Volkswagen Corporate Social Responsibility

Volkswagen is one of the most interesting case stories when it comes to corporate social responsibility. Their reputation was horribly ruined because of a mega scandal. What makes this a compelling case study is their fall to a disgraceful position and attempt at an image makeover. Should we take Volkswagen corporate social responsibility seriously? Let's find out.

The megascandal (2008-2015)

Volkswagen was mired in acontroversial CSR scandalin 2015. It was the Volkswagen emissions scandal or theDieselgatescandal.The company used defeat devices. The defeat device was essentially a mechanism to ensure two different modes of operation for their diesel engine. The device controlled the NOx output and therefore passed the emission testing with flying colors.On the other hand, it deactivated this pollution control and therefore it created 40 times higher NOx thanthe tests while on road.

This was known to the highest-level executives of the Volkswagen Group. Subsequently, theCEO as well as Audi's R&D head, were indicted. As ashort termloss,theirmarket value went downby a whopping 23% by September 2015. However, the total loss incurred by the company is estimated to be much more than US dollars. 8 billion.

Overview of Volkswagen Corporate Social Responsibility

It is difficult to summarize the entire CSR effort by such a large firm. However, we attempt to provide key points fromtheir annual sustainability report.

1. The company has declared that they are committed to the Paris climateagreement'sgoal. The goal is to limit global warming to 2.In order to achieve this feat, the company intends to reduce its carbon footprint.Theyplan to reduce greenhouse gas emissions for both passenger cars as well as commercial vehicles.Alternatively, the company is also investing in electric mobility.
2. The second important goal mentioned in their annual report is that they want to move towards a circular economy. A circular economy ensures that we take bare minimum resourcesfrom nature and reuse the products without dumping them back. The net effect of the circular economy is reduced carbon dioxide emissions. Secondly, it also reduces the overall water, an energy requirement for production.Thirdly, it eliminates or minimizes the waste and toxic materials that are dumped.
3. Commitment to environmental compliance. This is one of the trickiest and most difficult aspects of CSR at Volkswagen Group.The company has looked at strengthening its corporate governance practices. Additionally, they have also put into place checks and balances to prevent such corrupt practices.They're following the mantra ofPrevent, Detect and Reactto act proactively on such cases.

Current CSRphilosophyat Volkswagen

Mission	"For all our products and mobility solutions we aspire to minimize environmental impacts along the entire lifecycle - from raw material extraction until end-of-life - in order to keep ecosystems intact and to create positive impacts on society."
Vision	"Compliance with environmental regulations, standards, and voluntary commitments is a basic prerequisite of our actions."

Is it all over, orit can be fixed?

One of the most disheartening aspects of this entire scandal was the sheer level of corporate lying that was detected in the annual report.They were rated by the Dow Jones Sustainability Index as the 2015 best company for corporate sustainability practices. Even inside their annual report, they had mentioned that they were highly committed to sustainability, Environmental Protection, and social responsibility. However, that was their public face. Privately, they were indulging inextremely unethical malpracticesresulting in a massiveamountof toxicemissions.

It is never 'the end' unless we give up.For instance, Nike is an example of CSR, disaster, and turnaround. There was a massive outrage against Nike's system of shoe manufacturing. Consumers started boycotting products of Nike when it was discovered that some of the shoes were getting made in exploitative sweatshops.

Volkswagen can take a clue from Nike to clean up its mess. In fact, they're doing just that. Some of the ways in which Nike hasturned around its CSR imageare:

1. Seeking professional help in auditing their production chain.
2. Establishing industry standard practices for supplier selection.
3. Becoming extremely transparentinreporting of these details in their annual report.

The road ahead for Volkswagen Corporate Social Responsibility

One of the first stepstowardssolvingaproblem is to accept the mistakes. Volkswagenseems to have done this step alright. The message ontheirCSR page reads:

"When it comes to the emissions issue, we have failed to live up to our own standards in several areas. The irregularities in the handling of emissions tests contradict everything we stand for."

The company has been releasing Group Sustainability Report from the last several years. At the same time, they are following international CSRreporting guidelines.

Volkswagen has also teamed up with Microsoft Germanyto work together on sustainability initiatives.Microsoft Corporate Social Responsibilityis highly regarded and this joint venture could help the Volkswagen group as well.

QUESTION:

Please summarize the article and what are the ethical dilemmas noticed. Provide additional examples if applicable for better understanding.