Responsibility

and Change
Sustainability Report 2016
 VOLKSWAGEN KONZERN NACHHALTIGKEITSBERICHT 2016

Content

Page 06 > LETTER TO OUR STAKEHOLDER

Page 01 > GROUP

Page 05 > STRATEGY

Page 31 > ECONOMY

Page 54 > PEOPLE

Page 74 > ENVIRONMENT

Page 101 > FACTS AND FIGURES

Page 127 > BRANDS

Page 162 > REGIONS

Page 186 > IMPRINT

 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Group

Group
12 Brands, 120 Locations
–
One Group
With 12 brands, the Volkswagen Group – based in Wolfsburg, Germany – is one of the world’s leading automobile
manufacturers and the largest in Europe. In 2016, the Group – including Chinese joint ventures – delivered a total of
10,296,997 cars and commercial vehicles to customers. Due to the growth of the passenger car market as a whole, this
equated to 11.9% of the global passenger car market. The Group’s sales revenue totaled €217,267 million in 2016, while
earnings after tax came to €5,379 million. More than 620,000 employees produce an average of 43,000 vehicles per
working day at 120 manufacturing locations on four continents, or are involved in providing mobility-related services.

STRUCTURE

Volkswagen AG is the parent company of the Volkswagen Group. tions 285 and 313 of the Handelsgesetzbuch (HGB – German Com-
It develops vehicles and components for the Group’s brands, but mercial Code), which can be accessed at www.volkswagen.com/en/ir
also produces and sells vehicles, in particular passenger cars and and forms part of the annual financial statements.
light commercial vehicles from the Volkswagen Passenger Cars and
Volkswagen Commercial Vehicles brands. In its function as parent Volkswagen AG is a vertically integrated energy company within
company, Volkswagen AG holds direct or indirect interests in AUDI the meaning of section 3 para. 38 of the Energiewirtschaftsgesetz
AG, SEAT S. A., ŠKODA AUTO a. s., Dr. Ing. h. c. F. Porsche AG, Scania AB, (EnWG – German Energy Industry Act) and is consequently subject
MAN SE, Volkswagen Financial Services AG and a large number of to the provisions of the EnWG. In the electricity sector, Volkswagen
other companies in Germany and abroad. More detailed disclosures AG performs electricity generation, sales and distribution together
are contained in the list of shareholdings in accordance with sec- with a Group subsidiary.

Matthias Müller Dr. rer. soc. Karlheinz Blessing Dr.-Ing. Herbert Diess Dr. rer. pol. h. c. Prof. Dr. rer. pol. Dr.-Ing. E. h.
Chairman of the Board of Human Resources and Chairman of the Brand Board Francisco Javier Garcia Sanz Jochem Heizmann
Management of Volkswagen Organization of Management of Volkswagen Procurement China
Aktiengesellschaft Passenger Cars

Andreas Renschler Prof. Rupert Stadler Hiltrud Dorothea Werner Frank Witter
Commercial Vehicles Chairman of the Board of Integrity and Legal Affairs Finance and Controlling
Management of AUDI AG (since February 1, 2017)

Volkswagen AG’s Board of Management is the body ultimately re-

sponsible for managing the Group. The Supervisory Board appoints,
monitors and advises the Board of Management, and is directly
consulted on decisions of fundamental significance for the Company.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Group

Shareholder Structure Employees by Continent

at December 31, 2016 in % of voting capital in % at December 31, 2016

German institutional Porsche Automobil Africa 1 Germany 45

investors 2.3 Holding SE 30.8
America 9
State of Lower
Saxony 11.8
Asia/Australia 16
Qatar Holding LLC 14.6
Foreign institutional
investors 22.5
Private shareholders/ Rest of Europe 29
Others 18.1

Group Key Figures

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016
Group

PRODUCTS

The Volkswagen Group is one of the leading multibrand groups in the MAN and Scania brands is managed and coordinated under the
the automotive industry. The Company’s business activities comprise umbrella of Volkswagen Truck & Bus GmbH. The commercial vehicles
the Automotive and Financial Services divisions. All brands in the portfolio ranges from pickups to heavy trucks and buses. Power
Auto­motive Division – with the exception of the Volkswagen Passen- Engineering manufactures large-bore diesel engines and special gear
ger Cars and Volkswagen Commercial Vehicles brands – are legally units, among other things. A wide array of financial services, which
inde­pendent separate companies. The business activities of the various will be gradually expanded to include mobility services rounds off
companies in the Volkswagen Group focus on developing, producing the Company’s portfolio. With its brands, the Volkswagen Group has
and selling passenger cars, light commercial vehicles, trucks and buses. a presence in all relevant markets around the world, with Western
The product portfolio of the Passenger Cars Business Area ranges Europe, China, the USA, Brazil, Mexico and Turkey currently represent-
from motorcycles to fuel-efficient small cars and luxury vehicles. In ing its key sales markets.
the Commercial Vehicles Business Area, the collaboration between

LOCATIONS AND EMPLOYEES

The Volkswagen Group’s production network comprised 120 produc­ duction sites. North America (five) has added another site, and in
tion sites at the end of the reporting year. Europe remains the heart South America (nine), the number of sites remained unchanged in
of our production activities, with 71 facilities that manufacture vehi- the reporting period. The Group has four production sites in Africa.
cles and components, 28 of them in Germany alone. The significance
of the Asia-Pacific region continues to grow, with a total of 31 pro­­-

MARKETS

Despite difficult economic conditions in 2016, the Group sold Group purchased goods and services in the amount of €166.5 billion.
10,391,113 (2015: 10,009,605) vehicles to dealers. The Group’s share This includes purchasing figures for the Chinese joint-venture com-
of the global passenger car market currently stands at 11.9%. The panies.
Group maintained its strong competitive position in the reporting
period thank to its wide range of attractive and environmentally Further details on the Group’s development, holdings and changes
friendly models. Worldwide, for the manufacture of its products, the affecting production locations or activities can be found here.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016
Group

THE VOLKSWAGEN VALUE CHAIN

Research & Development

Year for year, the Volkswagen Group invests more in research and development
than any other company in the world, laying the foundations for new models
and innovative concepts with which to master the challenges of the future:
The Volkswagen Group employs
digitization, networking and electric mobility.
48,063 people
in Research & Development

Procurement
Every year, the Volkswagen Group purchases a wide range of raw materials, compo-
nents and other goods. A sustainable supply chain and environmentally compatible
The annual transportation solutions form an indispensable part of demonstrating comprehen-
procurement volume sive responsibility for human rights, as well as a commitment to the environment
and to the battle against corruption.
comes to 166.5 Bn. €

Production
Every working day, the Volkswagen Group manufactures an average of 43,000 vehi-
cles. As we do so, efficient production ranks alongside employee health and safety as
our core goal. New concepts help prepare employees for the future, covering every
step from vocational education and training onwards. 120
production locations
on four continents (2016)

Marketing & Sales

The Volkswagen Group markets its vehicles in 153 countries. Around the world,
comfort and safety are considered the key customer requirements. We continuously
reduce the fuel consumption of our models and offer alternative mobility services.
>10.2 million
vehicles sold worldwide (2016)

After-Sales & Financial Services

Service provision includes supporting dealerships to ensure they can provide quality
advice and maintenance; managing the original parts business; and providing
innovative vehicle-related financial services. Fuel-economy driver training courses
play an effective part in cutting fuel consumption and thus CO2 emissions. 3,412
people attended Driving Experience
eco-driving coursese (2016)

Recycling
Recycling makes a key contribution to reducing our products’ impact on the
environment and conserving resources. It is not just a matter of recycling vehicles
End-of-life vehicles are at the end of their service life – on the contrary, even at the development stage
85% recycled for new vehicles, we pay attention to the recyclability of the required materials,
and the use of high-quality recycled material and the avoidance of pollutants. At
the same time, we factor in aspects of the use phase, such as the treatment and
95% recovered disposal of service fluids or high-wear components.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Our Objective – To Provide Sustainable Mobility

Strategy
Our Objective –
To Provide Sustainable Mobility
As one of the world’s largest industrial corporations, our Group bears a special social responsibility. We intend to put our
creative powers to good use for the benefit of people and the environment. Every year we produce more than 10 million
vehicles. This gives rise to positive effects such as new jobs, regional prosperity and individual opportunities for partici-
pation – but also to negative impacts such as emissions and resource consumption. In view of the growing trend toward
digitalization, we will in the future be faced with new issues – for example, what we do with our customers’ data, how
we ensure that they are secure and protected at all times, and what legal and ethical problems are raised by automated
driving. It is our task to ensure responsible and efficient production, and to make mobility not only as safe, convenient
and environmentally compatible as possible, but at the same time affordable for large numbers of people. After all, indi-
vidual mobility remains a basic human need, and fulfilling this need is the main mission of our Group.

With its future program TOGETHER – Strategy 2025, the Volkswagen Group has launched the biggest change process in
its history, laying the foundations for lasting success in tomorrow’s world of mobility and for its evolution into a globally
leading provider of sustainable mobility.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Letter to our Stakeholder

Letter to our Stakeholder

Dear Readers and Colleagues,

These are not normal times for Volkswagen. You can even sense this such as sustainable mobility, environmental protection and the
in the timing of our reports – our sustainability report for 2015 only future of work. The council has already started its activities and is in
appeared toward the end of November 2016. the process of developing its first projects. We stay in close contact
with council members and look forward to the many ideas they will
But now we are back on schedule, so to speak. We are pleased to generate.
present our report for 2016 in good time for our annual general meet-
ing. However, this does not mean that everything is back to normal “We are undergoing a profound
at o
­ ur Company. There is no question that in terms of corporate
res­ponsibility, dealing with the repercussions of the diesel crisis is still
and challenging – yet at the same
one of our top priorities. Each of the key developments over the past time, extraordinarily exciting –
12 months has been given its own dedicated chapter in this report.
transformation.”
“This makes it all the more essential Over the last year, Volkswagen also substantially extended the
for us to establish a solid framework of ­Company’s voluntary commitment to behave ethically and with
integrity. One outcome of this was the creation of a new position
values, in the form of our renewed on our Board of Management. Hiltrud Werner, an outstanding
commitment to sustainable, responsible expert and former head of Group Internal Audit, has taken on the
challenging role of Board Member for Integrity and Legal Affairs
business practices.” following the departure of Christine Hohmann-Dennhardt.

Corporate responsibility is also about running our business prudently The Volkswagen Group is changing, just as the automotive industry
and successfully. Together with our entire workforce, we can be as a whole is changing. As we see it, developments over the next
proud that in an extremely challenging year, we met and exceeded 10 years will be even more far-reaching than the changes we have
our operational objectives. At the same time, in mid-2016, we intro- seen in the last 100 years. This makes it all the more essential for us
duced our TOGETHER – Strategy 2025 program. This represents our to establish a solid framework of values, in the form of our renewed
vision for the future, guiding our actions, defining specific targets commitment to sustainable, responsible business practices.
and detailing how we should achieve them. We intend to become a
world-leading provider of sustainable mobility. Low-emission drive
technologies; smart mobility services; innovative, safe solutions for “Low-emission drive technologies;
autonomous driving – these are among the ambitious plans we are
working on right now as we look ahead to the future. You will find
smart mobility services; innovative, safe
more details in this report. solutions for autonomous driving –
We are undergoing a profound and challenging – yet at the same
these are among the ambitious plans
time, extraordinarily exciting – transformation. This in turn poses we are working on right now as we look
an important question: how do we want to work together in the fu-
ture? This is one of the issues addressed in our TOGETHER strategy,
ahead to the future.”
in which we launch a transformation of our corporate culture that
may be unique in the history of Volkswagen. This will result in flatter This report is an expression of this commitment. In a spirit of trans-
hierarchies, decentralized decision-making and an open, collabora- parency, accountability and comparability, the statements, figures
tive style of working that explicitly encourages constructive criticism, and data included in this report follow the guidelines of the Global
while simultaneously encouraging all our employees to think and Reporting Initiative (GRI) and the Sustainable Development Goals
act like responsible entrepreneurs. As we pursue this radical trans- (SDGs) of the United Nations. The report also represents our Com-
formation, our managers bear special responsibility – they must lead munication on Progress under the United Nations Global Compact
by example and work closely with their teams to bring about this (UNGC).
sweeping cultural change.
We look forward to receiving your suggestions and feedback,
When we talk about openness, we also mean that we intend to pay
even greater attention to how our stakeholders, as well as outside
experts, view our work. With this aim in mind, we set up our Group
Sustainability Council in late 2016. Nine respected experts from the
worlds of politics, research and NGOs are now advising us on issues M. Müller B. Osterloh

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Our approach

Our approach
For Volkswagen, sustainability means pursuing economic, social The automotive world is undergoing a profound transformation,
and ecological objectives simultaneously and with equal energy. It and automated driving, e-mobility and connected vehicle concepts
is our aim to create lasting values, offer good working conditions, are the dominant trends. Technological changes are influencing
and conserve resources and the environment. When it comes to the customer needs and business models; new competitors are entering
diesel crisis, we have failed to live up to our own standards in several the market from other industries; shorter innovation cycles and the
areas. The irregularities in the handling of emissions tests contra- establishment of new core competencies are requiring ever more
dict e
­ verything that we stand for. We regret this immensely and are capital; stricter emission standards and increased market volatility
aware that we have let our stakeholders down. We will do every- are leading to more complex underlying conditions. All this poses
thing in our power to prevent incidents of this kind from reoccurring, new challenges for us as a vehicle manufacturer.
and are fully committed to re-embracing our standards and winning
back public trust. We continue to apply our sustainability concept Against this backdrop, in June 2016 the Volkswagen Group Board
with the aim of ensuring that opportunities and risks associated of Management launched our TOGETHER – Strategy 2025 program
with our environmental, social and governance activities are identi- for the future, with the full approval of the Supervisory Board. It is
fied as early as possible at every stage of the value creation process. our aim to play a decisive role in shaping the mobility not just of
In keeping with this aim, we are determined that our corporate today, but of tomorrow as well. This is why we are repositioning our
social responsibility activities will have a lasting, positive impact on Company with the vision of becoming one of the world’s leading
the Company’s value and reputation. providers of sustainable mobility. Our future program will make the
Volkswagen Group more focused, efficient, innovative and sustain-
able – bringing us closer to our customers and setting us on a steady
course of profitable growth.

The Volkswagen Group of the Future

EXCITED
CUSTOMERS
MISSION

We offer tailor-made mobility

solutions to our customers
VISION We serve our customers’
diverse needs with a portfolio EXCELLENT
“We are a globally of strong brands EMPLOYER SUSTAINABLE
leading provider of COMPETITIVE
We assume responsibility
GROWTH PROFITABILITY
sustainable mobility” regarding the environment,
safety and social issues

We act with integrity and

build on reliability, quality and
passion as the foundation ROLE MODEL FOR
for our work
ENVIRONMENT, SAFETY
AND INTEGRITY

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Our approach

TOGETHER – STRATEGY 2025

We know that growth can only take place hand in hand with social
responsibility and environmental protection. TOGETHER – Strategy
2025 effectively bridges the conceptual gap between sustainability
and business objectives. It creates the framework and defines the
key building blocks for the future evolution of the Group, with its
strong brands, international production sites and skilled, dedicat-
ed workforce. The Code of Collaboration formulated as part of our
future program is the foundation on which the Group strategy rests.
The Code describes how collaboration is to take place within the
Group and between individuals in their daily work. Its core values
are encapsulated in the terms “open and honest”, “uncomplicated”,
“without prejudice”, “on an equal footing” and “for one another”. e-Golf (100 kW/136 PS). Electrical consumption in kWh/100 km: 12.7 (combined),
The change process is complemented by the corresponding strate- CO2 emissions in g/km: 0 (combined), efficiency class: A+.
gies of the brands and functions.

TRANSFORM
CORE BUSINESS BUILD SECURE FUNDING
MOBILITY SOLUTIONS
BUSINESS
Sharpen positioning of brands Improve operational
excellence
Develop successful vehicle and drivetrain portfolio Establish
mobility solutions Optimize business
Partner with regional players to win in economy segment business portfolio

Streamline modular architectures Develop and expand Integrate strategy and

attractive and profitable planning process
Implement model line organization smart mobility offering

Realign components business

Develop battery technology as new core competency

Develop self-driving system for autonomous vehicles and artificial intelligence

Develop best-in-class user experience across brands and customer touchpoints

STRENGTHEN
Drive digital transformation Create organisation 4.0
INNOVATION POWER

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Our approach

The new Group strategy comprises a raft of far-reaching strategic de- Second key building block: establishing a mobility solutions business
cisions and specific initiatives essentially aimed at safeguarding the
Group’s long-term future and generating profitable growth. A total The second key building block of the new Group strategy is the new
of 16 strategic Group initiatives are assigned to the four key building cross-brand mobility solutions business, in which we are setting up
blocks of the program, which are: comprehensively transforming mobility services. In this context, we have established MOIA, a new
our core automotive business; establishing a new mobility solutions business unit which will focus on ride hailing. Subsequently, we are
business; strengthening the Group’s innovative power; and securely aiming to develop or acquire further attractive and profitable ser-
funding our investments. vices that are tailored to customer requirements, such as robotaxis,
carsharing and on-demand transport for the logistics industry. To
First key building block: transforming our core business achieve this, we will rely to a greater extent than previously on part-
nerships, acquisitions and venture capital investments. Investment
Developing, building and selling vehicles will remain essential for selection will be managed centrally so as to generate maximum
the Volkswagen Group going forward. However, there will be far-­ value for the Group and its brands.
reaching and lasting changes to this business. That is why we are
profoundly restructuring our core business to face this new era of
mobility.

MOIA – Rethinking mobility SEDRIC – Automated driving at the touch of a button

The automotive industry is undergoing rapid change. Along- In the future, fully automated vehicles will enrich the mobility
side the traditional automotive business, innovative, digitally experience of many people. A mobility concept based on
connected mobility services promise a high growth dynamic. intensively used self-driving vehicles will take up less space,
Together with newly founded company MOIA, Volkswagen is consume less energy, and be safer and more sustainable at
laying the foundations for sustained success in tomorrow’s the same time. And the concept offers tailor-made mobility
world of mobility throughout the Group and across all brands. for everyone: adults and children, senior citizens and people
Individual mobility for everyone – this is what MOIA stands with physical disabilities, urban residents who do not have
for. Convenient, at the touch of a button, at affordable prices their own cars or driving licenses, and visitors to a new city
and without having to own your own car. As a first step, the who suddenly decide they want a convenient way to get from
app-based ride-hailing business sector shows the greatest A to B.
potential for MOIA. The Volkswagen Group has already
opened the way for new mobility concepts with its stake in With SEDRIC (self-driving car), the Volkswagen Group has not
Gett, one of the world’s leading ride-hailing providers. Gett only developed a completely new, fully autonomous concept
app users can already instantly book rides, deliveries and car, but also an integrated mobility concept showing how we
logistics services at the touch of a button in more than will use our roads in the future. A cross-brand ideas platform
100 cities worldwide. At the same time, MOIA is also focusing for the Volkswagen Group, SEDRIC, which features an inno-
on a second major business activity, namely the ride-pooling vative control system, is giving entirely new meaning to the
business. The company’s goal is to set up its own app-based concept of automated driving. The touch of a button, a verbal
on-demand ride-pooling services – also known as connected command or a smartphone app is enough to summon the
commuting. It is aiming for holistic transport solutions that self-driving automobile, which comes and takes its passen-
make individual and public transport more efficient by avoid- gers conveniently, reliably and safely to their destination.
ing unnecessary individual journeys and optimizing the use
of existing road infrastructure. This approach concentrates
on transport that takes users beyond the boundaries of a
single city.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Our approach

Third key building block: strengthening innovative power The strategic KPIs of this target dimension include the Group’s
attractiveness as an employer as determined internally by means
Both the transformation of our core business and the new mobil- of the opinion survey and as perceived externally, as well as the
ity solutions business require us to strengthen our traditionally equality index.
excellent ability to innovate and place it on an even broader footing.
To this end, the Volkswagen Group is pushing ahead with the digital Target dimension: role model for the environment,
transformation of all parts of the Company. safety and integrity

Fourth key building block: secure funding Every day, we at the Volkswagen Group assume and exercise re-
sponsibility in relation to the environment, safety and society. This
Becoming one of the world’s leading providers of sustainable sense of responsibility informs all our thoughts and actions in equal
mobility calls for substantial capital expenditure. This expenditure measure in all the decisions we make.
is to be funded primarily through efficiency gains across all brands
and functions; operational excellence is something that concerns We pay particular attention to the use of resources and the emis-
the entire value chain, from product development and sourcing to sions of our product portfolio as well as those of our locations and
production and distribution. Additional funds for future invest- plants, with the goal of continuously reducing our carbon footprint
ments can also be generated by optimizing the existing portfolio and lowering pollutant emissions. Through our innovations and
of brands and equity investments. outstanding quality, we offer our customers maximum product safety.

Goals and key performance indicators of the Group’s strategy We want to regain and strengthen the trust of our customers and
restore the Group’s positive public image. The most important princi-
The strategic initiatives describe how we intend to achieve our vision ples in this process include compliance with laws and regulations,
of becoming a world-leading provider of sustainable mobility. For the establishment of secure processes, and dealing openly with mis-
this purpose, we have defined four target dimensions – excited cus- takes so that they can be avoided or rectified in the future. In terms
tomers, excellent employer, role model for environment, safety and of integrity, Volkswagen aims to become a role model for a modern,
integrity, and competitive profitability – which are designed to help transparent and successful enterprise.
us grow sustainably.
The strategic KPIs of this target dimension include the decarbon-
Target dimension: excited customers ization index and emissions metrics, as well as compliance, process
reliability and an error management culture.
This target dimension focuses on the diverse needs of our customers
and on tailor-made mobility solutions. We aspire to exceed our Target dimension: competitive profitability
customers’ expectations, generating maximum benefit for them.
That calls not only for the best products, the most efficient solutions Investors judge us by whether we are able to meet our obligations
and the best service, but also for flawless quality and an outstand­ing as regards interest payments and debt repayments. As equity holders,
image. We want to excite our existing customers, win over new they expect adequate dividends and a lasting increase in the value
ones and retain their loyalty in the long term – because only loyal of their shares.
and faithful customers will recommend us to others.
We make investments with a view to achieving profitable growth
The strategic KPIs include, for example, the loyalty rate, conquest and strengthening our competitiveness, thus keeping the Volkswagen
rate and breakdowns. Group on a firm footing and ensuring it remains an attractive invest-
ment option.
Target dimension: excellent employer
The goals we have set ourselves are to achieve operational excel-
Skilled and dedicated employees are one of the keys to sustainable lence in all business processes and to become the benchmark for the
success. We wish to promote their satisfaction and motivation by entire industry.
means of equal opportunities, a modern and attractive working
environment, and a forward-looking work organization. An exemplary The strategic KPIs are operationalized for internal management
leadership and corporate culture forms the basis for this, enabling purposes: target and actual data are derived from Volkswagen Group
us to retain our core workforce and attract new talent. figures.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Our approach

Strategic KPIs:
competitive profitability

SUSTAINABLE MOBILITY

Mobility is one of the key conditions for economic growth. The latest as urbanization, urban development and the quality of transport
challenge is to cater to the growing demand for mobility despite infrastructure. We also take account of demand trends, such as the
diminishing resources and, in the process, reduce its negative effects shared use of vehicles.
on the environment. Holistic mobility concepts have to be efficient,
sustainable, customer-oriented and, above all else, designed in It is our goal to provide our customers around the globe with viable,
such a way that they are accessible anytime and anywhere. We at long-term mobility solutions that place equal priority on economic,
Volkswagen are researching and developing groundbreaking mobility social and ecological objectives. To offer such solutions, a company
solutions for our customers that will shape the future in this area. must operate sustainably – which means developing sustainable
We do not limit our focus to automotive mobility, but take in other technologies and creating an environment in which they are applied
modes of transport as well and examine structural issues such in a sustainable manner. This is our understanding of sustainable
mobility.

SUSTAINABLE
COMPANY

Employment
Return on sales
Cultural change
Integrity
Compliance Conflict minerals
Customer wishes Life cycle
Transparency
Recycling Stakeholders
Industry 4.0
Lightweight design Concept vehicles
Shuttle-pooling service
Algorithms
Elektric drives Software Ride hailing
Autonomous driving
Hybrid drives

Natura-gas drives Mobility on demand Robotaxis

SUSTAINABLE SUSTAINABLE
TECHNOLOGY APPLICATIONS

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Our approach

However, the economic, social and environmental requirements At the same time, the shift toward electric mobility and the
placed on our mobility solutions often contain inherently conflicting associated investments in production capacity, like for the man-
goals, as can be seen in some of the examples discussed below: ufacturing of innovative battery technology, also generate new
employment opportunities.
§§ Individual mobility solutions facilitate participation in society and
individual autonomy. In the future, many people will still want §§ But electric mobility also raises new environmental questions,
their own cars – despite the continuously increasing availability such as how to measure the environmental impact of electric and
of innovative mobility concepts such as robotaxis and carsharing. hybrid vehicles compared with conventional vehicles in terms
This applies particularly in the growing consumer markets of emer­ of the use of mineral resources in production and the recycling of
ging and developing countries. However, the desire for individual battery cells at the end of the product lifecycle.
mobility also contributes to increased consumption of natural
resources and accelerates the process of human-made climate §§ Automated vehicles and new mobility services offer more con­
change. venience, boost safety, and encourage further optimization of
transport and traffic systems, especially in urban agglomerations.
§§ The enormous market success of SUVs underscores the attractive- The lines between individual and collective mobility are becoming
ness of Volkswagen products. Fulfilling these existing customer increasingly blurred. The result is a new competitive environment
wishes safeguards the economic success of the Volkswagen Group with completely new players, to which the Volkswagen Group
and provides job security to its employees. But the higher fuel must adapt.
consumption of SUVs compared with other vehicle models makes
it more difficult for the Volkswagen Group to meet the climate Identifying, openly addressing and finding solutions to these issues –
targets it has set. in collaboration with our stakeholders whenever possible, but at
the very least in a spirit of constructive dialog – is essential to the
§§ Government legislation has made ecological structural change Volkswagen Group’s sustainable growth. Whenever we fail to achieve
inevitable. Electrification has the potential to transform mobility a balance between economic, social and environmental objectives,
and makes compliance with carbon emission regulations possible. long-term risks emerge both for our stakeholders and for the financial
However, this profound change presents new challenges for exist- success of the Volkswagen Group.
ing production methods and requires retraining for employees.

MATERIALITY ANALYSIS
AND SUSTAINABILITY MANAGEMENT
GRI G4-18, G4-19, G4-20, G4-25, G4-26, G4-27

Even if the major challenges are known and can be assessed, are made on the basis of a ten-year timeline. Another instrument
the resulting demands on the Volkswagen Group are nevertheless for identifying challenges and expectations and for dealing with
subject to constant change and must be reassessed at regular changing underlying conditions is the stakeholder dialog, which we
intervals, necessitating ongoing adjustments to our strategic plan- cultivate at both Group and market level (see “Stakeholder Manage-
ning. Consequently, within the Volkswagen Group we have several ment”).
specialized functions engaged in observing megatrends in society,
analyzing the overall economic environment, tracking emerging Based on these observations and in light of the widespread societal
customer trends and continuously benchmarking our products and challenges we face, in 2016 we once again reviewed the identified
services against the competition. The results are brought together areas in which the Volkswagen Group can and must make a special
in a process known as the planning round, which ensures that the contribution – because these are fields where we have a significant
important decisions for production, purchasing and sales structures impact or where we are particularly well placed to exert influence,
and where consequently a great deal is also expected of us.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Our approach

Materiality Analysis and Sustainability Management

in the Volkswagen Group

ACTION AREAS STAKEHOLDER ANALYSIS COMMUNICATION

Stability and profitability

INTERNAL EXTERNAL
Sustainability Report
Customer satisfaction
ECONOMY

Brands Financial markets

Quality/vehicle safety
Annual Report
Compliance, risk management, Regions Politics
governance

Supplier relations
Location-specific
Companies NGOs
projects
STRATEGY EVALUATION
Health Specialist Key accounts
functions
Vision Diversity and equal opportunities
Internet
Ratings/rankings
… …
PEOPLE

Training
Mission
Group Connect: GCM Stakeholder Panel
Attractive employer
Community
Objectives
Social responsibility Awards
Sustainability UN Global
Participation Board Compact
Strategy 2025 Guidelines/standards
newsletter
CSR&S CSG CSR Europe
Environmentally friendly
products/electrification
Conferences and
CSR project team econsense
presentations
ENVIRONMENT

Sustainable mobility and

connectivity

Resource conservation Group CSR Biodiversity in …

throughout life cycle Meeting Good Company
e.V.
Climate protection/decarbonization
… …
Environmental protection and
nature conservation

MANAGEMENT: SUSTAINABILITY MANAGEMENT SYSTEM

In 2016, two developments played a role in a detailed analysis of the 3. Since the creation of the Volkswagen Group’s Corporate Strategy
topics of material importance to the Volkswagen Group. Specifically, unit in November 2015, information and ideas are shared more
these were the question of the strategic realignment of the Company closely and intensively between the sustainability and strategy
under our TOGETHER – Strategy 2025, and the question of handling teams. This has included, for example, participation in the Corpo-
the repercussions from the diesel crisis. rate Sustainability Steering Committee and in strategy workshops.

In practice, our approach to the analysis and identification of signifi- 4. To ensure that sustainability is implemented as part of the
cant issues was as follows: corporate strategy, four workshops were held with sustainability
officers from the brands and specialist departments in the first
1. From global challenges, we derived a list of 16 central action areas half of 2016. One important result was a clear focus in the topic
in which we need to provide answers. We did this on the basis of of decarbonization. This led us to revisit the “climate protection/
the following sources: external studies, industry analyses and our decarbonization” action area, which was then included in
brands’ stakeholder surveys, as well as internal guidelines such TOGETHER – Strategy 2025 with an indicator (decarbonization
as the Group-wide TOGETHER – Strategy 2025 and the individual index). In addition, activities bundled under “environment and
strategies of our divisions. nature conservation” were made more visible in that action area.

2. The identification of these action areas was largely based on the 5. Whereas – in light of the diesel issue – at the 2015 Group CSR
findings of three expert workshops held in 2015, addressing topics Meeting (GCM) we held discussions with representatives of the
relating to the economy, the environment and people. One key brands and regions, examining the Group’s sustainability perfor-
objective was to develop targets and indicators for issues deemed mance based on an analysis of our strengths and weaknesses, at
significant. The findings were incorporated into the corporate the 2016 GCM we focused completely on TOGETHER – Strategy
restructuring which followed as part of the TOGETHER – Strategy 2025. This included discussing the significance of the United Na-
2025, enabling a systematic examination of non-financial perfor- tions’ Sustainable Development Goals (SDGs) for the Volkswagen
mance indicators. Group and conducting an assessment. The results were explored

13
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Our approach

in depth by the various sustainability committees and have been bility, all the issues on the Global Reporting Initiative (GRI) list of
integrated into the Group’s comprehensive realignment process. sustainability aspects can and must be regarded as “significant”
for the Volkswagen Group. The specific measures within the action
6. F ollowing these detailed discussions, the overall findings of the areas are still being fleshed out in line with the objectives, values
materiality process led to the realization that in view of the and indicators in our TOGETHER – Strategy 2025.
Group’s size, its potential influence and the associated responsi-

Volkswagen Group’s Key Action Areas

GRI G4-19, G4-20, G4-21
Volkswagen Group´s key action areas
People

Attractiveness as
an employer
Participation Training

Diversity and Corporate

equality responsibility Environmentally
Customer satisfaction friendly products/

Env
my

electrification

iron
no

me
Eco

Stability and

nt
profitability Health Sustainable
mobility and Resource
Quality/ connectivity conservation
Vehicle Safety throughout life cycle
Compliance, risk
management, corporate
governance Environmental
Supplier Climate
protection and nature
relationships protection /
conservation
decarbonization
Leading provider
of sustainable
mobility

This representation of the 16 key action areas, broken down into the for example, whether the health of more than 625,000 employees
three dimensions of Economy, People and Environment, is intended worldwide is more important than, for example, resource conserva-
to illustrate the factors we focus on in order to be a leading global tion throughout the vehicle life cycle – or vice versa. As we under-
provider of sustainable mobility. In view of our broad international stand it, sustainable development means taking equal account of
standing, we have deliberately avoided any prioritization of our economic, environmental and social interests and maintaining an
action areas. On the one hand, the relevance of the individual areas appropriate balance between them.
may vary by region; on the other hand, we do not want to judge,

14
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Sustainable management

Sustainable management

The Volkswagen Group has made a commitment to sustainability-oriented, transparent and responsible management.
The greatest challenge to putting this into practice at all levels and all stages of the value chain is our complexity, with
12 brands, more than 625,000 employees and 120 production sites. In line with the recommendations of the German
Corporate Governance Code, we practice Group-wide sustainability coordination and forward-looking risk manage-
ment, and rely on a clear framework for the future-oriented handling of environmental issues, responsibility toward our
employees and social engagement by our brands and in the various regions. The remuneration of the Group Board of
Management is geared to the Company’s long-term results.

COORDINATION OF SUSTAINABILITY

Sustainability has top priority at the Volkswagen Group. We have

­established a clear structure for coordinating sustainability activities,
including internal and external sustainability committees.

Volkswagen Sustainability Organization

VOLKSWAGEN GROUP (SUSTAINABILITY BOARD)

GROUP SUSTAINABILITY STEERING SUSTAINABILITY

COMMITTEE OFFICE
SUSTAINABILITY
COUNCIL
OTHER GROUP
STEERING
EXTERNAL

COMMITTEES
INTERNAL

BRANDS

Sustainability Board &

Management
Steering Committee

STAKEHOLDER
PANEL

REGIONS national international

Our internal sustainability coordination reflects the inseparability worked on strategic questions of holistic sustainability manage-
of our corporate and sustainability strategies. We firmly believe that ment, encompassing issues of environmental as well as social
a company can only be successful in the long term if its corporate responsibility.
activities remain in balance with the environment and society. This
is why at Volkswagen, sustainability is a management issue. In its The Group Board of Management is regularly informed by the
function as our Sustainability Board, in 2016, the Group Board of Corporate Sustainability Steering Committee on issues related to
Management under the leadership of CEO Matthias Müller regularly sustainability and corporate responsibility. The steering commit-

15
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Sustainable management

tee includes top managers from central Group business areas and These coordination and working structures have also been estab-
representatives of the Group Works Council and the brands. Its tasks lished across the brands and are subject to ongoing development.
include defining strategic sustainability goals and position state-
ments, identifying key action areas, and approving the sustainability With the aim of continuously improving our sustainability concept
report. Indicators are used to monitor the extent to which these and living up to the expectations of our stakeholders, the Volkswagen
sustainability goals are being met. The steering committee meets Group has set up two external committees, the Sustainability
regularly under the leadership of the external affairs and sustain- Council and the Stakeholder Panel, to independently advise the
ability function. Group.

The sustainability office supports the steering committee. Its duties Appointed in 2016, the international Sustainability Council is made
include coordinating all sustainability-related activities within the up of renowned experts from the scientific community, government
Group and the brands. Relevant economic, environmental and social and society. Council members regularly consult with the Board of
issues are integrated into the ongoing development of the Group’s Management, senior managers and employee representatives. The
sustainability strategy. As part of the environmental and socio-­ council’s role is to keep a watchful, critical eye on developments
political regulatory process, we maintain on ongoing dialog with within the Company and in society. The Sustainability Council is
policymakers with the aim of providing information and advice and authorized to proactively propose topics and implement projects
learning from each other. Stakeholder expectations from the brands subject to prior agreement. More detailed information on the coun-
and regions are comprehensively discussed in the sustainability cil’s members and activities can be found here.
office. The office also handles the monitoring and coordination of
sustainability ratings, the results of which increasingly impact on In cooperation with the Institute for Market, Environment and Society
companies’ attractiveness to investors. And finally, it is responsible (imug), we set up a Stakeholder Panel that has kept track of our
for drawing up the sustainability report and coordinating the Sus- sustainability activities, especially those covered in our sustainability
tainability Council and its meetings. reporting, for the past 20 years and provided a critical commentary.
The panel includes some 100 national and international stakeholders
At divisional level, the CSR project team fosters a regular exchange from government, academia and research, the financial markets,
of information on current projects between the various sustainability and civil society. Detailed interviews are conducted and the findings
experts within the Volkswagen Group. In addition, other project applied to sharpen our understanding of the expectations of our ex-
teams work across business areas on topics such as reporting, ternal stakeholders. This helps us ask the necessary critical questions
stakeholder management and sustainability in supplier relations. and systematically optimize our sustainability management and
reporting to make them more effective.

FUNCTIONS AND COMPOSITION OF

THE MANAGEMENT BODIES
Company. The composition of the Supervisory Board complies with
The Board of Management of Volkswagen AG, which is has nine the Gesetz für die gleichberechtigte Teilhabe von Frauen und Män-
members, is the ultimate body responsible for managing the Group. nern an Führungspositionen in der Privatwirtschaft und im öffentli-
Each member is responsible for one or more functions, and some chen Dienst (FührposGleichberG – Act on the Equal Participation
members also have responsibility for a region. The Group Board of of Women and Men in Leadership Positions in the Private and Public
Management is supported in its work by the boards and manage- Sectors), which specifies a statutory quota of at least 30% women
ment teams of the brands and regions, and of the other Group and at least 30% men. Shareholder and employee representatives
companies and affiliated companies. The Supervisory Board, which have resolved that each side shall meet this quota separately.
appoints, monitors and advises the Board of Management, is con-
sulted directly on decisions that are of material significance for the

16
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Sustainable management

GUIDELINES AND PRINCIPLES

Our business practices are in line with the recommendations of the Model of Sustainable Development:
German Corporate Governance Code, and we coordinate sustainability
across the Group. This reflects our conviction that stable, long-term The Model of Sustainable Development, which Volkswagen adopted
business based on ethical criteria is a prerequisite for acting in an in 2002 to mark the UN World Summit in South Africa, build a bridge
environment-friendly way and playing a responsible part in shaping between our traditions and our future while providing a framework
the future of people within the Group and in society at large. for sustainable corporate policy with three key elements:

Voluntary undertakings and principles that apply across the Group §§ a lasting balance between economic, ecological and social
form the basis and backbone of our sustainability management. systems and the aim for a long-term balance of divergent interests,
These include our Model of Sustainable Development, our stake-
holder guidelines and our corporate guidelines. §§ responsibility for our own actions at regional, national and
global level,

§§ transparent communications and fair cooperation.

Stakeholder Guidelines

In addition, we are committed to the United Nations Global Com- include the CEO Water Mandate, which aims to ensure careful use
pact, and since 2002 have remained dedicated to promoting human of water resources. Until the diesel crisis has finally been resolved,
rights, upholding labor standards, protecting the environment and we have agreed that the Volkswagen Group’s membership should be
combatting corruption. In 2013, this commitment was extended to suspended.

17
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Sustainable management

Corporate Guidelines

18
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Strategic STAKEHOLDER MANAGEMENT

Strategic
Stakeholder Management
As an automobile manufacturer encompassing 12 brands and 120 production sites in 153 markets, we are confronted
with a broad spectrum of requirements, expectations and attitudes on a daily basis. The enormous diversity of our
interactions represents an enormous opportunity, because the relationships which our companies maintain with their
stakeholders are invaluable to the work we do together. At the same time, this diversity of interests is also a challenge,
because it can result in conflicting objectives.

VOLKSWAGEN BALANCES STAKEHOLDER DEMANDS

GRI G4-24, G4-25, G4-27

Around the globe, we are confronted with a broad spectrum of Stakeholders are individuals, groups or organizations with a legit-
stakeholder requirements, expectations and attitudes on a daily imate interest in how the Volkswagen Group reaches its corporate
basis. The enormous diversity of our interactions is invaluable to decisions and in the implications of those decisions. Our customers
the work we do. At the same time, this diversity of interests is also and employees form the center of our stakeholder universe. Based
a challenge, because it can result in conflicting objectives. on our regular contacts, we have identified twelve additional stake-
holder groups surrounding this core, which we make no attempt to
prioritize.

19
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Strategic STAKEHOLDER MANAGEMENT

Volkswagen Group Stakeholders

GRI G4-24

BUSINESS POLITICS

Investors and analysts Government agencies & authorities

Business partners Trade unions

1
2 3 Competitors Clubs and associations

NGOs / charitable
organizations

CUSTOMERS

Volkswagen
Group
ACADEMIA MEDIA

Researchers & experts Media organizations

EMPLOYEES

SOCIETY

Religious institutions

Residents & local authorities

Cultural &
educational institutions

Volkswagen Group Stakeholders GRI G4-24

In the 2016 reporting year, our stakeholders took advantage of sur­

veys and dialog events to communicate numerous expectations of
the Volkswagen Group. We have summarized their suggestions and
feedback, as well as our reactions to this input, for you here.

20
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Strategic STAKEHOLDER MANAGEMENT

Stakeholder Suggestions and Volkswagen AG Responses

HOLISTIC APPROACH TO STRATEGIC

STAKEHOLDER MANAGEMENT
GRI G4-26

We have a strategic stakeholder management system in place to §§ Openly addressing differing interests and potential areas
help the Volkswagen Group navigate the large numbers of diverse of conflict
stakeholders and their needs, and ensure they are included in our
business decisions. We will only be successful in the long term if §§ Jointly developing solutions to problems
we familiarize ourselves thoroughly with the interests, needs and
expectations of our stakeholders and deal with them proactively. §§ Transparently making decisions
To successfully facilitate a dialog of equals, our stakeholder manage-
ment system must meet the following criteria: We believe that stakeholder management means fostering relation-
ships with our stakeholders. This requires systematic and strategic
§§ Systematically recording the expectations placed on Volkswagen planning, implementation and monitoring of our activities. To this
end, in the 2016 reporting year we restructured and consolidated
§§ Productively sharing the knowledge of all parties involved our stakeholder management system in line with a holistic approach.

21
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Strategic STAKEHOLDER MANAGEMENT

STRATEGY

Goals and social engagement

requirements derived from
corporate strategy
N
T IO
IZA

es and h

and nt; id n of sts

Sys eview ntific akeh
ug

EV
me uatio ntere
D

eva
gu rinci thro

tem

ALU
AR

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l
s
ND

ati

ATI
ide ple

PLANNING &
n
ng izatio

c m oal a and
STA

O
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MANAGEMENT

of ation older
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on
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gu dard

ito tain-
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rin
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Sta

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We take responsibility,
together with our
stakeholders
Off ugh shop els
thr , wor

-
ipa s, ad mina
eri
sia

y c ory
o

ure
ng vent and

tor vis
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pa rojec -dete
dia s, le oth
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k

log

s a ugh ed co
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ue tures r cha

DOCUMENTATION &
s

op
n

PA
c

rtic
COMMUNICATION p
bo n thr onali
po , sym n-

RT
N

rtu
TIO

IC
tio ituti
o
nd

IPA
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nit o-
LTA

TIO
ies

t
SU

Ins
p

die

N
N
CO

Close, trust-based collaboration through

partnership programs, memberships and
multi-stakeholder initiatives

COOPERATION

22
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Strategic STAKEHOLDER MANAGEMENT

Stakeholder Management at Volkswagen GRI G4-26

§§ Planning and Governance: Our brands and divisions are responsi- as a recent study conducted by terre des hommes that made us
ble for maintaining direct contact with our stakeholders. We bring aware of issues surrounding the production of mica in India, can
these processes together under one roof at Group level, ensuring also lead us to initiate discussions and examine opportunities for
that information is shared between Group, brands and regions, cooperation. GRI G4-25, G4-26
establishing clear guidelines for stakeholder management, and
coordinating the activities of Group sustainability officers (sus- §§ Partnerships: At the Group level, our work with selected stake-
tainability management) Materiality Analysis. GRI G4-18, G4-25, holders takes the form of strategic partnerships. In the reporting
G4-26 year, this included our cooperation with the German Red Cross
(DRK) and Kiron. Since 1998, the Volkswagen Group Works Council
§§ Documentation and Communication: Our Sustainability Report is has been successfully collaborating with terre des hommes, a
our primary medium for documentation. Shift, our sustainability children’s and young people’s charity, in the “One hour for the
magazine, supplements this report with critical self-scrutiny and future” campaign. Our memberships provide an additional format
forward-looking perspectives. We regularly provide additional for cooperation with our stakeholders. A list of our current mem-
information on current projects in press releases and social media. berships can be found here. GRI G4-16, G4-26
For internal communications, we also use our online community
Group Connect, several magazines and a short messaging service. §§ Participation: Stakeholder relations are not a one-way street.
We employ the latter to send out weekly information on current We see our stakeholders as equal partners, and involve them in
topics and issues in two languages. The Group Sustainability our decision-making processes. In addition to the strong culture
Council has its own newsletter. GRI G4-25, G4-26 of co-determination at Volkswagen, which played a role in the
­development of our Social Charter and Charter on Labour Relations,
§§ Standardization: Our stakeholder management is guided by the the activities of our Group Sustainability Council should also be
standards established by many different levels of regulation mentioned here.
(policies). The most important policies include the AccountAbility
1000 Stakeholder Engagement Standard and the latest generation §§ Evaluation: Stakeholder management begins with the question of
of the Global Reporting Initiative (GRI Standard). We also remain stakeholder needs and ends with systematic monitoring of results.
committed to the objectives and principles of sustainable develop- Each year, we collect feedback from our stakeholders through our
ment. GRI G4-25, G4-26 Stakeholder Panel and our comprehensive stakeholder surveys.
The results of our 2016 reputation study, which we used to obtain
§§ Consultation: An overview of our programs and initiatives for a systematic picture of the opinions and expectations of our
dialog and interaction can be found here. In the reporting year, the stakeholders, can be found here. In addition, three dissertation
primary forums for direct, face-to-face discussions were the Audi projects are currently examining suggestions for the further devel-
Stakeholder Forum in Brussels, the Scania Sustainable Transport opment of our stakeholder management approach. An overview
Forum in Paris, and the Stakeholder Panel dialog event held by of these projects can be found here. GRI G4-25, G4-26
Volkswagen AG in Hanover. Information received from NGOs, such

“Revitalize the global partnership for sustainable

development” is one of the United Nation’s goals
for sustainable development.

