Global Political Ecology

Francisco J. Montoro Rios


Ecology is based on the existence of communities and associations between different organisms whose structures and functions cannot be understood when examining only their individual parts. Ecology delves into the question of the bond between living beings and their environment. After the appearance of the General System Theory, and due to the successive scientific findings pointing out the negative effects of human activity on the environment (pollution, acid rain, loss of biodiversity and climate change), ecology has become a sort of ‘suprascience’ serving as a framework to articulate other disciplines (Goldsmith, 1999, p. 24). This is especially relevant when considering the Gaia Hypothesis that Earth is life and not simply its support (Lovelock, 1989, pp. 80-94). In any case, ecology has transformed itself into an adjective that, when united with the noun of certain academic disciplines, defines a very extensive and transversal field of knowledge and practice. Among social sciences it comprises human ecology, ecological economics, environmental marketing and political ecology. In any case, adopting an ecological approach from any of the disciplines cited above requires taking into account the principles of how ecosystems function (Botkin & Keller, 1995, pp. 35-45 and 99-102). These are as follows:

  • • Ecosystems are flow systems where each of the elements affects another but tend to remain in balance. That explains why ecosystem studies are undertaken from a holistic perspective by delving into how their different parts interact.
  • • Energy in an ecosystem flows through it whereas matter, in the form of chemical elements, flows within it. The energy and life relationship thus follows the fundamental laws of thermodynamics. The first means that energy can be transformed but not created or destroyed. The second is that energy changes from a more useful and organised form to a less useful, less organised form (i.e., it increases entropy).

If ecology is the study of ecosystems, then what is ecologism? The response is that ecolo- gism is a way of viewing human relationship with nature and quality of life through prisms gleaned from ecology. In other words, ecologism represents a certain degree of concern for the situation of the environment, the perception of a threat to well-being and the ways to solve the problem. Ecologism has been shaped on a planetary scale by the dissemination of scientific information by the media and by the succession of particular events reflected in Table 12.1, which have moulded environmental concern and conditioned global political ecology.

TABLE 12.1 Events relevant to raising environmental concern (by author)




Publication of‘Silent Spring’ by Rachel Carson


Publication of‘The Population Bomb’ by Paul Ehrlich


Founding of “Friends of the Earth” (first important ecological group)


Publication of‘Resources and Man’ by the National Academy of Sciences (USA)

It is the first report by the scientific community about the deterioration of the environment


First ‘Earth Day’. Created by the Environmental Protection Agency of the USA


Foundation of the group ‘Don’t make a wave’ against nuclear tests (embryon of Greenpeace)


Publication of‘The Limits of Growth’ (Club of Rome report)


United Nations Conference on Fluman Environment


Occupation by protesters of the construction site of the nuclear plant of Whyl, Germany. Outset of the German antinuclear movement


Accident of the ‘Amoco-Cadiz’ supertanker off'the coast of Brittany, France


Accident at the Three Mile Island (Harrisburg, USA) nuclear plant


Protest in Brussels (Belgium) against the installation of‘Euromissiles’ (outset of the European pacifist movement)


Approval of the World Conservation Strategy


First scientific report on the existence of an ozone hole over the Antarctic


Moratorium on the hunting of whales


Bhopal (India) toxic gas accident


Sinking of the ‘Rainbow Warrior’ in New Zealand by the French secret service


Chernobyl (Ukraine) nuclear plant accident


Publication of‘Our Common Future’ (Main report of the Brudtland Commission)


Assassination of Chico Mendes (Brazil)


‘Exxon Valdez’ supertanker spill (Alaska)


Fall of the Berlin Wall. Beginning of news of the state of the environment in countries in the Soviet orbit


Gulf War. Burning of 650 oil wells and the largest oil spill in history


Rio de Janeiro Earth Summit


Publication of the first complete draft of the human genome


Food crisis in Europe. Outbreak of the Mad Cow disease


‘Prestige’ supertanker spill off'the coast of Spain


Johannesburg World Summit on Sustainable Development


The Kyoto Protocol comes into effect


“An Inconvenient Truth” by A1 Gore


Intergovernmental Panel on Climate Change (IPCC) Fourth Report


Copenhagen COP 15


Deepwater Horizon Oil spill (Gulf of Mexico)


