Environmental whistleblowers are the perfect candidates for rewards: they face daunting social and financial retaliation to bring to light the crimes that have the greatest global impact. Yet these efforts go unrewarded, discouraging potential whistleblowers and leading them to remain silent out of fear of retribution. If the script were flipped on whistleblowing, rewarding informants, and punishing bad actors, environmental crime could be proactively prevented rather than reactively mitigated. Yet, because of the misguided belief that reward laws discourage timely internal reporting, the international community is unwilling to use these tools. 

A large share of environmental crime is committed by multinational corporations, many of which already have internal compliance structures in place. Incentives are given to whistleblowers whose reports result in a prosecution; functionally, this means whistleblowers who report to external authorities, or through both internal and external channels. Supporters of internal compliance programs may find this alarming, but this fear is baseless. 

Disproving the Discouragement Effect

As a recent study by Professor Masaki Iwasaki, an associate professor at Seoul University, shows, the common criticisms that rewards will discourage employees from reporting through internal channels are untrue—especially for environmental whistleblowers. Iwasaki’s study, “Environmental Governance and Whistleblower Rewards: Balancing Prosocial Motivations with Monetary Incentives,” statistically disproves this misbelief and advises policymakers on effective strategies for legal frameworks. The majority of whistleblowers would choose to report internally first, so crimes could be stopped earlier, even if it meant they might lose a reward. 

Throughout the article, Iwasaki describes this unfounded fear of decline in internal reporting for the sake of rewards as the “discouragement effect.”

To empirically demonstrate that the “discouragement effect” critique is unfounded, Iwasaki designed a vignette-based survey for American adults. Given a hypothetical scenario where they worked for a company whose corporate malfeasance was negatively impacting the environment, participants were asked whether they would report internally, externally, or not at all. Participants were then asked if they would be more or less likely to report internally and externally if offered rewards of varying amounts.

The study extends three hypotheses:

“(1) that individuals with higher prosociality or prosocial tendencies are more likely to report corporate misconduct internally or externally;

(2) that modest monetary rewards for external reporting to authorities sufficiently increase the likelihood of such reporting; and

(3) that the discouragement effect is less pronounced for those with higher levels of prosociality than for those with lower levels.”

Prosociality is measured on a sliding scale. Based on their responses to preliminary survey questions, participants were given a social value orientation score (SVO). The higher the SVO score, the greater value the participant places on communal welfare. In a competitive environment, for example, a prosocial individual seeks to maximize profit for all, whereas an individualistic or pro-self-person seeks to maximize their own profit.

The first hypothesis, that prosocial people are more likely than pro-self-people to report internally and externally, is shown by the study to be empirically true. Eighty-seven percent of prosocial participants reported they would report internally without a reward, compared with 72.2 percent of individualistic participants; furthermore, 80.6 percent of prosocial participants would report externally without reward, compared with 63.6 percent of individualistic participants.

Iwasaki next demonstrates that rewards for whistleblowers successfully incentivize external reporting to authorities. Seventy-three percent of participants who would not report externally without an incentive indicated that they would blow the whistle if offered a modest reward.

Finally, according to the study, 61.1 percent of prosocial participants, compared with 45.5 percent of individualistic participants, would first report internally, even if it meant potentially losing monetary rewards. Furthermore, “changes brought about by the reward policy on wrongdoers, internal compliance departments, compliance culture, and norms” make internally reporting a more viable option. Thus, the “[remaining] proportion of people who are discouraged is likely to decrease.” This finding strongly indicates that, although it exists, the so-called discouragement effect has a minimal impact on prosocial individuals.

Iwasaki writes, “We did not find evidence to justify the claim that monetary incentives greatly reduce internal reporting driven by prosocial motivations, destroying corporate internal controls.” Concerns about the discouragement effect are unfounded, yet authorities continue to disregard the brave individuals who blow the whistle at high personal, social, and financial cost.

