The Emergence of Trade Associations as
Agents of Environmental Performance Improvement
Jennifer Nash
Technology, Business, and Environment Program
Massachusetts Institute of Technology
77 Massachusetts Avenue, Room E40-251
Cambridge, MA 02139
617 253 3586 (Tel)
617 253 7140 (Fax)
jnash@mit.edu
ABSTRACT
This paper explores a surprising phenomenon: the emergence of trade associations
as agents of environmental performance improvement. Trade associations in the United
States have historically fought environmental regulation, not embraced it. Trade
associations are generally organized to service the needs of their members, not control
their behavior. Yet, since the late 1980s, seven trade associations representing
manufacturing sectors have enacted codes of practice with the stated goal of enhancing
member companies’ environmental performance.
Four of these codes have been developed by trade associations in the chemicals
sector. The other trade associations represent oil, forestry, and textile industries. This
paper explores why and how trade associations have attempted to exert authority over
members’ environmental performance. First, the specific factors that caused each trade
association to develop its code are discussed. Second, the codes are compared in terms of
three dimensions: the environmental practices they require, the techniques used to share
values and practices among members, and the authority structures used to ensure
compliance. A final section offers observations about the conditions under which codes
are likely to emerge and considers their implications for public policy. By seeing where
and how this trade association activity is emerging, it is possible to begin to understand
the limits, and the potential, of this approach as a tool for moving firms in the direction of
environmental performance improvement and sustainability.
This paper has been prepared with support and guidance from the Performance Incentives
Division, U.S. Environmental Protection Agency, Dr. Daniel J. Fiorino, Director.
Mistakes and omissions, and the views expressed, are the author’s, not EPA’s. Thanks to
Stefani Okasaki who undertook important background research for this paper.
1
The Emergence of Trade Associations as
Agents of Environmental Performance Improvement
Jennifer Nash
Technology, Business, and Environment Program
Massachusetts Institute of Technology
This paper explores a surprising phenomenon: the emergence of trade associations
as agents of environmental performance improvement. Trade associations in the United
States have historically fought environmental regulation, not embraced it. Trade
associations are generally organized to service the needs of their members, not control
their behavior. Yet, since the late 1980s, a number of trade groups have enacted codes of
practice with the stated goal of enhancing member companies’ environmental
performance. How are we to understand this improbable activity?
Environmental codes promulgated by trade associations are part of a private sector
movement, apparent since the mid-1980’s, to improve environmental performance
beyond what is required by regulation. During this period, many firms have developed
policies that call for preventing pollution, conserving resources, and protecting the planet
for future generations. Firms have developed programs to audit environmental
performance and report results to the public. This paper focuses on just one element in
this complex movement — the efforts of collectives of firms in manufacturing sectors to
change the environmental management practices of members of their group.
Firms choose to participate in a collective program for different reasons than those
that lead them to choose a firm-based program. The mechanisms that work to change
behavior of firms participating in a collective undertaking also are different. This paper
explores these different motivations and mechanisms. One key difference is that trade
association codes, as programs of collective action, are aimed at benefiting the group of
firms that share an identity. Firms that share an identity — in the minds of regulators and
2
members of the public — are bound together in a way that poses unique opportunities and
difficulties for environmental performance improvement. If one firm harms the
environment in a well-publicized accident, all will share a portion of the blame. Firms
that share an identity are therefore invested in ensuring that no member’s performance
falls too far behind. On the other hand, if most members develop strong environmental
programs, a few may be able to hide their poor performance in the cover provided by the
group.
Trade association codes of practice have emerged in a disparate set of
manufacturing industries, from chemicals to forestry to textiles. Despite differences in
industry context, all trade association codes have certain features in common. All attempt
to demonstrate that firms can achieve environmental performance improvements
collectively and voluntarily. All require that participating firms pledge to prevent
pollution, share information with surrounding communities, and take some level of
responsibility for their products after they leave factory doors. Most of the trade groups
that have promulgated such codes have also enacted some system for ensuring that
members abide by code requirements. These mechanisms range from self-reporting of
environmental practices to third party verification. Trade associations contend that they
have developed environmental codes to change the culture within their industries so that
environmental concerns become a priority in business decisions and openness and caring
are woven into day to day operations.
Why have these trade association programs emerged at this time? Why have
some trade groups moved to adopt environmental codes, while the majority has not?
What do these codes require of members, and how are commitments enforced? This
paper begins to answer these questions by providing an inventory of current trade
association codes of environmental management practice. By seeing where and how
trade association activity is emerging, it is possible to begin to understand the limits, and
the potential, of this approach as a tool of environmental performance improvement.
3
1. Evolution of Trade Associations in the United States
Trade associations are nonprofit organizations of business competitors in a single
industry (Bradley 1965). Thousands of trade associations operate at the national level in
the U.S., and at least as many at the state and local level. A firm may belong to a few, or
to several dozen. The largest companies in the U.S. may belong to hundreds (Mack
1989).
Trade associations rely on membership support in order to remain viable.
Membership is voluntary. Most trade associations specify certain characteristics for
members. The American Textile Manufacturers Institute by-laws, for example, stipulate
that members must “operate machinery for the manufacture or processing of textile
products.” The U.S. Chemical Manufacturers Association (CMA) requires that its
members manufacture chemicals, which it defines as “mixing, formulating, and
compounding” chemical operations. Trade associations limit membership to firms that
share a set of business concerns — they manufacture a similar set of products, sell to a
similar set of customers, and are subject to the same set of regulations. In many cases the
public perceives these firms as alike.
Most trade associations raise their operating revenues from fees and dues assessed
upon members. Fee structures are usually based on an ability to pay principle, so that
larger firms pay more than smaller organizations. Annual membership fees for the CMA,
for example, range from approximately $7500 for firms with sales under $10 million to a
maximum of roughly $825,000 for the largest firms in the industry. Boards of directors,
made up of member firms, set policy for the group. Members generally have one vote
regardless of size.
Trade associations are in a constant battle to secure and maintain members.
Members provide the base of financial support as well as organizational clout. What are
firms “buying” when they decide to join?
The answer to this question has changed over time. Business historian Louis
Galambos (Galambos 1966) has identified three distinct phases in trade association
history in the U.S. During the late 19th century trade associations served primarily as
“dinner club associations”: places where businessmen could discuss technical, political,
and economic developments. Dinner club associations had weak leadership. They lacked
4
professional staff and offered very little to their members other than a club-like
atmosphere in which to meet and discuss policy informally.
In the early 20th century a new form of trade association emerged, the “service
associations.” For the first time trade associations hired full-time professional staffs.
These groups replaced the ad hoc policies of their predecessors with long-range programs
that emphasized stability and cooperation. A working relationship between trade
associations and government began to emerge, and lobbying was a primary activity.
In the 1920’s a third type of trade association began to develop, the “policyshaping association.” Trade associations began to assume semi-autonomous identities
and to exert considerable influence over their members:
This particular form of trade association was distinguished by outstanding
leaders, a well-defined and carefully articulated ideology, and formidable
cooperative programs. It was a semi-autonomous economic institution
with an identity clearly distinguished from its members. In seeking to
implement associative values, it impinged forcefully upon individual
manufacturers, members, and non-members alike (Galambos, 1966: 292).
The policy-shaping trade association influenced the decisions of its members. One of the
chief challenges was to establish an “industry-wide viewpoint” among members who
were used to thinking in individual terms (Galambos, 1966: 112). While service
associations coordinated and communicated members’ interests, policy-shaping
associations worked to control members’ actions — in the 1920’s and early 1930’s such
groups attempted to control members’ production volumes and prices.
In the United States, policy-shaping trade associations have always been relatively
rare. In the 1920’s and early 1930’s, when economic conditions favored the
establishment of centralized control, fewer than ten national trade associations assumed
this role. Galambos chronicles the experience of the Cotton-Textile Institute, a policyshaping organization that generated industry production and cost statistics in attempt to
reduce inventory and raise prices for this industry. Tired of flat or declining profits year
after year, managers of two-thirds of the cotton textile industry’s mills joined the new
Institute.
They paid their dues, received the statistical reports, and participated in cost
accounting. But, importantly, they would not support policies that went very far to
5
change existing individualistic practices. Furthermore, they did not change their
behavior.
Although the association leaders, the Executive Committee, and the Board
of Directors fiercely preached the doctrines of stability, cooperation, and
control, the producers ignored the [trade association] dogma when they
made their vital business decisions (Gallambos, 1966: 126).
With the passage of the National Industrial Recovery Act, groups such as the CottonTextile Institute enjoyed new authority. The policy-shaping association, for a brief
period, was able to extert “majority control with coercion of the recalcitrant minority”
(Gamambos, 1966: 201). This role ended abruptly with the Supreme Court’s decision to
strike down the National Recovery Act as an unconstitutional delegation of government
authority to trade associations and other business groups.
