Transparency is the new sustainability: From Mitsubishi to Flint, covering up doesn’t pay
IMD Professor Reacts: Francisco Szekely Reacts on Mitsubishi falsifying car data
Mitsubishi Motors has admitted to overstating the fuel efficiency of four types of small cars sold in Japan by 5 to 10%, putting at further risk the trust of consumers in the automobile industry, already undermined by the recent Volkswagen (VW) scandal. VW needs to fix at least 600,000 cars in the US and has set aside 6.7 billion euros to pay for potential consumer and government penalties. Its sales in Europe have already slowed by 0.5%. Like in the case of VW, in which the German company admitted to manipulating emissions test data on its diesel vehicles in the US and Europe, the falsification of data will certainly have a significant economic impact on Mitsubishi Motors.
In another incident involving misleading consumer information, three government workers in Flint, in the US state of Michigan, have been charged with covering up evidence of lead contamination in the city water supply. The workers — a city employee and two state workers assigned to monitor water quality in cities — are the first to face criminal charges in the case in which city residents drank foul and unsafe water for many months.
Why did these car companies exaggerate the sustainability benefits to consumers and lie about emissions (VW) and higher fuel performance (Mitsubishi Motors)? And why did government officials cover up vital information and put citizens at risk?
Two thoughts come to mind: First, companies recognize now that consumers are more environmentally educated and that the market is responding to products with higher sustainability performance. Likewise, citizens are demanding to be correctly informed so that they can be sure that governments are meeting their responsibilities to protect their health by keeping vital resources such as water safe. The second thought is that transparency on sustainability has become a key strategic issue for business and governments. This is now of paramount importance to business and governments if they want to earn the trust of consumers and citizens. Long gone are the days of glowing corporate social responsibility (CSR) reports and politically correct statements in which companies and governments trumpeted their sustainability achievements and commitments, but which members of society could not corroborate. Transparency is today the new word for sustainability.
Francisco Szekely is Adjunct Professor of Leadership at IMD. He is author of the upcoming book: “The Sustainability Journey: Eight Steps Towards a New Business Model” (MIT Press)