Understanding Social, Environmental, and Economic Impacts of Sustainability
Abstract
Volkswagen AG involves itself in the emission cheating scandal where for a long time, it produces cars where the automaker had defeat devices installed on its clean diesel engine models to pass the test of emission. When this was discovered in 2015, the cheating cars had produced emissions, which increased air pollution. The pollution posed the danger of the health problems of the citizens. This paper discusses in detail the Volkswagen deception, and it affects the company and corporate social responsibility.
Introduction
The deceptive move by the Volkswagen company to intentionally program (TDI) diesel engines, which activated their emissions controls only during laboratory tests, led to the emission of nitrogen 40 times more than the US required standards in real-world driving.
The cheating cars have been driving all around the US while polluting the air without no one suspecting anything until 2015 when the researchers at West Virginia University discovered the automaker deception. The company had sold up to 11 million cars worldwide, with 600,000 sold to the US (Carroll & Buchholtz). The automaker installed the software which activated the car emission control allowed released of nitrogen oxides of up to more than 40 times allowed by US regulations. Federal economists argued that the Volkswagen cheating emission scandal has led to increasing children’s pollution exposure, which risks their health (Joselow, 2019). Besides air pollution, the emission cheating scandal has led to asthma attacks and low birth weights.
Body
Description of the potential impacts this situation may have on Volkswagen
This cheating emission scandal situation has potential impacts on the Volkswagen as it begs on the responsibility concern of the company. When it was discovered that the company had been deceptive by installing defeat devices on its clean diesel models, multiple governments, which included the US, moved swiftly to take decisive action against the automaker. To quickly deal with the menace of the cheating diesel cars, Countries impose fines in billions of dollars as penalties while at the same time forced resignation of the top managers of the company from flouting the environmental rules and standards(Carroll & Buchholtz). The deception by the company not only painted a bad picture on the image of the company but also raised questions on the consumer confidence and serious environmental concerns, which revealed the shocking and irresponsible company, that disregard environmental protection and health safety. The top executive at some point tried to divert the attention of people that the diesel emission scandal was a purely technical issue and not ethical as it has been reported. The executive tried to avoid the question of sustainability of the company, which has had serious consequences on the company going into the future. The deceptive company action came to affect the company as production was halted, and the remaining cars were withdrawn in the market to revive the image of the company that it was sensitive to the matter of sustainable development. Don't use plagiarised sources.Get your custom essay just from $11/page
Analysis of how this may affect their total value proposition from a sustainability perspective
This situation may affect their total value from a sustainability perspective. From the onset, the company has been given a license to protect the health of the customers and their well-being. The company disregarded the modus operandi and engaged in corporate fraud, which has harmed the welfare of the citizens in society. On realization that the company was liable for the deception of diesel emissions, its market value dropped significantly. It is estimated that the market value dropped by 23 percent. The drop in the US alone was estimated to be 25 percent. In addition to this, the total scandal cost was projected to exceed 8 billion dollars (Carroll & Buchholtz). It was even very hard to quantify the long-term damages that range from reputation, brand trust, customer loyalty, and investor confidence, and employee satisfaction. Also, the automaker deception affected the other automaker’s reputation greatly. This is an externality effect where even other unrelated industries business were undermined through a public trust, which shapes the perception of the consumption that the automakers are fraudsters and are not producing environmentally friendly products. Due to the scandal of diesel, emissions the company has imposed a fine of 18 billion US dollars that the highest total value. Lastly, for the company to comply with pollution standards and sustainability, it had to set aside $7.4 billion to fix the cars that were emitting harmful gases into the environment. Furthermore, the company faces a lawsuit and could face criminal prosecution; hence will result in fines which will lead to a drop in share prices as the company has failed to adhere to the pollution regulations and environmental protection it has to dig deep into the company revenue to settle on the damages on the environment which has resulted in the health risks. In US Public health accounts, to an estimated 20 percent of the gross domestic product (Joselow, 2019).
Discussion of non-use values for the business’s green products.
