Volkswagen A.G.

RATING

SECTOR

Automotive, Financial Services

WEBSITE

CONTACT

Volkswagen A.G. Corporate Address
Jana Jonasa 1 Wolfsburg, 38440 Germany
Tel: 49-5361-9-0

STOCK EXCHANGE

LISTING

  • Dow Jones Sustainability Index
  • FTSE4Good Index.
  • MSCI
  • Sustainalytics
  • RobecoSAM
  • oekomISS
  • Vigeo Eiris
  • EcoVadis 
  • RepRisk

After the diesel issue became public knowledge, the Volkswagen Group was downgraded significantly in the MSCI, RobecoSAM, Sustainalytics, oekomISS, Vigeo Eiris, EcoVadis and RepRisk sustainability indices and consequently removed from sustainability indices such as the Dow Jones Sustainability Index and the FTSE4Good Index.

  • score of A– in the CDP (2018)
  • Score  of A– rating in the WDP (2018)

EMPLOYEES

671,205

CHIEF SUSTAINABILITY OFFICER

Ralf Pfitzner   

AWARDS

Lean & Green Management Award 2019

CONTENT SOURCE

FURTHER READING

Report created by Muge Acar

Volkswagen

SECTIONS :  Sustainability    Evaluation  •  Progress  •  Watch  •  Overview

Company Activity

Volkswagen AG was founded on May 28, 1937 and is headquartered in Wolfsburg, Germany. The company engages in the production and sale of passenger cars and light commercial vehicles. The firm also develops vehicles and components for the brands of the group. It operates through following segments: Passenger Cars, Commercial Vehicles, Power Engineering, and Financial Services.

  • The Passenger Cars segment covers the development of vehicles and engines; production and sale of passenger cars and light commercial vehicles; and the corresponding genuine parts business.
  • The Commercial Vehicles segment covers the development, production, and sale of light commercial vehicles, trucks, and buses; and the corresponding genuine parts business and related services.
  • The Power Engineering segment deals with the development and production of large-bore diesel engines, turbo compressors, industrial turbines and chemical reactor systems; and the production of gear units, propulsion components and testing systems.
  • The Financial Services segment involves dealer and customer financing, leasing, banking, insurance, fleet management services. 

The Volkswagen Group with its headquarters in Wolfsburg is one of the world’s leading automobile manufacturers and the largest carmaker in Europe. The Group is made up of twelve brands from seven European countries: Volkswagen, Audi, SEAT, ŠKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, Scania and MAN.

The Group operates 120 production plants in 20 European countries and a further eleven countries in the Americas, Asia and Africa. Each working day, around 630,000 employees worldwide produce some 43,000 vehicles, are involved in vehicle-related services or work in the other fields of business. The Volkswagen Group sells its vehicles in 153 countries.

Company Sustainability Activity

For Volkswagen, sustainability means pursuing economic, social and ecological objectives simultaneously and with equal energy. Their aim is to create lasting values, offer good working conditions, and conserve resources and the environment.

When it comes to the emissions issue, Volkswagen admits that they have failed to live up to their own standards in several areas. They stated that the irregularities in the handling of emissions tests contradict their beliefs. They promise to do everything in their power to prevent similar incidents from recurring, and they are fully committed to re-embracing their standards and winning back public trust.

With their sustainability concept Volkswagen wants to ensure that opportunities and risks associated with their environmental, social and governance activities are identified as early as possible at every stage of the value creation process. In keeping with this aim, they are determined that their corporate social responsibility (CSR) activities will have a lasting, positive impact on the Company’s value and reputation.

The Volkswagen Group has made a commitment to sustainable, transparent and responsible management. In line with the recommendations of the German Corporate Governance Code, they practice Group-wide sustainability coordination and forward-looking risk management and ensure a clear framework for the future-oriented handling of environmental issues, responsibility towards their employees and social engagement by their brands and in the various regions. With the future-oriented program TOGETHER – Strategy 2025 announced in 2016, they are seeking to make the Volkswagen Group more focused, efficient, innovative, customer-oriented and sustainable, and systematically geared toward generating profitable growth.

Highlights

  • 100% of electricity is obtained from renewable energy at 43 Volkswagen Group sites.
  • Company’s specific CO2 emissions were reduced by 38.4%
  • From 2010 to 2019 Volkswagen reduced their water consumption by 21.5%

Targets

REDUCING ENVIRONMENTAL FOOTPRINT

  • Volkswagen realizes that their products alone are responsible for about 1% of the total global CO2 emissions produced. This is why the pledge to become carbon- neutral by 2050.
  • Volkswagen wants to improve their passenger cars’ total lifecycle carbon footprint by 30% compared to 2015 by as early as 2025.
  • They plan to invest around €33 billion in decarbonization Group-wide by 2024.
  • Part of their decarbonization program is to reduce the CO2 emissions per vehicle of all plants by 50% by 2025 compared to 2010.
  • By 2030, the Group sites aim to emit 16% less CO2 in absolute terms compared to the base year of 2018.
  • By 2025, Volkswagen plans to have reduced the production-related environmental externalities (CO2, energy, water, waste, volatile organic compounds) by 45% per vehicle compared to 2010.
  • By 2025, the share of battery electric vehicles in their model portfolio will be between 20 and 25%.
  •  The share of electric vehicles in the Volkswagen Group fleet is to rise to at least 40% by 2030. 
  • Audi’s manufacturing in Brussels has been made carbon neutral throughout.
  • The Volkswagen Group intends to launch almost 70 new electric models on the market in the next ten years instead of 50 as previously planned.

