Environmental standards imposed on the Australian paper industry have emerged in response to public concern over the logging of native forests and the 'greening' of consumer demand. Such standards play an integral part in the paper industry's restructuring. Neo-classical theorists hypothesised environmental standards as encouraging the relocation of polluting industries to countries with lax regulations. An alternative hypothesis is that environmental standards encourage in-situ restructuring that can positively affect a company's competitiveness. In considering this alternative hypothesis the implications for state and federal policy are briefly considered. © Institute of Australian Geographers 1997.