United Nations Climate Change Conference (Doha). Extension of the Kyoto Protocol


IPCC Fifth Report


Paris Climate Change Agreement


USA withdrawal from the Paris Agreement


Fridays for Future. Global youth movements and students strikes for the climate. Greta Thunberg leadership


COVID-19 worldwide outbreak

Environmental awareness among citizens has surged over the years. According to the Eurobarometer survey of 2017, 94% of the citizens of the EU consider protecting the environment to be personally significant, with climate change at the top of the list of concerns. The issue of the environment in the UK, following the Extinction Rebellion protests, rose to third place behind Brexit and health (Smith, 2019). In Spain, 56% of the citizens see climate change to be the greatest challenge facing the planet (Sanchez, 2019, para. 1), a trend that is similar or even greater in other European countries.

This increase in awareness has led to an unprecedented surge in voting intention for green parties. Climate change, in fact, is an issue that has influenced the vote of 37% of the European electorate (European Parliament, 2019, p. 2). This is reflected by green parties gaining 70 seats (10% of the total) in the 2019 European Parliament elections. Polls at the time of this study reveal that green parties may be the first or second political force in several central and northern Europe countries, notably Germany. However, the effect of the recent COVID-19 crisis on the magnitude and direction of these voting trends remains to be seen.

Global political ecology

The philosophical foundations of political ecology

Despite the fact that the issue of protecting the environment is gaining relevance in politics, the reality is that the description of environmental politics varies enormously. Environmental philosophy is defined by principles that most political parties prefer to avoid. Firstly, according to Dobson (1997, pp. 61—66), social, political and economic problems mainly stem from an intellectual relationship with the world and the practices deriving from this relationship. This implies that to assume a truly ecological perspective, an analysis of the natural and social world requires adopting a holistic and organicist approach. Thus faced with the traditional paradigm of Mechanical Philosophy that led to a compartmentation of science, the organicist and holistic conception of nature has ushered in a new type of ecological spirituality.

Secondly, environmental philosophy affords equal value to all species as they are all essential to the system, a notion leading to the rejection of any form of natural and social hierarchy. This implies an ecocentrist approach according to which the human being is simply one more species of nature and thus shares equal rights with other species. The anthro- pocentrist approach, by contrast, views humans as the centre of nature, destined to freely exploit it for their own survival and development. This duality leads to the fundamental differentiation of the political convictions of‘deep ecology’ or ‘ecolatry’ and ‘shallow ecology’ or ‘environmentalism’.

Deep ecology advocates replacing the ‘social contract’ with a new ‘natural contract’ to protect the entire universe. Nature, hence, is not protected from a humanistic perspective, but based on the notion that the central nucleus of philosophical thought is the biosphere marked by an intrinsic value superior to that of humans (Sanz & Sanchez, 1995, pp. 28-29). Shallow ecology, by contrast, assumes a managerial approach to environmental problems (Dobson, 1997, p. 22). In other words, it is a humanistic solution where the value of nature is determined on the basis of its utility to humanity.

Both positions differ as to the place of humans in nature (anthropocentric or ecocentric), in the status afforded to the elements of nature (useful to humans or to the biosphere) and in the form of social organisation necessary to face a crisis. It is therefore possible to link deep ecology and shallow ecology respectively with ‘radical wing’ and ‘reform wing’ politics.

Deep ecology to Dobson (1997, p. 27) is an ideology that in itself that differs from others, while shallow ecology is a means of approaching the problems of the natural world. Therefore, that latter can be assumed by any of the traditional ideologies to favour the dominion of humans over nature and resorting to technological developments, to limit the risks of its exploitation.

Therefore, ecological parties as such aim to alter the system in a radical manner by means of an ideology based on non-violence, ecology, social justice and feminism (Kelly, 1997, p. 57). In this sense, assimilating ecological ideology with the left of the political spectrum is incorrect since the struggle against industrialism and economic growth is implicit in ecological ideology but not in Marxist-based thought. However, environmentalism and socialism do coincide in their criticism of capitalism due to its waste of resources stemming from production and consumption and its lack of social equality.