23
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Corporate Citizenship

Corporate Citizenship

Volkswagen has always believed in the importance of assuming In selecting and implementing projects, we are guided by our Group-
social responsibility for our stakeholders. As an internationally active wide policies, which provide the decision-making framework for all
corporation, we bear a global responsibility that extends beyond our our activities:
factory gates. The Sustainable Development Goals (SDGs) defined
by the United Nations in 2015 will provide an important frame of §§ The projects align with our corporate mission while addressing a
reference for our corporate citizenship going forward. One of the global challenge or a specific local or regional issue.
objectives behind the revision of our corporate citizenship strategy
in 2016 was to identify those SDGs to which the Volkswagen Group §§ They are an expression of the diversity within the Group and the
can contribute most effectively. social environment in which the projects are being carried out.

We consider it important to take a strategic approach to corporate §§ They are developed in close dialog with local stakeholders, who
citizenship, so we select and develop our projects carefully – both are also involved in their implementation.
independently and in collaboration with local partner organizations
and NGOs. Alongside our objective of helping to address global chal- §§ Projects are managed locally under the responsibility of the units
lenges, the needs of local stakeholders play an equally important that operate in that region.
role for us. Local project management allows us to react flexibly to
these needs. To achieve the aim of lasting structural change, we also By turning our attention to both local and international issues,
place great value on continuity and long-term partnerships. we are able to live up to the many and diverse expectations of our
stakeholders. In 2016, the Group and all its brands and regions were
involved in around 200 projects, which included development, edu-
cational and social welfare initiatives

STRATEGIC CORPORATE CITIZENSHIP

The building blocks of our corporate citizenship initiatives are de­cen­ continue to prioritize a balance between large-scale transregional
tralized project management, diversity, and space for local needs. projects that address strategically important issues, and local
Nevertheless, in the future we intend to pursue the networking of projects that take local problems and stakeholder expectations into
projects at Group level more aggressively, which will allow us to account.
scale up successful projects and bundle resources even more effi-
ciently. We also want to obtain a more comprehensive overview of Worldwide Responsibility
the effectiveness of our projects. With this in mind, we are looking
at new ways to quantify our activities. Building on the London Through some 200 projects around the globe, the Volkswagen Group
Benchmark Group’s input-output-impact (IOI) method for measur- is making a contribution to social mobility in the fields of education,
ing the effectiveness of corporate citizenship initiatives, we have diversity and health while at the same time promoting road safety,
analyzed selected projects to find out who they benefit. As part of regional economic development, sports, and the arts. These projects
this process, we have also aggregated our inputs across the Group can take on countless forms in order to meet different local needs
and recorded the different objectives in detail. and challenges. In India, our T5 was repurposed as a mobile health
clinic in very short order; in Uitenhage, South Africa, we are helping
This extensive pool of data gives us a comprehensive overview of the young entrepreneurs to launch start-ups; and in China, we are
backgrounds, objectives and effectiveness of our environmental and running seminars and campaigns to raise awareness of child safety
community projects. Based on this information, we will revise our on roads. An overview of our many, varied projects, together with
corporate citizenship strategy in 2017 and define new areas of focus detailed descriptions of each project, can be found here.
in line with our TOGETHER – Strategy 2025. We will also, however,

24
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Risk Management

Risk Management

Promptly identifying the risks and opportunities associated with and a compliance management system (CMS) within a single man-
our operating activities and taking a forward-looking approach agement strategy. Uniform Group principles are used as the basis for
to managing them is crucial to our Company’s long-term success. managing risks in a consistent manner.
A comprehensive risk management and internal control system
(RMS/ICS) helps the Volkswagen Group deal with risks in a responsible In the reporting year, we continued to develop our RMS/ICS. In
manner. addition to the ad hoc and annual risk assessment, the Board of
Management also receives quarterly risk reports. This additional
The aim of RMS/ICS is to identify potential risks at an early stage so reporting on the current risk situation raises awareness of risks in
that suitable countermeasures can be taken to avert the threat of the Company and encourages an open approach to dealing with
loss to the Company, and so that any risks that might jeopardize its them. We continued to reinforce the internal control system in the
continued existence can be ruled out. area of product compliance in 2016. This includes what are known
as the Golden Rules, which we describe in the chapter on the diesel
The organizational design of the Volkswagen Group’s RMS/ICS issue in the Volkswagen AG 2016 Annual Report, pages 96 and 97.
is based on the internationally recognized COSO framework for
enterprise risk management (COSO: Committee of Sponsoring Assessing the probability and extent of future events and develop­
Organizations of the Treadway Commission). In the reporting year, ments is, by its nature, subject to uncertainty. We are therefore
Volkswagen again pursued a holistic, integrated approach that aware that even the best RMS cannot foresee all potential risks and
combines a risk management system, an internal control system even the best ICS can never completely prevent illicit actions.

“THREE LINES OF DEFENSE” APPROACH

Another key element of the RMS/ICS at Volkswagen is the three lines ICS and coordinates the quarterly risk survey and the annual GRC
of defense model, a basic element required, among others, by the control process. In the GRC control process, the brands, major
European Confederation of Institutes of Internal Auditing (ECIIA). companies and individual functions identify systemic risks and
In line with this model, the Volkswagen Group’s RMS/ICS has three verify the effectiveness of the RMS/ICS. This serves as a basis for
lines of defense that are designed to protect the Company from the updating the overall picture of the potential risk situation and
occurrence of significant risks. assessing the effectiveness of the system. The Group Board of
Management receives a report on significant risks, which are also
§§ The first line of defense is formed by the divisions, companies defined in terms of quantitative and qualitative assessment criteria
and brands. Events that may give rise to risks are identified and and given probability ratings.
assessed locally in the divisions and by the investees. Thanks
to reports during the year via the paths documented above, the §§ The third line of defense is Group Internal Audit, which makes
Board has an overall picture of the current risk situation at all regular checks on the structure and implementation of the RMS as
times. The minimum requirements for the RMS/ICS are laid down part of its independent audit activities
in a single guidance document for the entire Group. This also
includes a process for timely notification of significant risks. A detailed overview of our risk management and internal control
system can be found in the Report on Risks and Opportunities in the
§§ The second line of defense is the Group Governance, Risk & Group Management Report of our 2016 Annual Report.
Compliance (GRC) department, which sets standards for the RMS/

25
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Risk Management

“Three Lines Of Defense” Approach

SUPERVISORY BOARD

BOARD OF MANAGEMENT

FIRST LEVEL SECOND LEVEL THIRD LEVEL

Group GRC

Companies and Group Internal

business units Compliance Audit
Risk Effectiveness
Management
Inventory RMS/ICS process
System

Operational Reports from Audit and Report

Risik Management Coordination RMS/ICS Process on RMS/ICS

SIGNIFICANT RISKS

The diesel issue both causes risks for the Volkswagen Group and has which can result from CO2 and emissions legislation and regulations.
an impact on existing risks. The Volkswagen Group has made suit- Extreme weather situations, storms or floods can lead to failure of
able provisions for risks arising from the diesel issue, in particular information and communication technology, supplier failure result-
for the upcoming service campaigns, recalls and customer-related ing in production stoppages, or general production downtime at one
measures, as well as legal risks, but also for residual value risks. of our more than 100 production locations worldwide.

Risks that could impact on the Volkswagen Group’s bottom line also More information on economic, political, financial and operational
include general environmental risks and climate change risks. These risks can be found in the Report on Risks and Opportunities in the
risks are identified, assessed and managed by the Group’s divisions Group Management Report of our 2016 Annual Report.
and companies within the framework of the RMS. This includes risks

26
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Diesel Crisis. A Status Report

Diesel Crisis.
A Status Report
TO OUR STAKEHOLDERS

Volkswagen does not tolerate any breaches of the law or other wrong­ The trust of our customers, our shareholders, partners, employees
doing. We deeply regret the behavior that gave rise to the diesel cri- and the general public is our most important asset. The Group has
sis. Such misconduct runs contrary to all the values that Volkswagen substantially elevated its commitment to working ethically and with
stands for. We have taken signif¬icant steps to strengthen account- integrity. Volkswagen can and will set an example in the years ahead
ability, extend transparency and prevent something like this from ever as to how a large, global company embodies and takes its social
happening again. responsibility seriously.

Chronicle
11.01.2017
Statements
26.08.2016 of Fact
16.06.2016 US dealers by DOJ 30.01.2017/
03.02.2016 23.11.2016
TOGETHER– compensated 14.03.2017
Trust campaign Publication
22.04.2016 Strategy Volkswagen
2025 of Shift 08.03.2017
Status of sustainability is world’s largest
clarification – Committee of
25.10.2016 magazine automaker
nothing Inquiry finishes
Settlement
04.01.2016 published its work
approved
US lawsuit by C. Breyer

01.01.2016 27.03.2017

08.06.2016 24.10.2016 28.02.2017

KBA approves Group EMIS Committee
29.02.2016 2.5 million Sustainability Final Report2
21.12.2016
Geneva: vehicles Council
ll KBA approvals;
Digitalization, 28.06.2016
27.01.2016 KBA disclaimer
Group Future Steps toward 21.01.2017 10.03.2017
Recall begins on Dec 30, 20161
Center agreement Professor Winterkorn Settlement
in Germany in USA 17.11.2016 comes into
attends Bundestag
Pact for the Committee force
Future of Inquiry

USA/KANADA EU28/RoW COMPANY As at: March 27, 2017

1
Annual Report: In fiscal year 2016, the Kraftfahrt-Bundesamt (KBA – German Federal Motor Transport Authority) issued the of ficial approvals needed
for modification of Volkswagen Group vehicles fitted with four-cylinder EA 189 1.2 l, 1.6 l and 2.0 l diesel engines falling within its remit.
Only the approval of the technical solutions for 14,000 vehicles is still outstanding, which is expected to be granted by April 2017.
2
Department of Justice (DOJ); Emission Measurements in the Automotive Sector (EMIS)

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Strategy Diesel Crisis. A Status Report

IMPACT

Operating result for 2016: Special items recognized in operating §§ Criminal and administrative proceedings worldwide (excluding
profit relating to the diesel issue amounted to €–6.4 billion in fiscal the USA/Canada)
year 2016, mainly due to higher provisions for legal risks.
§§ Product-related lawsuits worldwide (excluding the USA/Canada)
Legal risks: Various legal risks are associated with the diesel issue.
The provisions recognized for this matter and the contingent lia- §§ Lawsuits filed by investors worldwide (excluding the USA/Canada)
bilities disclosed as well as the other latent legal risks are partially
subject to substantial estimation risks given the complexity of the §§ Proceedings in the USA/Canada.
individual factors, the ongoing approval process with the authorities
and the fact that the independent, comprehensive investigations Should these legal risks materialize, this could result in considerable
have not yet been completed. The legal risks include (detailed infor- financial charges. Further risks from the diesel issue can be found in
mation can be found in the chapter on “Litigation”: the Report on Risks and Opportunities.

CLARIFYING THE FACTS 2015 with the responsible public prosecutor’s office in Braunschweig,
which is independently investigating the matter, including allegations
In January 2017, Volkswagen AG agreed with the US government to of fraud. Searches were carried out in Wolfsburg and elsewhere with
resolve federal criminal liability relating to the diesel issue. The Volk- the involvement of special agents from the State Office of Criminal
swagen Group also agreed with the US government to resolve civil Investigation.
penalties and injunctive relief under the Clean Air Act and other civil
claims against the Company relating to the diesel issue. We are cooperating with all the responsible authorities to clarify
these matters completely and transparently.
The coordinated resolutions involve four settlements, including a plea
agreement between Volkswagen AG and the DOJ. The plea agreement Investigations were divided into two parts. The Group Internal Audit
is accompanied by a published Statement of Facts that lays out rele- function, which involved bringing together experts from various
vant facts and has been acknowledged by Volkswagen AG. Group companies to form a task force, focused – as instructed by
the Supervisory Board and Board of Management – on reviewing
As part of its plea agreement, Volkswagen AG has agreed to plead relevant processes, reporting and control systems as well as the
guilty to three felony counts under US law: conspiracy, obstruction accompanying infrastructure. This function paid special attention
of justice and using false statements to import cars into the US. to the processes of software development for the engine control
The plea agreement, which is subject to US federal court approval, unit. The Group Internal Audit function provided its findings to the
provides for payment of a criminal fine of $2.8 billion and the external experts from Jones Day. The internationally renowned law
appointment of an independent monitor for a period of three years. firm was engaged by Volkswagen AG to fully clarify the facts and
The independent monitor will assess and oversee the Company’s responsibilities in a second investigation. Jones Day has received
compliance with the terms of the resolution. This includes oversee- operational support from auditing firm Deloitte.
ing the implementation of measures to further strengthen compli-
ance, reporting and monitoring systems, and an enhanced ethics The special investigation has involved conducting interviews with
program. employees and managers who were identified by Jones as relevant
sources of information on the diesel issue. In addition, Jones Day has
Organizing the Clarification evaluated documents and data (such as emails).

Volkswagen AG commissioned an external investigation by US law Communicating the Results of the Investigation
f¬irm Jones Day. This is an independent and comprehensive investi-
gation into the diesel issue. Jones Day is updating the Company and As already stated in April 2016, the US lawyers mandated by Volk-
the Department of Justice (DOJ) on the current results of its investiga- swagen had strongly advised against publication of interim results
tion on an ongoing basis and assisting Volkswagen AG in its cooper- at that time. They had a number of reasons for making this recom-
ation with the judicial authorities. The course of action in clearing up mendation. Among other things, publication could have impaired
the situation was determined largely by the investigating authorities. the ongoing investigation and had a significant negative impact on
Furthermore, Volkswagen AG filed a criminal complaint in September the cooperation between Volkswagen and the DOJ.

How long will it take until the company is able to leave the diesel crisis behind it?

“I can’t give you an exact time period – but it will take us quite a while. Serious mistakes
were made at Volkswagen. We have already paid dearly for them, and we remain
committed to taking responsibility for our actions. At the same time, we are using the crisis as
a starting point from which to steer Volkswagen in the right direction.”
Hans Dieter Pötsch, Chairman of the Supervisory Board, in an interview..

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Strategy Diesel Crisis. A Status Report

ACTIONS

Monitor

The plea agreement provides for payment of a criminal fine of While the procedural investigations of Group Internal Audit primarily
$2.8 billion and the appointment of an independent monitor for the applied to processes associated with diesel technology in 2015,
next three years. The independent monitor will assess and oversee the findings resulting from the investigations in the reporting period
Volkswagen’s compliance with the terms of the resolution. These were transformed into general guidelines to shore up governance
conditions include measures for further strengthening compliance and compliance. The “Golden Rules” encourage greater attentive-
and the reporting and control systems at Volkswagen, as well as ness and increase acceptance of critical process steps. These rules
implementing an enhanced ethics program. represent minimum requirements in multiple categories, including
the organization, process and tools & systems categories of control
Volkswagen has agreed to this solution and intends to comply with unit software development, emission classification and escalation
the terms of each of the agreements reached. management.

As part of the sought-for consent decree, Volkswagen has agreed to Self-assessments were performed in the Volkswagen Passenger Cars,
report on the steps it will take to further develop the processes that Audi and Porsche brands to ensure structured application of the
will enable the Group to manage the ethical behavior of employees, Golden Rules and thus to optimize the internal control system (ICS)
research and development, quality assurance and compliance with in the areas affected. The results were validated as an integral part
US environmental legislation. of an investigation by the audit departments in the relevant brands
or by Group Internal Audit. By applying this consistent methodology
Optimizing Processes across the brands, the implementation status of the guidelines in the
Golden Rules was established and transparency created regarding
The initiatives implemented in response to the diesel crisis aim to the degree of maturity of the ICS for the relevant processes; also for
further strengthen operational processes as well as reporting and the Board of Management.
control systems, in order to ensure that responsibilities are clearly
and unequivocally regulated at all times. In addition, a more robust In addition, a cross-brand project that ensures similar implementa-
whistleblower system and new, stricter standards for performing tion of the Golden Rules while taking the individual features of the
in-house emission tests have been established. The Group has brands into account was initiated under the responsibility of Group
significantly expanded its voluntary commitment to act ethically Research and Development. As part of this, development depart-
and with integrity, and forged ahead with decentralization within ments within the group reviewed their processes. Representatives
the organization. Brands and regions can now run their business of the brands are working on the optimization of their processes in
operations much more autonomously. These and other initiatives are project groups.
part of a comprehensive transformation of Volkswagen’s corporate
culture into a more entrepreneurial, international organization. Key elements of the process optimization are:

Within the Volkswagen Group, emissions tests are now always §§ Early identification and interpretation of legislation around the
audited by independent third parties. In addition, “real-life” tests of world and alignment of the product portfolio with the legal
emission characteristics under real-world driving conditions are now requirements
carried out internally. In tests of this kind, before a model is given
technical approval, a deliberate search is made for anything that §§ Guidelines for the development of software for drive control units
indicates the possible use of a defeat device. Important: in each case, with documentation of the features of relevance to registration
these tests must be carried out by a different department, which is/
was not responsible for developing the vehicle model to be tested. §§ Introduction of multiple controls for approvals in the product
development process
Volkswagen has not only optimized its technical processes, but also
improved its general compliance organization. §§ Reorganization within development for the purpose of separating
the responsibility for the development of drives from off¬icial
Specific corrective action was proposed by Group Internal Audit for approvals
the weaknesses it identified in 2015.
§§ Formation of new bodies for cross-brand management and clarifi-
As part of a structured follow-up process, implementation of cor- cation of compliance issues
rective actions in 2016 was continuously tracked and reported to
the relevant bodies. A total of 31 measures were de-fined by Group §§ Uniform process standards and work instructions that give those
Internal Audit and the majority of them were implemented by the involved legal certainty in the work process
end of 2016. The plan is to implement the remaining measures by
the middle of 2017. §§ Training programs in which everyone involved in the process is
required to participate

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Strategy Diesel Crisis. A Status Report

§§ Regular reporting to the Group Board of Management in order to ment and the experience of the entire workforce. This is why we
create transparency in relation to the implementation status of have instituted the Sounding Board program as a key initiative in
this process optimization the integrity program. It will ensure close collaboration and dialog
between the integrity management team and the workforce with
Adaptation of the Golden Rules to other vehicle development pro- the help of integrity ambassadors – voluntary support staff from
cesses and other areas of development is being addressed. management and staff circles. Interactive services forming part of
this program round off the communications portfolio.
Integrity Program
3. E
 xecutive program: Management’s function as a role model for
On January 1, 2016, we started to create the organizational frame- integrity along with managers’ special responsibility was clearly
work for a centralized integrity management function by setting up illustrated in a letter signed by all members of the Group Board
the new Board of Management position for Integrity and Legal Af- of Management and in supplementary information circulated to
fairs. This Group function is responsible for planning, preparing and executives and managers. The topic of integrity was also a fixed
implementing programs and projects aimed at raising, clarifying and part of numerous management events.
intensifying a collective awareness of integrity, as well as reinforcing
a shared culture of integrity in the Company. A continuous exchange 4. P
 rocesses & tools: We are continuously examining the possibility
of ideas and discussion of issues relating to integrity are key compo- of incorporating our principles of integrity into the Company’s
nents of the integrity management function. key management elements, for example in the field of human
resources and collaboration with business partners
Volkswagen’s goal is to enhance the culture of integrity in the Com-
pany and create a collective awareness of integrity. To this end, we 5. Monitoring & reporting: Regular monitoring of the integrity
launched an integrity program in 2016 involving all employees that program not only helps us to fine-tune and readjust; it also
is based on six action areas: underlines the relevance of the concept of integrity for employees
and managers. Here, continuous evaluation of feedback from
1. D
 ialog & communication: We provided information at regular the integrity ambassadors and from employees and managers
intervals on the concept of integrity and its importance as well as on issues relating to the adaptation and ref-inement of concepts
on the evolution of the integrity program. In addition, we set up plays just as important a role as the reporting in internal media
an integrity mailbox to create opportunities for direct communica- and publications such as the sustainability report.
tion between the integrity management team and the workforce.
An exchange in the form of a live chat also took place on the 6. Internationalization: Once the pilot phase at the Wolfsburg site
GroupConnect internal social network. has ended, we intend to expand the integrity program to all
brands, companies and regions. Managers of our Governance and
2. Sounding Board program: A shared understanding of what integ- Risk & Compliance functions will act as key intermediaries in this
rity means at Volkswagen can only be developed with the involve- context.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Economy Responsibly along the entire value chain

Economy
Responsibly along the
entire value chain
In the future, technological innovations will allow us to meet the mobility needs of business and society, conserving
resources through significant advances in efficiency and economy.

Management approach

The automotive world is undergoing a period of revolutionary ness of current and future trends is crucially important for the
change, and autonomous driving, e-mobility, connected vehicle con- correct orientation of our research and development activities. Only
cepts and the dynamics of digital transformation are showing the if we are armed with a reliable vision of technical possibilities
new way forward. Technological innovations are exerting huge in- and at the same time, of their limitations, can we position the
fluence on customer expectations and established business models, Group in such a way as to ensure sustainable growth. This is why the
new players are entering the market, shorter innovation cycles are Volkswagen Group’s research institutions scattered throughout the
the norm, and the development of new core competencies requires world’s key automotive markets monitor pioneering developments
steadily increasing capital investment. Combined with ever more directly at the coal face, thereby gaining crucial insights that will help
stringent emissions standards and a highly volatile market, all these safeguard the Group’s future.
factors are creating ever more demanding market conditions. This
presents us, as an automotive manufacturer, with new challenges – In the reporting period, we focused our research activities on
but also with a whole range of new opportunities, including pros- devising new mobility solutions, as well as developing expertise in
pects for lasting growth. Our aim is to operate responsibly along technological innovation that will make us even more competitive.
the entire value chain. Everyone should benefit from this – our Our development activities focused on expanding our product range
customers, our employees, the environment and society as a whole. and enhancing the functionality, quality, safety and environmental
We intend to become one of the world’s leading providers of sus- compatibility of our products.
tainable mobility, creating enduring values, offering good working
conditions, and treating the environment and natural resources Our company’s long-term success also depends on how promptly
with due care. we identify risks and opportunities, and how systematically we com-
ply with laws, regulations, ethical principles and our own voluntary
The early identification of pioneering developments and trends in commitments. Thus prudent risk management, effective internal
the ever more complex fields of social, political, technological, envi- monitoring systems and a stringent compliance organization are of
ronmental and economic activity represents an important basis enormous importance to us. Not only do we set high standards with-
for innovation and thus for the success of our business. This aware­ in the Volkswagen Group, we also insist that all our suppliers along
our entire value chain comply with these standards.

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Economy Responsibly along the entire value chain

MARKET DEVELOPMENTS

In 2016, the pace of global economic growth was slightly slower Our goal is to offer all customers the mobility and innovations they
than in the previous year. By contrast, global demand for vehicles need, strengthening our long-term market position in the process.
was higher. Despite persistently difficult market conditions, the Our policy of adding maximum value at local level is a vital part of
Volkswagen Group delivered more than 10 million vehicles to this approach – and with good reason. Not only does it allow us to
customers. In the reporting period, we launched a large number of reap numerous economic benefits, it also minimizes our risk expo-
attractive new models on the market, some of which were based sure. In each case, we are an important local driver of growth, while
on the Modular Transverse Toolkit (MQB). The current product port- at the same time being in a better position to accommodate our
folio comprises 336 models, covering almost all key segments and customers’ wishes.
body types, ranging from subcompact cars to supercars in the pas-
senger car segment, from pickups to heavy trucks and buses in the
commercial vehicles segment, plus motorcycles. By taking account SECTOR-SPECIFIC ENVIRONMENT
of regional market and customer needs, we have systematically
geared our product portfolio to profitable growth. Sector-specific conditions were significantly influenced by fiscal pol-
icy measures, which made a substantial contribution to the mixed
trends in sales volumes in the various target markets during the 2015
GLOBAL DEMAND FOR PASSENGER CARS HITS financial year. The instruments used for this were tax reductions or
NEW RECORD HIGH increases, incentive programs and sales incentives, as well as import
duties.
In fiscal year 2016, the number of new passenger car registrations
rose to 81.1 million vehicles worldwide, exceeding the previous Non-tariff trade barriers designed to protect various countries’ do-
year’s record by 5.4%. Demand was up in the Asia-Pacific, Western mestic automotive industries made the free movement of vehicles,
Europe, North America and Central Europe regions, while new pas- parts and components more difficult. Protectionist tendencies were
senger car registrations in South America, Eastern Europe and Africa especially evident where markets were on the decline.
failed to match the previous year’s levels.
This is contributing to increased volatility in the global procurement
We expect trends in the various regional passenger car markets to and sales markets. In response to this changing environment, we
vary considerably in 2017. Overall, growth in global demand for new intend to focus more strongly on high-growth segments and regions –
vehicles will probably be slower than in the reporting period. such as the economy segment in China and India. In particular, as
we continue to transform our core business, we will differentiate the
The Volkswagen Group is well positioned to deal with the mixed positioning of our Group brands more precisely and further optimize
development of automotive markets around the world. Our broad, our vehicle and powertrain portfolio as we target the most attractive,
selectively expanded product range features the latest generation fastest growing market segments. We will unveil more SUV models,
of engines as well as a variety of alternative drive technologies, put- integrate digitalization more systematically into our products and pro-
ting us in a good position compared with our competitors. vide important stimuli for the future through our e-mobility offerings.

Key Figures by Market1

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Economy Responsibly along the entire value chain

QUALITY ASSURANCE

The quality of our products and services plays a key role in main- implement and comply with these and other new requirements, as
taining customer satisfaction. Customers are particularly satisfied well as all relevant official regulations, we have developed guidelines,
and remain loyal when their expectations of a product or service are tips and recommendations for our quality management consultants,
met or even exceeded. Throughout the product experience, appeal, and provide support as they apply them in practice.
reliability and service are what determine quality as perceived by
the customer. Our objective is to positively surprise and excite our As a further step, we now apply the multiple internal controls princi-
customers in all areas and thus win them over with our outstanding ple – based on mutual support and cross-checks between divisions –
quality. We continued to aspire to this objective in the reporting peri- even more rigorously, and have developed important additional skills
od. The diesel issue has shown, however, that we must broaden our in, for example, software security. This particularly affects the control
previous understanding of quality. Quality assurance now checks the mechanisms between technical development and quality assurance
compliance of our products even more intensively. before and after the start of production. In product development, we
have introduced the same principle for the approval of power units.
We are also placing greater emphasis on our quality management And at the series production stage, we are now working even harder
system than before, thereby reinforcing the process-driven approach to carry out conformity checks on our products with the participation
across all our business activities Group-wide. Quality management of all business units involved, performing assessments and making
in the Volkswagen Group is based on the ISO 9001 standard: we decisions on this basis. This applies particularly to exhaust emissions
must comply with the provisions of this standard to obtain type ap- and fuel consumption.
proval for producing and selling our vehicles. Following the revision
of the standard in 2015, we applied the new requirements to all By taking these and other measures, quality assurance is ensuring
the Group’s locations and brands during the reporting period. One that we not only satisfy all legal requirements imposed on us as a
key change in the standard concerns the assessment of risks in the manufacturer, but that our products do so as well.
event of non-compliance with defined processes. To ensure that we

THE MODULAR STRATEGY

Our modular platforms and toolkits allow us enormous flexibility All Group brands are surging ahead with the development of electric
in the design of our production facilities. The Modular Transverse traction. We have expanded our expertise in this area by bringing
Toolkit (MQB) and Modular Production Toolkit (MPB) enable us to cut additional technical specialists and experts on board. Based on the
development costs, manufacturing times and any necessary one-off experience we have gained with existing vehicle architectures, we
expenses, and can also be used over several vehicle generations. The designed the Modular Electrification Toolkit (MEB) for the compact
toolkits also allow us to use the same production systems in the segment. This can be deployed across multiple brands for passenger
same plant to manufacture different models from different brands cars and light commercial vehicles alike. The MEB means we can
in varying quantities. This means that we can use our capacities now develop very exciting vehicles and supports ranges of 300 to
more flexibly throughout the entire Group, enabling us to achieve 600 km (190 to 375 miles) in all-electric mode. It also makes it pos-
efficiency gains. sible to factor in vehicle-specific requirements and achieve savings
by bundling volume purchases. Thanks to the Volkswagen Group’s
In addition to conventional petrol (gasoline) and diesel engines, the modular toolkit strategy, modules can be deployed across different
MQB also gives us the opportunity to integrate alternative power- model series and brands, thus achieving substantial synergies. This
trains, such as natural-gas, hybrid or electric drives. Previously, we applies in particular to models that share the same platform. We
had to make individual, vehicle-specific adjustments to each model. have integrated the production of electrified vehicles into the manu-
The MQB has created an extremely flexible vehicle architecture that facturing processes at our existing plants, for example in Wolfsburg,
permits the specific dimensions stipulated by the design concept – Emden, Bratislava, Ingolstadt and Leipzig. The electric motors are
such as wheelbase, track width, wheel size and seat position – to be manufactured at our plant in Kassel.
harmonized throughout the Group and then applied in flexible ways.
Other dimensions, such as the distance between the pedals and In 2016, we presented our visionary I.D. concept vehicle. With a
front wheel hubs, are always the same. This ensures that the front range of up to 600 km (375 miles), the zero-emission vehicle is
of the car always conforms to the same system, making it easier scheduled for market launch in 2020, and represents the vanguard
to exploit synergies. The MQB platform used across the Group was of an entirely new fleet of highly innovative electric vehicles based on
installed in the eight millionth vehicle in late 2016. the MEB platform.

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Economy Product Responsibility

Product Responsibility
By taking full responsibility for our products, we aim to keep our customers as safe as possible on the road by offering
a comprehensive range of road-safety solutions and a broad spectrum of efficient, affordable and practical powertrain
technologies. The Volkswagen Group takes responsibility for the products supplied by all its brands. This responsibility
extends to passive and active safety systems, conservation of resources, and climate and environmental protection.
In particular, we are prioritizing the electrification of our vehicle fleet. One objective of our future program TOGETHER –
Strategy 2025 is to significantly increase the proportion of our total sales accounted for by all-electric cars over the next
few years. This will help us to further reduce carbon emissions and air pollution

809,000 CARS FROM WOLFSBURG

In 2016, the Volkswagen plant in Wolfsburg produced

around 809,000 vehicles. The plant’s daily production
capacity now exceeds 3,800 vehicles.

INVESTMENT AND INNOVATION

In 2016, the Volkswagen Group further extended its innovation business area, which will also be a core element of our TOGETHER
and technology leadership by investing in new models, environ- strategy. We want to redefine the whole concept of mobility, work-
mentally compatible drive technologies and optimized production ing closely with selected partners to accomplish this. The first step
processes. At the same time, we aim to step up the efficiency of in this direction is our investment in Gett, a ride-hailing service. Gett
our cross-brand innovation management, as well as the network- is already operating in more than 100 cities, including major cities
ing of our brands’ development processes. By creating overarching such as New York, Moscow and London. One out of three taxis in the
technology networks we avoid parallel developments and facilitate British capital is already using the service to find new customers.
efficient technology transfer, while simultaneously reducing our
development costs. At present, 46,000 highly qualified employees In December 2016, we also set up MOIA, a company dedicated to
are working on these projects in research and development facilities new mobility solutions with a particular focus on ride hailing – the
around the world. The philosophy behind the Volkswagen Group’s instant provision of mobility services. Subsequently, we intend to
entire research and development effort is “Innovation for All”. The re- develop or acquire further attractive and prof-itable services tailored
sult will be new models with even more efficient powertrains. These to customer requirements, such as robot taxis, carsharing, and
include electric cars powered entirely by battery, as well as plug-in on-demand transport services for the logistics industry. To achieve
hybrids. Our core business as a whole is steadily shifting toward this, we will rely – to a greater extent than hitherto – on partner-
electric propulsion as we pursue our electrification initiative, which ships, acquisitions and venture capital investments. The selection
is second to none in the industry. And we are making the necessary of suitable investments will be managed centrally, with the aim of
investments in research into and development of various types of generating maximum value for the Group and its brands.
electric drive, suitable energy storage solutions, and series produc-
tion of the relevant modules. Audi has reaffirmed its progress in the field of autonomous driving –
the Audi A7 piloted driving concept car, a research vehicle, is capable
We see mobility as a holistic concept and bundle our mobility-­ not only of carrying out all freeway driving maneuvers on its own,
related activities under the heading of “Smart Mobility”. Higher but also and more importantly, of respecting other road users while
efficiency, better connectivity and greater flexibility in turn create doing so. “Piloted driving” is made possible by the zFAS driver assis-
safer, more comfortable and more environmentally compatible tance control unit, a central control system that uses state-of-the-
mobility solutions, making an important contribution to the imple- art, high-performance processors to evaluate signals from all sensors
mentation of the United Nations’ Sustainable Development Goals in real time, continuously generating a model of the surrounding
(SDGs). Examples of this approach include the development of driver environment. Long-range radar sensors, lane-keeping assistants and
assistance systems, autonomous (“piloted”) driving and our IT labs. laser scanners – not to mention a high-resolution, wide-angle 3D
To ensure that our approach to mobility remains consistently holistic, video camera – enable the concept car to change lanes, overtake,
we are pooling all these activities in our new Mobility Solutions accelerate and brake on its own, without human intervention.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Economy Product Responsibility

The g-tron model range also continues to grow; in addition to the Data:Lab in Munich is our center of expertise specializing in big
Audi A3 Sportback g-tron, Audi will soon bring two more CNG data, advanced analytics and machine learning. The Data:Lab team
models to market. The spring of 2017 saw the launch of the Audi A4 consists of data scientists, project managers and technology wizards
Avant g-tron and the Audi A5 Sportback g-tron. Compared to a who are supported by experts from leading big data firms, research
petrol-­engined car in the same performance class, Audi g-tron mod- institutions and startup companies. Successful projects developed
els produce 80% fewer CO2 emissions. They achieve this reduction by Data:Lab include forecasts of customer wishes and predictions of
by running on Audi e-gas, a green fuel. customer loyalty, as well as a long-term, all-time forecast for spare
parts scheduling at our central depot in Kassel.
Volkswagen Group’s IT labs are responding to the digitalization trend.
They are islands of innovation, where new IT solutions are developed We are also opening Digital:Lab in Berlin. Projects under develop-
in close collaboration with Group specialist departments, external ment here include a digital mobility platform and systems for pro-
research institutions and technology partners. The labs act as test cessing traffic-related information generated by vehicles. In addition,
laboratories for the Group as a whole, advise on questions about we are expanding our Smart.Production:Lab in Wolfsburg, which
future IT developments, and act as an interface with business startups. specializes in Industry 4.0 solutions with a particular focus on the
use of IT in production and logistics.

A WATCHFUL EYE

The new Passat features an optional head-up display (HuD) intended to improve
road safety. Trip data and alerts are projected onto a screen that slides out in the
driver’s field of vision. Drivers can thus keep their eyes on the road ahead while
simultaneously taking note of on-screen information that is seemingly displayed
two meters in front of the vehicle. Because alerts appear directly in the driver’s line
of sight, reaction times are reduced. And drivers’ eyes do not have to refocus so
often from far-field to near-field vision.

SAFE VEHICLES AND ROAD SAFETY

All our activities are geared to Vision Zero, which is to say zero In best-case scenarios, the powerful, active systems produced by our
fatalities or severe injuries in and due to vehicles manufactured by specialists help to avoid accidents from the outset. These include
the Volkswagen Group. This has been and continues to be the key emergency braking systems (such as Front Assist) and lane-keeping
objective for our work in this area. We take a holistic view of vehicle systems (such as Lane Assist). Where the collision itself is unavoid-
safety, from avoiding accidents completely to reducing or avoiding able, a raft of passive systems avoids or mitigates the consequences
their consequences. The Group’s accident research departments play of the accident for vehicle occupants. In particular, the coordinated
a pivotal role in this work, reconstructing and evaluating accidents interaction of the vehicle structure with the occupant retention sys-
in order to obtain information that will help boost future vehicle tem plays a central role. Our integral safety concept seamlessly com-
safety – findings that feed directly into our vehicle development bines passive and active systems. For example, following a collision
activities, leading to new, user-oriented innovations. involving one of our new vehicles, a multi-collision brake is activated
to bring the stricken vehicle to a halt and avoid secondary collisions,
or at least reduce the energy released by the collision.

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Economy Product Responsibility

AIMS AND MEASURES TO IMPROVE SAFETY

The ultimate aim of our Vision Zero is: zero fatalities or severe injuries in and due
to vehicles manufactured by the Volkswagen Group. To progress toward this vision,
we have set ourselves the following goals:

§§ avoidable accidents should not happen,

§§ unavoidable accidents will be actively mitigated,

§§ the severity of accidents will be minimized.

To achieve these goals, the Group’s accident researchers collect data from real
traffic accidents. Their investigations include:

§§ technical analyses of the vehicles involved to establish the technical

severity of the accident,

§§ medical analyses of injuries suffered by people involved in the accident,

§§ psychological analyses of the circumstances surrounding the accident.

The findings of these analyses are used to develop measures to protect people
inside and outside the vehicle. These include the development of body shell
concepts, occupant retention systems and new driving assistance systems capable
of avoiding accidents or mitigating their consequences.

The Volkswagen Group is an active member of the German Road

Safety Council (DVR), contributing expertise and experience with
the aim of making mobility safer. We also take part in conferences
on vehicle safety around the world.

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Economy Product Responsibility

EURO NCAP AND IIHS

Euro NCAP (European New Car Assessment Programme) and IIHS (Insurance Insti-
tute for Highway Safety) regularly test models built by the Volkswagen Group. The
following models were put through their paces in 2016:

§§ 5-star rating for Touran – Euro NCAP

§§ 4-star rating for Caddy – Euro NCAP

§§ 5-star rating for Vento – Latin NCAP

§§ Top Safety Pick for Passat – IIHS

§§ Top Safety Pick for Audi Q3 – IIHS

§§ 5-star rating for Audi Q7 – Euro NCAP

§§ 5-star rating for Audi A4 – Euro NCAP

§§ Top Safety Pick plus for Audi Q7 – IIHS

§§ 4-star rating for Audi TT – Euro NCAP

§§ 5-star rating for Škoda Superb – Euro NCAP

PRODUCT SAFETY

Our customers attach the utmost importance to product safety. So stage, production, we bring the collective experience of our global,
we take a meticulous approach to quality assurance along the entire cross-location network of product safety officers to bear. In their
value chain, from purchasing right through to sales. work, they rely on lessons-learned processes to ensure that our prod-
ucts stay safe. Because the approach followed by our product safety
Right at the start, when a vehicle is first being developed, we use officers has proved its worth, we are now gradually implementing
standardized processes to exclude potential use risks. At the next it among our suppliers, hence along our entire supply chain.

ODORS AND EMISSIONS FROM VEHICLE INTERIORS

The German automotive industry has been concerned about air quality inside
vehicle interiors since the mid-1980s. From the beginning, Volkswagen has played
a significant role in development work in this field. For good reason: odors and
emissions from plastic components inside the vehicle can cause people to feel
unwell, and in extreme cases may even be harmful to health. To avoid these issues,
we check the properties of the materials and components we use very carefully.
Our internal Group standard VW 50180 sets down our requirements for material
characteristics. Compliance with these requirements is partially verified while com-
ponents are still being designed and developed. And suppliers must demonstrate
that they are complying with these requirements by the sample prototype inspec-
tion stage at the very latest. In the case of around 20% of the components used in
Group vehicles, suppliers’ compliance data is further verified in our laboratories.
In addition to checking materials and components, we also evaluate odors and
emissions in the passenger compartment when we start the manufacturing stage
of new concept vehicles and production vehicles.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Economy Product Responsibility

We have established quality specifications for the components and components’ resistance to aggressive fuels and oils. They do this by
operating fluids we use, focusing not only on their functional prop- storing the components to be tested – ranging from individual seals
erties but also on the durability of the materials from which they or gaskets through to complete fuel-delivery modules – in containers
are made. These specifications provide the framework within which filled with the appropriate test fluid.
Volkswagen’s materials specialists, for example, define and verify

INFORMATION AND LABELING

Volkswagen Group companies are obliged by law to provide users of their products
with appropriate information about the risks that may arise from their intended
use or foreseeable misuse. Group companies fulfil this obligation by providing
instruction manuals and in specific instances, placing warning stickers inside the
vehicle. Furthermore, since December 1, 2011, all passenger vehicles manufactured
in Germany must carry a weight-based efficiency label similar to the energy con-
sumption labels used for household appliances. Efficiency ratings range from A+
(highly efficient) to G (inefficient). The label also informs users of fuel consumption,
annual fuel costs, CO2 emissions and annual tax charges under Germany’s CO2-
based vehicle tax. In the case of electric vehicles, the label provides information on
energy consumption. All our brands provide details of their models’ fuel consump-
tion and CO2 emissions on their websites. Information on consumption figures and
emissions for all of the models mentioned in this report can be found in this table.
The Volkswagen and Audi brands also publish Environmental Commendations
describing improvements in the environmental performance of new vehicles and
technologies over their predecessors or reference models.

CUSTOMER SATISFACTION

Volkswagen knows that customer satisfaction is one of the most The “Group KPI” platform is one important instrument supporting
important factors contributing to the lasting success of the Compa- the targeted management of value-creating measures for each of
ny. Customer satisfaction is benchmarked across all our brands using our brands. It provides access to key indicators such as unit sales
standardized performance indicators: brand image, desirability, growth and customer loyalty, while also allowing the brands to set
future purchase consideration, product quality and brand communi- up their own indicators for tracking customer satisfaction.
cation awareness.

Brand Value Management at Volkswagen Group

Group covers KPI’s in five dimensions, going beyond basic brand image monitoring

SALES GROWTH ... to ensure direct contribution of marketing efforts to sales success

CUSTOMER LOYALTY … to improve customer losses to Group external brands

BRAND STRENGTH ... to ensure superior image and shape differentiation of Group brands

BUDGET EFFICIENCY ... to increase efficiency of >2,0 bn € Group marketing spendings

BRAND PROGRESS ... to measure and ensure brand progress according to long-term strategy

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Economy Local Value Added

In terms of customer satisfaction with their products, Audi and customer loyalty in its core European markets for several years in
Porsche are leaders in the core European markets when compared a row. However, the emissions issue had a negative impact on brand
with other Group brands and with their competitors. The other image, brand trust, and customer satisfaction with products com-
brands in the Group also score higher than competing brands. pared with 2015. The loyalty of Audi, Porsche and ŠKODA customers
In terms of customer satisfaction with dealers, all Group brands has kept these brands in the upper rankings in comparison with
achieve figures at or above the level of the competition. The competitors for a number of years.
­Volkswagen Passenger Cars brand has maintained a high level of

BEST HIGH-VOLUME MANUFACTURER IN GERMANY

The Volkswagen Passenger Cars brand was ranked the number-one high-volume
manufacturer in the 2015 “Automobilwoche Triple-A Award”. In this test-purchase
study conducted by the trade journal, Volkswagen earned top marks for criteria
such as sales pitch/needs analysis, follow-up contact, and price/negotiations. This
is the second time in three years that the award has been presented to Volkswagen
Passenger Cars.

