Volkswagen 2012 Sustainability Report

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R E P O R T


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ConenThis report contains inormation about the sustainability

activities o the Volkswagen Group in . Following an in-

troductory chapter identiying the Groups basic strategic

principles, the Economy, Society and Environment chap-

ters illustrate the three central dimensions o sustainabili-

ty. Each chapter outlines principles o sustainability at

Volkswagen, usi ng s peciic measur es a nd projec ts in itiat ed

by the various Group brands to illustrate them. The key sus-tainability indicators are set out on page ., while the

Background chapter starting on page includes inorma-

tion on reporting standards and their veriication.

The reporting period extends rom February , ,

when the prev ious report went to pre ss, to Mar ch , .

The key indicators, however, relate to the calendar

year. Volkswa gen has publ ish ed its Sust ainabi lit y Report

on an annual basis since . The next report will be pub-

lished in the second quarter o .

The report has been prepared in accordance with thestandards o Germanys Institute or Ecological Econo-

my Research (IW) and the Global Reporting Initiative

(GRI). It has also been veriied in line with the interna-

tionally recognised Stakeholder Engagement Standard

Acc oun tAb il ity AS (A A ) . Thi s con irms the rel i-

ability o the reporting and the engagement o stake-

holders in the reporting process (> p. ). Certiication

to this eect can be ound in the Background chapter.

Ue of languageAll the inor mation in this repor t r elates to the Volkswagen

Group as a whole. I any inormation relates to individual

Group brands only, this is expressly stated. See also the

rame o reerence on page .

Addiional informaionThe content o this printed report is closely interlinked

wit h the sust ain abilit y inormatio n pre sent ed by Volks-

wage n onlin e. All the copy and graphics in the repor t, plus

additional inormation, can be ound on the microsite at

ww w.sust aina bili ty- repor t2012 .volk swagenag .com.

The symbol in the body copy indicates where more in-

depth content is available online. Select the number ater

the symbol to access this additional content directly. A list

o all additional inormation can be ound on the inside o

the back cover.

In addition, the latest news on sustainability at Volkswagen

can be ound at www.volkswagenag.com/sustainability. Some

Volkswagen Group brand s also oer suppl ementa ry sus-tainability reporting, the relevant web links or which can

be ound on the microsite. In keeping with the growing im-

portance o integrated reporting, sustainability inorma-

tion rom Volkswagen is also included in the Volkswagen

Groups Annual Report .

About this report.

Scan this QR cod with our smartphon

to accss th microsit o th Voswagn

Sustainabiit Rport . Intrnt con

nction chargs dpnd on our individu

a mobi ntwor rats.

SuSibili Smph

The Sustainability Report 01 on its own microsite.


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( )

P R O F . D R . R E R . P O L . D R . - I N G . E . H . J O C H E M H E I Z M A N N

China

P R O F . D R . R E R . P O L . H O R s t N E U M A N NHuman Rsourcs and Organization

C H R I s t I A N K L I N G L E R

Sas and Marting

D R . H . C . L E I F s t L I N GCommrcia Vhics

The Board o Management o Volkswagen Aktiengesellschat


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D R . R E R . P O L . H . C . F R A N C I s C O J A v I E R G A R C I A s A N ZProcurmnt

PR OF. DR . DR . H.C . MULt . MAR t I N W I Nt E R K OR NChairman o th Board o Managmnt o Voswagn AtingsschatRsarch and Dvopmnt

H A N s D I E t E R P t s C HFinanc and Controing

PR OF. R UPE R t st ADLE R

Chairman o th Board o Managmnt o AUDI AG

D R . - I N G . E . H . M I C H A E L M A C H tProduction

C UR R IC UL UM v ItA Ewww.voswagnag.com > Th Group > Snior Managmnt


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Sustainability works i all concerned

believe in dialogue and are

ready to assume joint responsibility.


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___ ABOUT THIS RePORT

___ CONTeNT INDex

0 ___ eDITORIAl

10 ___ PORTRAIT OF TH e GROUP

___ SUSTAINABIlITy AND

ReSPONSIBIlITy

22 ___ STAkeHOlDeR DIAlOGUe26 ___ MATeRIAl ISSUeS

8 ___ MANAGeMeNT SUMMARy

60 ___ eMPlOyMeNT

2 ___ DeMOGRAPHIC CHANGe ___ ADVANCING WOMeN AND

PROMOTING DIVeRSITy

1 ___ SOCIAl ReSPONSIBIlITy

6 ___ CSR

___ MANAGeMeN T SUMMA Ry

___ CUSTOMeR SATISFACTION

34 ___ SUSTAINABIlITy IN SUPPlIeRRelATIONS

40 ___ eCONOMIC STABIlITy

42 ___ COMPlIANCe

46 ___ RISk MAN AGeMeNT

4 ___ lOCAlISATION

50 ___ BUSINeSS FIelDS

52 ___ BRANDS

Content Index

imS F piCul iS i h p SCi mKD Wih hS SmblS:

Strategy 1 Economy 82 Society


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C o n t e n t i n d e x 7

___ MANAGeMeN T SUM MARy

94 ___ MANAGeMeNT APPROACH

9 ___ ClIMATe PROTeCTION101__ lIFe CyCle ASSeSSMeNTS

102__ eFFICIeNT VeHICleS

110__ eFFICIeNT PRODUCTION

113__ SUSTAINABle MOBIlITy

11__ TRAFFIC NOISe

11__ GReeN lOGISTICS

119__ GReeN IT

120__ ReSOURCe eFFICIeNCy

123__ WATeR

125__ BIODIVeRSITy

12__ AWARDS

130__ THINk BlUe. FACTORy.

136__ FINANCIAl INDICATORS

13__ SOCIAl IN DICATORS

142__ eNVIRONMeNTAlINDICATORS

14__ GOAlS AND ACTIONS

153__ FRAMe OF ReFeReNCe

156__ HIGHlIGHTS & lOWlIGHTS

15__ CONSUMPTION AND

eMISSION DATA160__ GRI CONTeNT INDex

162__ GRI APPlICATION leVel

CHeCk

163__ INDexe S, RATINGS,

RANkINGS AND AWARDS

166__ INDePeNDeNT ASSURANCe

RePORT

16__ lIST OF lINkS

169__ CReDITS

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Environment Indicators & goals Background


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Dear Reader,

Volkswa gen can loo k bac k on a ver y suc cess ul is cal year

in . Despite economic headwinds, our Group report-

ed new record igures. With . million vehicles deliv-

ered, we were able to sell one million more vehicles than

in the previous year while at the same time increasing our

operating proit to . billion.

We at Volkswagen are p roud o these s uccess es. At the sa me

time, however, they give rise to major responsibilities or

our employees and customers, or an intact environmentand or balanced social development. As Europes largest

automobile manuacturer we take these responsibilities

seriously as we showed once again in .

We are alig ning the entir e Group with the goal s o maxi -

mum energy- and resource eiciency. In this way we will be

able to cut the average CO emissions o our entire Euro-

pean new car leet to below g/km by . And we are

making rapid progress towards our goal o ensuring that

our production plants are percent more environmental-

ly compatible by .

It is not in our nature, however, to rest on our laurels. Con-

sequently, we recently set ourselves even more ambitious

environmental targets. For example, the Volkswagen Group

is sparing no eort to cut the average CO emissions o its

European new car leet to g/km by . To this end we

are working to optimise the entire spectrum o drivetrain

options: internal combustion engines, natural gas engines,

plug-in hybrids and electric drive. The XL model, which

can cover km on one litre o uel, demonstrates that our

Group with its , research and development engi-

neers has the necessary capacity or innovation and the

passion that it will take to master this challenge.

Launching innovative technologies does, however, call

or a sound inancial basis. With this in mind, or the Au-

tomotive Division alone, Volkswagen has put together a

package o investments worth . billion or the period

up to . Two thirds o these unds will be lowed into

even more eicient vehicles and technologies, as well as

into even more environmentally compatible production

processes at our plants around the world.

For Volkswagen, sustainability has an important social di-

mension. This includes, or example, shaping working

conditions in line with the principles o Decent Work, as

well as respe cting and enhancing minimum stand ards o

working co nditions. An importa nt pa rt her e is played by co-

determination. The act that the Volkswagen Groups suc-cess is paying dividends in many respects is illustrated by

the development o the workorce. Since we have cre-

ated more than , additional new jobs, , o

them in Germany. Today we have a total o , employ-

ees worldwide, including , young people in coun-

tries who are learning a proession in line with Germanys

dual model o vocational education and training.

