The global sourcing of green products

Abstract Recent years have seen a rise in global trade of “green products”—those designed to minimize environmental harm compared to traditional alternatives. In this study, we examine the relevance of pollution haven effects—i.e., shifts of production toward countries with less stringent environmental standards—in firms’ global sourcing strategies for green products. Given the importance of credible and sustainable manufacturing practices in firms’ global value chains for green products, we expect that country environmental standards shape global sourcing decisions for green versus non-green products differently. Our findings using data on global imports and exports for more than 5000 distinct products over the 2002–2019 period show that green products are more likely to be sourced from countries with higher environmental stringency, whereas non-green product sourcing patterns align with prior research, which emphasizes the appeal of lower environmental standards and cost-efficiency. This green sourcing effect is stronger for consumer-facing products and for sourcing into countries where consumer engagement in environmentalism is higher and non-governmental organizations are more active. Unlike prior research that implies that higher environmental standards hurt exporters, our results suggest that such standards can benefit green product exporters.