Designing Industrial Environmental Policies

Environmental sustainability in industry remains a meaningful concern. Accordingly, public governments all over the world are implementing industrial policies aimed at promoting or mandating responsible corporate behaviour. In this context, several research studies have focused on policy-related barriers to industrial sustainability that could undermine the effectiveness of such initiatives. However, open questions remain regarding the key success factors associated with different typologies of policy instruments and how they compare.
The paper presented in this PRICE Seminar, fills this research gap, by exploring the issue of policy design through the case study of the Autonomous Province of Bozen-Bolzano in Italy, where the public government is demonstrating a strong commitment to environmental sustainability. Data was collected through interviews with representatives from both the public administration and industrial companies. The interviewees were asked for their opinions on policy-related factors that might hinder, slow down, or facilitate the implementation of sustainability practices by companies, as well as sustainability measures by the public government. This exploratory analysis is framed within the lens of Agency Theory. In particular, the authors conceptualize the government as the principal who delegates environmental responsibility tasks to industrial companies, i.e. the agent, via sustainability policies. The findings contribute to the policy design literature by validating key success factors for the policy effectiveness and linking them to different typologies of policy instruments. Moreover, this research contributes to policymaking by highlighting factors that help to overcome information asymmetry between the principal and the agent, and to mitigate the agent’s aversion towards the risks involved in implementing sustainability policies.