There are at least five stances on how to face the ecological crisis when taking into account the differences between deep and shallow ecology:

  • Conservationism: Nature must be conserved because its resources are irreplaceable. This is an anthropocentric position assigning a strictly economic value to nature. The political parties that lean to the right generally adopt a certain degree of conservationism.
  • Preservationism: Nature encompasses values that cannot be gauged strictly from an economic standpoint. The values of nature can even surpass the economic realm and serve as a source of meaning for humans. This perspective embraces an ecocentric position and attributes an intrinsic value to nature. It is the position adopted by certain groups in defence of ancestral cultures and natural spaces.
  • Ecolatry: This view espouses the notion that since humanity is simply another element of nature at the same level as that of other species, there should be no social or natural hierarchies. Nature makes sense outside the human sphere and has supreme value. This is a position that is generally adopted by at least the militants of green parties. Certain derivations of deep ecology lead to more specific positions such as bioregionalism, which advocates that society must be organised on the basis of a zone’s possibilities.
  • Sustainable development: Nature serves as a resource to satisfy human needs. This stance represents a step away from conservationism toward meeting the needs of future generations. Almost all groups to the left of the political spectrum, and certain ones with tendencies toward the centre and centre-right, integrate this principle.
  • Environmental justice: There is a need for a fair distribution of the consequences of the deterioration of the environment. This will lead to social justice and a reduction of contamination to tolerable limits. This is an anthropocentric stance, which incorporates the notion of social equality.

Sustainable development

The notion of sustainable development began to gain favour with the appearance of the Brudtland Report in 1987 (World Commission on Environment and Development, 1992). This idea of this perspective is that the current needs must be met without compromising the ability of future generations to satisfy their own needs. Its principle has been accepted, although implemented differently, in practically every economy in the world. It has nonetheless been criticised by followers of deep ecology due to the apparent contradiction between the terms ‘development’ and ‘sustainable’. In this sense, Herman Daly points out that growth is not tantamount to development. Growth implies a quantitative increase in the physical size of the economy, whereas development implies a qualitative improvement of physical capital stocks through technological advances. In sum, an economy that grows is bigger, while a developing economy is better (Daly in Hawken, 1997, pp. 157-158).

Sustainable development, according to Jacobs (1997, pp. 125-127), is defined along the following three lines:

  • • Integrating the environment with economic policy.
  • • An uncompromising commitment to equity by not only creating wealth and conserving natural resources but through their equitable distribution.
  • • ‘Development’, as opposed to ‘growth’, is not measured by an increase in national income but in welfare.

How to attain the goal of sustainable development

Attaining sustainable development from the point of view of physics requires that renewable resources be exploited at a lesser rate than that of their regeneration and that non-renewable resources be exploited at a lesser rate than that of the regeneration of a renewable substitute (Daly, 1973). It is patent that current economic systems cannot comply with these two rules.

Humanity’s ecological footprint, in fact, exceeded Earth’s biological capacity in the early 1970s and the global demand for resources in 2016 was almost double that of its capacity.1 To achieve the objectives of sustainable development, it is therefore necessary to reduce resource depletion while simultaneously intensifying individual wellbeing.

This can be accomplished in three ways.

The first supposes technological developments that increase the efficiency of the use of energy and materials, and that produces electricity directly from the sun. This is the area in which public policies are most clearly being developed. It is, likewise, a field of action that most political parties have incorporated into their electoral programs. Thus, electricity from wind turbines, solar thermal plants, photovoltaic cells, geothermal plants or small hydroelectric power stations, depending on regional climate and orography, are promoted through subsidies or tax allowances. This also favours the demand for electric vehicles and low-consumption appliances.

Another means to bolster energy efficiency is to replace, whenever possible, the exchange of materials with those of information. Thus, the development of video conferencing technologies reduces the amount of travel. Email, electronic signature methods and cloud file management likewise reduce paper interchange.

