Tag: greenwashing

OM in the News: How Walmart Brought About the Light Bulb Revolution

light bulbsIt was the 1990s, the era of Al Gore’s Inconvenient Truth, and consumers were dubious about the new CFLs light bulbs. Why did they cost so much more than incandescents? What was their quality? As a result, nearly three decades after being introduced in the U.S., CFLs were used in only about 6% of homes. In November 2006, Walmart nearly single-handedly changed that. Walmart’s then–CEO, H. Lee Scott Jr., announced an ambitious initiative: The company would sell 100 million CFLs by the end of the following year. These bulbs would save consumers $3 billion in electricity costs and cut U.S. power needs by the equivalent of 450,000 homes.

Lighting manufacturers balked, and Walmart’s critics leveled charges of “greenwashing,” writes Fast Company (Dec. 2015/Jan. 2016). But the retailer went all-in, redesigning displays, increasing selection, educating consumers, and launching an affordable private-label brand. The campaign worked: In 2007, it sold 162 million CFLs.  Shipments of the bulbs surged across the U.S., surpassing 400 million. Walmart’s massive purchase of CFLs allowed it to dictate specs to its suppliers: It required Energy Star–rated bulbs that met strict performance standards and got manufacturers to reduce the amount of mercury in CFLs. Walmart’s actions also helped secure passage of the Energy Independence and Security Act of 2007, which ordered the phase out of inefficient incandescent bulbs by 2015.

In the second quarter of 2014, shipments of CFLs surpassed traditional incandescents for the first time. Prices dropped and quality rose. But most experts believe the future belongs to LED bulbs, which are even more efficient than CFLs—and increasingly affordable. Today, a CFL, LED, or next-generation incandescent fills 1 in 3 U.S. light sockets, helping to keep millions of tons of CO2 from entering the atmosphere. A case study of how a company can use its size for good.

Classroom discussion questions:
1. What was the genesis of Lee Scott’s decision? (See our blog of 2011 on the book about Scott).

2. Why was Walmart able to change people’s view?

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

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?