VW’s Code of Conduct on Emmissions

In 2011, European Commission’s Joint Research Centre discovers levels of nitrogen dioxide emissions exceeds EU levels by over tenfold in multiple car models. In 2014, another study by ICCT showed excessive emission volumes in several Volkswagen cars sold to the US (Amelang and Wehrmann). These discoveries lead to an onslaught of revelations within the renowned German car company of unethical production engineering, manipulated tests, careless leadership, and misuse of global trust from their partners, investors, and consumers. The failure to comply with their own book of conduct cost the company their integrity, billions of dollars, employee and consumer trust, polluted the air, and put public safety at risk.

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In September 2015, former VW CEO Winterkorn resigned from VW stating he was unaware of any personal wrongdoing but accepts responsibility for the crisis (Amelang and Wehrmann). By February 2017, his statement was contradicted by the former head of VW Board of Directors who claims CEO Winterkorn was informed of the faulty tests long before the scandal broke out (Amelang and Wehrmann). This contradiction shows at least three breaches of VW’s own Code of Conduct. First is their code of Responsibility for the Reputation of VWGoA. It states that employees must maintain the highest level of integrity in their actions. If there is even a question of whether their action is ethical enough or not, they should first consult a supervisor or someone in human resources before proceeding. Based on the contradiction, it is implied that CEO Winterkorn was lying when he stated he did not know of the faulty tests. Not only is he lying, he is contradicting his own words that he takes responsibility for the fault emissions crisis since he is in denial of how much information he actually knew. The second is their code of Management Culture and Collaboration. This states that there should be a clear bridge of communication and trust between the employer and manager. The employer should feel comfortable with coming up to the manager to speak on any matter/problem related to business so that both parties can work together to find an effective solution. Managers are also obligated to appropriately supervise their employers for any wrongdoing and act on such action immediately in order to prevent any damage to the company’s integrity and product quality. The lack of communication between the former CEO and his former employee shows that neither were on the same page when communicating emission tests. The third was is their code of Fair Trade Practices. This code just requires employees not to engage in unfair, deceptive, and misleading business principles. Either the former CEO ignored his responsibility of safety to the general public and the environment by knowingly allowing the release of faulty models, or his employee did not press hard enough on how seriously flawed the engines were. Due to these breaches, both parties are at fault for all three breaches of VW’s Code of Conduct.

As engineers, we believe the most efficient solution(s) and preventative measures for all three breaches of conduct would have been a clearer means of communication. Whether it is the employee persisting with his manager more and standing up for the universal public’s safety, or if it is his boss holding more open “office hours” so that communication can be handled over a period of time and not just in a single thirty-minute rushed session of “briefing” versus “discussing” the matter at hand. There is also a fear for employees of losing their jobs if they cannot meet a technical deadline on time. This creates a gap in communication since the employee is too scared to stand up for what is right as they can only prioritize personal security over universal safety. The solution to this is to prioritize health and safety above all when creating these products. If the employees know they are not at risk for voicing what is right then they will be more prone to standing up for it since their personal security and well-being is not put at risk for doing so. Due to the weak employer and employee bridge of communication, they also created an issue of the two of them voicing their miscommunication over news media. This looks extremely unprofessional in the public eye and makes it obvious of how far of a gap there was when communicating the matters of public safety. This kind of gap shows the public how lowly prioritized their safety was in the making of their product. The unprofessionalism creates even worse publicity for the company. If the line of communication was clearer between the two (where they felt comfortable talking to each other face-to-face and solving issues together as such), then the public passive-aggressive confrontation could have been prevented as well.

In January 2016, VW was sued by the Department of Justice for violations against the Clean Air Act for every U.S. diesel vehicle sold since the 2009 model year.. In April 2017, EU Industry Commissioner Elzbieta Bienkowska makes the statement that diesel engines will disappear much sooner than previously thought. In February 2018, cities in Germany discuss the possible ban of diesel cars due to the detrimental effects their pollution has had on the environment. In May 2018, Hamburg becomes the first German city to ban diesel driving. European Commission also sues Germany for pollution and Germany registers 2108 patents for combustion engines, under the guise that petrol based engines are more green friendly than diesel engines. By August 2018, Petrol cars make up 62 percent of all new car registrations in Germany (Amelang, Wehrmann). At this point, around 700,000 cars needed to be equipped with the new software. VW also fires several leading employees in the company for allegedly revealing information about emissions. We can see that there are at least another two breaches of VW’s code of conduct; they violated their Public Communications and Social Media code and their Environmental Protection code. The first means VW is obligated to provide complete and accurate information to the news media. The second means each of VW’s employees, as well as VW itself, is responsible for the protection of the environment. By firing several leading employees in the company for revealing information about the emissions, VW is essentially saying they intended to continue hiding harmful information from their consumers. This ties back to our last point of giving communities a safe space to discuss ethical issues in production without risking the loss of their livelihoods and personal security. As a result of having no means to communicate with their employers on the faulty models, the employees chose to speak out on the controversy publicly. Not only has VW caused another hit to their reputation in the public, they have broken trust with their other employees by telling them through action that if any of them are to speak out against them, they will lose their jobs and livelihood. In order to build trust and loyalty again, our solution for VW is to create the bridge of communication where employees have a safe space to discuss when ethics are being threatened and discuss these issues privately within their company, so that they can prevent negative hits to their reputation in the public and build back up the employee to employer relationship, as it has at this point been lost between them. As for a resolution for their environmental protection breach, we feel it’s more appropriate to discuss this towards the end of the timeline, as there are more dynamic shifts and discussions to be taken into account when it comes to discussing a solution and preventative measure.