Furthermore, the bolstering of systems of recycling and reuse is expanding globally and represents a great challenge for companies developing and managing their brands. Recycling today does not only imply the reuse of packaging materials, but also affects most industries such as the sectors of consumer electronics, transport and industrial equipment. The final objective is to achieve a total reincorporation of the materials serving the production processes. This is known as a circular economy, based on the fundamental principle of converting waste into resources and energy to fuel the process. This has been applied, for example, in eco-industrial parks where different businesses collaborate by exchanging their waste and by-products so they can serve as inputs for others.2

Technological development aimed at increasing energy efficiency and reducing the use of non-renewable resources is normally accompanied by governmental policies, reflected by a number of tools of economic interventionism.

First, prices in a market economy serve as key indicators of the scarcity of different resources. In most cases, price is an incentive to preserve scarce resources since goods whose production requires large quantities of rare resources are more expensive. This discourages the consumption of these goods, while stimulating the consumption of those made with inexpensive materials. However, many natural resources, despite their increasing scarcity, are still thought to be free goods, without price and therefore outside the market.

The most direct way to overcome the pitfalls of exploiting free goods is by resorting to ecotaxes to up the prices of the products that make greater use of them (e.g., water or clean air), which leads to lower prices of products with less use of free goods (Hawken, 1997, pp. 99-103). In addition to ecotaxes, there are other market incentives (Hartman & Stafford, 1997, p. 186) such as emissions trading by which the government assigns permits to different companies to cap their emissions. But if a company emits less than what it is allowed, it can sell its remaining permits to companies that pollute more. Hence, the companies that pollute the most will have to pay more, requiring them to increase their prices and decrease their profitability. Both ecotaxes and emission trading are means of internalising the use of free goods into the price of products so that companies that pollute more or exploit more resources have to assume greater production costs. By contrast, subsidies to businesses that generate renewable energy and implement more environment-friendly processes are another form of market intervention that, in this case, rewards the use of renewable resources.

There are likewise regulations on recycling, which directly affect product packaging and distribution strategies. A more advanced form is deposit-refund systems where polluters pay a fee they can recuperate only after returning the materials or eliminating the damage they cause to the environment. These policies are aimed at maximising the so-called three Rs of waste management: reduce, reuse and recycle.

Another tool serving environmental policy is raising the level of awareness and education. This includes the obligation of companies to publish environmental reports and apply a system of labelling (e.g., household appliances, organic farming, etc.) closely linked to communication, packaging and branding strategies. Regarding environmental education, most countries are integrating ecology and environmental content into the different levels of education from primary through high school. Moreover, the number of public environmental awareness campaigns is surging.

Apart from individual national, regional or city council initiatives, it is clear that environmental problems have to be faced internationally. This is because the effects of globalisation on the natural environment are obvious and environmental problems extend beyond national borders. Environmental policies are nonetheless designed by individual countries. This is why the only legislation among international environmental treaties are action programs or reports that replace legally binding regulations. An exception is process of European integration, which has forced a coordination of environmental regulations among all member states. The formal adoption of this type of international treaty took shape after the Stockholm Conference on the Human Environment in 1972, the first of a number of international conferences focusing on the environment (Table 12.1).

A third means to advance toward sustainable development, apart from technological development and adopting environmental policies, is to reshape the values of individuals.

Technological development will, in the future, allow the development of production and consumption processes with a minimal impact on nature. Public authorities will succeed in establishing market mechanisms that allow the internalisation of the social and environmental costs of products and services. However, both these means will not suffice in a finite world suffering from symptoms of imbalance and a burgeoning population afflicted by great inequalities from the perspective of the distribution of material wealth, human development and natural resource consumption.