This report provides inormation on our sustainability

strategy and on the ma ny dierent projects and measures

in the economic, social and environmental ields. In the

interests o maximum transparency, we have once againhad our Sustainability Report certiied in accordance

wit h the AA AS stan dard . In additio n, the Glob al Re-

porting Initiative (GRI) has again awarded this publica-

tion its highest rating A+. Moreover, the report com-

plies with the requirements o the German Sustainability

Code. Our commitment to sustainable development is

urther documented by our inclusion in key international

indices such as the Dow Jones Sustainability World Index

and the FTSEGood, as well as by our involvement in the

Carbon Disclosure Project. Through its participation in

the UN Global Compact, the worlds largest initiative or

businesses that support sustainability and responsibility,

Volkswa gen als o make s a cont rib utio n to prot ecti ng hu-

man rights and combating corruption.

We inv ite you to orm your own vie w o the sust ain abl e de -

vel opme nt o our Comp any and hope yo u ind that this re-

port makes inormative reading.

Pro. Dr. Martin Winterkorn Bernd OsterlohChairman o the Board o Management o Volkswagen Aktienges ellschat Chairman o the General and Group Works Councils

Research and Development

8


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E d i t o r i a l


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Portrait o the Group.

The Volkswagen Group, based in Wolsburg, is one o the

worlds leading automobile manuactur ers and the largest

automaker in Europe. In the Group increased the num-

ber o cars and commercial vehicles delivered to customers

to ,, (: ,,), which equates to . percent

o the global passenger car market (: .%).

srucureThe Volkswagen Group is a publicly quoted stock corpora-

tion under German law and owns twelve brands rom seven

European countries: Volkswagen, Audi, SEAT, KODA, Bent-

ley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen

Commercial Vehicles, Scania and MAN. Each brand has its

own distinctive character and operates autonomously in

the marketplace with its own legal status. 3

ProducThe Groups product portolio ranges rom two-wheeled

transport and economical compact cars to luxury high-end

models. In the commercial vehicle sector, the range starts

with pick -up trucks and extends all the way to buses and

heavy-duty trucks. In other business areas the products

manuactured include large-bore diesel engines or ma-

rine and stationary applications, turbochargers, turboma-

chinery (steam and gas turbines), compressors and chemi-

cal reactors. The portolio also comprises special gear units

or vehicles and wind turbines, slide bearings and cou-

plings, as well as testing systems or the mobility sector.

FinanceThe Groups sales revenue totalled , million in

(: , million). Prot ater tax in the scal year

totalled , million (: , million). Other im-

portant nancial data (> p. ) can also be ound at www.

volkswagenag.com/ir. Volkswagen AGs subscribed capital

totalled ,,, at the end o the reporting year. The

distribution o voting rights at the reporting date was as ol-

lows: Porsche Automobil Holding SE, Stuttgart held .%o the voting rights. The second-largest shareholder was the

state o Lower Saxony with .% o the voting rights. As

third-largest shareholder, Qatar Holding LLC held .%,

while Porsche GmbH, Salzburg, held .% o the voting

rights. The remaining .% o the ,, ordinary

shares were held by other shareholders. Notications o

changes in voting rights in accordance with the Wertpa-pierhandelsgesetz (WpHG German Securities Trading Act)

are published on our website at www.volkswagenag.com/ir.

In its unction as parent company, Volkswagen AG holds di-

rect and indirect interests in AUDI AG, SEAT S.A., KODA

AUTO a.s., Scania AB, MAN SE, Dr. Ing. h .c. F. Porsche AG,

Volkswagen Fina ncia l Services AG and numer ous other

companies in Germany and abroad. More detailed disclo-

sures are contained in the list o shareholdings in accord-

ance with sections and o the Handelsgesetzbuch

(HGB German Commercial Code), which can be accessed

at www.volkswagenag.com/ir and is part o the annual i-

nancial statements. 5

Locaion and employeeThe Volkswagen Group operates production acilities

around the world (: ). Europe remains the core o the

Groups production activities with vehicle and component

plants. The signicance o the Asia-Pacic region is increas-

ing, reected in the current total o production plants. In

North America, the Volkswagen Group operates our produc-

tion acilities, with nine in South America and three in Arica.

Their locations are shown on the world map on the ollowing

pages. Around the world almost , employees produce

approximately , vehicles per working day, provide vehi-

cle-related services or work in other business areas. ,

people are employed in Europe, , in Asia, , in

North and South America, in Australia and , in Ari-

ca. Any changes in location or activities are set out in our cur-

rent annual report under Chronicle . 4

MarkeThe Volkswagen Group sells its vehicles worldwide. In the

reporting year the Group was able to grow its share o thepassenger car market in all regions. In Western Europe,


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P o r t r a i t o t h e G r o u p

vOL KsW AG EN G R OU P

Voum Data 2011

Vhic sas (units) in 9,345 ,361

Production (units) in 9,255 ,494

empos (ar avrag) in 533 454

Proportion o ma mpos in % 15.2 14.

Absncs in % 3.2 3.4

CO missions europan nw car t in g/m 134 13

Dirct CO missions in g/vhic 425.13 46.9

enrg consumption in MWh/vhic 1.9 1.3

Financia data (IFRS), miion 2011

Sas rvnu 192,66 159,33

Oprating prot 11,510 11,21

Prot bor ta 25,492 1,926

Prot atr ta 21,4 15,99

Voswagn Group production sits not incuding Scania, MAN and Porsch Passngr Cars and light Commrcia Vhics

Inormation on produc

tion and sas o th

main Group products can

b ound in th Annua

Rport as w as in

th k indicators

chaptr o th prsnt

rport. This chaptr aso

contains rvnu and

prot gurs bron

down b brand and

businss d (> p. 7),

as w as commnts on

th sustainabiitindicators (> p. ).

the Groups market share reached . percent (: .

percent), in Central and Eastern Europe . percent (.

percent), in North America . percent (. percent), in

South America . percent (. percent) and in Asia-Pa-

ciic . percent (. percent). The Groups worldwide

market share totalled . percent (. percent). World-wide, or the manu actu re o its produc ts, the Group pur-

chased goods and services to the value o . billion

(: . billion). The largest procurement market is

Europe, with a volume o around . billion, ollowed by

the Asia-Paciic region with . billion.

ManagemenThe Supervisory Board is responsible or monitoring the

Management and approving important corporate decisions.

Moreover, it appoints the Members o the Board o Manage-

ment. Pro. Dr. Ferdinand K. Pich is the Chairman o the

Supervisory Board o Volkswagen AG. The Board o Manage-ment o Volkswagen AG comprises nine members. Each

Board Member is responsible or one or more unctions

within the Volkswagen Group. Some Board Members are

also responsible or a specic region. The Board o Manage-

ment is chaired by Pro. Dr. Martin Winterkorn. The work o

the Board o Management o Volkswagen AG is supported by

the boards o the brands and regions as well as by the other

Group companies and holdings.


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C (USA)

Pb (MEX)Q (MEX)

S (MEX)

S A (BR)Cb (AR)Cb (BR)P (AR)Rs (BR)S Cs (BR)S P (BR)Tb (BR)

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Group production plants.When the new engine pla nt in Sil ao,

Mexico, was opened in January ,

it brought the total number o Volks-

wage n Gro up pro duct ion ac ili ties

worl dwid e to . Additio nal prod uc-

tion plants o the Groups various

brands are already at the planning orconstruction stage in China, Hun-

gary, Russia and Mexico. This lays

the operational oundations or the

Group to reach its ambitious growth

targets. By , Volkswagen is aim-

ing to sell more than million vehi-

cles a year, not least by increasing its

share o the worlds major growthmarkets. 6


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P o r t r a i t o t h e G r o u p

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Strategy.


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With the growing prosp erity o the emergi ng econom ies

and developing countries, worldwide demand or individu-

al mobility is on the increase. In the years ahead the num-

ber o cars worldwide is set to rise rom roughly billion at

present to around . billion. As one o the worlds leading

automobile companies, the Volkswagen Group has a spe-cial responsibility here. With trendsetting technology and

social competence, the Company is making its contribu-

tion to a sustainable development which will ensure that

uture generations have at least the same opportunities as

the present generation.

Volkswa gens act ions are base d o n a mode rn unde rsta nd-

ing o corporate responsibility. One characteristic o this

is the application o sustainable management as a criteri-

on along the entire value chain. In this way we succeed in

combining the traditional values o corporate activity with

the challenges o our time responsibility and sustaina-bility in a global perspective. As a group with global oper-

ations, Volkswagen supports social projects through

worl dwid e comm itment and dona tion s. At the same time

it integrates this concept into a modern vision built

around the strategic anchoring o corporate social re-

sponsibility (CSR) and sustainability in the value chain.

