Volkswagen Emission Scandal: Ethical and Sustainability Report

This report provides a comprehensive analysis of the Volkswagen emission scandal, examining the unethical practices of the company in rigging diesel engine emission tests. It explores the case, comparing it to the Mitsubishi scandal, and provides a judgment and analysis of the resulting outcomes, including the repercussions on health, staff bonuses, and sales. The report relates the findings to the relevant industry sector's professional code of conduct and highlights the role of regulatory bodies and environmental groups in uncovering the scandal. It concludes by emphasizing the complexity of the case and suggesting solutions such as green punishments and the adoption of electronic cars to improve emission control. The report also discusses the impact on stakeholders and the importance of ethical business practices.

RUNNING HEAD: ETHICAL AND/OR SUSTAINABILITY REPORT 1
ETHICAL AND/OR SUSTAINABILITY REPORT
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Executive report
By the year of 2015, the automobile industry was in shock by different unethical practice of
the company which is one of the noticed market player among different automakers. In fact,
from 2015, the case was constantly under surveillance or investigation by number of
different authorities. The current investigators have also managed to understand the crucial
factors that are leading to this scandal of emission. The company is deceptive scandal
brought the company in so many devastating consequences on indirect as well as direct kind
of stakeholders of the company. From that time, the case is ongoing where the judges have
not finalized the case and put penalties on the company. In the current case, the candidates
and the primary factors of this rigging in diesel emission test can be recognized in line with
all the studies.

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Contents
Introduction..............................................................................................................................4
Body.........................................................................................................................................4
The case..................................................................................................................................4
What the Volkswagen scandal has in common with Mitsubishi Scandal?...............................5
Provide judgement and analysis of the resulting outcome.......................................................5
With this judgement and analysis relate it to the relevant industry sector’s professional code
of conduct.................................................................................................................................7
Conclusion...............................................................................................................................7
Reference.................................................................................................................................9

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Introduction
The news of the Volkswagen where it was proved that the company has rigged the diesel
engine to completely falsify the test of emission is highly shocking. It is important to
understand in this case that business leaders may not be right all the time however this case
of Volkswagen got it completely wrong. This example of corporate based misbehaviour is not
acceptable from any perspectives people study. In another case, the company called
Mitsubishi Motors scandal where the company falsified the fuel based economy data for at
least 4 of most popular models for minimum of 2 years (Tse et al., 2017). The case is very
similar with the case of Volkswagen emission scandal. However, the details of both the
cases are very distinct by nature.
Body
The case
There is a lot of debate which is animated surrounds around the Volkswagen emission
scandal to find main reasons that what kind factors can be paved from the ground for
different scandals to take place and was also involved in the scandal. The scandal was also
reported at different platform in different platforms along with media and news.
People participating in the scandal initially was reported that 9 managers are suspended for
being a part of this high case of deceptions (Rhodes, 2016). It is also declared by the
chairman of the company that one factor that is suspended by the group took this scandal
since the overall mindset in some departments of the organization which completely fails to
agree with the rules and regulations. In the year 2015, it was mentioned that the group of
people working in the company have participated in the scandal is not very big. The CEO
also announced to US lawmakers that whatever factors of a small group of software
engineers has further embedded the devices in automobile. The CEO also discussed that he
is completely unaware of the right number of engineers and the scandal was not corporate
level decisions. At the later stage, a law organization Jones Day, that is external investigator
of the company and it is conducted investigation and further revealed that approx. fifty
members of staff usually in Wolfsburg further confessed that they were aware of emission
based scandal functions (Rhodes, 2016). At the later stage, the news also learned that some
engineers in the company and the technicians also informed the supervisors associated
emission based rigging operations in the 2011 and the supervisors have ignored those
alerts. In 2015, the number of people in the form of managers, engineers and technicians
participated in the emission scandal functioned to defeat the device came with a lot of

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drama. There have been many places in the scandal and was defined that one person who
can write the codes of the defeat device program and on the contrary also implemented the
program to work with engine and other components needed with more staff to get involved in
the process. In addition, as per the bode, junior staff of the company were not the part of the
scandal test and in the end, it was declared that many managerial as well as non-managerial
positions and file workforce were part of the diesel emission case. The managerial group
that was suspended contain nine managers from board of supervisors along with quality
control manager and engine designer along with plant manager and executive of sub-
companies such Audi and others (Burki, 2015).
What the Volkswagen scandal has in common with Mitsubishi Scandal?
Both the scandal arose from the respective companies ambition to present their product as
something better than its previous performance and to stand out in the competitive
environment. Both the companies seem to have responses of development teams to intense
top-down pressure from the present management. The company also revised it fuels targets
as per the model in discussion which is five times in the space of approx. two-year growth
period. Also, both happens to be the companies with poor histories of corporate based
governance where the workforce can easily have had the opinions that a bit rule bending
and can be tolerated if the outcomes were fine (Connor, 2017).
The overall narrative based arc has trivial things in common and where disclosure is low in
process since the manipulation by Mitsubishi almost took twenty years to come to highlight
where the company just took nine years as well as triggered the external pressure where for
Volkswagen from the environmental protection agency. For Mitsubishi is scarcely less
painful from the current commercial partners like Nissan which will want to pound for the
damage to its corporate reputation. There is also some level of risk of slow drip of negative
kind news which is out of an external investigation by the lawyers recruited by the company.
Provide judgement and analysis of the resulting outcome.
In 2014, the company was considered as the second largest automobile in the world after
Toyota Motor. In 2015, the company also admitted which rigged in emission test which
causes the company to suffer from large amount of burden from cost (Boston et al., 2015).
The company has also brought 3 public relations companies based in US, Germany and
Britain to help the company to cope with the crisis. In addition, the company has further
employed the former interaction of BMW as a consultant to function for sixty hours a week
with salary of twenty-two thousand dollars every month. Following is the repercussions: -

