“Emissionsgate “at Volkswagen
Student’s Name
University
“Emissionsgate” At Volkswagen
Volkswagen is one of the leading car manufacturing companies in the world, and it is located in Germany. In 2015, U.S. regulators found out that Volkswagen had installed software that allowed vehicles manufactured by the company to misrepresent their levels of emissions (Hill & Hult, 2019). This paper examines the “Emissionsgate” Volkswagen scandal in terms of its implications to various stakeholders.
Explain Volkswagen’s Responsibility for Accurate Reporting of its Business Practices to its External Stakeholders
In addition to financial reports, companies have a responsibility to provide sustainable reports that communicate information pertaining to corporate actions regarding issues that are of interest to its stakeholders and the society at large (Stocker, Arruda, Mascena, & Boaventura, 2020). Thus, Volkswagen had a responsibility to provide accurate reports to American consumers and investors and the federal government about the cars it was selling in the U.S. However, the company chose not to provide correct information to the U.S. agency tasked with the responsibility of protecting public health and environment. Also, the company had a responsibility to inform American consumers and business people about the levels of emissions of the cars they were driving or investing in.
Analyze the Extent to Which Volkswagen Violated Ethical Standards of a Foreign Country That it Conducted Business in
To begin with, Volkswagen violated the ethical standards pertaining to U.S. codified law. Codified law refers to the standards and values that are part of a country’s legal system and which are enforceable by the courts (Hill & Hult, 2019). The case study dictates that Congress created the Environmental Protection Agency (EPA) to serve the mandate of protecting public health and the environment (Hill & Hult, 2019). The agency enforces the laws enacted by Congress. However, Volkswagen engaged in actions aimed at preventing EPA from executing its mandate of protecting the public health and the environment. At the same time, Volkswagen failed to adhere to the ethical standards of the United States pertaining to its corporate social responsibility. Companies have a responsibility to protect the environment in their areas of operations (Hill & Hult, 2019). By selling cars with high levels of emissions to the U.S., Volkswagen failed to fulfill its responsibility to the environment, especially as far as the U.S. is concerned.
Analyze the Harm That Was Done To Stakeholders By Volkswagen And Volkswagen Management in Falsifying Emissions Records
Some customers are very conscious of their environmental obligations. These individuals would never buy cars that produce high levels of air pollutants. Consequently, many firms, both small and large, are focusing on enticing environmentally-conscious consumers (Hill & Hult, 2019). As a result of the actions of Volkswagen and its management, some customers end up destroying the environment against their will. At the same time, the action of the Volkswagen and its management affected the level of trust its customers have towards the company. Some customers may start to think that there may be other bad things that Volkswagen is doing without their knowledge. Besides, the “Emissionsgate” scandal resulted in a significant plummeting of the Volkswagen shares. On this note, Volkswagen shares lost a third of their value since the company admitted to using on-board software to cheat about the levels of emissions by its cars (CNBC, 2016). Thus, many of the stakeholders of this company lost huge amounts of money in potential earnings.
Determine if the Severity of the Penalties Against Volkswagen Met the Severity of the Harm Done to the Environment and Stakeholders
The case scenario indicates that U.S. regulators fined Volkswagen $4.3 billion after the former was convinced that the latter was guilty of altering its car mechanism to cheat emissions assessment systems (Hill & Hult, 2019). This amount of money is inadequate to compensate for the harm caused by Volkswagen to the environment. Air pollution is associated with a wide array of negative health, social, economic costs (Manisalidis, Stavropoulou, Stavropoulos, & Bezirtzoglou, 2020). Some of these effects are short-term, while others are long-term. On this note, the case study indicates that the pollutants produced by the cars manufactured Volkswagen are responsible for causing conditions such as emphysema, bronchitis, and several other respiratory ailments. At the same time, CNBC (2016) indicates that shareholders have lost huge amounts of money following the “Emissionsgate” scandal in potential revenues after Volkswagen shares lost a significant proportion of its value. At the same time, Volkswagen reacted to the fine placed by the U.S. regulators on it by firing some of its engineers whom it thought were responsible for the installation of the deceitful software (Hill & Hult, 2019). This action may discourage innovations by Volkswagen’s workers since it makes them fearful of being held personally responsible for their creations and ideas. Evidently, Volkswagen should have been given a heftier fine.
Examine the ethical issues associated with the case
Ethics refers to the code of moral values and principles that dictates how people or group behaves with respect to what is right or wrong (Hill & Hult, 2019). One of the ethical issues associated with the “Emissionsgate” scandal is which been saving fuel and increasing emissions should be prioritized. In the case scenario under review, Volkswagen resolved to install the software that allowed cars to misrepresent their levels of emissions in order to save on the fuel consumed by its vehicles (Hill & Hult, 2019). On the one hand, decreasing the amount of fuel used by vehicles has the potential to reduce the levels of pollution across the globe. The individualistic approach views moral acts as those that promote entities’ best long-term interests (Hill & Hult, 2019). Reduced fuel consumption is likely to increase customer loyalty for cars manufactured by Volkswagen. Thus, Volkswagen chose to prioritize its own needs for more customers at the expense of its duty to protect the environment.
Determine Whether Volkswagen Made an Error or Whether Management Had Participated in Corruption
It is highly likely that the management of Volkswagen participated in the “Emissionsgate” scandal. The case study indicates that the engineers at Volkswagen went to great lengths to ensure that the software providing misleading information about cars’ emissions levels worked (Hill & Hult, 2019). Thus, the software was not installed by accident. It is highly likely that there are things within Volkswagen that account for the engineers’ actions. On this note, corporate culture can exert a powerful influence on the behaviors of various entities within organizations (Hill & Hult, 2019). Organizational culture offers ethical signals to workers. Other aspects of the organization, such as reward systems and rules and policies, may also affect the workers’ ethical decision-making (Hill & Hult, 2019). The management has a responsibility for creating and sustaining conditions that dictate how the employees are expected to behave.
In conclusion, the “Emissionsgate” scandal is an example of the implications of the malpractices by multinational companies on the environment, stakeholders, and ethical standards. By allowing the installation of software that enabled cars to provide misleading information about their levels of emissions, Volkswagen exposed its stakeholders to the risk of suffering harm, such as reduced profits and increased chances of contracting respiratory conditions, among others. The harm caused to the environment by Volkswagen is far higher than the fine placed on the company by U.S. regulators.
References
CNBC. (2016). Volkswagen faces shareholder claims over emissions scandal. Retrieved from https://www.cnbc.com/2016/01/18/volkswagen-faces-shareholder-claims-over-emissions-scandal.html
Hill, C.W. & Hult, G.T.M. (2019). International business: Competing in the global marketplace (12th ed.). McGraw-Hill Education.
Manisalidis, I., Stavropoulou, E., Stavropoulos, A., & Bezirtzoglou, E. (2020). Environmental and health impacts of air pollution: A Review. Frontiers in Public Health, 8. 1-3.
Stocker, F., de Arruda, M. P., de Mascena, K. M., & Boaventura, J. M. (2020). Stakeholder engagement in sustainability reporting: A classification model. Corporate Social Responsibility and Environmental Management, 1(2). 1-10.