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For decades, Wall Street has been plagued by accusations of corporate greenwashing, using aggressive marketing tactics that leave the impression businesses are doing more for the environment than they actually are. Although the term was coined in the 1980s, the adoption of the Paris Agreement in 2015 led to an explosion of corporate pledges to reduce greenhouse gas emissions. Government regulators began cracking down, however, as promotion and perception increasingly diverged from reality.
“Washing” proved so effective in that context, however, that observers say it’s now being used to paint a similarly rosy, as well as illusory, picture of successful AI strategies. Sometimes, the goal is making companies appear ahead of the curve, or at least not behind it. On other occasions, it can mask cost-cutting measures such as layoffs.
“CEOs love AI washing because it makes them sound innovative,” says J.P. Gownder, vice president and principal analyst at Forrester. “It sounds plausible. But it’s often just a financialized decision that they use AI as a scapegoat for.”
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Companies have been quick to point to automation as the cause of layoffs. Earlier this year, Block cofounder and CEO Jack Dorsey wrote in a letter to shareholders that the company was cutting nearly half its workforce. “We are choosing to shift how we operate at a time when our business is accelerating and we see an opportunity to move faster with smaller, highly talented teams using AI to automate more work,” added Amrita Ahuja, chief financial officer.
Amazon laid off 16,000 employees in January, just three months after ousting 14,000 workers in October and less than a year after CEO Andy Jassy predicted as much. “We expect that this will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company,” he wrote in a memo to employees last summer. Salesforce CEO Marc Benioff said in September that he laid off 4,000 workers because he needs “less heads,” thanks to AI, and education tech firm Chegg shrank its workforce by 45% in October as the “new realities of AI” led to significant declines in traffic and revenue. The list goes on.
