Environmental Regulations and Their Influence on Green Supply Chain Adoption

Abstract

The environmental regulations have become an important external force that influences organizational strategies towards sustainability especially in the supply chain management. This paper discusses how environmental laws have affected the implementation of environmental supply chain in industries. As regulatory pressure increases with regard to the emissions control, waste management, resource efficiency, and environmental reporting, companies are forced to incorporate environment-related concerns in the procurement, production, logistics, and distribution processes. The paper addresses the regulatory frameworks, as they do not only impose compliance, but also promote proactive environmental projects that promote operational efficiency and long-term competitive advantage.

The paper examines how and why environmental regulations influence organizational decision-making and the transformation of supply chains using a comprehensive review of existing research and regulatory policy frameworks. The findings reveal that tough and properly implemented regulations have a great influence in accelerating the use of green supply chain practices by facilitating sourcing in a more environmentally friendly manner, utilization of cleaner production technologies, reverse logistics, and partnership with more environmentally friendly suppliers. In addition, regulatory incentives like tax breaks, subsidies and certification programs also encourage companies to go beyond the minimum compliance needs.

The research also mentions that the success of environmental regulations in influencing the green supply chain adoption is influenced by organizational capabilities, top management commitment, industry nature, as well as institutional support. Companies which view regulations as strategic benefits as opposed to as compliance costs, will have higher chances of realizing improved environmental performance, cost efficiency and reputational benefits. The paper adds to the increasing literature on sustainability and supply chain in highlighting the aspect of a regulatory institution as a driver of green innovation. The presented insights can be useful to policy-makers who would like to design effective environmental regulations as well as to managers who would like to synchronize regulatory compliance with sustainable supply chains strategies.