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According to the CBC, “11 million diesel vehicles worldwide were outfitted with software designed to rig emis- sions tests,” an illegal practice in many countries all over the world. Amazingly, some vehicles could be emitting 40 times allowed pollution limits, despite “passing” emissions tests without anyone noticing until recently. The company has set aside roughly 10 billion (yes billion) dollars to deal with the fallout of the scandal, and the value of VW stock on the German market has dropped accordingly by one third. To top it off, new CEO Mat-


Be The Change


Michael Silicz


thias Mueller (who replaced former CEO Martin Winterkorn


who stepped down as a result of the scandal) has now advised of “major cutbacks” at the company, stating to employees that “I will be very open: this won't be pain- less." Olaf Lies (yes that’s his name), a provincial Ger- man economy minister, has even gone on record with the BBC accusing those who authorized the decision as acting with criminal intent. All in all – VW lied, got caught, and now faces the consequences. What can be made of the event to date? Considered


only last month to be the standard of progressive, environmentally-minded companies, Volkswagen is now suffering the fallout of short-sighted decisions made by its corporate leaders. It shows the importance of corporate governance, and likely more important, how the values, beliefs and vision that form a corporate culture must be practiced in deeds, not just words. Without good leaders in place to uphold moral (let alone legal) values, then calamities like this become possible. Te VW scandal also shows the power and impor-


tance of responsible investment practices. With the release of the news and the market reaction, from retail holders of VW stock, all the way to the largest institutional investors on earth, have sold or shorted their stocks at lower and lower values, sending clear signals that the value of the company has decreased in a tangible way. Despite their image as a forward- thinking corporation, the truth now reveals that they are not-so-forward-thinking; and the perceived value of what they do, and perhaps most important, why they do it, has likely been irreparably damaged. Te loss of reputation as a brand leader in the environmental, social and corporate governance (ESG) investment spheres and the resulting sell-off shows the potential of how markets are increasingly placing value on cor- porate social responsibility. With VW reeling, it is now likely that another auto-manufacturer will attempt to usurp it as the leader in environmental sustainability. Ultimately, what this all boils down to is trust, and


how important a value that is in all facets of life. Be it at a personal level between two people, at the corporate governance level between leaders, or the macroeco- nomic level of markets between buyers and sellers, trust


Das Boot to Das Auto I


The Importance of trust in corporate social responsibility (change to CSR if too long)


t’s been a tough few weeks for Das Auto… trust me. Volkswagen (VW), the popular German automo- bile manufacturer, is embroiled in a major scandal.


Public opinion for Volkswagon has cooled off alot lately.


has been lost and now VW is paying the steep price. Ac- cording to Kumar Saha of Frost & Sullivan consulting, "Tis boils down to that trust between the consumer and the manufacturer that a product [they’re] selling on the market, to the best of your knowledge, works a certain way. But this shows that they knew that it didn't work in a certain way but they were still trying to pass it off as something else.” As a result, it will take some time before VW earns back the trust of consumers.


So, when it comes to earning the trust of customers


in any industry, remember that the only thing harder than earning it is making it back after you lose it. VW has its work cut out for it. Michael Silicz helps people separate the signal form the


noise in financial markets. Prior to investing, Michael was a lawyer and Policy Analyst with the Government of Manitoba. Please email him at msilicz@shaw.ca if you’d like him to write about a specific topic.


November is Financial Literacy Month T


he National Strategy for Financial Literacy has proclaimed November as Financial Literacy Month. Lit-


eracy in and of itself was, and continues to be, a key enabler in our collective civilizational growth. Financial literacy, where individuals are com- petent in their understanding of the subject matter, is one of many factors needed in navi- gating the complexity of the financial terrain. The global financial crisis


and fallout, a rapidly changing economic climate, bewilder- ing array of financial prod- ucts, increased life expectancy and greater focus on personal f inancial management has brought heightened attention to financial capabilities and wellness. Fi- nancial development matters with respect to inclusion by allowing individuals access to mainstream financial products and knowledge resulting in a fairer distribution of disposable income. How do we, as a community, tackle what


November 2015


Financial Literacy


Janice Desautels


“Strengthening Financial Literacy through Collaboration” shed light on a variety of in- teresting themes that should be addressed at the individual, community and national levels. We have many tools at our disposal now that can teach us what we need to know, but it doesn’t show us how to use them. We can all remember being taught something in school but if we haven’t used it on a regular ba- sis we may not remember the specifics. I remember taking trigonometry in high school but I couldn’t even begin to remember anything about it now. Mainstream financial education is the same thing. If we don’t use it regularly it fades into our distant memory.


Some themes presented at the confer-


ence as a means to tackle this crisis in- cluded: • Teachable moments, just prior to mak-


is considered a national crisis in education- where do we start? Te 2014 conference,


ing key financial decisions, are examples of one such successful method in improving our sense of well-being. Te reasoning is that at the time of the decision our focus is heightened and we are open to learning


Financial literacy is more than just about dollars and cents.


and counsel. Simply put being able to get information and guidance when we need it is more important to us than having it presented to us when someone else wants to give it. • One- on- one financial counseling was


cited as being the most successful form of building financial literacy. However, many Canadians do not see this advice as a top priority but as many of the partici- pants reported, those who seek financial advice have more confidence and focus which helps them get started in the right


www.smartbizwpg.com


direction. • Keep it simple, relevant and fun. Finan-


cial terms and practices are intimidating and put up barriers to those who may not understand. Information, educational ma- terial and financial industry forms should be clear, simple and in plain language for all to understand. Te ability to customize is also important so that the information is relevant to the individual and it needs to capture our attention to compel us to learn. To learn more or to read the entire confer- ence summary go to: www.fcac-acfc.gc.ca.


Smart Biz 15


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