“In 2002 the Volkswagen Group signed the UN Global Compact, thereby committing itself to the ten principles on human rights, labor, environment and anti-corruption.”
VW Sustainability Report, 2013
The world, October 2015
Watching from a distance one could be excused for believing a major ‘support’ in global social trust for the behaviour of private enterprise was ‘taken out’ when it was revealed VW knowingly and wilfully rigged its vehicles to cheat emissions tests.
Going past the corporate-speak of damaged ‘brand reputation’ for VW (also Audi, Skoda, SEAT) what we really encounter are the very human feelings of ‘humiliation’ and ‘disgrace’ for what is essentially misbehaviour by a human entity – and potentially, in legal terms, corruption on a global scale.
It is the reason VW faces damages costs in the billions and its workforce braces for mass layoffs. But there are wider and more profound consequences that go beyond the damage done to a publicly listed engineering behemoth - and they relate specifically to a nation, a continent and most importantly, a global economic system in a state of decay.
Volkswagen has brazenly shirked its legal responsibilities and abused the trust of its customers. So much so that many find it difficult to understand how such an ‘upstanding’ company could be so shockingly immoral. It joins a long list of companies the world over (and will soon be joined by some of its prominent peers) actively destroying public trust in ‘private’ endeavour, and in ‘private’ claims of good behaviour.
When proclamations of ‘responsible business’ are proven to be false, the public’s cynicism towards other claims is justifiably enhanced - and what can follow is very serious, if not permanent, harm. All this was made brutally clear by Germany’s finance minister Wolfgang Schauble who said “VW will no longer be what it was”. As a former VW board member in Lower Saxony, he knows that thiskind of damage (when companies are deceptive about ethical claims) is particularly destructive, and so he fears VW’s future will be very different from its past.
VW’s PR disaster will no doubt also affect ‘brand’ Germany. The methodical employment of positive cultural traits in VW’s marketing (‘das auto’ remains the global motto and name of the VW Magazine) is expected to now work in reverse as the scandal shines a light on the very close links between VW and present and past German governments. It has emerged, for instance, that VW’s chief lobbyist was a former deputy spokesman for the Merkel Government.
We also learn from leaked documents seen by the UK’s Guardian newspaper that major European nations with large car manufacturing industries lobbied the EC to keep loopholes in emissions tests that would increase real world carbon dioxide pollution by 14% above those claimed. “The VW scandal appals, but the big picture shows that European carmakers and governments have colluded over a generation to deceive and harm their populations.”
Then in the backdrop we have increasingly prominent figures mounting powerful critiques exposing the failures neo-liberal, financialised capitalism. Nearly 8 years on from the GFC there has been no broad-based ‘recovery’ and faced with serious demographic headwinds the global economy has projected only a veneer of normality. This has happened principally by inflating bubbles in various asset classes and growing global total debt to levels now exceeding those in 2007. Is there any clear thinking individual who now believes we’ve resumed some sort of pre GFC ‘perpetual growth’ trajectory? Any international financial institution?
Ipso facto, another pivotal moment confronts global business – one where a crisis in confidence by consumer citizens combines with a growing distrust in global governance and the failure of an international economic system to live up to its promises. To make things worse, one can’t help but think that we are only just around the corner from ever more stunning revelations of corruption by corporate giants once considered paragons of respectability.
VW is proud to say it’s been a member of the UN Global Compact since 2002 and states in its most recent report that “as one of the worlds biggest automakers we bear a special responsibility for our environment and for people”.
“LOL” would be the contemptuous response from today’s young who now have to endure VW’s irresponsibility for decades to come.
Public and private institutions need to urgently re-commit to broad agreements like that of the UN Global Compact, and work together in the spirit of co-habitation, inclusion and universal social progress to rebuild trust and help forge a better future for all.
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(or why nobody ever saw a dog make a fair and equal exchange
of one bone for another, with another dog)
Adam Smith’s infamous quip (above) has had fair airing since his pivotal work ‘The Wealth of Nations’ was published in 1776. The aphorism is amusing, with revealing implications for what we believe to be ‘ethical’ behaviour in contemporary business.
Smith applied it as a precursor to an argument he considered a truism – that ‘man’ is better positioned to satisfy his needs by appealing to the ‘self-love’ in others, rather than to ‘their benevolence only’.
As a preliminary thinker to the dialectical-materialist, psychoanalytic epoch that followed, Smith was a product of his era, but his ideas continue to exert strong influence to this day, and despite the ostensibly genuine behaviour/philosophy of contemporary businesses, that influence still acts upon the authenticity of the ‘ethics’ being practiced.
It is unfortunate that in business today, ethical intention is not primarily something derived from a deeper desire to do good, but from a selfishness that considers ethical behaviour another way of gaining a competitive advantage. This is, of course, not an altogether bad thing. After all, why should we question the motive if a business conducts itself in a honourable way? The problem arises when we consider wether or not this approach to practical ethics is itself ethical.
For instance, is acting ethically, ethical, when the sole motivator is self-benefit? Doesn’t that seem unethical? Or, to put it another way – If no commercial advantage could be gained from ethical behaviour, would we still conduct ourselves ethically?
There is a lot to be said for the benefits that can flow from truly altruistic resolve where intent doesn’t have one eye on benefit for the individual. Conversely, the potential for self-benefit can be so irresistibly great, that it can lead to a trade in a ‘faux’ ethics, as seen recently in Australia where a young start-up promoted her serious (although fictitious) health problems and miraculous recovery, as well as illusory acts of munificence, to grow a business with connections to Apple as well as a number of well-known publishing houses. When she was exposed, it was in full view of the social media channels she exploited to perfection, which turned on her and her commercial backers with concentrated fury.
The point to be made is that the public’s sense of integrity is not easily outmanoeuvred; they reserve a special anger for enterprises making false ethical claims. However, this same sense of integrity works just as well in reverse, encouraging and rewarding behaviour that is real, not overtly premeditated and separated in its provision from the obvious strategy of every commercial entity on Earth – that of making money.
Unlike the motivating factors associated with business success and the influential precepts of economic thinkers, ethical behaviour should be practiced first as a way of life and then interfaced naturally with business. The altruistic egotism of core business tenets, wether right or wrong, should not trade using the currency of ‘ethics’ – the consequences can be too great.
So lets be good. For ‘goodness’ sake.
This article was originally published on www.wolffdorsay.com.au
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