The challenges o the st century, especially resource

conservation and climate protection and intra- and inter-

generation equity, are brought together in our vision o

responsibility and sustainability. Sustainability calls or a

balance o economic, environmental and social objec-

tives. Volkswagens CSR and sustainability concept en-

sures that, at every stage in the value-added process, the

Company avoids risks, identiies development opportuni-

ties at an early stage and continues to enhance its reputa-

tion. This balance thus makes a necessary contribution to

saeguarding the Companys uture and raising its value

in the long term. 9

Thanks to this contribution, sustainability orms an inte-

gral part o our Strategy . By Volkswagen aims to

be not only the most proitable, but also the most ascinat-

ing and most sustainable automaker in the world. In prac-

tical terms, this means that Volkswagen will

> deploy intelligent innovations and technologies to be-

come a world leader in customer satisaction and quality,

> increase unit sales to over million vehicles a year,

> increase its return on sales beore tax to at least percent,

> be the top employer across all brands, companies and re-

gions,

> reduce the energy consumption, waste output, solvent

emissions, water consumption and CO emissions by

percent per vehicle, compared with .

One year ater the most extensive ecological restructuring

operation in the Groups history was announced at the Ge-neva Motor Show in spring , it is time to take stock. By

, Volkswagen will reduce CO emissions in its EU new

car leet to under g/km.

The Company is pushing ahead with its high-end green

technology all over the world, including in particular Chi-

na, India and Brazil. Volkswagen is taking great strides to-

wards its goal o m aking its acto ries p ercent more envi-

ronmentally compatible by . In the past two years alone,

energy and water consumption per vehicle have been cut

by around percent. But as Europes largest automaker,

Volkswa gen is also paving the way or urth er resolu te pro-

gress. With the ull power o the Company and the entire

spectrum o powertrain options, ranging rom combustion

engines via natural gas propulsion to plug-in hybrids and

electric cars, Volkswagen is pursuing the goal o reducing

the CO emissions o its European new car leet to g/km

by . Important milestones in strategic environmental

Sustainability and responsibilityh VlKSW upS S iS bSD mD uD SDi F

Cp SpSi bili. iS W bCmi h mS FSCii DSuSibl umbil muFCu i h WlD, h up iS puSui

iS CmiC, Viml D SCil bJCiVS S S u i uS 201. 81


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S t r a t e g y E c o n o m y S o c i e t y E n v i r o n m e n t 7

protection include the ocus on the entire lie cycle o a ve-

hicle and the recording o CO emission data across all up-

stream and downstream areas in line with the Scope In-

ventor y (> p. , ).

On the basis o our Strategy , Volkswagen works with

its stakeholders to identiy those topics that are material to

the companys long-term viability. In this analytical pro-

cess, Volkswagen evaluates international sustainability

studies and engages in active dialogue with its stakehold-

ers. These include analysts, politicians and government

agencies, academia, non-governmental organisations and

not least its employees, customers and suppliers. At

both brand and Group level, Volkswagen holds extensive

discussions on major challenges or the Company and theautomobile industry. Materiality analysis is an ongoing

process in which internal bodies discuss and assess the

relative importance o the topics identiied. The result is

the sustainability strategy roadmap: a matrix o the princi-

pal topics (> p. ). ,

suainabiliy managemenThe criteria or sustainability management o an enter-

prise that now has brands are determined partly by

growing global challenges such as climate change and re-source conservation, respect or human rights and social

involvement, and as a result partly by the increasing

expectations o political and economic stakeholders and

especially the customer, with regard to quality, transpar-

ency and governance.

Without a bandon ing t he basi c principles o a vol untar y and

hence competition-driven approach, it is increasingly a

matter o establishing a systemic and strategic sustainabil-

ity concept within the Company. In this spirit, CSR means

the responsibility o enterprises or their impacts on soci-ety, as set out in the European Commissions deinition in

the CSR Strategy .

To put this responsibility into practice, Volkswagen has es-

tablished a clear structure. The Groups Board o Manage-

C S D S u S i b i l i m m h V l K S W u p

bd f m Ss bd

CS & Ss S CSR & Ssb S G

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8

ment is also the highest-ranking sustainability body in the

Company (Sustainability Board). It is inormed periodically

about responsibility and sustainability issues by the Group

CSR & Sustainability Steering Group. This includes topmanagers rom central Group business areas, the Group

Works Counc il and repres entati ves o the brand s and re-

gions. The Steering Group approves the sustainability

strategy that the Group is pursuing to achieve its goal o be-

ing the worlds most sustainable automaker by . Since

the CSR Oice has been coordinating all relevant ac-

tivities within the Group and the brands, using standard-

ised structures, processes and reporting. It ensures the

strategic orientation o CSR activities and acts as a steering

group or the internal management processes and the

stakeholder dialogue. CSR project teams work on a cross-sectoral basis on topical issues such as sustainability in

supplier relations.

Since there has been a regular international ex-

change o inormation between the CSR coordinators o all

brands and regions. For Group-wide coordination o the

activities o the environmental oicers, there is also the

Group Environmental Conerence and the Corporate Envi-

ronment and Energy Steering Group. The appointment o a

Group Chie Oicer or the Environment, Energy and New

Business Areas paved the way or the ecological restructur-

ing o the Volkswagen Group.

One important milestone in this restructuring process is

the modular transverse matrix or the brands Volkswagen,

Audi , SEAT and KODA. This big gest deve lopment ini tia -

tive in the history o the Volkswagen Group was success-ully introduced in : the modular transverse matrix

was used as a basi s or prod ucing the new Gol , the Audi

A, the KODA Octa via and the SEAT Leo n. Acr oss the

Group, orty models based on the modular transverse ma-

trix will go on sale i n the next ew years. 3, 4

One crucial actor in achieving the Groups ambitious eco-

nomic and environmental objectives is the people who do

their best or Volkswagen every day. With almost ,

employees, Volkswagen has a special responsibility. In a

dialogue with its employees, the Volkswagen Group setsstandards or good work, whether in vocational education

and training, continuing proessional development at

home and abroad, pioneering remuneration policy or em-

ployee participation. Volkswagen does ull justice to this re-

sponsibility (> p. .).

With th e es tabli shment o the IT-based sustai nability man-

agement system and the urther integration o the indica-

tor systems, Volkswagen has laid the oundations or ull

and timely CSR and sustainability reporting by the Group.

Volkswagen respo nds to incr easing share holder expect a-

tions regarding up-to-date and dierentiated presentationo the Companys CSR and sustainability perormance with

the aid o the increased control eiciency and transparen-

cy o the Key Perormance Indicator system.

Code of Conduc and policieThe Group-wide Code o Conduct provides Volkswagen em-

ployees with a guide to mastering the legal and ethical chal-

lenges o their daily work. These principles summarise the

Groups values, i.e. closeness to the customer, superior per-

ormance, value creation, renewability, respect, responsi-

bility and sustainability. Each individual bears equal respon-

sibility or ensuring compliance with the Code. 5

Other important guidelines are provided by international

conventions, laws and internal regulations. In the Decla-

ration on Social Rights and Industrial Relationships at

Volkswagen (Volkswage n Social Charte r), the Chart er on

G R O U P - W I D E I N C L U s I O NO F H U M A N R I G H t s I NCOMPLIANCE RIsK ANALYsIs

Th Guiding Princips on Businss and Human Rights:

Impmnting th Unitd Nations Protct, Rspct and

Rmd Framwor hav d to th topic o human

rights bing incudd in th annua compianc ris

anasis procss and or th irst tim bing assssd

across th Group. Among othr things, Voswagn is

monitoring th riss in rspct o human rights in th

contt o sustainabiit in th supp chain.

INTRODUCTION OF THe MODUlAR TRANSVeRSe MATRIx


19/170

S t r a t e g y E c o n o m y S o c i e t y E n v i r o n m e n t

Temporary Work and the Charter on Labour Relations,

Volkswagen proe sses its commitment to unda menta l so-

cial rights and principles. 6, 7

With ee ct ro m Nove mber , the World Gro up Works

Council, the Group Board o Management and the Inter-

national Metalworkers Federation reairmed their com-

mitment to the Social Charter that has been in orce since

thereby underlining its importance or the Volks-

wage n Group on the way to beco min g t he t op e mpl oyer. In

the recently signed version, under the heading o Com-

pensation and Beneits the wording was made more pre-

cise in order to clariy the existing ruling and ensure the

unequivocal interpretation o the remuneration stand-

ard. The wording now runs: The compensation and ben-

eits paid or received or a normal work week correspond

at least to the legally valid and guaranteed minimum. In

case legal or collective bargaining regulations are not ex-

istent, branch speciic tari compensation and beneits

are used as an orientation that are customary to the re-

spective location and ensure an appropriate standard o

living or the employees and their amilies. The Social

Charter is available in twelve languages (> p. ). 8

Since , Volkswagen has been committed to the worlds

largest and most important CSR initiative, the Global Com-

pact. The , participating companies in over coun-

tries work together to shape a more sustainable and equita-

ble world economy. Volkswagen makes an important

contribution here, and in it attained Global Compact

Advanced L evel s tatus. 9

Volkswagen also attach es great impo rtance to ensuri ng

that our corporate activities are in keeping with interna-

tional conventions and guidelines. The main conventions

o this kind are:

S D D i S D S u C u S D p i

bd f m Ss bd

CS & Ss S s s, G Ws C b ss ssb

bdsE b s s s ss s

Vksw d m ...

