Corporate-Led Environmental Governance: A Theoretical Model

• Published date: 01 January 2021
• Date: 01 January 2021
• DOI: 10.1177/0095399720918512
• Author: Yuhao Ba
• Subject Matter: Articles

918512AASXXX10.1177/0095399720918512Administration & SocietyBa
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Administration & Society
2021, Vol. 53(1) 97 –122
Corporate-Led
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Governance: A
Theoretical Model
Yuhao Ba1
Abstract
The growing reliance on non-state environmental governance (EG) coupled
with the current U.S. political environment portends an increasing salience
of governing efforts from non-state actors. Among non-state actors,
corporations play a substantial role given their market and societal power,
their corresponding social responsibilities, and their organizational and
institutional adaptability in developing and performing EG solutions. This
article proposes a corporate-led environmental governance (CLEG) model.
An important distinction between previous iterations of corporate social
responsibility (CSR) and corporate governance and the CLEG model
proposed here is the active assertion of corporate environmental leadership
as state leadership is subject to retrenchment in the United States.
Keywords
environmental governance, corporate leadership, non-state governance,
state retrenchment
Introduction
A longstanding consensus in the literature acknowledges the prominence of
environmental governance (EG) efforts from non-state actors, including
1North Carolina State University, Raleigh, USA
Corresponding Author:
Yuhao Ba, Doctoral Candidate, Department of Public Administration, School of Public and
International Affairs, North Carolina State University, 212 Caldwell Hall, Raleigh, NC 27695,
USA.
Email: yba@ncsu.edu

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Administration & Society 53(1)
businesses, civil society and nonprofit members, and local and regional com-
munities (Hale, 2016; Lemos & Agrawal, 2006; Mol, 2016). Among non-
state actors, corporations have competitive advantages in many regards in
delivering governance solutions (Bartley, 2007; Cashore, 2002; Fiorino &
Bhan, 2016; Green, 2013; Hale, 2018). Economically, the fiscal and market
leverage of corporations ensures the capital resources necessary for their EG
involvement. Politically, the cyclical effect of influences translated from their
economic power and the further economic advantages secured by such influ-
ences empower corporations’ voices in shaping environmental policy agen-
das across various venues (Kraft & Kamieniecki, 2007; Salamon & Siegfried,
1977). Societally, the growing commitment of corporations to, and the
expanding networks of participants around, environmentally responsible
practices contribute to corporations’ enhanced EG actions. Technologically,
the rapid growth of business environmental R&D investments (Bumpus &
Comello, 2017; Louw, 2018) helps to sustain corporations’ green behavior
with improved future products and processes. Along this line, corporations’
organizational and institutional adaptability likewise adds to their advantages
in developing alternative EG mechanisms (Cashore, 2002; Hsueh, 2013).
More broadly, corporations’ greater EG involvement will likely trigger an
ambition loop in which corporations’ bold EG actions will encourage policy-
makers to adopt more ambitious policies that will in turn catalyze further
enhanced corporate EG involvement (“The Ambition Loop,” 2018).
The rising role of corporations as an important EG component has like-
wise attracted scholarly attention, ranging from governance with govern-
ment—prominently promoting multilevel, polycentric, and collaborative
governance arrangements (Bulkeley & Betsill, 2005; Newig & Fritsch, 2009;
Ostrom, 2010)—to governance without government, chiefly relying on mar-
ket mechanisms to deliver regulatory practices and outcomes (Cashore, 2002;
Falkner, 2003). The attention also extends to topics including their emer-
gence (Green, 2013; Pattberg, 2005), legitimacy (Cashore, 2002; Schouten &
Glasbergen, 2011), and operation (Fiorino & Bhan, 2016; Hsueh, 2013)
through lenses of political science, public administration, and economics.
Efforts from other disciplines include environmental law, business manage-
ment, sociology, and environmental geography, focusing on topics such as
the parallels between public and private standard-setting and enforcement
(Light & Orts, 2015), the relationship between corporate characteristics and
environmental performance (Walls et al., 2012), the political construction of
market-driven institutions (Bartley, 2007), and the reconceptualization of
scale and spatiality through alternative governance practices (Reed &
Bruyneel, 2010).

