Examining the ethics of “Dieselgate”

Examining the ethics of “Dieselgate”

Diesel engines had been touted for some time by car manufacturers as being cleaner and more efficient than their petrol cousins. Such was the power of the diesel message that these cars rose steadily in popularity in Europe for over a decade, and excepting 2009, represented more than 50% of the new passenger car sales in Europe from 2006 to 20151.

The popularity of diesel in Europe peaked in 2011 before commencing a gradual decline, and with 2016 new diesel car sales dropped back below the 50% mark at, albeit at just under – 49.5%. This, predictably, has flow-on effects on fuel sales in Europe as well2:

The decline in diesel registrations mean that the fuel has lost its dominance of the European market, accounting for 46% of the market compared with 50% in April 2016.

In 2014, the Center for Alternative Fuels, Engines and Emissions (CAFEE) at West Virginia University conducted road tests against various diesel cars, including Volkswagen and BMW3. While they were able to independently verify BMW’s emissions statements, their on-road tests of Volkswagen kept turning up results that did not match the manufacturer’s published lab tests.

VW Covered With Snow

When they realised the implications of their results, the group provided their results to the US EPA4, which conducted its own tests in 2014 and 2015. The results, when confirmed, were clear: Volkswagen had installed a device to detect when the cars were in a laboratory test situation (i.e., when the wheels were turning but the vehicle wasn’t moving), and adjust the engine profile to produce emissions that matched their claims.

Fast forward to 2017, and the consequences of the process have been legally and financially severe for Volkswagen. In January the company pled guilty, was fined $4.3 billion US, and several executives were charged over the entire incident. (That was on top of a US $15 billion civil settlement, and a voluntary recall of several types of affected vehicles.)

Additionally, per The Register’s VW engineer sent to the clink for three years for emissions-busting code5:

The engineer responsible for designing the software that enabled Volkswagen to diesel cars to cheat on US emissions tests has been sentenced to 40 months in prison and fined $200,000.

Here we have a clean-cut example of a business (or at least, a number of employees within a business) conducting illegal activities.

Yet, as we’ve noted in an earlier article6, there is not a guaranteed correlation between an act being legal and it being ethical. Is it likewise possible that an act can be illegal yet ethical? This is something many would argue as possible. Let’s consider three examples: conscientious objectors, aid for the homeless and gagging of medical professionals.

A common aspect of major wars in the past has been the introduction of conscription, whereby young people (usually, based on the times, men), have been forced to join the military. In most situations, governments have given people a stark choice – join the military, or be interred in gaol for the duration of the the war. Such people typically became known as conscientious objectors. While some no doubt may have chosen gaol was a way of evading the risk of being killed, many documented conscientious objectors defined themselves so because they abhorred the notion of taking another person’s life, regardless of the rationale. For those who find war morally repellent, this would clearly be an example of an act defined at the time as illegal but actually ethical.

More recently, we are seeing rather odious examples of jurisdictions in the United States and elsewhere finding people or organisations succouring the homeless. In a 2015 article in the Washington Post7, we are told a woman was fined $2,000 for feeding the homeless, noting:

Called “feeding bans,” a growing number of cities have taken up the call to restrict food-sharing, activists say, in an attempt to de-incentivize homelessness. According to an October report by the National Coalition for the Homeless, 71 cities have either passed or attempted to pass an ordinance that restricts food-sharing.

This, too, would appear to be a situation where an act that has been defined as illegal would be declared ethical behaviour by most observers.

Finally, consider the gagging of medical professionals. The Australian Federal Government, which practices offshore detention of asylum seekers who have arrived without a visa, changed the law to gag medical professionals treating those asylum seekers from speaking up publicly about any abuse observed. In the Sydney Morning Herald we were told8:

Under the laws, doctors, nurses, counsellors and other health professionals risked two years’ jail if they publicly revealed physical or sexual abuse, or medical negligence in Australia’s offshore detention centres.

While the law was eventually rescinded after a fierce legal debate, there was a time at least in Australia a highly ethically questionable law designed to prevent disclosure of abuse and other violations of vulnerable people. Thus, it was possible to be guilty of illegal, yet ethical behaviour.

So, while it is tempting to declare the Volkswagen incident unethical as well as illegal, more is needed than a gut feel assessment.

In legal findings, Volkswagen were declared to have cheated on the emissions testing, acted with deception, and having lied9.

