Trust in Corporate Responsibility after Volkswagen & Mitsubishi Emissions Scandal

Apr 27, 2016 | Blogs

After the Volkswagen and Mitsubishi emissions scandal, how can we ever know if a company is truly responsible?

What industry comes to mind when critics shout about cheating on regulations, lying executives, widespread hubris, and a general disregard for the wellbeing of society?  It used to be banking. Today, it’s fast becoming the automotive industry.

The automotive industry is caught up in an emissions rigging scandal that exposes systematic cheating and an apparent culture of corrupt ethics.  Both Volkswagen and Mitsubishi Motors are now implicated and anti-fraud inspectors are launching investigations into their peers – including Daimler and Peugeot – to assess the extent of the problem around the world.  With the announcement of Mitsubishi’s participation in the scandal, carmakers’ share prices tumbled as investors questioned how widespread such unethical practices are across the industry.

The fact that carmakers are in the headlights has come as a major surprise to many in the responsible business world.  Volkswagen was the sustainability golden child – often cited as best practice and listed as the most sustainable automaker in the Dow Jones Sustainability Index (since amended).  The company even listed environmental and climate protection as one of its top three most material topics.

Similarly, Mitsubishi Motors dedicated more than 25% of its 2015 Corporate Social Responsibility report to discussing its commitment to environmentally-friendly products and initiatives.

If these seemingly responsible companies are caught up in this scandal, critics say it undermines trust in any business claiming to create long-term value for its stakeholders.  Without a lie detector test accompanying every report, can stakeholders ever have absolute confidence that companies are executing their corporate responsibility strategies as they say?

The good news is that stakeholders can look for certain elements that companies should have in place to assess if responsible and sustainable practices are truly embedded across the enterprise:

  • Purpose: A clearly articulated statement of the change that the business wants to achieve in the world – its passion and reason for being.  Stakeholders can reference the corporate purpose to understand the shared motivation across the business.
  • Mission: High-level objectives and an articulation of the company’s unique value proposition can show that the figurative corporate ship steers towards a shared goal.
  • Strategy: A sustainability strategy that aligns business objectives with social impact and demonstrates that the company understands its priority issues and plans to allocate resources accordingly.
  • Goals and targets: Corporations indicate their commitment to continuous progress when they set, track, and assess performance against KPIs.
  • Third-party verification: An independent review of companies’ public reporting, systems and data helps build confidence in the accuracy and reliability of information.
  • Corporate culture: While perhaps the most difficult to prove, a strong, shared corporate culture that is embedded across the company is often the first battle front against potential issues such as ethics and compliance.
  • Transparency: Public reporting builds accountability and facilitates benchmarking so that external stakeholders can assess if companies “walk the talk.” Talking openly about challenges and when things haven’t gone to plan is just as important as the success stories.


While having these elements in place cannot ensure a company’s commitment to sustainability, they can help raise potential red flags.  For example, while Volkswagen’s corporate strategy outlines its mission to be “the most successful, fascinating, and sustainable automaker in the world by 2018,” its four supporting business goals focus on being the most successful, not the most sustainable.

Hopefully, the emissions rigging scandal will serve as a wake-up call for the wider business community.  Companies should not treat sustainability and business goals as separate aims.  Rather, they need to recognize that it is in their best interest to embed sustainability across the business to create long-term value for both the company and its stakeholders.  If not, they may face the real, and often financial, consequences.