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As environmental legislation grows more stringent in response to the escalating climate crisis, some of the world’s largest corporations have adopted fraudulent mechanisms to keep their margins of profit, and achieve improper competitive advantage. Such mechanisms can lead to problems in the supply chain, a decrease in market value, diminished trust in brands, increased surveillance of companies, as well as damage to the environment.

This book offers a holistic view of the nature and consequences of environmental fraud, bringing together practical examples, empirical research data, and management theory. It will be of interest to academics working in the fields of sustainability management, business ethics, and corporate social and environmental responsibility.

Inhaltsverzeichnis

Frontmatter

1. Business Ethics

Abstract
This chapter approaches some of the fundamental issues that compose the debate around business ethics. Themes such as the reasons for anti-ethical behavior (i.e. “why do businesspeople behave the way they do?”), the distinction between good and bad business practices, and the nature of ideal behavior (i.e. “how should businesspeople behave”?) are treated both in theoretical and in illustrative manners. Beyond that, the chapter broaches the relevance of the debate (i.e. “why should we care?”), pointing to diverse forms with which moral deviations from men and women that are in the command of enterprises can negatively affect societies. Overlaps and distinctions between ethics and business ethics are also discussed, offering new justifications for the study of the latter. Within this view, the tripartite business ethics conceptual model is proposed, delimiting the region of confluences that structure the locus of this debate. Additionally, a brief historic of the developments that culminated in the consolidation of business ethics as a distinct discipline is presented. Finally, diverse practical applications of such discussions are conferred, focusing on relevant current themes (e.g. modern slavery, child labor, food production, and animal rights).
Mauro Fracarolli Nunes, Camila Lee Park

2. Environmental Fraud

Abstract
This chapter develops the concept of environmental fraud. Beyond its definition, its specificities are also addressed, in a way that the distinction between environmental and other types of fraud is better understood. The chapter also offers a contrast between the construct and other consecrated concepts of the management literature, being the notion of greenwashing particularly relevant in this sense. These discussions contribute to the development of sub-classifications and gradations of environmental fraud that consider both the ways they are applied and their causes and consequences. Furthermore, the proposed debates should be of interest for diverse fields of knowledge, being Business Ethics and Sustainability in general the most evident ones.
Mauro Fracarolli Nunes, Camila Lee Park

3. Improper Competitive Advantage

Abstract
This chapter develops the concept of improper competitive advantage, approaching the role of unethical business practices in the search for abnormal performance. In that direction, a broad debate on the nature of competitive markets is presented, with the characteristics and mechanics of its most common forms (e.g. perfect competition, monopoly, duopoly, and oligopoly) being addressed. Competitive advantage is discussed in greater detail, as well as the main theoretical foundations supporting it. Building on the debate on Business Ethics (Chap. 1) and Environmental Fraud (Chap. 2), the notion of improper competitive advantage is proposed, encompassing corporate misconducts and subterfuges used by companies in their search to outperform competitors. A contrast between honest and dishonest competition is then built, positioning environmental fraud as a particularly harmful practice.
Mauro Fracarolli Nunes, Camila Lee Park

4. The Age of Green

Abstract
This chapter approaches what is here defined as the age of green. The development of a collective environmental mindset is discussed as a response to human need for meaning and guidance. Building on the outcomes of historical and philosophical movements (e.g. French Revolution and the Enlightenment), a parallel is made between modern environmentalism and religious thought, with the age of green fulfilling a gap left by the decline of Christianism in the West. Beyond that, the philosophical roots of modern environmentalism are also broached, particularly addressing the work of Jean-Jacques Rousseau. Likewise, the history of sustainability as a concept is revisited, mainly through the examination of the various efforts and conferences promoted by the United Nations since the 1970s. Finally, the chapter discusses the complex association between environmentalism and ideology, as well as the manifestations of the age of green in practice, notably in politics and consumption habits.
Mauro Fracarolli Nunes, Camila Lee Park

5. The Automotive Industry Under Suspicion

Abstract
Introducing the second part of the book, this chapter treats the automobile industry from a holistic perspective, discussing it as a propitious scenario for environmental fraud. Beyond the history of its development, the influence of thinkers and entrepreneurs such as Taylor and Ford in shaping the industry’s competition is also approached. In particular, the materializations of the notion of scientific management, as well as that of philosophies such as lean manufacturing, are discussed as fundamental factors in the constant pursuit for operational efficiency that characterizes the industry up until today. The chapter also broaches the economic organization of automobile production, pointing to its main players, their geographical distribution, and the power dynamics that are typical of this activity. In the same way, the social impacts of such products are surrounded, highlighting the relationship between brands, products, and consumers. The emotional value of automobiles is also discussed, together with the different importance it may hold among distinct publics (e.g. urban and rural consumers). In the end, an analysis of the competitive forces that reign the automobile industry is presented, corroborating the argument that the industry represents, in fact, a prosperous atmosphere for the occurrence of environmental fraud.
Mauro Fracarolli Nunes, Camila Lee Park