Galambos argues that a consistent feature of trade associations throughout history
has been their stabilizing function. While trade associations have assumed different roles
depending on the changing political and business context, they have consistently sought
to maintain a favorable political setting for the economic activities of their members.
Thus, the 1950’s and early 1960’s were a period of relative inactivity for most trade
associations because government policy largely favored business interests. But the wave
of social legislation that swept through Congress in the early 1970’s curtailed business’
authority. Business entered the political arena on an unprecedented scale (Maitland
1987). Trade associations, seeking to maintain a stable business climate, became active
once again.
Today, trade associations in the U.S. serve two major roles. They provide an
organizational vehicle for political or economic collective action by their members (Lynn
and McKeown 1987). They also offer a range of direct services to members, such as
training programs and group buying plans for insurance.
While most trade associations offer both collective and direct services, activities
to advance the industry’s collective economic interest appear to be the primary activity.
The direct services trade associations provide are also available from other sources. For
example, as a direct service to members many trade associations help firms interpret the
federal regulations they must comply with. But non-members can find similar advice
6
from in-house lawyers or consultants they hire for this purpose. Trade associations are
uniquely capable of articulating the industry’s collective voice, usually through litigation
and lobbying.
Trade association promotional materials emphasize their function as agents for the
collective. The homepage of the American Petroleum Institute, for example, states that
the trade association “speak[s]…with one voice” for the industry:
API speaks for the petroleum industry before Congress…It negotiates with
regulatory agencies and represents the industry in legal proceedings… And
it strives to enhance credibility of the environmental, health and safety
issues that are central to the public’s perception of the industry and its
products.
Representing the entire industry in rulemaking and working to improve the public’s
perception of the industry as a whole are two functions that cannot be provided by
individual firms acting on their own. The Chemical Manufacturers Association literature
makes similar claims:
Collectively we can accomplish so much more than individually…[CMA
offers] Responsible Care, the industry’s flagship environmental, health and
safety performance improvement initiative, [and] expert advocacy
representing you and the industry in the state, national and international
political arenas having positive bottom-line results (Chemical
Manufacturers Association 1998).
With their trade association dues, firms contribute to their industry’s collective
voice. But firms need not be trade association members to enjoy the benefits the
collective provides. A forestry firm need not maintain its membership in the American
Forest and Paper Association to benefit from this trade association’s lobbying activities.
A chemical company that does not participate in the CMA can still enjoy the reduction in
costs that might result from lawsuits brought by trade association legal staff. Trade
associations offer direct services as an additional incentive to participate. In its
promotional materials CMA describes opportunities for networking, participation in
committees, and mentoring services available to members. These activities allow
members to compare practices and learn from their peers. As this example suggests, the
distinction between collective action and direct service is not precise. By networking
7
with other firms, CMA members learn new techniques for improving their own
performance, which in turn may advance the public’s perception of the entire industry.
An unanswered question posed in this paper is where codes of environmental
management practice fit in this classification of trade association roles. Do they represent
collective action programs, direct service programs, or something different? By creating
their codes, have trade associations returned to policy-shaping, assuming an identity
distinct from their members’ and establishing authority over their behavior? Do codes
include mechanisms that address the problem that undermined the programs of policyshaping associations in the late 1920’s: the fact that managers would only support
incremental policy changes and generally ignored policies that were at odds with their
individual self-interest as they understood it? We will return to this question in the
conclusion of this paper.
2. Trade association environmental programs
The MIT Technology, Business, and Environment Program recently contacted
more than 100 U.S. trade associations representing manufacturing sectors to determine
which had developed codes of environmental management practicesi. We discovered that
trade associations are engaged in a variety of environmental management activities.
Lobbying on behalf of members’ interest to minimize the costs of environmental
regulatory compliance is a major activity. The largest trade groups spend millions of
dollars annually on lobbying activities. CMA spends about 12% of its annual budget on
lobbying; until it was disbanded in early 1999 the American Automobile Manufacturers
Association spent approximately 30%ii.
Technical assistance on environmental regulatory compliance is offered by all of
the trade associations we surveyed. For example, the Pharmaceutical Manufacturers
Association holds periodic workshops to describe to members new EPA regulatory rules
for air and water. The Agricultural Retailers Association offers training programs to help
professional pesticide applicators maintain their state licenses.
These activities correspond to the collective action programs and direct services
historically offered by trade associations. In addition to these two activities, however, we
found a small number of trade groups engaged in activities which they say are intended to
8
shape the environmental policies and management practices of their members. These
activities are reminiscent of the policy-shaping programs of trade associations in earlier
decades.
2.1 Product standards
Many trade associations have developed product standards for their industry
(Caves and Roberts 1975). For example, the Aerospace Industries Association has
promulgated some 2800 standards, and the American Petroleum Institute (API) has
developed more than 400. Some 150 of API’s standards address aspects of
environmental and safety performance. The U.S. Occupational Safety and Health
Administration (OSHA) has adopted numerous privately developed safety standards,
suggesting that these standards often serve the public interest (Cheit 1990). Private
standard setting, by trade associations and other institutions (such as the American
Society for Testing and Materials) is an area of inquiry that merits further attention, but is
not addressed in this paper.
2.2 Pollution prevention partnerships with regulatory agencies
Many trade associations have established programs with environmental regulatory
agencies to address performance in a particular area. The Great Printers Project,
established in 1995, is an example of this approach. The program was initiated jointly by
the Council of Great Lakes Governors, the Environmental Defense Fund, and Printing
Industries of America, a national trade association. The three organizations drafted a set
of guiding environmental principles for the printing industry that emphasize regulatory
compliance and pollution prevention. The purpose of the program is to bring together
small printing shops in the Great Lakes region with state environmental agencies to work
toward these goals.
The Environmental Assistance Division of the Michigan Department of
Environmental Quality runs pollution prevention partnerships with trade associations in
the printing, pulp and paper, and automobile manufacturing. According to Wendy
Fitzner, who helps to manage partnerships with the pulp and paper industry, companies
are asked to set pollution prevention goals and report to a third party on their progress.
9
Because a large number of firms participate from each trade group, the partnerships
provide a forum for sharing ideas. Fitzner believes that one reason why firms participate
is that agency involvement makes their environmental programs appear more credible to
the public. Trade association partnerships with state environmental agencies have been
formed in Massachusetts, New Jersey, Texas, Wisconsin, and other states.
2.3 Environmental statements
Many trade associations have developed broad environmental statements about
the environmental conduct of firms in their industry. For example, the Independent
Cosmetic Manufacturers and Distributors group has written a code of ethics under which
member firms pledge to "operate [their] business utilizing ingredients and packaging
consistent with the goals of preserving and protecting the environment." The American
Wood Preservers Institute’s code of ethics states that members must “recognize and
respond to community concerns about chemicals and industry operations [and] operate
facilities in accordance with current applicable laws and regulations in order to protect the
environment.” Perhaps the Steel Manufacturers Association has developed the most
elaborate of such statements. The text appears in Table 1. According to Steel
Manufacturers Association staff member Eric Stuart, the statement was developed to
“codify existing perspectives” within the industry.
Table 1. Guiding Environmental Principles for Members of the Steel Manufacturers Association
(Steel Manufacturers Association 1999)
Recognizing that steel is the most recycled material in North America, we advocate:
 the promotion of steel recycling;
1. the implementation of continuous improvement in environmental performance; and
2. the participation with government and community groups in creating responsible laws, regulations, and
standards to safeguard the community and the environment.
Recognizing that people are our most important asset, and that we live in the communities surrounding
facilities, we commit to:
 the integration of environmental awareness in our operations by educating our employees on the
environmental impact of our processes and involving them in decisions that will have a direct impact
on the environment;
 meet of exceed the requirements of environmental laws and rules;
 the distribution of information to local communities about our operations and their impact on the
environment through reasonable efforts;
 the advancement of research on the health, safety, and environmental effects of our industry.
Recognizing that steelmaking is an energy intensive process, we encourage:
10

the optimization of energy efficiency in our production processes for the conservation of natural
resources.
2.4 Codes of environmental management practice
Seven U.S. trade associations have developed codes of environmental
management practice, listed in Table 2. Codes of environmental management practice
stipulate environmental goals for the industry beyond those that are codified into
regulation. They include guidance as to how participating firms are to meet these goals.
They utilize a mix of mechanisms, including trade association oversight, external
verification, and peer pressure to ensure performance.
