As we continue our journey into the 21st Century are global businesses setting higher standards for themselves or are
they becoming more selfish and greedy?
If the latter – maybe we should be asking some basic questions
on social media and elsewhere to try and get some substantive change. For
example, who gets to set the rules in business? And how well are they doing
their job? What values should these rules reflect? What’s fair and how is this
defined? And what, if anything, do we owe to one another?
The 21st Century has seen large global brands
being caught misleading their customers for financial gain. The global
financial crisis was a tough time for most consumers across the world, who must
have been saddened (and more) to find that many of the financial institutions
they trusted to look after their hard earned cash were misleading customers or
had colluded to make financial gain through for example rigging forex rates.
More recently we had the Volkswagen (VW) emissions cheating scandal allegedly brought about
when VW realized that a new generation of diesel motors could not meet United
States air quality standards legally. The company officially admitted the
cheating to regulators, but not to the public, on September 3, 2015, after the
E.P.A. threatened to refuse to allow 2016 models to go on sale.
According to
the documents reviewed by The New York Times, a confidant of Mr. Winterkorn
(the Chief Executive of Volkswagen at the time), wrote to him in May 2014,
warning that regulators might accuse the carmaker of using a so-called defeat
device - software that recognized when the car was being tested for emissions
and activated pollution-control equipment. At other times, the cars produced up
to 35 times the allowed amount of nitrogen oxide emissions, which are linked to
lung ailments and premature deaths.
On September
1, 2016 the Australian Competition and Consumer Commission (ACCC) sued
Volkswagen AG (VW) and its local subsidiary for misleading customers. The suit
alleges that VW engaged in misleading or deceptive conduct, made false or
misleading representations and engaged in conduct liable to mislead the public
in relation to diesel vehicle emission claims. Specifically, the ACCC claims
that between 2011 and 2015 VW misled customers in relation to the significantly
higher nitrogen oxide emissions being produced by the vehicles, misled
customers to believe that the vehicles complied with Australian and European
standards and all Australian regulatory requirements, and marketed the vehicles
in Australia as being environmentally friendly, clean burning, low emission and
compliant with stringent European standards when this was not the case under
normal driving conditions. The ACCC claims that this constituted multiple breaches
of the Australian Consumer Law. The ACCC is seeking declarations, pecuniary
penalties, corrective advertising, findings of fact and costs.
On September
7, this year Bloomberg Business Week asked the question “can ExxonMobil Be
Found Liable for Misleading the Public on Climate Change? Where it’s alleged
that scientists at the biggest U.S. oil company understood as early as anyone
that fossil fuel emissions were heating up the earth’s atmosphere. The world’s
largest oil explorer by market value had been hit by a pair of multipart
investigations by InsideClimate News and the Los Angeles Times. Both reported
that as early as the 1970s, the company understood more about climate change
than it had let on and had deliberately misled the public about it. One of
Exxon’s senior scientists noted in 1977 - 11 years before a NASA scientist
sounded the alarm about global warming during congressional testimony - that the
most likely manner in which mankind is influencing the global climate is
through carbon dioxide release from the burning of fossil fuels.”
And then
there’s Wells Fargo.
Two former Wells Fargo & Co employees have filed a
class action in California seeking $2.6 billion or more for workers who tried
to meet aggressive sales quotas without engaging in fraud and were later
demoted, forced to resign or fired. The lawsuit on behalf of people who worked
for Wells Fargo in California over the past 10 years, including current
employees, focuses on those who followed the rules and were penalized for not
meeting sales quotas.
"Wells Fargo fired or demoted employees who failed
to meet unrealistic quotas while at the same time providing promotions to
employees who met these quotas by opening fraudulent accounts," the
lawsuit filed in California Superior Court in Los Angeles County said. Wells
Fargo has fired some 5,300 employees for opening as many as 2 million accounts
in customers' names without their authorization. On September 8, a federal
regulator and Los Angeles prosecutor announced a $190 million settlement with
Wells.
If the fraud isn’t bad enough it’s worth highlighting
that institutional investors now want Wells Fargo to reclaim money it gave to
Carrie Tolstedt - the executive who oversaw the Wells Fargo unit during the
time it carried out a massive fraud. Tolstedt resigned earlier this year with a
$124 million severance payment, plus equity.
One can sadly
Google many other organizations misleading the consumers in some form or other
– which begs the current question – who’s setting the rules of business? As
individuals ‘we’ have two simple choices – we can either turn a blind eye to
forms of corporate corruption and greed and thereby tacitly approving these bad
practices, which at a minimum are ripping us off and at worst will destroy the
planet – or we can start to ‘fight’ and stand up for the world we want our
children and grand-children to inherit from us.
If we’re going
to put our heads in the sand thinking ‘I have no power to make a difference; I
don’t drive a VW or bank with Wells Fargo; or I don’t know what to believe
anymore so I just won’t get involved’ – then sadly we’re accepting that it’s
okay for businesses to cheat, lie and be focused on selfish greed. In which
case why don’t we start teaching our kids the skills required to be good at lying
and corruption - as we might as well ensure our future businesses and
associated nations are best equipped to maximize this apparent tacitly
‘acceptable’ approach to business.
The business ‘buzz
words’ of the past few decades have focused on leadership development;
corporate governance and corporate social responsibility – in fact many
organizations are making millions of dollars supposedly ‘developing’ these
importance areas of business.
But if
businesses are corrupt – then it’s the fault of their leadership; their
corporate governance and their approach and belief in corporate social responsibility.
One of the key
rules of business should be to have stringent corporate governance rules in
place to ensure the organization is operating at the highest ethical standards,
for the good of their stakeholders, their community and when appropriate the
planet; for organizations to embrace and genuinely understand the long-term and
sustainable benefit of corporate social responsibility; and to have the right
leadership in place to ensure these first to rules are upheld each and every
day.
When
organizations cheat – then the leadership must be held to account and be held
personally liable to their stakeholders.
Until this
happens we are sadly allowing and tacitly approving greedy corporations and
institutional investors to make a mockery of the concept of leadership and the
accountability that comes with it – and taking the principled role of leadership
back to the dark ages.