Ss bdSsb S GSs s/bs

Ss bdSsb S GSs s/bs

Ss bdSsb S GSs s/bs

Ss bdSsb S GSs s/bs

ss

s,s,s

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20/170

> The Universal Declaration o Human Rights, dating rom

(UNO)

> European Convention on Human Rights,

> International Covenant on Economic, Social and Cultur-al Rights,

> International Covenant on Civil and Political Rights,

> Tripartite Declaration on Principles Concerning Multi-

national Enterprises and Social Policy, ILO (Internation-

al Labour Organisation),

> ILO Declaration on Fundamental Principles and Rights

at Work, (especially the ollowing topics: abolition

o child labour, elimination o orced or compulsory la-

bour, ban on discrimination, reedom o association and

the right to collective bargaining)

> OECD Convention on Combating Bribery o Foreign Pub-

lic Oicials in International Business Transactions,

> Agenda on sustainable development (inal document

o the ground-breaking United Nations Conerence on

Environment and Development, Rio de Janeiro )

> Principles o the Global Compact or more social and

more ecological globalisation,

> OECD Guidelines or Multinational Enterprises,

volkwagen in uainabiliy raing and indexeBecause analysts and investors regard CSR and sustainabili-

ty as leading indicators o orward-looking corporate leader-

ship, they are increasingly basing their recommendationsand decisions not just on companies business perormance

but also on their CSR and sustainability proles. In particu-

lar, they are using sustainability ratings to assess a compa-

nys environmental, social and economic perormance. I a

company achieves top scores in these ratings, this not only

sends a clear signal to its stakeholders, but also makes the

company more attractive as an employer and boosts its em-

ployees motivation.

In , as in previous years, Volkswagen once again succeed-

ed in maintaining a leading position in its sector in the main

international ratings and indexes. Volkswagen is one o only

three automobile companies listed in the Dow Jones Sustain-

ability World Index. MAN is the only German company in the

mechanical engineering sector o the Dow Jones Sustainabil-

ity World Index and the Dow Jones Sustainability Europe In-

dex. Moreover, the Norwegian insurance company Store-

brand has included Volkswagen in its new Trippel Smart and

The new XL1 rom Volkswagen made its debut at the Geneva Motor Show. With uel consumption o 0.9l/100 km it is the worlds most economi-

cal production model. With its plug-in hybrid powertrain, this two-seater can cover up to 50 km in all-electric mode with zero local emissions.

PReSeNTATION OF THe xl AT THe GeNeVA

MOTOR SHOW


21/170


SPP Global Topp unds launched in . This und in-

cludes the most sustainable companies in the world.

Volkswagen leads the eld in the Social category.

On December Volkswagen was represented in the

ollowing sustainability indices: Advanced Sustainability

Perormance Index (ASPI), Dow Jones Sustaina bility World

Index, ECPI Ethical Index Europe, ECPI Ethical Index

EMU, ECPI Ethical Index Global, Ethibel Sustainability In-

dices (ESI) Excellence, FTSEGood and STOXX Global ESG

Leaders Indices (> p. ).

Dealing wih longerm megarend and

horerm influenceIn order to achieve its operational and strategic growth ob-jectives and to stabilise its succe ss on a sustai nabl e basis,

the Group implements a systematic planning and strategy

process. The advantages o long-term planning are obvi-

ous: it permits proactive allocation o resources and allows

the Company to make ull use o savings while maintain-

ing a high degree o quality awareness.

However, long-term planning in the Volkswagen Group also

needs to be exible: the economy is subject to cyclical uctu-

ations, national markets are governed by legal regulations,

and new customer needs can quickly emerge and becomeimportant. The main drivers o social change are the global

mega-trends.

The mega-trends o relevance to the Group are progressive

urbanisation, demographic change (ageing society) and the

issue o resource depletion (ossil uels, rare earths, etc.).

These trends are increasingly producing changes in custom-

er purchasing. The emerging middle class is demanding

new products and innovative solutions and at the same

time the state is imposing new regulations that have a mas-

sive inuence on day-to-day business.

sraegy and proceWithin the Volkswagen Group severa l depar tment s are

constantly at work on long-term planning: observing social

mega-trends, analysing overall economic ramework con-

ditions, tracking emerging customer trends and analysing

the competition, and merging all these aspects in a single

process.

This process, known within the Group as the planninground, makes it possible to take important decisions on

the development o production, procurement and sales

structures within a -year time rame. However, to take

adequate account o the increasing pace o change, every

planning round is updated and adjusted as the year goes on

until the next planning round starts in the autumn.

OulookLong-term planning is o paramount importance or a

globally operating group like Volkswagen but in view oreal-world developments must remain capable o modii-

cation and adjustment. This is the only way to achieve our

objective o sustainable growth. The Group is thereore

continuously reining its orecast toolbox and speciically

in the ield o market research undertaking a undamen-

tal redevelopment o these tools in response to the dynam-

ic changes in the various markets.

: TOP RANkING IN THe key INTeRNATIONAl

RATINGS AND INDexeS

Ss d ss S M sss


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Pro. Dr. U SchradrB Us T

Cornia HdnrichGw .V.

Id i to s Voswagn ocusing mor strong on aras

mard b conicting objctivs. Ta ctric mobiit, or

amp: hr, Voswagn coud prsnt a comparison o

stahodr and customr wishs with what is currnt

tchnica asib.

Id i to now act what Voswagn has don to

invstigat th 12 cass in which suppirs ar suspctd o

inringmnts. This is an ara whr Voswagn is too

supricia in its covrag.

Learning to understand eachother: stakeholder dialogue.VlKSW iS CmmiD D Vlpi D muFCui VhiClS F uSDi Quli

h Dlih CuSmS h WlD V. l h i Vlu Chi u CiViiS F CuS

SuSibili D SpSibili i li u mplS, SCi D h Vim.

As a compa ny with worldwi de operat ions, Volkswagen isengaged in a permanent exchange o inormation with the

various intere st groups or stakehol ders. As well as custom-

ers, employees and suppliers, these include actors rom the

political world, science and research, civil society and non-

governmental organisations. They all have expectations,

and they all express interests. Volkswagen in its turn takes

note o their suggestions and learns rom this exchange.

sakeholder managemenExchange means give and take. Here Volkswagen ollows

a systematic and organised process. The Company basi-cally believes in an open and constructive dialogue in

whi ch it ca n pu rsu e its inter est s in a ta rge ted way. The

outcome o this process should be at least a mutual under-

standing o the dierent starting points and positions

and preerably agreement on the possible shape o a

jointl y addr esse d solu tion , whic h shou ld idea lly be sup-

ported by a joint project.

The stakeholder dialogue is backed up by a management

approach that ensures documentation and plausibility.

Within the limi ts o the Grou p appr oach, bran ds and re-

gions act on an independent and decentralised basis. The

right methods or communication and the exchange plat-orms are selected jointly with the stakeholders. Whether

it be workshops, symposia, public controversies or social

media tools what matters is making progress towards a

solution. In our internal management, steering groups

and project groups ensure that all necessary departments

are involved in order to guarantee transparency and

eectiveness. In , stakeholder management in the

Volkswagen Grou p will becom e even more syste matic

thanks to an IT-based Issue and Stakeholder Module,

whic h wil l i rmly estab lish it wi thin the C ompa nys orga ni-

sation.

In an ongoing process, Volkswagen conducts an employee

opinion survey to appraise the views o the workorce and

, employees took part in . At several Volkswagen

plants, Neighbourhood Forums have been set up to pro-

vid e a pla tor m or per man ent dia logue wit h loc al resi -

dents and local government agencies. At brand and Group

levels a variety o instruments are available with which to

conduct stakeholder surveys and implement dialogue o-

rums. And or customer communications there is also a

standardised process which ensures that suggestions and

complaints are dealt with promptly and without exception

by the specialist departments responsible.


23/170


lars MnchF E A

Pro. Dr. tho. Grhard WgnrPs C G

Voswagn is right to sa that sustainab mobiit must

invov mor than just cars. But how ar has Voswagn ra

progrssd in this procss? What riss dos this invov or

Voswagn?

Its not nough to ocus so on th topic o icinc. High

unit sas utimat ad to a rbound ct that Voswagn

ought to discuss.

For Volkswagen, playing an active part in national and in-

ternational business networks is a major element in its

permanent dialogue with important groups and actors.

