It is Not Easy Diffusing Green: The Impact of Mandatory Regulations on the Diffusion Breadth and Depth of Voluntary Environmental Standards

The adoption of voluntary environmental standards has emerged as a promising approach to coping with climate change and achieving sustainable development. While prior research has underscored the significance of establishing an appropriate regulatory environment in diffusing these standards, the relationship between mandatory regulations and voluntary environmental standards adoption remains controversial. Distinguishing from the view of a positive or negative linear relationship, in this article, we draw on neoinstitutional theory to suggest that the tradeoff between the legitimacy benefits and costs may result in a curvilinear relationship. Specifically, using leadership in energy and environmental design certification data in the U.S. states from 2000 to 2020, we investigate how mandatory regulations influence the diffusion of voluntary environmental standards and examine the moderating role of policy mood (liberal ideology versus conservative ideology). Our findings reveal a U-shaped relationship between mandatory regulations and the diffusion breadth and depth of voluntary environmental standards. Moreover, policy mood favoring more liberal ideology amplifies the convexity of these U-shaped relationships. Our study contributes to the growing body of research on environmental governance and offers novel insights into strategies for effectively diffusing voluntary environmental standards in terms of breadth and depth. In addition, this study also provides guidance for policymakers to foster sustainability practices diffusion through regulatory instruments.