The Human Development Index (HDI),3 a scale to quantify a country’s human development based on non-economic criteria, has recorded steady progress throughout all geographic regions since it started keeping records. The findings, nonetheless, point to enormous disparities between specific nations and geographical areas. The countries that are part of the Organisation for Economic Co-operation and Development (OECD) in 2018 had - on a scale of 0 to 1 - an HDI above 0.9, whereas that of Sub-Saharan Africa was hardly above 0.5. The highest HDI in 2018 corresponded to Norway (0.954), while the lowest was that of Niger (0.377). It should be borne in mind that the HDI assesses aspects such as literacy, life expectancy and material wealth, which is why it reveals differences between geographical areas and, in particular, it offers data as to the future of the citizens of these countries.

The ecological footprint, alluded to above, also points to clear differences from one country to another, as to the use of natural resources. The needs of a Canadian in 2013 were equivalent to 8.76 hectares,4 whereas those of citizens of India and Pakistani correspond to 1.12 and 0.54 hectares, respectively. If these values are correct, all the citizens of India and Pakistan would require approximately a planet with the capacity of Earth to equal the level of Canadian consumption.

Aside from the ethical and moral issues of this data, there is a more pragmatic issue: the lower the standard of living, the more difficult it is to care for the environment. Furthermore, there is a clear relationship between a country’s standard of living and the rate of population growth, as is its relationship with the complexity of applying sustainability policies. Poor economies are, in fact, the most dependant on their natural environment. Therefore, there are basically two dimensions to the same problem. There is, on one hand, population growth and, on the other, the logic inherent to the capitalist system in terms of the dynamics of growth per se and a deficient distribution of wealth.

The Dominant Social Paradigm (DSP) in industrialised societies determines that, in general, individuals value their quality of life based on material achievements and consumption as the only sure path toward happiness. In general, five DSP dimensions can be identified among western societies (Kilbourne, 2004, pp. 195-198):

  • Technological optimism: This dimension counts on technology as the solution to all material and social troubles. Technological development is the way toward progress when considering progress as a continuous improvement of the material existence of humans.
  • Possessive individualism: This dimension applies to individuals who decide for themselves, based on their own interests, how they define their relationship with others, their professions and their wealth. This dimension views civil society as the sum of all these relationships, legitimises private property and justifies the acceptance by society of the accumulation of wealth.
  • Economic liberalism: Individuals who are motivated by their own interests relate to each other through market exchanges. The market is the ideal tool to increase wealth for all members of society. Any intervention by the authorities poses a threat to this type of prosperity.
  • Anthropocentrism: This dimension views human beings as different and superior to other elements of nature, leading to a human-nature relationship based on exploitation and domination. Nature is, thus, a tool at the service of humanity.
  • Competition versus collaboration: Human fulfilment is measured not only by the accumulation of wealth, but by a material affluence superior to that of others.

The DSP defined along the lines of the previous dimensions is incompatible with sustainable development. From a deep ecology viewpoint, a real change is necessary to limit environmental damage. From the perspective of shallow ecology, in turn, a simple technological development and a certain degree of interventionism will suffice to solve the environmental problem.

A current portrait of the global political ecology: the Paris Agreement and the Green New Deal

The Paris Agreement is the international treaty on climate change currently in force. It was signed in 2016 and currently includes 196 countries. As of April 2020, the most important countries that have not ratified the agreement are Iran, Turkey and Iraq. The USA in November 2019 requested a withdrawal, taking effect in November 2020.3 The agreement targets a global average temperature maximum of 2°C above pre-industrial levels. Each country is free to determine its own means (Nationally Determined Contributions; NDCs) to reduce emissions (United Nations Climate Change, 2020). The EU objective known as 20/20/20 is threefold: a 20% reduction of C02 emissions compared to levels from 1999, 20% of the energy should stem from renewable sources, and energy efficiency must increase by 20% in 2020.

Since the Paris Agreement does not set specific obligations for its signatories, it has no specific effect on international trade, marketing or branding. However, each NDC may present specific opportunities in the field of trade (import subsidies for products with less emissions) or threats (border taxes on the most polluting products). It can also lead to an increase in the use of ecolabels, which certify each product’s impact on the environment. An example is Product Carbon Footprint (PCF) labelling (Cosbey, 2016, p. 3). Different ecolabelling schemes intend to increase consumer confidence as to the environmental benefits of each brand. An empirical study by Roe et al. (2001), for example, reveals the importance of standardising information as to the environmental benefits of products as it facilitates comparison and choice by consumers.

