Do voluntary environmental programs reduce emissions? EMAS in the German manufacturing sector

Highlights: • We evaluate the EMAS program in Germany, using production census firm-level data. • Matching Difference-in-Differences estimation accounts for the self-selection of firms. • We find weak evidence of CO₂ intensity reductions for early adopters of the program. -- Abstract: Voluntary environmental management programs for firms are a popular instrument of environmental policy. However, the effectiveness of such programs is ambiguous based on the existing literature. We evaluate the Eco-Management and Audit Scheme (EMAS) introduced in 1995 by the European Union. EMAS is a premium certification of continuous pro-environmental efforts above regulatory minimum standards. It is more demanding than other voluntary programs as it requires publication of annual reports by firms on their environmental performance and targets. We use official firm-level production census data on the German manufacturing sector. Our research design combines the Coarsened Exact Matching approach with a Difference-in-Differences estimation. We find weak evidence of reductions in CO₂ intensity by about 9 percent for firms that were certified in the early years of the program. For firms certified in later years we find no statistically significant evidence of emission reductions. Moreover, we find no statistically significant evidence of higher investments in environmental and climate protection or an increased use of renewable energy sources for certified firms.