How to Spot and Avoid Greenwashing in Supply Chains
Research draws attention to practice of firms greenwashing their CSR by disclosing supply chain relationships with “green” but concealing “brown” suppliers

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The days of running businesses solely for profit are long gone. Businesses, large or small, must make considerable efforts to be socially responsible and eco-friendly. A past survey shows that 91 percent of global consumers expect businesses to address social and environmental issues, and 90 percent of them would boycott a company if it were engaged in irresponsible business practices. In other words, corporate social responsibility (CSR) is not only a buzzword, but vital for businesses to be successful nowadays. However, it is not always easy to tell whether a company is really doing good or just faking it, and as a recent research study looks at depth, some firms would voluntarily publish their supply chain relationships with “green” suppliers to fake a good CSR brand.
“It is just not enough for firms to show the ‘green’ image of themselves to the world to demonstrate their efforts in CSR. Our results show that firms now selectively reveal their ‘green’ suppliers to win customer trust,” Prof. Wu says.
“If the ‘bright’ side to CSR is a world where firms are seeking to lower their carbon footprint, then what our study shows is the ‘dark’ side and how smaller and weaker firms are using it to greenwash their public image.” – Prof. Jing Wu
To gauge greenwashing behaviour, the researchers first calculated a score for each of the companies in the sample based on their environmental performance. They found consistent evidence that a suppliers’ environment score is positively related to how likely their partner firm would disclose its supply chain relationship. Specifically, a one-standard-deviation increase in a supplier’s environment score would lead to a 4.2 percent higher chance of being disclosed by their customer firm. In addition, firms tend to conceal their less eco-friendly suppliers.