The diesel cheating affair of 2015 nearly destroyed Volkswagen. The company sat at the center of one of the largest scandals in auto history after employees wrote software to make Volkswagen diesel car emissions appear cleaner than they were. Volkswagen’s long-standing reputation for engineering excellence and sustainability innovation was destroyed overnight. $30 billion in compensation, years in court appearances, and reams of repair costs followed.
This crisis forced Volkswagen to take a hard look at its strategy, operations, and culture. It had to fight for its existence. Only then could it formulate a recovery strategy.
The company is lucky to have survived.
BP’s Gulf of Mexico disaster in 2010 was the environmental mega-crisis of the decade, which proved a cautionary tale. On a business and communications footing, there was a path for Volkswagen to follow after BP’s travails. News trends also gave Volkswagen some air cover in the U.S., as Donald Trump’s presidential run and a visit from Pope Francis were making headlines at the time. But there are savvy methods for rebounding from a crisis no matter the scenario.
In Political Risk, a book on how organizations anticipate risk and insecurity, Condoleeza Rice and Amy Zegart outlined the method for how companies can tackle crises effectively. They take them seriously, approach with humility, and they lead from the top. Fast application of these principles can help companies find a path forward. Clear communications play an important role in such endeavors.
Time and Tide and Sustainability
Now, industry analysts say Volkswagen is reborn. It is the leading global seller of cars, and has lofty electric car goals for market share and driving emissions down. It has pledged to spend $25 billion to develop battery-powered or hybrid versions of every one of its models by 2030. It wants to flood the electric vehicle market with affordable cars — “mainstream” it away from the Tesla market perception of EVs as the preserve of the few, not the many. Electric vehicles are expected to account for as much as 25 percent of global sales by 2025. Volkswagen is hungry for a large slice of the pie. Damaged reputation still hinders that effort to a degree.
While companies such as Volkswagen were guilty of misleading behavior, others have pragmatically tried to plot the journey from being the very emblem of the environmental degradation, to standing at the forefront of sustainable changes driving the low-carbon economy.
A decade ago, I advised a client called Drax on effectively communicating its necessary shift toward sustainability. Drax is a biomass and coal-fired power station in England that, at the time, was aiming to diversify to low carbon fuels. It had a visionary chief executive who wasn’t afraid of what the move from coal to biomass would send to the market. To her, the business case was compelling and the environmental benefits profound — and she was able to win over institutional investors. Drax also chose to work with Imperial College London, a world-class research university, and with leading NGO, WWF. Working with third-party stakeholders meant concepts were challenged and road tested, and gave Drax’s transformation greater credibility in the market.
The sustainable case was made to transition from coal to biomass, and the company was able to change with the times. Now, Drax is planning to become the world’s first carbon-negative business within 10 years, furthering their sustainability credentials.
Brave Green World
With 2021’s new administration in the US, we are likely to see renewed private sector investment in the clean-tech and clean energy sectors. Ambitious climate targets, a reversal of the decision to withdraw from the Paris Agreement, and more investment in solar, wind, and sustainable energy projects are on the table. The attention and commitment to sustainability will ratchet up again across sectors.
The competing stories of Volkswagen and Drax demonstrate how leadership and communicating effectively with all stakeholders can allow you to rebuild after a crisis, but also that pivoting boldly to face the realities of a new landscape and setting the right communications strategy up-front can have real impact on success.
One created a crisis and handled it badly initially, before finding a path to restore its image and embrace technology that would allow millions of people to drive electric cars. The other didn’t waver when it saw that renewable energy, and driving down emissions, was compatible with business performance.
There is long-term opportunity in risk, crisis, and transition stemming from the convergence of profit, people, and planet. And there are ample techniques for communicating those issues to the world professionally.
But they all start with a simple step. In short, doing the right thing.