Table 2. Codes of environmental management practice promulgated by U.S. trade associations
Code name and year established
Trade Association
Chemical Manufacturers Association (CMA)
Responsible Care, 1989
National Association of Chemical Distributors (NACD)
Responsible Distribution Process (RDP), 1991
National Association of Chemical Recyclers (NACR)
Responsible Recycling, 1993
National Paint and Coatings Association (NPCA)
Coatings Care, 1996
American Petroleum Institute (API)
Strategies for Today's Environmental Partnership
(STEP), 1990
American Forest & Paper Association (AF&PA)


Sustainable Forestry Initiative (SFI), 1994
Environmental, Health and Safety Principles,
1995
American Textile Manufacturers Institute (ATMI)

Encouraging Environmental Excellence (E3),
1992
Quest for the Best, 1993

Why have some trade associations taken on this policy-shaping role? If a trade
association is concerned about the collective welfare of its industry, why not focus
exclusively on lobbying activities, which impose lower costs upon members? By taking
on the role of regulator of its industry, a trade association runs the risk of alienating
members. Even a well established trade association like CMA loses approximately 5% of
11
its members annually (roughly offset by new firms joining). Exit is easy, and as noted
previously firms can enjoy many of the benefits of membership without paying their dues.
The remainder of this paper explores why and how trade associations have
assumed this policy-shaping function. First, the specific factors that caused each trade
association to develop its code are described. Second, the codes are compared in terms of
three dimensions: the environmental practices they require, the techniques utilized to
share values and practices among members, and the authority structures used to ensure
compliance. A final section offers observations about the conditions under which codes
will emerge and considers the implications of these observations for public policy.
3. Codes of practice in the chemical industry
The chemical industry has been the force behind the development of trade
association codes. CMA was the first U.S. trade association to develop a code of
environmental management practice, Responsible Care. CMA firms have been
instrumental in the diffusion of codes to related industries. Codes developed by chemical
distributors, chemical recyclers, and the paint and coatings industry were established
under pressure, and with guidance, from CMA.
Responsible Care’s impact is evident in the environmental management practices
of nearly every industry that touches on the chemical product life cycle. The Synthetic
Organic Chemical Manufacturers Association requires its members to adopt Responsible
Care, and the National Petrochemical and Refiners Association and the Adhesive and
Sealant Council encourage their members to do the same. Nineteen state and local
chemical industry trade associations have signed on to Responsible Care. These “partner
associations” must provide CMA with an annual summary of their members’ progress
toward meeting Responsible Care goals. The guiding principles and codes of practice for
the American Petroleum Institute are modeled after Responsible Care. What can explain
Responsible Care’s pervasive influence?
Part of the answer comes from the nature of the chemical industry in the U.S. The
industry is huge — chemical manufacturing is the country’s largest single manufacturing
sector. In 1998 it produced about 2% of the total U.S. gross national product and nearly
12
12% of the value of all U.S. manufacturing. The industry is also the largest U.S.
exporting sector (Bossong-Martines 1999). Table 3 lists the largest chemical producers,
by sales.
Table 3. Top 10 U.S. chemical producers, (based on sales), 1998. Sales in millions of dollars
(Bossong-Martines 1999).
DuPont
Dow Chemical
Exxon
General Electric
Union Carbide
Amoco
Huntsman Chemical
Celanese
BASF
Praxair
21,295
19,056
12,195
6,695
6,502
5,941
5,000
4,950
4,860
4,735
The chemical industry is its own best customer. It transforms raw materials —
air, water, salt, limestone, sulfur and fossil fuels — into products used by the automobile,
housing, and agricultural sectors, and most significantly by the chemical industry itself.
Chemical products nearly always require further processing before marketing to end
users. Most chemical products go through several manufacturing processes, often
undertaken at different firms, before final sale. This unique feature of the chemical
industry has resulted in an “incestuous” network of “mutual dependence” (Rees 1997)
among producers, distributors, and processors.
The chemical industry is, by its nature, highly polluting. The chemical industry
has historically reported the largest emissions of any industry covered by U.S. EPA’s
Toxics Release Inventory (TRI). In 1996 the chemical industry reported 785 million
pounds of releases, or 32% of the total reported to EPA. The chemical industry has also
shown the largest reductions in total releases of any industry, with a decline of 535
million pounds or 51% compared with the 1988 base year (Bossong-Martines 1999).
The chemical industry’s size, its lack of direct access to consumers, and its
unwanted byproducts form the context for the development of Responsible Care and
other related trade association codes. During the 1970s and early 1980s the U.S. Congress
enacted law after law that drastically curtailed business’ autonomy. Many of these were
13
aimed at the chemical industry: the Clean Air Act (1970), Clean Water Act (1972), the
Endangered Species Act (1973), and the Toxic Substances Control Act (1976), the
Resource Conservation and Recovery Act (1976), the Occupational Safety and Health Act
(1970), and the Comprehensive Environmental Response, Compensation, and Liability
Act, or Superfund (1980). Before 1970 the chemical industry had been essentially free to
manage its environmental impacts as it saw fit. By 1980 this freedom was gone; the
perception among chemical industry managers was that the industry was “run, not just
regulated, from State and Federal Agencies” (Hoffman, quoting Chemical Week editorial,
1995: 190). At the root of these new environmental laws was the public’s growing
suspicion about the chemical industry. The public viewed the chemical industry as the
nation’s leading environmental risk. Public opinion polling showed that a large portion
of the public believed the chemical industry had no self-control, did not listen to the
public, and did not take responsibility for its operations (Rees 1997). Problems worsened
significantly in December 1984 when a major accident at Union Carbide’s Bhopal India
plant killed thousands of people and injured tens of thousands.
3.1 Responsible Care, Chemical Manufacturers Association
CMA responded to the onslaught of federal environmental legislation with
stepped up lobbying efforts, but soon realized this response was inadequate. In August
1985 Union Carbide had another serious accident, this time from a facility in Institute,
West Virginia. Not long afterwards, when CMA polled its membership, it learned that
the number one or number two issue on executives’ minds was the public’s poor
perception of the industry. This poor perception was negatively impacting business.
When firms attempted to expand, they encountered fierce resistance from nearby
communities. Siting any waste management facility became nearly impossible except in
the most economically disadvantaged neighborhoods. Insurance costs for handling
chemicals and wastes were rising precipitously. And the prospect of more legislation
loomed. “A great many [people] believe[d] that the country would be far better off
without a chemical industry at all ” (Deavenport, 1993: 9), explained Earnie Deavenport,
President of Eastman Chemical.
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CMA moved to institute a program called Community Awareness and Emergency
Response (CAER). The goal of CAER was to establish an industry-wide policy of
openness with people living near chemical plants and provide CMA members with a set
of tools to engage the public. CAER represented a big step for CMA because the
prevailing view in the industry before Bhopal was that public concerns were irrational —
scientists ran the chemical industry, and their decisions would not be improved through
consultation with citizens.
While CAER was a significant step, CMA’s Public Perception Committee urged
the association to go further. Their public opinion polls showed that public distrust was
so intense that the industry would have to find a way to improve its performance, not just
its image. For guidance on how to do this the committee investigated a program of the
Canadian Chemical Producers Association called Responsible Care. CCPA had created a
set of principles and implementation guidelines several years earlier, and had taken the
usual step of requiring each of its members to adopt them or leave the association. In
October 1989 CMA’s board of directors adopted the Canadian program by unanimous
vote. “I believe that if industry doesn’t take the lead on this issue, government will. And
that’s not the solution we need,” explained Eastman Kodak CEO Deavenport
(Deavenport, 1993: 11).
Adoption of Responsible Care is required, as a condition of membership, for all
firms that participate in CMA. Adoption consists of two actions. First, the CEO of every
member firm must sign the Responsible Care guiding principles. Second, every member
must implement six codes of management practices: community awareness and
emergency response (CAER), pollution prevention, process safety, employee health &
safety, distribution, and product stewardship. Together, these codes contain more than
100 individual management practices.
The pollution prevention, process safety, employee health & safety codes address
environmental management practices within chemical manufacturing plants. The
distribution and product stewardship codes address the world beyond plant gates,
requiring members to ensure that their products are distributed and used without
damaging the environment. Industry statistics showed that the public’s greatest risk
15
exposure from chemicals occurred as products were transported. Chemical spills during
distribution were far more common than when chemicals were being manufactured. The
Responsible Care distribution code requires CMA members to audit distributors’ safety
and environmental programs, train distributors in environmental management techniques,
and discontinue business relationships with those who do not abide by Responsible Care.
To fulfill these requirements CMA members began to pressure firms that
distributed, used, or sold their products to develop environmental management practices
of their own, based on Responsible Care. It created a partners program in which nonCMA members can participate in the entire Responsible Care effort. Many of these
partner companies distribute CMA members’ products — they are truckload highway
carriers, barge lines, and railroads. In addition, CMA urged chemical distributors and
recyclers to develop their own environmental codes of conduct. In 1991, the National
Association of Chemical Distributors responded with a program of its own.
