INTRODUCTION

Business-led environmental initiatives have become increasingly prominent in recent years. From McDonald's voluntary replacement of paper for styrofoam sandwich packaging to the chemical industry's “Responsible Care” ® program, corporate environmentalism has become a familiar phenomenon. At the same time, governments have shown great interest in “voluntary” programs for environmental protection, which invite pollution abatement rather than demanding it. Neither of these developments makes sense within conventional paradigms for understanding the environment. Since pollution abatement is costly, firms are expected to avoid it whenever possible, and governments must impose penalties severe enough to compel compliance. A sudden shift to a world of cooperation and voluntary environmental protection seems strange, if not downright suspicious.

Several reasons have been suggested for the recent surge of corporate environmental activity. Perhaps pollution is symptomatic of broader production inefficiencies, and pollution reduction and cost reduction go hand-in-hand to create “win–win” opportunities in today's economy. Perhaps a new generation of “green” consumers is willing to pay higher prices for clean products, and firms are simply responding to this shift. Or perhaps business has become more savvy about the workings of the political system, taking pro-active steps to avert political conflict rather than reacting to public pressure after the fact.

Our basic message is simple: political–economic analysis is required to understand the emergence of corporate environmentalism, by which we mean environmentally friendly actions not required by law. While cost reduction and green marketing play a role, their impact appears to be modest. Furthermore, from a research perspective, no new theory of corporate behavior is needed to explain cost control and green marketing: they can be understood perfectly well in terms of traditional strategies of cost minimization and product differentiation.