Overstated profits, secretive lobbying, the dirty side of industries laid bare – 2015 saw yet another clutch of corporate scandals. Sustainability and corporate responsibility may have become watchwords for global companies, but this doesn’t seem to have stemmed the bad behaviour of some businesses.

Here we round up some of the most significant corporate scandals of the year.

Volkswagen: emissions cover up



Volkswagen may well have won the prize for corporate villain of the year in 2015 following revelations that the German car manufacturer had installed software designed to cheat nitrous oxide (NOx) emissions tests in up to 11m of its diesel cars. The scandal widened in November when it emerged the company may also have been reporting its CO 2 emissions incorrectly.

Matthias Müller, CEO of VW, while addressing journalists in October 2015. Photograph: Odd Andersen/AFP/Getty Images

As is so often the case with corporate scandals, establishing responsibility proves a slippery task. Then-CEO Martin Winterkorn took five days to resign, accepting responsibility only with the caveat “I am not aware of any wrongdoing on my part”. Under the new leadership of Matthias Müller, VW says it has made progress in its search to understand what went on. A “chain of errors” is the unsatisfying conclusion so far, with blame pinned on weak processes, “misconduct and shortcomings”, and some overly-tolerant “mindsets”.

VW’s dodgy emissions tests speak to a broader problem of people’s trust in businesses. When businesses abuse their position and indulge in dangerous greenwashing they undermine any company’s attempts to advocate for climate change action and responsible business.

Consistently pitching itself as a champion of corporate responsibility, VW topped the Dow Jones Sustainability Index as the most sustainable car maker just before the scandal broke, with Winterkorn saying “the Volkswagen Group is well on the way to establishing itself long term as the world’s most sustainable automaker”. It now faces multiple investigations, including from the European parliament, and potentially tens of billions of euros in fines.

Exxon: “no corporation has ever done anything ... this bad”

If VW was villain of the year, some are suggesting that oil and gas behemoth ExxonMobil is the villain of our lifetime.

An Inside Climate News investigation in September into internal Exxon documents revealed that the company’s own research had warned of the dangers of man-made climate change as early as 1981. Rather than start a debate about how to transition to a low carbon economy, the company chose instead to plough more than $30m (£20.3m) into climate denial, according to Greenpeace figures. For a long time it ran a campaign of misinformation, insisting that climate science remained uncertain, and even now it dismisses the possibility of a low-carbon future any time soon.

The scandal is so significant because it is now clear that the richest company in America’s history had a choice. It could have engaged with its own research, opened up a public debate about the implications of climate change and looked at how to adapt its business model to meet the oncoming crisis. Or, as it chose to do, it could bury its head in the sand, invest in denial, minimise the potential of renewables and claim the future lies in oil and gas.

According to Bill McKibben: “Businesses misbehave all the time, but VW is the flea to Exxon’s elephant. No corporation has ever done anything this big and this bad.”

Climate lobbying – the gap between words and action

In a year that saw the Paris climate talks and negotiations on two global trade agreements – the Trans Pacific Partnership Agreement (TTP) and the Transatlantic Trade and Investment Partnership (TTIP) – it’s perhaps not surprising that climate lobbying was such a big feature of 2015. According to data from the environmental non-profit CDP, 77% of the largest 500 companies in the world say they use trade associations to lobby on climate policy.

A Policy Studies Institute (PSI) investigation in March found that multinational companies eager to tout their sustainability credentials were also members of influential trade associations lobbying against EU climate policy. PSI looked at groups such as BusinessEurope, which has argued climate policies will undermine competitiveness, and the European Chemical Council, which argued that strengthening the EU Emissions Trading System would lead to businesses moving overseas for lower energy costs.



Armed with this research, NGO ShareAction launched its “clean words, dirty lobby” campaign aiming to force companies to stand up to their rhetoric on climate change and stop funding trade associations working to weaken climate policy. In September, ShareAction organised a group of 25 investors with more than €61bn (£45bn) in assets to write to multinationals including BP, Glencore and Proctor & Gamble asking them to justify their membership of big EU trade associations.

There is movement from companies. Shell announced in August that it was cutting ties with the rightwing American Legislative Exchange Council (Alec) because of its denial of climate change and last year Unilever split from BusinessEurope, reportedly for similar reasons.

Multinational companies have enormous power and influence and will have a key role in shaping climate policy. While many made bold pledges in 2015 in the run up to the Paris talks (Ikea, for example, promised €1bn to fight climate change), the continued existence of cosy, secretive lobbying threatens to undermine action we need to avoid catastrophic climate change.

Brazil mining tragedy

Brazil’s government called it the “worst environmental disaster in Brazil’s history”. In November, a tailings dam in the Brazilian mining state of Minas Gerais burst causing a huge and devastating mudflow. The 60m cubic meters of mine waste (equivalent to 25,000 Olympic swimming pools) killed at least 13 people and left hundreds homeless as it swept through villages and polluted the 800km River Doce, depriving local people of their water source and killing thousands of fish.

Aerial view of damages after a dam burst in the village of Bento Rodrigues, in Mariana, Minas Gerais state, Brazil, on November 6, 2015. Photograph: Christophe Simon/AFP/Getty Images

The dam belonged to Samarco, a joint venture between mining giants Vale and BHP Billiton. All three companies, along with the Brazilian government, have been slammed by the UN for their “insufficient” response to the crisis. Vale, the world’s biggest iron ore specialist, has tried to wriggle out of liability by arguing Samarco is an independent company and wholly responsible for the tragedy.

A federal judge has disagreed, freezing the assets of BHP Billiton and Vale after finding that Samarco would not have the funds to pay for the scale of the damage caused by the dam. The ruling found that both companies could be held responsible for the dam collapse, for which the government is demanding at least 20bn reals (£3.5bn). Both companies can appeal.

As the country begins to collect itself after the tragedy, the spotlight has fallen on the Brazilian authorities, with allegations of lax safety regulations for the mining industry. The state of Minas Gerais has suffered five dam breaks in the last ten years, yet the pace of change is slow; a new mining code has been working it way through Congress for years.

Toshiba: a broken corporate culture

Japanese computers-to-nuclear company Toshiba came undone in July 2015 after it was revealed to have inflated net profits by £780m over several years.

A report filed to the Tokyo Stock Exchange by the company spoke of a broken corporate culture: “Within Toshiba, there was a corporate culture in which one could not go against the wishes of superiors”. According to regulators, the company set unrealistic targets and employees were discouraged from questioning the actions of their bosses. Independent investigators found that both the president and chief executive of the 140-year old company were aware of the overstatement.

Former Toshiba president and CEO Hisao Tanaka attending a news conference in Tokyo. Photograph: Issei Kato/Reuters

Financial regulators have recommended fines of £40m for Toshiba. The company’s share price has slumped by 40% since the beginning of 2015 and it’s laying off nearly 7,000 consumer electronics jobs as part of a post-scandal restructuring process.

For many the Toshiba scandal is reminiscent of the fall from grace of another of Japan’s huge corporations, Olympus. In 2011 the company was revealed to have hidden $1.7bn of losses over 13 years. The Japanese government is under fire for not doing more to prevent corporate wrongdoing. Japan’s prime minister Shinzo Abe has championed corporate responsibility as part of his growth strategy and the Toshiba scandal hit just weeks after the unveiling of a new corporate governance code in Japan, intended to instil a new culture of openness between shareholders and companies.

There is clearly much more work to be done to achieve corporate transparency. Toshiba was a company lauded for its corporate governance structures yet these could not stand up to a culture of secrecy, a failure to properly monitor and a relentless quest for profits.