The CPA Journal article “The Volkswagen Diesel Emissions Scandal and Accountability,” outlined a scandal that hit the global automotive industry. In 2015, Volkswagen, the German multinational car company, was found to have installed software in its diesel cars that allowed them to cheat emissions tests. This resulted in emissions that exceeded legal limits.
From 2009-2015 the Environmental Protection Agency (EPA) released a report that stated the company “had manufactured and installed software (known as ‘defeat devices’) that substantially reduced the effectiveness of the emissions control system of the diesel vehicles when on the open road.” Volkswagen faced very public backlash and legal repercussions across the globe.
This case serves as an example of how a company’s actions can have a significant impact on its reputation around the world. Volkswagen marketed its diesel cars as environmentally friendly, and the scandal was a clear violation of that trust. It became a global issue—and a global public relations nightmare—when it was revealed that millions of cars were affected worldwide.
Photo by Erik Mclean
In response, Volkswagen implemented a plan to recall affected vehicles, began working on a settlement with affected customers, and also launched a marketing campaign to regain consumer trust, emphasizing its commitment to safety and environmental responsibility. Additionally, the company took steps to improve its compliance with governance manufacturing requirements. In other words, they made right on their mistakes with the public and governments. But at what cost?
Ultimately, the company faced billions of dollars in fines. This scandal also severely damaged the company’s reputation and trust with consumers. Furthermore, MIT scientists predict that this issue was detrimental to human life: “The excess particulate matter (PM) and nitrogen oxide (NOx) emissions produced by the fake clean diesel vehicles will lead to some 60 premature deaths in the United States and 1,200 in Europe.”
The global social and environmental impact of corporations’ mistakes is something that needs to be considered by businesses across the globe (and across market sectors). Volkswagen’s “defeat devices” caused environmental damage and potentially the loss of human life; it resulted in the loss of billions and irrevocable damage to the company’s reputation. A lose-lose scenario.
Volkswagen’s mistake highlights the importance of transparency and honesty in international marketing communication. Consumers value authenticity, and any attempts to deceive them can severely damage a company’s reputation. It is essential for companies to be truthful about their products, services, and environmental impact. The future of global business is socially and environmentally responsible.
One reply on “Volkswagen’s Financial and Ethical Consequences”
Hi Anna, This was a very interesting read. It is shocking how a company will put its greed in front of the rules and laws. I wonder if their marketing campaign was effective or if consumers still hold negative feelings toward them.