Sustainability means maintaining intact environmental, social and economic systems with long-term viability at a global, regional and local level. The Volkswagen Group can influence these systems in various ways and actively takes responsibility to make a contribution to their sustainability. We have thus developed a sustainable style of company management and put in place the necessary management structures.
We have anchored our goal to sustainably shape mobility for present and future generations in our Group strategy TOGETHER 2025+. In addition, we want to be an excellent employer and a role model for the environment, safety and integrity. Sustainability is thus at the center of our corporate actions.
A particular challenge when implementing our strategic goals on all levels of the value chain is the complexity of our Company, with its twelve brands, more than 660 thousand employees and 118 production sites. At the same time, we are guiding our Group through the furthest-reaching process of change in its history. The transformation sweeping our entire industry is dominated especially by the transition to e-mobility, digitalization and new mobility services. We want to master these challenges and become a leading company for individual mobility in this electric and connected age.
Protecting the climate is currently the greatest global challenge affecting all three sustainability dimensions. We want to provide our own highly unique answer to this and have decided on an ambitious decarbonization program. With the implementation of this program, we want to be a net-carbon-neutral company by 2050. We are assuming a pioneering role by making this voluntary commitment based on the Paris Climate Agreement. We are guided in this by the specifications of the Task Force on Climate-Related Financial Disclosures (TCFD) For more information, please see our Sustainability Report for fiscal year 2020.
In the field of digitalization, we also want to help shape the transformation and are pressing ahead with developments in our vehicles and mobility services on the one hand and in our operating processes and management on the other. The digital transformation requires us not just to develop new technologies and be able to harness them, but also to devise a forward-looking human resources strategy that takes our employees along this path of change, trains them accordingly, and ensures that their jobs are secure.
Parameters and guiding principles
Our actions are determined by the Volkswagen Group Essentials as the foundation of values and the basis for our shared corporate culture. The Volkswagen Group Essentials support managers and employees in overcoming legal and ethical challenges that arise in their daily work. At the same time, we are guided in our activities by a large number of internal guidelines on sustainability.
On this basis, our objective is to attain that the Volkswagen Group’s actions are in line with international agreements and frameworks such as the Sustainable Development Goals (SDGs) of the United Nations (UN), the declarations of the International Labour Organization (ILO), the principles and conventions of the Organization for Economic Co-operation and Development (OECD) and the UN covenants on basic rights and freedoms.
Management and coordination
The structure and workflows of Group-wide sustainability management were expanded in the reporting period. The related structures, processes and responsibilities are codified in a separate Group policy. We view sustainability management as a continuous improvement process. The core elements include assumption of overall responsibility for sustainability by the Chairman of the Board of Management of Volkswagen AG, specification of the competence of the responsible Board members for specific sustainability management concepts and implementation of the Group Sustainability Steering Committee as a top management committee. The members of this steering committee include managers from central Board of Management positions and representatives of the brands and the Group Works Council. The steering committee defines concrete strategic goals and programs, establishes measures for uniform further development of sustainability management across divisions, brands and regions and decides on fundamental sustainability issues. It also handles the enhancement of Group-wide sustainability management. The offices of the Group Sustainability Steering Committee are the responsibility of the Group’s Sustainability function.
Strategic stakeholder management
Our stakeholders are individuals, groups, or organizations who have an influence on or are influenced by the course or the result of corporate decisions. Our customers and employees are at the center of our stakeholder network. Based on our annual stakeholder assessment, we have identified eight more stakeholder groups of equal value around this core. The Group’s supervisory and advisory bodies such as the Supervisory Board, the Works Council and the Sustainability Council act as a special interface between internal and external stakeholders. The Monitor appointed by the US Department of Justice until the termination of his duties in September 2020 was a stakeholder of the Volkswagen Group as well.
We understand stakeholder management as systematic, continuous interaction with key stakeholder groups in line with our TOGETHER 2025+ Group strategy. Stakeholder management aims to systematically record expectations and use feedback from our stakeholders to critically reflect on strategic planning processes.
To be able to systematically incorporate our stakeholders’ suggestions and recommendations, we have given our stakeholder management an organizational structure in the form of external committees. At Group level, these are the Sustainability Council and the Stakeholder Panel. The latter took a break in 2020 due to the pandemic. In addition, we offer our stakeholders a broad range of opportunities for interaction and feedback channels including regular discussion panels with stakeholders, stakeholder surveys and international cooperative projects.
THE VOLKSWAGEN GROUP'S STAKEHOLDERS
The Sustainability Council set up in 2016 provides assistance to the Volkswagen Group with important, strategic sustainability issues and is made up of internationally renowned experts from the academic world, politics and society. The Council establishes its own working methods and areas of focus independently, has far-reaching rights for the purposes of exchanging information, consultation and initiating action, and consults regularly with the Board of Management, top management and the employee representatives. In the reporting year, the Volkswagen Group extended its collaboration with the Sustainability Council by two more years.
In 2020, the agenda for the intensified dialogue between Volkswagen and the Sustainability Council included the CEO Alliance for Europe’s Recovery, Reform and Resilience, jointly initiated by the Chairman of the Board of Management of Volkswagen AG and the Council in support of the EU Green Deal, aspects of corporate governance and integrity, decarbonization, employment in times of advancing digitalization and e-mobility, and sustainable action in international markets.
The Council also launched two new projects: a research project on the distribution effects of climate-related fiscal and transport policies with the Mercator Research Institute on Global Commons and Climate Change, building on the preceding project on climate-conscious transport policies, and a study with the Fraunhofer Institut für Arbeitswirtschaft und Organisation (IAO – Fraunhofer Institute for Industrial Engineering) to examine the effects of digitalization and e-mobility on employment. The Open Source Lab on Sustainable Mobility concluded its work in 2020 with the publication of the project results.
In 2020, we forged ahead with the overhaul of our materiality analysis begun in the previous year and established a new binding sustainability strategy with the development of a sustainability narrative for the Volkswagen Group. Some 60 stakeholders were involved in this process, including decision-makers from various business areas and brands as well as representatives of the Sustainability Council.
The materiality process is used to identify and evaluate the most important sustainability issues for the Group. The decisive factors here are the impact on the environment and society, stakeholder expectations, the business model of Volkswagen AG and adherence to legal provisions and internationally established reporting standards.
The sustainability strategy developed based on the materiality analysis focuses on the key sustainability issues within the Group strategy TOGETHER 2025+, which is supported by the vision “Shaping Mobility – for generations to come” and the seven Group principles. The sustainability narrative clearly illustrates how the Volkswagen Group intends to achieve its overarching strategic objective of sustainable growth. Not only will it lay the foundation for performance management and improvement in environmental, social and governance performance, but it will also boost confidence among stakeholders and in the financial markets.
To implement the transformation with a holistic approach and run our business responsibly along the value chain, we prioritized four focus areas that are essential for our core business.
- Circular economy
- Responsibility in supply chains and in business
- Workforce transformation
The focus areas are each underpinned by forward-looking ambition and are developed and implemented within the framework of programs and initiatives.
As a good corporate citizen, we aim to be a constant source of economic impetus for local structural development and equal opportunities. We have always believed in the importance of recognizing our social responsibilities toward our stakeholders. The main focus of our corporate social engagement activities is on supporting future, educational and community projects at many of our sites across the world. In 2020, the brands and companies launched or continued around 700 projects and initiatives worldwide.