 CLIMATE ACTION

  • The Volkswagen Group is bundling its activities for greater resource efficiency in the future in the “goTOzero – zero impact factory” initiative, which targets production with no impact on the environment

→ This means a rise in the number of electric vehicles projected for the next decade that are to be built on the Group’s e-platforms from 15 million to 22 million.
→ The proportion of the fleet that is electric should rise to at least 40% by 2030.

DIVERSITY

  • Volkswagen wants to increase the proportion of women in management to 20.2% by 2025. 
  • Volkswagen AG has set itself targets for increasing the proportion of women in management by the end of 2021with an increase of 13% on the first level of management and 16.9% on the second level within the active workforce.
  • They aim to increase the level of internationalization in top management, the uppermost of their three management tiers, to 25.0% by 2025.

Progress

REDUCING ENVIRONMENTAL FOOTPRINT

  • According to Volkswagen’s suppliers’ self-assessments, they reduced their overall emissions by a total of 8.05 million t of CO2e compared to the previous year. The suppliers put the proportion of renewable electrical energy at 23%. 
  • Volkswagen’s specific energy requirements were reduced by 20.2% from 2010 to 2019 
  • Company’s specific CO2 emissions were reduced by 38.4% and their  VOC emissions were reduced by 59.3% from 2010 to 2019
  • Volkswagen’s Environmental impact reduction production (UEP): (energy and water consumption plus waste and emissions levels across the Group) was reduced by 36.1%.
  • Volkswagen supports active forest protection and reforestation, particularly in the tropics. Their first project, the Katingan Mataya Forest Protection Project on the Indonesian island of Borneo, the Group offsets the currently still unavoidable CO2 emissions from the supply chain, manufacturing and delivery of the new Volkswagen electric vehicle ID.3 and further emissions from other areas.

REDUCING WATER CONSUMPTION

  • From 2010 to 2019 Volkswagen reduced their water consumption by 21.5%

REDUCING WASTE AND RECYCLING

  • From 2010 to 2019 Volkswagen reduced their waste disposal by 58.4%
  • Volkswagen’s vehicles registered in Europe meet the requirements for the European Directive on End-of-Life Vehicles, which is that passenger cars and light commercial vehicles should be 85% recyclable and 95% recoverable at the end of their lives.

RENEWABLE ENERGY

  • Globally, renewable energies account for 41% of electricity consumption in the Volkswagen Group. 
  • 100% of electricity is obtained from renewable energy at 43 Volkswagen Group sites.
  • According to Volkswagen’s suppliers’ self-assessments they put the proportion of renewable electrical energy at 23%.

SOCIAL RESPONSIBILITY

  • In 2019, Volkswagen AG made donations amounting to €33.6 million to NGOs.
  • Volkswagen AG’s employees donated more than €760,000 in 2019
  • The Volkswagen Group’s refugee aid program created a large number of site-specific options for refugees in cooperation with the people responsible for sustainability of the Group brands in 2019.
  • The Volkswagen Group supported the Global Social Business Summit in November 2019.

→ In Berlin, 550 representatives from business, the academic world, politics and society discussed business models that pursue social and environmental objectives and are at the same time economic. 

DIVERSITY

  • Volkswagen implemented the program “Diversity Wins @Volkswagen” in 2019.

→Managers, including foremen and trainers, are to be equipped to recognize new perspectives and skills in their teams and as a result to promote working together in a more efficient and innovative way.

  • The Volkswagen Group’s employees and diversity management founded the “We Drive Proud” LGBT* and friends network in 2019 with the support of Volkswagen AG’s Board of Management. 

→The network not only represents the interests of lesbian, gay, bisexual and trans*, intersex* and queer people, it first and foremost wants to help to shape cultural change in the Group.

  • At the end of 2019, the proportion of women in the active workforce at the first level of management was 11.4% and at the second level of management it was 16.4%.
  • In 2019, the proportion of women in managerial roles as part of the overall workforce of Volkswagen Group in Germany rose to 9.7% in senior management and 13.7% in management generally 
  • The proportion of women in their management increased from 6.1% in 2018 to 7.4% in the reporting year 
  • The proportion of women in management across the Group in Germany came to 12.1%, up from 11.5% the year before.

