Environmental Management System (ISO 14001) and Total‐Factor Carbon Emission Performance: A Two‐Stage Malmquist Data Envelopment Analysis

Abstract

ABSTRACT As global decarbonization goals become more urgent, it is vital to understand that decoupling carbon from growth is not a purely mechanical process of adopting green machines; it is a socio‐technical transition. Understanding carbon productivity requires analyzing the synergy between voluntary standards and strict regulation, demonstrating that technology only drives societal change when embedded in a robust institutional framework that prevents mere compliance. Therefore, this cross‐country panel study examines whether the diffusion of Environmental Management System (EMS) ISO 14001 is associated with improvements in total‐factor carbon emission performance in 15 countries with the highest ISO 14001 adoption intensity over 2010–2024, yielding a balanced panel of 210 country‐year observations. Using a two‐stage Malmquist Data Envelopment Analysis (DEA) model, we decompose change in carbon performance into two critical vectors: change in efficiency (catch‐up effect) and technological change (frontier shift). The decomposition results indicate that, for most countries, 24% in carbon performance observed gains were more closely associated with efficiency catch‐up than with frontier‐shifting technological change. Meanwhile, Germany shows consistently shifted the carbon‐efficiency frontier during the study period. Moreover, panel regression analysis indicates that ISO 14001 adoption intensity remains conditionally associated with these improvements after controlling for energy intensity and industrial structure. This study contributes to the literature by demonstrating that management systems act as technology absorption mechanisms, enabling lagging nations to reach the frontier of existing best practices. Finally, the findings provide a forward‐looking basis suggesting that, without an acceleration in radical technological innovation (frontier‐shift), current efficiency efforts based on voluntary standards will be insufficient to achieve net‐zero emissions goals.