Volkswagen scandal spells trouble beyond the auto industry

This week automotive giant Volkswagen (VW) has tipped the entire global automotive industry into crisis mode and provided a gift to students of reputation risk seeking case study material.

The repercussions of the VW scandal extend way beyond the auto industry. Although it now looks increasingly absurd, VW is a front-runner in Corporate Social Responsibility (CSR). As you can see below, it currently ranks highly in The Reputation Institute’s just released 2015 Global CSR Reptrak100, which the research firm says is the ‘deepest normative database of reputation in the world’.

Image courtesy of Forbes magazine

Image courtesy of Forbes magazine

Sceptics of the true intentions of corporate CSR activities will have their ranks swelled by this week’s news. And if you are one of the many people working in this area, your cause has probably been considerably set back, courtesy of VW.

If you’re one of the many who work in corporate public affairs, your relationships with regulators will come under closer scrutiny, thanks again to VW. The Reputation Institute’s research shows that companies with better reputations are more likely to be invited to provide input during the policy making progress. Until this week, VW was one of those firms. And it deceived regulators. You can therefore expect them to be much reticent in their dealings with big business from hereon.

VW itself will survive this scandal. It will be able to restore public trust faster if interim chairman Berthold Huber acts quickly and decisively to find and fire those responsible. But anyone who thinks this is bad news for VW alone is clearly mistaken.

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