6. Dieselgates: VW, FCA, Renault, and PSA

Abstract
This chapter examines prominent cases of environmental fraud within the automotive industry. In particular, the scandal come to be known as the Volkswagen Dieselgate is grappled as an exemplary case of the practice. Similar occurrences involving other firms are also approached (e.g. FCA, Renault, and PSA). Beyond the description of the cases from the technical point, the chronology of events that both preceded and followed fraud disclosure is developed. Possible motivations that lead executives from these organizations to opt for the adoption of illicit practices, for instance, are considered. In this sense, discussions from the previous chapters are resumed, especially in what refers to decision-making processes, and to competitive characteristics of the automotive industry.
Mauro Fracarolli Nunes, Camila Lee Park

7. Not a “Privilege”: Environmental Fraud Beyond the Automotive Industry

Abstract
This chapter extends the discussions to assorted contexts, analyzing cases of environmental fraud in a range of economic activities. Cases linked to the fast fashion, food and beverage, electronics, and logistics industries are examined. That includes the commercialization of conventional products as organic (e.g. cotton, soybeans), the deliberate slowdown of electronic products to push sales (e.g. smartphones), and the use of what is here defined as iceberg strategies by logistics service providers (i.e. green operations limited to the interface these companies keep with consumers, particularly within the last-mile delivery), among others.
Mauro Fracarolli Nunes, Camila Lee Park

8. The Intangible Costs of Environmental Fraud: Impacts for Brands, Trust, Corporate Identity, Image, Credibility, and Reputation

Abstract
Initiating the considerations around the consequences of environmental fraud, this chapter approaches the impact of this type of deviation in the bundle of companies’ intangible resources. Through a contextualized discussion of the concepts of brand, trust, corporate identity, corporate image, corporate credibility, and corporate reputation, the processes that can lead firms to compromise such resources, causing long-term damages to affected companies, are presented. Alongside a literature review concerning each of these constructs, the debates treat the connection between them, with their similarities and differences being broached. The chapter contributes thus to the understanding of environmental fraud as a risk factor that goes beyond the immediate losses that companies might suffer. While examining the committal of stakeholders’ perceptions, the discussions add to the debate around the nature of intangible resources, as well as to the valorization of strategies that aim to protect them.
Mauro Fracarolli Nunes, Camila Lee Park

9. Your Fraud, Our Country: Impacts on National Brands and Reputations

Abstract
The most comprehensive impacts of environmental fraud are discussed in this chapter. More specifically, the association of fraudulent companies with their countries of origin is approached as a risk to the activities of compatriot organizations. In this sense, the intrinsic value of “Made In” brands (e.g. Made in Germany, Made in France, Made in Italy) is addressed, with the disclosure of environmental frauds—as well as other types of immoral conducts—being treated as a potential trigger to a chain reaction. The dissemination of negative event is broached as a harmful mechanism that can result in reputational contamination for other companies. Given the relevancy of environmental fraud cases in the automobile industry (e.g. Volkswagen Dieselgate), the use of national reputation by carmakers is assessed in more detail. Beyond offering a technical vision on the subject, this discussion offers the bases to the understanding of associated risks in anti-ethical management practices, which are often neglected. The chapter contributes to a broader perception on the consequences of corporate scandals, while this debate can be extended to other kinds of crises.
Mauro Fracarolli Nunes, Camila Lee Park

10. Impacts on Market Value

Abstract
This chapter completes the discussion around the consequences of environmental fraud. Based on the results from a series of event studies, Volkswagen Dieselgate’s impact on the market value of the company is approached in more detail. Similarly, the losses caused for investors of firms that orbit the German company (e.g. suppliers, competitors) are analyzed. Beyond the objective examination of empirical data, the chapter offers a theoretical discussion around the diverse constructs connected to the theme. Among them, the notions of market value and value per se are advanced, along with various explaining factors for value loss. In addition to contributing to the literature on the causes, means, and consequences of market value fluctuations, the conceptual considerations aim to allow for the generalization of ideas to other contexts. This would include other types of environmental fraud, and its occurrence in other industries beyond the automobile one.
Mauro Fracarolli Nunes, Camila Lee Park

11. Is Diesel Dead?

Abstract
This chapter introduces the fourth and final part of the book, discussing the past and future of the diesel technology. Besides the historic development of diesel-fueled motors, its different status in markets such as the European and the American ones is also approached. Likewise, the environmental performance of diverse concurrent energy sources is critically analyzed. Included in this group are alternatives such as natural gas, shale gas, and electric cars. The latter is specifically highlighted, with several problems linked to its production, use, and discard of electric batteries being broached in further detail. In addition, the environmental impacts of the different forms of energy generation are examined (e.g. wind, solar, hydroelectric). The joint analysis of the reputational damage suffered by diesel throughout decades and the notation of the environmental fragilities of the diverse alternatives for its use corroborate the verdict on the future of the diesel technology.
Mauro Fracarolli Nunes, Camila Lee Park

12. Lessons Learned, Future Research and Tendencies on Environmental Fraud

Abstract
Closing the book, this chapter reviews the lessons learned, briefly discussing each of the 11 previous chapters. Beyond the specific contributions on the diverse themes approached, several avenues for future research are also presented, especially on the conjectures that lack empirical evidence. Although they treat the specificities of the previous debates, the chapter’s discussions also focus on the relationship among different ideas, favoring the understanding of the book as a whole. Trends on the debate on environmental fraud are also broached, with the possibility of these conducts being disseminated, being the field of Green Finance particularly discussed.
Mauro Fracarolli Nunes, Camila Lee Park

Backmatter

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