The Green New Deal (GND) is an environmental policy proposal in the USA intended to fight climate change while simultaneously boosting the economy and reducing economic inequality. The name of the project alludes to Franklin Roosevelt’s New Deal, which comprised a series of public policies and economic reforms to combat the effects of the Great Depression. Although the strategy has been in the making for several years, it gained in influence when presented for debate in the US Congress in 2019 before its ultimate rejection by the Senate. Similarly, the EU commission presented its own European Green Deal (European Commission, 2019, p. 2). Its aim is to attain carbon neutrality by 2050 and integrate a set of public policies to increase energy efficiency, achieve a circular economy, search for ways to reduce agricultural and livestock emissions and apply new technologies to make transportation more efficient.

Both the policies of the Paris Agreement and the proposals of the GND and the European New Deal fall undeniably into the category of shallow ecology. They are environmental policy proposals based mainly on the notion of technological development that avoid a containment of consumption and production (Hickel & Kallis, 2019, pp. 8-12). Yet the move toward carbon neutral economies can hardly be envisioned with the current levels of consumption. Although renewable energies are, by definition, unlimited, the materials necessary to manufacture and harness them (solar panels, turbines, etc) are scarce and limited. It is for this reason that sustainable development can only be achieved through implementing environmental policies that address the three areas described throughout this chapter: technological innovation, market interventionism and a change in consumption patterns.

Future lines of research

The first papers published in academic journals delving into the relationship between marketing and environmental damage (Feldman, 1971; Zikmund & Stanton, 1971; Fisk, 1973) date to the early 1970s. This field in the 50 years since these publications, although mostly focusing on consumer behaviour, has matured and diversified. Less relevance is now placed on studies centred on the effects of the restrictions of environmental policies on marketing management in general and on branding in particular.

Certain countries have occasionally experienced steps backward in the development of these policies depending on their type of political system. However, there are certain irreversible adverse effects of climate change that will, in the coming decades, undoubtedly bolster environmental policies, regardless of ideology. They will have to focus on both reducing emissions and adapting to the new climate scenario.

Therefore brands in the future will be highly conditioned by environmental policies. This will lead to an intensification of research on how the development of these policies will affect trading and branding. Ecolabelling and its effects on brand association will be a very relevant subject of research in coming years. It will be essential to deepen the knowledge of its effects on consumer confidence in certifying bodies and the criteria they adopt.

On the other hand, all evidence appears to signal that governments will continue to exert ecotaxes and environmental subsidies, measures of market interventionism, to discourage and incentivise the purchase of products and the use of services, respectively, depending on whether they are harmful or beneficial to the environment. As this will affect brand pricing, it will be necessary to gain a better understanding of green brand positioning.

Recycling and reuse regulations will continue to be reinforced in most countries. A fundamental aspect of the branding of convenience products is packaging, a subject that requires future research to put in place new sustainable procedures. They must continue to enclose the product, contribute to its positioning and visibility at the point of sale while also reducing the use of materials and increasing their capacity to be recycled or reused.

Finally, it is vital that future research focuses on the potential of incorporating the objectives of sustainable development by means of thought and practice marketing. From another perspective, it is also necessary to analyse the degree of the clash between deep and shallow Ecology in the field of marketing. A study by Layton (2009, p. 360) highlights the necessity of a change in emphasis, and consequently, a change in how to measure success. Thus, instead of qualifying brand performance through ROI, ROA, market share or added value, the measurements should focus on how brands contribute to improving the quality of life, whether they produce small or big negative externalities, whether they contribute to reducing or increasing social inequalities and whether brand acquisition contributes to consumer happiness or, on the contrary, increases levels of stress and frustration. As noted by Varey (2010, p. 122), it is worth striving to attain a radical, critical marketing based on quality of life, sustainability, durability, equitable distribution and long term welfare, as opposed to reformist, traditional marketing based on technology, material consumption and short term pleasure based on wealth.