Volkswagen contr ibutes its technical and socia l capa bili-ties here and supports numerous projects. The Group is

represented on the board o the leading European busi-

ness network or corporate social responsibility, CSR Eu-

rope. At a national level, Volkswagen is represented on the

boards o econsense, the Forum or Sustainable Develop-

ment o German Business and o the international Biodi-

versit y in Good Compa ny init iative. Along with numer ous

other companies, Volkswagen has signed the Code o Re-

sponsible Conduct or Business initiative.

Since , Volkswagen has been committed to theworl ds lar ges t and most imp orta nt CSR ini tia tive , the

Global Compact. The , participating companies in

over countries work together to shape a more sustain-

able and equitable world economy. Volkswagen makes a

signiicant contribution to this initiative. Ten principles

under the headings o human rights, labour standards,

environmental protection and anti-corruption describe

the values o the Global Compact. In the Company

once again reached Global Compact Advanced Level,

gearing its business activities to the principles o the

Global Compact at all its locations. With its expertise,

Volkswa gen als o help s othe r comp ani es in the Glo balCompact to embrace their global responsibility. One ex-

ample o this is our ongoing participation in the advisory

board or the Sustainable Supplier Chain project.

Volkswa gen is als o comm itt ed to the oll ow-u p acti vit ies

or the UN sustainability conerence Rio+, and to the

activities o the World Business Council or Sustainable

Development.

For twelve years now, Volkswagen and the German Nature

and Biodiversity Conservation Union (NABU) Germanys

largest environmental protection organisation have

been engaged in a unique orm o cooperation. It is based

on mutual respect or dierent interests. The cooperation

consists o three components: consultation, dialogue and

projects. Within this ramework, Volkswagen and NABU

raise public awareness o issues relating to sustainabilityand the environment, not least through the uel-saver

courses organised in conjunction with NABU.

The eet management project with Volkswagen Leasing

GmbH is a success story rom both an environmental and an

economic point o view. Using the most ecient vehicles re-

duces not only CO emissions, but also eet operators costs.

The project is also a particularly efective orm o climate

change mitigation, since it provides unds or protecting

moorlands in Germany, which are major CO sinks. 3

Volkswagen recentl y conclu ded a strategic partnership with

the German Red Cross (DRK). The aim o the collaboration

is to motivate people to embrace responsible conduct and

engage in social welare activities. Both parties are especial-

ly keen to oster a stronger ambulance service. In addition,

Volkswagen pursues a series o dia logues a t expert level as

described in the various chapters o this report.

suainabiliy reporingVolkswagen delibe ratel y seeks a dialo gue with certa in

stakeholders not least to obtain eedback about the rele-vanc e a nd quali ty o its sustai nability repor ting. For exa m-

ple, the reporting year marked the eighteenth consecutive

year in which our repor ting has been systematica lly im-

proved through target-group surveys and active stakehold-

er dialogue. This dialogue continued with the evaluation o

our Sustainability Report and the establishment o a

Sustainability Panel. The aim here is to document positive

and in particular negative eedback on the Volkswagen

Sustainability Report and thereby identiy concrete areas

or improvement. The our statements at the bottom o

these two pages, provided by way o example, relect the

wide range o opinions and t he diversit y o the dialogue.

Ssb ssb Skd d M sss


24/170

Customers& Suppliers

Politics & GovernmentAgencies

NGOs

Gobscan

Word Rsourcs Institut

Grman Natur andBiodivrsit ConsrvationUnion (NABU)

VCD

BUND

WBCSD

lowr Saon Govrnmnt CommissionProtstant Church in Grman

Fdra environmnt AgncStitrvrband r di Dutsch Wissnschat

Fdra Ministr o labourand Socia Aairs

Fdra Ministr o th environmnt

Mtroporgion Hanovr

CSR europ

Goba Compact

GRITransparnc Intrnationa Dutschand .V.

Condration o Grman Trad Unions (DGB)

consns

Fdration o Grman Industris (BDI)

SustainAbiit

etractiv Industris Transparnc Initiativ

Grman Rd Cross (DRk)SOS chidrns viags

trr ds homms

Matriaitanasis

Audi Cit

Customr onin orums

Customr worshops Customrsatisaction

The stakeholder universe.

lowr Saon Rsarch Airport

efcintvhics

Sustainabiitin suppirrations

Cimatchang

managmnt

Sustainabmobiit

Suppirs

Sustainabiit

trnds andprospcts


25/170


Financial Market

Humbodt Univrsit Brin

Sustainab Businss Institut

TU Brin

TU BraunschwigUnivrsit o St. Gan

eTH Zurich

Fraunhor

AutoUni

imug Bratungsgsschat

Wupprta Institut or Cimat, environmnt and enrg

Intrgovrnmnta Pan on Cimat Chang (IPCC)

IW/utur

Corporat Watr String Group

eprt Ntwor Cimatand enrg (eNke)

Corporat Rsourc efcinc String Group

Group CSR Mting (GCM)

empos

Wors Counci

CSR projct tam

Adhoc prt tam sustainabiitin suppir rations

Formr mpos

Voswagn Communit Trust

Tongji Univrsit

Jiin Univrsit

DVFA

RobcoSAM

CDP

Sustainatics

Oom

Vigo

Ban SarasineIRiS

knowdggnration

Groupwid

C m p h S i V V V i W F S K h l D D i l u S

C b F u D l i

Corporatrsponsibiit

Potsdam Institut or Cimat Impact Rsarch (PIk)Intrnationa enrg Agnc

Employees

Science

Um Univrsit

Ssb ssb Skd d M sss


26/170

Materiality matrix:rom dialogue to action.i pCSS bSD i -Dph lSiS, VlKSW DFiS h piCS

b uSD S Cii F iS SuSibili S.

From its dialogue with stakeholders and many other ap-

proaches and instruments ranging rom uture research to

internal environmental radar Volkswagen gathers impor-

tant ndings about what society expects o the Company.These ndings are analysed and assessed in a standardised

multidimensional process, in terms o both their impor-

tance or our stakeholders and their signicance with re-

gard to Volkswagens long-term viability. At the same time,

the extent to which a topic can be inluenced by the Com-

pany is also taken into account. The result is a matrix o the

principal topics the materiality matrix, a roadmap or

the Volkswagen sustainability strategy.

Analyi

The wide-ranging topics and ambitions are registered and

systematically assessed in the relevant sustainability man-

agement units at Group and brand level including the o-

ice o the CSR & Sustainability Steering Group and the

technical departments in the ields o Group external rela-

tions, environment, human resources and compliance/

governance. This also includes coordination with the

rules and conventions that Volkswagen is committed to,

e.g. not only undamental standards such as the UN Uni-

vers al Decl ara tion o H uman Righ ts or t he E urop ean Con-

vent ion on H uman Righ ts, but also the I LO Decla ration o n

Fundamental Principles and Rights at Work or the OECD

Guidelines or Multinational Enterprises. Furthermore,

potential topics are checked or compliance with the prin-

ciples o the Global Compact and the internal Volkswagenstandards e.g. the Volkswagen Social Charter, the Char-

ter on Labour Relations, the Charter on Temporary Work

and the Volkswagen Environmental Principles. Recent

scientiic articles and studies are also taken into account

when asses sing the mate ria lity o individu al topics. Volks-

wage n Grou p Resea rch is also clos ely invo lved in this

work . T he outc ome o the mate rial ity deiniti on proc ess is

discussed in internal bodies also in a standardised pro-

cess with predeined communication paths. The inal se-

lection is made by the CSR & Sustainability Steering

Group. , , 6, 7, 8, 9, 4, 5, 6, 7, 9

PrincipleThroughout the concentration process Volkswagen is

guided by the principal requirements Inclusivity, Ma-

teriality and Responsiveness o the AA AccountA-

bility Standard, a globally recognised standard or the

ver iic ati on o sus ta inabi lity rep ort ing . Com pl ia nce wit h

these principles ensures that the Company pursues

comprehensive, targeted and systematic integration o

stakeholders in the process o selecting material topics,

S M s/ssT E wE Rw s ssTsS ss

mili mixlSiS & CDii

GRI, IW

S F G

GCSR M

AA 1000

G CSR &SsbS G

Gb C,ILO, OECD

D Fi i h m i l i m i x

SUSTAINABILITYBOARD


27/170

STAKEHOLDER

EXPECTATION

S

I MP O RT AN CE F O R BU SI N ESS SU CCESS

> Food

> Health

> Land take

> Urbanization

> Segment shifts> Market shifts

> Employment> Diversity

> Human rights

> Noise reduction

> Compliance

> Efficient productsand production

> Customersatisfaction

> Economic

stability

> Climateprotection

> Sustainablesupplier relations

> Socialresponsibility

> Biodiversity

> e-mobility> Sustainable

mobility

S t r a t e g y E c o n o m y S o c i e t y E n v i r o n m e n t 7

K i S S u S ( S u l S F h m i l i l S i S )

responds systematically to stakeholder initiatives and

draws up the materiality matrix taking due account o

stakeholder expectations. Accordingly, Volkswagen not

only carried on an intensive stakeholder dialogue in thereporting year (> p. .), but also discussed the result-

ing materiality matrix with its stakeholders. As part o

this process, Volkswagen engages in targeted research and

analysis o negative ecological and social impacts o the

Companys activities.

