Blake Dawson, Melbourne, 101 Collins Street, Melbourne, Vic. 3000, Australia. E-mail: rebecca.nelson@blakedawson.com

Received 2 March 2008; Revised 15 July 2008; Accepted 1 August 2008.

Abstract

Despite China's comprehensive system of environmental laws and standards, poor water quality is widespread. This has significant detrimental effects on Chinese society and business, and causes serious economic losses. Academic commentary on this issue has largely focused on increasing the effectiveness of government enforcement of laws related to water pollution. However, effective enforcement will depend on legal and institutional reform, and problems are unlikely to be solved quickly. As a result, it is necessary to look beyond the state. This paper argues that some businesses, here termed 'influencing firms', have significant capacity to influence other businesses ('target firms') to improve China's environmental situation. This paper brings together recent empirical research, documented case studies, and public corporate reports to demonstrate how and why influential firms can and should use their influence for environmental good in this context. Four key tools are suggested for influencing firms to encourage improved environmental management in target firms: (1) green supply chain management measures; (2) influencing through business groups; (3) publishing environmental performance reports; and (4) forming alliances with environmental groups.