Figure 5 summarizes what we know about the impact of public information. Factories in developing countries exhibit great variety in environmental performance despite the widely acknowledged weaknesses of their regulatory systems. Even in the poorest countries, some plants would satisfy OECD emissions standards . Figure 5 In countries as different as China, Brazil, Mexico and Indonesia, local communities find many ways of enforcing their environmental norms. Where formal regulators are absent or ineffective, 'informal regulation' is implemented through community groups or NGOs.
Market forces are also powerful determinants of environmental performance under some conditions.
Evidence from both the OECD and developing countries suggests that environmental reputation matters for firms whose expected costs or revenues are affected by judgments of environmental performance by customers, suppliers, and stockholders. These can affect lending decisions by bankers, who may also be concerned about legal or financial liability for polluters who are not complying with regulations. Once informal regulation is recognized as an important force, regulatory agencies experience a change of role. While retaining ultimate responsibility for monitoring and enforcement, they assume new importance as sources of environmental information. Polluters find it impossible to 'hide' from so many interested parties, and a complex set of new relationships and negotiations is established.