The regulation of corporate environmental responsibility

M. Lu, M.G. Faure

Research output: Chapter in Book/Report/Conference proceedingChapterAcademic


This chapter focuses on an increasingly popular phenomenon—corporate environmental responsibility (cer). The key question that is addressed is how cer can be viewed from a law and economics perspective and, more particularly, whether cer can be considered as an example of conditioned self-regulation, i.e., a form of voluntarism which is to some extent backed by government regulation. To answer this question, we analyse cer from a law and economics perspective, providing the arguments why particular firms may engage in altruism on a voluntary basis. We also explain to what extent cer can be a useful instrument in curing the market failure caused by environmental externalities. However, we equally argue that because of a risk of so-called “green washing” some regulation (i.e., control on self-regulatory mechanisms) is perhaps necessary to accompany the effectiveness of cer. We equally address cer within a corporate governance structure, hence addressing principal-agent issues related to the question of whether the interests of shareholders and managers are always aligned as far as the pursuance of cer is concerned. To the extent available, we use empirical studies providing evidence on the effectiveness of cer.the importance of cer for the case of china is clear: given the huge ecological crisis in china, the question arises whether the (apparent) failure of the current regulatory framework in china can (at least to some extent) be remedied by convincing the corporate world in china of their own interest in moving towards cer. Attention is paid to the question of whether the institutional environment in china is promising as far as the implementation of effective cer mechanisms is concerned.keywordscorporate social responsibilitycorporate environmental responsibilityregulationself-regulation.
Original languageEnglish
Title of host publicationMarket integration: the EU experience and implications for regulatory reform in China
EditorsN. Philipsen, S.E. Weishaar, G. Xu
Place of PublicationBerlin/Heidelberg
ISBN (Print)978-3-662-48272-8
Publication statusPublished - 1 Jan 2016

Publication series

SeriesChina-EU Law Series

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