VOLKSWAGEN
EMISSION
SCANDAL:
ANALYTICAL REPORT
In Wolfsburg, Germany, on September 25, 2015, a Greenpeace activist holding a demonstration in front of Volkswagen. (Fabian
Bimmer / Reuters)
Source: Adapted from [8]
INTRODUCTION
In today’s world, protecting the environment has become a crucial
aspect that businesses cannot ignore. Companies must prioritise
environmental targets to ensure sustainable and smooth operations. On
September 18, 2015, Volkswagen was exposed for turning a blind eye to
environmental regulations. The company was caught cheating on
mandatory emission tests using in-built software in their vehicles. This
analytical report will focus on the Volkswagen Scandal, investigating
the ethical issues, causes, and consequences after and during the
company’s deceptive practices.
BACKGROUND
From 2009–2015, the engineers at Volkswagen implemented a software
known as a “defeat device” in their diesel cars [1]. This software could
change the vehicle’s performance according to the type of scenario the
vehicle was put under. Under test conditions, the software activates,
worsening the car’s performance while improving the vehicle’s emission
levels (drastic reduction in nitrogen oxide emissions [2]). This helped
the company navigate their vehicles through tough environmental
regulations put forth by different countries. It was confirmed [2] that
over 11 million cars worldwide were fitted with this device. These cars
include popular models such as VW Golf, VW Beetle, and Audi A3.
The company was finally exposed by the Environmental Protection
Agency (EPA) and faced severe public backlash. This led to a sharp
decline in stock prices, resulting in a €15 billion plummet in share prices
[3]. The CEO of VW, Martin Winterkorn, responded to the allegations
with an apology and even claimed to be “unaware” of the installation of
the “defeat device”[2], but the damage had been done and the
company’s reputation had been jeopardised.
CAUSES AND ETHICAL IMPLICATIONS
The three main causes of the VW scandal are organisational, technical,
and structural. Under organisational causes, issues arose from the
corporate culture established within the company. Between 2007 and
2015, CEO Martin Winterkorn was known for being intense and
“demanding” [4]. His aspirations were to bring VW up the ranks and
ensure VW became the biggest car manufacturer in the world [4]. With
such ambitious goals, the company strived for perfection, putting
immense pressure on the engineers. These engineers struggled to
manufacture cars that could meet the same standards as competitors with
regards to durability, fuel economy, performance, and emissions [5]. In
order to surpass competitors, the engineers were forced to resort to the
“defeat device”. This is a clear violation of rules 1.1, 1.4, and 3.4 of the
HKIE rules of conduct because the engineers act disingenuously by
compromising the integrity of the profession and the protection of the
environment. However, engineers cannot be entirely blamed. According
to a former VW executive [4], the company had established an
authoritarian leadership. This style of leadership forces engineers to
follow orders set by individuals in higher positions blindly. This made it
difficult for engineers in VW to voice out their professional opinions,
which led them to disregard rule 1.3 of the HKIE rule of conduct by not
providing their professional insights. One former executive even goes on
to say, “If you didn’t like it, you moved of your own accord or you were
performance-managed out of the business”. This highlights how VW
strong-armed their engineers into following all instructions put forth by
managers.
With regards to technical causes, doubts had risen regarding the
technical capabilities of the engineers in the company. According to
Marc Tarahan, a retired vice president at VW and a supporter of Martin
Winterkorn [4], he believed that the CEO and management board were
oblivious to the “defeat device” and even stated that “There is no way
they would have allowed this to continue if they had known that U.S.
laws were being broken”. This would imply that engineers discretely
designed the “defeat device” by themselves, which highlights the fact
that they lacked the skills the job required. This is a violation of rules 1.7
and 3.1 of the HKIE rule of conduct because the engineers take up a task
that they are not qualified to fulfil with integrity while also safeguarding
information from their employers. This view would place the entirety of
the blame on the engineers.
In terms of the structure of the company, VW consists of a management
board that oversees the company’s operations and a supervisory board
that has control over the CEO and possesses the authority to dismiss
members of the management board [4]. Within this supervisory board,
labour holds more than half of the position, meaning the majority of
control lies in the hands of the union. The union’s main objective is to
ensure that jobs are protected and provided [4] [6]. Martin Winterkorn
used this to his advantage by ensuring this objective was met. This
allowed him to have full control of the company, instilling his own
beliefs and mindset down the chain of command. As mentioned earlier,
Martin Winterkorn was known for being “demanding” [4] and wanting
VW to become a powerhouse in the car industry despite the ethical
implications it may have (in 2014, VW faced scrutiny for installing
defective airbags in the VW Beetle [7]). This idea of not prioritising
“ethics” may have passed down the hierarchy, leading to some engineers
not valuing its importance, resulting in the engineers developing the
“defeat device”.
CONCLUSION
In summary, the Volkswagen Scandal of 2015 shows how a toxic mix of
corporate culture, authoritarian leadership, and technical inadequacies
can lead to a serious ethical lapse. The relentless pursuit of corporate
success pressured engineers into compromising their professionalism by
using the "defeat device" to meet emissions standards. Doubts about
their technical competence further worsened the situation, revealing a
lack of both skill and ethics.
In my opinion, this serves as a vital reminder for companies to prioritise
ethics and environmental sustainability to build trust and long-term
success.
REFERENCE LIST
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[8]B. Lam, "The Academic Paper That Broke the Volkswagen Scandal," The Atlantic,
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