Sustainability Issues And Ethical Theories: A Case Study Of Volkswagen Emission Scandal

Identified sustainability issues for Volkswagen

There are number of media reports being published regarding the corporate social responsibilities of Volkswagen and most of these reports pointed about the negative and issues with their approach. This is due to the reason that emission scandal in 2013 for Volkswagen caused huge dent in their goodwill along with having other major impacts on different stakeholders. According to the report published by Siano, Vollero, Conte and Amabile (2017), this issue of emission scandal for Volkswagen is having much deeper root as reason due to the fact that demands and criteria of the customers lead to this situation (Siano et al., 2017). This report also stated that emission scandal of Volkswagen showed that it is just the tip of iceberg and there are number of other companies who are indulging in unethical business practices. According to the authors, market competitiveness is also responsible for the increase in unethical behavior of the firms (Krall & Peng, 2015).

In this essay, the major sustainable issues for Volkswagen will be identified and evaluated from the chosen academic paper. In addition, a number of theories will be used in justifying the actions and identify their extent of negativity. In accordance to the identified issues, it will be discussed whether Volkswagen was able to deal with the situation properly or not.

One of the major issues identified is from the environmental point of view. This is due to the reason that is the emission scandal of Volkswagen caused huge adverse impact on the environment. They have fitted cheating devices in their diesel cars in order to get overlooked by the authoritative agency in the United States (Jung, Chilton & Valero, 2017). However, this caused in increased level of pollution from the cars and caused huge emission in the environment. It is stated that faulty diesel cars of Volkswagen were being sold in number of countries around the world with millions of them were sold only in the United States. Thus, the emission scandal of Volkswagen causes adverse impact on the environment. There are number of reports being published where it is stated that faulty diesel cars of Volkswagen emitted a number of poisonous gas without being noticed that caused impact not only on the environment but also on the health of global population (Crete, 2016).

Another major issue that is being identified is social and technological fraud of Volkswagen. This is due to the reason that initiation of the technological fraud in the cars of Volkswagen caused emission from them over the prescribed limits. It is reported that technological fraud was done deliberately by Volkswagen in order to pass off the stringent environmental standard in the United States and also to avoid the reduction in the performance of the cars. Thus, with millions of car sold around the world, it can be concluded as one of the biggest technological fraud in the recent time (Mansouri, 2016). This technological fraud is having impact on the social factor also due to the reason that none of the consumers bought the diesel cars of Volkswagen were aware about the cheating device. Thus, they are also being affected from the emission as well as the larger section of the society who also inhaled the emitted substances (Rhodes, 2016). This can also be termed as failure of the corporate governance for Volkswagen due to the reason that upper level management was involved in the emission scandal.

Application of ethical theories in evaluating Volkswagen’s actions

Though the major portion of the reports published about the emission scandal of Volkswagen has termed it as unethical but application of theories will help to identify the different aspects of this incident. According to the utilitarianism theory of ethics, actions will be considered as ethical only if the end results provides positive outcome for maximum people and stakeholders (Lane, 2016). However, in the case of the emission scandal of Volkswagen, the action and steps taken by them to install the cheating device or software in their diesel cars lead to larger adverse impact on the environment, internal stakeholders and external stakeholders as well as to the goodwill of the company. Environment got affected by means of emission of polluted materials in air. Furthermore, external stakeholders including the users of the cars and the larger population got exposed to the harmful substances in the air (Barrett et al., 2015). Internal stakeholders including the employees and upper level management also got affected. This is due to the fact that number of employees got terminated from the job and some other lost their jobs due to the financial strain faced by the company (Burki, 2015). On the other hand, a number of top level management including the CEO got accused in the case and prosecuted accordingly. Hence, it can be concluded that the installation of the cheating device by Volkswagen caused no benefits in the long term and thus according to the utilitarianism theory of ethics, their action can be termed as unethical.

According to the deontological theory of ethics, it is important to follow and uphold the duties and obligations in initiating certain actions. In addition, this theory also states that promise should be fulfilled in the most ethical manner. However, in the case of Volkswagen, their promise of providing cleaner vehicles was not being fulfilled and they also didn’t followed their obligations of reducing the environmental impact from their cars (Paquette, Sommerfeldt & Kent, 2015). Though, the installation of the cheating device helped Volkswagen in portraying the cleaner image of their cars but they have emitted harmful substances. This refers to the fact that promise of providing cleaner diesel vehicles was not being fulfilled and Volkswagen was also not focused on reducing their environmental impact. This can be concluded that according to the deontological theory of ethics, emission scandal faced by Volkswagen was due to their unethical business practices (Hall & Page, 2015). Evaluation of the emission scandal of Volkswagen with the help of two major ethical theories identified that Volkswagen was unethical from their side.

Ineffectiveness of leadership in handling the issue

After in the incident, the major shortcoming for Volkswagen being identified is the ineffectiveness of their leadership. This is due to the reason that ineffective leadership lead to the improper handling of the issue and further amplified it. It is reported that in the initial stage of publication of the incident, upper level management of the company tried to delegate the entire responsibilities to the engineers. This led to further dissatisfaction among the employees. On the other hand, Volkswagen also tried to counter the facts rather than accepting it in the primary stage. However, all these issues are being emerged due to the improper handling by their leadership. According to the theory of participative leadership, decision making process should be initiated with the inputs from all the involved stakeholders (Lam, Huang & Chan, 2015). However, in the case of Volkswagen, the decision of installing the cheating device was taken only by the top level management.

This theory also states that opinions of the employees should be given most preferences, which was not in the case of Volkswagen. In the case of participative leadership, upper level management takes the responsibilities and agrees to the opinion of the larger section of stakeholders. However, top level management of Volkswagen decided to counter the accusation and delegate it to the employees. This led to the amplification of the issue among the external stakeholders as well among the employees. Thus, it can be concluded that as per the theory of participative leadership, opinions of the stakeholders should have been given more focus and decision should be taken with consensus.

Conclusion

It can be concluded that Volkswagen was not effective in handling the issue rather their ineffective management lead to further amplification. It is concluded that Volkswagen should have agreed to the accusations and promised about taking the necessary steps, rather than countering it. This would have helped them to reduce the negative impression in the market and among different forums and would have also helped in maintaining the goodwill of the company. In addition, it is also identified that top level management should have taken the entire responsibility for the incident in the initial stage by resigning from their respective posts. This ensured fair trial and investigations and external stakeholders would have more trust in the brand. However, due to the delegation of the responsibilities to the employees, top level management of Volkswagen lost their credibility among both the internal as well as among the external stakeholders. This essay concluded that emission scandal of Volkswagen was having number of impacts in different sectors ranging from environmental factors to social factors. In addition, in this essay, the emission scandal of Volkswagen was also evaluated from the basis of different ethical theories. Two major ethical theories are being used and concluded that actions of Volkswagen are unethical in nature. Leadership theory is also being used to evaluate the effectiveness of Volkswagen in handling the issue.

Reference

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