Economic Geography

Towards an environmental economic geography
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visibly part of the contested dynamic of industrial change for firms and indus-
tries, whether this is in the context of global climate change, health risks or water
supply. But what is most distinctive about the current period is not so much the
elevated interest in the environment as the attention paid by firms themselves 
to issues of resource use and environment impact in managing fundamental
processes of investment, technological change and the organization of business
enterprises. Innovation and learning, subcontracting relations, and supply chains
are being examined from the perspective of environmental performance and
resource use in a way that was far from common even a decade ago. Concepts
such as design-for-the environment, ISO 14000 certification, life-cycle analysis,
resource use score-cards, environmental footprints, are now common place tools
of business practice among large firms. At the same time, the relation between
environmental quality, resource use and economic change is now of central
concern, not just to environmental regulatory agencies, but also to institutions
responsible for economic development, ranging from Ministries of Industry to
multi-lateral development agencies, such as the Asian Development Bank and the
World Bank (see World Bank 1999). Most fundamentally, there is beginning to
emerge some empirical evidence that efforts to meet environmental regulations
and associated mandates are causing firms to rethink the overall organization of
production systems, including the structure of global production networks
(Angel and Rock 2005).
What underlies this more direct engagement with issues of the resources and
the environment on the part of firms and industries? Several factors are in play.
First, there has been important evolution in patterns of environmental regulation
of firms and industries, and an increasing amount of self-regulation and adoption
of voluntary compliance codes of conduct by firms seeking to avoid more direct
regulation of their activities. Of particular importance is the growing significance
of end-market regulation in which firms are regulated not just in terms of envi-
ronmental impacts and resource use at the site-of-production but also in terms
of the environmental profile of products sold. The most significant examples of
such end-market regulations are the European Union RoHS and WEEE legisla-
tion that mandate the elimination of certain toxic substances from products sold
in member countries along with minimum standards on product recycling.
Because these end-market regulations address the material characteristics of
products sold, they reach deeply into the operation of supply chains and produc-
tion networks in ways that traditional site-of-production regulation does not. 
An electronics manufacturer needs to be concerned about whether the printed
circuit board manufactured by a second tier supplier used lead solder in its
production process, and what chemicals were used as solvents in production.
Second, firms and industries now find themselves subject to a higher level of
scrutiny of their activities around the world, and scrutiny by a wider array of
actors. In part this is simply a consequence of globalization and the increasing
connectedness of places and people around the world. Activists now have the
capacity to create networks of advocacy linking local communities in places such
as Vietnam to shareholders in the United States. At the same time, institutional
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investors have become increasingly interested in the risks that weak environmen-
tal performance might present to shareholder value. In and of themselves, these
developments might have elevated the pressure on firms to address issues of envi-
ronmental performance, but they are unlikely to have had the more far reaching
impact on basic processes of investment and technology change observed in
some global firms today. What appears to have been decisive in leading firms to
respond to these advocacy networks is the fundamental importance of ‘reputational
capital’ to the long term competitiveness of firms in many sectors of the contem-
porary economy. This was perhaps most visibly evident in the vulnerability of name
brand apparel manufacturers to pressures to improve working conditions in sweat-
shops. Where brand reputation is a crucial constructed asset, and where environ-
mental health and safety concerns are issues that can potentially weaken the
brand, firms are likely to be more responsive to advocacy networks.
Beyond these two factors, the more general concern voiced around issues such
as climate change, as well as local and regional environmental challenges, has
contributed to the pressure on firms to improve their environmental perform-
ance. This has been especially the case in rapidly industrializing economies in
East Asia and elsewhere where the sheer scale and pace of industrialization and
urbanization has placed extraordinary stress on environmental conditions and
resources.