Better coordination between government regulatory agencies and free Technical Assistance Programs can successfully encourage companies to make environmental improvements
Many companies know that undertaking environmental improvements can save money, and there are numerous state and regional technical assistance programs (TAPs), such as the Wisconsin Manufacturing Extension Partnership, that offer expert assistance and support. But only 30-40 percent of TAP ideas get implemented. Doubling that rate would result in significant air and water quality improvements, reduced landfill and energy consumption and cost savings and without new regulations or increased penalties for non-compliant businesses. So why doesn’t this happen?
New research from the Wisconsin School of Business at the University of Wisconsin–Madison reveals that better coordination and improved timing of punitive measures can improve implementation rates. Enno Siemsen, Wisconsin School of Business professor of operations and information management, along with Suvrat S. Dhanorkar of Pennsylvania State University and Kevin W. Linderman of the University of Minnesota, says the key is securing managerial attention to make sure environmental improvements remain a priority.
“If a company is hit with environmental sanctions by a regulator and then TAP comes in and provides a roadmap for fixing the problem, managers are going to pay attention because they can make this fix a priority and show cost savings and be a good corporate citizen,” says Siemsen. “But if TAP comes in with recommendations first and regulators step in months later with sanctions that may cover a range of areas not related to the TAP project, you don’t get the same focused attention.”
Siemsen adds, “At a time when the U.S. has pulled out of the Paris climate accords and federal regulators such as the EPA are prioritizing cutting red tape, we are going to see more environmental initiatives coming from cities and states. Our findings give those local regulators insights into how they can effectively support companies seeking to implement environmental improvements.”
The study reviewed the activities of two state-level environmental assistance agencies in Minnesota: Minnesota Technical Assistance Program (MTAP) and the Minnesota Pollution Control Agency (MCPA). Siemsen and his colleagues looked at more than 1,000 projects receiving support from the agencies across 200 facilities that also received periodic punitive fines or disciplinary actions from the Environmental Protection Agency (EPA) or other regulators.
Their findings indicated that the timing and order of punitive tactics mattered in terms of project completion. Those instances where a punitive regulatory action was followed by project recommendations from TAP helped to secure the managerial attention necessary to ensure completion of the environmental improvements.
While TAPs and regulatory agencies communicate, there is not always formal coordination between them, and Siemsen says that simply aligning their activities would lead to better outcomes in terms of implementing desired changes. He notes that firms that took part in “Touchbase Tuesdays” with their MTAP contacts, check-ins that involved an MTAP employee checking in with the company’s manager regarding progress on improvements, saw increases of 10 to 20 percent in their project completion rates.
“With multiple projects in the pipeline at a company at any given time, managerial attention can be in short supply,” says Siemsen. “With better coordination, TAPs and regulators can identify problems, provide meaningful solutions, and encourage companies to take steps that will save them money and enhance the environmental sustainability of their operations.”
The paper, “Promoting Change from the Outside: Directing Managerial Attention in the Implementation of Environmental Improvements”, was published in Management Science.