We use market research studies to involve our customers in the

product development process as well. The studies help boost
customer satisfaction in the long term by providing us with
the customer perspective on our products and highlighting the
improvements they would like to see. We also ask for customer
feedback when evaluating prototypes prior to market launch.

Local Value Added

Local production in our most important sales markets is a core education, the sciences, health and sports, as well as structural
element of our sustainable growth strategy. The benefits are clear: development and nature conservation in the regions (CSR projects
Lower logistics costs, procurement prices in line with local market worldwide).
conditions, elimination of import duties and immunity from volatile
exchange rates all contribute to the competitiveness of our brands And through our payment of taxes and duties, we help ensure that
in these markets. And people in the regions benefit as well, because state and municipal investments in infrastructure and public welfare
we create skilled jobs and contribute to the development of local are possible in many parts of the world.
economies by attracting supplier businesses to the areas around our
production locations. In Pune, India, for example, 69 new supplier
businesses have been founded since our plant was set up, creating TAXES AND SUBSIDIES
around 13,500 direct and indirect jobs. And thanks to the long-term
presence of partners at the Kaluga site, the plant there can now We pay taxes wherever we add value. Worldwide, we paid around
draw on more than 60 local suppliers for the models produced. €3.3 billion in income taxes; by far the largest proportion of this
was paid in Germany. In the 2016 fiscal year, the Volkswagen Group
Creating jobs in our plants and with our suppliers and strengthening received €435 million in performance-related public subsidies. Fur-
regional economies is a key part of our growth strategy. But we don’t thermore, government grants of €218 million were deducted from
stop there. As a major player in regional economies and with the aim the costs of property, plant and equipment, and another €12 million
of actively promoting the United Nations’ Sustainable Development in noncash benefits received were not capitalized as asset costs.
Goals (SDGs), we support local projects related to the arts, culture,

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Economy Supplier Management

Supplier Management
As globalization continues to advance and value creation increasing- materials of the requisite quality and in the required quantities –
ly shifts toward our various sales markets, the Volkswagen Group’s on a sustainable basis and at competitive prices. In the reporting
sustainability efforts do not stop at our factory gates. At 39 locations year, our procurement volume totaled €166.5 billion. These figures
in 23 countries, the Volkswagen Group’s procurement network include the data from our Chinese joint ventures.
ensures that our production facilities are supplied with production

Group Procurement Volume

In %

Asia-Pacific 29%

South America 2%

North America 5%

Europe/other markets 65%

We share the responsibility associated with the globalization of our Diligence Guidance for Responsible Supply Chains of Minerals from
procurement processes with our suppliers and their subcontractors Conflict-­Affected and High-Risk Areas into our supplier management
– responsibility for a successful future, for a fair and just society, approach.
and for the environment. Only by working closely with our business
partners can we succeed in ensuring compliance with sustainabil- In this context, in 2016 we expanded our Code of Conduct for Busi-
ity standards and thereby make a contribution toward achieving ness Partners to include a passage on our duty to promote respon­
the United Nations’ Sustainable Development Goals (SDGs). With sible supply chains for minerals from countries affected by conflict
these objectives in mind, we rolled out our “Sustainability in or classified as high-risk. We also made corresponding revisions to
Supplier Relations” concept in 2006 and continue to develop it on the Volkswagen Guideline on Raw Materials from Conflict Regions.
an ongoing basis. And in 2016, we began integrating the OECD Due

40
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Economy Supplier Management

SUSTAINABILITY IN SUPPLIER RELATIONS

The Sustainability in Supplier Relations concept is based on the Not only do we include sustainability requirements in our supplier
“Volkswagen Group requirements regarding sustainability in its contracts, we also expect our suppliers to acknowledge these sus-
relationships with business partners (Code of Conduct for Business tainability requirements before submitting a quotation. This explicit
Partners).” (new English link). The latter formulate the Volkswagen acknowledgement must be updated every 12 months. These require-
Group’s expectations for our business partners’ conduct with ments have been integrated into our contracts with all suppliers to
respect to key environmental, social and compliance standards. By General Procurement since November 2013, and into our contracts
including contractual integration of sustainability requirements with all suppliers of production materials since January 2014. They
into the procurement process, we aim to ensure compliance with apply to all outsourced goods and services worldwide.
our sustainability standards along the entire supply chain world-
wide. These requirements are based on the principles of the UN Our Sustainability in Supplier Relations concept rests on three
Global Compact, the International Chamber of Commerce’s Business pillars: requirements, monitoring and development. We apply these
Charter for Sustainable Development and the relevant conventions three benchmarks to the ongoing assessment and improvement of
of the Inter­national Labour Organization. They are supplemented our suppliers’ sustainability performance.
by Volkswagen’s Environmental Policy, the environmental targets
and regulations derived from it, the Group’s Quality Policy and the
Volkswagen Declaration on Social Rights.

REQUIREMENTS MONITORING DEVELOPMENT

Environmental protection Sustainability questionnaire E-learning for suppliers and

Employees’ rights “Sustainability in Supplier Relations” purchasing staff
Transparent business relationships flag Face-to-face training courses
Fair behavior in the marketplace Sustainability audits OEM workgroups
Continuous dialog with suppliers Dialog with external stakeholders

Requirements are contractually Verification of understanding and Ongoing development of Sustain-

mandated implementation of requirements ability in Supplier Relations concept
Avoidance of conflict minerals

SUPPLIER REQUIREMENTS

Among other data, the Volkswagen Group uses a country risk In addition, the procurement risk management system constantly
analysis to obtain a clearer picture of social, environmental and monitors and analyzes the financial stability of our suppliers. A suite
­human-rights risks in regions where potential suppliers operate of different processes is applied to help eliminate supply risks due
before entering into negotiations with them. This takes both third-­ to supplier failure, but also to minimize the financial impact of crises
party information and in-house empirical data into account. and insolvencies in the supply chain.

To identify current developments as well as long-term structural Among other activities, our early-warning systems also screen, for
challenges in each country, we rely on the ongoing dialog between example, press and Internet coverage of relevant sustainability
our brands and the regions during the regular meetings and video issues. Relevant information is passed on to the appropriate Procure-
conferences held by the Sustainability Procurement Network. This ment centers to support internal processes and decision-making.
network supports the continuous exchange of information between
20+ experts in our Group procurement organizations around the The Volkswagen Group expects its suppliers to avoid the use of any
world. materials made from the smelted ores of conflict minerals. Minerals
are considered conflict minerals if non-governmental armed groups
The Volkswagen Group also subjects all potential new business part- are supported directly or indirectly through their extraction, trans-
ners and suppliers to an integrity check (Business Partner Check). portation, trade, handling, processing or export.
By examining the social integrity of potential business partners, we
aim to reduce the risk of forming relationships that could adversely Information regarding the facilities used by suppliers or their subcon-
affect the Group and its business. tractors for the smelting or refining of minerals such as tin, tanta-

41
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Economy Supplier Management

lum, tungsten or gold must be disclosed to the Volkswagen Group For this purpose, Volkswagen recommends using the standardized
upon request. conflict minerals reporting template made available by the con-
flict-free sourcing initiative (cfsi). Based on the cfsi data, Volkswagen
We call on our suppliers to practice due diligence along the supply will inform suppliers who have business relationships with non-­
chain. This includes the implementation of measures to ensure that compliant smelters and/or refiners about alternative options for
the minerals used by the suppliers – in particular tantalum, tin, working with conflict-free smelters and/or refiners.
tungsten and gold – do not directly or indirectly promote or support
armed conflicts.

SUPPLIER MONITORING

In the course of the business process, our business partners are §§ employee rights
required to complete our sustainability questionnaire and to
document their activities relating to selected areas of responsibility. §§ transparent business relationships
The questionnaire covers the following areas of relevance to
Volkswagen AG: By the end of the reporting year, 21,067 of our suppliers had sub-
mitted responses to our questionnaire. This covers 88% of our total
§§ cooperation and collaboration (also with subcontractors) procurement volume.

§§ environmental responsibility

Status of Sustainability Questionnaire

We are transferring our sustainability questionnaire over to the We also expect our suppliers to take active responsibility for them-
self-assessment questionnaire developed for use throughout the in- selves. In the field of environmental protection, we require our main
dustry in a joint project with other automotive corporations involved suppliers to put in place a certified environmental management
in the European Automotive Working Group on Supply Chain Sus- system in accordance with ISO 14001 and/or EMAS; to date, 87% of
tainability organized by CSR Europe. We use the responses to these our suppliers have documented such a system. As part of the EMAS
self-assessments to help identify measures to improve performance, and ISO 14001 environmental certification and auditing procedures
and then communicate the latter to our suppliers. This means we are at Volkswagen AG sites, the contractors and suppliers who work on
able to give our suppliers specific, needs-based recommendations the site premises and have an environmental impact are also subject
for improving their sustainability performance. to regular audits. In addition, we expect our suppliers to have a
certified occupational health and safety management system that
Alongside the well-established Volkswagen survey, in the reporting complies with OHSAS 18001, SA8000 and/or AA1000.
year 1,336 of our suppliers filled out this multi-OEM industry
questionnaire, which also includes questions addressing the issue
of conflict minerals.

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Economy Supplier Management

Procurement Volume-based Proportion of

Environmental and Social Certification of Main Suppliers

Selected business partners identified by the self-assessments or tation. In the event of serious compliance violations by a supplier,
internal analysis system as being at increased risk of non-compli- we open an “ad-hoc case”. In 2016, an independent external services
ance with sustainability requirements are subjected to third-party provider carried out a total of 45 audits, resulting in 19 ad-hoc cases.
sustainability audits, which cover all aspects of our sustainability This demonstrates the effectiveness of this instrument and helps us
requirements and include interviews with employees of the selected to take action in more targeted, efficient ways.
suppliers.

Should the audit uncover non-compliance or areas requiring

improvement, we work with the supplier to develop a program of
measures for improving the situation and assist with its implemen-

Audits and Ad-hoc Cases by Continent

Africa 3 3 64

Asia 20 11 73

Europe 14 1 90

North America 11 90

South America 7 3 93

Audits Ad-hoc cases

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Economy Supplier Management

If there is reason to suspect that tier 1 suppliers or their subcon- Where there is an ad-hoc case or suspected case of non-compli-
tractors are failing to comply with our sustainability requirements, ance, the implementation of a series of remedial measures is
we ask the party concerned for a written statement using a stan- coordinated by the ad-hoc expert team from the relevant brand
dardized report (6D Report). Based on the six points we specify in or region, in turn coordinated and supported by the Group’s team
the report, our business partners can describe the status quo and of ad-hoc experts in Wolfsburg.
any remedial measures. If the answers prove unsatisfactory, we take
further appropriate steps, such as the examination of documents,
visits to the supplier’s premises or other customized supplier devel-
opment activities.

AD-HOC EXPERT TEAM: EXAMPLES OF AD-HOC CASES:

Every brand and every region has set up an ad-hoc expert In 2016, we worked with selected suppliers to address
team. Team members include experts from specialized challenges involved in complying with sustainability
fields such as occupational safety, occupational health, requirements in their management of subcontractors. Due
environment and personnel. This approach helps us to cover to the complexity of the supply chains involved, we are
all issues which could potentially arise in ad-hoc cases, and continuing to work on these issues with these suppliers in
to address them efficiently. By this means we were able to 2017.
agree on specific improvement measures with affected sup-
pliers during the reporting year, resulting in an optimization In another case, a third-party CSR audit documented
in their sustainability performance. The ad-hoc expert team non-compliance with our working-hours policy. We
in Wolfsburg plays a supporting and coordinating role in worked with the supplier to develop an action plan, and
this process. the implementation of this plan was monitored by the
responsible ad-hoc expert team. Ultimately, this approach
succeeded in establishing a process that will ensure this
supplier complies with our policy on working hours.

Ad-hoc Cases in 2016

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Economy Supplier Management

In addition these ad-hoc cases, the Internal Audit function uncov- The internal and external point of contact for suspected cases of
ered an additional 82 cases which resulted in measures being agreed non-compliance with our sustainability requirements – especially
with suppliers. These cases involved supplier conduct that failed where violations of human rights are concerned – is the e-mail
to comply with regulatory or contractual requirements which was address sustainability@vwgroupsupply.com.
either reported by individuals or discovered in the course of regular
program audits. In addition, both employees and third parties can address possible
cases of non-compliance via the Volkswagen Group’s national and
Because of these infringements and the abovementioned ad-hoc international employee representation bodies, as well as national
cases, 39 business relationships were terminated in the reporting and international trade union federations. The Volkswagen Group’s
period. The increase in terminated business relationships is closely worldwide ombudsman system can also be used to confidentially
related to procedures initiated in response to the results of audits by report irregularities to two external lawyers appointed by the Group.
the Internal Audit function. Since 2014, it has also been possible for information providers to
communicate anonymously with the ombudsmen via an online
channel.

SUPPLIER TRAINING

To anchor the Sustainability in Supplier Relations concept more on sustainability available in all languages of the countries which
firmly throughout the Group, we are making employees more aware have been defined as compliance risks. To successfully complete the
of and providing training in sustainability issues. The concept of module, suppliers must pass a final test. We made further prog-
“sustainability in the supply chain” is an established part of the skills ress here in 2016, with 25,002 suppliers – representing 82% of the
profile for all Procurement employees. In 2016, more than 950 pur- procurement volume – completing the e-learning module by the
chasing staff worldwide were given training in this area. end of the reporting year. For training purposes, this tool is available
both to the supplier’s workforce and to employees of Volkswagen AG
To facilitate ongoing supplier development, in the course of our busi- Procurement.
ness relations we make an electronic learning (e-learning) module

Status of Sustainability e-Learning

Alongside the e-learning format, we also conduct topic-specific Through our involvement in national and international industry
sustainability training courses and workshops with our suppliers at and sector associations, we are also working with other automotive
selected locations. During the reporting period, training events manufacturers to create shared communication platforms with the
were organized in countries such as Argentina, Brazil, China, South aim of driving forward sustainability in the supply chain. Volkswagen
Africa and the U.S. In total, 1,348 employees of more than 800 of Group is a member of, for example, the German Association of the
our suppliers were given training on sustainability issues. The main Automotive Industry (VDA) and econsense – the Forum for Sus-
focus of these events was on the “Social rights of employees”. Some tainable Development of German Business, and is also part of the
of these training activities were organized in cooperation with other Automotive Industry Action Group (AIAG). Audi AG is also involved
automotive manufacturers under the auspices of the European in the Aluminium Stewardship Initiative.
Working Group on Supply Chain Sustainability.
In the European Automotive Working Group on Supply Chain
We also organize stakeholder dialogs in order to discuss the concept Sustainability, part of the European Business Network for Corpo-
of and structures required to apply our sustainability standards. rate Social Responsibility (CSR Europe), we are working to develop
This informed exchange of ideas with representatives of political recognized frames of reference for companies in the automotive
and governmental organizations, civil society, research institutions industry. In collaboration with other members of this working
and NGOs, as well as other companies and our suppliers, ensures group, we have developed an industry-wide self-assessment
the continuous development of our concept. One such discussion of questionnaire on sustainability performance, and offered related
issues surrounding sustainability in supplier relations took place on training courses to suppliers.
March 1 of the reporting year.

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Economy Supplier Management

In the context of our VDA activities, the VDA issued a “Recommenda- As part of our efforts to work with our suppliers to minimize the
tion for guiding principles in the automotive industry for improving negative environmental impacts of our vehicles, Volkswagen joined
sustainability in the supply chain” for the first time in 2016. These the CDP Supply Chain Program in 2015. We foster direct contact with
guiding principles not only advocate more sustainability in the sup- our suppliers by organizing specialist workshops in which we discuss
ply chain, but also recommend the use of the standardized self-as- and develop joint, innovative approaches for the environmental
sessment questionnaire developed by the European Working Group optimization of certain components.
on Supply Chain Sustainability. We hope that this will also encour-
age our direct suppliers to make greater use of this questionnaire for The Future Automotive Supply Tracks (FAST) initiative also plays
their subcontractors. a key role in our supplier development strategy. FAST is Group
Procurement’s core initiative for developing the Volkswagen Group
In the reporting year, as part of our implementation of the OECD’s and its supply network, both to ensure a strong future and to involve
Due Diligence Guidance for Responsible Supply Chains of Minerals suppliers in key goals earlier and more intensively. In addition to
from Conflict-Affected and High-Risk Areas, the Volkswagen Group innovation and globalization, the FAST dialogs also focus on sustain-
of America became a member of the Conflict-Free Sourcing Initiative. ability issues.

SUMMARY

Throughout all process steps and supplier development measures, experts or by external audits on suppliers’ premises, as outlined
our top priority is to maintain a balanced dialog in a fair-minded above. In the event of non-compliance with our sustainability require-
spirit of partnership. Keeping this key objective of ongoing, sustain- ments, in extreme cases we will terminate the business relationship,
able collaboration firmly in mind, we work with our suppliers to find especially if the supplier shows no interest in improvement. Our
even more opportunities to improve sustainability, such as boosting top priority, however, is to create a sustainable supply chain by
resource efficiency and continuously improving working conditions. encouraging proactive compliance with our sustainability require-
ments through dialog with and the ongoing development of our
The Volkswagen Group reserves the right to verify business partners’ business partners. Together with our suppliers, we aim to become
compliance with our sustainability requirements, either by in-house even better!

OUTLOOK FOR 2017

In 2017, we plan to perform the same number of sustainability respect to certain selected raw materials, we intend to work with
audits as in 2016, supplemented by a pilot process for on-site assess- the relevant business partners to identify ways of creating greater
ment of compliance with our sustainability requirements. transparency along the supply chain.

Moreover, our objectives for 2017 include the provision of train- With respect to reducing CO2 emissions, we are intending to imple-
ing that aims to continuously build our suppliers’ and employees’ ment a project for closed-loop aluminium scrap recycling. In addition
awareness of and capacity to engage with sustainability issues. to conserving resources, this project will also lower the carbon foot-
print associated with the use of aluminium sheeting.
We also intend to step up our engagement in industry-wide working
groups and initiatives. In particular, we plan to continue rolling And in the area of collaborative initiatives, in 2017 we will be lead
out the self-assessment questionnaire developed by the CSR Europe partner in the DRIVE Sustainability initiative.
working group and use its findings to further enhance the processes
of the Volkswagen Group procurement network. Furthermore, with

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Economy Integrity

Integrity
The Volkswagen AG is currently undergoing the most far-reaching process of change in the Company’s history. Painful
experience, especially the massive loss of trust that followed the diesel crisis, has made it clear that when it comes
to integrity, our primary aim must be to become a role model for a modern, transparent and successful enterprise. This
intention represents one of the key objectives of our TOGETHER – Strategy 2025.

“TOGETHER – Strategy 2025” Objectives

47
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Economy Integrity

On January 1, 2016, the Volkswagen Group created a new Board of tions, they will support our efforts to fulfil our social responsibilities,
Management position for “Integrity and Legal Affairs”, laying the promote integrity, foster our stakeholder dialog, and help drive the
organizational groundwork for centralized integrity management steady, sustainable progress of our corporate development.
across the Group.
Together, we intend to live by a new, partnership-based culture of in-
The integrity management function is responsible for planning, pre- tegrity in which we can all believe, and of which we can all be proud.
paring and implementing programs and projects aimed at raising,
clarifying and intensifying a collective awareness of integrity, as
well as reinforcing a shared culture of integrity within the Company. INTEGRITY PROGRAM
Key components of the integrity management function include a
continuous exchange of ideas and dialog concerning integrity-relat- The Volkswagen Group’s goal is to enhance the culture of integrity in
ed issues. the Company and create a collective awareness of integrity. To this
end, in 2016 we launched an integrity campaign that included in a
Because we value a neutral outside perspective, in October 2015 series of activities designed to encourage all employees to engage
the Volkswagen Group appointed a Sustainability Council of leading with the topic of integrity. At the end of December 2016, we moved
experts in research, academia, science and politics. Their remit is to from the integrity campaign to a multi-dimensional integrity pro-
provide advice on, among other things, questions of business ethics gram that is based on six action areas:
and integrity. With their independent expertise and recommenda-

The Six Action Areas of the Integrity Program

DIALOG & COMMUNICATION SOUNDING BOARD PROGRAM

Ongoing dialog on integrity made Volunteer integrity ambassadors from all
possible by focused involvement of divisions and levels of the hierarchy.
employees. Looking at things from employees’ perspective.
Dialog & Active interface between specialist depart-
Sounding ments and integrity management function.
Communication Board
Program
EXECUTIVE PROGRAM
Taking actions to hone managers’
ability to function as role models.
Executive
Program

Strengthening the culture of integrity

PROCESSES & TOOLS
Processes & Embedding integrity in existing
Tools processes (e.g. personnel processes).

Internatio- Monitoring
INTERNATIONALIZATION nalization & Reporting MONITORING & REPORTING
Planning and executing the expansion Measuring and communicating the effecti-
of the integrity program to brands, veness and cultural impact of activities
companies, regions, and locations. initiated under the integrity program.

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Economy Integrity

Ethical behavior is a prerequisite for the business success and EXECUTIVE PROGRAM
successful future of our Company. Only with enduring and depend-
able integrity can the Company gain and strengthen the trust of its The entire Group Board of Management signed a letter to all
employees, customers, shareholders and business partners. Each executives and managers in the Company, clearly emphasizing the
and every one of our employees – and especially our managers – is responsibility of each and every member of management to serve
asked to ensure that integrity becomes an integral part of our daily as a role model for integrity. The topic of integrity has also been high
working lives. on the agenda at many management meetings, including the Global
Top Management Conference, the Governance, Risk and Compliance
Global Conference, and other Group management information
DIALOG & COMMUNICATION events.

In September 2016, we launched an intensive communication

cam­paign in Wolfsburg. In the first phase, we raised employee PROCESSES & TOOLS
awareness of the topic of integrity by deploying visual messages on
posters, displays and monitors throughout the production site. This As part of our sustainability drive, and with the aim of establishing
was followed by a second phase in which employees were actively integrity as the bedrock of our business practices, we are also inte-
included in the dialog, and various participatory activities such grating ethical practices into our personnel recruitment and training
as an employee survey were conducted as part of a special event at processes.
a works meeting. Next, we accepted volunteers from all parts of the
company and levels of the hierarchy as Integrity Ambassadors for And by including a question about ethics in our annual employee
our Sounding Board program. opinion survey, we hope to be able to draw conclusions about the
culture of integrity at Volkswagen and identify when there is a con-
crete need for action to address a specific issue

MONITORING & REPORTING

Regular monitoring of the measures defined in each action area

helps us to fine-tune and readjust our integrity program. Our own
reporting on the effectiveness of measures that have been imple-
mented also plays an important role.

INTERNATIONALIZATION
SOUNDING-BOARD-PROGRAM
Since October 2016, the Group integrity management function has
Through the Integrity Ambassadors, the Sounding Board program been working closely with the brands and companies to plan, formu-
ensures close collaboration and dialog between the integrity man- late and roll out the successive expansion of the integrity program.
agement team and the workforce. The employees responsible for governance, risk and compliance
within the brands and companies are playing an important role in
In Wolfsburg, 140 Integrity Ambassadors for the Volkswagen Passen- this process.
ger Cars brand are already playing an active role in our transformation
process by acting as liaisons in their departments, communicating
the importance of integrity, encouraging networking and actively
supporting our culture of integrity. Our goal is to establish permanent
lines of communication between our employees and the integrity
management team. We also look to the Integrity Ambassadors to help
us analyze ethical dilemmas which may arise in our specialist depart-
ments and spotlight positive examples of ethical behavior within the
Company.

In addition, the Sounding Board program also organizes several

interactive events each quarter which provide a platform for the
ambassadors to actively share ideas with the integrity management
function and the Board Member for Integrity and Legal Affairs.

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Economy Compliance

Compliance
In the long term, a company can only be successful if it acts with The Group’s Internal Audit, Security, Personnel Management and
integrity, complies with statutory provisions worldwide and stands Legal departments are responsible for investigative measures and
by its voluntary undertakings and ethical principles, even when responses.
this is the harder choice.
Since January 2016, the Group Chief Compliance Officer has reported
We remain committed to this principle – especially in light of the directly to the Board Member for Integrity and Legal Affairs. The
misconduct uncovered in the 2015 fiscal year, which runs contrary Group Chief Compliance Officer is supported in his work by 14 Chief
to all of the values that Volkswagen stands for. Compliance must Compliance Officers (responsible for the brands, Volkswagen Financial
be second nature to all Group employees. Services and Porsche Holding GmbH in Salzburg, Austria), who are in
turn assisted by Compliance Officers in the Group companies. The
By raising awareness and educating employees, Volkswagen aims to compliance organization is networked together by various arrange-
prevent potential breaches before they occur. Nevertheless, we are ments, including regional workshops. One networking event held in
aware that even the best compliance management system can never the organization in the reporting year was a major Governance, Risk
entirely prevent criminal actions by individuals. & Compliance (GRC) Global Conference in Berlin. It was attended
by some 300 employees from 30 nations and all Group brands, who
The principles set down in the Volkswagen Group’s Code of Conduct shared their ideas in workshops and presentations focusing on
are of essential importance here. These guidelines have been current and upcoming issues in compliance and risk management.
communicated and can be accessed by all Group employees via the
Volkswagen portal, and on the web pages of the Volkswagen Group. Various bodies support the work of the compliance organization
at Group and brand company level. These include the Compliance
Board at senior management level and the core Compliance team,
which pools Group expertise in compliance issues.

In 2016, the CEO of Volkswagen AG, Matthias Müller, made the following statement
at a management meeting in Wolfsburg

“We want to make integrity the fundamental bedrock

of everything we do across the entire Group. With this
aim, we will redouble our Group-wide efforts to comply
with regulations and legislation.” He continued:
“Compliance is not a job for a single individual or
department. It is something that as managers, we must
all treat as an integral part of our responsibilities.”

COMPLIANCE AT VOLKSWAGEN

Volkswagen applies a holistic approach to compliance which in- remedial measures were reported by more than 100 units; more
tegrates its compliance management system (CMS), risk manage- than 500 tests were staged within Group companies to evaluate
ment system (RMS) and internal control system (ICS). One way to the effectiveness of these measures. Based on the findings of
identify and assess potential compliance risks is to use a standard such tests, preventive measures are drawn up and the appropriate
process that is now in place across the Group. Thanks to this pro­ compliance programs defined. During the selection process for
cess for cataloging systemic risks, in the reporting year more than new production locations, Group Production assesses the sites
2,400 assessments of potential compliance risks and the relevant with a view to identifying potential corruption risks, among others.

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Economy Compliance

COMPLIANCE MEASURES

In response to the diesel crisis, we have developed activities targeting The structure and procedures of the Volkswagen Group whistleblow-
improved product compliance in the development and production ing system have been completely reorganized. A guideline issued
process, as well as in quality assurance. Furthermore, development by the Group’s Board of Management sets out clear protections for
processes have been designed in such a way that even an attempt both information providers and those under investigation. As of
to circumvent mandatory regulations is easier to identify and prevent 2017, the Board Member for Integrity and Legal Affairs is responsible
at an early stage. In this context, we have further strengthened con- for the process of recording and analyzing the information reported
formity assessments for our products, among other things. by whistleblowers. As before, Group Internal Audit and Group Secu-
rity are responsible for investigations.
What is more, in the reporting period we expanded the range of
services for providing our employees with advice and support, ex-
tending our advisory services and our range of online tutorials.
We also published a new information guide for our staff on how
to prevent money laundering.

PREVENTION THROUGH INFORMATION

To raise awareness of the importance of compliance, since 2010 all business partners and members of our governance bodies on the
new employment contracts entered into between Volkswagen AG on Volkswagen portal as well as the Internet. 
the one part, and both management staff and employees covered by
collective agreements on the other, have included a reference to the Business partners of the Volkswagen Group are subject to a Business
Code of Conduct plus the obligation to comply with it. Completion Partner Check, a risk-oriented assessment of their integrity. With the
of the online training module on the Code of Conduct is mandatory aid of the “Volkswagen Group requirements regarding sustainability
for all new employees. Since 2014, compliance with the Code of in its relationships with business partners” (Code of Conduct for
Conduct has been a factor in calculating employees’ variable, perfor- business partners), we raise supplier awareness of issues such as
mance-related pay component. human rights.

By means of appropriate preventive measures integrated in our In 2016, around 187,000 employees across the Group took part in
existing management system, we foster compliance with the rules more than 6,000 classroom and e-learning courses on the topics of
within our organization and sharpen our employees’ awareness. compliance in general, as well as money laundering, the Code of
However, we are also aware that the risk of individual misconduct Conduct, competition and antitrust legislation, human rights and
can never be completely eliminated. To raise employee awareness of combating corruption. Online e-learning programs and classroom
compliance-related issues, we use both traditional communication training courses are firmly anchored in existing corporate processes.
channels such as employee magazines and information stands, and Employees of Volkswagen AG, all brand companies and a large num-
electronic media such as intranet portals, apps, blogs, audio-pod- ber of Group companies are able to obtain personal advice about
casts and online newsletters and guidelines. For example, our Anti-­ compliance issues by contacting the compliance organization via a
Corrup­tion Guidelines are available worldwide to all employees, dedicated e-mail address.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Economy Compliance

E-Learning program and classroom training courses*

Across all regions, 6,049 managers participated in classroom training

and e-learning courses on combating corruption.

CHECKS, AUDITS AND SANCTIONS

Group Internal Audit regularly and systematically reviews processes All such reports are followed up. For all breaches of the law and vio-
within the Company, using approaches such as the internationally lations of internal regulations, necessary sanctions are first reviewed
recognized COSO Enterprise Risk Management framework. It also and then applied where necessary. In 2016, action was taken against
carries out random checks irrespective of any suspicion of non-com- a total of 121 employees across the Volkswagen Group as a result
pliance and investigates whenever actual breaches are suspected. of the findings of investigations based on information received as
The worldwide ombudsman system in place since 2006 can be used described above. In 53 of these cases worldwide, the employee’s
to confidentially report corruption, fraudulent activities or other seri- contract was terminated. Moreover, in the reporting year, following
ous irregularities (such as human rights violations or ethical miscon- special audits that were based on information received, 10 contracts
duct) in 11 different languages to two external lawyers appointed by with business partners were terminated or not renewed due to
the Group. Naturally, the people providing the information need not non-compliance with contractual conditions for avoiding corruption.
fear being punished by the Company for doing so.
A risk-oriented assessment of the Group’s core business processes
As of December 2014, there is also the option of using an additional provides the basis for the auditing program of Group Internal Audit,
online channel to communicate with the ombudsmen. A technically the China region, and the eight other Group Audit departments op-
secure digital mailbox allows suspected breaches to be reported – erated by brands with local audit functions. The business processes
anonymously, if so desired. After checking them for plausibility, in of all Volkswagen Group companies are systematically classified in
2016 the ombudsmen passed on 125 reports to the Volkswagen terms of risks which, in the auditors’ view, are relevant to the audit.
Group’s Anti-Corruption Officer, the Head of Group Internal Audit; The issues with the highest risk levels are incorporated into the
the identities of the individuals providing the information were auditing programs. In 2016, a total of 1,274 audits were conducted
kept confidential if requested. In addition, information on a further across the Volkswagen Group worldwide. Among other things, these
110 cases was given directly to the Anti-Corruption Officer. During audits examine internal control mechanisms for the prevention
local internal audits of the brands and Group companies, 481 reports of corruption (dual-control principle, segregation of functions),
were submitted to the Anti-Corruption Officer. the existence of compliance guidelines and preventive measures.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Economy Ratings and Indices

Another aspect of the audit function is advising the Volkswagen quality assessment of the Volkswagen Group’s internal audit system
Group’s specialist departments. In particular, this advisory activity was carried out by an audit firm in the period between the third
helps to define processes, ensure they are designed in compliance quarter of 2014 and the first quarter of 2015. In addition to central
with internal standards, and that they can be applied worldwide. management and supervisory processes, this took into consideration
In addition, a Continuous Auditing System has been installed. This the quality of the brands’ and regions’ internal audit functions (sam-
function is responsible for, among other things, using structured ple size: Volkswagen AG, AUDI AG, SEAT S.A., Volkswagen de Mexico,
analysis of data in the financial systems to boost the effectiveness Volkswagen Group China). The audit firm confirmed that all the
of the Internal Control System (ICS). The continuous auditing pro- internal audit units examined are fully compliant with the underly-
cedures help to identify specific weak points in the ICS more rapidly ing DIIR Standard No. 3 “Quality management in the internal audit
and so avoid losses. activity” and in many areas, use leading internal audit methodologies
and practices. In 2016, the internal quality management function
In accordance with the normative standards issued by the German also saw further development, and a continuous improvement pro-
Institute for Internal Auditing (DIIR), internal audit functions should cess was initiated under the auspices of Group Internal Audit.
be audited externally at least once every five years. An external

Ratings and Indices

Because analysts and investors view corporate social responsibility but also helps make a company more attractive as an employer and
(CSR) and sustainability as key indicators of forward-looking boosts the motivation of its employees.
corporate governance, their recommendations and decisions are
increasingly based on factors that include companies’ CSR and Before the emissions issue, Volkswagen held leading positions in
sustainability profiles. They look to sustainability ratings in particular sustainability rankings and indices such as the Dow Jones Sustain-
to evaluate a company’s performance in terms of environmental ability Indices, the CDP Carbon Disclosure Project, Sustainalytics
compatibility, social responsibility and economy. Achieving top and oekom research. However, Volkswagen has now been down-
marks in these ratings not only sends a clear signal to stakeholders, graded or removed from these ratings.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

People Shaping Change

People
Shaping Change

Across its 12 brands, the Volkswagen Group aims to be an attractive employer and a good partner for society. Reliability,
trustworthiness and fairness are our watchwords – no matter whether we are talking to individual employees, nego-
tiating with collective representative bodies, collaborating with regional partners in local infrastructure development
projects, or cooperating with civil society initiatives and associations.

Our human resources strategy seeks to ensure that the Group and our workforce are well placed to adapt to the ever
more rapidly evolving challenges of the networked digital world. The in-service training we offer enables our employees
to keep their knowledge and skills up to date, while individual health programs boost their fitness and performance
levels. Our newly introduced Diversity Policy is helping to promote culture change and equal opportunities. And through
our involvement in numerous social projects around the globe, we are ensuring our company is firmly anchored in local
communities.

As a global enterprise with 120 production sites across Europe, the Americas, Asia and Africa, we have wide-ranging
experience of cultural differences, approaches and world views. Our company is committed to respect, tolerance and
openness, and we ensure equal opportunities and equal treatment for all our employees around the world. We also
engage with stakeholders in numerous ways to promote the sustainable development of the towns, cities and regions
in which we operate.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

People Management Approach

Management Approach
For 70 years now, industrial relations at Volkswagen have been guided On launching its TOGETHER 2025 strategy in October 2016, the
by a social pact that enables employees and their elected represent­ Volkswagen Group also approved a new “We empower to perform”
atives to exercise their long-established and extensive rights to have human resources strategy with five overarching objectives for per-
a say in the running of the company. From this a unique model for sonnel management:
the cooperative resolution of disagreements between the social part-
ners has evolved. In its human resources policies, ­Volkswagen explic-
itly realizes the potential of this model with its focus on conciliation, §§ The Volkswagen Group aims to be an excellent employer across
consensus and continuity in order to all its brands and companies worldwide.

§§ appropriately remunerate good performance, §§ Highly skilled, dedicated employees strive for excellence in terms
of innovation, added value and customer focus.
§§ benefit from the careful selection and long-term service
of employees to maximize upskilling, §§ Sustainable work practices ensure optimal working conditions
in factories and offices.
§§ capitalize on workers’ consultation rights to help drive
continuous improvement processes, and §§ An exemplary corporate culture creates a work climate character-
ized by openness, mutual trust and cooperation.
§§ systematically harness the team spirit of our workforce to
achieve our strategic goals. §§ While striving for operational excellence and strategic added value,
personnel management within the Group is strongly focused on
This approach is founded on our conviction that sustainably excellent employees.
performance is only possible if the company is seen to be an attrac-
tive employer which, as well as providing a safe workplace where the
latest tools are used, offers employees stimulating work, optimally
supports them as individuals and is well integrated in society.

THE FIVE OBJECTIVES OF THE

“WE EMPOWER TO PERFORM” STRATEGY

With its new “We empower to perform” strategy, the Volkswagen collaborative robots will take on heavy lifting work in factories in the
Group is continuing to pursue the successful key tenets of its human future and digital processes will simplify many administrative tasks.
resources policy. As well as seeking to appropriately balance perfor-
mance and remuneration, these include its strong stakeholder focus, By 2020, the Volkswagen Group will roll out a diversity management
comprehensive employee participation rights, excellent training system, not only to ensure that men and women are treated equally,
opportunities and systematic retention programs. The new human but also to prevent other forms of discrimination – against people
resources strategy is also setting innovative new trends: modern with performance impairments, for example – and to support the
forms of work such as agile working – where managers and team development of each individual employee in accordance with their
members work together to increase the efficiency with which all own particular abilities. In addition, culture change initiatives are
tasks are performed – are set to be expanded on many fronts, while already underway to establish flatter hierarchies, a more open form

55
 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

People Strategic Objective: Excellent Employer

of collaboration and a greater focus on the big picture within the industry, where we are seeing the automobile world undergoing
Company’s divisions. To benefit both the Group and its employees, the greatest period of disruption in its history. Our human resources
working times and locations are also set to become more flexible. strategy is designed to help the Volkswagen Group become a global
More weight will be attached to social sustainability and it will be leader in mobility on a long-term profitable and sustainable basis. At
systematically incorporated into our human resources strategy: in the core of this strategy is our mission to be an excellent employer.
the future, personnel management will more quickly and consis- In setting ourselves this strategic objective, we are expressly under-
tently reflect social and cultural megatrends, such as employees’ scoring our intention to remain, well into the future, an outstanding
aspirations to participate in decision-making for instance. The tradi- employer whose skilled and high-performing workforce is at the
tional focus of personnel management – such as providing optimal forefront of the automotive value chain.
support and training opportunities for employees along with the
careful planning and deployment of human resources – will also A first-rate team of this kind does not just come about by accident,
continue to apply. however. It is the product of extensive investment and carefully
developed concepts for training, upskilling, employee support and –
We have developed our “We empower to perform” strategy against last but by no means least – maintaining and improving health and
the backdrop of a rapidly changing situation in the automotive fitness.

Strategic Objective:
Excellent Employer

We may not always succeed in uniting these different perspectives in

everyday life, but we are evidently succeeding more and more often –
despite the diesel crisis, in 2016 we received a number of awards for
being an attractive employer and topped various employer rankings.
For instance, the Volkswagen Group ranked third among engineer-
ing, IT and business graduates in the trendence institute’s survey of
the most attractive employers in Europe. And, as in the previous year,
trendence’s poll of over 300,000 engineering, IT and business grad-
uates from a total of 24 European countries voted the Volkswagen
Group the most popular employer in the automotive sector.

In 2016, trendence’s Young Professionals Barometer, which mea-

sures the career aspirations and expectations of some 10,000 young
Seeking to be an attractive employer is not an end in itself. We will professionals with up to eight years’ work experience from across
only be able to sustain the enduring commitment and motivation all sectors, ranked our Audi brand third and our sports car maker
of our employees if we keep the promises we have made about the Porsche sixth. In the wake of the diesel scandal, the Volkswagen
working conditions in our company. And only if we can make these brand saw a drop in its popularity from 16th to 31st. In a similar sur-
promises visible, credible and transparent to the outside world will vey carried out by the Universum market research institute in which
we be perceived as attractive in an increasingly competitive talent experienced engineers were asked to state their ideal employer,
market and consequently be able to attract the best people to the Audi took second place while Porsche came third. The Volkswagen
company. brand ranked seventh.

The “We empower to perform” strategy fuses these two perspectives Among Czech graduates, trendence found ŠKODA Auto to be the most
by seamlessly integrating our consistent promise as an employer popular employer. In a number of other countries, including the
with the employee experience, i.e. how our quality as an employer is United Kingdom, Spain, Mexico, South Africa and China, Volkswagen
actually experienced on a day-to-day basis. and its 12 brands rank among the most respected employers.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

People Strategic Objective: Excellent Employer

Alongside the external impression that graduates and young in decision-making. In particular, we would like to highlight three
professionals have of us, there is of course also an internal perspec- aspects
tive – how our own employees view their workplace and working
environment. Personnel management at the Volkswagen Group is §§ the codification of Group-wide employment rights in
therefore endeavoring to create conditions at all levels that will de- guidelines and charters
liver a positive experience of Volkswagen as an employer. Along with
providing interesting jobs and attractive working conditions, our §§ the involvement of employees through their elected
guiding principles are designed to underline the status of employ- representatives
ees as confident, entrepreneurial, creative people who are involved
§§ the entitlement of our workforce to a share in profits.

EMPLOYMENT RIGHTS IN THE VOLKSWAGEN GROUP

The foundations underpinning the provision of attractive, long-term §§ The Charter on Temporary Work. In November 2012, Volkswagen’s
working conditions are a raft of charters and declarations agreed executive management, the GEWC and GGWC signed a char-
with our Group European Works Council (GEWC) and Global Group ter setting out the principles governing temporary work. These
Works Council (GGWC) which govern the collective rights of our included, for example, a guide ratio of temporary employees to
employees in the workplace and the organization of their work. core workforce, stipulations on equal pay, equal treatment and
These include: qualification programs, plus a time limit of 36 months before the
offer of a permanent position must be considered.
§§ The Declaration on Social Rights and Industrial Relations at
Volkswagen (the Volkswagen Social Charter). Volkswagen set out §§ The Charter on Vocational Education and Training. As well as a
the fundamental social rights of employees in this declaration in high standard of education, the Group is seeking to offer attractive
2002. These are based on the relevant conventions of the Interna- training opportunities at its various locations. Approved in 2015,
tional Labour Organization. A revised version of the Social Charter this charter recognizes vocational training as a core aspect of labor
was signed in 2012. relations. To comply with the charter, the social partners must
jointly define certain aspects such as the trainee selection process,
§§ The Charter on Labor Relations. This charter came into force in the duration and quality of vocational training, plus the conditions
autumn 2009 and combines greater rights to consultation with for subsequently hiring trainees following an apprenticeship.
shared responsibilities. It defines the rights to information, consul-
tation and co-determination enjoyed by employee representatives These policy foundations underpin the rights of elected employee
from brands, companies and sites represented on the GEWC and representatives at the Group level in the European and Global Works
the GGWC. Councils. They provide a binding framework for developing existing
local labor relations in a responsible manner using cooperative con-
flict resolution approaches.

