Volkswagen emissions scandal and recall will rock public trust in business – The City View

For much of the past few years the debate around trust in business has focussed on financial services. 

 

The case for the prosecution is well known and the roll-call of shame (Libor rigging, forex scandals, PPI mis-selling) should never fail to serve as a reminder of the damage caused when individuals and institutions consider themselves to be above the rules or beyond the law. 

 

For a while, the horse meat scandal reminded the public that a business doesn’t have to be dealing in currency to behave like a crook, but generally speaking it’s financial services that still takes the heat when the public wants to vent. 

 

Now a new bad guy has strolled into town in the shape of Volkswagen. How did it think it would get away with it? 

 

 

Consider the discussions that must have gone into such an audacious deceit. Up to 11m VW diesel cars may have been fitted with a device whose sole purpose appears to have been to cheat the consumer and lie to regulators over emission levels. 

 

The consequences for the 78-year-old German company could be immense. 

 

In two days, £17bn has been wiped off the value of the carmaker, governments around the world are launching investigations and it faces multi-billion dollar fines and the threat of criminal charges. 

 

Shareholders are staring in disbelief at significant losses. The wider consequences for public trust in business are just as depressing. 

 

The casual way in which some companies end up treating the hard-earned trust of the public sets back the probusiness cause by years. 

 

 

Edelman’s 2015 global trust barometer shows the automotive sector currently enjoying the number three spot in industry trust rankings, behind technology and consumer electronics. We can imagine next year’s survey results. 

 

What’s more, the vast majority of respondents from around the world already believe that government regulation of business does not go far enough. 

 

Campaigners for such a cause can now add VW to their posters. 

 

One final nugget from the Edelman survey: just 31 per cent think chief executives are trustworthy spokespeople. 

 

VW’s Martin Winterkorn can say he’s “endlessly sorry” as much as likes but his YouTube apology is hardly likely to improve the reputation of the chief exec.