On September 18 2015 the Environmental Protection Agency (EPA) alleged that
Volkswagen had violated the Clean Air Act by installing software to deceive emissions tests.
Volkswagen has since admitted to installing “defeat devices” in millions of their diesel vehicles
and this has opened up investigations at company, federal, and state levels. A scandal of such
proportions has brought up many questions in the business world. Here we will focus on three.
We will first discuss the obligations of a corporation to maximize profits for its shareholders and
its social and ethical responsibility. Then we will discuss to what extent should executive officers
be held responsible for such wrong doing. Lastly we will discuss the position of a consumer in
such a scandal.
The pressure of increasing or maximizing profits to benefit the shareholders absolutely
does not outweigh the moral and ethical obligations of a business. Milton Friedman said it best
that “there is one and only one social responsibility of business–to use its resources and engage
in activities designed to increase its profits so long as it stays within the rules of the game, which
is to say, engages in open and free competition without deception or fraud” (Friedman). This
highlights the importance of a business’ obligations to its owners and shareholders, but it also
highlights that such practices must take place in a frame work with openness and free of fraud or
deception. Volkswagen has been a profitable company with no quarterly losses for 15 years
(Hotten), so it has been honoring its obligation to the shareholders. However, as it has come to
light this year, Volkswagen has completely violated its ethical and moral obligations. Not only
this deception is unethical, here in the United States and Europe, it is also illegal to breach
emission standards. After the debate over social responsibility has been settled, one can venture
into the legal aspects of the Volkswagen scandal. On September 18 2015 the Environmental
Protection Agency issued a Notice of Violation to Volkswagen Group for violating the Clean Air
VOLKSWAGEN EMISSIONS SCANDAL 2
Act. EPA alleges “that model year 2009 – 2015 Volkswagen and Audi diesel cars equipped with
2.0 liter engines included software that circumvents EPA emissions standards for nitrogen
oxides. This software is a “defeat device” as defined by the Clean Air Act” (EPA). There may be
people on different sides of the political or social spectrum that argue for or against social
