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The purpose of this paper is to allow environmental policy makers to identify the sort of problems and obstacles and the kind of influences that firms face from different economic actors, when trying to improve their environmental performance. It aims to identify the actions that are taken by firms to cope with more difficult environmental regulations. These will help the regulator in the design of strategies to foster environmental improvements by firms.

This paper analyses some of the specific questions of an environmental management survey that was carried out in the manufacturing industry in Chile in 2001. A large number of variables from the survey were involved and they are hard to handle in such disaggregated terms. The factor analysis (FA) methodology is thus applied to reduce the information to a manageable number of variables.

The results of the FA methodology provide the regulator with fewer dimensions to concentrate on when designing environmental strategies, while they also provide an insight into each general area of concern. The indices of environmental performance that are developed in the paper contribute to the targeting of policy recommendations, as they allow comparisons of the levels of environmental performance between different sorts of manufacturing plants.

This paper helps to determine patterns of environmental performance in manufacturing firms, which are very helpful for environmental policy makers when designing strategies to foster environmental improvements by firms, particularly when countries are facing budget constraints. This case study could also be illustrative for other countries with similar characteristics.

The approach used in this paper allows environmental policy makers to count on certain indicators to efficiently target their environmental policies.