I wrote the following for my class’ discussion board assignment, but I was compelled to add this entry to my blog because it supports my point in my next blog entry regarding Trump’s election to president.
Volkswagen is an example of a company that has been challenged in terms of sustainability. It was discovered that Volkswagen had been cheating cars’ nitrogen oxide emission tests by placing a software that hide the emission. Volkswagen cars’ emission level, when measured without the software, was 40 times higher than that of U.S emission limit set under the Clean Air Act (Tabuchi and Ewing). In the past three to five years, Volkswagen created 11 million of their cars with this deceiving software, including Audi A3 and Porche (Gates, Ewing, Russell, and Watkins).
Volkswagen decided to pay a lot of money in response to this, and that is probably all they could do for now. Finding the Sweet Spot should be their next agenda, however. Volkswagen has decided to pay as much as $15 billion to settle this claim: “…diesel emissions cheating scandal, in what would be one of the largest consumer class-action settlements ever in United States” (Tabuchi and Ewing). This involves 475,000 Volkswagen vehicles in United States. The money will cover “buying back the affected cars at their pre-scandal values, and additional cash compensation for the owners…” (Tabuchi and Ewing). The Sweet Spot, according to Savitz, is the area that encompasses both business interests and environmental interests (Savitz). At this time, they are spending all of their energy and money fixing the mistake of pursuing business interest only. We may have to wait and see whether they would actively find the Sweet Spot after this crisis has passed.
To simply put, pollution is an expensive venture. Andrew Savitz says in his book, “A business that occupies the Sustainability Sweet Spot…should have real long-term advantages over its rivals.” This really was the case for Volkswagen. Volkswagen probably wanted to produce cars that have great performance, which would increase customer demand. This is a prime example of a company only pursuing the business interest. They may have enjoyed a short-term advantage in sales, but on the long run, they now need to spend $15 billion to undo the damage. The consequence did not end there; their stocks dropped from $38 to $27, and their net income turned into net loss of $6.3 billion in the year 2015 (Gates, Ewing, Russell, and Watkins). Had they pursued the Sweet Spot, they might be doing better on the long run.
One example of a sustainable company outlasting others is Pepsi in Kerala, India. In 2002, both Pepsi and Coca Cola plants were operating in Kerala, India when the residents accused them of drawing too much water from the public water source (Savitz). Although it was proven that neither Pepsi nor Coca Cola was using the public water, Pepsi, in response to the protest, helped develop wells in Kerala. Later on, anti-US sentiments in India drove Pepsi and Coca Cola to close their plants. However, only Pepsi’s plant was allowed to resume operating after the local villagers protected the business. Companies bent on supporting the sustainable environment for the local stakeholders outlast those who do not.
Gates, G., Ewing, J., Russell, K., & Watkins, D. (2016). “Explaining Volkswagen’s Emissions
Scandal.” The New York Times. Accessed 7 September. 2016,
http://www.nytimes.com/interactive/2015/business/international/vw-diesel-emissions-scand
Savitz, A. The Triple Bottom Line: How Today’s Best-Run companies Are Achieving Economic
Success–and How You Can Too. San Francisco: A Wiley Brand, 2014.
Tabuchi, H., Ewing, J. (2016). “Volkswagen to Pay $14.7 Billion to Settle Diesel Claims in U.S.”
The New York Times. Accessed 7 September. 2016,
http://www.nytimes.com/2016/06/28/business/volkswagen-settlement-diesel-scandal.html?
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