Volkswagen faces legal and public backlash in wake of emissions scandal

The business practices of corporations must be in compliance with legal regulations. Additionally, while the corporate environment that predated the mid-1990s was largely dominated by greed and profitability, today society holds corporations up to much higher standards. While some contend that the term corporate social responsibility is a contradictory concept that is in direct conflict with the very purpose and nature of any business, today corporations that fail to abide by certain legal and moral codes of conduct often end up suffering significant economic and legal repercussions.

The most recent corporation to fall victim to violating both legal regulations and CSR standards is the German car manufacturer Volkswagen and the company’s failures are likely to have significant and negative repercussions on the company’s future profitability and reputation.

On September 18, the Environmental Protection Agency disclosed that “Volkswagen admitted to cheating on emissions tests,” by installing so-called defeat devices in some 11 million diesel engine vehicles. The defeat devices allowed Volkswagen’s vehicles to pass emissions tests when, in reality, the vehicles were emitting as much as “40 times the legal limit of nitrogen oxide” into the environment. 

In response to the shocking admission, lawsuits have been filed by Volkswagen owners who assert that the value of their vehicles has plummeted as well as by company shareholders after the value of the company’s stocks plummeted by “more than 30 percent.” Additionally, the German car maker is also likely to face disciplinary action by regulators as well as possible criminal charges.

We’ll continue to provide additional updates and insight into the Volkswagen emissions scandal as lawsuits against the company proceed and this story unfolds.

Source: The Wall Street Journal, “VW Faces Barrage of Litigation,” Mike Spector, Sept. 29, 2015

Forbes, “Volkswagen And The Failure Of Corporate Social Responsibility,” Enrique Dans, Sept. 27, 2015