Volkswagen’s emissions scandal was analysed from an ethical perspective using various ethical theories. Additionally, an overview of their corporate governance structure was critiqued using Corporate Governance theories and codes derived from the UK Corporate Governance Code. It is important to note the use of a Pluralism approach within this paper in order to minimise bias and cover various perceptions of ethics. Deontology ethics has deemed it unethical for Volkswagen, as the intended action ‘cheating’ the emissions is rationally an immoral factor. However, deontology fails to bring other aspects of the equation such as consequences of the action. In addition, Peter Singer have criticised Kant’s approach to ethics saying that it removes “sympathy and emotions” (Murphy, 2016).
After deep analysis, Volkswagen’s corporate culture was ruled by fear and managers were exposed to pressure methods. It could be argued that they approved cheating emissions in order to meet their target sales and avoid being fired. When adding sympathy and emotions, the perspective towards deontology may arguably change. In the other hand, teleological ethics deemed Volkswagen as unethical as result of the consequence of their action. Negative impacts to the stakeholders and an increase to pollution that is linked with premature deaths supported this case.
Consequentialist ethics under Utilitarianism followed the same route in relation to the actions for the greater good as Volkswagen proved otherwise for the same reasons. Perhaps the most relevant theory was ethical egoism in relation to Volkswagen’s scandal as the action made benefited the company’s net income and stock price as revealed in the figures under the Appendix. However, various philosophers argue self-pursuit as a motive to achieve ethical mortality. James Rachels in his book “Ethical Theory: An Anthology” argues that egoist view the world divided in two categories: ourselves, and all the rest.
They view the first category’s interests as more worthy than the others. However, when justifying why you are placed in a ‘special’ category, asking questions like: “Am I more intelligent, do I enjoy life more, what is that makes me so special?” Failing an answer bring James Rachels to state: “We should care about the interests of other people for the very same reason we care about our own interests; for their needs and desires are comparable to our own” (Rachels, 2012: 193). As a result, Volkswagen’s ethical egoist approach may arguably not be justified, as we should seek to see why they fit in that ‘special’ category that justifies such actions.
Moving on to Absolutism where the theory also deems immoral actions from an absolutist approach. Relativism sheds a light of flexibility but we still fail to justify Volkswagen’s action even relative to their culture and background. One could still argue that Volkswagen’s corporate culture was ruled by fear and managers were exposed to pressure methods. It could be argued that they approved cheating emissions in order to meet their target sales and avoid being fired from a Relativist point of view. However, could we still justify this? In a more practical manner, Trucker “5 question” model was also used to assess the ethical morality.
The issue with using that model is which ethical viewpoint is used to answer its questions? Moving on with Corporate Governance culture for Volkswagen, the Shareholder, Stewardship, and Agency theories were used in line with Volkswagen’s corporate structure. The agent’s at Volkswagen whom were supposed to be the stewards and safeguards the assets of the shareholders have failed. Under theory it could be because of the conflicting interests between those two parties, however it is deeper than that. It could be that the management wanted to meet their target sales as a result of an autocratic leadership style. The structure of the border of Volkswagen also allowed room for the scandal.
Finally, several elements within the governance were assessed such as Independence, Leadership, Competence, and Accountability against the UK Corporate Governance Code. The lack of independence in the Volkswagen board structure was noticeable as conflicting interests presided within the families and shareholders. From the autocratic leadership to the incompetent two tier board that lacked the clear accountability structure when compared to the UK one tier system. Even with more stringent corporate governance and codes such as of the UK, how could we ascertain ethical conduct? Probably this is evident to what researchers such Dawson (1994) are trying to state our need to provide more answers to the ethicists questioning the assumption of codes of conduct entailing ethical conduct.