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Volkswagen didn’t keep it real

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The broadsheets and social media are currently rife with commentary about the dramatic fall from grace of one of the world’s largest and most trustworthy automotive brands; Volkswagen. The fallout is massive. This means billions in losses for the company. The CEO has resigned and it remains to be seen what the legal and long-term consequences are for the decision-makers involved in this debacle and even for the brand, no matter how resilient it might be. As a result of the scandal, even “brand Germany” reputed its for trustworthy, squeaky clean engineering excellence, is coming under scrutiny. Aileen Ionescu-Somers on the VW scandal.

The economic and political clout of the global corporation is growing constantly, going well beyond regional or national boundaries. With globalization, a company’s purpose defined solely around profit is inadequately articulated since it does not reflect the world’s vastly changing dynamic. Like it or not, companies are fundamentally social institutions, playing their own explicit and defined role within society. For a long time, their purpose was defined – not so much as promoting the common good, but as meeting market needs while making a profit as an indicator that they added more value to society than the resources they used up. However as of late, some prominent business leaders – but by far not enough – have realized that companies simply cannot do business as usual on a failing planet with dwindling resources and rising social inequity.

Volkswagen, as an industry leader had – at least on paper – recognized that. The very name of the brand exudes a societal purpose: Volkswagen after all, is the “People’s car”. But the company went further, defining its corporate purpose in a more meaningful way, seemingly taking a holistic view of its role in and contribution to society: “make Volkswagen the most successful, fascinating and sustainable automaker in the world by 2018”. Its Strategy 2018 puts environment, its clients and its people at the center of the company’s strategic vision.

There can be no doubt that Volkswagen clients and the public at large now perceive its lofty purpose to lack authenticity. Greenwashing would be putting it mildly. Right now, Volkswagen’s reputation lies in tatters. How could it have gone so wrong?

Let’s surmise basing ourselves on IMD’s “Keeping it real: How authentic is your corporate purpose?,” empirical research carried out in 2015 in partnership with Burson Marsteller, a top public relations firm. First, the hundreds of executives we surveyed had great difficulty identifying a single company with a truly authentic corporate purpose. This means that while many companies “talk the talk” on corporate purpose, they do not necessarily “walk the walk”. This also means that strategies and linked internal and external communications efforts need revision across industries. Our survey also indicated that executives do not generally rely on their own company’s stated purpose to guide their decision-making processes. There is a serious disconnect. It is highly likely that similar scenarios were playing out at Volkswagen.

In fact, stating purpose is actually the easy part and only the first step. It is important that purpose also be embedded in the organization. It’s may not seem like rocket science but so often important aspects are ignored that allow companies to take a holistic perspective on purpose and strategically align values, organizational culture, activities and operations around it; in other words, ensuring that one hand knows what the other is doing and above all, keeping it real. Taking a holistic approach helps avoid any disconnect between what companies say they do and what changes are truly being made to how they operate. It also helps avoid the substantial risks to brand and reputation that Volkswagen is currently experiencing. In other words, companies absolutely have to– and particularly in today’s digitally connected world– mercilessly walk their talk before they talk their walk. This starts within the company, top down and bottom up.

That said, much as walking the talk is crucial for any corporation, too few are shifting away from the sole short-term profit focus dictated by capital markets. The managerial mindset this promotes has clearly fundamentally affected the way Volkswagen operated in some of its key markets. We can deduct from the mayhem around Volkswagen this week that there are a increasing number of external factors requiring companies to adoptable broader purpose-driven strategies that are also authentic. Currently it’s a perfect storm where on the one hand we are reaching planetary boundaries and simply running out of resources, feeling the impact of climate change as never before, while on the other, issues around social equity need urgently to be addressed and this includes by corporations also. Now more than ever, companies have power to effect change both internally and externally by acting out and communicating purpose more holistically and effectively. If they can keep it real, better business is the result.

Economy

Will Self-Driving Cars Be Better for the Environment?

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Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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