The Scandal and Its Impact on the Environment
For over two years, the German car making company, Volkswagen, has been dealing with the scandal dubbed as the Volkswagen emission scandal. This emission scandal has immensely affected the integrity of the company regarding its view on the realization of a clean environment. A team of researchers from West Virginia University in May 2014, with the direction of Dan Carder, conducted an extensive emission test on passengers’ car ranging from a wide variety of companies that included, Volkswagen (ABC), Mercedes-Benz and BMW (Brooks, & Dunn, 2017). The team tested two Volkswagen models which had been embedded with the two-liter turbocharged 4-cylinder diesel engine. As a result, they uncovered significant information which coerced the California Air Resources Board to start a fresh and intense investigation into Volkswagen (Guilbert Gates, 2017).
According to Lee, & Vachon, (2016), it was established that Volkswagen has been equipping a wide range of its model of vehicles run by a diesel engine which ill devices which could detect when they are being tested. The United States of America has a staunch regulation when it comes to environmental protection through carbon emissions. For this reason, the United States require every car that runs on a diesel engine to have software installed in its exhausted which will assist in purifying the carbon emissions. However, in the case of Volkswagen, the software installed in the exhaust depict unusual characteristics. The software became enabled when undergoing testing but shuts off immediately testing was over. The reason why this was the case, was to enable Volkswagen vehicles to save on fuel and also to improve on performance. For this reason, the Volkswagen vehicles released a significant and more that required carbon emissions, which is more than forty times the legal required of emissions (Guilbert Gates, 2017). In this regard, the environment was at risk due to excess amount of emissions. To make matters worse, after numerous testing was done in almost all models of Volkswagen vehicles, it was established that fourteen car models by Volkswagen were fitted with the defective software. The seriousness of the matter made the information to be public. As a result, Volkswagen recalled around eleven million of their vehicles which were found to be fitted with defective software. The United States alone has more than half a million Volkswagen cars with defective software while a whopping ten million cars were recalled from Europe. The remaining half a million cars were recalled from the car distributed to various parts of the world such as Africa, Asia, and South America where the number of diesel cars are relatively minute. Since the scandal went public, Volkswagen has been seen making steps in ensuring that they rectify the situation in the bid to put their car company back on a map and restore its integrity.
Who Were Affected?
The Volkswagen emissions scandal affected a wide range of quotas among the most affected were the stakeholders. According to Weiss, (2008), stakeholders are the individuals in any organization that are responsible for financing activities of an organization are affected by activities of an organization. One of the stakeholders are the shareholders, this set of individuals depend on the performance of an organization for them to have the share of the profits. This means that if an organization perform poorly, then the shareholders get low returns as dividends. For the case of Volkswagen emissions scandal, the shareholders were affected greatly since the company was engaged in endless ligation process and also the recalling of cars and making changes to the exhausts, costed the company a lot. The customers, as part of the stakeholders, were affected greatly. Their cars had to be banned from use thus caused them a loss of money that they utilized in purchasing the vehicles. Consequently, other stakeholders who were affected include the dealers, German government, and auto manufacturers (Siedel, 2016).
As pointed out by Hotten, (2015), apart from the stakeholders, car manufactures were also affected by the Volkswagen emissions scandal. This is because there was a blow to the diesel market. Over decades, car manufacturers have reaped a lot from the production and sale of diesel fuel machineries. This proliferation of sales of diesel cars was as a result of the support of many governments believing that they are good for the environment. However, the latest scientific research proves this not to be the case. For this reason, in some countries and cities there diesel cars are not allowed. The Volkswagen emissions scandal has made the sale of diesel cars to slow down big time.
Utilitarianism is one of the eminent ethical theories that emanates from the Volkswagen emissions scandal. Utilitarianism falls under the importance of ethics where it means that regardless of whether an action is right or wrong, it is in tandem to its consequences (Smith, 2010). This theory is important since it deals with the repercussions of actions whether good or bad. In the case of Volkswagen emissions scandal, there are a lot of happenings that goes opposite with the beliefs of what a Utilitarian may hold. In the whole scandal, it is undoubtedly clear that there is no amount of good that emanated from the side of Volkswagen. There is nobody that benefited from the scandal of Volkswagen in any shape of form. This is because most of the consumers are faced with the dilemma of what action to take regarding their defective cars. A lot of millions have lost their jobs, and also Volkswagen itself is coerced to spend a significant amount of money in rectifying the situation. The only good thing that has come about from this scandal is the tightening of the rules and compliance regarding emissions (Rebentisch, 2017).
Ethical Theories and Perspectives
Deontology is a theory that focuses much on principles. According to Wonnell, (2011), this theory suggests that it is everyone’s duty to treat others with respect. Also, this theory reiterates that it is important that people are treated as people who deserve an autonomous life. It should be noted that people are not supposed to be regarded as a means to an end but rather be treated as ends. This can be determined by looking the rights that people have and resolving the emerging conflicts that arise from different rights. Volkswagen was completely immoral when it lied to its shareholders, customers, and employees, therefore, going against the Deontology perspective. The stakeholders were denied the rights to know what took place in the installation of the software into the engines. Volkswagen made the above people believe in the facts that and false images that the company tends to portray. The dishonesty of Volkswagen made the consumers continuously purchase their cars and encouraged the shareholders to buy their stocks largely. Consequently, their employees participated with vigor in the making of the faulty cars unknowingly. Volkswagen made use of the above people to advance its sales and its marketplace without giving them the truth so as to make have a chance to make own decisions.
