Yahoo Finance If governments will not punish VW’s shocking behaviour, consumers must
It is hard to think how Volkswagen could top a scandal involving it selling drivers 11 million cars that produced more pollution than advertised, harming human health and shamefully cheating regulators’ tests in the process. But the past fortnight’s mind-boggling revelations about research at the world’s biggest carmaker have come close.
First, it emerged the firm had taken the lead in a 2014 experiment on 10 macaque monkeys to test the health impact of exposure to nitrogen dioxide (NO2), a toxic gas produced by diesel cars. A VW Beetle, fitted with a cheat device of the sort the company used to game pollution checks during lab tests, pumped fumes into the monkeys’ chambers as they watched cartoons.
Later it was revealed that in 2015 an automotive lobby group part-funded by VW tested the effects of NO2 exposure on 25 healthy young people in Germany.
It’s often remarked that the banks emerged from the financial crash unpunished and unreformed. But the degree of effort that VW put into deceiving the world about the health impact of its diesel cars, and the pollution they were really generating, could be viewed as a bigger crime.
This is not just a case of destroying jobs and damaging people’s lives by creating a credit crunch: this is a matter of life and death. Nearly 9,500 people die prematurely in London alone each year because of the city’s illegally high levels of NO2.
We will never know the actual toll of the cheating and lobbying that VW took part in. But what we do know is that the punishment has been found wanting.
Chief executive Martin Winterkorn quit in 2015 after the emissions scandal was discovered. Last week, VW’s chief lobbyist, Thomas Steg, was suspended in the wake of revelations about the tests, which were carried out by the European Research Group on Environment and Health in the Transport Sector (EUGT), a car lobby group funded by Volkswagen, Daimler and BMW. VW’s new chief executive, Matthias Müller, who was not in charge at the time of the tests, said: “We are currently in the process of investigating the work of the EUGT, which was dissolved in 2017, and drawing all the necessary consequences.”
But those consequences should arrive at his door too, because of his failure to “drain the swamp” during his leadership of VW. Steg was promoted by Müller shortly after the emissions scandal, and reported directly to him.
The reality is that VW has hardly been hurt at all by the scandals, despite them costing $25bn (£17.6bn). The company now sells more models than ever and, thanks to a post-dieselgate cost-cutting programme, has a growing cash pile.
However, the blame doesn’t stop at Müller’s door. European governments have failed to punish the German car giant for the contempt it showed to a regulatory regime designed to protect human health.
While $4.3bn of fines have been imposed by US authorities, EU ministers have yet to hit the firm with any financial penalty. In the face of such timidity, VW has maintained it does not need to pay compensation to European drivers, including the 1.2 million cars sold in the UK that were fitted with cheat devices. To the UK’s credit, on Friday ministers did pledge unlimited fines and criminal charges for carmakers found fitting cheat devices, but that will do nothing to punish past failings.
So if governments and the car industry can’t be relied on, where does that leave us? It’s time motorists exercised their consumer power.
The car industry has, finally, got the message: diesel is over, and electric cars are the future, maybe not in the short term, but definitely in the long run. Even VW recognises that, with Müller doubling investment on zero-emission vehicles last year.
So as a consumer, the question is: who do you want to reward? Will it be the Teslas and the Nissans, which have forged ahead in this new electric world and pioneered efforts to clean up our air? Or – much as you might fancy an electric Golf – will it be the cheats with the monkeys?
Facebook working hard at being more likable
Facebook is like a casino: the house always wins, even if it says it’s losing. Announcing fourth-quarter results last week, founder and chief executive Mark Zuckerberg pointed out that changes to the site meant people were spending 50 million fewer hours per day watching viral videos on Facebook. However, that’s only about two minutes per day less for each of its 1.4 billion daily active users (DAUs, who log in at least once a day); they still spend on average 40 minutes Facebooking every day.
And did less time spent watching skateboarding cats hurt? No. Revenues soared by 47%, to $12.8bn (£9bn), and net income to $4.3bn. Clearly, Facebook and Instagram (which Facebook also owns, along with messaging app WhatsApp) have cracked the formula for how to sell mobile advertising.
There are, however, the faintest glimmers of future problems. But DAUs in North America dropped from 185 million to 184 million. Has Facebook peaked? Zuckerberg proclaimed that he was changing the amount of viral content because “in 2018, we’re focused on making sure Facebook isn’t just fun to use, but also good for people’s wellbeing and for society”. This might pose challenges for revenues, but a heavily touted focus on “wellbeing” and “society” will help keep the politicians off Facebook’s back; failing to keep authorities onside could have an even greater financial impact.
Nonetheless, if the lack of cat videos turns people off, Zuckerberg might end up as the first chief exec since the big tobacco bosses to decide that the less people use his product, the better. Revenues could fall as a result, which would explain why the shares dipped.
It’s never wise to bet against Zuckerberg, though. He pulled his company through the seismic shift from desktop to mobile a few years ago; the shift to clean-living internet citizen is just another challenge.
Equality needs more than pay gestures
The power of a principled gesture is the suggestion that change is simple to effect. Such was the symbolism of Johan Lundgren’s decision last week to take a £34,000 cut, bringing his pay into line with that of his predecessor at easyJet, Carolyn McCall.
Gender pay gaps are not an unbridgeable consequence of the free market setting salary levels according to ability and demand. They are often the result of cultural and corporate bias. They can therefore be adjusted at the executive level by actions such as Lundgren’s.
The message to every other male chief executive undeservedly paid more than a female peer is simple: repeat the gesture. Equality can be achieved with the stroke of a pen on your contract.
Elsewhere at easyJet though, gestures will not be enough. The airline also revealed that the overall gender pay gap at the company – the difference between the average pay of male and female staff – is a stark 51.7%. We are beyond acts of magnanimity here. That gap reflects not only a simple pay differential between men and women but also how the divide between highly skilled and less skilled occupations straddles gender too: 94% of easyJet’s pilots are men.
This is not entirely easyJet’s fault. Worldwide, 3% of commercial pilots are women and in the UK the figure is the same as it is at easyJet: 6%. And the solutions to this will sound familiar: culture and education.
According to the British Women Pilots’ Association, bridging this gap will require schools and career offices encouraging girls to study more Stem subjects (science, technology, engineering and mathematics). It will require more role models in the industry itself (meaning it is even more of a pity that McCall has gone to ITV). And it will require the adult world – at home and in the airline industry – emphasising to children that being a pilot is not just a man’s job. It sounds simple. But it will take more than a gesture to create this fundamental change.
