VW Automobile Assembly

The Volkswagen scandal has revealed the continuing disregard of major corporations to curb global emissions levels and participate in a systemic effort to incorporate green practices into their respective industries. VW was successful in deceiving the EPA and consumers by developing software that hid the emissions output of its Diesel fleet until the revelation of the last few days. The company has been thrown into crisis, expecting to recall 11 million cars worldwide triggering the resignation of its CEO, Martin Winterkorn and a 20% stock devaluation. VW executives have set aside $6.5 billion to cover the expected costs of the scandal but that could rise to $18.5 billion after the expected EPA legal proceedings for the 500,000 VW models recalled in the United States alone.

The company and potentially the entire auto industry is facing significant legal backlash if further concealed test software is found. It shouldn’t come as a shock that major auto companies are investing resources to deceive regulators such as the EPA. Stricter emission controls have become a costly burden to their traditional business models, with a growing emphasis on low-fuel and electric vehicles. This latest scandal simply proves the lengths companies like VW are willing to go in order to protect their fuel emitting fleets.

Despite the scandal, VW will survive and continue to evade environmental regulation, as BP survived the Deep Water Horizon spill. These major corporations are so entwined in the global economy and have such vast profit margins, there is very little to be done apart from lengthy legal proceedings and imposing hefty fines that the company can easily afford.  Major auto companies, backed by the fossil fuel and financial industries, continue to exert influence on government policy through lobbying and political contributions. The news today that major corparations such as Wal-Mart and Goldman Sachs are committing to 100% renewable energy projects suggests MNCs are accepting their role in stemming climate change. This should offer hope to climate change advocates who have fought the private sector over emission regulations and fossil fuel divestment for years.

Yet the structures of a market orientated system that limits government interference will only facilitate further abuses given the colluded structures of manufacturing and resource-based industries. It seems unlikely this will be the last environmental scandal we hear of involving a major corporation.