This post was written by Lauren Frisch ’20
As long as you are making lasting sustainable change, should motives matter?
This past semester, we’ve taken a deep dive into the world of corporate social responsibility (CSR), and thought about the different motives companies may have to invest in CSR practices. Some companies have economic motives.[i] Others want to build relationships with various stakeholders, called relational motives. Finally, some companies have moral motives, wanting to make the world, or their piece of it, run a little better.[ii] Consumers tend to digest CSR information better when there is at least a hint of a moral motive. But is this the right way to truly encourage CSR across the board?
Let’s use Volkswagen (VW) as an example. In 2015, news broke that VW had created technology that faked emissions levels in about 580,000 vehicles between 2006 and 2015.[iii] Defeat devices were created to register when a vehicle’s emissions were being tested, and modify performance to achieve a particular emissions level. By March 2019, VW had paid more than $30 billion in fines, penalties, resolutions and settlements towards Dieselgate.[iv] The company agreed to invest in electric vehicle (EV) technology and infrastructure to offset some of the damage caused by their deceptive technology.[v]
VW was able to survive this scandal and continue to thrive as a company, but not without a cost. The company had a turnover in high-level leadership after the scandal. The brand’s reputation was tarnished and stock prices dropped 23%[vi]. Enter Herbert Diess, a new CEO with a plan to completely reinvent Volkswagen as a sustainable leader in the industry. Diess and his team created Together 2025, a vision for how VW would grow between 2015 and 2025.[vii] The main goal of Together 2025 is to transform VW into a leader in the EV market. The company hopes that by 2025, 25% of VWs on the road will be EVs, a lofty goal that will help transform the makeup of the worldwide auto landscape.[viii]
The company has promised to launch a fleet of seven new electric vehicles, including four for VW, two for Audi and one for Seat.[ix] VW is also investing in new EV factory space and charging infrastructure, and the company hopes to establish and implement a carbon neutral supply chain by 2050.[x],[xi]
Critics of VW argue that the company should not be viewed as a leader in sustainable innovation because they were forced to implement aspects of this radical transformation to make up for Dieselgate. Others believe Diess is a transformational leader with strong moral motives, and is using this colossal environmental mess up to inspire change and create an automotive industry that he truly believes in. Consumers may never know the exact motives behind VW’s together 2025 campaign, although the truth likely lies somewhere between the suspicion of the cynics and the hope of the optimists. Almost all human behavior and corporate action is driven by varying degrees of multiple motives.
But should
Volkswagen’s motives matter if the company is able to advance renewable
technology? What matters is that Volkswagen is on the road to becoming a leader
in EV technology, and is investing not only in vehicle design, but factories
and infrastructure that will help support growing demand into the future. It
would be best for the industry if Volkswagen’s transformation is wildly
successful, because it will build momentum to advance critical EV technology at
VW and may inspire other companies to make similar commitments.
Of course, I’d prefer if all companies had
strong moral motives to back their CSR work. But it’s important for us to
recognize that people come from different experiences, and companies have
different priorities. At this stage, the change we’re making matters more than
the reason we started on the path. And if companies can profit from solving a
problem for someone, hopefully it will encourage others to follow in their
lead, and help sustain more change.
Endnotes
[i] Aguilera, Ruth V., Rupp, Deborah E., Williams, Cynthia A., Ganapathi, Jyoti. “Putting the S back in corporate social responsibility: A multilevel theory of social change in organizations.” Academy of Management Review. 3 Nov. 2007.
[ii] Aguilera, Ruth V., Rupp, Deborah E., Williams, Cynthia A., Ganapathi, Jyoti. “Putting the S back in corporate social responsibility: A multilevel theory of social change in organizations.” Academy of Management Review. 3 Nov. 2007.
[iii] “Exhausted by scandal: ‘Dieselgate’ continues to haunt Volkswagen.” Knowledge at Wharton. 21 Mar. 2019, https://knowledge.wharton.upenn.edu/article/volkswagen-diesel-scandal/
[iv] “Exhausted by scandal: ‘Dieselgate’ continues to haunt Volkswagen.” Knowledge at Wharton. 21 Mar. 2019, https://knowledge.wharton.upenn.edu/article/volkswagen-diesel-scandal/
[v] Voelcker, John. “VW Electrify America plan for electric-car charging across the US released.” Green Car Reports. 18, Apr. 2017,https://www.greencarreports.com/news/1109971_vw-electrify-america-plan-for-electric-car-charging-across-u-s-released.
[vi] “Exhausted by scandal: ‘Dieselgate’ continues to haunt Volkswagen.” Knowledge at Wharton. 21 Mar. 2019, https://knowledge.wharton.upenn.edu/article/volkswagen-diesel-scandal/
[vii] “2018 Sustainability Report.” The Volkswagen Group, Mar. 2019, https://www.volkswagenag.com/presence/nachhaltigkeit/documents/sustainability-report/2018/Nonfinancial_Report_2018_e.pdf
[viii] Keith, Travis. “Volkswagen stock price plunges after emissions scandal.” Column Five Media. https://www.columnfivemedia.com/volkswagen-stock-price-plunges-after-emissions-scandal
[ix] Rauwald, Christoph. “Volkswagen’s road to riches or ruin starts in this factory.” Bloomberg, 6 Sept. 2019, https://www.bloomberg.com/news/articles/2019-09-06/volkswagen-s-road-to-riches-or-ruin-starts-in-this-factory
[x] “2018 Sustainability Report.” The Volkswagen Group, Mar. 2019, https://www.volkswagenag.com/presence/nachhaltigkeit/documents/sustainability-report/2018/Nonfinancial_Report_2018_e.pdf
[xi] Rauwald, Christoph. “Volkswagen’s road to riches or ruin starts in this factory.” Bloomberg, 6 Sept. 2019, https://www.bloomberg.com/news/articles/2019-09-06/volkswagen-s-road-to-riches-or-ruin-starts-in-this-factory