Volkswagen CSR Reports were the Tip-Off, Say Analysts

Most of us want to know why. What would cause a leading car manufacturer, with an accomplished track record in green technology, to deceive consumers on its emissions standards?

But recent analysis published in the Huffington Post highlights another probing question: Why didn't we see the problem?

Business Editor Alexander Kaufman suggested in his column on Friday that the declining amount of coverage by the automaker concerning its emissions records in its yearly sustainability reports should have tipped off investors. It should have flagged the attention of the Environmental Protection Agency as well.

"Since 2010, the automaker's sustainability reports have devoted less and less room to discussing non-carbon gas emissions and their effect on the atmosphere," noted Kaufman. He pointed to a report published by data firm eRevalue which analyzed VW's sustainability reports and determined that its state-of-the art emissions technology has received less and less reporting over the last five years.

This may not sound like a very scientific way to analyze whether a company is being transparent, but as Huffington's Executive Editor, Emily Peck noted, sustainability reports are meant to do more than make the company sound good. To the discerning and caring consumer, corporate social responsibility reports are a window into a company's soul, so to speak. To the investor, they show in practical terms, how that investment is furthering environmental goals it promised to attain with his or her money. For a company like Volkswagen, which has won awards for its environmental advances at its Chattanooga TN plant and other facilities, those details are the underpinnings of its credibility.

So why didn't investors notice that the data was no longer being highlighted in its CSR reports?

And why did it take a university conducting routine performance tests to alert the EPA that the emissions are as much as 40 times higher than they should be?

As Peck noted, the fact that the automaker's sustainability reports have been less than forthcoming when it comes to its technological challenges don't just cast a pall over the corporation. It runs the risk of tarnishing the CSR movement, which succeeds because consumers believe companies can and will be honest about their sustainable business goals and progress.  But it also gives all of us plenty to reflect about how we all -- investors, consumers and federal agencies alike -- missed the signs that would have prompted more questions and more emissions testing. Validating data doesn't call companies into question. It helps to underscore the accomplishments when they are made, and ensure mistakes aren't missed when they truly matter.

Image: Gerry Lauzon