Corporate Culture

MATERIAL IMPACT AND THEIR INTERACTION WITH STRATEGY AND BUSINESS MODEL

Impact in the area of corporate culture

In the area of corporate culture, the Volkswagen Group identified an actual positive impact on the appropriate protection and development of its employees through the materiality assessment in the 2024 fiscal year. The Volkswagen Group has a broader understanding of corporate culture than the ESRS definition, extending it to topics such as diversity and co-determination. These topics are reported in the section on social information. The positive impact in this chapter on business conduct stems, for example, from the promotion of integrity, equal treatment, ethical conduct, responsible decision-making processes and the emphasis on fairness by the employee representatives.

Interaction with strategy and business model

The impact in the area of corporate culture identified in the materiality assessment has an effect on the Volkswagen Group’s strategy and business model. The overarching topic of corporate culture is anchored in the Group strategy and the Group regenerate+ sustainability strategy. The Volkswagen Group uses various actions in the area of corporate culture to emphasize the influence of its material impact on the business model and strategy. In this respect, the focus of the chapter is on topics relating to integrity and compliance (I&C), such as the Code of Conduct and Code of Conduct training, the Group Essentials in conjunction with the role model program, the opinion survey (Stimmungsbarometer) and additional training and awareness-raising actions.

An in-depth description of all actions in the area of corporate culture is provided in “Actions: Corporate culture”.

POLICIES: CORPORATE CULTURE

Code of Conduct and Volkswagen Group Essentials

Integrity and compliance are the basis for correct and value-oriented behavior at the Volkswagen Group. We have set out the relevant guidelines in the Code of Conduct and the Group Essentials. The Code of Conduct forms the ethical and values-based foundation for integrity and compliance in the Volkswagen Group. As a key tool, it promotes awareness of responsible conduct and decision-making, provides support in forming opinions, can be used as a way of finding the right contact persons and is binding for all Group brands and companies. The Code of Conduct is based on international conventions and declarations, particularly the International Bill of Human Rights, the Fundamental Conventions of the International Labour Organization (ILO), and the United Nations Convention against Corruption.

As part of the Code of Conduct, the Volkswagen Group Essentials define the shared underlying values across all of the Volkswagen Group’s brands and companies. They form the basis of the corporate culture and define what the Volkswagen Group represents globally across all its brands and companies: We take on responsibility for the environment and society; we are honest and speak up when something is wrong; we break new ground; we live diversity; we are proud of the work we do; we not me; we keep our word. These statements are a promise to customers, shareholders, business partners and employees. The Code of Conduct and the Group Essentials can be found on the Volkswagen Group website.

In cooperation with the relevant departments, the Group Chief Integrity & Compliance Officer is responsible for the content of the Code of Conduct. The Group Chief Integrity & Compliance Officer heads the Group-wide Integrity & Compliance organization, which is part of the Integrity and Legal Affairs function of the Board of Management. The brands and companies are responsible for local implementation throughout the workforce.

The Group Integrity & Compliance organization helps the Group and brand companies to comply with the rules when conducting their business activities and to comply with the relevant legislation and internal regulations. The focus of its work includes anti-corruption and the prevention of embezzlement, fraud and money laundering. The point of departure is the internal compliance risk assessment (ICRA).

Internal compliance risk assessment and minimum standards for integrity and compliance training and communication

As part of the operational implementation of integrity and compliance, potential risks in the Group (excluding the Porsche AG Group which conducts its own compliance risk analysis) are identified through actions including the internal compliance risk assessment, and relevant areas of focus are defined. The controlled companies of the Volkswagen Group are allocated risk profiles – categorized as low, medium or high – and packages of measures that also include training and communication requirements. On this basis, actions such as increasing awareness and providing training must be implemented for the Group’s employees to promote integrity in day-to-day business, ensure responsible actions and prevent misconduct. Through this risk-based approach, employees, members of management and relevant stakeholder groups receive regular training on integrity and compliance topics, processes and conduct requirements specific to their area of activity. Auditors also assess the effectiveness of the I&C actions as part of a monitoring and improvement process. Moreover, the integrity and compliance management system (ICMS) is optimized on a continuous basis.

The Porsche AG Group conducts an independent internal compliance risk assessment in its main departments to identify risk potential, determine key focus areas, and develop preventive actions.

In addition to the ICRA packages of measures, the minimum standards provide a more detailed framework for designing and implementing I&C training and are provided centrally by Group Integrity & Compliance. They are intended to provide the brands and companies with guidance on the training topics, the target groups and the minimum content. These Group-wide minimum standards ensure a consistent level of homogeneity in Group-wide I&C training. The respective brands and companies are responsible for developing an effective training program and organizing and implementing training courses, such as Code of Conduct training, taking account of the minimum standards.

The Code of Conduct training is aimed at all employees in the controlled companies, including management. The training must be repeated every three years for employees in non-production areas (full-time and part-time employees and managers). The system records attendance. Some employees, such as interns, student workers and doctoral candidates, are exempt.

At the end of the 2024 fiscal year, 261,707 employees had a valid qualification on the Code of Conduct. This is equivalent to 97% of the active workforce eligible for training. Scania AB’s figures are not included in reporting for 2024, as it is currently updating its monitoring system. A total of 19,324 employees of Porsche AG (95.1% of the relevant Porsche AG employees) completed the “Code of Conduct” digital training module in fiscal year 2024. The training module introduces the actual Code of Conduct and provides information on the whistleblower system and contact details for the Compliance Helpdesk. The training also covers the content of the Group Policies on avoiding conflicts of interest and corruption, and on human rights.