EMPLOYEE PARTICIPATION THROUGH ELECTED

REPRESENTATIVES AND COLLECTIVE BARGAINING

Volkswagen has an internationally recognized culture of co-determi- are constantly being adapted in line with the ongoing development
nation. At many sites, employees are represented in two ways: firstly, of the Group. In addition to the Group European Works Council and
by a trade union, and secondly, by representatives elected to a works the Group Global Works Council (set up in 1990 and 1999 respective-
council. Many companies in the Group also have a supervisory board ly), in recent years a number of committees have also been estab-
on which the workforce is represented. The International Charter on lished to reflect the increasing complexity of the Group (such as com-
Labor Relations allows employee representatives around the world mittees specifically concerned with commercial vehicles, financial
to conclude agreements with local management on specific rights to services and sales companies, mechanical engineering and so forth).
information, consultation and co-determination. In 2016, the decision was taken to set up a separate committee for
the Volkswagen brand itself, due to start work in 2017. The commit-
This widespread form of participation has proved highly successful tees of the European Works Council and the Global Works Council
over many decades. When major changes are expected, such as in meet at least once a year. In addition, all members of these two
the case of the pact negotiated in 2016 regarding the future of the works councils attend a joint session every year. As well as exchang-
Volkswagen brand for example, employee representatives are in- ing information internally and discussing the current situation at
volved in the planning process from an early stage. This ensures that the various sites, the respective HR managers and Group executive
such processes of change are tackled jointly and have the support management also share information about future product and work-
of all employees. These co-determination structures are by no means force plans and consult each other on social welfare and personnel
static, however. Our international employee representative bodies standards.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

People Strategic Objective: Excellent Employer

REMUNERATION, REWARDING PERFORMANCE,

PROFIT-SHARING AND RETIREMENT PROVISION

As stated in our Social Charter, all remuneration and benefits paid §§ an entitlement to profit-sharing, which is laid down in the
for a normal working week should at the very least correspond to collective agreement.
the respective statutory minimums – and this applies not only to our
employees, but to all our suppliers too. Because they are collectively This three-tier system has proved to be an expedient way of
agreed with trade unions, however, nearly everywhere our rates enabling employees to share in the company’s success.
of pay are considerably higher than the prevailing minimum levels.
When setting pay, we make no gender distinctions: people are Employees of Group companies in Germany and around the world
recruited, hired and promoted solely on the basis of their qualifica- also enjoy further company benefits.
tions and skills. Remuneration is based strictly on the job performed.
Along with an attractive remuneration package for our active em-
A total of nine new collective agreements were concluded at inter­ ployees, we are also concerned to make provision for those embark-
national car production plants in 2016. In some cases, these involved ing on the next stage of their life. By offering occupational pension
industrial action: strikes were held at Lamborghini, Ducati and Italde- schemes, Volkswagen AG, its brands and subsidiaries make an import-
sign during national pay negotiations within the Italian metalworking ant contribution to ensuring that retirees still have an income in later
and electrical engineering industry. There was also a stoppage at life. In addition to employer contributions, employees can convert part
Scania in São Bernardo do Campo, Brazil during collective bargaining of their pre-tax salary into pension contributions. They can also opt
talks. Group sites in Brazil and Belgium were affected by politically to defer a further proportion of their compensation in the form of a
motivated strikes. A regional strike against planned cost-cutting mea- direct retirement insurance contract.
sures and government reforms triggered a one-day strike at Volkswa-
gen do Brasil’s Anchieta plant. Workers at Audi’s factory in Brussels Volkswagen AG’s Time Asset Bond is a scheme for reducing the length
also took part in protests as part of national strike action against of an employee’s working life. Since 1998, employees have had the
actual and planned government cutbacks and reforms. As a company, option to contribute to the bond out of their gross pay and working
we respect the right of our employees to take part in lawful strikes. time credits. They can then use the time assets accumulated to take
paid time off in the run-up to retirement. Such benefits also help
Together with remuneration packages that include a profit-related boost our attractiveness as an employer in the long term.
element so employees can share in the company’s success, the
systematic encouragement and rewarding of good performance are Depending on location, benefits may also include subsidized trans­port
key qualities of an excellent employer. Since 2010, Volkswagen AG and meals, low-cost accommodation, monthly childcare allowances
has consistently applied standard criteria for skills development and and discounts on selected leisure activities. Additional healthcare
performance assessment across its entire workforce, from appren- or supplementary pension benefits round off the range of company
tices to top managers, which are underpinned by concrete incentive benefits offered.
programs within the pay structure.
The extensive social rights enjoyed by employees, strong workforce
Salaried employees at Volkswagen AG are paid according to representation, participation in decision-making processes, perfor-
a three-tier system: mance-related remuneration and good retirement provision form
the building blocks of our attractiveness as an employer, which
§§ basic pay in the form of a competitive monthly salary, together constitute the bedrock of our human resources policy. These
aspects are further augmented by numerous initiatives, agreements
§§ a performance-related component which additionally rewards and programs which aim to develop our workforce and create ver­
individual performance and satile first-rate teams.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

People Strategic Objective: Skilled and Committed Employees

Strategic Objective:
Skilled and Committed Employees
The second goal of our human resources strategy is to cultivate skilled
and committed employees. For us, commitment means first and
foremost actively participating and helping to add value, using one’s
initiative, but also taking change in one’s stride and personally initiat-
ing process improvements. It also means seeing the bigger picture and
taking an interest in the environment or events and developments in
society at large.

ON-THE-JOB COMMITMENT

We like to see our employees tackling their work enthusiastically, uously improve processes and structures in the areas of productivity,
showing commitment and team spirit while contributing their quality, ergonomics, leadership and teamwork. Using “train the
expertise. In return, we invest in our workforce, foster a good trainer” methods, the Group and brands are gradually bringing all
working atmosphere and offer attractive opportunities for career their plants up to speed. A trainer from the Group provides support
development. As well as listening to their opinions and constructive to participants during the initial stages of this pilot. By training
criticism, this includes actively involving employees in improving jointly, group and team leaders gain a greater understanding of each
processes and assuring quality. One tool used for this purpose other’s roles while everyone attains the same level of knowledge.
throughout the Group is our Employee Opinion Survey. We use
this standardized Group-wide employee survey to obtain regular This is not just limited to our plants in Germany. In 2016, for in-
feedback on employee satisfaction, and by extension on the extent stance, a new tool was trialed by our CIP team in the Group produc-
to which we have fulfilled our goal of being an attractive employer. tion system at SEAT Componentes at El Prat in Spain. The CIP team
The survey also helps to systematically identify scope for improve- focuses on eliminating waste in processes. Everything takes place
ment and pinpoint the areas where managers need to take action on the shop floor, from organizing workstations and standardizing
within their organizational units. In 2016, we revised the Employee workflows through to detecting non-conformances and resolving
Opinion Survey to include additional questions and new tools to problems. A wide range of the Group’s production system methodol-
help line managers discuss the results with employees. The 2016 ogy modules are used as part of the CIP team’s feedback loop.
survey was conducted at 172 sites and companies in 45 countries.
Approximately 440,000 of over 540,000 employees in the partici- Our ideas management program is another important tool for
pating Group companies responded; this is equivalent to a response encouraging employee engagement. This program enables employ-
rate of 81%. In 2016, the score on the employee satisfaction index – ees to bring their creativity, knowledge and initiative to bear and
a key indicator generated by the opinion survey – was 78 out of 100. take responsibility for improving both processes and products. Over
580,000 ideas were submitted in 2016, saving the company approxi-
We also rely on participation to make ongoing improvements to mately €435 million at Volkswagen AG sites in Germany, Volkswagen
our production systems. All the Group’s vehicle brands use stan- Sachsen GmbH and Volkswagen Osnabrück GmbH. Ideas manage-
dardized production systems which are continually developed with ment is an important leadership and motivational tool for plant
input from employees. On the basis of four company agreements on supervisors and managers. It also contributes to improving health
the “Volkswagen Way”, the Volkswagen brand workforce has been and safety in the Volkswagen workplace and helps us reach our
involved in improving organizational efficiency since 2007. This has targets for reducing energy and water consumption, waste, solvents
been done using a variety of tools and methods designed to contin- and CO2 emissions.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

People Strategic Objective: Skilled and Committed Employees

Ideas Management in the Volkswagen Group*

* 46 (41) participating production plants, results according to respective local agreements.

COMMITMENT TO SOCIETY

Volkswagen can look back on a long tradition of engagement with more than €450,000. One beneficiary, for example, was the local
society, not least at international level. As well as supporting local “Wolfsburger für Wolfsburg” non-profit association. Among other
development, educational and social welfare projects at numer- things, the association funds nature experience days for children
ous sites, in many regions we act as an economic driver, helping to and adolescents receiving treatment on the “Rainbow” psychosomatic
strengthen education, culture and civil society, as well as promote ward of the Wolfsburg pediatrics clinic.
sustainable development in the form of infrastructure development.
In the “One Hour for the Future” campaign, Volkswagen and Audi
Over the reporting year, we were involved in around 200 projects employees donate one hour’s pay to help street children, raising
around the globe designed to enhance economic and social structures. substantial amounts for those in need. Since the summer of 2003,
We also provide emergency assistance on an ad-hoc basis, following this initiative has also included the collection of “spare cents”, where
natural disasters for example. With our commitment to these causes Volkswagen AG employees in Germany and abroad donate the odd
and the partnerships into which we enter with local political and civil cents on their monthly pay slips to this campaign as well. The funds
society stakeholders, we underscore the importance of the United raised are used to support a total of 140 projects in seven countries
Nations’ Sustainable Development Goals in our daily operations. around the world.

One example of corporate regional responsibility in practice is Wolfs- Another workforce initiative led to the sale of sustainably produced
burg AG, a public-private partnership between Volkswagen AG and fair-trade products in the company’s cafes and restaurants, where the
the city of Wolfsburg. As well as supporting start-ups and businesses sale of products bearing the Fairtrade seal has been promoted since
seeking to relocate to this city where the Group is headquartered, the 1999. Through this commitment, Volkswagen is helping producers
organization works with numerous partners to jointly create knowl- in developing countries establish socially sustainable businesses. In
edge networks and provide funding for academic and community 2016, our annual consumption of fairly traded coffee rose by 30% to
facilities. The main focus is on education, energy, health, recreation 103 t, and a fairly traded orange juice was added to the menu. Since
and, of course, mobility – traditionally one of Wolfsburg’s strongest 2014, three varieties of fairly traded rice have also been served in
areas of expertise. In cooperation with the regional development Volkswagen eateries.
organization Allianz für die Region GmbH, Wolfsburg AG is devising
forward-looking solutions for improving job prospects and quality of The Volkswagen Employees’ Foundation, established in 2011, is play-
life across the whole of southeastern Lower Saxony. ing an increasingly significant role in terms of our social engagement.
This charitable foundation aims to support youth outreach as well as
Charitable donations constitute a further cornerstone of the Group’s education and vocational training at all levels, with a particular em-
long-term engagement with society. We support a wide range of so- phasis on improving the living conditions of children and adolescents,
cial initiatives and charitable projects around the world. The principles irrespective of their origin, background or religion. The Foundation
governing donations and sponsorships are set out in our Group-wide focuses its activities on the neighborhoods of Group sites worldwide,
Code of Conduct, which stipulates we may give donations in cash and implementing projects in partnership with children’s charity terre des
in kind to support activities and projects primarily devoted to research hommes. Since 2011, the Volkswagen Employees’ Foundation has
and education, culture, sports and social causes. Donations may only launched or supported more than 20 projects in Germany and else-
be given to recognized non-profit organizations or ones specifically where. For instance, the Foundation contributed to the construction
endorsed to receive donations. Volkswagen does not donate to polit- of the children’s refuge in Neindorf near Wolfsburg and the conver-
ical parties, party-affiliated foundations or individual politicians. In sion of the “Alte Schule” annex into a versatile learning and activity
the reporting period, Volkswagen AG made donations amounting to center. This center assists with the holistic care of children in need of
€33.2 million. psychomotricity and experiential learning support. The Foundation’s
partner for this project is the Diaconate of Wolfsburg, which runs
Added to this amount are the donations made by our employees, the only children’s refuge within a 100-km radius. The Volkswagen
which go to help support people in need in the vicinity of Volkswagen Employees’ Foundation also supports two projects run by the city of
AG’s various locations. In 2016, Wolfsburg employees alone donated Wolfsburg which aim to help refugees integrate into society. Both

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People Strategic Objective: Skilled and Committed Employees

projects target child refugees and young adults aged between 11 and their database to identify a suitable project for them to support in
22. The “Alphabetisierungsgruppen” literacy project offers language the future. Since 2007, around 2,600 volunteers have been matched
learning courses with parental involvement. The city of Wolfsburg to suitable vacancies through this volunteer exchange.
runs “Step by Step”, a three-month intensive integration program for
refugee children designed to make it easier for them to integrate into Volkswagen employees who are looking for a new challenge fol-
mainstream education in Germany. lowing retirement can register with our in-house “Senior Experts”
team. This offers them the opportunity to contribute their expertise
Alongside these projects, which are directly supported by Volkswagen regionally or globally either within the company or by volunteering
or the Volkswagen Works Council, we also encourage our employees with external organizations. In 2016, around 135 Senior Experts
to volunteer for local causes in their free time. To coordinate and took part in projects of their choosing, putting their specialist
provide targeted support for volunteering activities, the “Volkswagen knowledge to good use and contributing to a valuable intergener-
pro Ehrenamt” initiative (Volkswagen Supports Volunteering) is an ational exchange of experience. During the reporting year, 28 de­
integral part of personnel management. Employees who wish to partments and more than 20 Volkswagen sites worldwide benefited
do voluntary work can contact the volunteering office, who then use from the program.

SYSTEMATIC SKILLS DEVELOPMENT

As well as commitment, we place an equally strong emphasis on In the process, they also learn from more experienced colleagues
developing employees’ skills. Volkswagen has a highly sophisti- who act as experts and pass on their know-how in our occupational
cated education and training system which enjoys close ties with family academies.
public educational establishments such as vocational schools and
universities all over the world. At Volkswagen, enabling employees We are systematically expanding our network of academies for
to acquire further qualifications is organized around occupational occupational families. During the reporting period, the Governance
families (“Berufsfamilien”). Employees who require similar skills to Academy was established, along with the Academy of Technical
perform their jobs and who possess the associated competencies are Development, as stipulated in the pact for the future agreed with
said to belong to an occupational family. The general and technical the Works Council. Employees in the new model line organization
competencies required for each specific activity are defined in skills will be served by the existing Product Academy. From 2017 onward,
profiles. Employees are offered a wide range of opportunities to gain irrespective of brand or where an employee is based, skills develop-
further qualifications, allowing them to continually update their ment and training for all occupational families at Volkswagen will
skills and deepen their knowledge throughout their working lives. delivered by one of the 15 academies.

DUAL MODEL OF VOCATIONAL EDUCATION

AND TRAINING

The dual model of vocational education and training, where theory training and development program recruits the best 10% of appren-
and practice are closely intertwined, creates the foundations for tices from each year’s intake at Volkswagen AG and Volkswagen
acquiring the advanced skills, high quality standards and excellent Sachsen GmbH in Zwickau. 102 skilled workers joined the program
performance that the Volkswagen Group demands. Here, too, the during the reporting year, taking the total to 851 young men and
content of the training is very much geared to the skills required in women since the initiative was launched in 2008.
the various occupational families. Volkswagen has rolled out this
dual model at many of its locations outside Germany as well, and is On completion of an apprenticeship, the “Wanderjahre” (year abroad)
continuing to embed the model as the core framework for acquir- program offers young people the opportunity to spend 12 months
ing skilled worker qualifications. For instance, in 2016 a group of working for a Group company abroad. During the year under review,
apprentices at Volkswagen do Brasil were the first intake to graduate 15 Volkswagen Group sites in 13 countries took part in this develop-
as mechatronics engineers by passing an examination set by the ment program, including – for the first time – Volkswagen Truck &
German Chamber of Commerce and Industry. When planning new Bus as well as MAN Truck & Bus Germany. In 2016, 33 participants
plants, dual vocational training is taken into account from the outset. from Germany plus nine from four other countries began their year
Accordingly, more than three-quarters of all trainees in the Group abroad within the Volkswagen Group.
learn their trade through the dual system.
Once a year, Volkswagen honors its highest-achieving trainees across
As at the end of 2016, the Volkswagen Group had trained 19,490 young the Group with the “Best Apprentice Award”. In 2016, nine young
people in some 60 recognized occupations on 50 dual-study courses. women and 36 young men from a total of 43 Group locations
We also support the career development of new entrants once they received this award for their outstanding performance and technical
have completed their apprenticeship. Particularly talented young expertise.
skilled workers are supported through “talent groups”. This two-year

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CAREER DEVELOPMENT FOR GRADUATES

Volkswagen recruits and fosters academic talent through two working internationally can take part in the 18-month StartUp Cross
programs: the Student Talent Bank and the Academic Talent Pool. program. This enables them to get to know Volkswagen as a whole
Student Talent Bank fosters high-achieving students in both work-­ and start to network extensively. Through postings in a variety of
related and interdisciplinary areas. The aim here is to encourage specialist areas during this period, participants get to know the Volk-
former interns to join the company and give them the best possible swagen Passenger Cars brand and gain experience at its various sites
preparation for embarking on a career at Volkswagen. Shortly at home and abroad. Both programs also require trainees to spend
before they complete their degree or doctorate, students showing several weeks in production. Volkswagen took on 114 trainees under
high potential are transferred into the Academic Talent Pool. the two programs in 2016, of whom around 26% were women.
This program enables talented young students who have already
demonstrated their abilities through an internship, dissertation Trainee programs are also offered at international Group locations
or PhD at Volkswagen to raise their profile within the company, such as at ŠKODA in Czechia and Scania in Sweden. In addition, since
boosting their chances of starting a career in their chosen specialist 2012 the Volkswagen Group’s StartUp Europe trainee program has
field. offered young engineers from southern Europe – where unemploy-
ment continues to be a major issue for young academics in partic-
Volkswagen also offers two structured entry and development pro- ular – an opportunity to gain international work experience. This
grams for university graduates and young professionals. In addition Volkswagen program is designed to attract university graduates from
to working in their own field, trainees in the StartUp Direct program Italy, Spain and Portugal. Three months at a brand or subsidiary in
attend additional training courses and obtain a good overview of the their home country are followed by 21 months at a Group company
company over a two-year period. University graduates interested in in Germany.

EXTENSIVE TRAINING OPPORTUNITIES

FOR SPECIALISTS AND EXECUTIVES

At the Volkswagen Group Academy, skilled specialists can choose across the Group in 2016. Over 590 training courses and programs
from a broad range of advanced training courses – from further were newly developed for the Volkswagen brand alone.
training in occupational or cross-disciplinary areas of general interest
to the Company, to specific qualifications in the occupational fam­ We have standardized many of the development programs and
ilies, through to comprehensive personal development programs. selection procedures for executives, managers and group leaders
Here, too, the focus is on the dual-study model which combines across the Group. During the reporting year, the Volkswagen Group
theory with practical experience. Overall, around 106,000 qualifica- Academy ran some 615 training programs and assessment centers
tion activities totaling 13.3 million hours of training were completed for executives, managers and group leaders in 15 countries.

ACADEMIC SKILLS DEVELOPMENT

As part of the Volkswagen Group Academy, AutoUni employs top in- tations and theses, and offers PhD students in the Group a platform
house experts and collaborates with higher-education institutions for exchanging ideas and gaining interdisciplinary qualifications. As
to furnish the company with leading-edge knowledge for the future. at the end of 2016, more than 400 PhD students were engaged in
Its programs and collaborative study models use a blended learn- researching topics of future interest to Volkswagen’s various Group
ing format which combines face-to-face classroom teaching with companies in Germany.
online content, supplemented by lectures and conferences. Subjects
covered in 2016 included digital transformation, sustainability, e mo- In addition, AutoUni facilitates networking between the internal
bility, driverless cars, Industry 4.0, and the workplace of the future. contacts for universities within the Group and keeps track of links
Around 9,200 people from 59 locations worldwide took part in over to universities around the globe: during the year under review, over
160 AutoUni events. 1,700 national and international cooperation agreements with
universities, research institutes and universities of applied sciences
AutoUni cooperates with internationally renowned universities, in- were in place.
stitutes and research centers on numerous research projects, disser-

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IMPACT OF DIGITALIZATION ON TRAINING

New technologies can usefully complement traditional modes of As part of the corporate learning and digital learning initiatives,
learning and skills transfer. As the core training provider for the AutoUni and the Volkswagen Group Academy’s Group-wide training
Group, the Volkswagen Group Academy is consequently incorpo- networks are also making increased use of digital technology to
rating these technologies in various projects. The digitalXperience develop new training programs. At the same time, the Volkswagen
program is exploring ways of using digital technology to enhance Group Academy is setting up an Education Lab designed to create
the content and learning formats of dual-track vocational training stronger ties with education start-ups and translate the findings of
as part of gearing up for the future. These measures are flanked educational research into new technologies. These will then be tested
by systematic skills development among the teaching staff at the in collaboration with the teaching staff and students at Volkswagen
Volkswagen Group Academy. to aid learning and skills transfer.

Audi AG is employing tablets as a complementary mobile learning All these measures are aimed at maintaining and enhancing the
platform for vocational training in Ingolstadt and Neckarsulm as well high standard of skills and the outstanding expertise of Volkswagen
as in its Brussels and Györ training centers. Trainers are also being employees all over the world. Above all, we are committed to deliv-
instructed in how to work with tablet PCs. In 2016, ŠKODA launched ering learning and teaching within the framework of occupational
virtual classrooms and online language courses for German and families, by following the dual vocational training model where
English. theory and practice are closely intertwined. Systematic knowledge
transfer by in-house experts at all levels and across all brands and
specialist fields is another key factor underpinning our success.

HEALTHCARE AND SOCIAL PROVISION

Our efforts to ensure that our employees have well-developed skills As well as complying with Group guidelines on protecting and
and a high level of commitment address the first two facets of our promoting health, the medical and healthcare services we provide
strategic objective to cultivate “skilled and committed employees”. for our employees are in line with the relevant statutory require-
However, alongside a willingness to perform (through participation) ments and internal regulations at each site. All sites have at least
and empowerment to perform (through having the right qualifi- emergency health provision, while most also offer medical services
cations), there is a third facet, namely capability. This requires our under the oversight of a physician.
workforce to be physically and mentally capable of coping with the
stresses and strains that any form of work involves. In the context of health, sustainability means ensuring that, ideally,
every employee is still healthy when they retire. Protecting and
Consequently, we do not simply regard the protection and promo- promoting employees’ health is a priority for the company, shared
tion of our employees’ health as a self-evident social obligation by both management and employee representatives. Under the
and reflection of our corporate culture, but also as an integral part auspices of our TOGETHER 2025 strategy process, we have launched
of our human resources strategy. Volkswagen’s holistic approach our own Group health initiative. Over the coming years, we will fur-
to health management goes well beyond traditional preventive ther develop and implement innovative approaches to prevention,
healthcare and occupational safety; it also includes aspects such as workplace health management and ergonomics throughout the
work organization, ergonomics, prevention, integration and rehabil- Group. The aims of the health initiative are clearly defined: to im-
itation, along with leadership styles. prove employees’ quality of life, reduce stress, avoid chronic illness
and consequently also boost performance and reduce absences.

IMPROVING OCCUPATIONAL SAFETY

ELike preventive healthcare and emergency health provision, the conducted to ensure compliance with these worldwide standards.
continuous improvement of occupational safety is vitally import- For this purpose, in 2010 the Group launched its own occupational
ant to us. As long ago as 2004, the Volkswagen Group drew up an safety management system (KAMS). This system is used to analyze
occupational safety policy which is binding on all Group compa- the organizational structures and processes for occupational safety
nies around the globe. The same standards of work organization, at all participating Group companies. The findings are held in a
occupational safety and healthcare apply to all our employees central database with Group-wide access. To improve the sharing of
worldwide, taking into account local medical infrastructures and the information, in recent years the exchange of reports on serious and
relevant statutory requirements in each case. Group-wide audits are fatal accidents within the Group has been harmonized. As a result,

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People Strategic Objective: Skilled and Committed Employees

all sites can take specific action to prevent such accidents in the managers. Similarly, the group leader qualification modules have
future. Since 2012, Volkswagen in Germany has also been running also been standardized and now form a mandatory part of basic
mandatory occupational safety training modules for all prospective group leader training.

WORKPLACE ERGONOMICS

The Group continues to attach a high priority to improving work- a result, employees can be deployed in jobs that optimally reflect
place ergonomics. Its focus in 2016 was on firmly anchoring their capabilities.
ergonomics in the 2025 production strategy, in particular by lever­
aging ergonomics and synergies across all our brands. A number §§ S
ince June 2016, humans and robots have been working hand in
of projects were implemented in the reporting period: hand at Volkswagen’s Wolfsburg plant, and the first human-robot
collaboration (HRC) initiative has now been deployed on the Golf
§§ Together with Technical Development, Quality Assurance, Planning, production line. In the drive preassembly section, where individual
Industrial Engineering and Production units, in 2016 a standard powertrain components are assembled to produce an engine ready
process for reducing the effort required to record and analyze force for installation, employees are assisted by a robot. Collaborative
measurements and for designing workstations was developed and robots have already been deployed in other Group plants as well.
agreed.
At the same time, for several years Volkswagen has been making
§§ The drafting and approval of the Ergonomics White Paper provid- improvements throughout the product development process with
ed the basis for planning workstations in production and logistics, the aim of ensuring that the quality of jobs and the physical de-
with the aim of reducing the physical strain associated with the mands placed on employees by production processes are taken into
high-speed, value-adding production methods geared to matching consideration from the earliest planning and design stages of new
customer demand. vehicle models.

§§ In the future, cross-brand guidelines for ergonomic assessments in This involves leveraging both research and practical experience to
logistics will enable transparent, reproducible workload analyses combine state-of-the-art ergonomic workstations with innovative
for logistical activities. work processes. “Ergo assistants” on production lines give employees
advice and guidance directly at their workstations on how they can
§§ A
t Volkswagen-branded locations – currently as part of a pilot optimize workflows from an ergonomic standpoint.
project – a workplace management system is being used to match
workplace demands to individual employees’ physical capacity. As

Robots perform tasks that would not be ergonomic for humans

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PREVENTIVE HEALTHCARE

Ergonomics in factories and offices is one side of the occupational This checkup has now been rolled out to almost all international
health equation; individual preventive measures are the other. The sites. Other preventive healthcare programs have been brought into
Volkswagen Checkup – a free, comprehensive health screening line with Group-wide standards. In many cases, country-specific
program for all employees – is now established at all German sites supplementary examinations, such as HIV and tuberculosis tests,
and helps employees stay fit and healthy and maintain their per- have been added.
formance. Employees appreciate the high-quality diagnostics and
follow-up preventive healthcare and exercise programs.

Checkups within the Volkswagen Group1

REHABILITATION MEASURES

At many sites, we offer a tailored rehabilitation program to reinte­ are “JobReha” which offers one to three weeks of outpatient, day-­
grate employees following serious or long-term illness, providing patient or inpatient treatment, mainly for musculoskeletal prob-
specific job-related support at an early stage. The aim is to restore lems, and the “RehaFit” program, which focuses on orthopedic or
an employee’s ability to work within three to at most six months. psychological rehabilitation. Other examples include physiotherapy
and general or targeted stamina-building exercises at workplace
At Volkswagen AG, the program may also include specially tailored fitness centers. Support and counseling services for employees with
services, depending on the particular needs in each case. Examples mental health or psychosomatic problems are also being steadily
expanded.

SOCIAL PROVISION IN THE WORKPLACE

If an employee falls ill, our involvement is not solely limited to pro- The company also has a collective accident insurance scheme which
viding assistance of a medical nature, however. Volkswagen AG also insures employees for accidents resulting in death or disability. In
supplements benefits paid by social insurance providers, for example exceptional circumstances of financial need, Volkswagen AG can also
sick pay, and provides support to relatives of employees who die. provide employees with short-term loans.

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Volkswagen Group China will be prepared to deliver around

1.5 million zero emission cars to Chinese customers by 2025

Phase 1

Phase 2

Phase 3
Locally produced plug-in hybrids based
on current toolkits

+ Locally produced pure electric vehicles based

+ –
+ on current toolkits
Locally produced pure electric vehicles
Range: up to 1,000 km + based on scalable electric toolkit (MEB)
Pure electric: up to 60 km –
+ for different vehicle classes

Pure electric: up to 300 km +

–
+
Pure electric: up to 600 km
Speed charging of 80% in just 15 min

Hydrogen will still not be widely available as a fuel in the medium Thanks to our conventional and alternative technologies, as well as
term. Both hydrogen filling stations and production plants for produc- our modular toolkit strategy (including the new MEB), which allows
ing hydrogen as a renewable will need to be developed. Volkswagen innovations to be incorporated rapidly into different vehicles, we
has been working on fuel-cell technologies for over 15 years and has are ideally positioned to meet the challenges of the future. We have
gained extensive experience operating test fleets. The decision as to expanded our expertise in the field of electric traction by bringing
whether to proceed to series production will depend on market re- additional specialists and experts on board.
quirements and infrastructure. Volkswagen is actively involved in the
H2 Mobility project, the aim of which is the systematic development
of an H2 infrastructure in Germany.

CO2 LIMITS FOR TRUCKS AND BUSESE

Having already adopted CO2 legislation for passenger cars and light efficient, hence carbon-efficient, commercial vehicles, resulting in
commercial vehicles, in May 2014 the European Commission set out lower CO2 emissions. Europe’s commercial-vehicle industry supports
its strategy for reducing CO2 emissions from trucks and buses, with the aim of reducing CO2 emissions and improving road safety.
the aim of reducing CO2 emissions from the entire EU commercial-­
vehicle fleet. Until now, CO2 emissions from commercial vehicles have However, new vehicles are not solely responsible for CO2 emission
not been recorded, since the size, weight, application, mileage and trends. Important roles are also played by tires with reduced rolling
usage conditions of trucks and buses are extremely varied. Manufac- resistance, by the aerodynamic trim of trailers, and by driving be­
turers are currently collaborating with the EU Commission to draw havior, as well as alternative fuels, transport infrastructure and traffic
up a generally accessible quantification and binding declaration of conditions. In view of this, there is a joint obligation on automakers,
vehicle CO2 emissions using the VECTO CO2 simulation model (Vehicle but also on policy-makers, automotive suppliers, petroleum companies
Energy Consumption Calculation Tool). The aim is to further enhance and logistics companies, to take concerted action to minimize CO2
transparency and increase market pressure. Before the EU agrees CO2 emissions in the European transport sector.
limits for trucks and buses, however, an impact assessment must first
be carried out in order to identify the most cost-effective solution. Possible solutions could include long trucks; according to scientific
studies by the Federal Highway Research Institute (BASt), they could
Given the huge diversity of vehicle models and multi-stage pro­ cut CO2 emissions by up to 25% and are currently participating in field
duction processes that characterize heavy commercial vehicles, it trials on German roads. This would make tackling CO2 emissions the
would not be appropriate to use the one-size-fits-all approach to joint responsibility of manufacturers, haulage companies and policy-­
maximum admissible CO2 limits applied to cars and vans. Along with makers. The state would be responsible for developing appropriate
our competitors, we advocate a transparent quantification of CO2 infrastructure, the haulage companies for a more intelligent manag­
emissions that looks at the vehicle as a whole, i.e. including trailers ment of logistics processes. As manufacturers, our responsibility
and bodywork, and not just at the engine or tractor unit. This trans­ would include investing in the development of more fuel-efficient
parency should intensify the competition to build the most fuel-­ vehicles and alternative powertrains.

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NEDC TEST CYCLE COMES IN FOR CRITICISM

The New European Driving Cycle (NEDC), the procedure used in A further important European regulation pertains to Real Driving
the EU to measure passenger-car fuel consumption, has come in Emissions (RDE) for passenger cars and light commercial vehicles.
for repeated criticism from environmental organizations. Critics The packages of legislation are currently being elaborated; uniform
claim that the CO2 emissions measured in the NEDC’s 20-minute limits for nitrogen oxide and particulate emissions will then apply
laboratory-based test cycle are much lower than the emission levels across the EU from September 2017. These limits must be com-
generated in today’s actual, on-the-road driving conditions. Like all plied with in real-world road traffic, making the RDE test procedure
other vehicle manufacturers, however, we must comply with this fundamentally different from the Euro 6 standard still in force, which
legally mandated test cycle. stipulates that the limits are compulsory on the test bed. The RDE
regulation is intended primarily to improve air quality in urban areas
The European Union is planning to introduce the new World Light and areas close to traffic. It will lead to stricter requirements for
Vehicles Test Procedure (WLTP) in September 2017, which is intended exhaust gas aftertreatment in passenger cars and light commercial
to produce more realistic consumption figures. Volkswagen wel- vehicles.
comes the introduction of this new test procedure. Like the NEDC,
the WLTP aims to provide an objective benchmark for comparing
technical products.

LIFE CYCLE ENGINEERING

A comprehensive environmental assessment entails more than just an shops in which we jointly discuss and develop innovative approaches
analysis of fuel consumption; it must consider all the environmental to the environmental optimization of components and processes.
impacts of a vehicle over its full life cycle, from the manufacturing pro-
cess – including resource extraction, production of materials, supplier In 2016, we used the CDP SCP to send out a questionnaire to 119 sup-
processes and our own in-house production at all locations – through pliers. We received comprehensive responses from 83% of them – 13%
the use phase – including driving emissions, fuel preparation and more than the average response rate in the SCP. This year, the CDP
supply – through to the ultimate recycling of the vehicle at the end of evaluated the “Ability” of the 3,300 participating companies to make
its life cycle. contact with their suppliers. On a scale from A to D, Volkswagen
achieved an A– ranking, versus an average rating of C–. The ranking
Improving each vehicle’s environmental performance over its full was based on an analysis of the answers to the questionnaire.
life cycle is one of our Technical Development department’s most
firmly anchored environmental objectives. In order to meet this goal, We report on Life Cycle Engineering successes to our customers, share-
we prepare detailed life cycle assessments (LCA) of new vehicles, holders and other stakeholders by issuing what we call Environmental
powertrains, components and materials, so as to identify those areas Commendations. Based on an environmental impact assessment
where improvements will have the biggest effect. We then develop complying with ISO standards 14040 and 14044, Environmental Com-
innovations targeting precisely these hotspots. This process is known mendations describe the environmental improvements in our latest
as Life Cycle Engineering. An eponymous working group is tasked models compared with their predecessors. The Volkswagen Passenger
with ensuring the uniform Group-wide implementation of Life Cycle Cars and Commercial Vehicles brands both publish Environmental
Engineering. One of the outcomes of the working group’s activities Commendations. So does the Audi brand, under the heading Environ-
was the creation of the in-house software package LEAD (Life Cycle mental Footprint.
Environmental Assessment Database), a server-based system for the
Group-wide sharing of harmonized data that guarantees the use of Alongside LCAs, we also use other life-cycle approaches. In 2015, we
standardized routines for calculating environmental footprints. worked closely with the Technical University of Berlin (Technische Uni-
versität Berlin) to further develop our methods for calculating what is
As part of optimizing the whole value chain in the most holistic way, known as the “water footprint”. Based on a vehicle’s LCA, we calculate
we aim to minimize the environmental impact of our vehicles by and analyze the amount of water consumed by the vehicle over its
working closely with our suppliers. This is why Volkswagen joined the entire life cycle. This enables us to take specific actions to reduce water
CDP Supply Chain Program (SCP) back in 2015. In addition, we seek to consumption
stay in direct contact with our suppliers by organizing targeted work-

RESOURCE EFFICIENCY

Compared with purely environmental Life Cycle Engineering, our Group Research is involved in two long-term projects examining
analysis of the efficiency of our resource utilization takes the whole what the resource-efficient factory and resource-efficient vehicle
process one step further. Measures to improve a product’s environ- of the future will look like. New technologies such as electric and
mental performance over its life cycle are also assessed in commercial fuel-cell vehicles play a key role here, especially in terms of their
terms, so we can identify which approaches achieve the greatest resource requirements as well as new closed-loop recycling concepts.
environmental improvements in relation to the amount invested.

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“PROACTIVE RESOURCE EFFICIENCY”: USE OF RECYCLED MATERIALS (ECO-FRIENDLY MATERIALS)

Minimizing our consumption of primary raw materials is a key As well as dramatically improving a vehicle’s environmental
objective for Volkswagen. With this in mind, we explicitly insist footprint, the use of recycled and renewable materials can also
on the use of quality-assured recycled materials in almost all make good economic sense. New Volkswagen branded vehicles
vehicle components. already have a high proportion of recycled and renewable
content, accounting for approximately one-third of the weight
Recycled materials – also referred to as secondary raw materials – of six models (Polo 5 and 6, Golf 6 and 7, Passat 8, Sharan) for
are materials manufactured from production residues or end- which precise figures have already been calculated.
of-life materials. They must meet the same high Volkswagen
quality standards as primary raw materials; this we ensure by Wherever possible, the Group’s brands use renewable raw
subjecting them to regular inspections. Only the highest quality materials. For example, natural fibers like flax, cotton, wood,
materials are used in order to guarantee the safety, reliability cellulose and hemp are used in floor insulation, boot linings,
and longevity of our products and satisfy our customers’ ex- door and side panel trim and hood insulation. Similarly, kenaf
tremely high expectations. and flax fibers are used in armrests, while paper fibers are used
in cargo floors and roof reinforcement structures, and cotton
To calculate the proportion of recycled materials in an entire fibers in floor insulation.
vehicle, we identify the materials in all its components and their
recycled material content, and add them up. In order to do this, In December 2016, Volkswagen signed a pilot agreement for
we depend on reliable information obtained directly from our returning scrap aluminium directly to suppliers for subsequent
suppliers, as well as data from industry-specific associations, reuse in vehicles. The implementation of the Aluminium Closed
since a single vehicle model may include around 5,000 compo- Loop Project in 2017 will be the very first time a closed loop
nents containing more than 10,000 material items. for aluminium has been organized with non-Group suppliers.

Input materials ans primary products

as Input
illustrated by the
materials andexample of the
primary products
as illustrated
VW Golf by the example of the
VW Golf
Operating fluids and
auxiliary materials 2,3 %
Electronics 0,1 %
Composites and
other materials 3,3 %

Process polymers 1,1 %

Polymer materials 19,5 %

Nonferrous metals 2,6 %

Light alloys 8,2 %

Steel and iron materials 62,9 %

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Environment Products

LIGHTWEIGHT CONSTRUCTION

Lightweight body shell production remains a strategic development designs. One example from the reporting period is the start of series
priority. Volkswagen uses hot-formed, high-strength steels in pro­duc­ production of the new Panamera. For the first time, the Panamera’s
tion models. We are also pursuing a composite materials approach roof and side panels are made out of aluminium, and more than 30%
for specific vehicles and platforms, using a range of different mate- of the bodywork is also now made out of aluminium. But the pro-
rials in one body shell. Lightweight materials such as aluminium are portion of high-strength steel alloys has also been increased, among
also used in the development of new platforms. other things by integrating a highly complex tube of super-high-
strength steel as the bulkhead support.
The proportion of hot-formed metals in the latest Passat has been
increased by more than 75% compared with its predecessor. New On September 22, 2016, the Open Hybrid LabFactory (OHLF) was
additions include crossmembers at the front and rear of the car and in opened in the presence of Federal Research Minister Professor Wanka
the transmission tunnel. While this means more energy is consumed and other dignitaries. We are researching economical lightweight
in the production process, the reduced fuel consumption resulting construction technologies for series production as part of the OHLF
from component weight savings has a dramatic impact on CO2 emis- public-private partnership, a joint venture with the Lower Saxony
sions and energy consumption over the vehicle’s life cycle as a whole. Research Center for Vehicle Technology (NFF) at the Technical Univer-
sity of Braunschweig, the Fraunhofer Gesellschaft and various other
Porsche continues to pursue a policy of “smart lightweight con- industry partners.
struction” by implementing a sophisticated mix of materials in body

Audi is committed to the use of lightweight construction to Similarly, lightweight construction plays a key role in the success-
improve the dynamics of its models while at the same time ful new Audi A4, which entered production in 2015. Depending
reducing fuel consumption. The Audi Q7 body is largely made of on the model variant, an intelligent choice of materials and more
aluminium. Thanks to the Audi Space Frame construction, the extensive use of lightweight construction techniques make the
vehicle body only weighs a little more than 200 kg – 71 kg less new Audi A4 a full 65 kg lighter than its predecessor. The car
than its predecessor. The weight of the vehicle as a whole has produces 6 t fewer greenhouse gas emissions (equivalent to
been reduced by as much as 325 kg. CO2) over its full life cycle than its predecessor, thanks to the use
of eco-friendly production methods, reduced weight, and a wide
Lightweight construction and a high level of rigidity are also range of efficiency enhancements such as outstanding aero-
defining characteristics of the body shell of the Audi R8 Coupé. dynamics (the 1.4 TFSI ultra has a drag coefficient of just 0.23).
Along with various aluminium components, the supercar’s This translates into a 16% improvement. In this way, we have
high-strength, almost torsion-free backbone consists of a rear succeeded in reducing emissions even at the production stage,
panel, center tunnel and three-part B-pillars that are all made despite our increased use of lightweight construction materials.
of carbon fiber-reinforced plastic (CFRP). While the earlier model generated around 7.16 t of greenhouse
gases in the production phase, the new Audi A4’s production
process has reduced this by around 4% to 6.85 t.

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ENVIRONMENTAL AWARDS

Volkswagen Group and Group brand models received numerous §§ VW is the brand that has received the most awards in the “Ten
awards in 2016 for their environmentally friendly features. Here are best 2016” rankings organized by Car & Driver magazine. After as-
some examples: sessing 231 models available on the Brazilian market, a specialist
jury chose the move up! TSI as the “most sustainable model” and
§§ In the ADAC EcoTest, the models tested in 2016 – including the the speed up! TSI as the “best hatchback”, with particular em-
ŠKODA Octavia Combi 1.4 TSI G-TEC, ŠKODA Superb Combi 1.6 TDI phasis on the new 1.0 TSI Total Flex engine. The new 1.0 TSI Total
GreenLine and VW Passat Variant 1.6 TDI SCR BlueMotion – were Flex engine is Volkswagen do Brasil’s most advanced engine and
all awarded the top 5-star rating. The overall results of the ADAC the first in Brazil to feature direct injection, a turbo compressor
EcoTest are based on a range of metrics, including tests of emis- and Flex technology. The engine has already received a number of
sions of e.g. carbon monoxide, hydrocarbons, nitrogen oxides and awards in the Brazilian marketplace.
particulates in realistic driving cycles. Driving cycles are conducted
with daytime running lights (or low-beam headlights) switched §§ Volkswagen Passenger Cars vehicles emerged from a test organized
on, the air-conditioning system turned on, and a 200 kg payload. by Brazil’s Quatro Rodas magazine with top marks for energy
In late 2016, the ADAC EcoTest methodology was revised. Vehicles efficiency. Of all the cars with petrol engines, the speed up! was
that achieve good results in the EcoTest must now also be tested the most fuel-efficient, followed by the take up! and the Fox
on the road using a PEMS device (Portable Emission Measurement BlueMotion. The new Gol Comfortline with its 1.0 MPI engine and
System). In 2016, the VW up! 1.0 TSI BMT beats was subjected to the Audi A1 Sport 1.4 TFSI also made it onto the list of most eco-
and successfully passed such a PEMS re-test. nomical vehicles.

§§ AUTO TEST, the monthly consumer advice edition of AUTO BILD, §§ The Green Car of the Year Award is presented by U. S. specialist
and ÖKOTREND, the independent environmental research institu- magazine Green Car Journal. In 2016, two models from the
tion, presented awards for the most environmentally friendly cars ­Volkswagen Group were nominated, including the Audi A3 E-TRON
in all classes in 2016. Two Volkswagen Passenger Cars models won in the “Green Car of the Year” and “Connected Green Car of the
in their respective classes: the eco-up! 1.0 EcoFuel in the sub- Year” categories, and the Porsche Cayenne S E-Hybrid in the “Luxury
compact class and the Passat GTE in the upper medium (mid-size Green Car of the Year” category.
­luxury) class. The Porsche Cayenne E-Hybrid was voted number
one in the SUV class. Assessment criteria included the manu- §§ Next Green Car Ltd. in the UK presents annual awards for the most
facturer’s commitment to environmental protection and social environmentally friendly vehicles in 10 categories, after evaluating
responsibility, and the environmental impact of the vehicles the vehicles’ environmental impact throughout their life cycles.
over their entire life cycle. In 2016, the VW e-up! was chosen as the winner in the “City Car”
category thanks to its local emission output of 0 g and 93-mile
§§ In the China Eco-Car Assessment Programme (C-ECAP), the VW Golf range, which is ideal for city traffic.
TSI was the first vehicle ever to be awarded the platinum medal,
the best possible ranking. Vehicles were evaluated in six categories, §§ The American Automobile Association publishes the AAA Green
including energy efficiency and recycling quotient. Car Guide, an annual assessment of environmentally friendly
vehicles available on the U.S. market. Among the criteria applied
§§ In the 2017 VCS environmental rankings, three Group models – the are pollutant emissions and fuel consumption. In the 2016 rank-
VW up!, ŠKODA Citigo and SEAT Mii – took first places in the sub- ing, the VW e-Golf was awarded the title of “Best in Class” in the
compact (mini) class. compact car class.

§§ In the compact (small family) class, the Audi A3 Sportback TFSI §§ In the competition organized by industry magazines Verkehrs­
g-tron beat the VW Golf TGI; both vehicles are equipped with rundschau and Trucker, the Volkswagen Caddy came out on top in
natural-­gas drive systems. the van category, receiving the “Green Van 2016” award. The Caddy
delivered the best overall result based on fuel consumption,
§§ The Caddy TGI beat out other 5-seater vans to take first place. payload and load capacity. The EfficientLine 2 fuel-efficiency pack-
age for the MAN TGX was awarded the “Green Truck Innovation”
§§ The editorial team of Engadget, one of the leading U. S. online accolade for its demonstrable reduction of emissions of atmo-
technology magazines, bestowed this year’s “Best of CES” award spheric pollutants, greenhouse gases and noise pollution. Scania
on the BUDD-e in the Best Innovation category. Special mention was presented with the “Green Truck Future Innovation 2016”
was made of the vehicle’s range and fast-charging mode. Online environmental award for its hybrid module for delivery vehicles in
consumer guide SlashGear, which generally rates smartphones, the Promising Innovations category. The 235 kW (320 hp) hybrid
cars, computers and digital lifestyles, also named the BUDD-e as truck achieves fuel savings of up to 18% compared with trucks that
overall winner. run solely on diesel. It can operate exclusively in all-electric mode,
or as a hybrid running on pure biodiesel.