As per Aristotle’s ethics, virtue theory is a significant theory in determining a kind of person (DesJardins, 2009). Virtue theory regarding virtue ethics is responsible for unveiling the character traits that an individual or an entity possesses. The character traits that an individual has need to depict goodness and be full of human life. The virtues which are important in ensuring that the fullness of human life and goodness include fairness, self-control, courage, and honesty (Lara, 2008). This virtue theory also gives clear details that regard to companies and their decision making where the differences between good and bad decisions are separated and are clear for everyone to see. Regarding the momentous virtues, Volkswagen has depicted to have no regard for any of them. A courageous virtue is where one need to stand firm for the right ideas and actions despite the fact that everyone in the surrounding is making bad choices. Volkswagen did not uphold courage because it intentionally fitted its engines with faulty software. Honesty as a virtue means that the treatment of the customers, employees and other companies should be transparent. However, Volkswagen was not honest from the word to go. It knew that it fitted its exhaust with software which could detect they are big tested and fail to work right after testing. Self-control is desires which are reasonable and does not cause harm. Volkswagen had reasonable desires for maximizing fuel performance, but they did not have the self-control from achieving this desire in the right way. Lastly, fairness means to ensure that there are right standards so as to realize fair business practices. Volkswagen failed in fairness since they created a dump software which was not up to the standards.
Utilitarianism
This theory deals with issues that touch on adherence to the set rules and regulations. “A social contract is enacted by between citizens and the state emphasizing moral action judged by adherence to agreed set of rules.” (Millie, 2016) Contract theory emphasizes that moral rights and goods and the responsibility of natural law needs to be considered with great care. It is imperative that by the contract theory, rules need to be followed with utmost respect (Pesqueux, 2012). In the case of Volkswagen, the contract theory was not adhered to. Despite the knowledge that in the United States there is a requirement that diesel cars should be fitted with software to clean the emissions, Volkswagen gave no regard to this rule and fitted its exhausts with faulty software.
After the Volkswagen’s emission scandal became known to the public in May 2014, numerous effort has been seen by the company in a bid to rectify the situation. Firstly, the company ensured that funds are set aside, to deal with ligations costs and settlements in the United States. The company set aside fifteen billion United States dollars to deal with the problem. Consequently, the company had the option of the buyback program, approved by the government of the United States. A lump sum of money, ten billion was set aside for this project where owners of the affected cars depending on the make, year of manufacture and car conditions, sold their cars to Volkswagen (Ewing, & Tabuchi, 2016). Consumers have options to keep their cars, however, if a consumer chose such option, one will be compensated with an amount ranging from five thousand to ten thousand United States dollars. Also, such customers will be able to hire Volkswagen cars at Volkswagen dealership while they will get their engines fixed free of charge. The customer-good–will-program, is Volkswagen’s last cause of action where Volkswagen car owners will receive car service maintenance free for a certain period.
For Volkswagen to win back the trust of the customers, dealers, and stakeholders, they need to be more transparent and give the blueprints for the make of their future cars. This means that it should publish reports of their future cars in regards to emission testing, and allow government check-ins to confirm the authenticity of their makes. Also, Volkswagen should ensure that the top level management including the board of directors and the executives are relieved off their services since they cannot be able to be trusted with the company’s operations. At present, the mission of the Volkswagen Company is “”offer attractive, safe and environmentally sound vehicles which can compete in an increasingly tough market and set world standards in their respective class.” (“Volkswagen Group < Company < Volkswagen Commercial Vehicles”, 2017), which is a good mission of the company.
References:
Brooks, L., & Dunn, P. (2017). Business & Professional Ethics for Directors, Executives & Accountants (8th ed., p. 143). Cengage Learning.
DesJardins, Joseph R (2009). An Introduction to Business Ethics (5th ed., p.42). New York: McGraw-Hill Higher Education.
Ewing, J., & Tabuchi, H. (2016). Volkswagen Scandal Reaches All the Way to the Top, Lawsuits Say. Nytimes.com. Retrieved 13 May 2017, from https://www.nytimes.com/2016/07/20/business/international/volkswagen-ny-attorney- general-emissions-scandal.html
Guilbert Gates, K. (2017). How Volkswagen’s ‘Defeat Devices’ Worked. Nytimes.com. Retrieved 13 May 2017, from https://www.nytimes.com/interactive/2015/business/international/vw- diesel-emissions-scandal-explained.html?_r=0
Hotten, R. (2015). Volkswagen: The scandal explained – BBC News. BBC News. Retrieved 13 May 2017, from https://www.bbc.com/news/business-34324772
Lara, A. (2008). Virtue theory and moral facts. Journal of Value Inquiry, 42(3), 331-352. doi:https://dx.doi.org/10.1007/s10790-008-9113-0
Lee, K., & Vachon, S. (2016). Business Value and Sustainability: An Integrated Supply Network Perspective (1st ed., p. 102). Springer.
Millie, A. (2016). Philosophical criminology (1st ed., p. 86). Policy Press.
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Rebentisch, E. (2017). Integrating Program Management with Systems Engineering (1st ed., p. 29). Somerset: John Wiley & Sons, Incorporated.
Siedel, G. (2016). The Three Pillar Model for Business Decisions: Strategy, Law and Ethics (1st ed.). Van Rye Publishing, LLC.
Smith, H. M. (2010). Measuring the consequences of rules. Utilitas, 22(4), 413-433. doi:https://dx.doi.org/10.1017/S0953820810000324
Volkswagen Group < Company < Volkswagen Commercial Vehicles. (2017). Volkswagen- commercial-vehicles.com. Retrieved 13 May 2017, from https://www.volkswagen- commercial-vehicles.com/en/company/volkswagen-group.html
Weiss, J. (2008). Business Ethics: A Stakeholder and Issues Management Approach (5th ed., p. 47). Cengage Learning.
Wonnell, C. T. (2011). Deontology, Thresholds, And Efficiency. Legal Theory, 17(4), 301-317. doi:https://dx.doi.org/10.1017/S1352325211000176
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