Volkswagen’s $15 billion lesson on the stakes of sustainability

Read the full story in GreenBiz.

The public backlash has already been swift, but the concrete financial toll of European automotive giant Volkswagen’s deliberate manipulation of diesel emission testing revealed last fall is starting to crystallize.

A $14.7 billion settlement announced yesterday for the owners of some 475,000 impacted U.S. cars. The company, once lauded for its sustainability efforts on corporate rankings like the Dow Jones Sustainability Indices, is now No. 2 on the dubious list of the costliest corporate environmental misdeeds in history behind BP’s $20 billion Gulf Oil Spill payout finalized last year.

In addition to the very visible green marketing fall from grace for allegedly “clean” diesel cars, the 11-figure financial penalty reflects a new precedent for regulatory crackdowns — and this is all in the U.S. alone, to say nothing of what regulators elsewhere may do about the 10 million-plus other vehicles impacted worldwide.

The verdict, which came after California regulators earlier this spring rebuffed a less costly Volkswagen plan to recall vehicles impacted by the emissions scandal, illustrates how much higher the stakes of reining in pollution have become for corporate America.

For those already immersed in corporate sustainability, however, the entire situation raises a counter-intuitive question: could the regulatory hammer dropped on VW actually be a good thing for environmentalists?

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