Ethical Issues Surrounding The Scandal Of The Volkswagen Group

Several ethical issues surrounding the scandal of The Volkswagen Group which are sustainability, conflict of interest, product safety and transparency. The ethical awareness, awareness of stakeholders, ethical reasoning, ethical decision-making and ethical suggestions of the case will be discussed in this part.

Sustainability focuses on meeting the needs of the current generations without jeopardising the future generations’ ability to meet their own needs. The issue that arises from the Volkswagen Group’s scandal was about the level of nitrogen oxide they had cheated with in their diesel engines.

They had used 40 times more nitrogen oxide than allowed by law so they can be the world’s leading car maker. The usage of nitrogen oxide in its diesel engines had highly polluted the planet. The Volkswagen Group had breached their own code of conduct where it states that “we bear responsibility for continuous improvement of the environmental tolerability of our products.”

Conflict of Interest

Conflict of interest is a situation in which a person is in a position to derive personal benefit from actions or decisions made in their official capacity.

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The Volkswagen Group promotes its employees on a merit-based system. This caused their employees, especially the higher level managers such as the board of directors and the shareholders, to take risky actions such as allowing the emissions of their diesel engines illegally. They did not want to spend money in the Research and Development to lower the emission level of the diesel engines so that the company can generate higher short-term profits.

This will lead to higher bonuses and dividends for the higher level managers.

Product safety

Product safety is a term used to describe policies designed to protect people from risks associates with thousands of consumer products they buy and use every day. The Volkswagen Group had used 40 times more nitrogen oxide than the law allowed might have highly affected the health of the consumers like heart issues and respiratory problems. Dan Greenbaum, president of the Health Effects Institute in Boston stated that “even the small increase in nitrogen oxide from Volkswagen diesel emissions is likely to have worsened pollution along the roadways where they have travelled and affected the lives of hundreds of thousands of people.”

Transparency

Transparency in a business context is honesty and openness. Transparency is one of main pillars of good corporate governance. The Volkswagen Group had altered the emission scores of nitrogen oxide with a device that reduced the engine’s performance when the car was placed under the emission test. The alteration was done through a software that was able to detect when the car underwent a testing by signalling the engine to switch to a more efficient setting and caused the nitrogen oxide filter to adjust accordingly.

The stakeholders involved in The Volkswagen Group’s scandal are the shareholders, board of directors, suppliers, employees and customers. Among the reasons why the Volkswagen Group had breached the professional ethics were due to their competitiveness in becoming the leading car brand among its competitors and conflict of interest about their positions in the company. They do not have any better alternatives other than continuing the operation without concerning the stakeholders’ situation and safety.