A report on

Volkswagen emission scandal

By
Mote Ruchitha- 20FMUCHH010353

Pendela Supriya – 20FMUCHH010420

R. Sreeya – 20FMUCHH010460

Shetty Mahitha – 20FMUCHH010703

Pooja Tiwari – 20FMUCHH010899

K. Baby Shalini – 20FMUCHH010909

N. Sri Naga Satya Devi- 20FMUCHH011024

Distribution List:
Professor Farrah Zeba

Date of submission: 10th April, 2023.

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Table of contents
Content Page number

Executive Summary 03

Introduction 04-05

Ethical practices 05-07

Ethical practices violated and subsequent action taken by the organisation 07-08

Recommendations 08

References 09

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Executive Summary
Volkswagen is one of the leading automakers in the world which was established in the year 1937 by
German Labor Front. It has built a great reputation in the eyes of the public in manufacturing of best
quality passenger cars. Since its establishment the company has given its best in order to manufacture
the cars which are conscious of the environment. The company follows a lot of ethical practices which
can be categorized as integrity and compliance, responsibility as a partner, responsibility as a member
of the society, responsibility at work place and support, which covers major part of putting an
organisation under the trust of people or gaining the positive image in public. Code of conduct for a
company gives the proper guidance for the company in the way of making sure the rules and regulations
are followed as well as in identifying the wrong doings and mistakes. Volkswagen have a great design
of its code of conduct which outlines the human rights, environment safety, equal treatment and
opportunities for the employee in the organisation, offering donations and sponsorships, product
conformity and protection, and political lobbying as a member of society and many more. Even by
having such a great design of code of conduct, the company was claimed for the emission scandal for
which they have agreed the violation of its ethical practices of manufacturing a sustainable and
environmental conscious car, in the year 2015.

The company has been charged for breaking rules pertaining to emissions in its vehicles, it has deployed
10.5 million cars with ‘defeat devices’. When the devices were tested, the usage of defeat device
objective was identified. The objective is to modify the performance outcome, which was restricted by
EPA. While driving the software switches to another setting, which modifies the fuel pressure, injection
timing, and exhaust gas circulation. This model releases nitrogen oxide, whose emission is 40 times
greater than federal limit. Due to this scandal the company’s market share went down, shareholders,
stakeholders and public lost the faith in Volkswagen. Due to this action the company was penalised and
asked to recall all the manufactured cars which were deployed with defeat devices. It has faced a lot of
down falls during that time, even now the company is facing the consequences of that scandal. The
company is trying to regain public trust by introducing a sustainable-vehicles.

We can recommend that company must incorporate normative perspectives of ethics in its decision
making so that issues could be avoided in future. The company probably try manufacturing electric
vehicles, sustainable cars, as well as establishing ethical leadership practices which can increase
the productivity of the organisation.

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Introduction:
The Volkswagen Group is one of the world's largest automakers. Founded in 1937 by the German Labor
Front, it has a reputation for producing high-quality passenger automobiles. Over the years, the company
has made countless efforts to produce environmentally sensitive vehicles, especially in today's world
where everyone is dealing with the repercussions of global warming. In order to comply with
environmental rules, the firm launched a programme to produce cars whose emissions did not contribute
to growing concentrations of greenhouse gases in the atmosphere.

All of their vehicles were required to pass laboratory tests in various markets in order to meet
environmental standards. The United States is one of the countries that has strictly adhered to its
pollution reduction programmes. Volkswagen was required to comply with the standards set in the
United States as one of its key markets as an internationally recognised vehicle manufacturer with
tremendous corporate, social, and ethical responsibilities. However, the company's reputation was
severely harmed in 2015 after the United States Environmental Protection Agency (EPA) discovered
that it had violated the Clean Air Act. According to the EPA, Volkswagen had carefully designed the
cars it showed to undergo emission tests in order to meet American regulations, yet the cars it put into
the market lacked the same regulatory mechanism.

Mission statement:

Volkswagen has no formal mission statement. Its goal, however, is "to offer appealing, safe, and
environmentally sound vehicles that can compete in an increasingly competitive market and set
world standards in their respective classes." This company aim encapsulates all the company
undertakes to get towards its vision. Its emphasis is on maintaining a level of quality that
outperforms all competitors in all areas.
The following are the major components of the statement:
1. Distinguished quality
2. Exceeding expectations
Volkswagen demonstrates the key cause for its dominance for over 80 years through the first
component. All of the vehicles are meticulously built to provide the best driving experience
possible. The Atlas Cross Sport and the Arteon, for example, are two of the most recent models.
Volkswagen demonstrates the key cause for its dominance for over 80 years through the first
component. All of the vehicles are meticulously built to provide the best driving experience
possible. The Atlas Cross Sport and the Arteon, for example, are two of the most recent models.