The non-use values for the company business green products is seen in the way it has admitted that it failed to adhere to pollution regulations standards through irregularities from the emissions tests. The diesel emission cheat completely contradicts the company’s quest for creating lasting values, offering a good working environment, and conserving resources and environment to attain green products. It jeopardizes the company as being in the forefront towards achieving sustainability by adhering to the emissions tests. The fact that automaker uses software to cheat and escape the emission tests questions the credibility of the staff integrity if at all, they can rely on matters sustainability. It even goes further to poke holes on the credibility of other products released to the market before if indeed it followed the regulations. The company argues that it is fully committed to embracing the required standards to win back public trust and lost glory. The company adheres to sustainability to every stage of the value creation process and is aware of the social and environmental risks (Baker, 2019). For the first time, the company worldwide has come up with a supplier sustainability rating to ensure the conduct of its business partners in the supply chain is checked. The current deception on diesel emission has set a driving force for the company’s green products. By 2050 it wants to achieve carbon neutrality (Baker, 2019). This is a pace set by the company, which should see its partners commit to these stainability efforts. Additionally, the company is embracing renewable energy sources in its productions and operations.it makes it partners to be aware of green products and ultimate social responsibility through carbon dioxide footprint awareness by dealers. The company installs fast chargers for electric cars and solar panels.
How the business should improve its focus on Willingness to Pay (WTP), Willingness to Accept (WTA), and consumer surplus?
The business should improve its focus on Willingness to Pay (WTP) and Willingness to Accept (WTA) or consumer surplus. The Willingness to pay by the company is the amount of money, which is attained through the determination of charges for improving the quality of the environment, or the amount paid as environmental taxes. On the other hand, the Willingness to Accept is the amount the company is willing to accept environmental burden compensation (Tanrivermis, 1998). The company has caused air pollution due to the deception of diesel emission and, therefore, has caused health hazards and risks to the citizens. As noted by Joselow (2019), ” the addition of just one cheating diesel car per 1000 cars increased rates of low birth weight and acute asthma attacks among children by 1.9% and 8.0 % respectively”. In this case, the company should be willing to pay for the charges called environmental taxes because of the pollution, which affects the health of the citizens.it, should also commit itself to Willingness to accept to pay as compensation money due to environmental burden it caused which has affected the society. The environment is a non-good and has no price; therefore, there are compensating and equivalent surpluses. The focus on WTP and WTA is to cater to compensation for damages in the environment now and in the future. Quality of the environment as a public good and should be protected from free riders through imposing social costs. The focus on WTA and WTP ensures compensation of environmental burden and hence sustainability.
Recommendations for improvements
The recommendations for improvement for the company is to revive its tainted image, which had serious repercussions. It needs to rebuild its reputation, which has been affected by diesel emission cheat.it should convince its consumers that it is environmentally minded, which shapes the decisions of the customers significantly. When the company has rebranded, it will have an image that it is greener and is adhering to the corporate social responsibility.it should incorporate sustainability in every level of the company leadership. It is noted that the staff used the instilled software to cheat, which means that their work was not verified before the product was released to the market. With respect to this, and in a bid to restore credibility, the company should have an independent agency for verification (Zhou, 2016). This will ensure that the product has adhered to the regulation of environmental sustainability and discover at early stages the mischief that may be present.
Additionally, regulations and enforcement need to pair for it to be successful (Alexander & Schwandt, 2019). The company was aware of the regulation, but it did not adhere to it; hence need serious enforcement. Lastly, the stakeholders, for example, consumers, regulators, and communities need to be made aware of the comprehensive health cost of car pollution. The primary focus is that they should get the difference between diesel cars, which emit more pollutants as compared to gasoline cars (Alexander & Schwandt, 2019).
Conclusion
The deception of diesel emission cheat has caused a lot of impacts on the company in terms of fines imposed on the company and the charges it had to use to withdraw in the market the cheating cars. On the other hand, the company cheating scandal posed a great danger to the health of the citizens, where incidences of low births and asthma attacks were reported. The company corporate social responsibility was in question though it claims it was adhering ring to it.
References
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