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1. Threatens the health of people: by year end of 2016, Volkswagen automobiles also
defeated the devices and will have manufactured added toxic pollution to directly
trigger the death in premature stage of about sixty people merely in US. From the
time of 2008 till 2015, approximately four lakhs and twenty-eight thousand vehicles
and Audi diesel car were pumped with nitrogen oxide which forty times more than it is
permitted by the act of Clean Air. It is further estimated by the people who
researched that within period of six years of company and Audi diesel manufactured
an excess of thirty-six million kg nitrogen oxide in the environment (Stanwick and
Stanwick, 2017). The Nitrogen oxide is mainly an element of specific and smog
based matters which further paves the ground for many problems like bronchitis and
cardiovascular diseases.
2. Slum in staff bonus: at the time of rigging in emission of diesel engines further
revealed in public, that sales of the automobile by the company was impacted. Thus,
the company to cope up with the crisis has further announced that the bonus of the
CEO can be decreased substantially. The company also passed a statement that
many models were set up for fair and rational solution for all the participated parties
and it is a deliberated step. As an outcome, this further lead to a lot of diminution of
variable salary. The decrease in bonus also consist of management board and a
group of executive position that assist the management to function in the day to day
routine of the company (Posada, 2015).
3. Loss due to drop in sales: however, the emission scandal of the company has
resulted in important impact on the company’s group brand namely Skoda and Audi
and there was major slump in sales of vehicles of the company than group based
brands. The bad goodwill of the company has also impacted the customer loyalty
towards it and thus the customer further switches from the company to its
competitors which lead to a major drop in sales.
With this judgement and analysis relate it to the relevant industry sector’s
professional code of conduct.
The issue of public interest by the company must be held responsible to the actions
however, another major issue is how the current manipulation of software went completely
undetected for number of years. If it were not for the existence of the NGOs like ICCT, the
scandal may never have been highlighted and the company would have proceeded to
function with harmful gases above the allowed levels. The environmental groups also
warned previously about the national level care permit based on authorities and the
European Commission that the diesel cars further emitted less NOx in official based

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laboratory tests than just being on the roads (Schiermeier, 2015). There are number of
people who also knew that this was because of the tricks utilised by the producers however
regulators did not take any necessary measures for the same.
As per international centre for Finance Regulation also called as ICFR, is a kind of corruption
that happens when the agency was supposed to work in the interest of public, instead of
choosing in advance about the commercial level concerns of special interest group or sector
it is charged with regulations. Just a month after the scandal, the officials of the European
Union came together in Brussels and discussed the consequences however, failed to push
the optional testing methods like testing auto emission on the road which could have
defeated the manipulation software (Cavico and Mujtaba, 2016). The representatives from
Spain further urged for the proposals and the reason was to overhaul the system of testing
so that it can be watered down to save the overall destruction of some highly qualified jobs
and save the negative impact on the economy of the Spain. At the same time,
representatives from countries like UK, French and Germany also took same kind of stance
and later the commissioner of EU feared that the conversation will collapse so he requested
everyone to back or support the deal.
Conclusion
As per the findings as well as analysis which was discussed in the report, Volkswagen
emission scandal and the company’s deception is very complicated case and it have created
many dramatic hassles for its indirect and direct stakeholders. It is obvious that the company
cheating in diesel emission tests was not a right action and it resulted in series of disastrous
repercussions and the proposal of green punishment can be the right solution to finish the
case (Gates et al., 2016). Also, electronic cars ensure that environment protection agencies
also save the cost as well as the time for deciding the new system to control emission tests.
In addition, this way the company is not just penalized but also must pay compensation for
the scandal in right manner.

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Reference
Boston, W., Geiger, F. and Spector, M., 2015. Audi Engines Implicated in Volkswagen
Emissions Scandal. Wall Str. J.
Burki, T.K., 2015. Diesel cars and health: the Volkswagen emissions scandal. The Lancet
Respiratory Medicine, 3(11), pp.838-839.
Cavico, F.J. and Mujtaba, B.G., 2016. Volkswagen Emissions Scandal: A Global Case Study
of Legal, Ethical, and Practical Consequences and Recommendations for Sustainable
Management. Global Journal of Research in Business & Management, 4(2), pp.303-311.
Connor, J.M., 2017. The German Auto-Emissions Scandal: Likely US Antitrust Response.
Gates, G., Ewing, J., Russell, K. and Watkins, D., 2016. Explaining Volkswagen's emissions
scandal. New York Times, 19.
Posada, F., 2015. Volkswagen emissions scandal undermines confidence in analytical
chemistry.
Rhodes, C., 2016, January. Democracy, Business Ethics and the Volkswagen Emissions
Scandal (WITHDRAWN). In Academy of Management Proceedings (Vol. 2016, No. 1, p.
12743). Academy of Management.
Rhodes, C., 2016. Democratic business ethics: Volkswagen’s emissions scandal and the
disruption of corporate sovereignty. Organization Studies, 37(10), pp.1501-1518.
Schiermeier, Q., 2015. The science behind the Volkswagen emissions scandal. Nature
News, 25.
Stanwick, P. and Stanwick, S., 2017. Volkswagen Emissions Scandal: The Perils of
Installing Illegal Software. International Review of Management and Business
Research, 6(1), p.18.
Tse, Y.K., Zhang, M., Doherty, B., Chappell, P., Moore, S.R. and Keefe, T., 2017. Exploring
the hidden pattern from tweets: Investigation into Volkswagen emissions scandal. In Supply
Chain Management in the Big Data Era (pp. 172-198). IGI Global.