Vision Statement:

Volkswagen's vision statement is "to make this world a mobile, sustainable place where all citizens
have access." This company's objective in this statement is to initiate mobility changes around the
world through its goods. The following elements are included in the statement:
1. Global reach
2. Improve mobility and sustainability.

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Through its expansion, Volkswagen has demonstrated its capacity to reach people all over the
world. These German machines are now available in almost every area of the world. Furthermore,
they are designed to be adaptable to varied surroundings, allowing VW to meet mobility and
environmental goals regardless of where cars are utilised.
Core values
"Accountability, teamwork, a servant's attitude, and integrity" are among Volkswagen's key values.
This company's popularity confirms that it actively serves and satisfies the needs of all of its
clients. This is one of the many practises for which VW is known, along with being a responsible
organisation due to its basic principles. Because it values teamwork and doing things correctly, the
company has been able to survive both internal and external business obstacles.

Ethical Practices:
Code of ethics:
Integrity and compliance:
Employees at Volkswagen are responsible to society, the environment, their coworkers, and all
living things. They use honesty and integrity to protect the company and the interests of the public
or consumers, partners, and the communities they serve. This code of ethics embodies fundamental
ethical values and serves as a framework for activities. They all agree to follow all applicable laws
and regulations and to base their daily decisions on the group values and the code of conduct
principles. The code of conduct provides advice to members of the organisation and aids in the
identification of errors and wrongdoing. The Volkswagen Group's management is convinced that
compliance, integrity, and justice are essential.
Responsibility as a member of the society:
Responsibility means observing and complying with law is a matter of course.
• Human rights: Respecting and promoting all existing legislation to preserve human rights
and children's rights as a fundamental and universal obligation around the world.
• Equal opportunity and equal treatment: They treat everyone equally and provide
opportunities for employees in a fair, unprejudiced, and open manner. Volkswagen
promotes respectful collaboration in an atmosphere of partnership, diversity, and tolerance.
• Product conformity and product safety: The Volkswagen group is responsible for
preventing, to the greatest extent possible, any risks, negative effects, and hazards to our
customers' or any third party's health and safety, environment, and assets arising from the
handling and use of these products and services.
• Environmental protection: Volkswagen manufactures and sells vehicles, services, and
mobility solutions all over the world, with the goal of providing sustainable and individual
mobility.
• Donations and sponsorships: The company also provides donations (on a voluntary basis
with no expectations) and sponsorship payments (on a contractually agreed upon basis) in
order to gain public reputation and a positive image.
• Communication and marketing: They feel it is critical to maintain open and clear
communication with members of the organization, customers, individuals, and
stakeholders while remaining honest and lawful.

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 • Political Lobbying:
Responsibility as a partner:
• Conflict of interest
• Gifts, hospitality, and invitation
• Prohibition of corruption
• Dealing with officials and holders of political office
• Prohibition of money laundering and terrorism financing
• Accounting and financial reporting
• Taxes and customs
• Fair and free competition
• Procurement
• Export control
• Prohibition of inside trading
Responsibility at Workplace:
• Occupational safety and healthcare
• Data protection
• Security and protection of information, know-how and intellectual property
• IT security
• Handling company assets
Support:
• Employee representation
• Whistleblower system: The Volkswagen Group's fundamental moral ideals, as well as
expectations for personnel' lawful behaviour, are reflected in its code of conduct. When
something goes wrong, we all raise our voices to defend our company. If we have any
questions, are unsure about something, or suspect a violation of internal or external
regulations, we consult with our supervisor and seek clarification from the appropriate
authorities. The HR department and employee reps are on hand to help.
The VW firm places a very high value on the ethics of sales and marketing. With respect to the
cost of manufacturing and the profit margin, the corporation makes sure that its products are fairly
priced. VW also takes the nation's economic situation into account in developed economies.
Spare components for the goods are always made available to all nations at discounted rates as
well. VW is very careful with the details of its advertising and avoids using raunch culture (the
usage and exhibition of sexuality and sex) in them.
In a situation that is closely analogous to this, Volkswagen's commitment to customer satisfaction
ensures that the business only creates high-quality goods. On an average the, the company makes
robust cars and car parts in order to achieve this for the last 20 years. Because of current business
policies, everybody who purchases goods or services worth 50 Euros or more is given the chance
to win a variety of pricey prizes by being given a raffle ticket, another way that the Volkswagen
firm recognises the satisfaction of its customers.

