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Covenants with weak swords: ISO 14001 and facilities’ environmental performance

Covenants with weak swords: ISO 14001 and facilities’ environmental performance’ (Potoski, Prakash, 2005), examines the effectiveness of ISO 14001 certification to drive environmental performance, with its ‘weak swords’ of just monitoring as opposed to ‘strong swords’ which have monitoring, public ownership and sanctioning.

The research is based on empirical analysis of the effect of ISO 14001 certification on firms’ environmental performance using a sample of over 3,000 facilities regulated as “major sources” under the U.S. Clean Air Act, the vast majority of which weren’t certified (96%). The research poses the key question ‘Can a “weak sword” program that provides only for third-party audits create incentives for participating firms to improve their environmental performance’?

One concern of the “weak swords” is that without disclosure of audit specifics (just successful certification), this can lead to ‘shirking’ – organisations not taking their responsibilities other than for the sake of successful certification. However, the ‘analysis suggests that even a relatively “weak sword” program such as ISO 14001, whose enforcement mechanism is based on third-party audits without public disclosure of audit information, can mitigate shirking in voluntary programs. The analysis further suggests that ‘ISO 14001-certified facilities have better environmental performance, they reduced their pollution emissions faster compared to non-participants’.

Two theories are put forward for ISO 14001 certification improving facilities’ environmental performance:

1. Certification provides a real focus on bettering a plant’s environmental performance, enabling the identification and reaction to issues and opportunities;

2. The re-certification process ensures commitments are adhered to continuously.

The results lead to the conclusion ‘that compared to noncertified facilities, ISO 14001-certified facilities experienced significantly larger reductions in pollution emissions’.

By comparing with a non-certification scheme (the Responsible Care program), the researchers were able to conclude that one of the key reasons for the success of the ‘weak sword’ of ISO 14001 was third party certification: ‘While Responsible Care—a covenant without swords—did not improve participants’ environmental performance (King, Lenox, 2000), our study finds that ISO 14001, a covenant with a weak sword, improved participants’ environmental performance. The discriminating variable in the design of the two programs is third-party audits’.

Paper available for purchase


  • Potoski, M., Prakash, A. (2005), ‘Covenants with weak swords: ISO 14001 and facilities’ environmental performance’, Journal of Policy Analysis and Management, Volume 24, Issue 4, pp 745- 769.

Iowa State University (Potoski), University of Washington (Prakash)