Employees in production-related areas receive the relevant training every four years. The training is based on the principles of the Code of Conduct brochure and includes topics such as environmental compliance, product compliance and the prohibition of corruption. The content is updated regularly. The Group-wide implementation of the mandatory training measures on the Code of Conduct is reported to the Group Board of Management on an ad hoc basis and at least once a year.

ACTIONS: CORPORATE CULTURE

Code of Conduct training

The Code of Conduct training educates Volkswagen Group employees on the topics of integrity and compliance, with a focus on the prohibition and, specifically, the prevention of corruption. An in-depth description of the Code of Conduct training is provided in “Policies: Corporate culture”.

Employees from senior management upwards are certified on the Code of Conduct every two years, with the aim of recognizing their function as role models, raising their employees’ awareness accordingly and making it easier for them to find relevant information in the Code of Conduct. As part of the certification, participants are made aware of their reporting obligation under the employment contract in the event of serious compliance breaches and their obligation to disclose any conflicts of interest.

Code of Conduct brochure

The Code of Conduct brochure is used to communicate the Code of Conduct to all employees and external stakeholders. It aims to ensure a clear understanding of the Code of Conduct throughout the Volkswagen Group.

All employees receive the brochure when appointed. It can also be accessed online at any time, both internally and externally. The document is published across the Group, regularly updated, and supported by relevant communication campaigns. In the reporting year, an updated Code of Conduct 3.0 was publicized throughout the Group. This was followed in October 2024 by the Code of Conduct 3.1, updated with respect to the reporting channels for the whistleblower system.

Role model program

Encouraging and empowering managers to contribute to a successful transformation and act as role models is an important part of the Volkswagen Group’s philosophy. Managers who lead by example motivate their staff, encourage resilience in the face of change, boost their teams’ effectiveness and create trust. These are key factors for successful collaboration. The role model program helps managers to reinforce these factors.

A toolbox of easy-to-follow team activities gives managers suggestions and instructions that can be implemented easily and without any additional budget and are easy to integrate into day-to-day work. In all activities, it is about making management dynamic and engaging, decreasing distances between hierarchy levels, promoting innovation, and reinforcing mutual trust and communication. The methods and instructions contained in the toolbox are assigned to the seven Group Essentials. In addition to the centrally suggested methods and instructions, the managers have the option to develop their own methods and tools and to implement them as actions in the program using wild cards.

The binding framework, with its minimum requirements for managers, supports the implementation of this program to improve the corporate culture. The role model program is run annually across the Group. It is targeted at all employees with management or team leadership functions in the Group.

Opinion survey

The Group-wide opinion survey (Stimmungsbarometer) offered employees the opportunity to express their opinion, assessment, and criticism. It measured sentiment in the Group on an annual basis and also internal employer attractiveness in the Volkswagen Group. Employees’ opinions on the topics of integrity and cooperation are of particular interest. Managers are informed of the results of the opinion survey, highlighting areas for improvement within their departments. They are then asked to take action to make further improvements. The Group team responsible for the opinion survey supports managers in defined processes using various tools, including the methods toolbox. The progress of actions is regularly discussed in the teams and also reviewed in a top-down approach, from the highest to the lowest management level, with the aim of ensuring sustainable implementation of the measures derived by the organizational units.

In 2023, 129 companies across 48 countries in which the Group operates participated in the opinion survey. This is equivalent to a participation rate of 86% of the entire workforce including the Chinese joint ventures. Of the 588,072 employees in the participating companies, 464,749 (79%) participated. The employee satisfaction index calculated from 22 questions is the main parameter of the opinion survey. It is calculated from the total of all the related answers in the survey and, in 2023, stood at 82.5 index points in the Volkswagen Group and at 75.8 in Volkswagen AG out of a possible total of 100 index points.

In 2024, the opinion survey was temporarily suspended across the Group for revision purposes. For this reason, no employee satisfaction index score was calculated for 2024. However, the activities initiated based on the results of the 2023 opinion survey continued to have an effect in 2024 and will also continue to do so in subsequent years. The revision of the Group employee survey includes a new IT system, a new questionnaire concept and improved follow-up processes for evaluating the results. The objective of the revision is to reinforce continuous dialog and further boost employee loyalty and motivation. After its revision, it will continue to be provided to all the companies as a tool.

The result of the employee satisfaction index influences the level of the annual bonus as part of the variable remuneration for the Board of Management. For fiscal year 2024, the Supervisory Board used the option provided for fiscal years 2024 and 2025 to apply only the diversity index for the social subtarget and to suspend the employee satisfaction index as an ESG criterion, as the measurement method for the employee satisfaction index is currently being revised.

TARGETS: CORPORATE CULTURE

No measurable, outcome-oriented targets within the meaning of the ESRS are currently defined in relation to corporate culture. The effectiveness of the policies and actions in relation to the positive impact identified through the materiality assessment performed this year for the first time is currently not monitored. The Code of conduct and the related training are an important expression of the corporate culture. An update of the Code of Conduct was publicized throughout the Group on January 1, 2024. Relevant additional content and an overarching, Group-wide narrative convey a clear, values-oriented attitude and ensure ease of integration of future developments.