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VW Golf TGI BlueMotion CNG – fuel consumption in kg/100 km: from 3.5 to 3.4 (combined); CO2 emis-
sions in g/km: from 94 to 92 (combined); VW Golf TGI BlueMotion petrol – fuel consumption in kg/100
km: from 5.3 to 5.1 (combined); CO2 emissions in g/km: from 124 to 119 (combined); CO2 efficiency
class: A+

ŠKODA Octavia TDI GreenLine – fuel consumption in l/100 km: 3.5 (combined); VW e-up! – energy consumption in kWh/100 km: 11.7 (combined); CO2 emissions
CO2 emissions in g/km: 90 (combined); CO2 efficiency class: A+ in g/km: 0 (combined); CO2 efficiency class: A+

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Production and logistics

By 2018, the Volkswagen Group is aiming to reduce levels of the five §§ ultra-strategy – Audi
key environmental indicators per vehicle manufactured – energy
and water consumption, waste for disposal, and CO2 and VOC emis- §§ Green Factory – ŠKODA
sions – by 25% compared with the 2010 baseline. This target applies
to all the Group’s production locations for passenger cars and light §§ ECOMOTIVE Factory – SEAT
commercial vehicles, and builds on the general production process
requirements defined in the Group Environmental Principles. We §§ Environmental Factory – Bentley
have already made considerable progress towards reducing all five
key indicators. §§ Resource-efficient Production – Porsche

In terms of environmental impact reduction per unit (UEP), we had §§ Blue Rating – Scania
already reached our goal by the end of 2016, having cut produc-
tion-related environmental impacts by 25.3%. The status at the end §§ Climate Strategy – MAN
of 2016 compared with the 2010 baseline breaks down as follows
(2015 figures in brackets): We encourage close integration and communication between the
brands worldwide in order to create synergies, for example with
§§ specific energy consumption: –17.0% (–16.4%) our Environment Task Force. We record and catalog environmental
measures in an IT system and make these available for Group-wide
§§ specific CO2 emissions: –19.5% (–19.5%) sharing of best practices.

§§ specific VOC emissions: –41.3% (–30.5%) In the reporting period, more than 1,600 implemented measures
relating to energy and the environment were documented in this
§§ specific water consumption: –14.2% (–8.8%) system, all serving to improve passenger car and light commercial
vehicle production processes. As well as being worthwhile from an
§§ specific waste for disposal: –34.6% (–32.1%) environmental viewpoint, these activities also make financial sense,
resulting in annual savings of around €49 million. The measures are
The reduction in environmental impacts across the Group is the helping us reduce all five key environmental indicators, although
result of specific environmental programs by the individual brands, additional negative effects meant that the indicators for energy con-
including: sumption and CO2 emissions did not change very significantly.

§§ Think Blue. Factory. – Volkswagen Passenger Cars and Although 2016 was – yet again – the world’s warmest year since
Volkswagen Commercial Vehicles climate records began, a colder winter resulted in increased heating
demand across Group locations.

ENVIRONMENT TASK FORCE

We set up the Environment Task Force in 2014, with the aim of At Volkswagen-branded component manufacturing facilities, the
identifying and implementing savings initiatives at Group locations. team works hand in hand with the energy management teams in
This team of analysts from the Group environmental research unit Component Planning, who also help identify potential savings.
acts as a networking intermediary between departments involved in
planning, maintenance and operations, helping to close any gaps by Up to and including 2016, the Environment Task Force was involved
providing additional capacity and local expertise. in 25 projects around the world. Over this period, they implemented
savings measures worth €2 million and identified potential savings
The broad-based knowledge of the Environment Task Force, com­ at Group locations estimated at an additional €9 million.
bined with the many excellent ideas and solutions from col-
leagues in our various locations, plus the sharing of initiatives via
massnahmen@web, all help to promote a lively, Group-wide dialog.

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ENERGY CONSUMPTION AND CO2 EMISSIONS

In 2016, energy consumption per vehicle fell from 2,106 kWh in Since 2011, VW Kraftwerk GmbH has been investing in the ongoing
2015 to 2,090 kWh in 2016. Absolute volumes increased due to development of renewables and the construction of highly efficient
the larger number of vehicles produced. This meant that we reduced combined heat and power (CHP) plants driven by natural gas. In the
energy consumption by –17.0% (against the 2010 baseline). period to 2016, the company invested around €26 million in renew-
ables such as wind farms and photovoltaic power plants. As part
CO2 emissions (Scope 1 and 2) per vehicle rose from 882 kg in 2015 of our fuel conversion strategy, VW Kraftwerk GmbH also invested
to 883 kg in 2016. Absolute volumes also increased due to the larger some €15 million in a cogeneration plant in Braunschweig and some
number of vehicles produced. This represents a –19.5% reduction in €65 million in a gas and steam turbine (combined cycle) plant in
CO2 emissions compared with the 2010 baseline. ­Kassel. Furthermore, alongside the company’s own electricity gener-
ation activities, we are currently implementing a proportional energy
Our strategy for meeting our targets includes improving energy program for the Volkswagen Group’s production sites in Germany
efficiency, replacing coal with gas for our in-house energy production, using carbon-neutral Volkswagen Naturstrom®. Over the next few
and purchasing electricity from renewable sources. We now meet years, VW Kraftwerk GmbH is planning to invest in a new combined
around one-third of our global electricity requirements from re­ cycle plant in Wolfsburg (by 2022) and in the further development
newables. of renewables.

Examples of Best Practice §§ Lamborghini: New combined cooling, heat and power (CCHP) and
We set a particularly positive example in Brazil, switching to 100% district heating plants, coupled with a 17,000 m2 photovoltaic sys-
renewable energy despite the country’s ongoing economic diffi- tem on the roof of the central production shop at the Sant’Agata
culties. This measure is reducing CO2 emissions by approximately site in Italy, were the main factors contributing to the brand’s cer-
21,000 t per year. tification as a carbon-neutral manufacturer. Annual CO2 emissions
at the Lamborghini site have been cut by around 820 t. By the end
In 2016, the first industrial combined heat and power plant in of 2017, the CCHP is expected to reduce annual CO2 emissions
the greater Shanghai metropolitan area went into operation at to around 5,600 t, and the company is also planning to convert
­Volkswagen’s Chinese plant in Anting, in the form of a MAN CHP the plant to run on biogas. Compensatory measures will be taken
plant. The power plant supplies the site with 26 MW of electricity to offset the remaining CO2 emissions. Lamborghini is the first
and 60 t/h of steam. This covers most of the energy and all of company in the world to be certified by DNV GL (Det Norske Veri-
the steam requirements of Car Plant 3, meaning that Anting is now tas Germanischer Lloyd) under their “Carbon Neutrality” program.
making annual savings of around 95,000 MWh of energy and DNV GL is one of the world’s leading service-providers in the clas-
59,300 t of CO2. sification, verification and management of environmental risks.

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§§ A number of other examples illustrate our success in saving energy

and reducing CO2 emissions:

§§ VW: One important lever for reducing energy consumption is on-­

demand operation of all facilities. In 2016, we reinforced the energy
efficiency gains from the first pilot projects involving the load-­
dependent operation of paint dryers by rolling out the technology
at more locations. The change has cut energy requirements by
around 7,300 MWh a year, saving around €290,000 and reducing
annual CO2 emissions by approximately 1,900 t.

§§ In 2016, MAN successfully recovered thermal energy at the ship

engine test facility in Frederikshavn, Denmark, using the newly
installed heat recovery system. The recovered energy was supplied
to the municipal district heating system. The heat recovery system
is enabling us to avoid over 1,300 t in CO2 emissions.

§§ VW: We use energy value stream analysis to identify suitable

measures for reducing our energy KPI. This technique was trialed Volkswagen AG plant in Bratislava, Slovakia
at our Bratislava location and others in 2014, reducing annual
energy consumption by 12,916 MWh with annual savings of more
than €900,000. This methodology has since been rolled out to
other sites.

BLUE BUILDING

In our quest for improved environmental performance, the All lighting in the building and its external facilities is provided
­Volkswagen Group does not limit its efforts to the internal work- by LEDs, while heat and power are supplied by a photovoltaic
ings of our production facilities. We also keep a close eye on ­ system and a CHP unit (manufactured by Lichtblick). This cuts
our buildings and real estate. With our Blue Building standard CO2 emissions by up to 58 t per year.
and internal “Blue Building” award for energy-efficient, sustain-
able construction, we aim to reduce CO2 emissions from our A ventilation and cooling system delivers a steady supply of
properties while ensuring that they are built and continue to fresh air, improving the overall quality of life within the build-
operate sustainably. We aim to significantly undercut statutory ing as well as the wellbeing of employees. At night or during
energy consumption thresholds. the daytime, special louvered windows can be used to cool
down the showroom by purely natural means.
Volkswagen Immobilien completed the first Blue Building – a
Volkswagen-brand car showroom in Hanover – at the end of Our aim is to steadily refine and improve the Blue Building
2015. In the course of this project, the old building was demol- standard. To do so, we systematically evaluate experience
ished, reprocessed on site and then reused as part of the foun- acquired during the planning, construction and operation of
dations for the new building and its outdoor facilities. Recycled our buildings.
waste glass was used as insulation underneath the building.

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MATERIAL FLOW MANAGEMENT

Volkswagen uses material flow management as a tool for analyzing external databases. Any missing data is obtained from in-process
and evaluating material flows in production and the associated measurements.
environmental impacts.
Material flow analyses are useful to a variety of players. They can
Material flows are resources and energy which flow within specified be used to sensitize employees to the resource-efficient handling
system limits and can be allocated to production processes by of process materials, as a useful aid for planning new, more re-
originator. Material flow analysis allows us to depict processes more source-efficient plants, or as a decision-making tool for implement-
transparently, making it easier to recommend actions for reducing ing specific measures.
environmental impacts and cutting production costs.
Two comprehensive material flow analyses focusing on material
The informative value of a material flow analysis depends on the efficiency were carried out in the paint shops of our Poznan and
data available. Incoming and outgoing material flows in process- Bratislava car factories. The measures identified in the course of
es must be measured both qualitatively and quantitatively, by these analyses are currently being prepared for implementation in
reference to both internal environmental information systems and production.

EMISSIONS TRADING

The procedure for allocating CO2 emissions certificates under the benchmarks, a set number of certificates are being allocated free of
European Union’s Emissions Trading System changed fundamentally charge over the 2013–2020 trading period. The automotive industry
in 2013, at the start of the third trading period (2013–2020). Since was included in the new carbon leakage list that came into effect in
2013, emissions allowances for electricity providers have been auc- 2015.
tioned. For the manufacturing industry and certain types of power
plant (e.g. CHP plants), a proportion of the certificates were initially A total of 30 Volkswagen Group locations are affected by the Euro­
allocated free of charge. However, over the course of the trading pean Emissions Trading System. For 2016, 1,186,418 emissions
period, the number of such certificates has been steadily declining; certificates were allocated to the Volkswagen Group free of charge
providers requiring additional certificates must purchase them at (39,769 fewer than in the previous year).
auction.
As well as the European Union, other countries in which the
In certain industry (sub)sectors, there is a risk that production will Volkswagen Group has production sites are also considering the
be transferred to countries outside Europe now that the amended introduction of emissions trading. Seven pilot projects have
provisions governing emissions trading have come into force been launched in China, for example, although they have not yet
(a phenomenon known as “carbon leakage”). Based on pan-EU affected the Volkswagen Group. The Chinese government plans
to expand these pilot projects to form a national emissions trading
system.

SOLVENTS

In 2016, VOC emissions per vehicle were reduced from 2.80 kg in Examples of Best Practice
2015 to 2.42 kg. Compared with the 2010 baseline, emissions per
vehicle were reduced by 41.3%. This impressive achievement, whereby §§ A new, low-impact top coat painting line came onstream in
targets were not only reached but exceeded in 2016, was driven by ­Ingolstadt. Featuring state-of-the-art technology such as air
numerous VOC-reducing measures in many of the paint shops at recirculation, dry scrubbing and exhaust air purification, the new
Group locations, as well as the state-of-the-art painting and exhaust facility has reduced the consumption of thermal energy and
air treatment systems installed in new plants. water per car by 20%. Furthermore, air recirculation is helping to
reduce CO2 emissions per painted vehicle by 30%, while exhaust
air purification is reducing VOC emissions by 90%.

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WATER

In 2016, water consumption per vehicle was reduced from 4.14 m3

in 2015 to 3.90 m3. Despite the larger number of vehicles produced,
freshwater consumption per vehicle has steadily fallen since 2010
thanks to a raft of recycling measures and the introduction of manu-
facturing techniques that use minimal water.

Alongside climate protection, conserving our planet’s freshwater

reserves is one of the pivotal requirements for preserving the basic
necessities of life. Water resources are already scarce in many re-
gions of the world, and access to clean drinking water is an increas-
ingly pressing problem for large sections of the global population.
This prompted us to adopt water as a focus topic for 2014. Within
our sphere of influence, we also support the United Nations’ Sus-
tainable Development Goals (SDGs) adopted in September 2015.
Drawing on the comprehensive data collated in our life cycle
assessments, we published a pioneering analysis of our water foot-
print in 2013, in which we identified those processes that consume
the most water over the life cycle of a representative selection of
­Volkswagen-branded models. In 2015, we worked with the Technical
University of Berlin to further refine the in-house methodology §§ Social and environmental initiatives. Particularly through our bio-
used to calculate our water footprint. diversity projects, we help protect water resources and promote
public environmental awareness.
The water footprint analysis showed that the use phase plays only a
minor role. Much of the water consumed is due to the fuel produc- §§ Transparency. We communicate our goals and activities to the
tion process. Another significant water consumer is the supply chain public. In 2013, Volkswagen became the world’s first automaker
for the extraction or creation of raw materials, over which we have to commit to the United Nations’ CEO Water Mandate. Also,
no direct influence. Consequently, we are focusing our attention since 2011, we have been providing extensive disclosure of our
on areas where we can directly influence water consumption: our water management practices and progress, by completing the
production sites. We are also making efforts to continuously reduce very detailed CDP water management questionnaire. In 2015, we
our water consumption by further improving our vehicles’ fuel withdrew our responses in the light of the diesel issue. After a
consumption and using more secondary materials, such as recycled one-year suspension in 2015 as a consequence of the diesel issue,
materials, in production. Our latest review indicates that 57% of our we rejoined the program in 2016, achieving a Leadership rating
entire freshwater consumption – approximately 23 million m3 – is of A– for our Water Disclosure Project.
attributable to sites located in regions where groundwater resources
are at risk, especially our plants in Mexico, Spain, South Africa, India 2016 – “Year of Water” in China
and China. In these regions in particular, we have made minimiz-
ing water use an even higher priority. We adapt our water use to §§ Given the high production volume in China, the country’s share
the varying regional availability of water resources worldwide. At of Group-wide water consumption is comparatively high. Conse-
the same time, we support a broad range of projects in which the quently, 2016 was designated the “Year of Water” in China. Teams
protection or development of water resources is a key or even the of experts analyzed water management at all Volkswagen pro-
primary objective. The same approach also characterizes the water duction sites in China and implemented optimization measures
management strategy adopted by the Corporate Environment & in order to save even more water per vehicle produced. Between
Energy Steering Committee, which defines four action areas: 2010 and 2015, we had already achieved water savings of around
14.1% in China. In 2016, we achieved further significant water
§§ Safe and reliable water supply and sewerage. We aim to protect savings, bringing total savings between 2010 and 2016 up to
groundwater reserves against pollution, and to avoid production 22.4%. Systematic analysis enabled us to achieve savings in every
downtimes caused by water shortages. part of the factory by, for example, optimizing cooling systems
and introducing on-demand management of paint consumption
§§ Efficient water use throughout the life cycle. By using water as in the paint shop.
economically and efficiently as possible during the production pro-
cess, and by recycling as much water as possible, we aim to reduce
total water consumption to the great possible extent.

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Examples of Best Practice §§ In 2016 alone, our Foshan plant successfully reduced its water
consumption by more than 26%, from 3.9 to 2.9 m³ per vehicle,
§§ We use recycling facilities at some of the Group’s locations that by implementing measures devised during the “Year of Water”.
use a membrane process to prepare biologically precleaned waste
water for reuse, thereby reducing freshwater consumption levels. §§ In total, the Group saved 906,807 m³ of freshwater in 2016
In 2015, we brought a recycling facility on stream at our Salzgitter compared with the previous year, thanks to a raft of individu-
plant. This facility processes half the plant’s wastewater into al measures and optimizations. However, factors beyond our
recycled water and uses it to feed the central cooling tower. As a control, such as fluctuating weather conditions, also influence
result of this measure, we save around 75,000 m3 of freshwater freshwater consumption. With water prices ranging from around
annually, equivalent to around a quarter of the plant’s needs. €0.3 – €1.0 per m³, this translates into water supply cost savings
of approximately €0.5 million
§§ Our Uitenhage plant in South Africa has managed to reduce its in the reporting period.
water consumption per vehicle by more than 50% (from 6.2 to
2.7 m³/vehicle). In 2015, this achievement so impressed the jury §§ In order to permanently implement water-saving processes within
of the annual Greening the Future Awards competition that the the Group, a new internal White Paper defines key requirements
plant won the national prize in the “Water Efficiency & Manage- for the various processes in the production sequence.
ment” category.

WASTE

Wherever possible, we make great efforts to use standardized waste

management systems to optimize our waste management in all
divisions. These systems are already used to control waste manage­
ment processes in all German factories run by the Volkswagen,
Volkswagen Commercial Vehicles, Porsche, Audi and MAN brands,
and for state-monitored disposal of hazardous waste in particular
(Electronic Government). The aim is to roll out these systems in
Europe and thereafter across regions around the world.

ŠKODA plants in the Czech Republic and Volkswagen plants in

Slovakia also use waste management systems. In 2015/16, implemen­
tation in the VW and SEAT plants in Spain, Portugal and Poland
was coordinated with in-house IT departments and preliminary
plans were drawn up. In 2017, plants in Spain will be equipped with
a waste management system.

In 2015, in order to review our waste management processes and

recycling, we introduced audits of waste disposal processes as a key
By the end of 2016, the volume of waste for disposal per vehicle had control mechanism at many of our sites. This reflects our duty of
been reduced from 16.2 kg in 2015 to 15.2 kg, representing a reduc- care to ensure controlled, environmentally friendly waste disposal.
tion of 34.6% against the 2010 baseline. In Germany, a standardized procedure for these audits was devel-
oped in collaboration with other vehicle manufacturers (original
We aim to use materials and products as efficiently as possible, and equipment manufacturers or OEMs) and major suppliers. In 2015
so reduce the volume of waste per unit manufactured. and 2016, we carried out audits across multiple locations and OEMs
in Europe. Audits have also been carried out in the regions, albeit
In order to achieve this goal, we have adopted a three-stage waste exclusively for Volkswagen’s own brands. In order to set a common
strategy: benchmark for the quality standards expected of waste disposal
services, we also trained potential auditors at a number of eastern
1. Prioritizing waste recycling and reducing waste for disposal European sites, giving them the skills to carry out quality-assured
audits so that the results could also be used by other OEMs and
2. Reducing waste volumes via waste treatment suppliers. Based on these positive experiences, similar training
programs will be organized at other sites. Descriptions of the audit
3. Reducing waste volumes by optimizing production and procedures, as well as audit documentation, are now available in
ancillary processes the languages of the various countries in which the Group operates,
with the exception of China.

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Environment Production and logistics

Production waste from packaging and workshops, as well as the §§ At the Audi site in Neckarsulm, special containers for dewatering
Technical Development department, is recycled to the highest paint sludge are being used experimentally. So far – and contrary
possible standards. For the recycling of waste from production and to previous experience – the experiment has been successful.
logistics that has a resale value, such as paper, plastics, wood and The system has reduced the residual liquid content of the sludge,
metal, our Purchasing department has rolled out a Group-wide sys- hence the amount of waste, and the sludge has a more solid
tem to improve the efficiency of the entire process. The focus here consistency. Whether the containers are suitable for permanent
is not only on revenue generation, but also on optimized preparation use will be decided after a long-term pilot.
of the waste for efficient transportation.
§§ At ŠKODA, transportable oil filtration systems are used to increase
Examples of Best Practice the service life of oils and so reduce the amount of waste oil. In
§§ In January 2016, an advanced waste management system was addition, a new evaporator system for separating emulsions has
introduced at our Bratislava plant for optimizing waste logistics gone into operation at the Vrchlabi plant, aiming to reduce the
processes. Transponder technology (based on Data Matrix code) volume of waste emulsions for disposal. ŠKODA is also now using
is used to identify every single piece of waste at its point of origin washable – i.e. reusable – cleaning cloths instead of disposable
and track it seamlessly all the way through to final disposal. At ones.
each stage of the disposal process, the system records the volume,
fill level, degree of sorting and condition of waste container loca- §§ At the Braunschweig plant, press containers used for household-­
tions, as well as any wrongly disposed materials. Working together type commercial waste, cardboard, paper and plastic film are
with the waste producers, the waste management department equipped with a GPS signaling system. The system automatically
uses the collected information to develop suitable measures for tracks the fill level and position of the containers. Once containers
optimizing container volumes, collection intervals, container are 75% full, a signal is automatically sent to the waste disposal
locations and disposal routes in response to ambient production specialist for transport scheduling purposes. This has enabled the
conditions. This tool has streamlined waste management at the plant to significantly increase full container weights and so reduce
Bratislava plant, as reflected in, for example, the 15% reduction in the number of disposal runs.
the amount of cost-incurring waste. Furthermore, substantially
less time is required to collate waste figures for reports.

GREEN LOGISTICS

Logistics is part of the Volkswagen Group’s environmental focus.

For example, we are optimizing the entire transport chain in order
to avoid CO2 emissions. The aim is to avoid transportation com­
pletely or else shift to more environmentally friendly modes of trans-
port, and to reduce fuel consumption. We are pursuing measures
and activities for optimizing logistics processes across our brands.

The Corporate Green Logistics Working Group was set up in 2012.

The Group is responsible for coordinating and jointly developing
initiatives, accounting practices and training packages across the
Group.

Choosing the right means of transport is a key starting point for

reducing CO2 emissions. Maritime shipping is regarded as one of the
most efficient transport options. So the Volkswagen Group is now
involved in the Clean Shipping Network (CSN), an association of
marine cargo owners, and is represented on its management board.
CSN members can use the Clean Shipping Index (CSI) rating tool to
compare environmental efficiency figures such as the emissions of
individual ships on particular routes. This is useful for analyzing the
environmental impact of shipping. At the request of Volkswagen
AG and others, soot particles have now been included in the index, Starting in 2019, the Volkswagen Group will become one of the first
alongside CO2, NOX , SOX , water and chemicals. vehicle logistics OEMs to use two car-carrying vessels powered by
liquefied natural gas (LNG) supplied by Siem Car Carriers AS between
Volkswagen Group Logistics is continuously expanding the number Europe and North America. The alternative, LNG-driven marine en­gine
of CSI-listed vessels in its own transport network. The ratio is is improving the environmental compatibility of marine trans­port
regularly updated and considered whenever the Group offers new and sustainably reducing airborne pollution – CO2 by up to 25% and
transport services to tender. NOX by up to 30%; soot particles by up to 60% and SOX by up to 100%.

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Environment Production and logistics

Furthermore, the Group is constantly working to find and use alter- The Group Consolidation Center that opened in 2016 in Malacky
native and more environmentally compatible transport options for near Bratislava is also helping to improve the environmentally
material logistics. Materials from Turkey destined for Volkswagen friendly profile of logistics within the Volkswagen Group. Optimized
Autoeuropa in Palmela, Portugal, have been shipped from Izmir to thermal insulation is reducing heating costs; the use of double doors
Lisbon since late 2015. Previously, the materials traveled by truck. in the loading and unloading area is ensuring that heat losses are
By changing the means of transport, the company is saving 240 t of minimized, and LED lighting is cutting electricity consumption
CO2 per year and also cutting costs. by around 50%. At the same time, the bundling of freight in the
Consolidation Center has cut the daily traffic volume by an average
of around 90 trucks in goods incoming, and around 65 trucks in
goods dispatch.

BIODIVERSITY

Biodiversity signifies the variety of life on our planet, encapsulating the soil and biodiversity at 32 locations belonging to the Volkswagen
the variety of species, genetic differences within species, and the Passenger Cars, Porsche and MAN brands.
diversity of ecosystems. We rely on it as the basis for our continued
existence: healthy food, clean water, fertile soils and a balanced One of the projects we jointly implemented with Naturschutzbund
climate. Protecting biological diversity is one of the greatest societal Deutschland e.V. (NABU) was a wetland conservation project in
challenges of our time. The United Nations has thus declared the ­Germany. In 2016, Volkswagen Financial Services AG once again
current decade to be the “UN Decade on Biodiversity”. made a donation in support of NABU’s International Peatland
Conservation Fund. The company is currently sponsoring 13 wetland
Volkswagen has been committed to protecting biodiversity since conservation projects in various parts of Germany ranging from
2007 and is a founder member of the Biodiversity in Good Company Lower Saxony to Bavaria, as well as projects in Poland, Lithuania,
e.V. initiative. In our mission statement, we promise to support the Latvia and Estonia.
protection of species at all locations. On the basis of this commit-
ment, VW Mexico was invited to give a guest presentation at the At our international sites, we collaborate with a range of partners to
Business and Biodiversity Forum in Cancun in December 2016. The support the protection of nature and biodiversity. This means we can
Forum was part of the United Nations’ Conference of the Parties to contribute to local implementation of the United Nations’ Sustain-
the Convention on Biological Diversity (COP13-CBD). We primarily able Development Goals (SDGs). We also fund biodiversity research
contribute to achieving the targets of the UN Convention on Biolog- at our Urumqi site in the Chinese province of Xinjiang. We have been
ical Diversity by minimizing greenhouse gas emissions and utilizing supporting the Dyer Island Conservation Trust in South Africa since
materials and resources as efficiently as possible. As a consequence 2011; in 2015, the Trust opened a care center for seabirds there.
of the diesel issue, we are putting our membership of the Biodiver- Since 2012, Volkswagen Slovakia has been engaged in a joint venture
sity in Good Company e.V. initiative on hold for the time being. with Comenius University in Bratislava, breeding crayfish threatened
with extinction with the aim of resettling them in Slovakia’s streams
Biodiversity is a component of our environmental management. and rivers. In 2017, we are planning further research projects in
We have, among other things, appointed a biodiversity officer and Slovakia’s nature reserves and lakes.
commissioned external expert assessments of the risks to water,

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Environment Sales, use and recycling

Sales, use
and recycling
Our philosophy of forward-thinking, environmentally minded with a smaller carbon footprint. This is why we are committed to of-
mo­bility spans every stage in the value chain. But the use phase is fering our customers the fullest possible range of mobility services,
pivotal – not just in terms of impact, but also because it is critical and why the Group’s Environmental Strategy also embraces the final
to success as our customers’ needs continue to evolve. Fuel-efficient stage of the vehicle’s life cycle: recycling.
vehicles are just one, albeit vital, component of progressive mobility

SMART MOBILITY

Objective tions against this yardstick. Using scientific criteria, a catalog of –

Mobility is an essential prerequisite of a functioning society and at the last count – 19 indicators has been developed and trialed in
economic growth. Our aim is to make mobility even more efficient six model cities around the world. In return, each of the partici­
and environmentally compatible, but also to enable more people pating cities is given a sustainability profile, while a database of
to play an active part in society – in line with the United Nations’ solutions also developed as part of the project reveals the most
Sustainable Development Goals (SDGs). We define “smart mobility” effective measures for each indicator. In the spring of 2016, the
as optimized interaction between road users, infrastructure and European Commission announced that it would actively support
different modes of transport. Digitalization and connectivity are the use of these indicators in cities.
pivotal in preparing for the use of new products and services and
improving traffic flows. However, in addition to environmental pro- Research Projects
tection, smart mobility is also synonymous with improved safety It is also important to produce reliable forecasts of the potential
and the economical use of traffic areas, for example through the use impacts of future solutions on urban air quality, noise pollution or
of innovative assistance systems to circumvent traffic jams. traffic flow (impact assessment). This is where models and simu-
lations make an important contribution, because many solutions
Strategic Approach – such as dial-a-bus systems – only exert appreciable influence once
During the reporting period, Volkswagen continued its long-stand- they have achieved a certain market penetration. Building on these
ing systematic research into mobility issues. In order to develop results, it is then possible to develop or optimize the right solutions
appropriate, intelligent solutions, auto mobility must be treated as for the future with much greater exactitude.
part of a complete system that incorporates other modes of trans-
port, human settlement patterns, urban and infrastructural develop- In parallel with the ongoing automation of driving functions, innova-
ments, new technologies – especially automatic driving, digitaliza- tive methods for identifying situations and using them to calculate
tion, electric mobility and connectivity – as well as trending demand traffic-efficient driving strategies are gaining in importance. We are
(e.g. carsharing, vehicle sharing) and other influencing factors. Part further expanding our research activities in these areas in order to
of our strategic approach is to maintain an intensive dialog with the make the most of the limited road area in the vicinity of urban junc-
general public and academia. tions and other sensitive nodes in the traffic system.

Challenges and their possible solutions, especially in towns and More and more of us live in cities. Traffic noise impairs our quality
cities, once again featured high on the mobility agenda for both of life, and is produced by many different means of transport. At
the general public and academia. Our film “Urban Mobility 2030” Volkswagen, we are very aware of our responsibilities as a manu-
helped us refine our strategic appreciation of the challenges posed facturer of one of those means of transport in particular – the auto­
by urban mobility and the various potential solutions, and to open mobile – and are working intensively on ways to steadily reduce
it up for debate – for example at DRIVE, the Volkswagen Group noise emissions from individual vehicles. In these efforts to reduce
Forum in Berlin. noise, Volkswagen is even going one step further. We are using a
specially developed tool to calculate noise pollution levels in cities
Since 2013, Volkswagen has been collaborating with 14 other and further develop our understanding of the role of the car, assess
companies from various industries on the Sustainable Mobility 2.0 interactions between different noise sources, and evaluate various
project launched by the World Business Council for Sustainable measures for reducing noise. Our aim is to improve the noise situa­
Development (WBCSD). A sustainable approach to future urban tion for urban residents in general by entering into dialog with
mobility needs a credible definition of what the word “sustainable” cities and fellow noise emitters.
actually means, and a way of measuring current and future solu-

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Environment Sales, use and recycling

Volkswagen AG supported the INEES research project by providing 20 VW e-up! cars. VW e-up! energy consumption in
kWh/100 km: 11.7 (combined); CO2 emissions in g/km: 0 (combined); efficiency rating: A+

MOBILITY SERVICES
AUDI E-GAS FUEL CARD AND
GREEN GAS PRODUCTION Mobility Solutions is one of the four cornerstones of our new
TOGETHER – Strategy 2025.

Drivers of the Audi A3 Sportback g-tron can become almost In future, the Group plans to invest in carsharing, robotaxis and
entirely carbon-neutral, thanks to the Audi e-gas fuel card. transport-on-demand initiatives. The strategic partnership with
Audi records the amount of gas each customer purchases on-demand mobility company GETT is one such initiative, aimed at
with the card, and ensures that exactly the same quantity of expanding the Group’s Mobility Solutions portfolio.
synthetically produced, renewable Audi e-gas is fed into the
German natural-gas network to compensate. The e-gas is With the rapid expansion of Internet commerce, the number of
produced by the world’s largest industrial power-to-gas plant packages being delivered in towns and cities is rising sharply, result-
on the grid, which uses a chemical process based on wind ing in escalating traffic volumes. If deliveries fail because there is
power, CO2 and water to generate synthetic methane, effec- no-one to accept the delivery, this is a negative outcome for all par-
tively “storing” green electricity in the existing natural-gas ties involved – but also for the environment. Consequently, we aim
network. In 2015, following a successful test sequence, the to create synergies between passenger and goods transportation by
plant qualified to participate in the balancing energy market. devising new logistics concepts that avoid unnecessary journeys.
Thus the effects of the Audi e-gas project extend well beyond One possible solution, developed in cooperation between Audi and
the automotive industry. Group Research, is the so-called “parcel car”. In the era of networked
vehicles, a car boot (trunk) becomes a mobile delivery address to
which logistics service providers can gain keyless access. Thanks to
this temporary access authorization, by the time the recipient leaves
work, the package is already safely in their car boot. Audi AG is joint-
ly testing this solution – dubbed “Audi connect easy delivery” – with
DHL Paket and Amazon in Munich, and is preparing to launch it with
a view to making the concept available to all Group vehicles in the
future.

MOBILITY MANAGEMENT AT OUR SITES

Of course smart mobility also includes providing solutions for

our own employees at Volkswagen sites with what we call
“mobility management”. This includes, but is not limited to,
cars and parking spaces. Examples include cycling campaigns,
shuttle-bus services, season tickets for public transport,
the provision of ridesharing apps, and parking spaces for
carpools.

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Eco-friendly Driving
Regardless of model or brand, alongside the development of ever §§ Customers can also book “Think Blue. Eco-Training.” courses
more efficient vehicles, eco-friendly driving habits are a major factor directly with Volkswagen in Germany, Hong Kong and Singapore.
in reducing fuel consumption and CO2 emissions, not to mention
noise and pollutant emissions. With this in mind, we support our §§ Plenty of fuel-saving hints and tips are provided in dedicated
customers by offering a range of courses: brochures and car manuals

SAVE FUEL WITH “THINK BLUE. TRAINER.” SCANIA ECOLUTION

“Think Blue. Trainer.” is a driver assistance program offering Ecolution by Scania combines our tailored products with driver
vital information on current fuel consumption during journeys services. Based on continuous customer dialogue, the common
as a way of encouraging eco-friendlier driving habits. It already goal is improved fuel efficiency. Through optimized vehicle
features in the e-up! and up! models with conventional power­ specifications, performance diagnostics, driver training and
trains, as well as the Polo and Passat, and will gradually be monthly follow-ups, our results show an average 10% reduction
rolled out to other models. The range of functions offered by the in fuel consumption.
“Think Blue. Trainer.” program can be further extended with the
“Volkswagen Car-Net Think Blue. Trainer.” app, which communi- Scania Fuel Masters, a new interactive competition site that
cates with the vehicle and can be operated via the infotainment Scania launched in October 2015, allows drivers to compare their
system. The app also contains training challenges for additional most fuel-efficient journeys with each other via their mobile
motivation. All trips are automatically stored, and can be used phones.
later for cross-comparison.

Audi Mobility Services

Audi offers three innovative carsharing services: Audi shared fleet, The Audi select service targets private individuals and corporate
Audi select and Audi on demand. customers alike. Over a 12-month period, customers can drive three
different Audi models – and for six months, choose a Ducati as well.
With Audi shared fleet, companies can customize their own corpo- A premium pool of low-mileage, well-equipped second-hand cars is
rate fleets. Depending on the individual arrangement, Audi takes available for this service.
care of the on-site implementation and maintenance of the cor-
porate vehicle fleet – from supplying carpool vehicles to regularly Audi on demand is a mobility service that gives customers flexible
servicing, fueling and cleaning them. The highlight: employees can access to premium mobility. Whether for spontaneous short adven-
use the pool vehicles for business and private trips. This increases tures or longer business trips, customers can book the right Audi
employees’ mobility – even after regular working hours – and can online; cars are available in a matter of minutes. Munich Airport is
be used as an additional incentive by employers. Even better, Audi the first Audi on demand location in Germany.
shared fleet enhances fleet utilization and cost efficiency.

PRODUCT COMMUNICATION
CARSHARING
Alongside the development of ever more fuel-efficient new models,
the Volkswagen Group boasts a wide range of other offerings for
eco-friendly mobility. Our product communications spotlight partic- In 2013, Volkswagen Financial Services, together with its
ularly efficient vehicles and low-carbon technologies by awarding partner Pon Holdings B.V., acquired a stake in market-leading
them efficiency badges, and report on the environmental progress Dutch carsharing company Collect Car B.V., better known as
new models have made over their predecessors by means of Life Greenwheels.
Cycle Assessments and Environmental Commendations.

Porsche has also launched a sustainability initiative to support

dealers, aimed at improving the energy efficiency of existing Porsche
Centers and ensuring that new centers are made as energy-efficient
as possible.

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Environment Products

Volkswagen Group China will be prepared to deliver around

1.5 million zero emission cars to Chinese customers by 2025

Phase 1

Phase 2

Phase 3
Locally produced plug-in hybrids based
on current toolkits

+ Locally produced pure electric vehicles based

+ –
+ on current toolkits
Locally produced pure electric vehicles
Range: up to 1,000 km + based on scalable electric toolkit (MEB)
Pure electric: up to 60 km –
+ for different vehicle classes

Pure electric: up to 300 km +

–
+
Pure electric: up to 600 km
Speed charging of 80% in just 15 min

Hydrogen will still not be widely available as a fuel in the medium Thanks to our conventional and alternative technologies, as well as
term. Both hydrogen filling stations and production plants for produc- our modular toolkit strategy (including the new MEB), which allows
ing hydrogen as a renewable will need to be developed. Volkswagen innovations to be incorporated rapidly into different vehicles, we
has been working on fuel-cell technologies for over 15 years and has are ideally positioned to meet the challenges of the future. We have
gained extensive experience operating test fleets. The decision as to expanded our expertise in the field of electric traction by bringing
whether to proceed to series production will depend on market re- additional specialists and experts on board.
quirements and infrastructure. Volkswagen is actively involved in the
H2 Mobility project, the aim of which is the systematic development
of an H2 infrastructure in Germany.

CO2 LIMITS FOR TRUCKS AND BUSESE

Having already adopted CO2 legislation for passenger cars and light efficient, hence carbon-efficient, commercial vehicles, resulting in
commercial vehicles, in May 2014 the European Commission set out lower CO2 emissions. Europe’s commercial-vehicle industry supports
its strategy for reducing CO2 emissions from trucks and buses, with the aim of reducing CO2 emissions and improving road safety.
the aim of reducing CO2 emissions from the entire EU commercial-­
vehicle fleet. Until now, CO2 emissions from commercial vehicles have However, new vehicles are not solely responsible for CO2 emission
not been recorded, since the size, weight, application, mileage and trends. Important roles are also played by tires with reduced rolling
usage conditions of trucks and buses are extremely varied. Manufac- resistance, by the aerodynamic trim of trailers, and by driving be­
turers are currently collaborating with the EU Commission to draw havior, as well as alternative fuels, transport infrastructure and traffic
up a generally accessible quantification and binding declaration of conditions. In view of this, there is a joint obligation on automakers,
vehicle CO2 emissions using the VECTO CO2 simulation model (Vehicle but also on policy-makers, automotive suppliers, petroleum companies
Energy Consumption Calculation Tool). The aim is to further enhance and logistics companies, to take concerted action to minimize CO2
transparency and increase market pressure. Before the EU agrees CO2 emissions in the European transport sector.
limits for trucks and buses, however, an impact assessment must first
be carried out in order to identify the most cost-effective solution. Possible solutions could include long trucks; according to scientific
studies by the Federal Highway Research Institute (BASt), they could
Given the huge diversity of vehicle models and multi-stage pro­ cut CO2 emissions by up to 25% and are currently participating in field
duction processes that characterize heavy commercial vehicles, it trials on German roads. This would make tackling CO2 emissions the
would not be appropriate to use the one-size-fits-all approach to joint responsibility of manufacturers, haulage companies and policy-­
maximum admissible CO2 limits applied to cars and vans. Along with makers. The state would be responsible for developing appropriate
our competitors, we advocate a transparent quantification of CO2 infrastructure, the haulage companies for a more intelligent manag­
emissions that looks at the vehicle as a whole, i.e. including trailers ment of logistics processes. As manufacturers, our responsibility
and bodywork, and not just at the engine or tractor unit. This trans­ would include investing in the development of more fuel-efficient
parency should intensify the competition to build the most fuel-­ vehicles and alternative powertrains.

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NEDC TEST CYCLE COMES IN FOR CRITICISM

The New European Driving Cycle (NEDC), the procedure used in A further important European regulation pertains to Real Driving
the EU to measure passenger-car fuel consumption, has come in Emissions (RDE) for passenger cars and light commercial vehicles.
for repeated criticism from environmental organizations. Critics The packages of legislation are currently being elaborated; uniform
claim that the CO2 emissions measured in the NEDC’s 20-minute limits for nitrogen oxide and particulate emissions will then apply
laboratory-based test cycle are much lower than the emission levels across the EU from September 2017. These limits must be com-
generated in today’s actual, on-the-road driving conditions. Like all plied with in real-world road traffic, making the RDE test procedure
other vehicle manufacturers, however, we must comply with this fundamentally different from the Euro 6 standard still in force, which
legally mandated test cycle. stipulates that the limits are compulsory on the test bed. The RDE
regulation is intended primarily to improve air quality in urban areas
The European Union is planning to introduce the new World Light and areas close to traffic. It will lead to stricter requirements for
Vehicles Test Procedure (WLTP) in September 2017, which is intended exhaust gas aftertreatment in passenger cars and light commercial
to produce more realistic consumption figures. Volkswagen wel- vehicles.
comes the introduction of this new test procedure. Like the NEDC,
the WLTP aims to provide an objective benchmark for comparing
technical products.

LIFE CYCLE ENGINEERING

A comprehensive environmental assessment entails more than just an shops in which we jointly discuss and develop innovative approaches
analysis of fuel consumption; it must consider all the environmental to the environmental optimization of components and processes.
impacts of a vehicle over its full life cycle, from the manufacturing pro-
cess – including resource extraction, production of materials, supplier In 2016, we used the CDP SCP to send out a questionnaire to 119 sup-
processes and our own in-house production at all locations – through pliers. We received comprehensive responses from 83% of them – 13%
the use phase – including driving emissions, fuel preparation and more than the average response rate in the SCP. This year, the CDP
supply – through to the ultimate recycling of the vehicle at the end of evaluated the “Ability” of the 3,300 participating companies to make
its life cycle. contact with their suppliers. On a scale from A to D, Volkswagen
achieved an A– ranking, versus an average rating of C–. The ranking
Improving each vehicle’s environmental performance over its full was based on an analysis of the answers to the questionnaire.
life cycle is one of our Technical Development department’s most
firmly anchored environmental objectives. In order to meet this goal, We report on Life Cycle Engineering successes to our customers, share-
we prepare detailed life cycle assessments (LCA) of new vehicles, holders and other stakeholders by issuing what we call Environmental
powertrains, components and materials, so as to identify those areas Commendations. Based on an environmental impact assessment
where improvements will have the biggest effect. We then develop complying with ISO standards 14040 and 14044, Environmental Com-
innovations targeting precisely these hotspots. This process is known mendations describe the environmental improvements in our latest
as Life Cycle Engineering. An eponymous working group is tasked models compared with their predecessors. The Volkswagen Passenger
with ensuring the uniform Group-wide implementation of Life Cycle Cars and Commercial Vehicles brands both publish Environmental
Engineering. One of the outcomes of the working group’s activities Commendations. So does the Audi brand, under the heading Environ-
was the creation of the in-house software package LEAD (Life Cycle mental Footprint.
Environmental Assessment Database), a server-based system for the
Group-wide sharing of harmonized data that guarantees the use of Alongside LCAs, we also use other life-cycle approaches. In 2015, we
standardized routines for calculating environmental footprints. worked closely with the Technical University of Berlin (Technische Uni-
versität Berlin) to further develop our methods for calculating what is
As part of optimizing the whole value chain in the most holistic way, known as the “water footprint”. Based on a vehicle’s LCA, we calculate
we aim to minimize the environmental impact of our vehicles by and analyze the amount of water consumed by the vehicle over its
working closely with our suppliers. This is why Volkswagen joined the entire life cycle. This enables us to take specific actions to reduce water
CDP Supply Chain Program (SCP) back in 2015. In addition, we seek to consumption
stay in direct contact with our suppliers by organizing targeted work-

RESOURCE EFFICIENCY

Compared with purely environmental Life Cycle Engineering, our Group Research is involved in two long-term projects examining
analysis of the efficiency of our resource utilization takes the whole what the resource-efficient factory and resource-efficient vehicle
process one step further. Measures to improve a product’s environ- of the future will look like. New technologies such as electric and
mental performance over its life cycle are also assessed in commercial fuel-cell vehicles play a key role here, especially in terms of their
terms, so we can identify which approaches achieve the greatest resource requirements as well as new closed-loop recycling concepts.
environmental improvements in relation to the amount invested.

