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There are differences in the way awareness is defined according to discipline (Akerlof, 2017). Introjection of environmental awareness is not spontaneous, is conducted by socio-economic, political, and cultural processes. The environmentally responsible person is formed from the earliest youth through education obtained at home and school and configuring values and behaviors in an environmental direction (Maravić et al., 2014). Here, the authors focus on the awareness of environmental like public policy, and the subsequent introjection of environmental awareness on trade issues and product demand. Increasing environmental awareness can impact the pleasure of consuming a good for which an environmentally friendly substitute is available, and companies can affect prices, product characteristics, and market shares (Conrad, 2005).
Since the Stockholm Declaration in 1972, it has been written about the need to protect the environment, and that education lays the foundations for an enlightened opinion and responsible conduct of people and companies in the world, in the sense of conveying intellectual and moral conviction. Therefore, there is a need for States to legislate internally and seek international cooperation to protect the environment (Sohn, 1973, pp. 427-481). The agents involved in the legislation policies are local governments, international agencies, corporate companies, and international organizations.
These agents interact in three areas to define environmental policies according to the environmental requirements using a set of instruments for regulating and/or eradicating damage caused by pollution and the exploitation of natural resources. First, in the national and international legal area; second, in the economic and market area; and third, in the area of motivations and social awareness, and can be framed in the combination of them (Eccleston & March, 2011).
From the first and second areas, the most common environmental policy instruments are those designed and used by governments to obtain some environmental impact. They may use economic incentives instruments such as subsidies, tax exemptions, and/or market-based instruments such as permits, fees, taxes, pollution quotas among many others (Barnes-Dabban et al., 2018). Awareness of environmental problems has increased environmentally friendly business practices, thanks to legislation that affects general environmental awareness (Gadenne et al., 2009). For instance, when the degree of product differentiation is large enough, companies benefit from technological side effects through cooperative environmental R&D, attracting environmentally conscious individuals (Yakita & Yamauchi, 2011). Emissions tax is collected when consumer awareness of pollution is low, and consumer externality is large or a production subsidy is usually granted (Hsu et al., 2017).
With the growing awareness of environmental responsibility in the industry, the improvement of technology only achieves environmental sustainability under sufficiently strict recovery standards; otherwise, it can be counterproductive and damage the environment (Cai et al., 2019). Considering the increased consumer environmental awareness and the strict government rating standard, Zu and Zeng (2020) show that the government rating standard has a major driving impact on the level of efficiency energy of the products. When the energy efficiency level of the product is lower than the government standard, the manufacturer will go to great lengths to improve energy efficiency, since “in industrialized countries; environmental problems are generally related to industrialization and technological development” (Sohn, 1973, p.443).