Scientific evidence over the last 50 years offers more than enough evidence of the negative effect of human activity on the environment. This paints a bleak portrait of a future highly conditioned by the deterioration of natural resources and particularly by radical climate change. This has led the public to take part in global social movements (e.g. Extinction Rebellion, Fridays for Future, etc.) and increase pressure on the political class to adopt global environmental policies.

The positions of political ecology are nonetheless not homogeneous and range from shallow ecology (more reformist and based on technological development and energy efficiency) to deep ecology (oriented toward degrowth and a decrease in resource consumption). To date, an overwhelming majority of political positions have adopted the former approach. This includes even the most recent initiatives such as the Green New Deal or the European Green Deal.

The political positions adopted in the coming years will exert a broad impact on marketing management and branding, and will affect different aspects of the marketing mix and positioning strategies. In any case, all the evidence indicates that any path toward real sustainable development implies a decrease in the consumption of materials, an aspect that is accompanied by enormous implications for brand management.

Case study: Dieselgate and the Volkswagen brand crisis

The US Environmental Protection Agency (EPA) in September 2015 charged the Volkswagen Group with a violation of the Clean Air Act/’ The citation accused the automobile manufacturer of altering the turbocharged direct injection control software of its diesel engines to detect the test and manipulate the data so that it could meet emission requirements (Hotten, 2015, para. 1). The investigation concluded that these cars, in reality, emitted up to 40 times more nitrogen dioxide7 than the values indicated in the readings (Chappell, 2015).

Volkswagen admitted to circumventing the emissions control system in about 550,000 cars sold in the USA between 2008 and 2015. As a result, the automobile giant accepted a settlement ofS14.7 billion to compensate the car owners and for the damage caused to the environment (Bartlett, Naranjo & Plungis, 2017, para. 1).

The EPA announcement led to a large number of investigations around the world, especially in Europe, where Volkswagen also faced multiple lawsuits. The fact that


judges have generally sided with the plaintiffs8 is giving rise to huge compensations to both car owners and governments. In addition, the group has been forced to recall around 10 million vehicles worldwide. The brands affected by the scandal include Volkswagen, Audi, Porsche, Skoda and Seat. Ultimately, the scandal led to the resignation of a part of the group’s leadership.

‘Dieselgate’, as it is commonly known, is the most extensive scandal linked to non-compliance with environmental laws. Although other car brands have been investigated (Transport & Environment, 2016, p. 4), it is the brands of the Volkswagen Group that have been the most affected. But what effect has the scandal had on these brands beyond the court rulings?

The value of the Volkswagen Group shares plunged from around €170 in August 2015 to less than €100 just after the EPA announcement and the subsequent spread of the news. The months prior to the COVID-19 crisis, however, saw the value of the Group’s shares once more around €170.

The effect of Dieselgate on the position of Volkswagen in the car market is somewhat contradictory. Its sales from 2015 to 2019 have risen worldwide (except in 2018) (see chart). In fact, 10 million cars were sold in 2015 and the number in 2019 was near 11 million. Moreover, in spite of the scandal, the Volkswagen Group was the world’s number one car maker in 2019 (Figure 12.1).

Volkswagen Group worldwide car sales

FIGURE 12.1 Volkswagen Group worldwide car sales.

Source: Prepared by the authors from Volkswagen Annual Reports.1"

Despite the increase in sales, the VW brand appears to have lost value. According to Forbes’ World’s Most Valuables Brands List, Volkswagen in 2014 occupied the 56th position globally and was 6th among automobiles, whereas in 2019 it was no longer among the top 100 (Forbes, 2020). Two other brands of the group (Audi and Porsche) ranking among the top 100 remained unchanged over the past six years. The World’s Most Admired Companies list compiled by Fortune during the same period also saw Volkswagen fall from 36th place to disappear from the top 100. The RankingtheBrands top 100, which attempts to summarise all rankings from differ- ent sources, indicates that Volkswagen went from 32nd, and 4th specifically among automobile manufacturers (after Toyota, BMW and Mercedes-Benz), to disappearing from the list.11