Oucome

The materiality matrix 01 shows how Volkswagen assess-

es dierent topics in the light o these actors. The urther

right a topic is located within the matrix, the greater is itsimportance or the uture viability and success o the Com-

pany. The closer it is to the top o the matrix, the greater its

importance or the stakeholders. At the same time, the ma-

trix takes account o the extent to which a topic can be in-

luenced by Volkswagen. While all topics in the matrix are

important, special priority or the purposes o the sustain-

ability strategy is assigned to those topics which Volks-

wagen can direc tly in luenc e in other words topic s to-

wards the top right o the matrix. Accord ingl y, thes e t opics

also determine the structure o this report, while other rel-

evant topics, such as water, appear in an overall list pub-

lished on the Internet. This analysis o materiality ensures

that Volkswagen reports on the key social and ecological

impacts o its operations. Opportunities and risks in re-

spect o the Companys perormance and competitiveness

are set out in the various chapters o the report and speciic

goals and actions derived rom them.

Reporing ime frameAs a rule the ana lysis o importa nt topic s is completed by th e

end o the third quarter o a reporting year though it must

be remembered that the stakeholder dialogue is constantly

generating new topics which have to be taken into account.

Once the materiality matrix has been drawn up and dis-

cussed with strategic stakeholder partners, it is approved bythe CSR & Sustainability Steering Group. On the basis o

this matrix, the individual sectors are approached during

the inal quarter o the year and asked to supply acts and

igures. A meticulously documented editorial process then

prepares this material or sustainability reporting. Among

other things, this observes the principles o the Global Re-

porting Initiative (GRI). External stakeholders and analyti-

cal and consulting companies are involved in the editorial

process. The Sustainability Report itsel complete with the

relevant online microsite is then presented to the public

at the Annual General Meeting. 3

Ssb ssb S m sss


28/170

EconomyCuSm SiSFCi // SuSibili i Suppli liS // CmiC

Sbili // CmpliC // iSK mm // lCliSi2

Economy.


29/170

A N G E, sss s b .

E , 1.2 s s Vsw G bs

ss , b b. Ts 800 ss... s.


30/170

Growing sustainably.

is th margin b which proit atr ta incrasd in th rportingar, raching ,88 miion. Sas rvnus wr aso up b. prcnt to ,7 miion. And at . biion, oprating

proit cdd th prvious ars rcord v o . biion.

+38.5%

Higher vehicle sales, higher sales revenue and higher operating proit: in the reportingyear the Volkswagen Group outp erormed the record level o the previous year. As a result,the Group is irmly on course to reach its ambitious growth targets and sustainably secureits long-term viability.

Th tota procurmnt voum or thVoswagn Group in th rporting aramountd to 8.7 biion. This rprsnts an incras o .8 prcnt ovrth prvious ar.

Th igurs incud th procurmntvoum or Porsch rom August and or MAN rom Novmbr . Thprocurmnt voum or Audi incudsth brands lamborghini and Ducati(rom August ).

Procurement volume by brand.

VoswagnPassngr Cars

77

Audi.7

kODA

SeAT

3.7

MAN

9.

VoswagnCommrciaVhics

.4

Scania

5.

Porsch.4

Bnt.6

6.6


31/170

S t r a t e g y c o n o y S o c i e t y E n v i r o n m e n t

hS Di pSCh'FiC D Clli'

It is only through

sustainable development thatVolkswagen has been able to make

Milestone.Th arnings rportd b Voswagn or mard a major miston on th wato bcoming th words ading automobi group.

urther progress towards becoming

the worlds top automaker.

Worldwide market shares, passenger cars.

12.2%

24.4%

4.9%

AsiaPaciic (: .%)

Wstrn europ

(: .%)

North Amrica

(: .%)

Passngr car divris wr up

wordwid. mart shar igurs hav bn rvisd on account ostatistica updats. Divris b thPorsch brand ar incudd rom August .

15.4%Cntra and eastrn europ (: .%)

19.6%South Amrica

(: 8.%)


32/170

CUstOMER sAtIsFACtIONCustomer satisaction satisaction with products, servic-

es and perormance is a cornerstone o Volkswagens

corporate strategy, laying the oundation or long-term,

sustainable success. Knowing customers needs and ex-pectations, and learning more about them by maintaining

an ongoing dialogue with customers, is a top priority or

Volkswagen. In this respect, a longside excellent products

and expert advice, personal contact with the customer is o

critical importance. Particularly when it comes to the

Groups new sustainability measures, customer satisac-

tion is a key indicator o how well product developments

and model updates are responding to stakeholder needs.

Consequently, customer satisaction is a key component o

the Groups Strategy 2018, and is reected in the strategies

o all the individual brands. And the Group sets itsel the

highest possible goals in this respect: Volkswagen aims todo more than just satisy its customers it aims to delight

and inspire them. Reecting this priority, the Board o

Management receives updates on all customer-related ac-

tivities as oten as six times a year.

Individual Group brands conduct satisaction surveys in

their respective markets, placing special emphasis on cus-

tomer satisaction ratings related to products and services.

For product satisaction, the Porsche and Audi brands lead

the rankings in their European core markets, compared

with o ther Group b rands and w ith th eir c ompet itors. But in

terms o overall satisaction levels, the Groups other

brands perorm well, too, matching or outperorming

their competitors. Overall, the surveys reveal that well over

two thirds o all customers are very satisied with the prod-

ucts o the Volkswagen Group brands. In the European

core markets, Porsche and Audi rank among the top three

brands. Volkswagen, KODA and SEAT score satisaction

ratings in excess o percent ar above the market aver-

age. In the USA, Porsche and Audi lead the ield, occupying

the no. and no. positions. In China, Audi, KODA and

Volkswagen set the stand ards in terms o produc t satis ac-

tion, scoring over percent. Volkswagen and KODA arealso setting the pace or dealer satisaction in China, rank-

ing at no. . Volkswagen Group customers are loyal to the

brands because they are satisied with the products and

services. Brand loyalty ratings, which are calculated on a

regular basis, show how much customers trust the respec-

tive brands: the Volkswagen passenger car brand, or ex-

ample, has maintained a high level o brand loyalty in its

European core markets or several successive years now.

KODAs customers are very loyal, too: the brand has also

maintained a leading ranking compared with its competi-

tors or a number o years. 3

Volkswagens market research evaluates customer satisac-

tion in comparison with the Groups competitors while at

the same time gathering detailed inormation through to

dealership level. Depending on the specic context or the re-

search, various survey methods are used both ace-to-ace

and telephone interviews, and written and online surveys. For

legal reasons, Volkswagen is not authorised to publish specic

management-related external customer satisaction data.

Methodically and systematically measuring the brands

perormance in this key area provides a sound basis or con-

tinually improving the customer process. Yet Volkswagen

has gone a stage urther, too, introducing a unique initiative

that actively includes the customer in the product process.

Since , the brands target market has been invited to

contribute to the product design process. The Peoples Car

Project gives customers in China the opportunity to pre-

sent their ideas or design, customisation and connectivity

Successul despite a diicult backdropVlKSW hS ChD h lS i S iSlF. hKS iS hih

FiCil Sh D iS pW, bD-bSD mDl , WlDWiD pSC D CiV pCK F FiCil SViCS,

VlKSW iS Wll plCD Ciu mK b pSS hh Cmpii i Fuu.2


33/170


via a n onli ne pla torm. The resp onse has been ph enomena l the website has had more than million Chinese visitors,

and more than , ideas have been submitted. Origi-

nally scheduled to run or one year, the project has now

been extended indeinitely. In other words Volkswagen is

making cars not just or its customers but also with its cus-

tomers, in a process that yields an i n-depth insight into cus-

tomers needs and preerences. In this way, Volkswagen is

aiming to ensure that it ra nks as one o the worlds top three

automakers or customer satisaction by . 3

Audis Board o Manag ement regul arly discu sses produc t

and satisaction requirements in its Kundentisch cus-

tomer orum, with the aim o understanding background

trends and inluences, and optimising business processes.

