China Policy Journal Volume 1, Number 1, Fall 2018 | Page 114

China Policy Journal • Vol. 1, No. 1 • Fall 2018 Environmental Performance Rating and Disclosure: An Empirical Investigation in Jiangsu, China Yanhong Jin 1 , Hua Wang 2* , David Wheeler 3 Abstract Environmental performance rating and disclosure (PRD) has emerged as an alternative or complementary approach to conventional pollution regulation, especially in developing countries. However, little systematic research has been conducted on the effectiveness of this emerging environmental policy instrument. This paper investigates the impact of a PRD program, Green Watch in Jiangsu, China, which has been operating for more than 10 years. This study assesses the impact of Green Watch by using panel data on pollution emissions from rated and unrated firms, before and after implementation of the program. Controlling for the characteristics of firms and locations, time trend, and the initial level of environmental performance, we draw two main findings: (1) firms covered by Green Watch improved their environmental performance more than non-covered firms and (2) the program effects varied by the initial level of environmental performance: bad performers improved more than good performers and moderately non-compliant firms improve more than firms that are significantly out of compliance. The reasons for these different responses seem to be that the strengths of incentives that the disclosure program provides to the polluters at different levels of compliance are different and the abatement costs of achieving desired levels of ratings are different for different firms. Further investigation is merited for a large scale or even a national level in most recent years. 1 Rutgers, The State University of New York, New Brunswick, NJ 2 Renmin University of China, Beijing 3 Independent Scholar * Corresponding author: [email protected] 111 doi: 10.18278/cpj.1.1.5