Status 18. Juli 2023
ESG Controversies
Volkswagen AG is in full transformation mode, pushing forward on our strategy with full force.
Parallel to the transformation of our industry we are seeing the rising importance of ESG in investment decisions, which no one will argue has become mainstream and will continue to grow at a rapid pace.
The importance of ESG is also growing continuously within our organization and is fully embedded in our decision making processes. We believe we have made significant progress amongst others in the areas stated below.
Nevertheless we are fully aware that much more needs to be done.
We have learned that the area of controversies is a reoccurring concern.
This website addresses relevant current and ongoing controversies in a factual manner with the aim of increasing transparency for you our stakeholders.
We invite you to browse this content, welcome any feedback from your side, also on suggestions of further topics that require clarity, and we look forward to our increased dialogue.
Contact
Please feel free to send a mail to investor.relations@volkswagen.de or contact the following persons, who are responsible for ESG within the IR Team:
Alexander Hunger
Investor Relations Manager Equity & ESG
Ulrich Hauswaldt
Investor Relations Manager Debt & ESG
Human Rights
The Volkswagen Group stands firmly against forced and child labor in connection with its business activities. The company takes its responsibility for human rights very seriously in all regions of the world, including China, adhering closely to the UN Guiding Principles on Business and Human Rights. These principles form part of the company’s Code of Conduct. We maintain these values throughout our supply chain and have zero tolerance for any exceptions to this policy.
While in Chinese Joint Venture facilities the Joint Venture is responsible for all employee welfare, all partners agree that basic values and legal rights must be respected and protected. Ensuring good working conditions for all employees is of top priority.
Volkswagen and its partner SAIC are also in full agreement that human rights violations will not be tolerated in the Urumqi plant, which is operated by a subsidiary of the joint venture SAIC Volkswagen.
In February 2023, Volkswagen China’s CEO Ralf Brandstätter, also a member of the Supervisory Board of the SAIC Volkswagen joint venture, visited the Urumqi plant to gain a first-hand impression of the plant and meet employees. Of the 238 employees at the plant, 41 ( 17 percent) belong to the Uyghur ethnic group. There is no indication of any human rights violations or wider issues around working conditions at SAIC Volkswagen (Xinjiang) Automotive Co. Ltd.
The MSCI ESG report, which contains allegations of human rights violations in Xinjiang, is factually incorrect and wholly misleading. Volkswagen is actively addressing this issue with MSCI.
Our joint ventures have an own Code of Conduct, a whistleblower and an external ombudsmen system to prevent or detect possible wrong doings or violations.
Volkswagen has built a long history with China and will remain firmly committed to its presence in China.
Link to the Website: "Menschenrechte im Volkswagen Konzern"
Statements
United Nations Human Rights Special Procedures: Communication with the “Working Group on the issue of human rights and transnational corporations and other business enterprises":
End of Independent Compliance Monitorship
Volkswagen AG successfully completed the Independent Compliance Monitorship under Agreements with U.S. Authorities.During the Monitorship, Volkswagen implemented nearly 300 new or revised internal regulations and policies in the relevant legal entities to accelerate the rollout of new processes.
These include:
- Establishing a Group Compliance Committee, HR Steering Committee within the Group and new role for Environment, Health & Safety at Volkswagen Group of America
- Launching Together4Integrity, a global framework to oversee Volkswagen’s integrity and compliance program as well as its cultural change activities;
- The introduction of a group-wide uniform Code of Conduct for all 12 brands and all other companies;
- Expanding the whistle-blower system by investing in processes, staffing and in IT infrastructure;
- Publishing an employee survey conducted by the Ethics and Compliance Initiative (ECI)
- The T4I program has been determined in April 2018 by the Volkswagen Group’s Board of Management. It is the Group-wide program for implementing the Volkswagen Group's holistic and comprehensive integrity and compliance management system. It is firmly anchored in the Group's NEW AUTO strategy. The standards for ensuring integrity and compliance (I&C) are uniformly rolled out and implemented by T4I throughout the Group in more than 100 packages of measures, which are summarized in eleven so-called Key Initiatives.
- Since the launch of T4I, almost 750 Group Entities have been onboarded, thus more than half a million employees of the Volkswagen Group have been involved in our Integrity and Compliance programme.
- As part of T4I, we want to inspire and motivate employees, particularly through Launch- and Perception workshops. These are part of every local T4I implementation and involve representatively selected employees and managers across hierarchies as players in the change process. As of today, we have conducted over 600 across the involved entities.
- The Workshops have enabled us to make further progress: By repeating the events, we measure the progress of the company in question. 83% of those surveyed saw the anchoring of I&C as part of the T4I program in the companies as progressing successfully (as of end of Q1/2022). This is an increase, compared with the year 2020 (78%) and a significant increase compared with the first measurement point in 2019 (71%).
- Each member of the board of management is clearly committed in Integrity & Compliance and pursue I&C projects in their executive responsibilities. T4I program was assigned to steer these I&C projects in the executive responsibilities.
Links
Link to website: End of monitorship
Ethics & Compliance Initiative (ECI) https://www.ethics.org
Volkswagen Group Sustainability Report: Sustainability Report (volkswagenag.com) - 2022-03-24:
Supply Chain / Sustainable Procurement, Code of Conduct
Volkswagen is convinced that a sustainable supplier network guarantees long term business success. All suppliers must accept the code of conduct which has been published under www.vwgroupsupply.com. The code of conduct defines legally compliant, sustainable and responsible business behavior under environmental, social and ethical aspects. Compliance with the code of conduct is evaluated by us for every relevant supplier on the basis of self-assessment questionnaires as well as possible local on site inspections. The sustainability index is directly relevant for the contract award: when a supplier does not meet our requirement for sustainability compliance standards, they are not entitled to a contract award. Therefore, there is a direct incentive for all suppliers to improve their sustainability performance.
