Holman Jenkins of the Wall Street Journal tells the tale of Volkswagen and their disastrous business and ethical decisions over the past decade. This sleazy story of corruption, deception and duplicity is a natural outgrowth of the "stakeholder" theory of corporate governance.
When you no longer use maximizing shareholder value and move off to fuzzy thinking justified as doing social good, inevitably, you end up doing social bad. Volkswagen is just the latest example.
Shareholders and the public are always the losers when corporate boards muddy their mission with "feelgood" policies that undermine their commitment to maximizing shareholder value. Shareholders, who provide the capital, that fuels capitalism deserve to have their interests represented in the boardroom. That's not what happened at Volkswagen, a firm that professed to be a friend of labor and an adopter of "green" policies.
Just saying that you are environmentally friendly, as Volkswagen did, seems to justify the most egregious policies of environmental damage and harm to consumers. No shareholder maximizing firm can long afford absurd and dangerous corporate policies such as those in place at Volkswagen justified as "social justice" policies.
Corporate boards should stick to their knitting -- maximize shareholder value and stop pretending to represent stakeholders. No one wins with the stakeholder approach -- least of all the shareholders or any legitimate "stakeholders," whatever that might mean.