Volkswagen’s Greenwashing Backfires: The Road to Redemption


In September 2015, the German automaker Volkswagen rocked the automotive industry with a scandal of dramatic proportions. Regardless of aggressive marketing and advertising campaigns touting environmental friendliness, Volkswagen had outfitted its diesel vehicles with software that allowed the engine to recognize when it was being emissions-tested and perform with lower power, then switch into high gear when on the road. As a result, these diesel vehicles were emitting nitrogen oxide pollutants in quantities as much as 40 times the legal limit. Nearly 11 million diesel VW vehicles worldwide were deliberately equipped with the “defeat device.” The direct monetary costs of the scandal came to USD 30 billion in fines for environmental damage and fraud paid to U.S. and EU regulators, in addition to compensation to almost 11 million disgruntled customers. The moral lesson is very clear: Brands that make unsubstantiated claims about being eco-friendly just to lure customers and capture market share—a practice known as greenwashing—will be publicly embarrassed and financially hurt. Can Volkswagen now redeem itself and regain customers’ trust?

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