Group Management Report

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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 also anchored our goal to sustainably shape mobility for present and future generations in our new Group strategy NEW AUTO. Especially the Group’s ESG, Decarbonization and Integrity base initiative will drive this topic further.

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 compliance with legal provisions and internationally established reporting standards.

We conducted another materiality analysis in the reporting period. In reviewing potentially material issues, we considered both external and internal company perspectives. During the development phase of the Group’s NEW AUTO strategy, financial and capital market requirements were also taken into consideration for the selection of focus issues. As a result of this process, the four already defined focus areas – decarbonization, circular economy, responsibility in supply chains and in business, and people & transformation – were confirmed from the 2020 materiality analysis. Two new focus areas – diversity as well as integrity – were added in 2021, and all focus areas were classified as material by the Group Sustainability Steering Committee. The associated United Nations Sustainable Development Goals (SDGs) including the relevant subgoals were assigned to the focus areas in parallel. The six focus areas cover most of the requirements formulated in the ESG ratings for assessment criteria applied. The focus areas are each underpinned by explicit goals and milestones, measurable KPIs – where available – and clear responsibilities allocated to the respective Group functions and appropriate packages of measures. ESG-related KPIs such as the decarbonization index and the diversity index are already today reflected in the remuneration of members of the Board of Management.

For more information on sustainability, please see our Sustainability Report for fiscal year 2021.

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 several internal guidelines on sustainability.

On this basis, we seek to align the Volkswagen Group’s actions 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.

Reinstatement in the UN Global Compact

Since 2021, after a five-year hiatus, the Volkswagen Group has officially been reinstated as a participant of the UN Global Compact, the world’s largest corporate sustainability initiative. The Volkswagen Group formally requested renewed participation in the reporting period and its request was granted. We had been removed from the list of members in the wake of the diesel issue. An important prerequisite for reinstatement was met on successful completion of the compliance monitorship in 2020.

Management and coordination

The Volkswagen Group has established a Group-wide sustainability management. The related structures, processes and responsibilities are codified in a specific Group policy. We view sustainability management as a continuous improvement process. The core elements include assumption of overall responsibility for sustainability by the Chair 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 and from Group Divisin positions as well as 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 analysis, we have identified eight more stakeholder groups of importance around this core. The Group’s supervisory and advisory bodies such as the Supervisory Board, the Works Council and the Sustainability Council act as interfaces between internal and external stakeholders.

We understand stakeholder management as systematic, continuous interaction with key interest and stakeholder groups in line with our new Group strategy NEW AUTO. Our stakeholder management aims to actively shape and promote an open, constructive and also critical exchange with non-profit organizations (NGOs), investors, business partners, associations, policymakers and the scientific community regarding their requirements and expectations, as well as central strategic issues and their implementation.

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 mentioned above and the Stakeholder Panel. The latter once again took a break in 2021 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 (graphic)

Sustainability Council

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. This advisory body 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.

Dialogue between Volkswagen and the Sustainability Council in 2021 focused on the new Group strategy NEW AUTO and on the topics of ESG, decarbonization, sustainable supply chains, circular economy, diversity and workforce transformation. Following the discussions, the Sustainability Council submitted two letters of recommendation on these aspects to the Group Board of Management.

Furthermore, the Council launched a project to examine the importance of digitalization for sustainability as well as a study on the potential of future forms of work and training. In the reporting period, the research project with the Mercator Research Institute on Global Commons and Climate Change begun in 2020 focused on dialogue and initial analyses of the inclusivity and effectiveness of climate legislation in the transport sector.

Corporate citizenship

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 2021, the brands and companies launched or continued around 800 projects and initiatives worldwide.

Systematic assessment of companies in terms of their credit quality. Ratings are expressed by means of rating classes, which are defined differently by the individual rating agencies.