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International business has made it necessary to look for global ideals based on how such values
are manifested in global communities. Also, the necessity to compare, contrast, and design ethical
traditions throughout various nations has prompted the development of ideas and principles
pertaining to the ethics of global commercial and economic systems. In the following, issues
relating to globalisation and the entrenchment of cultural imperialism, as well as divergent or
opposing global trends like the usage of child labour, are discussed. The VW Corporation takes
these issues seriously. In light of this, the Volkswagen Corporation makes a strong effort to
incorporate aspects of indigenous cultures into its methods of operation and the business culture
that is typically displayed through commercials. Being a multinational corporation, Volkswagen
does not utilise the idea of outsourcing to manipulate globalisation to drive down wages, nor does
it support or use child labour. In order to adjust manufacturing costs and maximise profit,
Volkswagen as a firm has never outsourced work to other companies.

Ethical practices violated and subsequent action taken by the

organisation:
Volkswagen has been charged with breaking rules pertaining to emissions in its vehicles. On 10.5
million of the company's diesel vehicles, emission software has been deployed. These are known
as "defeat devices” and they tend to identify whether they have been tested. In accordance with
the restrictions imposed by the Environmental Protection Agency, it modifies performance and
outcomes. However, when driving normally, the software switches to another setting that modifies
the fuel pressure, injection timing, and exhaust gas recirculation. This model produces nitrogen
oxide, which has been linked to lung cancer and environmental pollution. The emission is 40 times
greater than the federal limit.
Volkswagen has already engaged in extensive marketing for its diesel vehicles, bragging about the
low emissions levels. Volkswagen has acknowledged using defeat devices to violate EPA
regulations. As a result, both the general public and the company's clients have lost faith in it.
Environmental organizations, authorities, and politicians all across the world have questioned the
scandal's credibility.
Volkswagen must recall the implicated vehicles worldwide, and the scandal has caused the
company's market share to plummet. Therefore, it is conceivable that Volkswagen was complicit
in breaking the law. Emissions have an impact on both the environment and human health. The
incident has caused the company to lose market share, confidence, and reputation.
Volkswagen has been subject to legal action, and customers have been suing for damages due to
the emissions fraud. The dispute involves more than 470,000 owners of these diesel-powered cars.
The business has already spent more than 30 billion dollars on legal actions, compensation, and
fines in response to the issue. The company's top executives have been charged with fraud in
connection with their approvals to install cheating devices in the vehicles.
This has raised ethical concerns because it has purposely misled consumers by installing cheating
devices. Furthermore, regulatory standards were not satisfied, and information on emission values
was manipulated. Such actions have affected both the environment and society.

Volkswagen is rebranding with a new "authentic" strategy in an attempt to move past the 2015
emissions disaster.

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The revamp took nine months to conceptualise and will now be rolled out throughout 171 markets,
including 10,000 dealer and service partner facilities, involving the replacement of about 70,000
logos. This will begin in Europe, followed by China in October, and will be completed globally
by the middle of 2020.

The new logo depicts a simpler Volkswagen, with adjustments such as a conversion to two
dimensions and a reduction to "essential elements" to guarantee it performs well in digital media.
It’s been long years but even now the company is facing some issues related to scandal, but the
company is putting a lot of efforts to gain public image.

Recommendations:
Volkswagen's management must include normative concepts of ethics into its decision making in
order to avoid future issues.
Volkswagen must instill ethical values in its future practises. It is capable of producing zero-
emission vehicles, which can significantly cut emissions levels. The corporation may focus on
investing in electric vehicles with high-capacity batteries. Several battery manufacturers created
around the world may have an impact on job creation.
Volkswagen must adopt ethical ideals and work hard to avoid any negative activity that could
jeopardise its brand. It could entail developing electric vehicles that will benefit society.
The value of ethics must be recognized, and the leader must disseminate the word to his followers.
The 4V paradigm of ethical leadership focuses values, vision, voice, and virtue in order to
influence followers' behaviours towards the common good by harmonising internal beliefs and
exterior behaviours.
However, dealing with ethical difficulties in the workplace necessitates a consistent and cautious
attitude to matters that may be dangerous or illegal.

Conclusion:
Volkswagen is known for best quality passenger cars since it was established. It has gained such
a positive image and public attention because of its qualified code of conduct and the outlined
rules and regulations which helps in guiding the employees. But in the year 2015, it was claimed
of emission scandal as they have deployed the defeat devices which releases nitrogen oxide
which is 40 times more than federal limit causing harm to environment. So, one should follow
proper ethics in their industry for their survival and for serving public.

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References:
https://www.volkswagen.co.in/en.html

https://en.wikipedia.org/wiki/Volkswagen

https://www.volkswagenag.com/presence/konzern/documents/Code_of_Conduct_Group_En.pdf

https://www.volkswagen-karriere.de/en/working-at-volkswagen/code-of-conduct.html

https://edubirdie.com/examples/business-ethics-issues-of-volkswagen/

https://studycorgi.com/volkswagen-companys-emissions-scandal-ethical-dilemma/