SUSTAINABILITY REPORT 2019 “ Focusing on consistent decarbonization can be a strong competitive edge. In any case, it off ers the best way for setting a common course for a secure and economically successful future on a planet worth living on.” Georg Kell Spokesman for Volkswagen’s Sustainability Council 01 RESPONSIBILITY 24 Integrity 26 Compliance 30 Sustainability Management 36 Social Responsibility 38 Supply Chain 42 Human Rights CONTENTS 44 Additional Tables and KPIs INTRODUCTION 02 DIGITAL 4 Foreword 48 Mobility Concepts 8 Decarbonization 51 Digitalization and Customer Concerns 14 Group Profile 56 Additional Tables and KPIs 17 Goals and Strategies 20 Risk Management 03 THE ENVIRONMENT 60 Commitment to an Undamaged Environment APPENDIX 61 Climate Protection 65 Air Quality 90 About this Report 66 Resources 92 About the Nonfinancial Report 68 Additional Tables and KPIs 94 Independent Practitioner’s Report TABLE OF CONTENTS 98 Imprint 04 PEOPLE 76 Fairness and Responsibility 78 Employer Attractiveness 80 Qualification 81 Diversity and Equal Opportunities 84 Occupational Health and Safety 85 Additional Tables and KPIs A detailed description of the sustainability activities of our brands and regions and of the Volkswagen Group’s CC projects is available at: www.volkswagenag.com > Sustainability > Reporting NAVIGATION References to chapters in the Sustainability Report References to websites References to the Annual Report References to the Nonfinancial Report (highlighted in chapter color, see “About the Report”) 3 FOREWORD GRI 102-14, 102-15, 102-16 Dr.-Ing. Herbert Diess Chairman of the Board of Management of Volkswagen AG and Chairman of the Brand Board of Management of Volkswagen Passenger Cars, Volume brand group, China Ladies and gentlemen, The automotive industry is in a state of deep upheaval. We are fueling the system change to e-mobility – not least in order to deliver new answers for environmental and climate protection. The Volkswagen Group was the first automotive manufacturer globally to commit to the Paris Agreement. We are taking responsibility and making our contribution to keeping global warming below two degrees Celsius with a reference year of 2050. We have therefore launched our industry’s largest decarbonization offensive. The intention is for the entire Volkswagen Group to be carbon neutral by 2050. This in- cludes our fleet and our entire Group. We are guided by binding intermediate goals along the way. In this way, we want to reduce our passenger car fleet’s total life-cycle carbon footprint by 30% by 2025. Our target is to halve our plants’ global CO2 emissions. This year, we have come a long way towards achieving our targets. Every vehicle is now manufactured in a 36% more environmentally friendly way than in 2010. We are also fully focusing our fleet on the electric vehicle. This is the best and most efficient option for less CO2 in road traffic for the foreseeable future. Around 75 new e-models are planned to come onto the market in the next ten years. 4 Audi has already introduced the e-tron, and Porsche the Taycan. Mass production of the Volkswagen ID.3, the world’s first electric vehicle with a carbon-neutral footprint, has started in Zwickau. In addition, we invest in new business models in order to fuel the penetration of electric vehicles. “WeShare”, our new carsharing service in Berlin and Hamburg, started this year. The fleet consists entirely of battery vehicles fueled by green power. The service will be expanded to numerous cities in Europe in 2020. The Volkswagen Group is comprehensively driving the change. This is also underlined by our new rating system in procurement. It commits suppliers to clean production processes and to respecting human and codetermination rights. In addition, we have enshrined the topic of business and human rights in our compliance management system and set clear standards. Moreover, our Group-wide Together4Integrity program and our Code of Conduct lay the foundation for conduct in the Volkswagen Group that is honest, ethically correct and has integrity. We are making new alliances with industrial corporations, such as Ford, Microsoft, or Amazon. We also have new project partners, such as Permian Global, who support us in protecting and restoring tropical forests. This diversity enriches our work. At the same time it challenges us. Mediating between the different demands, expectations and attitudes requires dialog. Our sustainability report FOREWORD makes an important contribution to this. It follows the guidelines of the Global Reporting Initiative, with reference to the Sustainable Development Goals of the United Nations. It also represents our Communication on Progress under the United Nations Global Compact and serves as our Nonfinancial Declaration under the German CSR Directive Implementation Act. We look forward to receiving your suggestions and feedback! Best regards, Dr. Herbert Diess 5 6 DECARBONIZATION DECARBONIZATION GRI 102-15 DECARBONIZATION – ON THE PATH TO BECOMING