Globalization and the environment: Strategies for international voluntary environmental initiatives

Executive overview: Multinational firms and their global supply chains are facing increasing pressures for environmental responsibility from non-governmental actors. Reasons for these increasing pressures include concerns about the ability of national governments to regulate firms' environmental conduct in the global economy and the increasing influence of non-governmental organizations theft are extending their reach into supply chains. International voluntary environmental initiatives (VEIs) are emerging as an important tool for corporate environmental self-regulation in the global economy. In the past decade, the number of national and international VEIs has grown from a handful to hundreds. Although these initiatives are not mandated by government regulations, firms can decide to adopt them and adhere to their requirements. This article analyzes reasons for the emergence of international VEIs, explains the importance of this trend for business, and develops a strategic framework to help firms manage their involvement in VEIs. A firm's capabilities to address each particular environmental issue and the strategic importance of each issue are key factors to consider in selecting a strategy. We develop a roadmap for business decision-makers and conclude with a discussion of the impact of international VEIs on the role of government regulations in the global economy.