Home UK News The 5 biggest corporate greenwashing fines

The 5 biggest corporate greenwashing fines

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Climate change is destroying habitats, warming oceans and causing more extreme weather than ever. With the public growing increasingly interested in environmental issues, some companies have begun to take action to make their products and production processes greener. However, other corporations have been engaging in “greenwashing,” which means they have made “an unsubstantiated claim to deceive consumers into believing that a company’s products are environmentally friendly or have a greater positive environmental impact than they actually do,” said Investopedia. Companies can be punished if they are discovered greenwashing, and often forced to pay millions or even billions of dollars. Here are five examples.

Volkswagen

Volkswagen has had the largest greenwashing fine to date. In 2015, the company was caught rigging two of its diesel engines to make them appear to release fewer emissions. In reality, the engines were releasing 40 times the nitrogen oxide permitted by the Environmental Protection Agency (EPA), BBC said. VW incurred costs of approximately $30 billion, including a $2.8 billion criminal penalty from the U.S. government — the price of buying back close to 500,000 vehicles sold in the country — a $125 million fine in Australia and $590 million from the European Commission. Six employees also faced criminal charges in the U.S. “Our company was dishonest with the EPA, and the California Air Resources Board and with all of you,” Michael Horn, former CEO of the Volkswagen Group of America’s, said in a statement. Former Volkswagen CEO Herbert Diess said to The New York Times that a “combination of too much pressure and lack of a speak-up culture,” was to blame for the fraud.

Toyota

Automaker Toyota was required to pay a $180 million fine for Clean Air Act violations. Between 2005 and 2015, the company “systematically failed to report defects that interfered with how its cars controlled tailpipe emissions, violating standards designed to protect public health and the environment from harmful air pollutants,” The New York Times said. In addition, “managers and staff in Japan knew about the practice but failed to stop it, and the automaker quite likely sold millions of vehicles with the defects.” Toyota may also be facing an additional $50 million fine from the Australian Competition and Consumer Commission (ACCC) for misleading environmental performance claims after Greenpeace Australia called for an investigation. “We believe Toyota Motor Corporation’s advertising is misleading Australian consumers by understating its cars’ emissions and overstating its commitment to clean transport,” Lindsay Soutar, director of Greenpeace Australia Pacific’s electrify campaign told The Guardian.

DWS

Deutsche Bank’s investment firm DWS is required to pay $25 million by the U.S. Securities and Exchange Commission (SEC) over its statements regarding the environmental, social and governance (ESG) investing process. A two-year investigation found that the firm “made materially misleading statements about its controls for incorporating ESG factors into research and investment recommendations for ESG integrated products,” said ESGToday. The fine also encompasses DWS’s failure to “develop a mutual fund anti-money laundering program as required by law,” Reuters said. “The firm marketed itself as a leader in ESG investing, but from August 2018 until late 2021, failed to implement certain related policies as they were billed to investors.”

Keurig

Following an investigation by the country’s Competition Bureau, Keurig Canada was ordered to pay a $3 million fine for falsely claiming that its single-use K-Cup pods could be recycled. In reality, “K-Cups aren’t widely accepted for recycling in any province except Quebec and British Columbia and those instructions don’t go far enough for many cities that might accept them in a recycling program,” CBC said. Along with the fine, the company was required to donate “$800,000 to a Canadian charitable organization focused on environmental causes” and “pay an additional $85,000 for the costs of the Bureau’s investigation,” the Competition Bureau said in a statement. Keurig was also required to change the K-Pod packaging and correct the false claims on its website and social media. Matthew Boswell, Canadian Commissioner of Competition, said the misleading information “harm[s] consumers who are unable to make informed purchasing decisions, as well as competition and businesses who actually offer products with a lower environmental impact.”

Kohl’s and Walmart

Kohl’s and Walmart were required to pay a combined $5.5 million for violations of the Textile Act. Both companies were “advertising products as made of bamboo when such products were actually made of rayon and did not contain bamboo fibers,” said a statement by the U.S. Office of Public Affairs. They further claimed the bamboo products were environmentally friendly, with Kohl’s adding “such products were produced free of harmful chemicals, when in fact rayon is produced using a chemical process that requires toxic chemicals and results in the emission of hazardous pollutants.” Arun G. Rao, Deputy Assistant Attorney General and head of the Justice Department’s Consumer Protection Branch, said “consumers should be able to trust retailers’ representations about the materials from which their clothes and linens are made.” 

Pretending to be green can be expensive