent corporation influences mill-level environmental indicants. Perhaps one more pass at this investigation, examining the link between mill-level profit margins and performance, could have provided further clarity.

There are other limits to this research that the authors acknowledge but cannot be faulted for not pursuing. Questions regarding the determinants of corporate style (in itself a key influence on performance), a more systematic understanding of the links among the three licenses and corporate style, and of course the extent to which these findings can be generalized, simply require more time and a multitude of research before they can begin to be satisfactorily answered. In short, because SHADES OF GREEN does such a good job of drawing readers into its story and framework, most will finish the book wanting to know more. Overall, the authors have achieved their goal of establishing at least baseline evidence of management style as a key mediator of the impact of regulatory, social, and economic license. Along the way, readers will comprehend a great deal of additional, valuable information and ways of thinking about corporate compliance.

SHADES OF GREEN would certainly be appropriate for graduate students, and I doubt advanced undergraduates would have much difficulty with it either. The book would fit well in environmental policy/management classes offered either in social science or business curricula, probably stimulating a good bit of class discussion on what the “proper” role for corporate managers should be. One of the strong points of the narrative is its level, objective tone, recognizing without judgment the competing pressures of environmental responsibility and profit-making on modern corporations. For my own part, I plan to utilize this book in a somewhat unusual way. Because of its strength as a clearly written, straightforward example of sound social science research, I will likely assign this for graduate-level courses in research design.

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Copyright 2003 by the author, Francine Sanders Romero.