The impact of campaign-style enforcement on corporate environmental Action：Evidence from China’s central environmental protection inspection

Abstract

Abstract Regardless of the implementation of central environmental protection inspection, a campaign style enforcement, across China to address the upsurging environmental issues in recent years, very few studies have revealed the effect of central environmental protection inspection on corporate environmental actions in China. This paper focuses on China’s central environmental protection inspection to evaluate the effectiveness of campaign-style enforcement in promoting corporate environmental actions. Using a regression discontinuity design and one of the most comprehensive datasets of environmental statistics on firm-level pollution from 2011 to 2018 in one province in south China. Based on 15,154 enterprise observations, we find that the central environmental protection inspection is associated with substantial changes in corporate environmental actions. We also find that the number of polluting firms shrank by 48% (and by even more among small and micro firms) after the implementation of the central environmental protection inspection. Furthermore, the central environmental protection inspection significantly reduces industrial chemical oxygen demand (COD) emissions by at least 46.5% without affecting the production output of surviving firms. These findings are robust to alternative specifications and different sampling strategies. This paper opens up a new viewpoint to focus on the effect of the central environmental protection inspection on corporate environmental actions. The available evidence leads us to cautiously conclude that environmental campaign-style enforcement promotes firms meeting emissions reduction goals in the short term through end-of-pipe abatement. A long-term inspection mechanism and incentives for firms to carry out green transformations are thus recommended for future practice.