Published on March 1st, 2021 | by Subhash Nair0
VW Group Reinstated As Part Of UN Global Compact
VW Group gets another chance to redeem itself, and is once again a participant to the UN Global Compact.
What is the UN Global Compact?
The UN Global Compact is a voluntary initiative based on CEO commitments to achieve UN sustainable development goals. You can learn about the 10 principles that guide the UN Global Compact here.
Why did VW Group leave in the first place?
The Volkswagen Group joined the UN Global Compact in 2002. However, in 2015 it was revealed that the company had been deceiving regulators with ‘Defeat Devices’. These devices would detect when the car was being tested for tailpipe emissions, and change the way the vehicle performed to meet the requirements. In the real world, the same cars would switch to their default mode which produced between 5-20 times the legal limit of pollutants such as the cancer-causing nitrogen dioxide.
As the Dieselgate scandal began to unfold towards the end of 2015, the company was encouraged to voluntarily leave the UN Global Compact.
Here are some principles that VW Group may have violated:
- Principle 7: Businesses should support a precautionary approach to environmental challenges;
- Principle 8: undertake initiatives to promote greater environmental responsibility; and
- Principle 9: encourage the development and diffusion of environmentally friendly technologies.
Why are they joining now?
While Volkswagen has had to initiate a buy-back process for customers in the US, the situation is different across the pond. There’s evidence to suggest about 50 million vehicles in the EU are still operational and polluting more than legally expected. However, the VW Group itself is said to have changed.
In the last 5 years, they have completely rebuilt their compliance and integrity policy under the supervision of the US Department of Justice. They have also made commitments to reduce lifecycle CO2 emissions on their passenger cars by 30% by the year 2025. By 2050, they aim to be climate neutral.
Here’s the kicker. Volkswagen have been using defeat devices since at least 2009. They were only found out in 2015. So 6 years of harm has been erased by 5 years of… what exactly? Buybacks, policy reforms and penalty payments?
As a result, they’ve been reinstated as a participant of the UN Global Compact.
What does that mean exactly for the VW Group?
Honestly, not much. The UN Global Compact has no performance or assessment tools in place and participation doesn’t certify the company for anything at all. However, participants are expected to publish annual reports to show how they’re supporting the 10 principles. More importantly, larger companies are REQUIRED to make an annual tax-deductible contribution to support global and country-level operations.
The Former CEO of the UN Global Compact Georg Kell had this to say:
“…Volkswagen, while far from infallible, has learned from its mistakes. It is a moment for every employee at Volkswagen to pause for a second and be proud of what has been achieved together.”
What do you think? Has the company done enough in 5 years to be ‘proud’ of itself? Does this symbolic position have any effect on how the brand is perceived? Have they proven that they have indeed changed in just 5 years? We’ll have to wait and see.