Each of these statements: cheating, deception, and lying, might seem on the face of it to be sufficient cause to declare they acted unethically, but we can imagine scenarios where any three of those behavioural traits may not be deemed unethical. Deceiving a loved one into thinking they are going to a birthday dinner for two when the restaurant is actually filled with friends to help celebrate the party as a surprise could be considered ethically acceptable. Lying to a relative with Alzheimer’s who is inquiring about a deceased partner they believe to still be alive could save regular infliction of anguish on that person. Cheating in a solo computer game to get past a particularly challenging level so you can complete the rest of the game might also be argued as being ethically acceptable.

Such explanations are not meant to draw a direct comparison between the behaviour of Volkswagen employees involved in the scandal, but do help demonstrate that if we’re to consider something to have been unethical behaviour, we need more evidence than simply a surface examination.

Consider now that as a publicly traded company, Volkswagen employees and executives have an obligation to ensure shareholders receive a good return on investment. Since the deception allowed Volkswagen to sell into markets it would have otherwise been denied access to due to its poor emissions, employees an executives at that level at least may have acted according to their employment obligations. One might argue that, if one is paid to perform a particular function, then it would be unethical to not perform that function. Could it therefore be the case that executives in particular were ethically obligated to maximise shareholder profit, and employees ethically obliged to perform the job executives required of them?

If there are a large number of shareholders, could utilitarianism give rise to the idea that something increasing shareholder profit is likely to also increase shareholder happiness, and therefore the behaviour, while deemed illegal, was in fact ethical?

Or is it possible to pursue an Epicurean or egoist approach to ethics? The actions were justified because presumably doing them brought personal value or success to the actors in the process, and were unlikely to have directly, on a per-car basis, have caused harm to those deceived? After all, those who purchased the deceptive cars would have purchased a car anyway, and the comparative cost of fuelling the vehicles were unlikely to be so different as to cause lasting financial harm to the consumers.

While the above propositions each show ways of looking at the incident to enable a statement absolving parties involved of ethical responsibility, none would be so sufficiently binding as to achieve a full statement of irrefutable ethical positivity in the actions.

First, consider the notion of it being ethical to do what you are paid to do. This, from an initial review, might actually be the most binding of all possible ethical interpretations of the behaviour. However, it is a well documented fact that many companies will lay out processes to enable employees to report situations where they are being asked to perform unethical activities, either by their chain of command, customers or suppliers. Many western governments in fact create laws to support whistleblowers10 and prohibit them from being unfairly targeted when they have acted in good conscience.

If we review the actual Volkswagen Group Code of Conduct from 201511, we see instances that expressly state an appropriate behaviour is to avoid particular activities:

With the goal of a successful and sustainable business, we are convincing in competition with the quality and value of our products and services. We support national and international efforts not to influence or distort competition through bribery, and we reject any corrupt and detrimental conduct to business.

and

Each of our employees is obligated to seek help or advice upon suspicion or legal uncertainty about the existence of corruption or white-collar crime. Advice and assistance are provided by the superior, the responsible internal departments (e.g., Auditing, Legal, Compliance, Group Security, or Human Resources), the anti- corruption officer, or the ombudsmen. In addition, every employee can also turn to the Works Council.

With such directives as part of the group code of conduct, it becomes very difficult to justify the behaviour exhibited by the various employees involved. They would either have to demonstrate a failure to have read the code of conduct, a failure to understand that what they were doing was either corrupt, illegal or even suspected to be illegal, or perhaps demonstrate that prior codes of conduct (the one we have sourced the quote from is dated 2015) did not require this behaviour.

The 2014 statement of compliance by Volkswagen12, however, includes similar directives on employee behaviour. The opening paragraph, in fact, states:

In the long term, a company can only be successful if it acts with integrity, complies with statutory provisions worldwide and stands by its voluntary undertakings and ethical principles even when this is the harder choice. Our Compliance organization supports this approach.

That compliance report goes on to provide details of the different compliance training required of employees, and the total hours spent in that training – the table is shown below.

Volkswagen Compliance Training 2014 Report
Volkswagen Compliance Training 2014 Report

While examples were raised previously of situations where lying, cheating and deceiving might all be ethically excused, it was also noted they were not meant to be seen as a direct comparison of Volkswagen employee behaviour in this case. In the settlement, it was noted13:

VW installed software in diesel engines on nearly 600,000 VW, Porsche and Audi vehicles in the US … The software allowed the cars to spew harmful nitrogen oxide at 40 times above the legal limit.