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“PROACTIVE RESOURCE EFFICIENCY”: USE OF RECYCLED MATERIALS (ECO-FRIENDLY MATERIALS)

Minimizing our consumption of primary raw materials is a key As well as dramatically improving a vehicle’s environmental
objective for Volkswagen. With this in mind, we explicitly insist footprint, the use of recycled and renewable materials can also
on the use of quality-assured recycled materials in almost all make good economic sense. New Volkswagen branded vehicles
vehicle components. already have a high proportion of recycled and renewable
content, accounting for approximately one-third of the weight
Recycled materials – also referred to as secondary raw materials – of six models (Polo 5 and 6, Golf 6 and 7, Passat 8, Sharan) for
are materials manufactured from production residues or end- which precise figures have already been calculated.
of-life materials. They must meet the same high Volkswagen
quality standards as primary raw materials; this we ensure by Wherever possible, the Group’s brands use renewable raw
subjecting them to regular inspections. Only the highest quality materials. For example, natural fibers like flax, cotton, wood,
materials are used in order to guarantee the safety, reliability cellulose and hemp are used in floor insulation, boot linings,
and longevity of our products and satisfy our customers’ ex- door and side panel trim and hood insulation. Similarly, kenaf
tremely high expectations. and flax fibers are used in armrests, while paper fibers are used
in cargo floors and roof reinforcement structures, and cotton
To calculate the proportion of recycled materials in an entire fibers in floor insulation.
vehicle, we identify the materials in all its components and their
recycled material content, and add them up. In order to do this, In December 2016, Volkswagen signed a pilot agreement for
we depend on reliable information obtained directly from our returning scrap aluminium directly to suppliers for subsequent
suppliers, as well as data from industry-specific associations, reuse in vehicles. The implementation of the Aluminium Closed
since a single vehicle model may include around 5,000 compo- Loop Project in 2017 will be the very first time a closed loop
nents containing more than 10,000 material items. for aluminium has been organized with non-Group suppliers.

Input materials ans primary products

as Input
illustrated by the
materials andexample of the
primary products
as illustrated
VW Golf by the example of the
VW Golf
Operating fluids and
auxiliary materials 2,3 %
Electronics 0,1 %
Composites and
other materials 3,3 %

Process polymers 1,1 %

Polymer materials 19,5 %

Nonferrous metals 2,6 %

Light alloys 8,2 %

Steel and iron materials 62,9 %

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LIGHTWEIGHT CONSTRUCTION

Lightweight body shell production remains a strategic development designs. One example from the reporting period is the start of series
priority. Volkswagen uses hot-formed, high-strength steels in pro­duc­ production of the new Panamera. For the first time, the Panamera’s
tion models. We are also pursuing a composite materials approach roof and side panels are made out of aluminium, and more than 30%
for specific vehicles and platforms, using a range of different mate- of the bodywork is also now made out of aluminium. But the pro-
rials in one body shell. Lightweight materials such as aluminium are portion of high-strength steel alloys has also been increased, among
also used in the development of new platforms. other things by integrating a highly complex tube of super-high-
strength steel as the bulkhead support.
The proportion of hot-formed metals in the latest Passat has been
increased by more than 75% compared with its predecessor. New On September 22, 2016, the Open Hybrid LabFactory (OHLF) was
additions include crossmembers at the front and rear of the car and in opened in the presence of Federal Research Minister Professor Wanka
the transmission tunnel. While this means more energy is consumed and other dignitaries. We are researching economical lightweight
in the production process, the reduced fuel consumption resulting construction technologies for series production as part of the OHLF
from component weight savings has a dramatic impact on CO2 emis- public-private partnership, a joint venture with the Lower Saxony
sions and energy consumption over the vehicle’s life cycle as a whole. Research Center for Vehicle Technology (NFF) at the Technical Univer-
sity of Braunschweig, the Fraunhofer Gesellschaft and various other
Porsche continues to pursue a policy of “smart lightweight con- industry partners.
struction” by implementing a sophisticated mix of materials in body

Audi is committed to the use of lightweight construction to Similarly, lightweight construction plays a key role in the success-
improve the dynamics of its models while at the same time ful new Audi A4, which entered production in 2015. Depending
reducing fuel consumption. The Audi Q7 body is largely made of on the model variant, an intelligent choice of materials and more
aluminium. Thanks to the Audi Space Frame construction, the extensive use of lightweight construction techniques make the
vehicle body only weighs a little more than 200 kg – 71 kg less new Audi A4 a full 65 kg lighter than its predecessor. The car
than its predecessor. The weight of the vehicle as a whole has produces 6 t fewer greenhouse gas emissions (equivalent to
been reduced by as much as 325 kg. CO2) over its full life cycle than its predecessor, thanks to the use
of eco-friendly production methods, reduced weight, and a wide
Lightweight construction and a high level of rigidity are also range of efficiency enhancements such as outstanding aero-
defining characteristics of the body shell of the Audi R8 Coupé. dynamics (the 1.4 TFSI ultra has a drag coefficient of just 0.23).
Along with various aluminium components, the supercar’s This translates into a 16% improvement. In this way, we have
high-strength, almost torsion-free backbone consists of a rear succeeded in reducing emissions even at the production stage,
panel, center tunnel and three-part B-pillars that are all made despite our increased use of lightweight construction materials.
of carbon fiber-reinforced plastic (CFRP). While the earlier model generated around 7.16 t of greenhouse
gases in the production phase, the new Audi A4’s production
process has reduced this by around 4% to 6.85 t.

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ENVIRONMENTAL AWARDS

Volkswagen Group and Group brand models received numerous §§ VW is the brand that has received the most awards in the “Ten
awards in 2016 for their environmentally friendly features. Here are best 2016” rankings organized by Car & Driver magazine. After as-
some examples: sessing 231 models available on the Brazilian market, a specialist
jury chose the move up! TSI as the “most sustainable model” and
§§ In the ADAC EcoTest, the models tested in 2016 – including the the speed up! TSI as the “best hatchback”, with particular em-
ŠKODA Octavia Combi 1.4 TSI G-TEC, ŠKODA Superb Combi 1.6 TDI phasis on the new 1.0 TSI Total Flex engine. The new 1.0 TSI Total
GreenLine and VW Passat Variant 1.6 TDI SCR BlueMotion – were Flex engine is Volkswagen do Brasil’s most advanced engine and
all awarded the top 5-star rating. The overall results of the ADAC the first in Brazil to feature direct injection, a turbo compressor
EcoTest are based on a range of metrics, including tests of emis- and Flex technology. The engine has already received a number of
sions of e.g. carbon monoxide, hydrocarbons, nitrogen oxides and awards in the Brazilian marketplace.
particulates in realistic driving cycles. Driving cycles are conducted
with daytime running lights (or low-beam headlights) switched §§ Volkswagen Passenger Cars vehicles emerged from a test organized
on, the air-conditioning system turned on, and a 200 kg payload. by Brazil’s Quatro Rodas magazine with top marks for energy
In late 2016, the ADAC EcoTest methodology was revised. Vehicles efficiency. Of all the cars with petrol engines, the speed up! was
that achieve good results in the EcoTest must now also be tested the most fuel-efficient, followed by the take up! and the Fox
on the road using a PEMS device (Portable Emission Measurement BlueMotion. The new Gol Comfortline with its 1.0 MPI engine and
System). In 2016, the VW up! 1.0 TSI BMT beats was subjected to the Audi A1 Sport 1.4 TFSI also made it onto the list of most eco-
and successfully passed such a PEMS re-test. nomical vehicles.

§§ AUTO TEST, the monthly consumer advice edition of AUTO BILD, §§ The Green Car of the Year Award is presented by U. S. specialist
and ÖKOTREND, the independent environmental research institu- magazine Green Car Journal. In 2016, two models from the
tion, presented awards for the most environmentally friendly cars ­Volkswagen Group were nominated, including the Audi A3 E-TRON
in all classes in 2016. Two Volkswagen Passenger Cars models won in the “Green Car of the Year” and “Connected Green Car of the
in their respective classes: the eco-up! 1.0 EcoFuel in the sub- Year” categories, and the Porsche Cayenne S E-Hybrid in the “Luxury
compact class and the Passat GTE in the upper medium (mid-size Green Car of the Year” category.
­luxury) class. The Porsche Cayenne E-Hybrid was voted number
one in the SUV class. Assessment criteria included the manu- §§ Next Green Car Ltd. in the UK presents annual awards for the most
facturer’s commitment to environmental protection and social environmentally friendly vehicles in 10 categories, after evaluating
responsibility, and the environmental impact of the vehicles the vehicles’ environmental impact throughout their life cycles.
over their entire life cycle. In 2016, the VW e-up! was chosen as the winner in the “City Car”
category thanks to its local emission output of 0 g and 93-mile
§§ In the China Eco-Car Assessment Programme (C-ECAP), the VW Golf range, which is ideal for city traffic.
TSI was the first vehicle ever to be awarded the platinum medal,
the best possible ranking. Vehicles were evaluated in six categories, §§ The American Automobile Association publishes the AAA Green
including energy efficiency and recycling quotient. Car Guide, an annual assessment of environmentally friendly
vehicles available on the U.S. market. Among the criteria applied
§§ In the 2017 VCS environmental rankings, three Group models – the are pollutant emissions and fuel consumption. In the 2016 rank-
VW up!, ŠKODA Citigo and SEAT Mii – took first places in the sub- ing, the VW e-Golf was awarded the title of “Best in Class” in the
compact (mini) class. compact car class.

§§ In the compact (small family) class, the Audi A3 Sportback TFSI §§ In the competition organized by industry magazines Verkehrs­
g-tron beat the VW Golf TGI; both vehicles are equipped with rundschau and Trucker, the Volkswagen Caddy came out on top in
natural-­gas drive systems. the van category, receiving the “Green Van 2016” award. The Caddy
delivered the best overall result based on fuel consumption,
§§ The Caddy TGI beat out other 5-seater vans to take first place. payload and load capacity. The EfficientLine 2 fuel-efficiency pack-
age for the MAN TGX was awarded the “Green Truck Innovation”
§§ The editorial team of Engadget, one of the leading U. S. online accolade for its demonstrable reduction of emissions of atmo-
technology magazines, bestowed this year’s “Best of CES” award spheric pollutants, greenhouse gases and noise pollution. Scania
on the BUDD-e in the Best Innovation category. Special mention was presented with the “Green Truck Future Innovation 2016”
was made of the vehicle’s range and fast-charging mode. Online environmental award for its hybrid module for delivery vehicles in
consumer guide SlashGear, which generally rates smartphones, the Promising Innovations category. The 235 kW (320 hp) hybrid
cars, computers and digital lifestyles, also named the BUDD-e as truck achieves fuel savings of up to 18% compared with trucks that
overall winner. run solely on diesel. It can operate exclusively in all-electric mode,
or as a hybrid running on pure biodiesel.

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VW Golf TGI BlueMotion CNG – fuel consumption in kg/100 km: from 3.5 to 3.4 (combined); CO2 emis-
sions in g/km: from 94 to 92 (combined); VW Golf TGI BlueMotion petrol – fuel consumption in kg/100
km: from 5.3 to 5.1 (combined); CO2 emissions in g/km: from 124 to 119 (combined); CO2 efficiency
class: A+

ŠKODA Octavia TDI GreenLine – fuel consumption in l/100 km: 3.5 (combined); VW e-up! – energy consumption in kWh/100 km: 11.7 (combined); CO2 emissions
CO2 emissions in g/km: 90 (combined); CO2 efficiency class: A+ in g/km: 0 (combined); CO2 efficiency class: A+

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Production and logistics

By 2018, the Volkswagen Group is aiming to reduce levels of the five §§ ultra-strategy – Audi
key environmental indicators per vehicle manufactured – energy
and water consumption, waste for disposal, and CO2 and VOC emis- §§ Green Factory – ŠKODA
sions – by 25% compared with the 2010 baseline. This target applies
to all the Group’s production locations for passenger cars and light §§ ECOMOTIVE Factory – SEAT
commercial vehicles, and builds on the general production process
requirements defined in the Group Environmental Principles. We §§ Environmental Factory – Bentley
have already made considerable progress towards reducing all five
key indicators. §§ Resource-efficient Production – Porsche

In terms of environmental impact reduction per unit (UEP), we had §§ Blue Rating – Scania
already reached our goal by the end of 2016, having cut produc-
tion-related environmental impacts by 25.3%. The status at the end §§ Climate Strategy – MAN
of 2016 compared with the 2010 baseline breaks down as follows
(2015 figures in brackets): We encourage close integration and communication between the
brands worldwide in order to create synergies, for example with
§§ specific energy consumption: –17.0% (–16.4%) our Environment Task Force. We record and catalog environmental
measures in an IT system and make these available for Group-wide
§§ specific CO2 emissions: –19.5% (–19.5%) sharing of best practices.

§§ specific VOC emissions: –41.3% (–30.5%) In the reporting period, more than 1,600 implemented measures
relating to energy and the environment were documented in this
§§ specific water consumption: –14.2% (–8.8%) system, all serving to improve passenger car and light commercial
vehicle production processes. As well as being worthwhile from an
§§ specific waste for disposal: –34.6% (–32.1%) environmental viewpoint, these activities also make financial sense,
resulting in annual savings of around €49 million. The measures are
The reduction in environmental impacts across the Group is the helping us reduce all five key environmental indicators, although
result of specific environmental programs by the individual brands, additional negative effects meant that the indicators for energy con-
including: sumption and CO2 emissions did not change very significantly.

§§ Think Blue. Factory. – Volkswagen Passenger Cars and Although 2016 was – yet again – the world’s warmest year since
Volkswagen Commercial Vehicles climate records began, a colder winter resulted in increased heating
demand across Group locations.

ENVIRONMENT TASK FORCE

We set up the Environment Task Force in 2014, with the aim of At Volkswagen-branded component manufacturing facilities, the
identifying and implementing savings initiatives at Group locations. team works hand in hand with the energy management teams in
This team of analysts from the Group environmental research unit Component Planning, who also help identify potential savings.
acts as a networking intermediary between departments involved in
planning, maintenance and operations, helping to close any gaps by Up to and including 2016, the Environment Task Force was involved
providing additional capacity and local expertise. in 25 projects around the world. Over this period, they implemented
savings measures worth €2 million and identified potential savings
The broad-based knowledge of the Environment Task Force, com­ at Group locations estimated at an additional €9 million.
bined with the many excellent ideas and solutions from col-
leagues in our various locations, plus the sharing of initiatives via
massnahmen@web, all help to promote a lively, Group-wide dialog.

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ENERGY CONSUMPTION AND CO2 EMISSIONS

In 2016, energy consumption per vehicle fell from 2,106 kWh in Since 2011, VW Kraftwerk GmbH has been investing in the ongoing
2015 to 2,090 kWh in 2016. Absolute volumes increased due to development of renewables and the construction of highly efficient
the larger number of vehicles produced. This meant that we reduced combined heat and power (CHP) plants driven by natural gas. In the
energy consumption by –17.0% (against the 2010 baseline). period to 2016, the company invested around €26 million in renew-
ables such as wind farms and photovoltaic power plants. As part
CO2 emissions (Scope 1 and 2) per vehicle rose from 882 kg in 2015 of our fuel conversion strategy, VW Kraftwerk GmbH also invested
to 883 kg in 2016. Absolute volumes also increased due to the larger some €15 million in a cogeneration plant in Braunschweig and some
number of vehicles produced. This represents a –19.5% reduction in €65 million in a gas and steam turbine (combined cycle) plant in
CO2 emissions compared with the 2010 baseline. ­Kassel. Furthermore, alongside the company’s own electricity gener-
ation activities, we are currently implementing a proportional energy
Our strategy for meeting our targets includes improving energy program for the Volkswagen Group’s production sites in Germany
efficiency, replacing coal with gas for our in-house energy production, using carbon-neutral Volkswagen Naturstrom®. Over the next few
and purchasing electricity from renewable sources. We now meet years, VW Kraftwerk GmbH is planning to invest in a new combined
around one-third of our global electricity requirements from re­ cycle plant in Wolfsburg (by 2022) and in the further development
newables. of renewables.

Examples of Best Practice §§ Lamborghini: New combined cooling, heat and power (CCHP) and
We set a particularly positive example in Brazil, switching to 100% district heating plants, coupled with a 17,000 m2 photovoltaic sys-
renewable energy despite the country’s ongoing economic diffi- tem on the roof of the central production shop at the Sant’Agata
culties. This measure is reducing CO2 emissions by approximately site in Italy, were the main factors contributing to the brand’s cer-
21,000 t per year. tification as a carbon-neutral manufacturer. Annual CO2 emissions
at the Lamborghini site have been cut by around 820 t. By the end
In 2016, the first industrial combined heat and power plant in of 2017, the CCHP is expected to reduce annual CO2 emissions
the greater Shanghai metropolitan area went into operation at to around 5,600 t, and the company is also planning to convert
­Volkswagen’s Chinese plant in Anting, in the form of a MAN CHP the plant to run on biogas. Compensatory measures will be taken
plant. The power plant supplies the site with 26 MW of electricity to offset the remaining CO2 emissions. Lamborghini is the first
and 60 t/h of steam. This covers most of the energy and all of company in the world to be certified by DNV GL (Det Norske Veri-
the steam requirements of Car Plant 3, meaning that Anting is now tas Germanischer Lloyd) under their “Carbon Neutrality” program.
making annual savings of around 95,000 MWh of energy and DNV GL is one of the world’s leading service-providers in the clas-
59,300 t of CO2. sification, verification and management of environmental risks.

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§§ A number of other examples illustrate our success in saving energy

and reducing CO2 emissions:

§§ VW: One important lever for reducing energy consumption is on-­

demand operation of all facilities. In 2016, we reinforced the energy
efficiency gains from the first pilot projects involving the load-­
dependent operation of paint dryers by rolling out the technology
at more locations. The change has cut energy requirements by
around 7,300 MWh a year, saving around €290,000 and reducing
annual CO2 emissions by approximately 1,900 t.

§§ In 2016, MAN successfully recovered thermal energy at the ship

engine test facility in Frederikshavn, Denmark, using the newly
installed heat recovery system. The recovered energy was supplied
to the municipal district heating system. The heat recovery system
is enabling us to avoid over 1,300 t in CO2 emissions.

§§ VW: We use energy value stream analysis to identify suitable

measures for reducing our energy KPI. This technique was trialed Volkswagen AG plant in Bratislava, Slovakia
at our Bratislava location and others in 2014, reducing annual
energy consumption by 12,916 MWh with annual savings of more
than €900,000. This methodology has since been rolled out to
other sites.

BLUE BUILDING

In our quest for improved environmental performance, the All lighting in the building and its external facilities is provided
­Volkswagen Group does not limit its efforts to the internal work- by LEDs, while heat and power are supplied by a photovoltaic
ings of our production facilities. We also keep a close eye on ­ system and a CHP unit (manufactured by Lichtblick). This cuts
our buildings and real estate. With our Blue Building standard CO2 emissions by up to 58 t per year.
and internal “Blue Building” award for energy-efficient, sustain-
able construction, we aim to reduce CO2 emissions from our A ventilation and cooling system delivers a steady supply of
properties while ensuring that they are built and continue to fresh air, improving the overall quality of life within the build-
operate sustainably. We aim to significantly undercut statutory ing as well as the wellbeing of employees. At night or during
energy consumption thresholds. the daytime, special louvered windows can be used to cool
down the showroom by purely natural means.
Volkswagen Immobilien completed the first Blue Building – a
Volkswagen-brand car showroom in Hanover – at the end of Our aim is to steadily refine and improve the Blue Building
2015. In the course of this project, the old building was demol- standard. To do so, we systematically evaluate experience
ished, reprocessed on site and then reused as part of the foun- acquired during the planning, construction and operation of
dations for the new building and its outdoor facilities. Recycled our buildings.
waste glass was used as insulation underneath the building.

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MATERIAL FLOW MANAGEMENT

Volkswagen uses material flow management as a tool for analyzing external databases. Any missing data is obtained from in-process
and evaluating material flows in production and the associated measurements.
environmental impacts.
Material flow analyses are useful to a variety of players. They can
Material flows are resources and energy which flow within specified be used to sensitize employees to the resource-efficient handling
system limits and can be allocated to production processes by of process materials, as a useful aid for planning new, more re-
originator. Material flow analysis allows us to depict processes more source-efficient plants, or as a decision-making tool for implement-
transparently, making it easier to recommend actions for reducing ing specific measures.
environmental impacts and cutting production costs.
Two comprehensive material flow analyses focusing on material
The informative value of a material flow analysis depends on the efficiency were carried out in the paint shops of our Poznan and
data available. Incoming and outgoing material flows in process- Bratislava car factories. The measures identified in the course of
es must be measured both qualitatively and quantitatively, by these analyses are currently being prepared for implementation in
reference to both internal environmental information systems and production.

EMISSIONS TRADING

The procedure for allocating CO2 emissions certificates under the benchmarks, a set number of certificates are being allocated free of
European Union’s Emissions Trading System changed fundamentally charge over the 2013–2020 trading period. The automotive industry
in 2013, at the start of the third trading period (2013–2020). Since was included in the new carbon leakage list that came into effect in
2013, emissions allowances for electricity providers have been auc- 2015.
tioned. For the manufacturing industry and certain types of power
plant (e.g. CHP plants), a proportion of the certificates were initially A total of 30 Volkswagen Group locations are affected by the Euro­
allocated free of charge. However, over the course of the trading pean Emissions Trading System. For 2016, 1,186,418 emissions
period, the number of such certificates has been steadily declining; certificates were allocated to the Volkswagen Group free of charge
providers requiring additional certificates must purchase them at (39,769 fewer than in the previous year).
auction.
As well as the European Union, other countries in which the
In certain industry (sub)sectors, there is a risk that production will Volkswagen Group has production sites are also considering the
be transferred to countries outside Europe now that the amended introduction of emissions trading. Seven pilot projects have
provisions governing emissions trading have come into force been launched in China, for example, although they have not yet
(a phenomenon known as “carbon leakage”). Based on pan-EU affected the Volkswagen Group. The Chinese government plans
to expand these pilot projects to form a national emissions trading
system.

SOLVENTS

In 2016, VOC emissions per vehicle were reduced from 2.80 kg in Examples of Best Practice
2015 to 2.42 kg. Compared with the 2010 baseline, emissions per
vehicle were reduced by 41.3%. This impressive achievement, whereby §§ A new, low-impact top coat painting line came onstream in
targets were not only reached but exceeded in 2016, was driven by ­Ingolstadt. Featuring state-of-the-art technology such as air
numerous VOC-reducing measures in many of the paint shops at recirculation, dry scrubbing and exhaust air purification, the new
Group locations, as well as the state-of-the-art painting and exhaust facility has reduced the consumption of thermal energy and
air treatment systems installed in new plants. water per car by 20%. Furthermore, air recirculation is helping to
reduce CO2 emissions per painted vehicle by 30%, while exhaust
air purification is reducing VOC emissions by 90%.

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WATER

In 2016, water consumption per vehicle was reduced from 4.14 m3

in 2015 to 3.90 m3. Despite the larger number of vehicles produced,
freshwater consumption per vehicle has steadily fallen since 2010
thanks to a raft of recycling measures and the introduction of manu-
facturing techniques that use minimal water.

Alongside climate protection, conserving our planet’s freshwater

reserves is one of the pivotal requirements for preserving the basic
necessities of life. Water resources are already scarce in many re-
gions of the world, and access to clean drinking water is an increas-
ingly pressing problem for large sections of the global population.
This prompted us to adopt water as a focus topic for 2014. Within
our sphere of influence, we also support the United Nations’ Sus-
tainable Development Goals (SDGs) adopted in September 2015.
Drawing on the comprehensive data collated in our life cycle
assessments, we published a pioneering analysis of our water foot-
print in 2013, in which we identified those processes that consume
the most water over the life cycle of a representative selection of
­Volkswagen-branded models. In 2015, we worked with the Technical
University of Berlin to further refine the in-house methodology §§ Social and environmental initiatives. Particularly through our bio-
used to calculate our water footprint. diversity projects, we help protect water resources and promote
public environmental awareness.
The water footprint analysis showed that the use phase plays only a
minor role. Much of the water consumed is due to the fuel produc- §§ Transparency. We communicate our goals and activities to the
tion process. Another significant water consumer is the supply chain public. In 2013, Volkswagen became the world’s first automaker
for the extraction or creation of raw materials, over which we have to commit to the United Nations’ CEO Water Mandate. Also,
no direct influence. Consequently, we are focusing our attention since 2011, we have been providing extensive disclosure of our
on areas where we can directly influence water consumption: our water management practices and progress, by completing the
production sites. We are also making efforts to continuously reduce very detailed CDP water management questionnaire. In 2015, we
our water consumption by further improving our vehicles’ fuel withdrew our responses in the light of the diesel issue. After a
consumption and using more secondary materials, such as recycled one-year suspension in 2015 as a consequence of the diesel issue,
materials, in production. Our latest review indicates that 57% of our we rejoined the program in 2016, achieving a Leadership rating
entire freshwater consumption – approximately 23 million m3 – is of A– for our Water Disclosure Project.
attributable to sites located in regions where groundwater resources
are at risk, especially our plants in Mexico, Spain, South Africa, India 2016 – “Year of Water” in China
and China. In these regions in particular, we have made minimiz-
ing water use an even higher priority. We adapt our water use to §§ Given the high production volume in China, the country’s share
the varying regional availability of water resources worldwide. At of Group-wide water consumption is comparatively high. Conse-
the same time, we support a broad range of projects in which the quently, 2016 was designated the “Year of Water” in China. Teams
protection or development of water resources is a key or even the of experts analyzed water management at all Volkswagen pro-
primary objective. The same approach also characterizes the water duction sites in China and implemented optimization measures
management strategy adopted by the Corporate Environment & in order to save even more water per vehicle produced. Between
Energy Steering Committee, which defines four action areas: 2010 and 2015, we had already achieved water savings of around
14.1% in China. In 2016, we achieved further significant water
§§ Safe and reliable water supply and sewerage. We aim to protect savings, bringing total savings between 2010 and 2016 up to
groundwater reserves against pollution, and to avoid production 22.4%. Systematic analysis enabled us to achieve savings in every
downtimes caused by water shortages. part of the factory by, for example, optimizing cooling systems
and introducing on-demand management of paint consumption
§§ Efficient water use throughout the life cycle. By using water as in the paint shop.
economically and efficiently as possible during the production pro-
cess, and by recycling as much water as possible, we aim to reduce
total water consumption to the great possible extent.

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Examples of Best Practice §§ In 2016 alone, our Foshan plant successfully reduced its water
consumption by more than 26%, from 3.9 to 2.9 m³ per vehicle,
§§ We use recycling facilities at some of the Group’s locations that by implementing measures devised during the “Year of Water”.
use a membrane process to prepare biologically precleaned waste
water for reuse, thereby reducing freshwater consumption levels. §§ In total, the Group saved 906,807 m³ of freshwater in 2016
In 2015, we brought a recycling facility on stream at our Salzgitter compared with the previous year, thanks to a raft of individu-
plant. This facility processes half the plant’s wastewater into al measures and optimizations. However, factors beyond our
recycled water and uses it to feed the central cooling tower. As a control, such as fluctuating weather conditions, also influence
result of this measure, we save around 75,000 m3 of freshwater freshwater consumption. With water prices ranging from around
annually, equivalent to around a quarter of the plant’s needs. €0.3 – €1.0 per m³, this translates into water supply cost savings
of approximately €0.5 million
§§ Our Uitenhage plant in South Africa has managed to reduce its in the reporting period.
water consumption per vehicle by more than 50% (from 6.2 to
2.7 m³/vehicle). In 2015, this achievement so impressed the jury §§ In order to permanently implement water-saving processes within
of the annual Greening the Future Awards competition that the the Group, a new internal White Paper defines key requirements
plant won the national prize in the “Water Efficiency & Manage- for the various processes in the production sequence.
ment” category.

WASTE

Wherever possible, we make great efforts to use standardized waste

management systems to optimize our waste management in all
divisions. These systems are already used to control waste manage­
ment processes in all German factories run by the Volkswagen,
Volkswagen Commercial Vehicles, Porsche, Audi and MAN brands,
and for state-monitored disposal of hazardous waste in particular
(Electronic Government). The aim is to roll out these systems in
Europe and thereafter across regions around the world.

ŠKODA plants in the Czech Republic and Volkswagen plants in

Slovakia also use waste management systems. In 2015/16, implemen­
tation in the VW and SEAT plants in Spain, Portugal and Poland
was coordinated with in-house IT departments and preliminary
plans were drawn up. In 2017, plants in Spain will be equipped with
a waste management system.

In 2015, in order to review our waste management processes and

recycling, we introduced audits of waste disposal processes as a key
By the end of 2016, the volume of waste for disposal per vehicle had control mechanism at many of our sites. This reflects our duty of
been reduced from 16.2 kg in 2015 to 15.2 kg, representing a reduc- care to ensure controlled, environmentally friendly waste disposal.
tion of 34.6% against the 2010 baseline. In Germany, a standardized procedure for these audits was devel-
oped in collaboration with other vehicle manufacturers (original
We aim to use materials and products as efficiently as possible, and equipment manufacturers or OEMs) and major suppliers. In 2015
so reduce the volume of waste per unit manufactured. and 2016, we carried out audits across multiple locations and OEMs
in Europe. Audits have also been carried out in the regions, albeit
In order to achieve this goal, we have adopted a three-stage waste exclusively for Volkswagen’s own brands. In order to set a common
strategy: benchmark for the quality standards expected of waste disposal
services, we also trained potential auditors at a number of eastern
1. Prioritizing waste recycling and reducing waste for disposal European sites, giving them the skills to carry out quality-assured
audits so that the results could also be used by other OEMs and
2. Reducing waste volumes via waste treatment suppliers. Based on these positive experiences, similar training
programs will be organized at other sites. Descriptions of the audit
3. Reducing waste volumes by optimizing production and procedures, as well as audit documentation, are now available in
ancillary processes the languages of the various countries in which the Group operates,
with the exception of China.

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Production waste from packaging and workshops, as well as the §§ At the Audi site in Neckarsulm, special containers for dewatering
Technical Development department, is recycled to the highest paint sludge are being used experimentally. So far – and contrary
possible standards. For the recycling of waste from production and to previous experience – the experiment has been successful.
logistics that has a resale value, such as paper, plastics, wood and The system has reduced the residual liquid content of the sludge,
metal, our Purchasing department has rolled out a Group-wide sys- hence the amount of waste, and the sludge has a more solid
tem to improve the efficiency of the entire process. The focus here consistency. Whether the containers are suitable for permanent
is not only on revenue generation, but also on optimized preparation use will be decided after a long-term pilot.
of the waste for efficient transportation.
§§ At ŠKODA, transportable oil filtration systems are used to increase
Examples of Best Practice the service life of oils and so reduce the amount of waste oil. In
§§ In January 2016, an advanced waste management system was addition, a new evaporator system for separating emulsions has
introduced at our Bratislava plant for optimizing waste logistics gone into operation at the Vrchlabi plant, aiming to reduce the
processes. Transponder technology (based on Data Matrix code) volume of waste emulsions for disposal. ŠKODA is also now using
is used to identify every single piece of waste at its point of origin washable – i.e. reusable – cleaning cloths instead of disposable
and track it seamlessly all the way through to final disposal. At ones.
each stage of the disposal process, the system records the volume,
fill level, degree of sorting and condition of waste container loca- §§ At the Braunschweig plant, press containers used for household-­
tions, as well as any wrongly disposed materials. Working together type commercial waste, cardboard, paper and plastic film are
with the waste producers, the waste management department equipped with a GPS signaling system. The system automatically
uses the collected information to develop suitable measures for tracks the fill level and position of the containers. Once containers
optimizing container volumes, collection intervals, container are 75% full, a signal is automatically sent to the waste disposal
locations and disposal routes in response to ambient production specialist for transport scheduling purposes. This has enabled the
conditions. This tool has streamlined waste management at the plant to significantly increase full container weights and so reduce
Bratislava plant, as reflected in, for example, the 15% reduction in the number of disposal runs.
the amount of cost-incurring waste. Furthermore, substantially
less time is required to collate waste figures for reports.

GREEN LOGISTICS

Logistics is part of the Volkswagen Group’s environmental focus.

For example, we are optimizing the entire transport chain in order
to avoid CO2 emissions. The aim is to avoid transportation com­
pletely or else shift to more environmentally friendly modes of trans-
port, and to reduce fuel consumption. We are pursuing measures
and activities for optimizing logistics processes across our brands.

The Corporate Green Logistics Working Group was set up in 2012.

The Group is responsible for coordinating and jointly developing
initiatives, accounting practices and training packages across the
Group.

Choosing the right means of transport is a key starting point for

reducing CO2 emissions. Maritime shipping is regarded as one of the
most efficient transport options. So the Volkswagen Group is now
involved in the Clean Shipping Network (CSN), an association of
marine cargo owners, and is represented on its management board.
CSN members can use the Clean Shipping Index (CSI) rating tool to
compare environmental efficiency figures such as the emissions of
individual ships on particular routes. This is useful for analyzing the
environmental impact of shipping. At the request of Volkswagen
AG and others, soot particles have now been included in the index, Starting in 2019, the Volkswagen Group will become one of the first
alongside CO2, NOX , SOX , water and chemicals. vehicle logistics OEMs to use two car-carrying vessels powered by
liquefied natural gas (LNG) supplied by Siem Car Carriers AS between
Volkswagen Group Logistics is continuously expanding the number Europe and North America. The alternative, LNG-driven marine en­gine
of CSI-listed vessels in its own transport network. The ratio is is improving the environmental compatibility of marine trans­port
regularly updated and considered whenever the Group offers new and sustainably reducing airborne pollution – CO2 by up to 25% and
transport services to tender. NOX by up to 30%; soot particles by up to 60% and SOX by up to 100%.

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Environment Production and logistics

Furthermore, the Group is constantly working to find and use alter- The Group Consolidation Center that opened in 2016 in Malacky
native and more environmentally compatible transport options for near Bratislava is also helping to improve the environmentally
material logistics. Materials from Turkey destined for Volkswagen friendly profile of logistics within the Volkswagen Group. Optimized
Autoeuropa in Palmela, Portugal, have been shipped from Izmir to thermal insulation is reducing heating costs; the use of double doors
Lisbon since late 2015. Previously, the materials traveled by truck. in the loading and unloading area is ensuring that heat losses are
By changing the means of transport, the company is saving 240 t of minimized, and LED lighting is cutting electricity consumption
CO2 per year and also cutting costs. by around 50%. At the same time, the bundling of freight in the
Consolidation Center has cut the daily traffic volume by an average
of around 90 trucks in goods incoming, and around 65 trucks in
goods dispatch.

BIODIVERSITY

Biodiversity signifies the variety of life on our planet, encapsulating the soil and biodiversity at 32 locations belonging to the Volkswagen
the variety of species, genetic differences within species, and the Passenger Cars, Porsche and MAN brands.
diversity of ecosystems. We rely on it as the basis for our continued
existence: healthy food, clean water, fertile soils and a balanced One of the projects we jointly implemented with Naturschutzbund
climate. Protecting biological diversity is one of the greatest societal Deutschland e.V. (NABU) was a wetland conservation project in
challenges of our time. The United Nations has thus declared the ­Germany. In 2016, Volkswagen Financial Services AG once again
current decade to be the “UN Decade on Biodiversity”. made a donation in support of NABU’s International Peatland
Conservation Fund. The company is currently sponsoring 13 wetland
Volkswagen has been committed to protecting biodiversity since conservation projects in various parts of Germany ranging from
2007 and is a founder member of the Biodiversity in Good Company Lower Saxony to Bavaria, as well as projects in Poland, Lithuania,
e.V. initiative. In our mission statement, we promise to support the Latvia and Estonia.
protection of species at all locations. On the basis of this commit-
ment, VW Mexico was invited to give a guest presentation at the At our international sites, we collaborate with a range of partners to
Business and Biodiversity Forum in Cancun in December 2016. The support the protection of nature and biodiversity. This means we can
Forum was part of the United Nations’ Conference of the Parties to contribute to local implementation of the United Nations’ Sustain-
the Convention on Biological Diversity (COP13-CBD). We primarily able Development Goals (SDGs). We also fund biodiversity research
contribute to achieving the targets of the UN Convention on Biolog- at our Urumqi site in the Chinese province of Xinjiang. We have been
ical Diversity by minimizing greenhouse gas emissions and utilizing supporting the Dyer Island Conservation Trust in South Africa since
materials and resources as efficiently as possible. As a consequence 2011; in 2015, the Trust opened a care center for seabirds there.
of the diesel issue, we are putting our membership of the Biodiver- Since 2012, Volkswagen Slovakia has been engaged in a joint venture
sity in Good Company e.V. initiative on hold for the time being. with Comenius University in Bratislava, breeding crayfish threatened
with extinction with the aim of resettling them in Slovakia’s streams
Biodiversity is a component of our environmental management. and rivers. In 2017, we are planning further research projects in
We have, among other things, appointed a biodiversity officer and Slovakia’s nature reserves and lakes.
commissioned external expert assessments of the risks to water,

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Environment Sales, use and recycling

Sales, use
and recycling
Our philosophy of forward-thinking, environmentally minded with a smaller carbon footprint. This is why we are committed to of-
mo­bility spans every stage in the value chain. But the use phase is fering our customers the fullest possible range of mobility services,
pivotal – not just in terms of impact, but also because it is critical and why the Group’s Environmental Strategy also embraces the final
to success as our customers’ needs continue to evolve. Fuel-efficient stage of the vehicle’s life cycle: recycling.
vehicles are just one, albeit vital, component of progressive mobility

SMART MOBILITY

Objective tions against this yardstick. Using scientific criteria, a catalog of –

Mobility is an essential prerequisite of a functioning society and at the last count – 19 indicators has been developed and trialed in
economic growth. Our aim is to make mobility even more efficient six model cities around the world. In return, each of the partici­
and environmentally compatible, but also to enable more people pating cities is given a sustainability profile, while a database of
to play an active part in society – in line with the United Nations’ solutions also developed as part of the project reveals the most
Sustainable Development Goals (SDGs). We define “smart mobility” effective measures for each indicator. In the spring of 2016, the
as optimized interaction between road users, infrastructure and European Commission announced that it would actively support
different modes of transport. Digitalization and connectivity are the use of these indicators in cities.
pivotal in preparing for the use of new products and services and
improving traffic flows. However, in addition to environmental pro- Research Projects
tection, smart mobility is also synonymous with improved safety It is also important to produce reliable forecasts of the potential
and the economical use of traffic areas, for example through the use impacts of future solutions on urban air quality, noise pollution or
of innovative assistance systems to circumvent traffic jams. traffic flow (impact assessment). This is where models and simu-
lations make an important contribution, because many solutions
Strategic Approach – such as dial-a-bus systems – only exert appreciable influence once
During the reporting period, Volkswagen continued its long-stand- they have achieved a certain market penetration. Building on these
ing systematic research into mobility issues. In order to develop results, it is then possible to develop or optimize the right solutions
appropriate, intelligent solutions, auto mobility must be treated as for the future with much greater exactitude.
part of a complete system that incorporates other modes of trans-
port, human settlement patterns, urban and infrastructural develop- In parallel with the ongoing automation of driving functions, innova-
ments, new technologies – especially automatic driving, digitaliza- tive methods for identifying situations and using them to calculate
tion, electric mobility and connectivity – as well as trending demand traffic-efficient driving strategies are gaining in importance. We are
(e.g. carsharing, vehicle sharing) and other influencing factors. Part further expanding our research activities in these areas in order to
of our strategic approach is to maintain an intensive dialog with the make the most of the limited road area in the vicinity of urban junc-
general public and academia. tions and other sensitive nodes in the traffic system.

Challenges and their possible solutions, especially in towns and More and more of us live in cities. Traffic noise impairs our quality
cities, once again featured high on the mobility agenda for both of life, and is produced by many different means of transport. At
the general public and academia. Our film “Urban Mobility 2030” Volkswagen, we are very aware of our responsibilities as a manu-
helped us refine our strategic appreciation of the challenges posed facturer of one of those means of transport in particular – the auto­
by urban mobility and the various potential solutions, and to open mobile – and are working intensively on ways to steadily reduce
it up for debate – for example at DRIVE, the Volkswagen Group noise emissions from individual vehicles. In these efforts to reduce
Forum in Berlin. noise, Volkswagen is even going one step further. We are using a
specially developed tool to calculate noise pollution levels in cities
Since 2013, Volkswagen has been collaborating with 14 other and further develop our understanding of the role of the car, assess
companies from various industries on the Sustainable Mobility 2.0 interactions between different noise sources, and evaluate various
project launched by the World Business Council for Sustainable measures for reducing noise. Our aim is to improve the noise situa­
Development (WBCSD). A sustainable approach to future urban tion for urban residents in general by entering into dialog with
mobility needs a credible definition of what the word “sustainable” cities and fellow noise emitters.
actually means, and a way of measuring current and future solu-

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Environment Sales, use and recycling

Volkswagen AG supported the INEES research project by providing 20 VW e-up! cars. VW e-up! energy consumption in
kWh/100 km: 11.7 (combined); CO2 emissions in g/km: 0 (combined); efficiency rating: A+

MOBILITY SERVICES
AUDI E-GAS FUEL CARD AND
GREEN GAS PRODUCTION Mobility Solutions is one of the four cornerstones of our new
TOGETHER – Strategy 2025.

Drivers of the Audi A3 Sportback g-tron can become almost In future, the Group plans to invest in carsharing, robotaxis and
entirely carbon-neutral, thanks to the Audi e-gas fuel card. transport-on-demand initiatives. The strategic partnership with
Audi records the amount of gas each customer purchases on-demand mobility company GETT is one such initiative, aimed at
with the card, and ensures that exactly the same quantity of expanding the Group’s Mobility Solutions portfolio.
synthetically produced, renewable Audi e-gas is fed into the
German natural-gas network to compensate. The e-gas is With the rapid expansion of Internet commerce, the number of
produced by the world’s largest industrial power-to-gas plant packages being delivered in towns and cities is rising sharply, result-
on the grid, which uses a chemical process based on wind ing in escalating traffic volumes. If deliveries fail because there is
power, CO2 and water to generate synthetic methane, effec- no-one to accept the delivery, this is a negative outcome for all par-
tively “storing” green electricity in the existing natural-gas ties involved – but also for the environment. Consequently, we aim
network. In 2015, following a successful test sequence, the to create synergies between passenger and goods transportation by
plant qualified to participate in the balancing energy market. devising new logistics concepts that avoid unnecessary journeys.
Thus the effects of the Audi e-gas project extend well beyond One possible solution, developed in cooperation between Audi and
the automotive industry. Group Research, is the so-called “parcel car”. In the era of networked
vehicles, a car boot (trunk) becomes a mobile delivery address to
which logistics service providers can gain keyless access. Thanks to
this temporary access authorization, by the time the recipient leaves
work, the package is already safely in their car boot. Audi AG is joint-
ly testing this solution – dubbed “Audi connect easy delivery” – with
DHL Paket and Amazon in Munich, and is preparing to launch it with
a view to making the concept available to all Group vehicles in the
future.

MOBILITY MANAGEMENT AT OUR SITES

Of course smart mobility also includes providing solutions for

our own employees at Volkswagen sites with what we call
“mobility management”. This includes, but is not limited to,
cars and parking spaces. Examples include cycling campaigns,
shuttle-bus services, season tickets for public transport,
the provision of ridesharing apps, and parking spaces for
carpools.

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Environment Sales, use and recycling

Eco-friendly Driving
Regardless of model or brand, alongside the development of ever §§ Customers can also book “Think Blue. Eco-Training.” courses
more efficient vehicles, eco-friendly driving habits are a major factor directly with Volkswagen in Germany, Hong Kong and Singapore.
in reducing fuel consumption and CO2 emissions, not to mention
noise and pollutant emissions. With this in mind, we support our §§ Plenty of fuel-saving hints and tips are provided in dedicated
customers by offering a range of courses: brochures and car manuals

SAVE FUEL WITH “THINK BLUE. TRAINER.” SCANIA ECOLUTION

“Think Blue. Trainer.” is a driver assistance program offering Ecolution by Scania combines our tailored products with driver
vital information on current fuel consumption during journeys services. Based on continuous customer dialogue, the common
as a way of encouraging eco-friendlier driving habits. It already goal is improved fuel efficiency. Through optimized vehicle
features in the e-up! and up! models with conventional power­ specifications, performance diagnostics, driver training and
trains, as well as the Polo and Passat, and will gradually be monthly follow-ups, our results show an average 10% reduction
rolled out to other models. The range of functions offered by the in fuel consumption.
“Think Blue. Trainer.” program can be further extended with the
“Volkswagen Car-Net Think Blue. Trainer.” app, which communi- Scania Fuel Masters, a new interactive competition site that
cates with the vehicle and can be operated via the infotainment Scania launched in October 2015, allows drivers to compare their
system. The app also contains training challenges for additional most fuel-efficient journeys with each other via their mobile
motivation. All trips are automatically stored, and can be used phones.
later for cross-comparison.

