Thursday, October 22, 2015

A lesson from VW

“By 2018, we want to take our group to the very top of the global car industry,” said the Volkswagen CEO four years ago.
 For social and environmental investors or for that matter for all investors that should have been a red flag. A month ago it was discovered that VW knowingly rigged their emissions control system. So they lied and they were environmentally irresponsible. Their intention of being the number one car -maker prevailed, and so then did short cuts and cover-ups. Hundreds of thousands if not millions of investors, customers and employees have been negatively impacted. The fall-out is still uncertain, there is talk that the German economy may suffer as well
 The intended goal of “building the best possible product for our customers, and working toward the most efficient fuel efficient technology” an admirable goal in itself, became just glossy presentation on the road to number one. Sustainable profit requires sustainable practices and fostering sustainable resources.
 “It takes 20 years to build a reputation and five minutes to ruin it.” – says Warren Buffet.
 The lesson we learn is that setting goals that are not directly correlated to the greater good is not productive. The greater good will always prevail; it’s in our nature.
 P.S. The science of this can be found all over the internet. Firms of Endearment (click on the “performance tab”) is one example.

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