The Volkswagen Group is one of the leading multi-brand groups in the automotive industry. It develops vehicles and components for the Group’s brands, and also produces and sells vehicles – in particular passenger cars and light commercial vehicles – under the Volkswagen Passenger Cars and Volkswagen Commercial Vehicles brands.
The Volkswagen Group was the first automotive manufacturer globally to commit to the Paris Agreement. It is taking responsibility and contributing to keeping global warming below two degrees Celsius with the reference year of 2050. To achieve this, it has launched the industry’s largest decarbonization offensive. The company intends for the entire Volkswagen Group to be carbon neutral by 2050.
Volkswagen Group aims to reduce its passenger car fleet’s total life-cycle carbon footprint by 30% by 2025. The target is to halve the plants’ global CO2 emissions. In addition, the company is investing in new business models in order to fuel the penetration of electric vehicles.
The Volkswagen Group is comprehensively driving the change. This is also underlined by its new rating system in procurement which commits suppliers to clean production processes and to respecting human and codetermination rights.
1. Decarbonization – On The Path To Becoming Carbon Neutral
Climate change is one of humanity’s key challenges. The speed of global warming has rapidly increased in the last three decades. Stopping it is an obligation for us all. Society accuses politicians and businesses, including the Volkswagen Group, of lacking the willingness to act on climate protection issues. The global Fridays for Future movement constantly repeat this criticism – and emphatically so. The major public response shows that the attitude and demands of the movement are supported by large sections of the population.
The Volkswagen group is actively taking action towards this because it wants to go from part of the problem to part of the solution. That is why the group has launched a comprehensive decarbonization program and seeks to use it to contribute to achieving the two-degree target in the Paris Agreement or even to come in significantly below this target – if possible. The entire Volkswagen Group wants to be a carbon-neutral organization by 2050 at the latest. That extends from the fleet through production to administration. For this, the group is going far beyond legal and political requirements and are taking on a pioneering role in the industry.
The key is the consistent electrification of the group’s vehicle fleet, opening up the way to sustainable, emission-free mobility for its customers. The group plans to invest around €33 billion by 2024. However, electric mobility only makes a contribution to climate change when the carbon footprint over the entire life cycle is optimized. That is why the group particularly has an eye on the supply chain, manufacture and supplying the vehicles with green electricity in its decarbonization program.
1.1 Making Decarbonization Measurable
The company supports its decarbonization program with concrete, verifiable targets and measures. It is based on three key principles, which at the same time represent a set of priorities: the top priority measures with which CO2 emissions can be avoided or reduced. In second place come measures with which we can shift the energy supply in the entire value chain to less CO2-intensive energy and/or renewable energy. Finally, the company offsets unavoidable CO2 emissions through climate protection projects that meet the highest international standards.
The decarbonization index (DCI) of the group is an informative measurement tool that makes our progress and intermediate results in this area public and verifiable. The DCI is calculated based on the CO2 emissions of the major brands that manufacture passenger cars and of light commercial vehicles of Europe (EU-28, Norway and Iceland), China and USA regions over the entire life cycle. By 2025, it should fall by 30% compared to the baseline of 2015. The DCI value was 43.0 t CO2e/vehicle in the reporting year. In 2019, all production locations, as well as the brands and regions, created decarbonization roadmaps, which were incorporated into a Group decarbonization roadmap.
1.2 Battery Manufacturing Challenge
The Volkswagen Group is tackling the challenge of higher CO2 emissions than initially arise in the supply chain during the transition to electric mobility. The CO2 emissions in manufacturing an electric vehicle are – from raw material extraction to handover to the customer – roughly twice as high as with a vehicle with a combustion engine. This is because of the difficulty of raw material extraction and the energy-intensive processes in manufacturing batteries. In particular, drying the raw materials, which are applied to a carrier film in liquid form, causes energy consumption to rocket. However, the company is increasing efficiency in big steps here: the first ID. model will already emit around 50% less CO2 per kilowatt-hour (kWh) of battery capacity than the current e-Golf – as a result of improved battery technologies and the manufacture of the battery with green electricity. All battery suppliers are contractually obliged to use certified green electricity in their production. Suppliers must provide proof of this before the award of the contract. CO2 emissions in battery manufacturing are thus falling significantly.
1.3 Saving CO2 By Recycling
The group believes that used batteries from electric vehicles should not be treated as hazardous waste, instead they can serve as a valuable source of raw materials and contribute to the reduction of emissions. Batteries that are fundamentally still intact, but no longer provide full power for use in electric cars can be used as energy storage units in charging stations. Completely dead batteries need to be recycled. To this end, Volkswagen Group Components in Salzgitter is setting up a pilot facility for battery recycling. From 2020 onward, up to 3,000 batteries per year can be recycled in it. For example, a new raw material (black powder) can be extracted for the cathodes of new batteries. This results in CO2 saving potential of up to 25%. In the long term, we want to expand this and further improve recovery.