Audi Mobility Services

Audi offers three innovative carsharing services: Audi shared fleet, The Audi select service targets private individuals and corporate
Audi select and Audi on demand. customers alike. Over a 12-month period, customers can drive three
different Audi models – and for six months, choose a Ducati as well.
With Audi shared fleet, companies can customize their own corpo- A premium pool of low-mileage, well-equipped second-hand cars is
rate fleets. Depending on the individual arrangement, Audi takes available for this service.
care of the on-site implementation and maintenance of the cor-
porate vehicle fleet – from supplying carpool vehicles to regularly Audi on demand is a mobility service that gives customers flexible
servicing, fueling and cleaning them. The highlight: employees can access to premium mobility. Whether for spontaneous short adven-
use the pool vehicles for business and private trips. This increases tures or longer business trips, customers can book the right Audi
employees’ mobility – even after regular working hours – and can online; cars are available in a matter of minutes. Munich Airport is
be used as an additional incentive by employers. Even better, Audi the first Audi on demand location in Germany.
shared fleet enhances fleet utilization and cost efficiency.

PRODUCT COMMUNICATION
CARSHARING
Alongside the development of ever more fuel-efficient new models,
the Volkswagen Group boasts a wide range of other offerings for
eco-friendly mobility. Our product communications spotlight partic- In 2013, Volkswagen Financial Services, together with its
ularly efficient vehicles and low-carbon technologies by awarding partner Pon Holdings B.V., acquired a stake in market-leading
them efficiency badges, and report on the environmental progress Dutch carsharing company Collect Car B.V., better known as
new models have made over their predecessors by means of Life Greenwheels.
Cycle Assessments and Environmental Commendations.

Porsche has also launched a sustainability initiative to support

dealers, aimed at improving the energy efficiency of existing Porsche
Centers and ensuring that new centers are made as energy-efficient
as possible.

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Environment Sales, use and recycling

RECYCLING

Recycling makes a key contribution to reducing our products’ impact tric vehicles in two research projects: LithoRec (lithium-ion battery
on the environment and conserving resources. This is not just about recycling) and ElmoRel (electric vehicle recycling – key components
recycling vehicles at the end of their service life; recycling starts in power electronics).
at the new-vehicle development stage, during which we pay close
attention to the recyclability of the required materials, the use of Audi also presented a pilot project for the reuse of traction batteries
high-quality recycled materials, and the avoidance of pollutants. At from e-tron models, which could significantly extend the useful
the same time, we factor in aspects of the use phase, for instance life of lithium-ion batteries and substantially improve the environ­
the treatment and disposal of service fluids or high-wear compo- mental impact and cost-effectiveness of vehicles with electric
nents. powertrains. Giving batteries a second lease of life by using them
as stationary accumulators makes an important contribution to the
Volkswagen is also constantly working on developing and enhancing transition to renewable energy sources.
recycling methods, processes and technologies. We have developed
a multi-award-winning process, VW-SiCon, that allows end-of-life Last but not least, we should mention the Volkswagen Passenger
vehicles to be 85% recycled and 95% recovered. This complies with Cars Genuine Exchange Parts program. Our industrial reconditioning
the regulatory requirements that have been in force in the EU since produces high-quality exchange parts that conserve resources and
the beginning of the reporting period. With our partners, we are de- offer the same quality, functionality and warranty as the correspond-
veloping modern technologies for recycling components from elec- ing new parts while being on average 40% cheaper.

MAN TRUCK & BUS

MAN Truck & Bus professionally remanufactures used parts for

use in vehicle repairs under the “MAN Original Teile® ecoline”
brand. The range includes more than 3,000 items. This helps con-
serve resources, save energy, and cut costs by an average of 30%.
We also offer customers in most areas of Europe an extensive
portfolio of replacement and spare parts.

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Facts and Figures Sustainable through an through

Facts and Figures

In this chapter, we report on how our key financial, personnel and environmental indicators have developed over recent
years. These indicators provide information on what has already been achieved, but they also highlight areas where
there is still room for improvement. The charts and figures are therefore followed by a presentation of our goals and an
estimation of the extent to which those goals have been achieved.

Sustainable through an through

G4-17

The Volkswagen Group is committed to sustainable, transparent and Frame of Reference  G4-17, G4-22, G4-23
responsible corporate governance.The principles of our sustainability In general, the indicators relate to the entire Group, including any
management are described in detail in the Strategy chapter, as are companies in which our equity interest exceeds 50%. For our joint
our continuous improvement goals. Our goals and actions, together ventures in China, we report social indicators “at equity”, in other
with planned activities and current status, are presented in greater words at 50%, but including 100% of environmentally relevant
detail at the end of this chapter. data. However, due to differing definitions or collection methods,
it is not yet possible to consolidate the data reported by the brands
The chapter Guidelines and Principles provide an overview of the and regions in all areas, which means that there are still numerous
Group-wide principles, agreements and methods that form the basis exceptions. In this report indicators which are only relate to parts of
for our shared understanding of sustainability across the Group, the Group are marked with footnotes and explaining which parts.
allowing performance to be measured, controlled and improved. Over the coming years, we will continue to endeavor to make data
collection uniform across all locations and companies.

MANAGEMENT BY KEY INDICATORS

AUDITING AND STANDARDS
In order to manage its sustainability performance, the Volkswa-
gen Group collects central performance indicators in line with the The Volkswagen Group Sustainability Report 2016 has been audit-
requirements of the Global Reporting Initiative (GRI) and the ESG ed by PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft
(Environment, Social, Governance) indicator framework of the Euro- (PwC) against the relevant requirements and criteria laid down in
pean Federation of Financial Analysts Societies (EFFAS). Increasingly, the G4 Sustainability Reporting Guidelines of the Global Reporting
shareholders and investors demand transparency, and this makes Initiative, taking supplementary account of the International Stan-
them an important target group for our sustainability reporting. dard on Assurance Engagements (ISAE) 3000 (Revised). The audit
In recognition of this, we provide an overview of our economic, activities carried out by PwC include: management surveys, surveys
environmental and social performance in the following chapters of employees responsible for reporting sustainability information,
on Financial Indicators, Environmental Indicators and Personnel and recording of the processes used to collect, calculate and report
Indicators. The overview is as comprehensive as possible and stated sustainability information. In the following Indicators chapters, the
in quantitative terms. quantitative details of the 2016 reporting period audited by PwC
are marked with the symbol Further information about the audit
The key indicators we present are a continuation of those from can be found in the Independent Assurance Report.
previous years. There have been no changes in the methods used to
report and measure our sustainability performance. The Volkswagen
Group’s global production network comprised 120 production loca- ADDITIONAL REPORTING WITHIN THE GROUP
tions at the end of the reporting year. This is now the fourth time we
have reported our emissions in line with Scope 3 of the Greenhouse More detailed insights into our environmental management
Gas Protocol (GHG), which makes us one of the trailblazers in our approach are provided by the Environmental Statements which
industry. numerous locations compile as part of their voluntary participation
in the European EMAS (Eco-Management and Audit Scheme) system.
The sustainability reports of the Audi, MAN, Porsche, Scania and
ŠKODA brands are also indicative of the Group’s commitment to
sustainability.

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Facts and Figures Financial Indicators

Financial Indicators
detailed presentation of financial indicators can be found in the current Volkswagen Group Annual Report. The indicators shown below
comply with the International Financial Reporting Standards (IFRS) for the entire 2012 to 2016 period.

Volume Data*
in thousands

Financial Data1
in € million

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Facts and Figures Financial Indicators

Added Value Generated by the Volkswagen Group

(Appropriation of funds)*
in € million

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Facts and Figures Financial Indicators

Key Figures by Brand and Business Field1

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Facts and Figures Key Figures for People

Key Figures for People

The Volkswagen Group including the Chinese joint venture employed on average 619,346 people (+2.5%) in financial year 2016. Domestically
in 2016, on average 279,993 people were under contract; their share of the total workforce was slightly below the level of the previous year
with 45.2% (45.6%). As of December 31, 2016, the number of active employees in the Volkswagen Group was at 601,443 (+2.8%). In addition,
5,782 employees were in the passive phase of partial retirement and 19,490 young people (+4.5%) were in a training relationship. At the end
of the year under review the workforce of the Volkswagen Group came to 626,715 people (+2.7%). Essential factors for the rise in employee
numbers were the hiring of qualified staff above all in Germany and China, the volume-based growth abroad and the staff increase in our new
plants in Mexico and Poland. Domestically there were 281,518 people employed (+1.0%), abroad 345,197 (+4.2%).

Number of Employees Workforce

in the Volkswagen Group by Segment in the Volkswagen Group

15,785 0 200,000 400,000 600,000 800,000

Financial Services
2016 626,715
114,159 610,076
2015
Commercial Vehicles/
Power Engineering 2014 592,586

2013 572,800

2012 549,763
496,771
Passenger Cars

Number of Employees
in the Volkswagen Group by Type of Work

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Facts and Figures Key Figures for People

Number of Employees
in the Volkswagen Group by Regions

Female Employees*
in the Volkswagen Group (in %)

0 5 10 15 20

2016 16.0

2015 16.0

2014 15.7

2013 15.2

2012 15.2

* since 2011 incl. Scania.

Since 2013 incl. MAN and Porsche.

Proportion of Women1
in the Volkswagen Group in Germany (in %)

It is the goal of the company to further increase the proportion of the management circle (status at year-end without Scania, MAN or
women from Group-wide 16.0%. This applies in particular to the Porsche). In top management the proportion rose from 2.8% in 2015
management. In the year under review the proportion of women in to 4.7% in the year under review (status at year-end without Scania,
the management circles of the Volkswagen Group in Germany could MAN or Porsche).
already be increased to 8.7% in upper management and 12.8% in

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Facts and Figures Key Figures for People

Apprentices
in the Volkswagen Group

Apprentices Level of Qualification*

in the Volkswagen Group in Germany (in %) in the Volkswagen Group (in %)

0 1 2 3 4 5 0 10 20 30 40 50 60

2016 4.6 21.5

2015 4.7 59.2

2016
4.8 16.1
2014
3.1
2013 4.8

2012 4.8
20.9
59.8
2015
16.2
3

Higher education Vocational education and training

Secondary education Other

* Ohne Scania.
Ab 2014 inkl. MAN.

The total number of apprentices rose, remaining a constant propor- ensure that the number of trainees remains almost constant even in
tion of the overall workforce over the reporting period. economically difficult times.

The percentage share of trainees in the total workforce of the Volk- Through targeted personnel selection, the Volkswagen Group employs
swagen Group has been around 5% for years. Collective regulations a high share of qualified employees. Around 97% of employees have
completed training.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Facts and Figures Key Figures for People

Employee Age structure

in the Volkswagen Group (in %)

0 5 10 15 20 25

0.4
< 20 years
1.7

3.7
20 – 29 years
19.3

4.8
30 – 39 years
22.8

4.2
40 – 49 years
21.3

2.5
50 – 59 years
16.4

0.3
> 60 years
2.6

Women Men

Average Age
at Volkswagen AG

The average age in Volkswagen AG has remained relatively constant since 2011 – a sign that the adding
of trained people and the departure due to age of long-standing employees is in balance.

Employee Turnover*
at Volkswagen AG (in %)

The fluctuation rate states what percentage of employees leave the company in a year. The chart shows
that the stability of the employment relationships at Volkswagen is very high.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Facts and Figures Key Figures for People

Average period of Employment Absenteeism*

at Volkswagen AG (in years) Cumulative values (in %)

0 5 10 15 20 0 1 2 3 4

2016 18.6 2016 3.9

2015 18.3 2015 3.7

2014 18.4 2014 3.4

2013 19.0 2013 3.3

2012 19.1 2012 3.2

* Production locations with over 1,000 employees, excluding

Scania, MAN, Ducati, Shanghai Volkswagen Powertrain
and Volkswagen Automatic Transmission.
From 2014: including Porsche. From 2015: including MAN Germany.

Illness-related absence from the workplace not only represents a to the following formula: Absence days × 100/payment-relevant
considerable cost factor for production companies but also a major days (payment-relevant days are days on which work performance
logistical problem for staff deployment planning. A stronger offer was expected from the employee).
in diagnostics and prevention can support a low working-time-lost
ratio. The working time lost in the company is calculated according

Parental Leave* at Volkswagen AG

Returning from Parental Leave Foreign Service Employees*

at Volkswagen AG (2016) in the Volkswagen Group

586 0 1,000 2,000 3,000 4,000 5,000

Women
2016 4,526

2015 4,716

3,044 2014 4,507

Total
2013 4,052
2,458 2012 3,836
Men

From Germany To Germany

Except Germany

* From 2013 incl. new Group companies MAN, Scania,

Porsche AG, Ducati and Porsche Holding.

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Regions Volkswagen Group China

AWARDS

PERSONNEL CSR

Volkswagen Group China awarded Volkswagen Group China awarded

“Top Employer” in 2016 “Best CSR Management 2016” by
Southern Weekly
SAIC VOLKSWAGEN awarded
“Top Employer” in 2016 Volkswagen Group China awarded
“Best Company for CSR 2016” by
FAW-Volkswagen awarded China Newsweek
“Top Employer” in 2016
Volkswagen Group China awarded
“2016 China Excellent Contribution to
CSR” by Sina Gongyi

Volkswagen Group China awarded

“2016 China CSR Excellence Award” and
“China Top 100 Corporate Citizen” by China
Philanthropy Times

Volkswagen Group China awarded

“2016 Best Corporate Citizen” by China
Automotive News

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Regions Volkswagen India

Volkswagen
India

Through Volkswagen Group India, headquartered in Pune, Maha-

rashtra, the Volkswagen Group is represented by five passenger car
brands in India: Audi, Lamborghini, Porsche, ŠKODA and Volkswagen.
The Volkswagen Group has been present in India for the last 16 years
and began its Indian journey with the introduction of the ŠKODA
brand in 2001. The Audi and Volkswagen brands were launched in
India in 2007, and the Porsche and Lamborghini brands followed in
2012. Each brand has its own character and operates as an indepen-
dent entity in the market.

Volkswagen Group India has over 25 models and over 240 dealer-
ships in India and operates two plants in Pune and Aurangabad.
The Pune plant has an annual manufacturing capacity of 200,000
cars (using a three-shift system) and currently manufactures the
Volkswagen Polo, Ameo, Vento, as well as the ŠKODA Rapid. The Au-
rangabad plant produces various premium and luxury Audi, ŠKODA
and Volkswagen models sold in India and has an annual capacity of
approximately 89,000 vehicles.

HIGHLIGHTS OF THE YEAR 2016

“By reducing the amount of waste generated

in its plants by 30.5%, VW India was
able to meet an important environmental
protection objective.”

Mobile Healthcare
The Mobile Health Clinic Project is Volkswagen India’s endeavor to bring healthcare
for minor ailments to the doorsteps of 2,200 people who live in the villages of Kan-
hewadi tarf Chakan and Sangurdi. Neither of these villages have a primary healthcare
center or a resident doctor.

A team comprising two doctors (senior and assistant), and a compounder employed
by Volkswagen India, visits the two villages five days a week – Tuesday to Saturday,
excluding company and national holidays. Patients are provided with free medical
consultations and medicines. The service is also available to guests and others who
visit the two villages.

Since launch in August 2015, Volkswagen India’s Mobile Health Clinic has provided over 17,000 free medical consultations and free
medicines worth € 5200. The team has also referred patients to nearby hospitals for further medical consultation and/or hospital
admission based on their condition. The Mobile Health Clinic also runs awareness programs on various health-related topics.

VWIPL also carries out blood-group testing for children residing in these villages.

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Regions Volkswagen India

Key Environmental Goal Achieved – Three Years ahead of Schedule

The Volkswagen plant in Pune is one of 27 Volkswagen car production plants worldwide participat-
ing in the “Think Blue. Factory.” environmental program. With this initiative, Volkswagen is seeking
to reduce the impact of its vehicle production on the environment by 25% per vehicle around the
world. The program was rolled out in 2011 and the Pune plant has been working to achieve this
goal since 2012. During the reporting period, the plant celebrated an important achievement: by
the turn of the year 2014/2015, waste generation had been reduced by 30.5%. This meant that
the Pune plant had met an important target three years ahead of schedule. However, successes
were also achieved in other key areas: CO2 emissions fell by 21.2% and specific energy consumption
decreased by 20.6%.

Fighting Water Shortages

Volkswagen India has built a series of embankments (bunds) for water storage in a
drought-affected village in the State of Maharashtra. This CSR project was undertaken
under the aegis of a State Government initiative (Jalyukt Shivar Abhiyan) that aims to
declare around 5,000 villages in the state drought-free every year till 2019.



These water bunds will have sufficient capacity to store more than 7,500 cubic meters
of water and will be especially beneficial for irrigating farmlands.

This is the second water conservation project undertaken by Volkswagen India after
the recharging of water resources in the village of Guilani in 2013.

OTHER PROJECTS

Promoting Women in Pune

In the reporting period, Volkswagen Group India launched an initiative to promote women at the Pune plant. The aim of this program
is to increase the number of women in the workforce to 30% by 2025. Currently, only around 12% of employees are female. The start-
ing shot was fired at a kick-off meeting in March, attended by more than 120 female employees, who were given the details of the
skills development initiative aimed specifically at women. In practice, there are three cornerstones to the initiative: the Sakhi (friend)
Group, the Compass Program and the Mentor Program. The Sakhi Group seeks to encourage communication between women on a
range of different topics, for example the impact of women on the world economy, best practices, Volkswagen’s business, networks
and personal careers. Under the Compass Program, a select group of women, all of whom have already made progress and estab-
lished themselves in their respective fields, meets on a regular basis. They are given several months of training to enable them to
further develop their high potential. The Mentor Program supports women who have already progressed to another level. The focus
here is on mentoring, training, strategy and best practice.

Dual Education Mechatronics Apprenticeship Program

In 2011, Volkswagen India Academy introduced a 3.5-year dual education Mechatronics Apprenticeship Program. Based on the
German dual vocational education and training system (VET), the program imparts theoretical and practical knowledge across fields
such as mechanical, electrical and electronic engineering, as well as IT. This is complemented by training in interpersonal skills. Each
year the program recruits 16 students who have graduated from class X and meet other eligibility criteria. A unique feature of this
program is its focus on recruiting academically bright and financially deserving students from local towns and villages. The students
are provided with stipends for the duration of the program. VW also endeavors to ensure that each new intake comprises at least 25%
female students.

The students take the tests administered by the National Council for Vocational Training India and Deutscher Industrie-und Han-
delkammertag (IGCC). The curriculum is made more challenging by giving the students opportunities to participate in both national
and international skills-based competitions. Two cohorts of students have successfully completed the program and are now employed
at VW. The fifth cohort was enrolled in 2015.

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Regions Volkswagen India

AWARDS

VOLKSWAGEN INDIA AWARDED VOLKSWAGEN POLO RANKS HIGHEST IN J.D.

ISO 9001:2015 CERTIFICATION POWER ASIA PACIFIC 2014 INDIA APEAL STUDY

The Pune-based German automaker became The Volkswagen Polo was the highest-ranked
one of the first companies in India to receive car in the premium category of the Automotive
this international quality certification. Volk- Performance, Execution and Layout (APEAL)
swagen India is also the first company in the study, based on a customer survey conducted
Volkswagen Group to be awarded the ISO by J. D. Power Asia Pacific.
9001:2015 certificate. The certification under-
lines the consistent quality of the company’s
products and services for customers, and of
the company’s streamlined processes for more
efficient operation.

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Regions Volkswagen de Mexico

Volkswagen de Mexico

At Volkswagen de Mexico, we see sustainable development as an

opportunity to focus our innovation skills on ensuring the long-term
continuity of our company. It means creating greater value while
using fewer resources. We look after the interests of our employees
and are committed to maintaining long-term relationships with our
distributors, suppliers, the community and our customers. Sustain-
ability means continuous improvement of the technological aspects
of our processes and our vehicles in ways that are beneficial to the
environment and the consumer, always endeavoring to maintain
our technological and quality-focused leadership in the automotive
industry.

Social responsibility implies taking an active part in developing the

communities around our plants in Puebla and Silao. In addition to
creating well-paid jobs, Volkswagen of Mexico provides support for
cultural, educational and environmental protection activities – in
addition to the philanthropic activities in which our employees are
involved.

HIGHLIGHTS OF THE YEAR 2016

„Volkswagen is the most visible German company

in Mexico. That is why the Volkswagen Group is supporting
the activities of the German-Mexican year as a premium
partner of the Alliance for the Future being forged between the
two nations.“

Bilateral German-Mexican Year

Germany and Mexico have a long history of economic and cultural collaboration. Big
German companies like Volkswagen have been present in Mexico for many decades.
The German Chamber of Industry and Commerce has 750 members and has been ac-
tive since 1929. German Schools in Mexico City and Puebla are over 100 years old. And
cultural exchange between the two countries has been promoted by the Goethe-Insti-
tut for 50 years now with the support of the Cultural Foundation of German Industry,
of which Volkswagen is also a member.

Starting in June 2016, both countries launched the Bilateral German–Mexican Year,
which includes over 1,000 events in the fields of culture, science and economics, under
the aegis of the “Alliance for the Future” that is being forged between the two nations.
The Volkswagen Group is supporting the activities of the German-Mexican Year as a
premium partner and active participant in several events, such as the German Industrial
Fair and the PopUp Tour of several Mexican cities..

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Facts and Figures Key Figures for the Environment

CO2 emission*
of the Volkswagen Group’s European (EU 28) New Passenger Car Fleet
in g/km

0 30 60 90 120 150
2016 1211,2

2015 1211,2

2014 126

2013 129

2012 135

* Subject to official publication by the

European Commission. (”NEDC test cycle“).

The EU private-vehicle new-car fleet of the Volkswagen Group (ex- own an independent fleet within the context of the European CO2
cluding Lamborghini and Bentley) in the year under review emitted legislation and have also adhered to their individual target values.
on average 120.8g CO2/km, thus falling under the European ambient The fleet value in the USA is at 163g CO2/km, in China at 161.5g CO2/
standard for 2015 of 130g CO2/km by 9.2g and almost reaching km and in Brazil at 137.2g CO2/km.
its own objective of 120g. The Lamborghini and Bentley brands each

VOC emissions* VOC emissions*

in tonnes/year in kg/vehicle

0 10,000 20,000 30,000 40,000 0 1 2 3 4

2016 25,719 2016 2.42

2015 28,634 2015 2.80

2010 30,347 2010 4.13

Cars and light commercial vehicles Other divisions

* Cars and light commercial vehicles.

* Cars and light commercial vehicles and other divisions.

The painting processes are primarily responsible for the VOC emis- The ascertainment of emissions into the environment is based both
sions. In modern painting plants paints and process materials are on metrological analyses as well as on calculations.
used that contain lower quantities of solvents. Plus, measures are
taken in the painting processes to capture or eliminate emitted Despite a rise in vehicle production since 2010 and the associated
solvents. The process used the most is thermal afterburning the greater paint volume, it came to a reduction in the absolute
exhaust air which is downstream from the actual painting process. VOC emissions. It was possible to dramatically reduce the emissions
per vehicle.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Facts and Figures Key Figures for the Environment

Waste for disposal1, 2 Waste for disposal3

in tonnes/year in kg/vehicle

0 30,000 60,000 90,000 120,000 0 3 6 9 12 15

55,376 4.94
2016 2016
114,162 10.28

62,325 5.57
2015 2015
115,888 10.63

103,037 14.03
2010 2010
71,094 9.27

Non-hazardous waste for disposal Hazardous waste for disposal Non-hazardous waste for disposal
Cars and light commercial vehicles Other divisions Hazardous waste for disposal

1
The bars for “Non-hazardous waste for disposal” and “Hazardous waste for disposal”
indicate the share attributable to other Group divisions. This is not depicted for the other
fractions, however, due to their minimal share in these amounts.
2
Cars and light commercial vehicles and other divisions.
3
Cars and light commercial vehicles.

Waste for recycling1, 2 Waste for recycling3

in tonnes/year in kg/vehicle

0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 0 50 100 150 200 250

517,439 43.74

2016 147,345 2016 12.70

2,274,082 211.19

508,408 44.54

2015 140,575 2015 12.19

2,258,323 217.89

298,753 33.28

2010 97,607 2010 12.43

1,845,474 217.27

Non-hazardous waste for disposal Cars and light commercial vehicles Non-hazardous waste for disposal

Hazardous waste for disposal Hazardous waste for disposal

Other divisions
Metallic waste Metallic waste

1
The bars for “Non-hazardous waste for recycling”, “Hazardous waste for recycling”
and “Metallic waste” indicate the share attributable to other Group divisions. This is not
depicted for the other fractions, however, due to their minimal share in these amounts
2
Cars and light commercial vehicles and other divisions.
3
Cars and light commercial vehicles.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Facts and Figures Key Figures for the Environment

Due to the rise in production quantity compared to 2010 in the The absolute quantity of metallic “wastes”, which due to their
category of private and light commercial vehicles, the entire amount complete recycling potential and due to the returns achieved from
of dangerous and non-dangerous wastes generated also rose. The their sale are viewed internally as so-called “resources”, has risen
share of waste for removal contained in this could be reduced from over the entire reporting period since 2010. The reason for this was
approx. 34% in 2010 to approx. 21% in 2016. In contrast the share the Group-wide increase in production. When considering all wastes,
of waste for recycling increased from approx. 66% in 2010 to approx. including the metallic wastes, the recovery rate lies at approx. 95%.
79% in 2016. The increase in the share of recyclable waste is also
the result of the waste strategy established in the Group that has a In the past year under review due to the operation of energy genera-
higher recycling ratio of waste as its goal. tion plants by the Volkswagen Kraftwerk GmbH, power plant residues
in the amount of approx. 145,000 tonnes has been allocated to
recycling.

Freshwater and wastewater* Freshwater and wastewater*

in million m3/year in m3/vehicle

0 10 20 30 40 50 60 0 1 2 3 4 5
52.28 3.90
2016 2016
32.22 2.97

53.25 4.14
2015 2015
32.96 3.17

37.23 4.54
2010 2010
27.93 3.76

Freshwater volume Cars and light commercial vehicles Freshwater volume

Wastewater volume Other divisions Wastewater volume

* Cars and light commercial vehicles and other divisions. * Cars and light commercial vehicles.

With the increase in the number of private and light commercial ve- The quantity of wastewater accrued shows a similar pattern to that
hicles produced, the total consumption of fresh water has also risen of the fresh water. Due to evaporative losses in the cooling towers
in recent years. This increase in consumption is due to the integra- and in the production process there are quantity differences be-
tion of new locations into the reporting. Despite the rise in the num- tween fresh and wastewater. The quantity of wastewater per private
ber of Group locations, it was possible to continuously decrease the and light commercial vehicle produced could also be lowered.
fresh-water consumption per vehicle in the reporting period since
2010. This was achieved through a variety of recycling measures and
the introduction of production procedures requiring little water.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Facts and Figures Key Figures for the Environment

Wastewater discharges1, 2 Water withdrawal by source1, 2

in million m3/year in million m3/year

0 5 10 15 20 25 0 5 10 15 20 25 30 35
8.99 6.58
2016
21.36 2016 1.17
32.07
9.29
2015
21.94 7.01
2015 1.40
9.85 32.3
2010
24.00
2.04
Receiving stream 0.21
2010
Municipal effluent treatment plant 2.79

Groundwater
1
Cars and light commercial vehicles.
Rainwater/surface water
2
In 2010, differentiated figures for the Group as a whole were not yet available.
Purchased freshwater

1
Cars and light commercial vehicles.
2
Figures for 2014 and 2015 include all Passenger Car and Commercial Vehicle locations;
figures for 2010 only apply to Volkswagen AG and Volkswagen Sachsen GmbH locations,
because differentiated figures were not yet available for all Group locations.

Depending on the location of the wastewater purification system,

locations are differentiated as follows: as an indirect discharger
those where the wastewater is discharged into the municipal sew-
age collection system for further cleaning, and as a direct discharger
those that operate their own wastewater treatment system, there-
by discharging the cleaned wastewater directly into a body of water.

Direct NOx and SO2 emissions* Direct NOx and SO2 emissions*
in tonnes/year in g/vehicle

0 1,000 2,000 3,000 4,000 5,000 0 100 200 300 400

4,099 194
2016 2016
1,026 2

4,086 193
2015 2015
1,521 1

4,331 373
2010 2010
2,085 51

Nitrogen oxides (NOx as NO2) Sulfur dioxide (SO2) Nitrogen oxides (NOx as NO2) Sulfur dioxide (SO2)

Cars and light commercial vehicles Other divisions

* Cars and light commercial vehicles and other divisions. * Cars and light commercial vehicles.

A clear decline in the absolute NOx values as well as in the NOx emis- The strong decline in the direct SO2 emissions since the year 2010
sions is to be recorded per vehicle in the category of private and light is a result of changes in the positions regarding ownership in a
commercial vehicles in the period from 2010 to 2016. power-­generation plant and the replacement of coal as the fuel.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Facts and Figures Key Figures for the Environment

Particulate emissions* Particulate emissions*

in tonnes/year in g/vehicle

0 50 100 150 200 250 300 350 400 0 20 40 60 80 100

2016 343 2016 69

2015 371 2015 75

2010 380 2010 98

* Cars and light commercial vehicles Europa (total dust). * Cars and light commercial vehicles Europa (total dust).

The development of airborne particulate emissions in the category locations of the Group are among other things connected to the
private and light commercial vehicles at the European production increase in production.

Chemical Oxygen Demand (COD)1, 2 Chemical Oxygen Demand (COD)*

in tonnes/year in g/vehicle

0 2,000 4,000 6,000 8,000 0 200 400 600 800

2016 6,276 2016 595

2015 6,022 2015 612

2010 4,043 2010 555

Cars and light commercial vehicles

1
Cars and light commercial vehicles and other divisions. * Cars and light commercial vehicles.
2
Other divisions have not been highlighted in the
graphic due to the low proportions involved.

The absolute wastewater parameter “Chemical oxygen demand wastewater amount key figures. This parameter is an indicator for
(COD)” develops similarly to the fresh-water consumption and the wastewater’s degree of contamination.

Environmental protection costs* Environmental protection costs*

in € million/year in € million/vehicle

0 50 100 150 200 250 0 50 100 150 200 250

11 9
2016 2016
223 180

21 19
2015 2015
244 226

12 11
2010 2010
197 179

Capital expenditure Capital expenditure

Operating costs Operating costs

* Volkswagen AG production locations in Germany * Volkswagen AG production locations in Germany.

The environmental protection costs are reported for the German for the production-related environmental protection. Of the total
locations of Volkswagen AG. investments the positions accounted to the environmental protec-
tion investments are those that are done with the sole or dominant
When it comes to expenses for environmental protection measures, objective of environmental protection. Differentiation is made be-
differentiation is made between investments and operation costs tween end-of-pipe and integrated investments. End-of-pipe environ-

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Regions Volkswagen Group of America

Volkswagen Group of
America

At Volkswagen Group of America (VWGoA), we believe that effec-

tively confronting the social and sustainability challenges of today
and the future requires the collective actions of our employees and
partners. We instill a perseverant drive throughout the company
to work toward the greater good and to be compassionate citizens.
We are proud that our unified efforts have not only enriched our
local communities nationwide, but have strengthened our corporate
culture. Looking ahead, we pledge to work even harder to build the
future we want for our employees, families, neighbors and commu-
nities.

HIGHLIGHTS OF THE YEAR 2016

Group of America Joins the Fight Against Breast Cancer

In September 2016, Volkswagen of America collaborated with The Pink Agenda, a non-profit devoted to eradicating breast cancer, along
with breast cancer survivor and television personality Giuliana Rancic and her FAB-U-WISH initiative, to help raise money for breast
cancer research and improve the lives of those undergoing breast cancer treatment. As part of the collaboration, Volkswagen auctioned
the first limited-edition 2017 Volkswagen #PinkBeetle to arrive in the U.S. market, raising $30,272.00, with proceeds benefiting The
Pink Agenda’s and FAB-U-WISH’s efforts to fight against breast cancer.

Employees across the Volkswagen Group of America network also celebrated #PinkBeetle Day to kick off the launch of Volkswagen’s
new #PinkBeetle, in conjunction with Breast Cancer Awareness Month in October. Women In Motion (WIM) Employee Resource Group
(ERG) chapters from VWGoA locations across the country planned company-wide fundraisers throughout the month to raise money
and awareness for breast cancer research. VWGoA colleagues from across the country helped raise close to $10,000, with the company
matching donations program, for breast cancer awareness.

In the same month, VW Chattanooga participated in the America Cancer Society’s Making Strides Against Breast Cancer event, where
more than 2,500 supporters and 140 teams raised $150,000 to help the ACS save lives from breast cancer.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Regions Volkswagen Group of America

Sponsoring Young Artists with Disabilities

Volkswagen Group of America is proud of its ongoing relationship with the Kennedy
Center and 14-year sponsorship of VSA’s work. VWGoA has provided more than
$1 million in funding to support these accomplished artists, as well as underscoring
its commitment to diversity and inclusion. The program, which annually features
artwork by artists aged 16 to 25, supports individuals with disabilities during a critical
time in their lives when many are deciding whether to pursue the arts as a career.

In September 2016, fifteen talented visual artists converged in Washington, D.C. for
the culmination of the VSA Emerging Young Artists Program. Every year, this program
awards outstanding young artists with disabilities with cash prizes, professional op-
portunities, and visibility for their work. Alongside a weekend of career development
activities in D.C., the 2016 winners attended celebratory receptions on Capitol Hill and at the VWGoA’s headquarters Herndon, Va. Their
artwork has embarked on a nine-month tour of galleries and schools throughout the United States. The professional connections and
exposure that each winner receives through this program allow them to take profound steps in their artistic journeys and careers alike.

Volkswagen Group of American Employees Give Back

In 2016, more than 300 Volkswagen Group of America employees volunteered approximately 900 hours with charitable organizations
in the communities where they live and work as part of the company’s “Get Involved Month,” an initiative empowering employees
across the country to support and give back to their communities within a dedicated month of service.

VWGoA also encourages employees to “Get Involved” year-round, providing robust incentives for employees to serve their communities.
They include a matching employee donations initiative, a company-wide Dollars for Doers Program that provides a yearly one-time
financial donation to a charity at which a full-time employee has volunteered for eight hours or more, and providing employees with
a paid time off to volunteer.

AWARDS

VOLKSWAGEN GROUP OF AMERICA HONORED

BY THE HUMAN RIGHTS CAMPAIGN FOUNDATION AS A BEST PLACE
TO WORK FOR LGBT EQUALITY.

At Volkswagen Group of America, we embrace the diversity in our workforce,

and strive to create a culture of respect and inclusion for every employee
regardless of race, creed, religion, origin, gender or sexual orientation. We have proudly
earned a 100 percent score on the Human Rights Campaign Foundation’s 2016 Corporate
Equality Index (CEI) and the distinction of “Best Places to Work for LGBT Equality”.

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 VOLKSWAGEN KONZERN NACHHALTIGKEITSBERICHT 2016
Imprint

Imprint
PUBLISHER
Volkswagen AG
Group Sustainability
Letterbox 011/1265
38436 Wolfsburg
Germany

CONTACT
info@volkswagen-nachhaltigkeit.de

EDITING
Volkswagen Aktiengesellschaft

CONCEPT, COPY AND DESIGN

Kirchhoff Consult AG, Hamburg
Volkswagen Aktiengesellschaft

ENGLISH TRANSLATION
The Words Gym Ltd., UK

PHOTOS
Volkswagen Group and its brands

DATE OF PUBLICATION
Date of Publication: 10 May 2017
© Volkswagen Aktiengesellschaft
Errors and mistakes reserve.

DISCLAIMER
At the brands of the Volkswagen Group, work on all types and models never ceases, so please allow
for the fact that changes in design, equipment and technical specifications may be made at any time. Consequently, the data
and descriptions in this report cannot give rise to claims of any kind.

FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements on the development of the Volkswagen Group and
its companies as well as on economic and political developments. These statements are assumptions that we based on all the information
available to us at the time of reporting. If the assumptions made fail to materialize or additional risks occur, then the actual results, devel-
opment and performance of the Group may differ from the forecasts given. The Volkswagen Group therefore assumes no liability for the
forward-looking statements presented here.

The German version is binding. The English version is a convenience translation

for information purposes only.

YOUR FEEDBACK
In the interests of improving and advancing our commitment to sustainability, we would be delighted to receive your feedback
on our sustainability report. You can send us your views online under the above mentioned mail adress.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Brands Bentley

Trainee Volunteering
As part of the trainee programs at Bentley, all apprentices, industrial placement students and
graduates are asked to take part in charity fundraising and volunteering projects within the local
community. Since 2016, Bentley trainees have been supporting the Prince’s Trust, a charity for
young people that helps deliver the TEAM program in Crewe. Trainees have also been delivering
digital skills sessions for the elderly, giving advice on how to use technology such as tablets and
laptops to encourage digital inclusion.

Bentley establishes Rotary volunteering club

Bentley has recently established a company-wide volunteering club in conjunction with the local
branch of Rotary International. The Rotary Club of Bentley Cheshire organizes weekly meetings
where members can socialize and plan community projects. In their first year, Bentley Rotarians
have already dedicated over 1,000 hours to community service, including a project to renovate a
garden for cancer patients at a local hospital.

AUSZEICHNUNGEN

TOP EMPLOYER PRINCESS ROYAL TRAINING AWARD

INVESTORS IN PEOPLE SILVER CARBON TRUST TRIPLE STANDARD

EXCELLENCE IN INDUSTRY –
(PRIDE OF CREWE AWARDS)

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VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Brands Lamborghini

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Brands Lamborghini

Dual Education System Italy (DESI)

During the reporting year, Lamborghini and Ducati continued to develop the CSR project DESI
(Dual Education System Italy) jointly organized by both companies and launched in 2014. Other
project partners include the Volkswagen Workforce Foundation, the Italian Ministry of Educa­
tion, University and Research, the Education Ministry of the Emilia Romagna Region and two of
Bologna’s Technical High Schools. The DESI dual education program currently supports 45 young
people in their last year at technical high school, and combines classroom-based theory with
practical work experience placements. For the practical training component, Lamborghini and
Ducati have set up modern training centers at their respective plants.

Lamborghini – Biopark and Biomonitoring Project

The biopark, situated in the small Italian municipality of Sant’Agata Bolognese in the city of
­Bologna, includes a 70,000 m2 plantation of 9,000 young common oaks (quercus robur) and a fruit
garden (30 different species on 900 m2). Since 2008, similar projects have been carried out by ­
Audi at many of its production plants around the world. These plantations will be monitored over
the coming years and decades in a project that will provide insights into forest productivity, sto-
cking (forest density) and the ability of forests to store carbon and maintain biodiversity. Special
attractions in the forest include a nature walk featuring native tree species and a wetland area,
where local schoolchildren can learn more about the environment. The forest even features a fit-
ness area!

In April 2016, Lamborghini established an apiary in Lamborghini Biopark. The aim is to set up a
biomonitoring program that will track several different pollutants by analyzing honey, wax and the
honey bees themselves.

Bees are excellent environmental indicators, in that they can be used to indirectly monitor the
state of health of the surrounding area. Their natural inclination to explore every corner of a
neighborhood in search of vital resources means that every day, foragers from beehives make mil-
lions of withdrawals from various environmental matrices: pollen and nectar from flowers, honey-
dew (later transformed into honey) from leaves infested by sap-feeding insects, various resins from
buds and twigs (used to produce propolis), and of course water sources.

Lamborghini’s apiary consists of eight hives. During 2016, samples of all the hive matrices (honey,
pollen, wax, and the bees themselves) were taken from three of the eight hives and examined
for local environmental pollution, including heavy metals, polycyclic aromatic hydrocarbons, and
­dioxins, as well as pesticides used in agriculture and urban and private green spaces.

In 2016, the apiary produced 240 kg of honey. The honey was found to be free from all the residues
under research.

The Lamborghini Biopark project is an opportunity for mutually profitable collaboration between
Lamborghini and its host municipality of Sant’Agata Bolognese, because in addition to being a
research site, the oak forest adds value to the regional landscape and environment, and also has
an educational dimension.

OTHER PROJECTS

Carbon-Neutral Production
In 2015, Lamborghini inaugurated new trigeneration (CCHP) and district heating systems. These two projects played a major role in securing
carbon-neutral certification for the entire Lamborghini plant at the company’s historic Sant’Agata Bolognese site. Lamborghini was the first
company in the world to achieve carbon-neutral certification under the DNV GL (Det Norske Veritas Germanischer Lloyd) “Carbon Neutrality”
program. Starting in 2015, the company has been achieving carbon-neutral production every year by reducing and offsetting energy-related
CO2 emissions.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Brands Lamborghini

Trigeneration Plant
Trigeneration, also known as CCHP, is a system which uses a single fuel to simultaneously produce energy for heating, cooling and electricity.
The trigeneration plant at Lamborghini, for example, uses natural gas. The thermal energy produced by the fuel is used for air conditioning
via the refrigeration cycle of an absorption chiller, which is based on a phase-changing refrigerant combined with an absorbent. The trigener­
ation plant at Automobili Lamborghini has an installed capacity of 1.2 MWh. Electricity is supplied to the plant as a whole via a transformer,
while the thermal energy is delivered via a new hot-water piping network. The original cogeneration plants are used to provide back-up when
there are peaks in demand.

The installed thermal capacity of 1,190 kWh is used to meet demand during the winter months from November to March. In summer
(from April to October), the refrigeration output of approx. 890 kWh is absorbed by the company’s main refrigeration units. This project
has a n
­ umber of different objectives, the most important of which is to reduce CO2 emissions. By operating the system on natural gas,
greenhouse gas emissions can be reduced by an estimated 823 t CO2. With a number of minor modifications, it will be possible to convert
the system to run on biogas in the future.

Biogas-Powered District Heating System Reduces Greenhouse Gas Emissions

Automobili Lamborghini is the first Italian automaker to operate its own district heating system. This system pipes hot water to the plant
from a biogas-powered cogeneration plant in Nonantola, approximately 6 kilometers away. The hot water (85°C) is pumped through under-
ground pipes to the plant, where the thermal energy is used for heating. Forecasts indicate that the biogas cogeneration plant, which
has a total capacity of 1 MW, will in future provide Lamborghini with at least 7,200 MWh of thermal energy annually. This will reduce annual
greenhouse emissions by an estimated 1,780 t CO2.

Talent Days
During the reporting year, Automobili Lamborghini organized a whole day of career guidance, dedicated to employees’ children between
the ages of 17 and 27.

During this event, the young participants had the chance to meet HR managers from different Italian and international companies, so they
could ask them for advice on how best to tackle the job market. The goal of this CSR event is to empower young people from the local region
through training and vocational guidance, helping them to pave the way to successful career development and thereby avoid unemployment.

AWARDS

TOP EMPLOYER ITALIA 2016 AEOF CERTIFICATE

In recognition of its excellent workplace environ- The Italian customs authority Agenzia delle
ment and outstanding personnel management, Dogane e dei Monopoli has awarded Lamborghini
Lamborghini has been certified as a “Top Employer the status of “Authorized Economic Operator –
Italia 2016”. This annual certification is awarded Full”, thereby certifying that the company operates
by the Top Employers Institute. to the highest standards of reliability and security
in its trade with foreign countries.

UNIVERSUM AWARDS 2016 –

STUDENTS CHOOSE MOST ATTRACTIVE EMPLOYERS

The annual Universum employer rankings reveal which employers are

most attractive to students. In an annual survey carried out across
all Italian universities, students are asked to name the companies they
regard as the most appealing. In 2016, Lamborghini was ranked fifth
in the Engineering / IT / Natural Sciences category.

