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I N C LU S I V E G R E E N G R O W T H: T H E PAT H WAY TO S U S TA I N A B L E D E V E LO PM E N T
and positive social goal than if they perceive them as top-down government decisions to reduce oil imports or protect the climate. Germany presented its decision to gradually replace its nuclear plants with renewable energy sources as a collective national project that positions it as a leader in the transition toward a greener economy. This framing makes it more likely that the public will accept the resulting increases in the price of electricity. It also reduces the risk that the decision will be reversed by the next government. The certainty afforded by the decrease in the chance of policy reversal increases incentives for long-term investments in research and development and new technology. It may be more efficient to change the values related to the emotional part of decisions than to count on prices and other policies to counteract emotion-based decisions. For instance, many consumers prefer big and inefficient cars for status-related reasons. As long as such cars provide status, raising their price may not reduce consumers’ desire to own them. For this reason, price mechanisms may be less effective than efforts to make green and efficient cars a status symbol (Griskevicius and Tybur 2010). Ideally, price mechanisms and behavioral changes can reinforce each other, as recent trends in French car purchases show (box 2.6). It may also be more efficient to influence consumer behavior through advertising than through price—witness the hundreds of billions of dollars firms spend every year to advertise consumer products (Bertrand and others 2009). What is true for commercial consumption choices is likely to be true for environmental behaviors.
Informing and nudging to influence firms: Enabling public pressure and focusing managers’ attention Information allows citizens or governments to put pressure on businesses—the goal of programs that collect and disseminate information about firms’ environmental performance. This approach has been deemed the “third wave” in environmental regulation, after command-and-control and market-based
approaches (Tietenberg 1998). Studies show that it is making significant inroads in terms of environmental benefits. One type of disclosure program relies on emissions data without using them to rate or otherwise characterize environmental performance. Regulations requiring U.S. electric utilities to mail bill inserts to consumers reporting the extent of their reliance on fossil fuels led to a significant decrease in fossil fuel use (Delmas and others 2007). Another type of scheme involves reporting regulatory violations. A policy of publicly disclosing the identity of plants that are noncompliant or “of concern” spurred emissions reductions in a sample of pulp and paper plants in British Columbia (Foulon and others 2002). Performance evaluation and ratings programs (PERPs) report emissions data and use them to rate plants’ environmental performance. Examples include China’s GreenWatch program; India’s Green Rating Project (GRP); Indonesia’s Program for Pollution Control, Evaluation, and Rating (PROPER); the Philippines’ E coWatch prog ram; and Vietnam’s Black and Green Books initiative (box 2.7). These programs—which require no enforcement capacity or even a welldefined set of environmental regulations but do require an active civil society, local activism, or both—are particularly helpful in developing countries, where weak formal institutions make traditional enforcement of environmental regulations difficult. Thanks to advances in information technology, the administrative cost of such programs (mainly data collection and dissemination) is falling (Dasgupta and others 2007). Public disclosure can improve environmental performance through a variety of channels. It can have the following effects (Powers and others 2011): • Affect demand for fi rms’ products (output market pressure). • Affect demand for publicly traded companies’ shares and the ability of such companies to hire and retain employees (input market pressure). • Encourage private citizens to sue polluters (judicial pressure).