1.4 Offsetting Unavoidable CO2 Emissions
By reducing CO2 emissions and offsetting unavoidable emissions, the group wants to ensure that the ID.3 has a carbon-neutral footprint when handed over to the customer. The company offsets unavoidable CO2 emissions through climate protection projects with the highest certification standards, such as the Verified Carbon Standard (VCS), the Climate Community and Biodiversity Standards (CCB) or the Gold Standard. For the quality assurance of offsetting projects, it has developed a comprehensive scoring model and rate the projects with regard to compliance with standards, credibility, site selection, project size and the contribution to achieving the United Nations Sustainable Development Goals (SDGs).
2. Social Development Projects
As a good corporate citizen, the Volkswagen group strives to be a constant economic driver, contributing to local structural development and equal opportunities. The main focus of the group’s corporate social engagement activities is on supporting local development, educational and community projects at many of its sites around the world. In 2019, the brands and companies supported more than 520 projects and initiatives on a global scale. In the reporting period, Volkswagen AG made donations amounting to €33.6 million.
3. Volkswagen pro Ehrenamt program
The topic of corporate volunteering is particularly important to the group in the context of employees’ broad involvement in running the business. An important component of volunteering in Volkswagen AG is the Volkswagen pro Ehrenamt program. The aim is to raise more awareness of voluntary activities and to support and encourage them. This is why Volkswagen sees Pro Ehrenamt as a hub between people who want to get involved and those who have voluntary work to offer. The program is aimed at all Volkswagen employees and their partners at our sites and at former employees in early retirement or retirement.
The Volkswagen workforce has taken on social responsibility for people in need for decades: Volkswagen AG’s employees donated more than €760,000 in 2019. Employees and the Group support disadvantaged people at the Volkswagen AG locations through these workforce donations. Support is given to specific projects, which, for example, improve the situation of people whose quality of life has been affected by illness, disability, or other circumstances. Likewise, the Group’s employees, led by the Group Works Council, have supported the international children’s relief organization terre des hommes for 20 years. In 2019, the amount donated was more than €1.2 million.
At the Volkswagen Group’s production locations in Argentina, Brazil, India, Mexico, South Africa, Thailand and Germany, a wide variety of projects for disadvantaged boys and girls are funded from the donations. They are given protection, support, the opportunity for education and career prospects. Employees do not just get involved as part of special campaigns, such as the Audi workforce fundraising for earthquake victims in Mexico. For years, many employees have also been donating the cents shown after the decimal point in their payslips.
4. Integration Support For Refugees
The Volkswagen Group’s refugee aid program also created a large number of site-specific options for refugees in cooperation with the people responsible for sustainability of the Group brands in 2019. There were three areas of focus here: meeting, education and professional integration. Regular opportunities to meet other people, such as “Kitchen Stories” or “Kicking About and Cooking” have encouraged communication between our employees and refugees and dismantled reservations.
In the field of education, the grpup’s focus was on acquiring language skills, developing expertise and obtaining primary qualifications, because these skills form the basis for career prospects for refugees in Germany. It offered language courses lasting a number of months, supported integration and employability courses and, together with our cooperation partner for student support, Kiron, brought together refugee students and Volkswagen employees in intercultural workshops. It has implemented career guidance and skills assessment measures at various Group sites. Its entry-level vocational qualification options, which combine theoretical and practical preparation for a career and an intensive language course and thus prepare refugees for an apprenticeship in Germany, were just as successful. Apprenticeship options for refugees rounded off the offering.
In addition to the Group-wide involvement of the Audi, Porsche, MAN, Volkswagen Financial Services, Volkswagen Commercial Vehicles and Volkswagen Passenger Cars brands, many employees of the Volkswagen Group do voluntary work for refugees. Supporting them in this is also the Volkswagen Group’s refugee aid program’s task. From 2015 until the end of 2019, the group reached more than 5,000 refugees through such projects.
5. Supporting Social Business
The Volkswagen Group supported the Global Social Business Summit again in November 2019. In Berlin, 550 representatives from business, the academic world, politics and society discussed business models that pursue social and environmental objectives and are at the same time economic. The participants came from 54 countries. The Volkswagen Group supported the annual conference with Nobel Peace Prize winner, Prof. Muhammad Yunus, for the fourth time. At the event, international social business players presented their ideas for a more sustainable and more social world in various workshops and worked on their own possible social business projects with the Volkswagen Group.
6. Connecting Digitalization And Social Engagement
The Volkswagen Group also increasingly uses the potential of digitalization in its social engagement. One example is the xStarters program, which focuses on the digital education of young people. In creative workshops with design thinking elements, young people between the ages of 14 and 19 learn digital and non-digital skills for the future around finding ideas, prototyping or robotics in and outside of schools. Slightly more than 100 workshops have been held since 2018 and approximately 2,400 school students have been reached. Volkswagen Group employees are also involved in the xStarters program, working as volunteers to contribute their know-how and support the young people.
Disclaimer: The contents of this report are excerpts of the Volkswagen 2019 Global Sustainability Report.