 In June 2016, Norway’s state fund, one of VW’s largest shareholders threatens to sue VW for ~680 million euros, while fines and compensation payments to the US amounts to ~13.3 billion euros.  In September 2016, a VW engineer personally comes out and testifies to the US court that emission test manipulation dates back to 2006. Once a settlement is reached between retailers/customers in US, liability fees reach 15.2 billion euros. More proof emerges of supplier Bosch’s involvement with affair, US documents show manipulation in emission tests had been an “open secret” between VW and the subcontractor. Immediately we can see multiple breaches. This open secret is a violation of their Anti-trust code. This code stands for the protection of fair competition. For example, employees cannot not disclose private information with competitors that could interfere with production or sales of a product. There is also a code of being fair with all contract partners i.e. not showing favoritism to any one of them. On the business side, it is their job to safeguard fair competition in the market.  This open secret between VW and Bosch exposes a secret relationship between the two companies. One, Bosch knew of the faulty tests and kept the secret hidden from the general public and two, VW chooses Bosch and continues to prioritize business with them because of this secret and their need to keep it between a limited amount of parties. Not only do they break the standard code of not showing favoritism, they are also disclosing private information with another company and they are giving this company more business because of their vulnerability of doing business with other companies. They have made the dynamics of a competitive market unfair by showing favoritism and they are definitely not safeguarding any competition by choosing to have a secret and exclusive business relationship with Bosche that protects their personal agenda. After discussion, my peers and I decided the best way to resolve this would be to redesign their business model, take out all unethical behavior, and split the business evenly with multiple contractors versus allowing one company to monopolize all of VW’s contracted work.

In October 2018, the majority of German citizens were displeased with the method the government was using to prevent diesel driving bans. Three quarters said they did not have confidence in the government and the automobile companies to agree on a compromise that would prevent diesel driving bans. At this point, it has been stated by German NGO Transport Club Germany (VCD) that diesel cars complying with Euro 6d-Temp emission standards “are clean not only on the test stand but also on the road.” In the end, Germany decides to reduce diesel car emissions by replacing old models with new models or retrofitting old models with new technology/software. In November 2018, Germany’s government releases a federal emissions law to prevent diesel bans that says no limits should exceed the standard by twenty-five percent. In the meantime, the VW group announced their mission to invest over forty billion euros to their future business plans by implementing  services such as e-mobility, autonomous driving, digitalization, and other modernization measures. Simultaneously, German consumer groups filed a lawsuit against VW over the emissions cheating scandal. In December 2018, VW stated its plans to phase out of combustion engines to the absolute minimum and stated they will sell conventional cars until the early 2040s. They also plan to release new gasoline and diesel cars beginning in 2026. In a bid to prevent the ban of diesel cars in the future VW vows to provide an additional one billion euros to the country’s clean air program.

As we have reached a reasonable point in the timeline, it is now an appropriate time to revisit VW’s breach of their Environmental Protection policy. What we can see here is that diesel is not the complete enemy, in fact, maintained within certain limits, diesel engines are actually a greener option for the environment than petrol engines. Due to the appropriate measures the German company took to regulate gas emitted into the air that all of us found reasonable and agreed with, we thought it would be more appropriate to discuss preventive measures VW can take to prevent an environmental violation from happening again. The best way is for engineers to do thorough research before, during, and after the building process of new engines/models, for testers to do honest testing and have detailed discussions of results with their managers,  and for employees and employers to have stricter communication policies. Employers need to dig deeper for result data and employees need to insist on further participation between higher-ups and the reviewal process between production and model release time. Another solution we believe would be appropriate for the situation at hand, is to create a team of mediators that overlook and review the entire process, from production period, testing period, reviewing period, all the way to release period. Our conclusion is that it is better to be safe than sorry.

Sources:

• Amelang, Sören, and Benjamin Wehrmann. “‘Dieselgate’ – a Timeline of Germany’s Car Emissions Fraud Scandal.” Clean Energy Wire, 17 Dec. 2018, www.cleanenergywire.org/factsheets/dieselgate-timeline-germanys-car-emissionsfraud-scandal.
• Bartlett, Jeff S. “Guide to the Volkswagen Emissions Recall.” Product Reviews and Ratings Consumer Reports, 23 Oct. 2017, www.consumerreports.org/cro/cars/guide-to-the-volkswagen-dieselgate-emissios-recall-.
• Kerler, Wolfgang. “You Thought Dieselgate Was over? It’s Not.” The Verge, The Verge, 18 Sept. 2018, www.theverge.com/2018/9/18/17876012/dieselgate-volkswagen-vw-diesel-emissions-test-epa-german-auto-industry-mercedes-benz-bmw.