Audi C ity, an entir ely ne w concept, was introdu ced in orde r

to build even closer customer relationships, to showcase

the ull spectrum o products in a highly emotive way, and

to discover customer needs. This innovative space or in-teraction between brand, customer and product provides

digital access to all the brands models in lie size and in

real time. With its state-o-the-art technology, Audi City

perectly expresses the ethos o the Audi world, oering

customers the live experience o a next-generation show-

room. In , Audi City showrooms were opened in Lon-

don and Beijing; the brand plans to roll out the concept

worldw ide. 33

Focusing on the customer, then, is not just the basis o the

Volkswagen Groups ac tions, but a core element o its strate-

gy. Because only products and services o outstanding quality

that ensure a high level o customer satisaction can guaran-

tee long-term market success. One key actor here is meeting

the specic needs o consumer groups, or example by pro-

ducing special-purpose vehicles or the disabled. Superior

vehicle saety and state-o-the-art driver assistance systems

are also relevant considerations in this respect. 34, 35

Identiying and understanding customer wishes and needs holds the key to customer satisaction. One positive example here is the Peoples

Car Project in China, in which visitors to an online platorm were asked to submit their car design ideas. With million visitors and over

, suggestions submitted, the project has exceeded all expectations. Three o the car and technology concepts put orward and taken

up by Volkswagen were presented at the Auto China air. Among them was the Music Car, which changes colour depending on the

music that the driver selects.

Cs ssf Ssb s s E sb C Rs Ls


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Another decisi ve aspec t is air prici ng. Take KODA or ex-

ample: with the new Rapid, a locally produced version o

which was launc hed on the India n market in , the

KODA brand presented a compact notchback saloon, spe-cially designed or international growth markets like Chi-

na and Russia, as well as price-sensitive customer seg-

ments in Europe. Like the up! at the Volkswagen brand, the

our-door Citigo supplements the KODA oering in the

expanding small car segment.

sUstAINABILItY I N sUPPLIER RELAtIONs

Against the backdrop o the ongoing growth and diversi-cation o the supply chain, Volkswagen believes it has a re-

sponsibility to promote sustainability throughout the en-

tire value-added process. The aim o the Volkswagen

Group is to achieve globally stable, ecient and sustaina-

ble goods and supply chains that ensure security o supply.

To this end, as long ago as 2006, Volkswagen developed

and implemented the Sustainability in supplier rela-

tions concept. Since then the concept has been subject to

ongoing external evaluation and improvement.

ConcepBy implementing this concept, Volkswagen ensures that its

business partners, too, observe environmental and social

standards. In this context, Volkswagen attaches great im-

portance to a air and open dialogue in a spirit o partner-

ship. The concept essentially rests on our pillars:

) Sustainability requirements or suppliers that have to be

acknowledged by all suppliers beore submitting a quo-

tation. No company can submit a quotation without ac-

knowledging these requirements.

) An early warning system or identiying and minimis-

ing risks along the value chain.

) Integration into the procurement process.

) Supplier monitoring and development.

suainabiliy requiremenThe Sustainability in supplier relations concept is based

on the Volkswagen Group requirements or sustainability

in relations with business partners, which are signed by

the Groups Procurement Director and the Group Chie

Compliance Oicer. The Volkswagen Group expects its

business partners to observe these requirements and to re-quire them rom their own business partners. The require-

ments apply to all goods and services purchased. The

Group rejects any behaviour that is corrupt or damaging to

the Company in everyday transactions, and also any ailure

to comply with environmental and social standards. Com-

pliance with competition and anti-trust legislation is ex-

pected and veriied. 37

The Volkswagen Group requirements or sustainability in

relations with business partners set out Volkswagens ex-

pectations concerning its business partners conduct withregard to central environmental and social standards.

Among other things, the requirements are based on obser-

vance o internationa lly recognised human rights, the U nit-

ed Nations Global Compact, the International Chamber o

Commerce Business Charter or Sustainable Development

and the OECD guidelines or sustainable long-term develop-

ment. Moreover, the relevant core labour standards o the

International Labour Organisation ILO orm the ounda-

tions o the Volkswagen sustainability requirements. These

include observing the right to reedom o opinion, protec-

tion rom arbitrary decisions, the ban on discrimination at

work, the prohibition o orced l abour and child labour, theundamental right to reedom o association and the right to

equal treatment and appropriate remuneration.

These principles are supplemented by Volkswagens envi-

ronmental policy, the resulting environmental targets and

requirements, the Groups quality policy and the Volks-

wagen declaration on social rights. All suppliers are made

aware o the binding requirement to implement a sustaina-

bility strategy. This is done in a variety o ways. Thus, or

some years now we have been taking environmental targets

as a basis or awarding contracts; this is done by making VW

Norm and VW Norm parts o the contract and

co-valid contractual documents. V W Norm , or exam-

ple, explicitly standardises requirements relating to envi-

ronmental impact, recyclability and prohibited materials.

Furthermore, Volkswagen requires its major suppliers to

have a certiied environmental management system in


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place in accordance with ISO and/or EMAS. This has

been veried and documented or percent o our major

suppliers. As part o the environmental certication and au-

diting o the Volkswagen AG locations under EMAS and ISO, regular checks are made on the environmentally rele-

vant suppliers and service providers working on the actory

sites. Furthermore, together with other automakers we me-

ticulously audit the waste management companies that

work or the Volkswagen brands German locations. The

waste management contractor rst receives a act-nding

questionnaire and then has to urnish certicates and per-

mits, e.g. a valid inspection by the technical inspectorate

TV. A detailed checklist is then worked through in thecourse o an on-site inspection. Equipment is thoroughly in-

spected and documents scrutinised. The data is all collected

in a multi-company portal which in uture will also take ac-

count o Europe-wide standards. The Spanish Volkswagen

location Navarra is already using the portal. 38

p C u m V l u m S

In the reporting period, Volkswagen purchased goods and services rom a total o 1,917 suppliers. O this total, goods to the value o 67.6

billion rom 7,15 suppliers were or the production sector. This does not include goods to the value o 35.4 billi on rom suppliers to the Lam-

borghini, Bugatti, Porsche, SCANIA and MAN brands or to KODA India and the Chinese joint ventures. In the iel d o general procurement,

goods to th e value o 17. bill ion were delivered to Volkswagen by 14,79 suppliers. This does not include goods to th e value o 8.9 b illion

rom suppl iers to the Lamborghini, Bu gatti, Porsche, SCANIA and MAN bran ds or to KODA India and the Chinese joint ventures. In 01 there

were 75 new suppliers or the production sector and Volkswagen purchased goods to the value o 1 billion rom these suppliers. This does

not include goods rom suppliers to the Lamborghini, Bugatti, Porsche, SCANIA and MAN brands or to KODA India and the Chinese joint ven-

tures. In the general procurement sector there were 5,65 new suppliers, accounting or purchases totalling 4.4 billion. This does not i nclude

goods rom suppliers to the Lamborghini, Bugatt i, Porsch e, SCANIA and MAN brands or to KODA India and the Chinese joint ventures. Terms

o payment are an important topic in our dialogue with suppliers. The great majority o payments are made on the 5th calendar day o the

month ollowing delivery.

etrior4%

.6 bn Bnt VWPassngr Cars bn

Porsch.4 bn

1Audi incuding lamborghini and Ducati (rom August 2012)2Porsch rom August 2012

b d b d/ss

Intrior5%

%ectrica

Mta8%

%Powrtrain

. bnAudi

9. bnMAN

6.6 bnkODA

Scania 5. bn

SeAT . bn

Voswagncommrcia vhics

.4 bn

Cs ss Ss s s E sb C Rs Ls


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37/170


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8

taken. The measures to be initiated are coordinated by

a) the ad hoc expert team in Wolsburg and

b) the expert teams in the relevant brands and regions or

the suppliers in question. Where necessary, urther

measures are demanded and their implementation

monitored.

All procurement regions are represented within the pro-

curement sustainability network, ensuring regional cover-

age o the procurement regions and hence o the countries

in which the suppliers are located. Where suspicions exist,

ad hoc cases are dealt with in close consultation with the

representatives o the brands and regions. They, ater all,

are quickly on the spot, speak the local language and may

already have had contact with the supplier in a dierent

context. Depending on the situation, experts rom specialist

areas such as occupational saety and health or human

resources are called in to handle such ad hoc cases and pro-

vide c ase-specic and specialist support or their colleagues

in the procurement network. These ad hoc expert teams are

maintained in every brand and region. They are supported

by the ad hoc expert team based in Wolsburg.

Internal quality process auditors help Procurement to im-

plement monitoring o the Sustainability in supplier re-

lations concept. To this end the auditors use a status in-

Building a car takes thousands o parts, manuactured all over the world, assembled with extreme precision and in line with rigoroussustainability requirements all o which would not be possible without binding standards. Volkswagen established these standards

back in 006 wi th its Sustainability in Supplier Relations concept.


