Emission test fraud: Is it really becoming a habit among automakers?

In the wake of the recent Volkswagen emissions cheating scandal, General Motors had a lawsuit filed against them in May 2017 due to similar wrongdoings. The company must defend itself against a class-action lawsuit filed by Seattle firm Hagens Berman Sobol Shapiro, accusing the carmaker for cheating on emission tests for its Duramax diesel engines. The lawsuit filed in the U.S District Court in Detroit alleges that the engines have three devices on them, designed to facilitate more emissions on road than during emission tests in the Environmental Protection Agency (EPA) laboratory. General Motors has used the term ‘baseless’ to define such allegations and has stated that it complies with all EPA and California Air Resources Board (CARB) regulations.

GM’s large-displacement diesels, interestingly, use cheat devices that work only under specific conditions. According to the suit, the trucks follow the emission standards when being driven within speed limits, with the outside temperatures ranging from 68 to 86 degrees Fahrenheit. These are the basic conditions used in the EPA laboratory for emissions testing as well. However, in the absence of these conditions, the trucks reportedly emit four to five times the pollutants than are legally allowed. The lawsuit states that the emissions control system in the vehicles is intentionally programmed to pass emission tests and then to scale back the controls in real-world situations to improve power and fuel-economy.

There is a huge risk that such emissions pose with respect to the socio-environmental paradigm. Vehicle emissions contribute to the formation of smog. Nitrogen oxides (NOx) and volatile organic compounds (VOCs) in vehicle emissions can react to form pollutants during the summer. During winter, vehicle emissions can be trapped around ground-level due to temperature changes. This can lead to high levels of pollution including the presence of pollutants such as nitrogen dioxide (NO2), carbon monoxide (CO) and particulate matter. Smog is related to a variety of respiratory and cardiovascular symptoms and illnesses. There is an obvious threat that society, inclusive of the natural environment around it is facing because of such situations.

In case, General Motors is proven guilty, it would also reflect a massive gap from the point of view of its corporate governance. The company clearly states in its environmental policy that it is committed to preservation of the environment, reduction of pollution, development of environment-friendly technologies and that it will abide by all environmental laws and regulations. Moreover, General Motors states that the Environmental Compliance Oversight Committee (ECOC) of the company, which is chaired by an Executive director and an Executive Vice-President, is responsible for such matters. This raises serious questions about the efficacy of the company’s governance structure.

There are some situations when a lawsuit gets so much media attention that even if a company wants to bury the information about the pending suit, the public will still know about it. From an economic point of view, these cases could cause a company’s stock to take a blow. The company could lose a lot of investors and capital as a result of speculation, even if it actually isn’t guilty. Losing the lawsuit would be far worse. GM’s share value dropped by almost 2% in a matter of a day after the news broke out.

The news of yet another emission scandal broke out around the same time as this one surfaced. The US Justice Department has filed a civil lawsuit against Fiat Chrysler Automobiles (FCA), accusing the company of using software to get past the emissions regulations. The lawsuit focuses on 2014–2016 model FCA diesel vehicles. In this case, reports of possible emissions cheating could even date back to April of last year.  FCA has been accused of making the engines of its diesel cars perform differently for the first 22 minutes after they were turned on: just a few minutes longer than German emissions tests last.

With so many companies exploiting loopholes in monitoring and regulatory procedures in so many different ways, the regulatory authorities must step up their efforts to avoid the frequent occurrence of such events. The real question is: What can be done to deal with the mindset of ‘modern’ corporate who refuses to care about anything other than profit, in spite of all the policies, conferences, seminars that talk about the growing importance of environmental protection?