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Brands Porsche

Driving in
its Purest Form
Porsche is a leading manufacturer of exclusive sports cars and the
most profitable carmaker in the world. Porsche sports cars have
always stood for performance, quality and inimitable design. Last
year the company, which has been a Volkswagen Group brand since
2012 and is represented in 129 markets around the world, sold
237,778 vehicles and recorded revenues of €22,318 million. This
means 2016 was the most successful fiscal year in the company’s
history. It was also the sixth year in a row in which the company
achieved record sales revenue, operating result and deliveries.
Porsche’s most important markets are Western Europe, China and
the USA. The company’s headcount also reached record levels in
Porsche 718 Boxster S – fuel consumption in l/100 km: urban 10.7–9.5 / 2016, increasing to 27,612 employees across all sites. These loca-
extra-urban 6.5–6.0 / combined 8.1–7.3; CO2 emissions in g/km: 184–167 tions are currently being upgraded for future plans. At its main plant
(combined); CO2 efficiency class: F/E
in Zuffenhausen, for example, 2016 has been all about preparing
Porsche 911 Carrera S – fuel consumption in l/100 km: urban 12.2–10.1 / for the Mission E, Porsche’s first all-electric vehicle, which will soon
extra-urban 6.6–6.4 / combined 8.7–7.7; CO2 emissions in g/km: 199–174 roll off the production line at the factory. The investment of over
(combined); CO2 efficiency class: F/E
€1 billion is also creating more than 1,400 new jobs.
Porsche Cayenne S – fuel consumption in l/100 km: urban 13.0 / extra-­
urban 8.0 / combined 9.8; CO2 emissions in g/km: 229 (combined); CO2
efficiency class: E

Porsche Macan S – fuel consumption in l/100 km: urban 11.6 / extra-urban

7.6 / combined 9.0; CO2 emissions in g/km: 212 (combined); CO2 efficiency
class: E

Porsche Panamera S – fuel consumption in l/100 km: urban 12.2 /

extra-urban 7.1 / combined 8.9; CO2 emissions in g/km: 207 (combined);
CO2 efficiency class: E

HIGHLIGHTS OF THE YEAR 2016

“Porsche is investing in a sustainable future

for its main plant in Zuffenhausen,
injecting €1 billion into production of the
first all-electric Porsche Mission E and
creating 1,400 new jobs.”

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Brands Porsche

Establishment of Porsche Sustainability Council

In the 2016 fiscal year, Porsche took an important step in its plans to
expand stakeholder dialog by creating the Sustainability Council. Its
five members, all internationally renowned in academic and social
circles, held the Council’s first constituent meeting in November and
met with the Porsche Executive Board for the first time. Professor
Maximilian Gege (co-founder of B. A. U. M., the largest corporate net-
work for sustainable business in Europe), Dr. Sonja Peterson (Scientific
Director of the Institute for the World Economy in Kiel), Professor
Lucia A. Reisch (a member of the German Council for Sustainable
Development), Professor Ortwin Renn (Scientific Director of the
Institute for Advanced Sustainability Studies e.V.) and Professor Klaus
Töpfer (former German Federal Minister for the Environment, Nature
Conservation and Nuclear Safety) will advise the company on issues
and challenges arising from relevant ecological and social trends.

20 Years of Environmental Certification at Zuffenhausen

Saving energy, avoiding waste, printing on both sides of the page –
every Porsche employee knows about conserving resources and
contributing to the company’s environmental sustainability. On
May 20, 2016, a team of independent assessors from TÜV carried
out their audit of Porsche’s compliance with environmental standards
in operations and production. In 1996, Porsche was one of the first
companies in the federal state of Baden Württemberg to introduce
an EMAS (Eco-Management and Audit Scheme) compliant environ-
mental management system at its Zuffenhausen facility. The company
obtained this certification in recognition of the system’s clearly defined
processes, lines of responsibility, and effective implementation.

Refugee Integration Program

In spring 2016, Porsche AG introduced a comprehensive refugee in-
tegration program. Ten men and five women aged between 16 and 38
were given the opportunity to qualify for vocational training or direct
entry to a profession by attending a six-month integration program
drawn up by Porsche. The program participants came from Eritrea, Syria,
Afghanistan, Iran and Iraq. The program focuses on teaching German
as well as basic technical skills and cultural awareness. The 13 people
who took part in the first year of the program completed the course
successfully, with outcomes such as going directly into employment,
embarking on a course of vocational training or participating in further
initiatives. A new cohort of 15 refugees joined the ongoing program in
January 2017.

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Brands Porsche

STAKEHOLDER DIALOG

Informing Local Residents about Construction Work Customer surveys

in Zuffenhausen Stakeholder groups involved: customers
Stakeholder groups involved: local residents and interested
members of the public. Form of dialog: the Sales and Marketing department has christened
2015 “Customer Satisfaction Year” with a view to further improving
Form of dialog: letters were sent to residents living in the vicinity the quality of customer care worldwide. Under the “Customer Experi-
of the main plant in Zuffenhausen inviting them to attend an in- ence Management” initiative, Porsche has implemented hundreds
formation event; this event included an explanation of the planned of measures aimed at ensuring high standards of customer service
construction works, a question and answer session and a tour of the throughout the entire customer lifecycle. As part of the initiative, cus-
“Central Workshops” construction site. tomer satisfaction surveys generate approximately 17,000 responses
every month. This feedback directly reflects customer experience and
“targa” Newspaper for Residents feeds into the continuous improvement process.
BStakeholder groups involved: local residents living in the vicinity of
the Zuffenhausen, Weissach and Leipzig sites. Identification and Analysis of Key Stakeholder Topics in 2015
The 2015 stakeholder survey on Porsche’s sustainability performance
Form of dialog: site-specific information was provided to local resi­ identified the following topics as particularly relevant (top five, in
dents and interested members of the public about new develop- descending order of priority): long-term economic stability, long-term
ments at Porsche such as construction projects, far-reaching company customer relationships, health and safety, fuel consumption/vehicle
decisions and social outreach activities. Also, two email addresses – emissions, and staff development. These and all other survey findings
targa@porsche.de and nachgefragt@porsche.de – were set up so that are translated directly into a “materiality matrix”, where they are
interested readers could ask questions and provide feedback. ranked according to their relevance to stakeholders on the one hand,
and to the company on the other. This materiality analysis is then
used by Porsche to set priorities for its sustainability reporting. In
particular, it underpins the selection and editing of content in the
Sustainability Report itself. At the same time, stakeholders’ opinions
are also taken into account in internal decision-making, for example
in issue prioritization and strategic planning.

AWARDS

VEHICLE AWARDS SITE AWARDS

U. S. Sales Satisfaction Index published by market J. D. Power “Plant Quality Award”:
research institute J. D. Power: First place in the overall Zuffenhausen headquarters takes first place
brand ranking in the “Europe/Africa” category

EMPLOYER AWARDS AWARDS FOR SOCIAL PARTNERSHIPS

Automotive Top Career Award 2016: First place “Vocational Training Award” 2015 from the
among students on automotive courses German-Philippine Chamber of Commerce and
Industry for the Porsche Training and Recruitment
Center Asia (PTRCA) in Manila

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Brands Commercial Vehicles

Economical, Reliable,
Customer-focused
Global challenges are creating an ever-growing raft of problems for
our society and our environment, amid constantly evolving legal
and regulatory requirements. These changes are having a tangible
impact on companies, and their stakeholders expect solutions. At
Volkswagen Commercial Vehicles, we are tackling these challenges
head-on. We are actively committed to passing on an intact and
healthy living and working environment to future generations, while
at the same time securing a strong future for our own company.

The Volkswagen Group aims to become a world-leading provider

of sustainable mobility. This ambitious goal can only be achieved if
all of its brands work closely together. With our vehicles and services,
we are the Group’s only brand offering tailor-made transport solu-
tions in the light commercial vehicle market. Alongside our vision –
to offer world-leading transport solutions to our customers – we Caddy Delivery Van – fuel consumption in l/100 km: urban 7.6–4.7 /
have a responsibility to help the Group achieve its targets as effi- extra-urban 5.3–3.6 / combined 6.2–4.0; CO2 emissions in g/km: 143–106
(combined).
ciently and effectively as possible. At the same time, we want to
make addressing the global challenges of urbanization and climate T6 Transporter Delivery Van KR – fuel consumption in l/100 km: urban
change our main priorities. These are the two areas in which we add 12.6–6.8 / extra-urban 7.9–4.7 / combined 9–5.4; CO2 emissions in g/km:
222–142 (combined).
the most value for our customers, society and the environment.
Crafter Delivery Van – fuel consumption in l/100 km: urban 8.8–8.3 /
Sustainability is a top priority at Volkswagen Commercial Vehicles. extra-urban 7.0–6.9 / combined 7.6–7.4; CO2 emissions in g/km: 199–193
(combined).
The Brand Board of Management meets twice yearly to formulate
a CSR roadmap and decide on focus topics. All departments in the VW Amarok 3.0l TDI (SCR BMT) – fuel consumption in l/100 km: urban
company, from procurement and human resources to production 8.6–8.3 / extra-urban 7.3–7.1 / combined 7.8–7.5; CO2 emissions in g/km:
193–184 (combined).
and logistics, take part in regular steering committee meetings in
which they set common, binding targets in order to make corporate
responsibility the common decision-making framework for process-
es and projects.

HIGHLIGHTS OF THE YEAR 2016

“New standards in fuel consumption –

Caddy 4 and T6 models use up to 15%
less fuel”

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The New e-Crafter – Highlight of the IAA 2016 Commercial Vehicles Show

§§ World premiere for the first all-electric Crafter

§§ Concept shows solution for zero-emission urban delivery vehicle

nearly ready for series production

§§ No limits on load space

The e-Crafter concept incorporates
the latest developments in battery §§ Carries up to 1.7 tons
technology that allow a freely config-
urable range up to 400 km, depending
on customer needs and the demands §§ Range of over 200 km
of the job. This performance makes
the vehicle an intriguing prospect for §§ First vehicles hit the roads in 2017
many sectors, over and above urban
transport.
Electric power has not altered the character of the new Crafter. The concept vehicle still offers
attractive yet robust internal features, including the largest possible payload capacity, an ideal
11.3 m3 load space and a maximum load height of 1,691 millimeters. A generous 1,380 mm pay-
load width between the wheel arches and a maximum load space length of 4,855 mm round
off the vehicle – with no change to package dimensions.

The 100 kW electric drive accelerates the road-ready concept (with a dependable gross weight of
4.25 t) up to the maximum permitted speed of 80 km/h. The vehicle is equally at home on delivery
routes along urban highways as it is driving across country. With maximum torque of 290 Nm,
available almost instantaneously, real-world driving situations can easily be handled even when
carrying a full load weighing 1,709 kg.

Highly Efficient Environmental Solutions at New Crafter Plant in Września

The new Crafter plant in Września, approximately 50 km from Poznań, was officially opened in
October 2016. The design and construction of the new plant met the most demanding environ-
mental standards right from the start, in line with the “Think Blue. Factory.” strategy. From an envi-
ronmental protection perspective, one of the highlights here is the paintshop, which is exception-
ally resource-efficient and consumes remarkably little energy, water or materials. Paint is applied
automatically, by 36 robots. Efficient, high-speed rotating atomizers and color changers use much
less paint than conventional systems. In the paint booths, process air is scrubbed using a dry sepa-
Volkswagen Commercial Vehicles plant ration system, reducing energy consumption in the booth by up to 60%. No water or chemicals are
in Września required, and process air volumes are reduced as well. A new system for energy-optimized spray
booth air conditioning is also in operation. The body dryers are equipped with energy-saving heat
recovery technology. The body shop uses the latest, most energy-efficient robots and state-of-the-
art laser technology that is substantially more efficient. The factory buildings and infrastructure
were also built in accordance with Volkswagen’s strict environmental criteria. Ventilation technol-
ogy and energy media supply meet high standards of efficiency, while the lighting system makes
use of natural daylight and LED technology. Water savings were also made in assembly, where the
sprinkler booths used to check that vehicles are watertight achieve savings of up to 75% com-
pared to traditional processes. In December 2016, the plant was awarded the Golden Certificate
of the German Sustainable Building Council (DGNB). The plant in Września is the only automotive
production center in the world to be honored with this distinction, as well as the first and the only
building in Poland.

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Volkswagen Group and Anhui Jianghuai Automobile

Explore Future Cooperation on NEV in China
On September 7, 2016, Volkswagen AG and Anhui Jianghuai Automobile Co., Ltd.
(JAC) signed a Memorandum of Understanding (MoU) in Wolfsburg, heralding the next
phase of negotiations between the two companies with the aim of engaging in a
long-term joint venture for the development of new energy vehicles (NEV) in China.

According to the MoU, the two parties intend to enter into discussions to evaluate
the outlook and feasibility of a new joint venture (“JV”) focusing on NEV products; to
engage in full-scope cooperation in various fields, including research and develop-
ment, manufacture, sales and mobility services of NEV and parts designed to improve
fuel efficiency. The main goal will be to further develop zero-emission mobility.

Anhui Jianghuai Automobile Co., Ltd (JAC) is a full-service automotive company encompassing R&D, production, sales and services, and
other business activities related to commercial and passenger vehicles, including powertrains. The company has two vehicle brands,
“Jianghuai” and “Ankai”.

JAC delivered 333,639 vehicles and chassis in the first six months of 2016 (+14.15%) and NEV sales increased massively over the previous
year (+261%), while SUV sales maintained steady growth (+30%).

Volkswagen Group China Environmental Education Fund Established to Support China’s

Environmental Education Activities Nationwide
German Federal Chancellor Angela Merkel joined Chinese Premier Li Keqiang in Beijing on June 14,
2016, to witness the signing of an agreement between Volkswagen Group China and the Chinese
Ministry of Environmental Protection’s China Environmental Protection Foundation. The agree-
ment creates a new fund supporting environmental education training for teachers across the
country.

The “1,000 Environment-Friendly Youth Ambassadors Action Program” was initiated, is managed
and executed by the Ministry of Environmental Protection’s Center for Environmental Education
and Communication (CEEC). Volkswagen is the sole sponsor of the ¥10 million phased program,
which will run for at least three years, initially from 2016 to 2019. Stated goals include: training
1,000 teachers nationwide each year on environmental issues and environmental education methods,
thereby enabling them to develop and tailor suitable curricula. The program will also deliver envi-
ronmental education and eco-planning skills to thousands of students, empowering them to make
an impact in their schools and communities.

Volkswagen will open its Chinese manufacturing facilities for teacher visits, sharing best practices
and key lessons in environmental protection.

Volkswagen Plants in China Take Energy-Saving and Emission-Reducing Measures

Combined Heat and Power Project (CHP) of SAIC VOLKSWAGEN

SAIC VOLKSWAGEN’s CHP project is the first such project to be implemented by an
industrial firm in Shanghai, while the Anting plant is the first VWAG factory in
China to use this system. The primary energy source is natural gas and the plant can
produce both electricity and steam for heating purposes. The project was officially
launched in April 2015 and when the system came online in February 2016, it was
capable of generating 26 MW of electricity and 60 t of steam per hour , capable of
meeting most of the electricity demand of CPA3 and the entire Anting plant’s steam
requirements.

 p

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SAIC VOLKSWAGEN’s CHP project represents the efficient use of natural energy,
maximizing the utilization of energy resources and significantly reducing emissions
of CO2, greenhouse gases and TSP. The implementation of this project will reduce
energy consumption by the equivalent of 11,594 t of standard coal each year, and
reduce annual CO2 emissions by 59,308 t. It is making an important contribution to
the protection of air quality.

Second Stage Sewage Treatment Facility at FAW-Volkswagen Car Plant in Foshan

The second stage of the sewage treatment station at the FAW-Volkswagen car plant
in Foshan is used to treat industrial and sanitary sewage with a treatment capacity
of 2,200 m3/d. Thanks to an aerobic MBR process, effluent water quality can match
the GB/T18920-2002 “Reuse of recycled urban water – water quality standards for
urban miscellaneous water consumption”. The recycled water is reused for irrigation
and toilet flushing. Some 200,000 t of water is recycled annually. The plant has an
advanced treatment capacity of 300,000 – 400,000 t of recycled water for delivery to
the cooling water circulation system.

The sewage station is mainly equipped with high-efficiency motors and water
pumps (all with frequency control); the degree of automation at the sewage station
is well above 90%. The latest flat-membrane process has been implemented for the
first time at any FAW-Volkswagen plant, capable of dealing with more than double
the usual sludge load. The membrane is also easy to maintain and does not retain
pollution. Biological deodorization technology has been used to maintain good air
quality around the sewage station area.

Recycling Industrial Steam Condensation instead of Reverse Osmosis (RO) Water

for Washing Machines at Volkswagen Automatic Transmission (Dalian) Co., Ltd.
At VWATD, water from industrial steam condensate was plumbed through to
washing machines by adding pipes connecting the industrial steam system to the
RO water tank. The main impact of the improvement is a considerable saving in
freshwater, as well as a reduction in the working frequency of the RO water pumps
and discharges of domestic sewage.

In 2016, the improved process saved 4,800 t of RO water by generating 400 t of

condensation water per month. Since the RO water system’s production efficiency
is around 60%, this represents a saving of around 8,000 t of fresh water. In financial
terms, this is equivalent to an annual saving of ¥35,200.

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OTHER PROJECTS

Volkswagen Group China is Pioneering the Future of Mobility

Volkswagen Group China has just signed agreements for potential partnerships with five companies specializing in new mobility services.
VGC aims to collaborate intensively with Shouqi Group in the rapidly growing carsharing business. With its longtime automotive partners in
Shanghai and Changchun, the company also plans to tap into the fast-growing pre-owned car market and explore strategic cooperation with
leading online pre-owned car market company Youxin. With Didi Chuxing, it plans to form a strategic partnership for high-quality, safe and
efficient mobility services.

This year is FAW-Volkswagen’s 25th anniversary. 2016 marked the start of even more strategic undertakings. New operational bases have
been established in northern and eastern China, bringing FAW-Volkswagen’s nationwide strategy full circle. In terms of customer satisfaction,
FAW-Volkswagen has continued to enhance quality awareness and improve localization and R&D capabilities, while the company’s newly
released Sustainable Development Report underscores its ongoing commitment to green, responsible, sustainable development.

Faced with new situations and challenges in the market, FAW-Volkswagen is formulating its own Strategy 2025 as the company keeps
abreast of new developments and changes within the industry. The company remains committed to sustainable, innovation-driven develop-
ment, as well as ongoing engagement as a responsible corporate social citizen.

Volkswagen Group China Cultural Exchange Fund to Foster Youth Exchanges between Germany and China
With an endowment of ¥1 million, the Cultural Exchange Fund is an important element in Volkswagen’s programs and activities during the
2016 Year of China-Germany Youth Exchange inaugurated by Chinese President Xi Jinping and German Federal President Joachim Gauck
in Beijing in March 2016. The fund targets young people up to 35 years of age, particularly young scientists, artists and journalists, and will
increase socio-cultural exchanges in education, culture, science and the media.

The fund echoes the wider goals of Volkswagen’s Cultural Engagement Program “PACE”, fostering Participation, Connection and Exchange.
Under this umbrella, Volkswagen aims to create new opportunities for young people to participate in cultural and art programs; proactively
connect people to new cultures using social media and lighthouse programs; and promote active bilateral exchanges between China and
Germany, allowing the youth of both countries to develop deeper bilateral cooperation and gain broader experience and knowledge

Youth Environmental Ambassadors Action & Education Program

The Youth Environmental Ambassadors Action & Education Program (YEAAEP) is part of Volkswagen’s program for the 2016 Year of China-­
Germany Youth Exchange inaugurated in Beijing by Chinese President Xi Jinping and German Federal President Joachim Gauck in March
2016. 24 PaSch schools, supported by the Goethe-Institut in 14 cities across China, will take part in the 10-month program, which focuses on
three areas: Forests, Climate and Resource Efficiency. Experts from environmental organizations such as WWF and Beijing Forestry University
have worked together with experts on German as a foreign language to compile a teaching manual for the program.

Upon completion of YEAAEP, all participating PaSch schools will be honored with an environmental protection award, with each student
receiving a Young Environmental Ambassador certificate. This program will be rolled out further in the future.

STAKEHOLDER DIALOG

Being aware of our internal and external stakeholders’ needs and

expectations is a crucial prerequisite for business success. Volkswa-
gen Group China actively seeks out and maintains dialogs with our
stakeholders. Stakeholders include governmental organizations,
public organizations, international organizations, non-governmental
organizations, local communities, business partners, customers,
suppliers, employees, analysts and investors – a network of relation-
ships that is expanding in parallel with our market presence.

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AWARDS

PERSONNEL CSR

Volkswagen Group China awarded Volkswagen Group China awarded

“Top Employer” in 2016 “Best CSR Management 2016” by
Southern Weekly
SAIC VOLKSWAGEN awarded
“Top Employer” in 2016 Volkswagen Group China awarded
“Best Company for CSR 2016” by
FAW-Volkswagen awarded China Newsweek
“Top Employer” in 2016
Volkswagen Group China awarded
“2016 China Excellent Contribution to
CSR” by Sina Gongyi

Volkswagen Group China awarded

“2016 China CSR Excellence Award” and
“China Top 100 Corporate Citizen” by China
Philanthropy Times

Volkswagen Group China awarded

“2016 Best Corporate Citizen” by China
Automotive News

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Regions Volkswagen India

Volkswagen
India

Through Volkswagen Group India, headquartered in Pune, Maha-

rashtra, the Volkswagen Group is represented by five passenger car
brands in India: Audi, Lamborghini, Porsche, ŠKODA and Volkswagen.
The Volkswagen Group has been present in India for the last 16 years
and began its Indian journey with the introduction of the ŠKODA
brand in 2001. The Audi and Volkswagen brands were launched in
India in 2007, and the Porsche and Lamborghini brands followed in
2012. Each brand has its own character and operates as an indepen-
dent entity in the market.

Volkswagen Group India has over 25 models and over 240 dealer-
ships in India and operates two plants in Pune and Aurangabad.
The Pune plant has an annual manufacturing capacity of 200,000
cars (using a three-shift system) and currently manufactures the
Volkswagen Polo, Ameo, Vento, as well as the ŠKODA Rapid. The Au-
rangabad plant produces various premium and luxury Audi, ŠKODA
and Volkswagen models sold in India and has an annual capacity of
approximately 89,000 vehicles.

HIGHLIGHTS OF THE YEAR 2016

“By reducing the amount of waste generated

in its plants by 30.5%, VW India was
able to meet an important environmental
protection objective.”

Mobile Healthcare
The Mobile Health Clinic Project is Volkswagen India’s endeavor to bring healthcare
for minor ailments to the doorsteps of 2,200 people who live in the villages of Kan-
hewadi tarf Chakan and Sangurdi. Neither of these villages have a primary healthcare
center or a resident doctor.

A team comprising two doctors (senior and assistant), and a compounder employed
by Volkswagen India, visits the two villages five days a week – Tuesday to Saturday,
excluding company and national holidays. Patients are provided with free medical
consultations and medicines. The service is also available to guests and others who
visit the two villages.

Since launch in August 2015, Volkswagen India’s Mobile Health Clinic has provided over 17,000 free medical consultations and free
medicines worth € 5200. The team has also referred patients to nearby hospitals for further medical consultation and/or hospital
admission based on their condition. The Mobile Health Clinic also runs awareness programs on various health-related topics.

VWIPL also carries out blood-group testing for children residing in these villages.

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Key Environmental Goal Achieved – Three Years ahead of Schedule

The Volkswagen plant in Pune is one of 27 Volkswagen car production plants worldwide participat-
ing in the “Think Blue. Factory.” environmental program. With this initiative, Volkswagen is seeking
to reduce the impact of its vehicle production on the environment by 25% per vehicle around the
world. The program was rolled out in 2011 and the Pune plant has been working to achieve this
goal since 2012. During the reporting period, the plant celebrated an important achievement: by
the turn of the year 2014/2015, waste generation had been reduced by 30.5%. This meant that
the Pune plant had met an important target three years ahead of schedule. However, successes
were also achieved in other key areas: CO2 emissions fell by 21.2% and specific energy consumption
decreased by 20.6%.

Fighting Water Shortages

Volkswagen India has built a series of embankments (bunds) for water storage in a
drought-affected village in the State of Maharashtra. This CSR project was undertaken
under the aegis of a State Government initiative (Jalyukt Shivar Abhiyan) that aims to
declare around 5,000 villages in the state drought-free every year till 2019.



These water bunds will have sufficient capacity to store more than 7,500 cubic meters
of water and will be especially beneficial for irrigating farmlands.

This is the second water conservation project undertaken by Volkswagen India after
the recharging of water resources in the village of Guilani in 2013.

OTHER PROJECTS

Promoting Women in Pune

In the reporting period, Volkswagen Group India launched an initiative to promote women at the Pune plant. The aim of this program
is to increase the number of women in the workforce to 30% by 2025. Currently, only around 12% of employees are female. The start-
ing shot was fired at a kick-off meeting in March, attended by more than 120 female employees, who were given the details of the
skills development initiative aimed specifically at women. In practice, there are three cornerstones to the initiative: the Sakhi (friend)
Group, the Compass Program and the Mentor Program. The Sakhi Group seeks to encourage communication between women on a
range of different topics, for example the impact of women on the world economy, best practices, Volkswagen’s business, networks
and personal careers. Under the Compass Program, a select group of women, all of whom have already made progress and estab-
lished themselves in their respective fields, meets on a regular basis. They are given several months of training to enable them to
further develop their high potential. The Mentor Program supports women who have already progressed to another level. The focus
here is on mentoring, training, strategy and best practice.

Dual Education Mechatronics Apprenticeship Program

In 2011, Volkswagen India Academy introduced a 3.5-year dual education Mechatronics Apprenticeship Program. Based on the
German dual vocational education and training system (VET), the program imparts theoretical and practical knowledge across fields
such as mechanical, electrical and electronic engineering, as well as IT. This is complemented by training in interpersonal skills. Each
year the program recruits 16 students who have graduated from class X and meet other eligibility criteria. A unique feature of this
program is its focus on recruiting academically bright and financially deserving students from local towns and villages. The students
are provided with stipends for the duration of the program. VW also endeavors to ensure that each new intake comprises at least 25%
female students.

The students take the tests administered by the National Council for Vocational Training India and Deutscher Industrie-und Han-
delkammertag (IGCC). The curriculum is made more challenging by giving the students opportunities to participate in both national
and international skills-based competitions. Two cohorts of students have successfully completed the program and are now employed
at VW. The fifth cohort was enrolled in 2015.

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AWARDS

VOLKSWAGEN INDIA AWARDED VOLKSWAGEN POLO RANKS HIGHEST IN J.D.

ISO 9001:2015 CERTIFICATION POWER ASIA PACIFIC 2014 INDIA APEAL STUDY

The Pune-based German automaker became The Volkswagen Polo was the highest-ranked
one of the first companies in India to receive car in the premium category of the Automotive
this international quality certification. Volk- Performance, Execution and Layout (APEAL)
swagen India is also the first company in the study, based on a customer survey conducted
Volkswagen Group to be awarded the ISO by J. D. Power Asia Pacific.
9001:2015 certificate. The certification under-
lines the consistent quality of the company’s
products and services for customers, and of
the company’s streamlined processes for more
efficient operation.

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 VOLKSWAGEN KONZERN SUSTAINABILITY REPORT 2016

Regions Volkswagen de Mexico

Volkswagen de Mexico

At Volkswagen de Mexico, we see sustainable development as an

opportunity to focus our innovation skills on ensuring the long-term
continuity of our company. It means creating greater value while
using fewer resources. We look after the interests of our employees
and are committed to maintaining long-term relationships with our
distributors, suppliers, the community and our customers. Sustain-
ability means continuous improvement of the technological aspects
of our processes and our vehicles in ways that are beneficial to the
environment and the consumer, always endeavoring to maintain
our technological and quality-focused leadership in the automotive
industry.

Social responsibility implies taking an active part in developing the

communities around our plants in Puebla and Silao. In addition to
creating well-paid jobs, Volkswagen of Mexico provides support for
cultural, educational and environmental protection activities – in
addition to the philanthropic activities in which our employees are
involved.

HIGHLIGHTS OF THE YEAR 2016

„Volkswagen is the most visible German company

in Mexico. That is why the Volkswagen Group is supporting
the activities of the German-Mexican year as a premium
partner of the Alliance for the Future being forged between the
two nations.“

Bilateral German-Mexican Year

Germany and Mexico have a long history of economic and cultural collaboration. Big
German companies like Volkswagen have been present in Mexico for many decades.
The German Chamber of Industry and Commerce has 750 members and has been ac-
tive since 1929. German Schools in Mexico City and Puebla are over 100 years old. And
cultural exchange between the two countries has been promoted by the Goethe-Insti-
tut for 50 years now with the support of the Cultural Foundation of German Industry,
of which Volkswagen is also a member.

Starting in June 2016, both countries launched the Bilateral German–Mexican Year,
which includes over 1,000 events in the fields of culture, science and economics, under
the aegis of the “Alliance for the Future” that is being forged between the two nations.
The Volkswagen Group is supporting the activities of the German-Mexican Year as a
premium partner and active participant in several events, such as the German Industrial
Fair and the PopUp Tour of several Mexican cities..

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Regions Volkswagen de Mexico

Nature Conservation Program “Por Amor a México”

Since 2006, Volkswagen de México has been funding biodiversity research and
conservation projects in Mexico. By 2016, 11 Mexican scientists had been awarded
grants of €30,000 each, in recognition of their contributions to species conservation
in Mexico and in support of their ongoing work. Each year, the same amount has been
donated to a nature conservation research project undertaken by scientists in a pro-
tected area. Volkswagen de México has become the country’s most important private
donor in the field of biodiversity.

Starting in 2017, under the new motto “Volkswagen, Por Amor a México”, the award
is being opened up to the whole of Mexico’s conservationist community, representing
all kinds of nature conservation projects, any of which may qualify for the €30,000
grant. A jury of highly respected Mexican scientists specializing in nature conservation will select the two best qualified projects, which
will then be submitted for voting by the general public via Volkswagen’s social media channels.

The first award winner of this new contest will be announced in mid-2017.

A Day for the Future – Supporting the Disadvantaged

In 2002, Volkswagen de México joined forces with the trade union to launch the
initiative “A Day for the Future”. Employees voluntarily donate one day’s wages,
and the company provides matching funds. The money is donated to projects run
by institutions in the state of Puebla that are dedicated to helping sick, orphaned,
abandoned or disabled children. Since it was founded 15 years ago, the program
has raised a total of €2 million for more than 250 projects.

Since 2014, the Volkswagen fund has also supported a government initiative to
improve nutrition for the poorest sections of the population who are at risk of
malnutrition. A mobile soup kitchen was installed near the Puebla factory, in the
county of Cuautlancingo; it provides two meals per day to the needy population,
mainly children and the elderly. The county and state governments maintain the
soup kitchen, while Volkswagen provides funding for the food.

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Regions Volkswagen de Mexico

AWARDS

EMPRESA SOCIALMENTE RESPONSABLE MODELO DE EQUIDAD DE GÉNERO (INSTITUTO

(CEMEFI) 2011–2016 NACIONAL DE LAS MUJERES) 2012–2015

EMPRESA INCLUYENTE “GILBERTO RINCÓN EMPRESA FAMILIARMENTE RESPONSABLE

GALLARDO” (STPS) 2014 (STPS) 2014

ORGANIZACIÓN RESPONSABLEMENTE LISTED AS “GREAT PLACE TO WORK” 2016

SALUDABLE (CESB) 2015

LISTED AS “TOP EMPLOYER MÉXICO” 2016

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Regions Volkswagen Group Russia

Volkswagen Group
Russia

Volkswagen Group Russia is committed to giving back to the local

community through social welfare projects which tackle acute
problems. Good corporate citizenship is a natural and essential part
of the company’s role in a large country like Russia.

HIGHLIGHTS OF THE YEAR 2016

“We have been able to assist around 300 families

using the two VW Multivans we made available to the
children’s hospice in St. Petersburg.”

Talent Acquisition in Joint Venture with Automotive Transport College

The joint venture between the Volkswagen Group Rus Academy in Moscow and the
Automotive Transport College, set up as a pilot project in 2015, continued successfully
in 2016. The joint program offers two years of in-service training and study incorpo-
rated into the standard curriculum. Upon completing their studies, the most talented
college students selected for the program are given apprenticeships in the workshops
of Volkswagen Group Rus dealers. The project aims to tie young people into the Volk-
swagen Group at an early stage. The partnership also provides training sessions for the
educators at the college, including in-depth discussion of theory and practice by VW
experts, adding international expertise to the professional knowledge and skills of the
college instructors and preparing them for running similar programs at the college in
the future. The program is warmly welcomed by all those involved and is ongoing.

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Regions Volkswagen Group Russia

Dual Vocational Education and Training (VET)

In 2010, Volkswagen Group Rus (VGR) and the College for Information Technology and
Administration in the city of Kaluga, 170 kilometers from Moscow, launched a dual
vocational education program which was unique in Russia at that time. Designed by
Volkswagen experts, it is modelled on German programs that combine classroom
education with practical vocational training and aims to prepare skilled professionals
for work in the company. Before this program was established, there was no com-
parable VET concept of this kind in the country. The Group also cooperates with the
Kaluga branch of the Bauman Moscow State Technical University by offering students
internships at the plant and organizing lectures by company representatives at the
higher education institution. Since the program was launched, 299 students have
successfully completed their training (with 54 graduates in 2016) in six different
specialist or professional fields, and been awarded their certificates of qualification. New professions and qualifications are gradually
being added to the program, further expanding educational cooperation. VGR has actively participated in the development of nation-
al professional standards and maintains an ongoing dialog on educational topics with the Federal Institute for the Development of
Education, the Agency for Strategic Initiatives, BIBB, the Deutsch-Russische Auslandshandelskammer and the Ministry of Education and
Science of Kaluga Region.

Road Safety for Schoolchildren

At the start of each school year, from September to October, ŠKODA joins forces
with its dealers in Russia to run ŠKODA Krokha, a nationwide road-safety project
for children aged 7 to 10 years. The initiative, which was first launched in 2011,
includes information events presented in entertaining ways, plus an additional
online element to teach children about the Highway Code and safe road behavior.
In 2016, some 10,000 children from 32 cities in Russia attended road-safety classes
and learned how to behave safely on roads as part of the project.

OTHER PROJECTS

Fit for Work on the International Stage

At regional level, Volkswagen Group Russia is involved in the MOST project in Nizhny Novgorod Oblast, 400 kilometers (250 miles) from Moscow.
The project is aimed at selected students seeking an international career and offers them educational and professional support over a
12-month period. The company initiated MOST in 2014, in cooperation with the International Community Association of Nizhny Novgorod,
of which Volkswagen Group Rus is an active member, and leading regional universities. The company supports the project by organizing
lectures by company managers, factory visits and work placements.

Volkswagen Group Rus educational projects in cooperation with the Goethe-Institut include the award of corporate scholarships to selected
students. In 2016, the program was extended for another three years. The focus group of the Studienbrücke Deutschland project is composed
of highly motivated, talented and active school students from Moscow and other Russian regions, specializing in science and technical sub-
jects and showing exemplary levels of academic achievement and vision. They are all planning to continue their education at German univer-
sities. They receive one year of German language and cross-cultural pre-university training and advisory support in parallel with their regular
school studies. In 2016, five graduates of the program who were given preparatory training with the support of Volkswagen scholarships
successfully entered German universities and are now studying in their specialist subjects. The project is ongoing and has been supported by
Volkswagen Group Rus since 2012.

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Regions Volkswagen Group Russia

Support for Charitable Institutions

Volkswagen Group Rus supports a number of institutions and organizations committed to social welfare. One example is the children’s hos-
pice in St. Petersburg. Since 2010, Volkswagen Commercial Vehicles has been supporting the children’s hospice in St. Petersburg, which is also
the first children’s hospice in Russia. During the reporting period, the company provided two VW Multivans to the hospice for medical and
other trips. Around 300 families made use of the assistance provided by doctors, nurses and psychologists both at home and directly at the
hospice, with further support for improving the quality of life of both patients and their families.

ŠKODA Auto Russia has been part of Volkswagen Group Rus since 2011, and has provided continuous support to well-known international
charity SOS Children’s Villages. Currently, the charity uses 11 ŠKODA Octavia and Yeti cars in various locations to provide much-needed mobili-
ty across this enormous country’s vast territories. In 2016, the company invited children under the charity’s supervision to the Ice Hockey
World Championship 2016 in Moscow. It was an unforgettable experience, and for some children the first time they had ever visited the capital.

At Christmas time, Volkswagen Group Rus employees from Moscow, Kaluga and Nizhny Novgorod traditionally pay visits and organize dona-
tions of gifts or money to orphanages and charities in the vicinity. In 2016, visits were made to six children’s institutions and charities. In June,
employees of the VGR factory in Kaluga spent a day at Kondrovo orphanage organizing sports programs and master classes and talking about
environmental issues with the children. Also in 2016, a group of volunteers from the company’s Moscow office initiated a project with an
orphanage in Kolomna, 100 kilometers (60 miles) from the capital. Every month throughout the year, they visited 27 children, bringing
food and other goods, as well as books and presents. They discussed a wide variety of topics and organized educational games and activi-
ties for the kids.

Sport for a Good Cause / Young Football and Hockey Professionals

The company has provided regular support for sports activities in Russia, and in 2016, became involved in the development of youth
sports at the national level. Volkswagen and ŠKODA both continued to organize the Volkswagen Junior Masters Cup and ŠKODA Junior
Ice Hockey Cup in Russia, supporting and developing talented young players from all over the country and popularizing sports and a healthy
lifestyle.

The Volkswagen Junior Masters Cup has been held in Russia since 2006. The winning team at the national level represents the country bian-
nually in the international finals. In 2015/2016, five teams from Moscow and the Moscow region – a total of 65 young football players aged
11–13 – competed to represent Russia at the VW Junior Masters World Cup in France in May 2016. The project is ongoing and will continue
to run across Russia in the future, with the aim of raising further interest in sport generally and football in particular among young players
and potential future football stars.

The partnership and joint venture between ŠKODA in Russia and the Russian Ice Hockey Federation and National Ice Hockey Team has been
extended to provide active support for youth sport in the country. The ŠKODA Junior Ice Hockey Cup is a significant nationwide project aiming
to encourage children’s interest in youth sport. The games are organized at professional venues, and famous ice hockey players share their
experience with future professionals. In 2016, the company invited the winning team to the Ice Hockey World Championship 2016 in Moscow.

VW Commercial Vehicles has been cooperating with the charitable foundation Flag of Kindness in Russia for over five years. Every year
(including 2016), Volkswagen Commercial Vehicles helps the charity with its transport. The Cup of Kindness is a mini football cup organized
across the country as part of the “Under the Flag of Kindness” charity campaign, with 12 teams from well-known companies and enterprises,
as well as famous actors, musicians, singers and sportsmen, who all compete in Moscow to raise money for charity and in particular for medical
research into cures for seriously ill children.

Support for “Day of the City” in Kaluga (up to your decision if this is a relevant item)
Jointly with its dealers, Volkswagen Group Russia traditionally supports “The Day of the City” in Kaluga, where the Group has a production
facility. VW and ŠKODA cars are showcased at the center of the festivities, and factory employees play an active part in the walking parade
along the main streets of downtown, one of the major events of the year in Kaluga.

STAKEHOLDER DIALOG

Active membership of local business associations Volkswagen Group Russia is a permanent member of the Council
(AEB, AHK, ICANN) for Professional Qualifications in the automotive industry under
AEB = Association of European Businesses in Russia https://www. the Russian President’s National Council for Professional Qualifica-
aebrus.ru/ tions (company experts are members of different committees).
AHK = Deutsch-Russische Auslandshandelskammer http://russland.
ahk.de/
ICANN = International Community Association of Nizhny Novgorod
http://icann-nn.ru/

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Regions Volkswagen Group of America

Volkswagen Group of
America

At Volkswagen Group of America (VWGoA), we believe that effec-

tively confronting the social and sustainability challenges of today
and the future requires the collective actions of our employees and
partners. We instill a perseverant drive throughout the company
to work toward the greater good and to be compassionate citizens.
We are proud that our unified efforts have not only enriched our
local communities nationwide, but have strengthened our corporate
culture. Looking ahead, we pledge to work even harder to build the
future we want for our employees, families, neighbors and commu-
nities.

HIGHLIGHTS OF THE YEAR 2016

Group of America Joins the Fight Against Breast Cancer

In September 2016, Volkswagen of America collaborated with The Pink Agenda, a non-profit devoted to eradicating breast cancer, along
with breast cancer survivor and television personality Giuliana Rancic and her FAB-U-WISH initiative, to help raise money for breast
cancer research and improve the lives of those undergoing breast cancer treatment. As part of the collaboration, Volkswagen auctioned
the first limited-edition 2017 Volkswagen #PinkBeetle to arrive in the U.S. market, raising $30,272.00, with proceeds benefiting The
Pink Agenda’s and FAB-U-WISH’s efforts to fight against breast cancer.

Employees across the Volkswagen Group of America network also celebrated #PinkBeetle Day to kick off the launch of Volkswagen’s
new #PinkBeetle, in conjunction with Breast Cancer Awareness Month in October. Women In Motion (WIM) Employee Resource Group
(ERG) chapters from VWGoA locations across the country planned company-wide fundraisers throughout the month to raise money
and awareness for breast cancer research. VWGoA colleagues from across the country helped raise close to $10,000, with the company
matching donations program, for breast cancer awareness.

In the same month, VW Chattanooga participated in the America Cancer Society’s Making Strides Against Breast Cancer event, where
more than 2,500 supporters and 140 teams raised $150,000 to help the ACS save lives from breast cancer.

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Regions Volkswagen Group of America

Sponsoring Young Artists with Disabilities

Volkswagen Group of America is proud of its ongoing relationship with the Kennedy
Center and 14-year sponsorship of VSA’s work. VWGoA has provided more than
$1 million in funding to support these accomplished artists, as well as underscoring
its commitment to diversity and inclusion. The program, which annually features
artwork by artists aged 16 to 25, supports individuals with disabilities during a critical
time in their lives when many are deciding whether to pursue the arts as a career.

In September 2016, fifteen talented visual artists converged in Washington, D.C. for
the culmination of the VSA Emerging Young Artists Program. Every year, this program
awards outstanding young artists with disabilities with cash prizes, professional op-
portunities, and visibility for their work. Alongside a weekend of career development
activities in D.C., the 2016 winners attended celebratory receptions on Capitol Hill and at the VWGoA’s headquarters Herndon, Va. Their
artwork has embarked on a nine-month tour of galleries and schools throughout the United States. The professional connections and
exposure that each winner receives through this program allow them to take profound steps in their artistic journeys and careers alike.

Volkswagen Group of American Employees Give Back

In 2016, more than 300 Volkswagen Group of America employees volunteered approximately 900 hours with charitable organizations
in the communities where they live and work as part of the company’s “Get Involved Month,” an initiative empowering employees
across the country to support and give back to their communities within a dedicated month of service.

VWGoA also encourages employees to “Get Involved” year-round, providing robust incentives for employees to serve their communities.
They include a matching employee donations initiative, a company-wide Dollars for Doers Program that provides a yearly one-time
financial donation to a charity at which a full-time employee has volunteered for eight hours or more, and providing employees with
a paid time off to volunteer.

AWARDS

VOLKSWAGEN GROUP OF AMERICA HONORED

BY THE HUMAN RIGHTS CAMPAIGN FOUNDATION AS A BEST PLACE
TO WORK FOR LGBT EQUALITY.

At Volkswagen Group of America, we embrace the diversity in our workforce,

and strive to create a culture of respect and inclusion for every employee
regardless of race, creed, religion, origin, gender or sexual orientation. We have proudly
earned a 100 percent score on the Human Rights Campaign Foundation’s 2016 Corporate
Equality Index (CEI) and the distinction of “Best Places to Work for LGBT Equality”.

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Imprint

Imprint
PUBLISHER
Volkswagen AG
Group Sustainability
Letterbox 011/1265
38436 Wolfsburg
Germany

CONTACT
info@volkswagen-nachhaltigkeit.de

EDITING
Volkswagen Aktiengesellschaft

CONCEPT, COPY AND DESIGN

Kirchhoff Consult AG, Hamburg
Volkswagen Aktiengesellschaft

ENGLISH TRANSLATION
The Words Gym Ltd., UK

PHOTOS
Volkswagen Group and its brands

DATE OF PUBLICATION
Date of Publication: 10 May 2017
© Volkswagen Aktiengesellschaft
Errors and mistakes reserve.

DISCLAIMER
At the brands of the Volkswagen Group, work on all types and models never ceases, so please allow
for the fact that changes in design, equipment and technical specifications may be made at any time. Consequently, the data
and descriptions in this report cannot give rise to claims of any kind.

FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements on the development of the Volkswagen Group and
its companies as well as on economic and political developments. These statements are assumptions that we based on all the information
available to us at the time of reporting. If the assumptions made fail to materialize or additional risks occur, then the actual results, devel-
opment and performance of the Group may differ from the forecasts given. The Volkswagen Group therefore assumes no liability for the
forward-looking statements presented here.

The German version is binding. The English version is a convenience translation

for information purposes only.

YOUR FEEDBACK
In the interests of improving and advancing our commitment to sustainability, we would be delighted to receive your feedback
on our sustainability report. You can send us your views online under the above mentioned mail adress.

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