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Despite the burgeoning growth in research on corporate EG involvement,
the coverage across levels of analysis and positions of corporations remains
uneven and incomplete. For instance, most scholarly efforts tend to focus on
the transnational level, leaving EG arrangements at the national and subna-
tional levels underexplored. This is due to the cross-border nature of many
EG challenges (Andonova et al., 2009) as well as the inadequacy of gover-
nance infrastructures at the international level for addressing the social and
environmental impacts of the rapid economic globalization (Mayer & Gereffi,
2010). For studies that do position at a national or subnational level, their
focus tends to be on the roles and power of civil society or hybrid arrange-
ments (see Corson, 2010; Perkins, 2009) and/or particular aspects of corpo-
rate EG involvement (see Potoski & Prakash, 2004), necessitating a synthetic
theorization of EG efforts from corporations at such levels. In a similar vein,
the extant literature in general assumes a complementary role of corpora-
tions, while neglecting their potential to lead as a sectoral force in performing
EG functions (see Vogel, 2010). This can be attributed to the default primary
role of governmental solutions owing to the long-standing dominance of state
forces with sovereign policy-making authority in EG systems (Light & Orts,
2015). Yet the power dynamics resulting from and likewise reinforced by the
ongoingly sidelined state EG leadership are likely to suggest a new configu-
ration of corporate EG involvement; that is, corporate leadership in EG sys-
tems at national and subnational levels might be relevant, and to some degree
more promising, to address EG challenges given the changing political
landscape.
The emerging salience of corporate EG involvement has been synchro-
nized with the increasingly constrained state leadership in the environmental
sphere over the last few decades. That is, the proliferation of many non-state
arrangements and the retrenchment of state forces jointly characterize the
practice as well as the theorization of the development of EG arrangements.
Here, state retrenchment in the environmental sphere can be defined broadly
as the processes and outcomes of the shifting role and capacity of govern-
mental forces in pursuing and coordinating collective action given increas-
ingly complex, diverse, and dynamic environmental challenges. It entails a
reconfiguration from conventional hierarchical bureaucratic structures to
polycentric ecosystems of governance, a reconstruction of interactions
between state and non-state actors toward a more participatory and collabora-
tive direction, and a redistribution from command and compliance mecha-
nisms to more adaptive forms of regulation and implementation (Bellamy &
Palumbo, 2010; Hysing, 2009). In view of this, state retrenchment can be
seen as both the grounds for, and the consequences of, the rapid growth of
many non-state EG arrangements, and corporate EG leadership can likewise

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be understood as an active response to governance inadequacy resulting from
the retrenching state.
This looming rise of corporate leadership in EG systems is in particular
suggested by the current U.S. political environment. The 2016 U.S. presiden-
tial election itself marked a new era of state retrenchment in the environmen-
tal sphere that has been mounting due to the widening partisan polarization
over the last decades (Dunlap et al., 2016). Examples include the official
withdrawal of the United States from the Paris climate accord (Dennis, 2019)
as well as the rollback of 59 EG solutions previously implemented by gov-
ernmental agencies (Popovich et al., 2019). However, corporations that have
been traditionally posited as the opposite against EG actions are in fact advo-
cating more active and timelier EG solutions (Lyon & Maxwell, 2008). For
instance, the Task Force on Climate-Related Financial Disclosures (TFCD)
as a business-led initiative is urging companies to be more transparent on
climate-related financial risks and opportunities, to facilitate the transition to
a more stable and sustainable economy (TCFD, 2019). More broadly, busi-
nesses in various industries are actively collaborating with other non-state
actors through initiatives such as We are Still in and America’s Pledge, to
fulfill the U.S.’s commitment to the Paris Agreement in an absence of state
leadership. Such shifting attitudes of state and corporations are likely to be
translated into a reconfiguration of their power and roles in performing EG
functions, giving rise to corporate-led environmental governance (CLEG)
arrangements. In light of this, given the ongoing state retrenchment (Mol,
2016), a careful conceptualization of corporate leadership in EG systems...