Supply Chain / Lithium - Cobalt
As a one of the forerunners of e-mobility, the Volkswagen Group is ensuring intends to ensure greater transparency and responsibility in its raw material supply chains for batteries. To that end, the company has entered a strategic partnership with RCS Global, an agency specializing in supply chain analysis. The focus is on auditing suppliers for conformance with human rights, safe working conditions and environmental protection along the supply chain all the way back to the mines.
The Group introduced a sustainability rating for direct suppliers and a comprehensive system developed by RCS Global also tracks adherence to sustainability criteria at sub-suppliers, refineries, smelters, mines and recyclers. New guidelines for improvements issued to suppliers make an active contribution to achieving improvements when risks and shortcomings are identified. Serious audit violations may even lead to the disqualification of suppliers from the supply chain. That applies, for example, to small-scale mining operators when child labor cannot be ruled out. The approach builds on the Due Diligence Guidelines of the Organization for Economic Co-operation and Development (OECD).
Link to the website:
E-mobility forerunner Volkswagen ensures greater transparency in procurement of battery raw materials
Volkswagen Group Joins Responsible Sourcing Network
17.03.2022: Volkswagen Group joins the Initiative for Responsible Mining Assurance (IRMA)
Supply Chain / Leather
The brands of the Volkswagen Group have joined the Leather Working Group (LWG) on April 14 2023. The Group seeks to play a leading role in the auto industry in terms of responsible raw material procurement, and becoming a member of LWG is a further milestone on the way to achieving greater sustainability throughout the entire value chain.
Link to Press Release: Volkswagen is committed to more sustainable leather sourcing 14.04.2023
It can be excluded that the Volkswagen Group together with all its brands is sourcing or has ever sourced leather from Paraguay.
All our leather suppliers are working at a high level of sustainability. The general sustainability requirements of the Volkswagen Code of Conduct, which apply to all suppliers, are currently being adapted to leather. In order to improve the sustainability in the supply chain, we are currently working on leather specific mandatory requirement document for sustainable purchasing. This list has a mandatory leather specific external audit , the disclosure of the sub-suppliers of the vendors as well as the exclusion of leather and other primary material related to illegal deforestation. Volkswagen is therefore proactively improving
transparency and responsibility in the leather supply chain.
Volkswagen is convinced that a sustainable supplier network guarantees long term business success. All suppliers must accept the code of conduct which has been published under www.vwgroupsupply.com. The code of conduct defines legally compliant, sustainable and responsible business behavior under environmental, social and ethical aspects. Compliance with the code of conduct is evaluated by us for every relevant supplier on the basis of self-assessment questionnaires as well as possible local on site inspections. The sustainability index is directly relevant for the contract award: when a supplier does not meet our requirement for sustainability compliance standards, they are not entitled to a contract award. Therefore, there is a direct incentive for all suppliers to improve their sustainability performance.
Volkswagen Chattanooga (21.12.2021)
No matters involving Volkswagen Chattanooga are currently pending before the National Labor Relations Board (NLRB)
The UAW revoked its prior certification of a maintenance unit, filed for an election for both production and maintenance employees, and an election took place on June 12, 13, and 14, 2019. The employees voted against UAW representation, the UAW did not file any objections to the election.
End of EPA Auditorship (13.08.2022)
The Independent EPA Auditor retained pursuant to the EPA Administrative Agreement completed his three-year term on August 13, 2022.
During the EPA Auditorship, Volkswagen further strengthened its Code of Conduct and its policies and procedures related to the Whistleblower System. In particular,
- The Group amended whistleblower policies and Code of Conduct to state clearly that retaliation against whistleblowers and investigation participants is prohibited, and
- MAN ES implemented further communication and training measures to continue to increase awareness and acceptance of the Whistleblower System, and to continue to encourage employees to utilize the Whistleblower System.
In addition, Volkswagen maintained the commitment to integrity and compliance that led to Volkswagen’s successful completion of the Independent Compliance Monitorship under Agreements with U.S. Authorities in September 2020. Specifically, during the EPA Auditorship, Volkswagen
- Maintained an updated Code of Conduct to establish a baseline of principles and guidelines for the entire Group;
- Maintained an effective Whistleblower System based on the principles and standards established in the Group Policy for Volkswagen Group Whistleblower System;
- Communicated with employees to promote awareness of significant ethics and compliance topics and especially the Code of Conduct; and
- Utilized the System for Award Management database to ensure that certain employees with management or supervisory responsibility for business affairs related to U.S. federal procurement and nonprocurement programs had not been suspended or debarred by U.S. authorities.
Volkswagen remains committed to the continuous improvement of its organization and culture. This mindset continues to be essential to its ambition of making safer and more intelligent zero emission vehicles for today’s customers and for generations to come.
Volkswagen South Africa (26.06.2023)
In 2020 there was an illegal strike in the South African Volkswagen plant, which was recognized as such by the local courts. The dismissal of the shop stewards who organized the strike, remains an ongoing legal case with the local CCMA mediation organization, which cannot be commented on by the company.