Volkswagen emissions scandal case study

The German automaker was accused by the United States Environmental Protection agency (USEPA) of using a software to rig the test to pass the US emission standards (Schuetz, 2016). The software installed in the diesel engines could detect when cars were being tested changing its performance and hiding the fact that the cars emitted 40 times more NOx in the real world (Jordans, 2015). The company admitted to having fitted the “defeat device in 11million cars worldwide including 8million in Europe (Jordans, 2015). The scandal raised concerns on three main issues; corporate responsibility, ethical behavior and environmental impact. The scandal exposed unethical behavior and how this unethical behavior significantly impacted the environment. VW was be known for its ethics and was even ranked as a top ten Reputation Winner in 2014 by the Reputation Institution for its outstanding performance in citizenship, governance and workplace practices (Schuetz, 2016).

In light of the scandal the company’s ethics was questioned including its leadership, corporate governance and corporate culture. Deceiving the government and the society is a significant ethical misconduct that can’t be overlooked. The company’s Ex-CEO in 2018 was arraigned for unethical business practices (Ewing, 2018). The company had a number of Environmental policies that ensure that all its products were environmental friendly. The company and its leadership wrestled with how to behave after the news broke. Were they to accept the charges or reject them and try to prove their innocence? Immediately the scandal comes to light that Volkswagen USA made the sensible decision to stop posting on all social media platforms including Facebook and Twitter. Their accounts were dark for a whole week until, they posted a statement from the US CEO Micheal Horn admitting deception (Davis, 2015).

Just a few weeks into the scandal the stock prices had drastically declined by 17% (Schuetz, 2016). The company was estimated to spend $7. During their research they notice a discrepancies showing poor on-road emission. CAFEE results got the attention of the EPA who repeated tests on cars in 2014. EPA contacted VW for an explanation on the poor real world emission level but instead of explaining they offered to recall all TDI (turbocharged direct injection) diesel engine cars. This did not satisfy CARB (California Air Resources Board) and EPA. On 3 September 3, 2015 Volkswagen admits to using “defeat device” after EPA threatens not to certify 2016 diesels (Jordans, 2015). They felt betrayed by the company’s unethical behavior and the fact that the company claimed environmental conscious, which gradually lowered the trust levels.

However, there were still few loyal customers and VW supports who stated their love for Volkswagen regardless of the scandal. Many gave the company a chance to make things right. Interrelation of the issues Social and ethical issues are increasingly becoming a necessary professional practice in management. Reason being companies are facing an increase pressure to actively address concerns on social and environmental impacts of their business. Possible Future Implications In crimes against the environment like in the Volkswagen emission case it is difficult to calculate who is affected and the amount of damaged caused. However, based on the knowledge of the atmosphere and how pollutants affect the human body the damage can be estimated. Since VW’s emissions were 40 times the allowable level the estimated health damage will exceed $100 million in economic cost (Noelle, 2015).