We examine whether and how foreign environmental standards influence global sourcing decisions. Taking a question-driven approach, we find a negative association between the stringency of a country's environmental standards and its share in US imports for 82 manufacturing industries across 77 countries between 2006 and 2016. This pollution haven effect holds not only for sourcing from owned foreign operations (offshore integration), but also for sourcing from unrelated third parties abroad (offshore outsourcing), and is stronger in industries with high toxic emissions and low technological intensity. These results are robust across alternative measures of environmental stringency and to using the Kyoto Agreement as an instrumental variable. These findings shed new light on how firms use global sourcing, and especially offshore outsourcing, to arbitrage across institutional environments. 

For video abstract:https://www.youtube.com/watch?v=t23yqacdXcM
Main data sets: US Census data


2. Robbing Peter to Pay Paul: The impact of California's cap and trade program on toxic emissions (with Aseem Kaul, University of Minnesota) - Published at Management Science

This research project stems from my doctoral dissertation. It focuses on a comprehensive empirical analysis of the outcomes following the implementation of a cap-and-trade program in California. The findings reveal a dual impact - while the program successfully reduced GHGs emissions, an unintended consequence emerged. "Treated" California facilities, in their efforts to reduce GHGs emissions, inadvertently increased toxic emissions. This effect was more pronounced for relatively less harmful toxic chemicals and for facilities lacking prior investments in source reduction technologies. Additionally, the intensity of this outcome was more pronounced in facilities not closely monitored by regulators or local NGOs, consistent with it being the result of strategic firm actions. 

The study was featured at Singapore Green Finance Centre and major Korean media outlets, including 매일 경제, 헤럴드 경제. 

Main data sets: US EPA Greenhouse Gas Reporting Program (GHGRP) and Toxic Release Inventory (TRI)


3. Global sourcing of green products (with Heather Berry, Jasmina Chauvin, Georgetown University and Lance Cheng, University of Liverpool) - forthcoming at Journal of International Business Studies

This research project is an extension of my earlier project (Berry, Kaul and Lee 2021). In this research project, we examine how global sourcing strategies for green products are affected by the stringency of country environmental standards and green technology development within a country. We find that green products are more likely to be sourced from countries with higher environmental standards and advanced technology, while non-green product sourcing patterns align with prior research, which  emphasizes the appeal of lower environmental standards and cost-efficienty considerations.  We argue the divergence in the sourcing patterns is due to the importance of observable and credible sustainable manufacturing practices throughout firm global value chains and unique knowledge requirements for green products. By doing so, we suggest an important boundary condition for the pollution haven effect in global sourcing. 

Main data sets: UN Comtrade, UNEP Green Product List, OECD Green Patents


4. Corporate political activities and firm's carbon emissions  (with Abu amin, Miran Hossain and Samir Saadi) - Published at Journal of Corporate Finance

This study investigates the relationship between corporate political activities (CPA) and a firm's carbon emissions level. We test two competing hypotheses suggesting that political connections either incentivize firms toward stricter environmental standards through reputational pressures or enable higher emissions via regulatory leniency and compromised governance. Utilizing a large sample of U.S. firms, we find robust evidence that politically connected firms have significantly higher carbon emissions.  We further identify regulatory leniency and weakened environmental governance as mechanisms driving these higher emissions. 

 5. Issue priority and resource competition at society level (with Heli Wang, Singapore Management University)

This research project originates from my job market paper. In this project, we examine the influence of local immigrant populations on firm environmental performance. Leveraging a longitudinal dataset of US manufacturing facilities, we find that facilities tend to increase toxic chemical emissions as the local immigrant population increases. Building upon and extending the stakeholder saliency framework, we argue that this is attributable to the diversion of limited societal resources, including legislative attention and budgetary support, towards the more salient immigration challenges, reducing the pressures for sustainable practices. Given the inherent “free-rider” dilemma surrounding environmental concerns and the costs of sustainable initiatives, reduced external pressures lead to a decline in firm environmental performance. We further show that this negative effect is stronger when immigrants have greater influence on resource allocation decisions and when local governments face more resource constraints. These results are robust to the use of an instrumental variable approach and a wide variety of alternative specifications and subsamples. 

Main data sets: US EPA Toxic Release Inventory (TRI) and US Census American Community Survey (ACS)

(2nd R&R)