39/170


INTRODUCTION OF MORe IN-DePTH SUSTAINABIlITy

AUDITS AT SUPPlIeRS By eND OF

eleVeN CASeS OF DeVIATION FROM ReQUIReMeNTS

SUCCeSSFUlly FOllOWeD UP

dicator (SiSR lag) to perorm audits at the suppliers to

establish whether the supplier has a nswered the sustain-

ability questionnaire and understood the contents. In

cases o non-compliance or i the sustainability require-ments have not been understood, the procurement sus-

tainability network contacts the supplier in question. I

necessary, e.g. where deicits are detected, an escalation

process is launched which includes the use o the D Re-

port. The D Reports are also used to obtain an initial

statement rom the supplier in cases o suspicion arising

independently o these processes. Here too the above-

mentioned escalation process may be launched i the

need arises. In there were a total o eleven ad hoc

cases in which the dialogue with the supplier resulted in

compliance with the sustainability requirements. Othese, nine were in the social ield a nd two in the environ-

mental sector. Six o the cases occurred in Europe, three

in Asia and two in S outh America.

In all process steps and all measures, the ocus is on sup-

plier development, air dialogue in a spirit o partner-

ship, and ongoing cooperation with the supplier. The

Volkswa gen Grou p rese rves the right to have comp lia nce

wit h th e s usta ina bil ity requ ire ment s ve riied by ex per ts a t

the business partners premises during regular business

hours. The Volkswagen Group urthermore reserves the

right to terminate business relations with suppliers onthe grounds o non-compliance with the sustainability re-

quirements, especially in cases where the supplier dis-

plays no visible interest in long-term improvement. Dur-

ing the reporting period there was one case in which the

Volkswa gen Gro up termina ted its busi ness rela tion s with

a supplier because o non-compliance with the sustaina-

bility requirements.

supplier deelopmenIn the interests o an ongoing supplier development pro-

cess, Volkswagen makes an eLearning module in nine lan-

guages available to its suppliers on the Group Business

Platorm, or invites them to work through it via the To Do

unction on the Platorm. In the eLearning module the

user irst learns what requirements Volkswagen has with

regard to environmental and social standards and what

Volkswagens susta inab ility requir ement s are based on.

The inormation provided is supplemented by reerences

to urther reading. Ater the eLearning course, the suppli-

er has to perorm a sel-check. The learning module is not

regarded as passed until this check is successully com-pleted. As o December , , supplier locations

had completed the eLearning course.

Projec in 01To ensure worldwide integration o the Sustainability in

supplier relations concept into all the Groups brands and

regions, Volkswagen again held an international regional

meeting in . Some representatives rom the global

procurement regions met in Wolsburg, not least to share

examples o best practice. Speciic amendments to the con-cept were decided on the basis o this international dia-

logue.

All the conce pts struct ures and module s are regul arly re-

viewe d e.g. in exchanges with other organ isations and

companies, or example the Forum or Sustainable Devel-

opment o German Business (econsense), the German

Automo bile Indust ry Assoc iatio n (VDA), the Extra ctive In-

dustries Transparencies Initiative (EITI) or the European

Automo tive Working Group on Su pply Chain Sustai nability

(CSR Europe). 36, 4, 4, 43

Goal 013One important goal is the integration o the Porsche, Sca-

nia, MAN and Ducati brands into the Sustainability in

supplier relations concept. This process is to be complet-

ed in . Volkswagen also plans to expand its supplier

monitoring and supplier development activities. To this

end the concept or systematic identiication o sustaina-

bility risks in the supply chain will undergo urther devel-

opment in a doctoral thesis. This is to be used as a basis or

more comprehensive identiication and more detailed

analysis o sustainability risks. A urther goal is the intro-

duction o more in-depth sustainability audits at suppliers.

Moreover, special training courses are to be held in to

raise supplier awareness o sustainability issues.

The aim is to work exclusively with suppliers who comply

with all speciic sustai nabil ity r equire ments.

Cs ss Ss s s E sb C Rs Ls


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ECONOMIC stABILItYThe global economy continued to grow in 2012, but with

some loss o momentum. Once again, the driving orce

behind this development was the emerging economies,

which displayed above-average economic growth. In some

cases, however, growth rates ell short o the previous

years gures. In view o structural barriers, especially ex-

cessive pressures on national budgets and decits in the

competitive strength o some countries, the industrialised

countries achieved only limited expansion.

This split in the development o the global economy will

continue in . The emerging markets in Asia are likely to

maintain their role as growth drivers. By contrast, the situ-

ation in the industrialised countries is raught with uncer-tainties. Depending on the success o the eorts to bring

about political reorms, the situation could ease in the USA

in particular, and also in parts o the Eurozone. While the

avourable developments o recent weeks on the inancial

and currency markets indicate a certain potential or re-

covery, they are not yet suicient to indicate that the crisis

is drawing to a close.

Volkswagen will be aced with considerabl e chall enges .

These are due partly to global economic trends, and partly

to the increasing competition in the automotive industry

and the growing size and complexity o the Company. 44

Global economic rendThe relative shits in the global economy will continue in

the years ahead. This will be especially true i the tradi-

tional industrialised countries ail to overcome the

structural problems o their economies and do not take

ull advantage o their already reduced growth potential.

The BRIC countries in particular will become increas-

ingly signiicant in both economic and political terms.

Alt hou gh the rec ent sli ght dip in the pa ce o gro wth , es-

pecially in Brazil, indicates a undamental economic

vu lne rab il ity, the pr osp ect s are tha t the BRI C cou ntr ies

wil l con tin ue to mak e an ab ove -av era ge con tri but ion to

the growth o the global economy.

Furthermore, or some years now another group o

emerging countries has been taking shape in Southeast

Asia a nd Lati n A meri ca, cha ract erised by d yna mic grow th

in conjunction with relative political stability. Here too

the Volkswagen Group sees substantial opportunities in

terms o unit sales, thanks to the economic advancemento broad sections o the population and the associated in-

crease in household incomes.

The shit in the centres o growth is giving rise to an in-

creasingly multi-polar global economy with correspond-

ing impacts on international trade, and also on inance

lows and the energy and commodity markets. The coun-

tries in question are already exerting considerable inlu-

ence on global politics in order to saeguard their eco-

nomic and political interests.

In view o the lack o progress towards multilateral ree-

trade agreements, recent eorts to promote ree trade be-

tween individual states and regions oer opportunities or

market integration. They are helping to ensure that the

global economy and global trade continue to grow.

Nevertheless, the risk o oreign exchange conlicts and o

protectionist measures designed to improve national com-

petitive positions in the short term has recently increased.

There are also considerable risks arising rom the struc-

tural deicits in numerous economies especially with re-

gard to public budgets, the continuing inadequate supervi-sion and regulation o the international inancial markets,

and the impacts o political and social conlicts.

Increaing compeiionCompetition continues to intensiy on the global automo-

tive markets. Last year, Japanese manuacturers recov-

ered rom the natural disasters o and succeeded in

recapturing lost market shares. The Korean manuactur-

ers continued their worldwide expansion and increased

their sales on the EU market, which showed an overall

downturn. The presence o Chinese automakers on the

car markets o Western Europe and North America re-

mains insigniicant, but they are becoming increasingly

important in emerging economies.

Aga ins t this diic ult bac kgr ound , the Volkswa gen Grou p

succeeded in topping its strong perormance in the previ-


41/170


ous year, supplying more than million vehicles or the

irst time ever. The successul integration o Porsche,

MAN and Ducati also enlarged and strengthened the

Groups product portolio. The Volkswagen Group isthereore conident that it is irmly on course to achieve

its targets. The increasing strength o new and old com-

petitors provides additional motivation or resolutely pur-

suing our goal o becoming the number one global player

among car manuacturers by .

Emerging from he crii wih greaer reponibiliieVolkswagen emerge d rom the globa l economic crisi s ast-

er than expected and in a stronger position than its com-

petitors. It is only through responsible and sustainablemanagement that the Company has succeeded in main-

taining its progress towards global automotive leadership

as mapped out in our Strategy . As the Volkswagen

Group grows in size and complexity, its responsibility or

the Company and or its employees will continue to in-

crease.

In the years gone by, Volkswagen has successully stepped

up its presence in important markets. In view o the glob-

al economic trends and risks already described, it will in

uture be increasingly important to improve the condi-

tions or sustainable growth and to tap new potential.

A l arg e m easu re o lexibil ity and in anc ial ind epe nden ce

is absolutely essential or dealing successully with busi-

ness downturns and economic crises. The crisis years

have shown that sustained investment in product, process

and personnel development pays o, and that this is a key

actor in the long-term success o the Company. More

lexible production processes make it possible to ensure a

rapid response to market changes and prevent misalloca-

tion and surplus capacity. With the introduction o the

modular transverse matrix last year, the Volkswagen

Group took a major step towards making production more

Documents

Volkswagen 2012 Sustainability Report