Deceiving someone to provide them a surprise birthday party does not compare to deceiving potentially 600,000 customers that the emissions of the vehicles they are purchasing meet environmental regulations. Similarly, lying about the emissions or the system used to lie about the emissions would not compare to lying to a loved one with Alzheimer’s, nor would cheating in emissions testing for hundreds of thousands of vehicles equate to cheating in a solo computer-game in order to complete it.

Returning to our earlier statement: it would be challenging to argue based on the Volkswagen Group code of conduct that employees involved acted in any way other than unethically. They would have to demonstrate a profound ignorance of the law and/or a reasonably complete ignorance of the corporate code of conduct within the group.

If we move beyond an ethical review based on the code of conduct, might it be successfully argued that an Epicurean/egoist approach for employees allowed them to act ethically despite the illegality established? This would be challenging to argue. Key in these approaches to ethics is that while you should be free to follow your own behaviour, it should not come at the expense on infringing on others freedoms. While car buyers would have purchased a car regardless, and likely would have spent a comparable amount on fuel regardless of the vehicle purchased (except in particular circumstances), it is possible the perceived compliance of Volkswagen to environmental standards was a deciding point in their purchasing decision. This would indicate they had not been able to purchase freely because deceptive information had been provided. (Indeed, had Volkswagen not installed the test defeat system, those cars would not have been available as a purchase option, providing freedom for buyers to choose only between vehicles that met regulatory standards.)

Similarly, utilitarianism, instead of enabling the behaviour of the employees to be ethical would potentially condemn it. As of publication, there would appear to be slightly in excess of 500 million Volkswagen shares available14. Given a large percentage of shares are held by a relatively small number of groups15, it is unlikely half a billion people would have been made happy by Volkswagen share performance during the deception. It is possible though that a higher number of people than actual shareholders had their happiness reduced by knowledge of Volkswagen’s activities once it was established and publicised, either solely as being concerned with the environment, or a mix of those concerned with the environment and those who purchased the cars who felt deceived. Even if this is disputed, since the eventual result of the lawsuits and settlements was multiple staggering fines and a decrease in shareholder value, the combined level of people with reduced happiness as a result of the actions would have utilitarianism condemn the employees involved as having behaved unethically.

While a gut-feel consideration of Volkswagen employee behaviour would have likely condemned it as being unethical from the outset, it’s important when evaluating ethics in IT and technology overall to avoid quick judgement, and instead step through the situation in greater detail. The purpose of Fools Rush In won’t be to do a weekly highlight of Business Behaving Badly, but evaluating specific situations do become relevant as benchmarks (either in the negative or positive) for future consideration.

Footnotes

  1. Share of Diesel in New Passenger Cars, European Automobile Manufacturers Association
  2. Diesel engines lose European market dominance, James Attwood, 24 May 2017 for Autocar.co.uk
  3. How a Little Lab in West Virginia Caught Volkswagen’s Big Cheat, Sonari Glinton, September 24, 2015, NPR
  4. Environmental Protection Agency
  5. Kieren McCarthy for The Register, 25 August 2017
  6. What is Ethics?, Preston de Guise, Fools Rush In, 10 September 2017
  7. What happened when this feisty woman got fined $2,000 for feeding the homeless, Terrence McCoy, April 20 2015, Washington Post
  8. ‘A huge win for doctors’: Turnbull government backs down on gag laws for doctors on Nauru and Manus, Bianca Hall, October 20 2016, Sydney Morning Herald
  9. Volkswagen pleads guilty in emissions scandal, agrees to $5.7 billion settlement, 12 January 2017, ABC News Australia
  10. Those who disclose unethical or illegal behaviour to a third party, either within or outside of the company you work for.
  11. Volkswagen Group Code of Conduct, Volkswagen Group Homepage
  12. Volkswagen Sustainability Report, Compliance Page, 2014, Volkswagen Group Homepage
  13. Volkswagen pleads guilty in emissions scandal, agrees to $5.7 billion settlement, 12 January 2017, ABC News Australia
  14. Financial Times
  15. Shareholder Structure, Annual Report 2016, Volkswagen Group Homepage
%d bloggers like this: