Voluntary environmental governance is a widely used policy approach that has been criticized for its lack of effectiveness. This raises fundamental questions about how to design processes that can advance voluntary programmes in a way that makes them more successful. In this paper, we analyse a government-initiated dialogue process to phase out hazardous chemicals through voluntary action by the Swedish textile industry. The analysis shows that information transfer primarily motivated business participation, while consumer pressure, regulatory threats and traditions of government–business cooperation played minor roles. The institutional design of the dialogue ensured close interaction within a homogeneous group, but collective actions were limited by disagreement about the problems to be addressed, prior unilateral environmental commitments by leading companies, and ambivalent engagement. This case provides valuable insights into the effect of institutional design on the actual interplay between business and government and its effects on voluntary governance.