3.2 Responsible Distribution Process, National Association of Chemical Distributors
Nearly two-thirds of U.S. chemical production is concentrated in just 10 states.
While chemical manufacturing tends to be geographically concentrated, markets are
geographically dispersed, located in nearly every community that hosts some form of
manufacturing activity. As a result, distribution plays a key role in the industry. In 1997,
about 690 million tons of chemicals and products were shipped within the U.S. (BossongMartines 1999b).
Most chemical manufacturers do not consider distribution part of their business
activity and rely on the services of chemical distributors to ship, reformulate, and
distribute their products to end users. The National Association of Chemical Distributors
(NACD) represents the group of firms that provide these services. NACD’s 330 members
are a highly diverse group of companies. Many are small, with just 15 or so employees,
while some employ thousands of people. As shown in Table 4, even its largest members
are small by CMA standards. Only two CMA members hold memberships in NACD.
NACD staff members were present in the meetings where CMA members drafted
the Responsible Care distribution code. CMA members likewise played a role in the
16
development of NACD’s code for its members, Responsible Distribution Process. CMA
members provided input through NACD’s supplier advisory council, where they
reviewed drafts of RDP and gave comments. NACD established RDP as a condition of
trade association membership in December of 1991.
Table 4. Top ten North American chemical distributors (based on sales), 1995.
Sales in millions of dollars (Morris 1995).
Van Waters & Rogers
Ashland Chemical
Chemcentral
Soco Chemical
Ellis & Everard U.S.
Holland Chemical International
JLM Marketing
Harcros Chemicals
Great Western Chemical
Canadian Colors & Chemicals
1,630
1,220
750
500
440
323
224
197
170
103
3.3 Responsible Recycling, National Association of Chemical Recyclers
In October 1993 the National Association of Chemical Recyclers (NACR)
adopted Responsible Care’s ten guiding principles and set out to develop codes of
practices geared to members’ operations. This trade association has 15 members that
represent about 70% of the chemical recycling market. Two of these 15 members are also
members of CMA, and several belong to NACD. As they developed Responsible
Recycling, NACR consulted heavily with CMA, NACD, and SOCMA staff members.
Member firms are required to designate a Responsible Recycling coordinator, conduct
self-evaluations, submit periodic implementation progress assessments, and comply with
third-party audits. NACR has signed “mutual recognition” agreements with CMA and
NACD that state that the aims of their environmental codes are consistent. In addition,
NACR became a CMA partner association in 1997. To become a partner NACR had to
demonstrate to CMA that while the substance of its codes was different from Responsible
Care’s, the program addressed the full scope of the environmental, health, and safety
issues of its members, and that NACR provided a comparable level of oversight.
17
3.4 Coatings Care, National Paint and Coatings Association
The National Paint and Coatings Association shares many members with CMA.
While CMA members served as advisors as NACD developed RDP, they were directly
involved in the development of Coatings Care.
CMA members first briefed the NPCA board on the importance of implementing
a Responsible Care-type program in the late 1980s. CMA encouraged NPCA to join its
partners program. The NPCA board deliberated the issue for several years. In 1992 it
formally announced that it would develop its own program tailored to the specific needs
of its members. By 1994 an International Paint and Printing Ink Council had formed
made up of national trade associations from many countries, some of which had
operations in the U.S. This group urged NPCA to move forward developing its code.
Responsibility for developing Coatings Care was given to NPCA’s Industrial Coatings
Committee, on which many CMA members served.
While CMA, NACD, and NACR require participation in their codes as conditions
of membership, participation in Coatings Care is not required for NPCA members.
About 60% of NCPA members have joined the program. A priority for the next several
years is to involve more companies in the program. Large firms in the industry have
signed on, but many smaller firms do not yet see the business value of the program,
according to Stephen Sides who manages Coatings Care for NPCA. NCPA recently hired
a public relations firm to promote the program to members, emphasizing that Coatings
Care helps firms meet compliance obligations, enhances corporate image, and offers best
management practices.
In April 1997 CMA and NPCA signed an agreement acknowledging the mutual
benefits offered by their codes. A joint statement declared that members of both trade
associations are working toward the same goals. According to Sides, “the agreement
acknowledged that Coatings Care is an extension of Responsible Care. Responsible Care
companies doing business with Coatings Care companies can now assume that there is a
common commitment to an effective health, safety, and environmental program” (Gain,
1997: 68).
18
3.5 Responsible Care, Synthetic Organic Chemical Manufacturers Association
In April 1997 CMA and the Synthetic Organic Chemical Manufacturers
Association (SOCMA) signed an agreement allowing SOCMA to license Responsible
Care to its members. Previously SOCMA had Responsible Care partner status. By
signing the agreement with CMA SOCMA now assumes oversight of the program itself.
SOCMA’s 212 members are small and medium-size companies that manufacturer batches
of chemicals at a time, rather than continuously producing the same product line.
Membership overlaps heavily with CMA.
4. Strategies for Today’s Environmental Partnerships, American Petroleum
Institute
The oil and chemical industries in the U.S. have much in common. Both are large
emitters of toxic materials, based on the U.S. EPA’s toxics release inventory. Both are
subject to extensive environmental regulation. While the oil industry has not been
associated with human tragedy on the scale of Bhopal, its operations have devastated
wildlife and ecosystems. The massive oil spill from the Exxon Valdez oil tanker in March
1989 focused public attention on the hazards of the oil industry. Not only was the
reputation of the Exxon company damaged, the public perception of the entire industry
fell significantly, prompting an editorial in an oil industry trade journal to urge firms to
adopt a "group approach [toward building public trust] ... mean[ing] more than
companies' acting responsibly alone" (Oil & Gas Journal, 1990).
In addition to shared environmental impacts, the oil and chemical industries are
similarly structured. Both tend toward an oligopolistic structure, with a small number of
very large firms dominating the industry. Both have supported strong trade associations
with roughly comparable budgets.
On the surface the codes of environmental management practice developed by
CMA and the American Petroleum Institute (API) appear similar. The guiding principles
for CMA's Responsible Care program and API's Strategies for Today's Environmental
Partnerships are nearly identical. The programs were developed at roughly the same time
with the support of their industry's largest firms. But while Responsible Care is a
requirement for membership in CMA, STEP participation is discretionary. While CMA
19
has been active in overseeing members' Responsible Care implementation, API does not
keep track of which members have chosen to adopt the program. Rather than emphasize
the STEP environmental code, API has focused on providing direct environmental
services to members, particularly through the development of equipment standards and
reports on many technical aspects of industry operations.
News media attention devoted to the two initiatives reflects the different levels of
trade association emphasis. Chemical Week, one of the leading trade journals covering
the U.S. chemical industry, publishes Responsible Care stories regularly, and every year
one issue focuses in depth on this subject. Oil & Gas Journal, the comparable publication
for the U.S. oil industry, has published few stories about STEP since its inception.
According to Walter Retzsch, who administers STEP at API, the program may
soon be substantially revised to emphasize to a greater degree sharing best practices
among members and external communication.
5. Sustainable Forestry Initiative and the Environmental, Health, and Safety
Principles, American Forest & Paper Association
The forest and paper industry is a diverse business involved in the manufacture of
paper, paperboard, and wood products— products that use fiber or some form of fiber
resource as a raw material. Finding a dependable source of fiber has become more
complex in recent years. Fiber supply from federal lands has been increasingly curtailed
by federal environmental regulations. In June 1990 the U.S. Fish and Wildlife Service
ruled to list the northern spotted owl as a threatened species. This decision eliminated
timber harvesting from about nine million acres of land in the Pacific Northwest, the
owls’ habitat (Bossong-Martines 1999c).
In addition to the Endangered Species Act, the Clean Air and Clean Water Acts
have had a substantial impact on forestry companies. Compliance with federal and state
environmental regulations has required significant capital spending. Firms have been
required to add secondary treatment plants, control plant emissions, reduce the use of
elemental chlorine, and fulfill recycling commitments. Environmental spending has
20
accounted for about 14% of capital outlays made by the U.S. paper industry since the late
1980s, according to the U.S. Department of Commerce (Bossong-Martines 1999c).
The regulations regarding air and water quality standards for pulp and paper
companies recently grew more stringent under an EPA Cluster Rule. Capital spending
costs for the industry to comply with the rules have been estimated at $1.8 billion by EPA
and $2.6 billion by AF&PA. The Cluster Rule that was published was a less rigorous rule
than EPA had originally proposed. EPA’s initial proposed rule would have resulted in
capital compliance costs of $11.4 billion, according to AF&PA (Bossong-Martines
1999c).