Certificates

  • ISO 14001 (Environment)
  • ISO 50001 (Energy)
  • EMAS (Environmental Management Systems)
  • ISO 14006

UN Sustainable Development Goals

UN SDGs Compliance

SDG 5

  • Volkswagen works hard to bring an equal workplace for all genders.
  • Company’s proportion of women in management across the Group in Germany came to 12.1%, up from 11.5% the year before.
  • They encourage women to become more successful in their business.
  • When setting individual pay rates, Volkswagen makes no distinction between people of different genders or belonging to other groups.
  • Their employees are selected, appointed and nurtured exclusively on the basis of their qualifications and abilities.

SDG 7

  • The key success factor for the Volkswagen Group’s decarbonization strategy is the integration of renewable energy sources into all value creation stages.
  • They aim to shift the energy supply in the entire value chain to less CO2-intensive energy and/or renewable energy.
  • Globally, renewable energies account for 41% of electricity consumption in the Volkswagen Group.
  • 100% of electricity is already obtained from renewable energy at 43 Group sites. The biggest driver of emissions in the supply chain for electric mobility is the HV battery cell.
  • They have therefore consistently made the use of renewable energies for the production of their HV battery cells a contractual requirement.

SDG 9

  • Volkswagen aims to have a sustainable supply chain and production.
  • They are working towards their goal to become carbon neutral by 2050.
  • They are aiming to reduce their waste production and water consumption. 

SDG 11

  • Volkswagen believes in the importance of recognizing their social responsibilities towards their stakeholders.
  • The main focus of their corporate social engagement activities is on supporting local development, educational and community projects at many of their sites around the world.
  • In 2019, the brands and companies supported more than 520 projects and initiatives on a global scale.

SDG 15

  • Volkswagen works on forest protection and reforestation in tropical regions to support the maintenance and expansion of indispensable carbon sinks, and the establishment of renewable energy plants.
  • They support active forest protection and reforestation, particularly in the tropics.their first project, the Katingan Mataya Forest Protection Project on the Indonesian island of Borneo, the Group offsets the currently still unavoidable CO2 emissions from the supply chain, manufacturing and delivery of the new Volkswagen electric vehicle ID.3 and further emissions from other areas.
  • In 2019, they launched a comprehensive program for supporting climate protection projects and invested nearly half a million euros in offsetting unavoidable CO2 emissions.
  • For the next reporting year, they plan to massively expand their involvement in climate protection projects. The measures can be in all phases of the life cycle. One important criterion for this support: the CO2 saving must be precisely quantified and provable. A committee of members of top management makes the decision on supporting the projects.
  • They are making new alliances with industrial corporations, such as Ford, Microsoft, or Amazon. They also have new project partners, such as Permian Global, who support them in protecting and restoring tropical forests.

SDG 16

  • Volkswagen actively assumes and exercises responsibility in relation to the environment, safety and society, and they aim to be a role model in these areas. Integrity, reliability, quality and passion thus form the basis for their work. Using this approach, they aim for technological leadership in the industry and competitive profitability while also striving to be an excellent employer.
  • Company’s Code of Collaboration, along with their integrity and compliance program Together4Integrity (T4I), is a central pillar of the Group strategy. This Code describes how collaboration is to take place within the Group and between individuals in their day-to-day work. Its core values are encapsulated in the terms “genuine”, “straightforward”, “open-minded”, “as equals” and “united”.
  • T4I brings together all activities relating to integrity, culture, compliance, risk management and human resources, creating a common path toward a new corporate culture.

Secondary SDGs: 4, 6, 17

Evaluation

Volkswagen has made efforts to incorporate sustainability throughout their operations.

The company is pursuing economic, social and ecological objectives that will help them reach their goals of reducing their environmental footprint.

In addition to having few industry specific certificates, Volkswagen is on multiple listings, such as the Dow Jones Sustainability Index, FTSE4Good,  and MSCI. Volkswagen also complies with 6 out of the seventeen UN Sustainable Development Goals.

Despite their progress, Volkswagen has been rated a C.

Analyst Outlook: Neutral

After the 2015 emissions scandal, Volkswagen seems to have become proactive in pursuing sustainability to help recover its brand image and also because they have understood that customers today demand companies to behave responsibly.

They are moving towards a more sustainable and transparent business, but they still have a long way to go. 

Key Points

  • The Volkswagen emissions scandal, also known as Dieselgate or Emissionsgate, began in September 2015, when the United States Environmental Protection Agency (EPA) issued a notice of violation of the Clean Air Act to German automaker Volkswagen Group. The agency had found that Volkswagen had intentionally programmed turbocharged direct injection (TDI) diesel engines to activate their emissions controls only during laboratory emissions testing which caused the vehicles’ NOx output to meet US standards during regulatory testing, but emit up to 40 times more NOx in real-world driving have a lot of awards, have clear objectives, have clear progress and provide factual numbers.
  • Volkswagen pledged to become carbon- neutral by 2050.
  • Volkswagen is responsible for about 1% of the total global CO2 emissions produced.
  • Volksvagen’s dieselgate scandal caused them to be unreliable in their reporting.

 

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