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OM in the News: “Greenwashing” Becomes a Corporate Ethical Dilemma

October 18, 2015

greenwashing“Until recently, Volkswagen was waging a relentless campaign to portray itself as an environmental steward, its cars on the vanguard of a clean energy revolution,” writes The New York Times (Oct. 18, 2015). It promoted diesel as a low-emissions alternative to gasoline and spent $77 million this year in the American market to advertise its diesel cars, often proclaiming their greenness. As everyone now knows, at the same time VW was waging this eco-friendly public relations offensive, engineers at the German automaker had rigged 11 million of its supposedly clean diesel engines with software that tricked emissions tests, allowing the cars to spew far more pollutants than legally allowed. No matter how hard VW works to resolve this crisis, the episode is likely to live on in infamy as the latest and perhaps most egregious example of greenwashing.

Greenwashing, when a company tries to portray itself as more environmentally minded than it actually is, has intensified in recent decades as consumers have warmed to sustainable and organic products and services. Brands, trying to capitalize on that trend, often try to outdo one another with eco-credentials. “Social and environmental responsibility should not be a competitive sport,” said a Drexel U. prof.

A recent study that 95% of the products marketed as eco-friendly had committed at least one of what it called the “seven sins” of greenwashing. Those sins include relatively benign offenses like using weak data to more deliberate deceptions like inventing bogus certifications. VW is hardly the first automaker to be called out for exaggerated claims. Last year, Kia and Hyundai paid $300 million to settle with the government after overstating the gas mileage for 1.2 million vehicles. But VW’s efforts to deceive regulators and customers while trading on the supposed cleanliness of its diesel engines make it an exemplar of the least frequent — and most serious — form of greenwashing: outright lying.

Classroom discussion questions:

  1. What are the six other sins of greenwashing?
  2. How is sustainability the purview of operations management?
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