Public perception of the forestry industry parallels in many respects its views
about chemical manufacturers. During the late 1980s and early 1990s CEO's of the largest
U.S. forest and paper companies commissioned extensive public opinion research to
probe public attitudes. The results were dismaying. Many people, about 55% of those
asked, believed the industry did not practice sustainable forestry. An even larger
percentage found the industry was doing a "poor job" in its efforts protecting wildlife,
conserving resources, protecting air quality, and protecting lakes and steams (AF&PA,
1998b). AF&PA board members, like their counterparts at CMA, decided that public
relations alone would not dissipate these concerns. "Credibility can be enhanced only if
we have clear behavioral changes and our message communicates this change” (AF&PA,
1998b: 10) Both trade associations maintain that they have established programs that
demonstrate performance improvements.
At the same time, public interest organizations and European governments were
mounting campaigns to pressure the industry to improve its practices. These groups were
pushing programs to certify that timber was taken from sustainably managed forests. In
1994 the Forest Stewardship Council launched a process for accrediting third-party
certifiers of sustainable forestry claims. Austria established its own quality mark for
timber from sustainable sources, and the Dutch government banned the import of timber
from unsustainably managed forests (BATE 1994). The Canadian Standards Association
and the International Organization for Standardization (ISO) both announced plans to
develop a standard for sustainable forestry.
21
"The industry was trying to look ahead," according to AF&PA staff member Rick
Cantrell. "We wanted to find the high ground" in its positioning with external
stakeholders. To address low public opinion and campaigns by external groups, AF&PA
commissioned more opinion research, which showed that "sustainable forestry" was a
term the public found attractive:
We tested many terms such as ecosystem management, sustained yield and
multiple use. The research showed sustainable forestry was most
compelling as an expression of our commitment to the kind of forestry the
public wants. The research also indicated our current record of
reforestation and replanting helps legitimize the industry and our
commitment to sustainable forestry. Sustainable forestry provides an
excellent communication framework for proof-of-performance messages
(AF&PA, 1998b: 5).
While AF&PA's Forest Task Force was developing its sustainable forestry
program, its environmental task force was developing a separate set of principles aimed at
environmental health and safety practices. Two public issues triggered the second trade
association activity: demand for increased recycling and use of recycled fiber in paper
manufacture, and concern over dioxin emissions from paper mills.
Former AF&PA staff member Gloria Bergquist explains that the concerns of
communities living near paper mills are different from those of the national
environmental advocacy organizations. Communities become concerned when paper
mills emit foul odors, or when they detect color or foam in the mill effluent. National
advocacy groups focus on percentages of recycled content in paper, the presence of
detectable levels of dioxin in water bodies and wildlife, and the destruction of endangered
species habitats. Individual companies can enact programs to improve the performance
of their facilities, but acting on their own they can do little to address larger public
concerns. For example, AF&PA members believe they have already addressed the dioxin
problem. Emissions have been virtually eliminated to just two ounces a year for the
entire industry, according to Bergquist. Yet public concerns persist.
An additional impetus for action has come from some AF&PA customers.
McDonalds, a major paper consumer, has included a question about dioxin emissions in
its supplier qualification checklist. Several of these suppliers are AF&PA members.
22
Bergquist occasionally receives calls from customers who have questions about chlorinefree paper. The dairy industry has asked about chlorine content in milk cartons.
Bergquist said that none of these inquiries amounts to what she would call "pressure"
from customers. Purchasing decisions are made of the basis of cost and quality, not
environmental performance. But the fact that these questions are being asked at all has
been a factor in AF&PA’s decision to develop its environmental, health, and safety code.
Like CMA, AF&PA has found it necessary to extend its code beyond its
membership. Few AF&PA members employ their own logging crews. Logging
companies operate independently. Yet protecting sensitive ecosystems and reducing
large-scale clear cutting are largely the responsibility of loggers. So AF&PA has
developed extensive outreach programs to train loggers about its sustainable forestry
program, setting the goal of training all loggers supplying AF&PA member mills by
2000. According to AF&PA, in 1998 trained loggers harvested 85% of the timber going
to member-company mills. The American Loggers Council voted to adopt the principles
of the Sustainable Forestry Initiative in 1996. In addition, because almost 60% of
timberland in the U.S. is owned by non-industrial private landowners, AF&PA has
developed an extensive program to involve private landowners in forestry management.
6. Encouraging Environmental Excellence, American Textile Manufacturers
Institute.
The critical challenge facing the textile industry since the 1970s has been the
import of cheap textile products from developing countries. The major work of ATMI
has been to fight for import quotas, tariffs, and trade agreements favorable to the industry.
It has enacted numerous campaigns to build public support for textiles and clothing
manufactured in the U.S. — its “crafted with pride in the U.S.A.” program, begun in
1983, is its longest sustained promotional effort (Morrissey 1999).
During the 1980s ATMI broadened its advocacy efforts to include labor and
environmental regulatory issues. One of the first actions of the newly formed
Occupational Safety and Health Administration was to promulgate cotton dust and noise
standards. ATMI challenged these standards in court. ATMI developed a "Work
Practices Standard for Raw Cotton Dust" based on personal protection and medical
23
surveillance. The Labor Department rejected this approach, insisting instead on
engineering controls. In addition, ATMI began a push to polish the industry's image.
"The latter was important," explains a new ATMI text published in commemoration of
the association's 50th anniversary, “to convince government officials and the so-called
'opinion leaders' that the textile industry was a valuable national resource well work
saving" (Morrissey, 1999: 21)
During the 1990s the “import crisis” (Morrissey, 1999: 35) facing the industry
remained at the top of ATMI’s legislative agenda. The ATMI board issued a renewed
call for laws to control the growth of imports. In September 1990 more than 3,000 textile
workers demonstrated in Washington in support of bill establishing a global quota system
for textile and apparel imports.
Encouraging Environmental Excellence (E3) was launched in March 1992 by a
group of ATMI members that considered themselves environmental leaders. They
devised E3 to publicize their environmental accomplishments. They hoped to use the
program to distinguish their products from imports that might be produced under less
environmentally responsible conditions. In addition, customers of the industry,
particularly The Gap, Eddie Bauer, and Levis, had begun to ask questions about the
environmental performance of their suppliers, some of whom are ATMI members. E3
founders believed that demonstrating environmental responsibility to these customers
might help, over time, to strengthen their business relationships. About one-third of
ATMI’s membership participates in the program.
Quest for the Best, a program that addresses occupational health and safety
practices in the industry, was implemented by ATMI one year after E3. The two
programs share many features — roughly the same group of firms is involved, and a
similar program of trade association oversight has been established. Quest for the Best
grew out of an annual safety award program established by ATMI in 1981. The eightpoint “quest” program calls on companies to develop safety and health programs, set
performance objectives, measure progress, and educate workers.
24
7. Institute of Nuclear Power Operations
This paper focuses on the promulgation of environmental codes of conduct in
manufacturing sectors. Discussion would not be complete, however, without mention of
the nuclear power industry’s code of practice. In 1979, in direct response to the Three
Mile Island accident, the nuclear power industry executives created the Institute of
Nuclear Power Operations (INPO). INPO employs about four hundred people who
“develop standards, conduct inspections and investigate accidents” (Rees, 1997: 478) at
nuclear power plants. Since 1986 INPO has categorized operating practices in nuclear
power plants according to a one to five numerical ranking. If an INPO member utility
operates a plant rated 4 or 5, the INPO board of directors calls for a meeting with the
member utility board. (Five is the lowest ranking, called “marginal”.) In cases where
INPO has not been satisfied with the response of low-ranked utilities, it has alerted the
Nuclear Regulatory Commission to the problems. According to Joseph Rees, who has
published a detailed study of INPO’s role (Rees 1994), the NRC has been an important
“background presence” that has “in a subtle but unmistakable way strengthened INPO’s
hand” (Rees, 1997: 518).
8. Emerging codes
Our survey uncovered two trade associations in the process of developing codes
for their members. The National Association of Metal Finishers, a group of
approximately 900 small plating shops, is considering becoming “the first industry in the
small business side to develop a code of environmental conduct.” According to Christian
Richter, regulatory affairs director for the trade association, NAMF members represent
“the most heavily regulated small manufacturing sector.” A code of environmental
management practices based loosely on Responsible Care would help to improve
environmental performance and demonstrate to regulators the industry’s good faith.
NAMF members have participated in the U.S. EPA’s Common Sense Initiative to
promote institute “cleaner, cheaper, smarter” environmental regulations. Its goal is to
promote revisions to EPA rules under the Resource Conservation and Recovery Act
(RCRA) which, from the perspective of NAMF members, discourage metals recycling.