CARBON According to the calculations of the Intergovernmental Panel on NEUTRAL Climate Change (IPCC), the transport sector accounts for around 14% of global greenhouse gas emissions. In the EU, this is the only Climate change is one of humanity’s key challenges. The speed of area in which greenhouse gas emissions have increased in recent global warming has rapidly increased in the last three decades. years. We are aware of our responsibility as one of the world’s larg- Stopping it is an obligation for us all. Society accuses politicians est automotive manufacturers and mobility providers. In concrete and businesses, including the Volkswagen Group, of lacking will- terms, over their entire life cycles, our products alone (passenger ingness to act on climate protection issues. The global Fridays for cars and light commercial vehicles) are responsible for about 1% of Future movement constantly repeats this criticism – and emphati- the total global CO2 emissions produced. cally so. The major public response shows that the attitude and de- mands of the movement are supported by large sections of the population. 8 DECARBONIZATION TAKING RESPONSIBILITY This means we are going far beyond legal and political requirements and are taking on a pioneering role in our industry. This is our new We do not just take responsibility for this, we are also actively tak- identity. ing action because we want to go from part of the problem to part of the solution. That is why we have launched a comprehensive de- The key is the consistent electrification of our vehicle fleet, opening carbonization program and want to use it to make our contribution up the way to sustainable, emission-free mobility for our custom- to achieving the two-degree target in the Paris Agreement, or even ers. We plan to invest around €33 billion in this Group-wide by to come in significantly below this target – if possible. The entire 2024. However, electric mobility only makes a contribution to cli- Volkswagen Group wants to be a carbon-neutral organization by mate change when we optimize the carbon footprint over the en- 2050 at the latest. That extends from the fleet through production to tire life cycle. That is why we particularly have an eye on the supply administration. We want to improve our passenger cars’ total life- chain, manufacture and supplying the vehicles with green electric- cycle carbon footprint by 30% compared to 2015 by as early as 2025. ity in our decarbonization program. 9 The decarbonization of the Group not only means we are living up fall by 30% compared to the baseline of 2015. The DCI value was to our responsibility as one of the world’s leading mobility busi- 43.0 t CO2e/vehicle in the reporting year. In 2019, all production lo- nesses, but also opens up new potential and competitive advantag- cations as well as the brands and regions created decarbonization es for us. In this way, we meet the growing requirements of a wide roadmaps, which were incorporated into a Group decarbonization variety of stakeholders and lay the foundation for products that in- roadmap. spire people all over the world. This ensures our future and success. Decarbonization thus strengthens the value of our Group and is an The Environment > Climate Protection important instrument for providing for climate-related risks that could threaten our business model. Responsible handling of these The degree of achievement of our targets is measured with a track- risks has become a decisive factor for assessing companies, particu- ing system. If we temporarily miss the target, we will implement larly from the perspective of investors and shareholders. corrective measures. Our program’s first measures were already be- ing taken in 2019. These include the compulsory use of renewable We consider it our responsibility to actively participate in shaping energy sources in the manufacture of batteries by suppliers, con- the framework for our economic activity – i.e. also the framework verting power stations from coal to natural gas, customer offers for for the decarbonization of our business – in politics and civil society green electricity for e-vehicles, measures for battery recycling and in dialog with our stakeholders. In the process, we ensure consistent the production of the new ID.3 electric car. communication of all brands and companies (“One Voice Policy”), including in associations. REDUCING CO2 EMISSIONS OVER THE ENTIRE LIFE CYCLE We cannot achieve this system change alone – the interconnection One reason that achieving our CO2 reduction target is ambitious is of the sectors means that a successful transportation transforma- because we relate our reduction targets to the vehicle’s entire life tion only works with a successful energy transformation. Decar- cycle and thus also to areas that we can only in part directly influ- bonization in the energy and transportation sector is strongly de- ence ourselves. Our potential for direct action for carbon-neutral pendent on the political environment.