The Volkswagen Group, as a consequence of Dieselgate, has been forced to radically alter its future strategies. In what appears to be a decision made just a few weeks after the news of the scandal broke, the company’s medium- and long-term plan shifted to become one of the leading manufacturers of electric vehicles (EVs) (Taylor & Schwartz, 2019). The company in 2020 plans to introduce the I.D. family series to the market, starting with the I.D.3 slated for sale in the summer of 2020. In the next ten years, Volkswagen intends to introduce 70 new electric models and assemble 22 million vehicles. For this it will open a plant to produce lithium-ion batteries and invest more than US $33 billion through to 2024 to electrify its entire catalogue. The group also has the ambitious plan to be C02 neutral by 2050, in line with the EU’s environmental policy.

Otherwise, the European Green Deal (EGD) (European Commission, 2019, p. 2) claims that its policies are a response to the global environmental deterioration and has set a global goal of zero net emissions by 2050. This goal must also be attained in the framework of a prosperous and competitive economy. The reason for implementing the EGD is ‘to protect the health and well-being of the citizens from environment-related risks and impacts’. In fact, one of EGD’s pillars is accelerating the shift to sustainable and smart mobility.

The Volkswagen Group nonetheless faces great challenges in their transition to the EV market. The major EV brand of 2019 was Tesla, with an estimated global market share of 16%. Its most popular design, Model 3, sold 300,075 units.12 EV sales figures, at about 3% worldwide, are still far behind that of traditional combustion engines. Tesla is nevertheless already the second-highest-value automaker on the market, pushing Volkswagen into third place. Considering that the Volkswagen Group sells around 27 times more vehicles annually than Tesla, the current valuation of each of these companies is indicative of the expectations of investors regarding their potential to dominate future markets.

Case questions

  • 1. Flow did Dieselgate affect the brand strategy of the Volkswagen Group?
  • 2. Flow will the European Green Deal, which seeks a carbon neutral EU within 30 years, affect different car brands?
  • 3. What effect are the current and future initiatives of environmental politics in Europe, the United States and other countries having on the stock market value of Tesla?

Key terms and definitions - definitions for the key constructs

Ecologism: An ideological position that includes a certain degree of concern for the situation of the environment, the perception of a threat to wellbeing and the ways to solve the problem.

Environmental awareness: A certain degree of concern for the situation of the environment.

Deep ecology: A political ideology characterised by giving nature an intrinsic and superior value to humans. It advocates radical change in the economic system and in human relations, in order to protect nature.

Shallow ecology: A way of managing the deterioration of nature, through technological development and the use of public policies and which does not question the economic or political system.

Sustainable development: Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

Economic interventionism: A political position that promotes state intervention to correct market failures, such as those that are environmentally damaging.

Environmental policy: An action taken by the government, or any organisation, to prevent or reduce the impact of human activities on the natural environment.


  • 1 Data available at
  • 2 The best known example is the Eco-Industrial Park in Kalundborg (Denmark).
  • 3 The different reports can be consulted at
  • 4 The data are available at
  • 5 Press release available at https://www.theguardian.eom/us-news/2019/nov/04/donald-trump- climate-crisis-exit-paris-agreement.
  • 6 The Clean Air Act is an American law to control air quality. It was passed in 1963 and has since been updated by tightening the maximum emission requirements for different chemicals.
  • 7 Nitrogen dioxide (N02) contributes to smog formation and acid rain. It can cause respiratory diseases. In addition, it is considered a cause of the greenhouse effect, contributing to global warming.
  • 8 i.e.: The Guardian (2020). VW installed ‘defeat devices’ to subvert emissions tests, high court finds, unlawful-defeat-devices-high-court-dieselgate.
  • 9 i.e.: The Washington Post (2015). Volkswagen CEO quits amid emissions-cheating scandal. cheating-scandal-spreads/2015/09/23/6b09e540-6203-l le5-8e9e-dce8a2a2a679_story.html.
  • 10 Reports are available at publications/Annual_Reports.html.
  • 11 Rankings are available at rankingID=30.
  • 12 Sales report available at


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