25
The American Furniture Manufacturers Association is developing an
environmental management system for its industry based loosely on Responsible Care,
Coatings Care, and E3. Adoption of the code is discretionary. Members of this
association tend to be small businesses run by people with little environmental
management expertise. Andy Counts, the environmental staff person at AFMA, says that
members have relied on him to answer their questions about regulatory compliance and
performance improvement. He has developed a website that includes information about
the environmental regulations his members are subject to, written in straightforward
language. The new code of practice is intended to help members achieve cost savings
through stronger environmental management. Counts explains that opportunities for
improvement are significant — in 1995 and 1996 the furniture sector achieved that
highest rates of reductions of TRI chemicals of any industry.
9. Analysis of Industry Participation
Of the thousands of trade associations that operate in the U.S., only a handful have
promulgated environmental codes. What factors explain the emerging pattern of
adoption? Industry structure provides a partial explanation. As shown in Table 5, codes
have generally been developed by large trade associations — organizations with large
budgets and staffs. These trade associations represent industries dominated by a large
firms.
The exception are the small trade associations in the chemicals and related industries that
have developed codes at the urging of CMA. These organizations are strongly influenced
by their CMA suppliers. In many cases CMA members sit on the boards of these smaller
trade groups and are often their largest, and most influential, members.
Table 5. Comparison of operating characteristics of selected U.S. trade associations (Encyclopedia of
Associations 1999).
Trade Association
Operating Budget
Number of Staff Members
(1998), Millions of
Dollars
American Automobile Manufacturers
30
100
Association
American Electronics Association
NA
114
American Forest & Paper Association
30
125
American Furniture Manufacturers Association 3
17
26
American Petroleum Institute
American Textile Manufacturers Institute
Chemical Manufacturers Association
Electronic Industries Alliance
National Association of Chemical Distributors
National Association of Chemical Recyclers
National Association of Metal Finishers
National Paint and Coatings Association
Pharmaceutical Manufacturers Association
Steel Manufacturers Institute
Synthetic Organic Chemical Manufacturers
Association
40
NA
41
50
1.4
NA
.75
6
NA
.65
25
200
40
300
260
7
2
6
40
80
4
45
Our survey shows that codes are promulgated in industries facing substantial
regulatory pressure. An aggressive regulatory environment appears to be essential both to
the promulgation of codes as well as the development of measures to observe and
sanction firm performance. Members of the National Association of Metal Finishers now
perceive that EPA may be willing to entertain a more flexible approach toward RCRA
enforcement; this perception has fostered interest in developing a code in order to
demonstrate good faith.
In addition to regulation, a number of other factors appear to have spurred some
trade associations to develop environmental codes. The American Forest & Paper
Association initiated SFI in response to the Forest Stewardship Council’s program to
certify sustainable forestry claims. AF&PA chose to initiate its own code, based on
members’ understanding of their own needs and capabilities, rather than be subject to a
program developed by stakeholders external to the industry. The fact that U.S. textile
manufacturers face intense competition from developing countries has prompted some
U.S. companies to distinguish their manufacturing and environmental practices through
E3 and Quest for the Best. Companies participating in these codes are attempting to send
the message to consumers that higher costs for their products reflect environmentally
sound operations and fair labor practices.
What can explain the absence of codes in the pharmaceuticals, electronics, and
automotive industries? Each of these industries is associated with significant
environmental impacts and is subject to complex environmental regulations. The case of
27
the pharmaceutical industry is particularly striking. Pharmaceuticals are nothing more
than chemicals specifically designed for human and other animal intake. The
pharmaceutical industry has experienced its share of widely publicized problems arising
out of unintended consequences. A recent scientific study found that more than 100,000
people die each year in the U.S. as a result of the side effects of drug therapies in (Grady
1998). Yet the public’s perception of the pharmaceutical industry has little of the
negative quality that characterizes its view of the chemical industry, and much less
controversy is associated with the introduction and maintenance of drugs than of
chemicals.
While pharmaceutical, electronics, and automotive trade associations are active
lobbyists on environmental policy, they have left the promulgation of environmental
policies and management practices to their individual members. According to Tom
White of the Pharmaceutical Manufacturers Association, the pharmaceutical industry has
no plans to implement an industry code because it would not fulfill a perceived need of its
members. David Isaacs of the Electronic Industries Alliance explains that electronics
firms view themselves as environmental leaders. Many of its members participate in
EPA’s Energy Star program, under which EPA provides a product label to personal
computers that meet its criteria for energy efficiency. Many also have registered to ISO
14001, the international environmental management standard. These individual
approaches better meet the needs of members than a collective program. In addition,
Isaacs emphasizes that EIA’s members are diverse, in terms of products (consumer
electronics, telecommunication, semiconductors, components, computers, satellites, and
defense electronics) and in terms of customers. A single approach for such a diverse
membership would not be practical.
This discussion of the evolution of codes of environmental management practice
suggests that firms in the chemicals, forestry, and textile industries have faced a particular
threat not known by firms in other sectors. Firms in these industries have faced threats to
their legitimacy — their right to exist (Gale and Buchholz 1987). This threat is most
clearly seen in the case of the chemical industry. This industry’s products (chemicals far
removed from consumer end users) and its large environmental releases have generated
28
public suspicion. All aspects of the industry, from producers to distributors to recyclers,
have been tainted by the same negative public view. The forestry industry has
experienced a similar problem based on the public’s perception of the environmental
devastation associated with its operations. The textile industry’s legitimacy crisis has
come from a different source: overseas competition.
Trade associations have developed environmental codes in order to strengthen the
legitimacy of the collective, that is, society’s acceptance that the industry’s goals,
purposes, and methods are consistent with its own. Because the public does not appear to
question the basic rights of the pharmaceutical, electronics, and automotive industries to
exist, collective programs to affirm what they stand for and how they operate have not
been necessary.
10. Environmental objectives of trade association codes
A key mechanism by which trade association codes of practice change behavior is
by establishing environmental objectives for member firms. Most trade association codes
have common objectives: continuous improvement in environmental performance,
pollution prevention, product stewardship, and community participation. However, areas
of emphasis differ. Table 6 compares the environmental objectives of trade association
codes.
Responsible Care is a comprehensive program, addressing many aspects of the
chemical product life cycle. A substantial area of emphasis has been seeking and
incorporating public input with respect to chemical manufacturing operations. Many
chemical company managers view public participation as the “whole purpose of
Responsible Care” (Howard, Nash et al, 1999: 9). In late 1998 CMA revised the
Responsible Care guiding principles, adding language that calls on firms to move toward
“no accidents, injuries, or harm to the environment,” and “publicly
report[ing]…environmental performance.” These new requirements extend what has been
Responsible Care’s emphasis since its inception, to “develop and produce chemicals that
can be manufactured, transported, used and disposed of safely”, “make health, safety, and
the environment critical considerations for all new and existing products,” and “operate...
29
plants...in a manner that protects the environment,...employees and the public” (Chemical
Manufacturers Association 1998b).
Responsible Distribution Process emphasizes to a greater degree procedures to
safely load and store chemicals, procedures for investigating accidents, and following
manufacturers’ recommendations for handling chemicals — aspects of the distribution
phase of the product life cycle. In addition, RDP calls for regulatory compliance. RDP
contains 32 management practices, while Responsible Care includes 106 (National
Association of Chemical Distributors 1997).
The Coatings Care program defines four areas of responsibility: transportation and
distribution, product stewardship, manufacturing management, and community
responsibility. To date, NPCA has developed implementation guidelines for the first two
areas only. These guidelines require, among other things, that companies make protection
of health, safety and the environment “an early and integral part of the organizational
planning process,” and provide information on the safe use and disposal of industry
products to customers (National Paint and Coatings Association 1996). NPCA hopes to
finish guidelines for the manufacturing and community responsibility codes by 2000.
NPCA’s decision about which areas of responsibility to develop first reflects its close
business ties with CMA. Coatings Care’s product stewardship guidelines are designed
explicitly to help CMA suppliers meet the requirements of the Responsible Care product
stewardship code.
AF&PA’s Sustainable Forestry Initiative calls on firms to meet the needs of the
present without compromising future generations. In this respect it is unique; none of the
other trade association codes explicitly calls for sustainable business practices. SFI
requires that members promote environmentally and economically responsible practices,
improve forest health and productivity, and manage certain forests to protect their special
qualities. Each AF&PA member must develop its own program to implement these
policies and inform all employees, loggers, and other raw material suppliers of its
intention to comply. Compliance with the Clean Water Act requirements for forestland
and regulations concerning the use of fertilizers and other forest chemicals is also
mandatory. In addition, members must establish riparian protection measures, promote
30
wildlife habitat diversity, and improve the visual quality of harvested forests. They must
report to the trade association on their harvesting and reforestation methods and the
amount of funding provided for forest-related research (American Forest and Paper
Association 1998c).