The study concludes by offering policymakers strategic and legal advice on designing potent and comprehensive reward programs for environmental whistleblowers. The combination of state and private efforts is most effective. The government must establish a program that offers awards to whistleblowers, impose sanctions on individuals and companies that retaliate, and shift the burden of proof for retaliation from whistleblowers to their employers.

As it stands, over 90% of whistleblowers who face retaliation report internally, while only 5% of retaliation cases result from external reporting. If companies hope to encourage the use of internal compliance structures, those structures must ensure reporters can remain anonymous and safe from retaliation.

Changing the Game: Taking Advantage of Corrupt Actors by Utilizing Reward Laws

Crimes that affect the environment (CAE) are underprioritized and underpunished. CAE includes pollution, illegal logging, overfishing, illegal mining, wildlife trafficking, and illegal dumping—illicit activities that are incredibly hard to detect without insider information. Despite being the third-largest area of criminal activity and generating up to US$280 billion annually, a recent study found that environmental crimes account for just 2% of all International Criminal Police Organization (INTERPOL) red notices. The ever-widening gap between criminality and enforcement must be considered with the gravity it deserves. CAE harms not only the economy but also the global environment, ecosystems, biospheres, and human health.

An analysis of CAE and climate change co-authored by the World Wildlife Fund (WWF) and the United Nations Office on Drugs and Crime (UNODC) discusses barriers to creating adequate international CAE legislation: “Preventing environmental crime, crime that is systematic and widespread, often requires investigations and prosecutions of corporations rather than individuals.” Further still, “Prosecuting crimes that affect the environment associated with climate change is often procedurally and substantively complicated, and under-resourced.”

The lack of resources for environmental defenders could be easily addressed by whistleblower reward laws. Illegal logging, mining, fishing, wildlife trafficking, drilling, dumping, and polluting can be prosecuted under laws including the Foreign Corrupt Practices Act (FCPA), the False Claims Act (FCA), and the Commodity Exchange Act (CEA). 

The funds recovered from sanctions could and should be used to remedy the environmental damage caused by corruption. Since the FCPA was enacted, it has sanctioned corrupt businesses, individuals, and organizations over US$31 billion. From this, the SEC alone has awarded US$2.2 billion to 444 whistleblowers. Other laws are just as effective. Whistleblowers have earned over US$30 million from reporting the illegal discharge of oil under the Act to Prevent Pollution from Ships.

Potential whistleblowers, non-governmental organizations (NGOs), independent media, and conservation activists must be made aware of the unrealized utility of whistleblower award laws. The FCPA’s jurisdiction allows non-US citizens, including journalists and other members of civil society, to report corruption and receive rewards. Not only can environmental defenders take advantage of these legal instruments to detect, deter, and prosecute environmental crime—they can use the well-deserved rewards to continue critical conservation efforts. 

Stephen M. Kohn, partner at whistleblower firm Kohn, Kohn, & Colapinto, stated, “The enforcement tools pioneered by the US could be implemented worldwide. The failure of nation-states to implement these laws is inexcusable. The value of enforcement laws is empirically proven. The structure and impact of the laws have been empirically validated. If parliaments and congresses don’t push these remedies, then their hypocrisy is startling.”

Fortunately, the international community has become increasingly aware of the far-reaching impact of CAE. The International Union for the Conservation of Nature (IUCN), for example, recognized the need to detect, deter, and prosecute CAE in a motion passed at its recent World Conservation Congress. Major organizations, including the Wildlife Conservation Congress and the World Resources Institute, are bringing attention to the issue. 

Yet the international community remains largely on the sidelines. The necessary laws already exist. Corporate objections have been empirically disproven. 

For now, environmental defenders and whistleblowers face an uphill battle, but the tools to level the playing field are already on the books. Whistleblower reward programs have sanctioned wildlife traffickers, oil drillers, and polluters to the tune of billions of dollars. The question is whether conservationists and NGOs will seize the opportunity to use them to change the game.