Regulatory or market pressures: What promotes environmental grandstanding in Bangladesh?

Abstract

Many factors affect the adoption of the mandatory technology of effluent treatment plants for pollution management in Bangladesh. Some of these factors could also affect the adoption of voluntary environmental standards. Therefore, it is important to identify and analyze the importance of these key factors, considering their role in enhancing environmental performance in crucial industries for the country's economy. In this study, a literature review preceded an analysis of factors through structural equation modelling to investigate how attributes of the regulatory agency combine with market aspects to influence environmental practices such as the adoption of mandatory ETP and voluntary certifications. Using official quarterly data, the results of this study show that access to green finance and the number of employees of the regulatory agency significantly affect the adoption of additional ETPs. On the other hand, the size of fines for pollution does not significantly affect the adoption of ETPs. It was also found that green finance and additional ETP adoption also increased the adoption of green factory buildings, which is a voluntary exercise. This study sheds light on the underlying relationships that can guide ongoing multilateral interventions to enhance capacity of regulatory agencies to implement environmental regulations. It also provides new evidence to formulate relevant strategies for enhancing environmental performance by scaling up green finance.