AF&PA’s Environmental, Health, & Safety code includes many of the same
objectives as Responsible Care. It emphasizes sound product development, performance
monitoring, employee training, and community outreach. In addition it calls on
companies to pursue energy conservation and utilization of alternatives to fossil fuels
(American Forest and Paper Association 1998).
E3 companies are required to comply with regulations, develop corporate
environmental policy and annual goals, and maintain an outreach and education program
for employees, customers, suppliers, and community. They must pursue a commitment to
pollution prevention (American Textile Manufacturers Association 1997).
A defining feature of all trade association codes is the discretion provided to
members to meet code commitments in their own way, at their own pace. Importantly,
with the exception of the requirement in some codes to achieve regulatory compliance,
codes do not set performance standards. For example, CMA’s distribution code requires
that companies “implement...chemical distribution risk reduction measures that are
appropriate to the risk level” (Chemical Manufacturers Association 1997) Companies
use their own judgment about what constitutes an “appropriate” response. When a trade
association asks a member to self-audit progress, it is asking the member to verify that it
has developed a response to each code requirement. Often firms are asked to indicate
their stage of implementation, usually on a scale from one to six with one being “no
action” and six being achieved when the practice has been implemented and the firm is
considering ways to strengthen it. The substance of the response is left to the individual
firm.
Table 6. Comparison of environmental objectives of selected codes of environmental management
practice.
Requires
Explicitly calls
Requires
Requires
Requires
regulatory
for sustainable
continuous
product
community
compliance
business
improvement in
stewardship involvement
practices
environmental
31
Responsible Care
Responsible
Distribution
Process
Coatings Care
Responsible
Recycling
STEP
SFI
Encouraging
Environmental
Excellence
management
practices
























11. Programs to transfer best practices
In addition to changing behavior through promoting specific environmental
objectives, industry codes change behavior through diffusion of environmental
management techniques. All of the trade associations that have developed codes have
instituted programs to share environmental management practices among members. Such
programs offer opportunities for members to compare their commitments and may
impose pressure to do more on managers of firms that are falling behind.
CMA organizes hundreds of meetings annually where approaches toward
Responsible Care implementation are discussed. In addition to national-level meetings,
many CMA member senior managers participate in “mutual assistance networks”, that is,
“direct company-to-company information exchange… so that companies learn from each
other’s experiences” (Chemical Manufacturers Association, 1997: 17) Peer pressure
generated through such direct exchanges may be significant because senior managers
meet in their own communities and interaction may be personal as well as businessrelated.
AF&PA and ATMI also organize conferences and workshops where members
address topics such as environmental auditing, management systems, and crisis
management. Typically such meetings attract corporate environmental managers, plant
engineers, human resources personnel responsible for training, and public relations staff
members.
Interaction of this sort is more difficult for trade associations whose members are
32
predominantly small firms. CMA firms, being large organizations, usually divide up
responsibility for implementing Responsible Care among several corporate managers and
several people in each plant. In contrast, generally one person handles implementing
NACD’s RDP on their own, usually in addition to other significant job responsibilities.
The job title of the person responsible for RDP is often warehouse manager, operations
manager, or president. Recognizing that people with these responsibilities are unable to
be away from their jobs for long periods, NACD offers an annual workshop for people
with significant RDP responsibilities. NPCA’s Sides believes that organizing meetings to
share best practices developed through Coatings Care is not feasible at this time. The
managers whom he would want to engage in such training — plant managers, quality
directors, and technical directors — rarely participate in NCPA events due to
commitments at their facilities.
12. Authority structures
Trade associations employ a variety of mechanisms to ensure compliance with
code requirements. All of the trade associations require members to self-audit
conformance. Most, but not all, require that each member submit a self-audit of its
progress implementing code requirements. A distinguishing feature is whether trade
association staff or a third party consultant reviews the self-audits. AF&PA and ATMI
staff members review member companies’ self-audits themselves, while CMA and
NACD have hired consultants for this purpose. This distinction is important because
consultants are generally hired to ensure the confidentiality of audit results. If staff
members review company progress, they know who is falling behind. Julie Fleming, who
administers the E3 program at ATMI, reports that she usually finds about 15% of the
company self-audit reports she reviews to be deficient in some way — information is
missing, or goals are not sufficiently different from the previous years’. In such cases she
contacts the company herself to request revisions. Fleming could recall only one case in
which an E3 company failed to respond to her requests to her satisfaction. She referred
this case, without revealing the identity of the firm, to the E3 Council (the group of firms
33
that oversees the program), which determined that the company response was in fact
adequate.
None of the trade associations publishes performance profiles of individual
members. CMA and AF&PA prepare performance reports based on information
aggregated from all members. They share this aggregated information on trends in toxic
releases and other environmental performance measures with external advisory
committees and other stakeholder groups. Notably, CMA recently began the practice of
revealing the relative performance of lagging firms to its Responsible Care committee. A
group of board members now knows the identities of firms that are slow in implementing
their Responsible Care commitments. According to Dick Doyle, CMA Vice President for
Responsible Care, “the board and staff have spent a lot of time and effort working directly
with these companies to help them move ahead. We lost some companies in the process”
(Nash, 1998: 12). Conceivably these lagging firms have been embarrassed through
shaming before their peers. None of the other trade groups reveals the names of its
poorer performers.
Several of the codes utilize external organizations to verify compliance, in a
variety of roles. NACD and NACR require third-party verification that members have
developed environmental policies consistent with code requirements. NACD has hired
Underwriters Laboratories (UL) as its verifier, while NACR uses Advent Environmental.
NACD members must mail in their policies to UL, which reviews them to ensure that
policies have been established and that they are appropriate given the firm’s business
activities. If UL is not satisfied with a firm’s policy, it contacts the firm directly. NACD
staff and board members are not involved. As a new initiative, NACD will soon require
that all members undergo on-site management systems verification by Science
Applications International Corporation. This review will go beyond UL’s document
verification by ensuring that code management practices are actually in place. In
addition, NACD will soon offer, on a discretionary basis, site class verification for
members that distribute materials that are particularly hazardous. Chemical
manufacturers will pay the costs of site class verification.
While NACD is the only organization that requires members to submit to third
34
party review, CMA and AF&PA members can choose to undergo a management systems
verification. Approximately 80 CMA members have had their management systems
checked to be sure they are consistent with Responsible Care. CMA has hired a private
consultant, Verrico Associates, to handle the verification process. Verrico assembles a
“verification team” made up of chemical industry managers and selected external
stakeholders. CMA requires that the team include a community participant. The team
interviews company personnel that have been assembled into panels that combine
functional areas. For example, a panel of managers from risk assessment, research and
development, and sales might be brought together and asked questions concerning the
company’s product stewardship activities. CMA’s protocol for management systems
verification lists the questions each panel is to be asked. The panel responsible for
product stewardship activities, for example, is asked “How does your company assess risk
for existing products?” and “How do you track the performance of your customers and
review it with them?” as well as many other questions. The verification team also walks
around the plant, randomly interviewing employees, and talks with facility neighbors,
suppliers, distributors. Verrico Associates prepares a report of “findings and
opportunities” identified through the verification. This report is “owned” by the
company, which may or may not choose to share it with the community representative on
the team. Many companies have chosen to share their verification results. Sixteen
companies have published their verification reports on their websites.
AF&PA has chosen a different process for management systems verification.
While CMA has contracted with a single firm to handle verification for its members,
AF&PA companies have several options. A company may choose to internally assess its
conformance to SFI, or hire a third party certifier. Customers may also conduct the
verification. To date, about ten companies have had their systems reviewed. AF&PA
shares with CMA the policy that all verification reports belong to the company.
Companies are not required to submit the reports to the trade association.
Two trade associations, NACD, and AF&PA, report having expelled members for
non-compliance with code requirements. After the first year of the program, in 1992,
NACD canceled the memberships of several companies that failed to submit their first
35
self-assessments. The majority of these firms later rejoined NACD after complying.
Fifteen AF&PA members left the trade association when the Sustainable Forestry
Initiative was adopted in 1996. Ten additional firms have resigned citing SFI as a reason.
It is AF&PA’s policy not to reveal the names of these companies. While CMA has not
officially asked any of its members to leave the association for failure to implement
Responsible Care, it has targeted poor performers and required them to develop action
plans. Such pressure has caused a small number of companies not to renew their CMA
memberships. Table 7 summarizes the authority structures used by trade associations to
ensure code compliance.
