Volkswagen Corporate Business Ethics

In a world with smarter consumer and stakeholder demographics leading to more socially responsible organizations, one could think that allegory of big corporations being tantamount to evil entities that are fueled by greed is perhaps not as prevalent today as it was back in the 20th Century. However, such views continue to persist, in no thanks to cases such as that of the Volkswagen emission scandal and Dieselgate Scandal.

Due to the ever increasing environmental standards and relevant regulation enforcements, corporate fraud committed under the climate mitigation pressures are becoming more frequently observed. (Li, et al., 2018) On September 15, 2015 US Environmental Protection Agency (EPA) served a Notice of Violation (NOV) on Volkswagen Group for violation of the Clean Air Act alleging that they used a software that circumvents emission testing for certain air pollutants. This essay will give an overview of the Volkswagen emission gate scandal and how this could have been avoided using two of the principles of Ethics: Utilitarianism and Ethics of Duty. Furthermore, this essay will analyze and evaluate which approach better fits to prevent such an incident.

Volkswagen, once a veritable poster-boy for corporate business ethics regarding areas such as sustainability, CSR and environment (CSR Europe, 2013) came crashing down in the events of September 2015. The company which had once proclaimed the importance of resource conservation, climate protection and emissions reduction (Volkswagen, 2014) was publicly vilified for lacking the very values that it prided itself in where the auto manufacturer had been caught for installing so-called ‘defeat device” to get around emission laws in 482,000 cars that were manufactured from 2009 to 2015 which was later revealed to be 11 million vehicles worldwide. (Add reference) So what does this defect device do? Modern cars have dozens of computers inside them to coordinate the functions of the engine for optimal performance, while making sure that there is not too much nitrous oxide coming out of the pipes. It has been working this way for decades now.

Every part of the modern car’s engine has a sensor or controller on it and these computers read data thousands of times per second, making adjustments like the ratio of fuel to air that is going into the cylinders. This cheating Volkswagen models are diesels and diesels are really important computer controlled parameter which is the amount of unburned fuel going into the exhaust. A defeat device is a special program inside these computers that make it appear as the car meets the emission standards even when it does not. The Volkswagen diesel engines were known for getting great fuel economy but NOx trap only works well when more fuel is being used, so the car would detect when it was being tested for emission. It would use more fuel and make the NOx trap work well and the emissions would be fine but then you get on the road the device turns off your burning fuel while 40 times more Nitrous oxide is released into the atmosphere.

According to ETPA, it was a sophisticated system that checks thing like the steering wheel position, speed and how long the engine was on and even the atmosphere pressure. In other words, there is no way that this was accidental because the software was designed very carefully to detect and official emissions test. This was the level of deception and that is the reason why Volkswagen went through serious trouble and backlash. Caught red-handed, the future of Volkswagen was cast under a dark shadow of doubt. In fact, their CEO Martin Winterkorn resigned under threat of a criminal investigation. (Boston 2015)