Blockchain Adoption and Greenwashing

• In Event: INNOVATION and NEW PRODUCT DEVELOPMENT: Innovation and Technology Management and Sustainable Operations

Abstract

Recently, some brands have started to adopt blockchain technology to certify sustainability claims of their products. While blockchain technology has advantages such as tamper-resistance and transparency, it also suffers from weaknesses such as data input integrity issues. We examine strategic aspects of blockchain adoption for certifying green products and examine its impact on greenwashing incentives. Using a stylized model, we demonstrate that, although blockchain certification can increase the environmental quality of products, it may also induce firms to engage in greenwashing. In addition, blockchain certification may lead to reduced profitability for the firm, reducing the incentives to adopt blockchain technology.

Author

• Yuze Li, Boston University