Table 7. Authority structures established by trade association codes
TA requires
TA tracks
TA reveals
code adoption
members’
individual
as condition of
progress
performance to
membership
toward code
board
implementation
Responsible



Care
Responsible
Distribution
Process
Responsible
Recycling
Coatings Care
STEP
SFI
E3







Third party
verifies
compliance
TA history of
expulsion of
members for
noncompliance
Voluntary
Required

Voluntary

CMA, NACD, NACR, and AF&PA require adoption of their codes as a condition
of trade association membership. NPCA, API, and ATMI have made their codes
discretionary. ATMI publishes a list of the firms that participate in E3, but NPCA and
API do not. Neither NPCA nor API requires firms to report on their progress. These
trade associations provide no oversight of firm implementation. As noted earlier, the
chemical and petroleum industries are similarly structured with large firms dominating
the industries. The guiding principles of Responsible Care and STEP are nearly identical.
These similarities make the different roles of CMA and API with respect to oversight
particularly striking.
36
13. Discussion
This review of the emergence of trade associations as agents of environmental
performance improvement suggests conditions that foster the development of this type of
trade association activity. These conditions are articulated below. The first four
conditions address the political and business context in which the trade association
operates. The final condition addresses the resources available to the trade association.

Codes are more likely to emerge in heavily regulated industries. Relief from further
regulation is a strong incentive to action. Regulation is itself a sign that citizens and
government perceive that industry lacks self-control, cannot be trusted, or is
inherently unsafe. Codes of environmental management practice represent industry’s
collective effort to demonstrate responsibility to critical public audiences, regulators
in particular. Trade associations will formulate codes only when the political
environment is perceived to be of high strategic salience. Otherwise the benefits of
this activity do not exceed perceived costs.
Furthermore, uncertainty as to the potential severity of government regulation may
be positively related to the stringency of the codes trade associations adopt.
Recent EPA programs to develop “cleaner, cheaper, smarter” environmental
regulation may encourage trade associations to focus attention on code activities.
Trade associations in highly regulated industries may view codes as consistent with
this EPA goal.

Codes are more likely to emerge in commodity industries where collective identity is
stronger than the name recognition of individual firms. Many of the industries that
have developed codes do not interact directly with the consuming public. They sell to
other firms that process their product into something else. The ultimate consumer
may be many steps away. Industries that manufacture commodities that require
further processing before sale to end-users tend to assume a collective identity. The
problems of one company color public perception of the entire industry. Therefore,
industries that do not sell directly to the public will be more likely to develop
37
environmental codes, which are intended to improve the public image of the industry
as a whole.

Codes are more likely to emerge in industries dominated by large firms. Industries of
large firms will be more likely to establish codes than industries made up of many
members of small size. These large firms internalize a large portion of the collective
reputation of the industry (Olson 1965). Large firms are more visible and therefore
held responsible for the behavior of the collective. Also, large firms have sufficient
resources to cover the relatively high fixed costs of code development.

The existence and power of an independent trade association that can carry out the
code is positively related to the likelihood that such a program will develop. Trade
associations with relatively large numbers of staff members, large budgets, and active
committees in areas related to environment, health, and safety have the institutional
resources necessary to develop and monitor code activities.
These conditions help to explain the contexts in which codes are likely to emerge.
But what are the chances for codes to actually change the behavior of firms that
participate? To return to the question posed earlier, do codes of environmental
management practice constitute policy-shaping for the trade associations that take part?
As the promulgators and enforcers of these codes, do trade associations serve as semiautonomous entities, exerting control over members? The answer, based on research
presented in this paper, is ambiguous.
As argued above, a primary mechanism trade associations use to change the
behavior of member firms is to establish environmental objectives. These objectives
include regulatory compliance, continuous improvement, community participation,
product stewardship, and sustainability. Ambitious objectives, if adopted and taken
seriously, require managers to establish new practices, allocate more resources, and
assign new responsibilities. Are the environmental objectives established by trade
association codes ambitious, or do they simply formalize existing practice?
The goal of regulatory compliance, embraced in several codes, is a minimal
objective for business. The objective of continuous improvement in environmental
38
performance, while positive, lacks definition. Virtually any activity could satisfy this
objective. Neither compliance nor continuous improvement constitutes an ambitious
environmental objective. However the requirement for product stewardship appears to be
fostering new activities and responsibilities. CMA, for example, has worked with trade
associations representing other phases in the chemical product life cycle to develop codes
of their own, based on Responsible Care. CMA members have initiated a new program
to oversee distributors’ implementation of Responsible Distribution Process. AF&PA’s
goal that members should only buy timber harvested by trained loggers led to the
formation of the American Loggers Council. Thus, AF&PA’s Sustainable Forestry
Initiative has institutionalized training programs, led to a new organization, and fostered
sustained and cooperative interaction between loggers and mills.
CMA and AF&PA have undertaken ambitious product stewardship programs
because they have found that their collective identities extend beyond their memberships.
They have developed an interlocking network of shared responsibility among a broad
spectrum of associations and firms. It is important to note, however, that these new
activities and responsibilities fall mainly on suppliers to and distributors of the
manufacturing firms that belong to these associations.
Trade associations exert authority by monitoring and sanctioning firm
environmental performance. However, the review of authority structures presented in this
paper shows that trade groups are generally reluctant to take action against recalcitrant
members. Trade associations take pains to conceal individual performance — by hiring
consultants to review audit results and allowing firms to “own” the results of their
verifications. While mechanisms to monitoring performance are growing, trade
associations have shown little interest in using information about performance to identify
and sanction lagging firms.
Recent developments suggest that trade association codes of environmental
management practice are spreading and becoming stronger. CMA has begun to reveal the
names of its poorer performers to a group of staff and board members, and NACD has
recently moved to strengthen its program for external verification. These and other
developments could significantly strengthen trade association authority.
39
14. Conclusion
Policy-shaping is an unusual activity for trade associations, which generally exist
to service the needs of their members, not control their behavior. By establishing codes
of environmental management practice, a handful of trade groups have moved tentatively
into this realm. At this point, trade association codes of environmental management
practice serve primarily as mechanisms by which firms take credit for programs already
in place. Codes help to formalize and standardize existing practices. This observation is
consistent with Galambos’ conclusions with respect to policy-shaping associations in the
late 1920’s. Galambos observed that trade associations were unable to enact policies
without the support of more than a majority of members. This constraint made it difficult
for these groups to advance ambitious programs. Little has changed for trade associations
today that attempt to change the behavior of their members.
A trade association’s ability to establish and exert authority varies in accordance
with its industry context. CMA and AF&PA have been the most successful in
establishing a policy-shaping role, particularly in the area of product stewardship. These
trade groups represent industries that the public holds in low regard, and have been
subject to heavy environmental regulation. Codes of environmental management practice
should therefore be viewed as an adjunct to traditional regulation, not an alternative. The
threat of command and control regulation, always in the air for industries operating
without a strong foundation of public legitimacy, appears to be the primary source of
authority for trade groups attempting to improve the environmental performance of their
members.
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Footnotes
i
We conducted our survey in the following manner. Encyclopedia of Associations
(Encyclopedia of Associations 1999) is an extensive directory of trade associations,
categorized by industry. We selected 14 industries that are active in manufacturing:
aerospace, automobile and truck manufacturing, construction materials, chemicals and
related manufacturers, metal finishing, mining, textiles, electronics, forestry, paper,
petroleum, pharmaceuticals, and primary metals. From among these categories, we chose
about 110 trade associations at random to pursue in our search for codes of environmental
management.
Our first step in contacting the aforementioned trade associations involved gathering
information from the World Wide Web. In some cases, we located environmental
guidelines in their entirety displayed on the web. In other cases, we acquired e-mail
addresses and phone numbers of individuals who we would later be in touch with. At this
point, we created a simple database that contained the name and industry category of the
trade association, as well as any contact information we were able to obtain from the
World Wide Web.
We created a survey, which we sent out over e-mail to approximately 75% of the trade
associations we intended to contact. The survey consisted of three short questions
regarding the existence of an environmental management code for member firms, how we
might acquire more information about any such code, and other trade associations in the
same industry that might have undertaken a code of environmental management.
43
Within the first two weeks, we received e-mail responses from many of the associations.
As an alternate means to gather data, we began to contact by telephone the trade
associations that we had not yet heard from. In the end, we received answers to our
queries from about seventy percent of the trade associations we had initially set out to
contact. In addition, we were given the names of about ten other trade associations that
might contribute to our study, and we added those to our database as well.
Percentages represent lobbying expenditures on all issues, not just environmental issues.
A breakdown on lobbying expenditures by issue area is not available.
ii
44