Volkswagen: Ethical and Environmental Challenges Report

This report examines the Volkswagen emissions scandal, focusing on the ethical and environmental challenges faced by the company. It analyzes the scandal, which involved the use of "defeat devices" to cheat emissions tests, and its impact on the company's ethical responsibilities. The report delves into the principles of the United Nations Global Compact and identifies the specific principles breached by Volkswagen. It further applies business ethics and corporate social responsibility theories to the case, highlighting the importance of ethical conduct and environmental responsibility in the global environment. Finally, the report offers recommendations for Volkswagen to overcome the challenges posed by the scandal, such as joining an independent verification agency and posting a bond to regain consumer trust, emphasizing the need for transparency and ethical business practices.

MANAGING IN THE
GLOBAL ENVIRONMENT

Table of Contents
INTRODUCTION..............................................................................................................1
1. Article: ......................................................................................................................... 1
2. Ethical responsibilities .................................................................................................3
3. Principles of the United Nations Global Compact.........................................................4
4. Identification of Principle breached by this case ..........................................................5
5. Application of business ethics and corporate social responsibility ..............................5
6. Recommendations ...................................................................................................... 5

INTRODUCTION
The aim of this report is to identify and analyse current challenges or issues that
is related to various responsive business practices by companies working in the global
environment. The case study will include article about Volkswagen that has been
reported for performing unethical business. It will also focus on ethical responsibilities of
the company while doing business in America. Furthermore, the report will identify UN
global compact principles breached by the cited company along with the application of
ethics and corporate social responsible theory.
1. Article:
Volkswagen: The scandal explained, By Russell HottenBusiness reporter, BBC News
10 December 2015
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Illustration 1: Volkswagen in America
(Source:Volkswagen: The scandal explained, 2015)

Volkswagen(VW) is one of the leading car manufacturers all around the world, emissions-gate
scandal began in September 2015 highly influenced this automotive company. The United states
environmental protection agency issued a notice related to violation of the clean air act to Volkswagen
that made this scandal popular. Environmental protection agency found that various cars produced by
the company and being sold in America had device or software in diesel engines that could detect
when they were being tested, changing performance consequently in order to improve the outcomes
or results. Volkswagen admitted that it has been cheating emissions tests in the United states. The
organisation has also been accused by the Environmental protection agency found of modifying
software on the 3 litre engines fitted to some Audi and Porsche as well as VW models. Volkswagen
has denied these claims, which influenced more than 10,000 vehicles. This scandal raised awareness
over the higher levels of pollution emitted by every vehicle powered by diesel engine from various car
manufacturers, that exceeded legal emission limits under real world driving conditions.
2. Ethical responsibilities
Volkswagen design, develop, manufacture and distribute auto-mobiles in almost
every country around the world for preserving individual mobility. The company bear a
huge responsibility for continuous development and improvement in the environmental
tolerability of their products as well as reducing the demands of natural resources by
taking into account essential economic considerations. It is corporate social
responsibility of the organisation that it achieve its economic aims with human progress
and sustainable growth. However, each and every business has its unique approach to
create value orientated corporate management this approach is generally bases upon
established conceptions. These concepts of corporate social responsibility encourage
organisations to include elements such as attitude towards human rights, needs of
customers, suppliers and employees, and commitment to social problems or issues.
The organisation has various responsibilities related to environment, good working
practices and its customers which is essential to be fulfilled. Volkswagen must produce
vehicles which are not harmful for the environment such as low emission cars. It is a
moral responsibility complying with the ethical standards. It is compulsory for every
organisation to to follow ethical code of conduct, and they should avoid getting engaged
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into unethical activities. Volkswagen failed to carry out its business activities according
to the ethical responsibilities as their cars were emitting higher level of carbon dioxide
which can harm the environment globally. The Scandal demonstrated bad ethics in the
business activities of the organisation which must be avoided to perform organisational
operations in a ethical way.
3. Principles of the United Nations Global Compact
There are various principles on the basis of which a business needs to perform
various business activities. Corporate sustainability start with a organisation's value
system and a approach based on principles that assist in doing business ethically. This
states that it is necessary for an organisation such as Volkswagen to operate in ways
that it can meet important responsibilities in the areas of labour, human rights, anti
corruption and environment. The ten principles can be discussed as below -
 Human rights
1. Principle 1 : This principles states Volkswagen should respect and support the
protection of internationally proclaimed human rights.
2. Principle 2 : It is essential to ensure that they are not complicit in human rights.
 Labour
1. Principle 3 : Organisations should maintain the freedom of association and the
effective identification of the right to collective bargaining .
2. Principle 4 : The elimination of each and every kind of compressor and forces
labour.
3. Principle 5 : Termination of child labour defectively
4. Principle 6 : Elimination of discrimination with respect of occupation and
employment.
 Environment
1. Principle 7 : Volkswagen must support preventative approach to environmental
issues or challenges. This case is linked with this principle as the company failed
to meet this principle due to the identification of high level emission in their
vehicles.
2. Principle 8 : Undertake initiative to promote environmental responsibility
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3. Principle 9 : Volkswagen should motivate the diffusion and development of
technologies friendly to environment.
 Anti-corruption
1. Principle 10 : Volkswagen must work against corruption in all its types consisting
bribery and extortion.
4. Identification of Principle breached by this case
According to the case of Volkswagen principle 7 in environment segment of the
United Nations Global Compact has been breached. The company lied to regulators
and consumers were not appropriate to its business, it was rather critical to the ways in
which company promoted its cars with diesel engines in United states. Volkswagen
promised that it is using diesel technology in order to control expenses on fuel and
helping customers to get lost cost rides with their vehicles. The company cheated on
emission tests for achieving high level of profitability in the global market. Principle 7 of
the United nations global compact states that organization should adopt and support
precautionary measures or approaches to protect the environment by its products. It
cheated the emission test and emission scandal proved that Volkswagen diesel
powered cars have a high level of emission which can be very harmful for the
environment, therefore it breaches the principle.
5. Application of business ethics and corporate social responsibility
Ethical responsibility refers to doing what is right even if it is not enforced by any
law or policy. The auto-mobiles manufacturer needs to understand their responsibilities
regarding environment as vehicles are emitting carbon dioxide and other harmful
components that can affect the global environment negatively. Corporate social
responsibility theory implies that it is a ethical obligation on companies which are
making products that can harm or pollute a society or environment that they take
effective measure to control the level of emission or negative impact of the products.
Volkswagen should focus on developing new method to produce vehicles by using new
technologies so that emission level can be minimized and it can perform its business
practices with respect to the corporate social responsibilities.
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6. Recommendations
In order to overcome the challenges faced by scandal Volkswagen can focus on
implementing the following recommendations -
1. Joining an independent verification agency – Volkswagen currently has its own
internal team that monitor and examines emission level in the vehicles. It can be
effective and beneficial if the organisation collaborate or partner up with some
other independent verification agencies so that it can rebuild consumer trust.
2. Posting bond – Another useful method to regain trust of customer is to
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Volkswagen: The scandal explained. 2015. [Online]. Available
through:<https://www.bbc.com/news/business-34324772>.
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