Adoption of environmental standards and a lack of awareness: evidence from the food and beverage industry in Vietnam

Abstract

AbstractVoluntary approaches to environmental policy can contribute to stemming environmental degradation in developing countries with weak institutions. We evaluate the role of a lack of awareness of a law in explaining the voluntary adoption of environmental certification by small and medium enterprises (SMEs) in the food and beverage industry in Vietnam. We find that firms, where owners or managers were unaware of the law were 38 percentage points less likely to receive environmental certification. Moreover, this effect is larger for firms that exported, had internet access or paid bribes, and it is weaker for household enterprises. Our results suggest that increasing legal awareness can weaken informational constraints for SMEs, where weak institutions and a lack of information often hamper the uptake of environmental policy initiatives.