Can the VW scandal drive businesses to change

AS THE OWNER of a Seat car with a diesel engine, I’ve been following the whole VW scandal with a mixture of disappointment and concern.

Foodservice Footprint Formula-300x206 Can the VW scandal drive businesses to change Comment Features Features  Will Hutton VW Observer Nick Hughes David Burrows Chris Elliott

But truth be told I am not that surprised at the whole sorry state of affairs. This isn’t the cynic in me, rather the realist.

 

We already know that the miles-per-gallon figures are pie in the sky, as well as the ones pertaining to carbon, so why should those for nitrogen oxides be any different? Sure, the scale of the deceit was on a much larger scale – and there are considerable health risks too – but the seed had been planted.

 

The regulatory system for testing performance and emissions has been due an overhaul for some time. Car manufacturers simply played on that. News that the UK government appears to have lobbied to keep the loopholes (which mean carbon emissions in the real world are 14% more than those claimed) is hardly surprising either.

 

As Will Hutton noted in the Observer: VW is further evidence that global business has become a law unto itself. “Capitalism in short may have boundless creative and innovative energy – but it also has boundless ways to go wrong,” he wrote. “Make god the share price, as so many British and US companies do, and you create one basket of problems – underinvestment, excess deal-making and cutting corners.”

 

It reminded me of another scandal. When horse-meat was discovered in everything from burgers to lasagnes, it was because criminals had targeted a chain that was beset with downward price pressures and B modelled on high output and low quality. The regulatory system was also there for the taking.

 

It was therefore fascinating to hear Prof Chris Elliott’s insight a year on from his review into the integrity of our food supply chains. He told me that he was deeply concerned that the food crime unit, one of his key recommendations, might take much longer than he planned to move from a passive intelligence-gathering mode to an active, operational one.

 

We don’t yet know whether VW’s bosses will face criminal charges but there’s a long legal battle ahead for sure. Was it worth it? Those involved must have thought so. This is where the horse-meat scandal does differ – someone at VW made a conscious decision to flout the laws; the supermarkets and caterers were unaware that their supply chains were being adulterated.

 

Regardless, the buck had to stop somewhere. The prime minister’s words at the time were along the lines of the fraud being a “completely unacceptable state of affairs. But it is worth making the point that ultimately retailers have to be responsible for what they sell and where it comes from.”

 

And this is key: responsibility. More than ever businesses must show that this quality extends beyond shareholders and to society at large and, of course, the environment. As Nick Hughes discusses later on in this month’s magazine, firms have started talking about purpose.

 

He notes: “The idea of having a broader purpose beyond profit maximisation is increasingly becoming implicit in company mission statements from Sodexo’s maxim of providing ‘Quality of life services’ to Nestlé’s reshaping of its corporate identity in recent years to focus on ‘Nutrition, health and wellness’.”

 

These are not the endgame but merely the early signs of an evolution in the ways businesses see themselves, looking from the outside in. The VW affair will undoubtedly have put companies from all sectors in reflective mood. No business plans to be exposed in this way – whether it’s for dodgy diesel emissions or using horse meat instead of beef – so I wonder whether more will start talking about proactive exposure.

 

As one retail representative told me when I was researching our cover feature on milk prices: “You have to be as transparent as you can – and not just on dairy [because] one way or another people will find out.”

 

David Burrows is editor of Footprint magazine

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