Introduction to environmental management

The Volkswagen Group is pursuing the goal of achieving more than simply cutting emissions. Our vision is to have a positive impact on people and the environment, and to contribute to restoration and improvement of ecosystems and living conditions by means of regenerative actions.

OVERARCHING POLICIES

Five policies are involved in the ESRS environmental standards:

• “Policy: Decarbonization”
• “Policy: Pollution prevention”
• “Policy: Sustainable water management”
• “Policy: Biodiversity”
• “Policy: Resource use and circular economy”

These policies are based on our Group policies on the environmental compliance management system (ECMS), which plays a major role in corporate governance. Also important are the Code of Conduct, our Group strategy, our Group sustainability strategy regenerate+, the Code of Conduct for Business Partners, our environmental mission statement goTOzero, the environmental policy, our decarbonization strategy and the Biodiversity Commitment. They address the environmental compatibility of products, services and processes, as well as the Volkswagen Group’s environmental footprint.

The relevant documents, which are applicable Group-wide, are available both publicly (with the exclusion of Group Policies) and internally. The relevant content of these documents is set out in the following chapters. Thematic specifications are provided in the relevant “Policy” section in the chapters under Environmental information.

Environmental protection is entrenched in the Code of Conduct as a key corporate principle. As a globally active company, the Volkswagen Group is responsible for the environmental compatibility and sustainability of its products, sites and services. Its mission is to be a global provider of sustainable mobility and a role model in environmental protection. The Volkswagen Group is committed to using environmentally compatible, advanced and efficient technologies and implements them throughout the life cycle of its products. As early as the development and production stage, the Group pays attention to the sustainable use of natural resources, works continuously to mitigate environmental impacts and ensures compliance with environmental legislations and regulations. In addition, the environmental compatibility of products and manufacturing processes is continually assessed and optimized as necessary.

The topics of climate change mitigation and energy are key elements of the Group strategy relating to the decarbonization of the Group’s business activities. Climate change mitigation is also an important aspect of regenerate+. By using electric drives, digital connectivity and autonomous driving, the Volkswagen Group aims to make its cars cleaner, smarter, quieter and safer. The Group harnesses its innovative power to reduce its environmental footprint – over the entire life cycle of its products and mobility solutions. The innovations are also intended to help customers to be more environmentally friendly.

In addition, the Volkswagen Group aligns its activities with the principles of environmental protection and enhancement in accordance with regenerate+. Decarbonization, establishing a circular economy, and preserving biodiversity are focal points within this framework. The nature dimension is a material element of the regenerate+ supporting program. The Volkswagen Group strives is to shape the positive impact of its actions in this area in a way that is quantifiable and transparent. Consequently, one of the core objectives of the nature dimension is to achieve more than just reducing emissions. The vision is to have a positive impact on people and the environment, as well as to contribute to the restoration and improvement of ecosystems and living conditions through regenerative actions.

The Code of Conduct for Business Partners contributes to Group-wide sustainability progress. In order also to extend the requirements of the Code of Conduct for Business Partners to lower levels of the supply chain, the Volkswagen Group requires its suppliers to pass the requirements on to their direct business partners. Above and beyond statutory requirements, the Volkswagen Group is committed to being a responsible member of society and a partner to policymakers, with whom the Group seeks dialog on the mobility concepts of the future and the design of environmentally sustainable development. The environmental issues addressed in the Code of Conduct for Business Partners include sustainability requirements in environmental protection, and responsible supply chains.

Our goTOzero environmental mission statement serves as the framework for all the Volkswagen Group’s environmental activities. With this mission statement, we aspire to reduce the environmental impact throughout the life cycle – from raw material extraction until end-of-life – for all our products and mobility solutions. Compliance with environmental regulations, standards and voluntary commitments is a prerequisite of our actions. The mission statement forms the basis for linking our targets, metrics, programs and actions. It places the focus of our activity on four central fields for action and their underlying objectives (see illustration).

In addition to the commitment to environmental protection, the Volkswagen Group has also made environmental compliance a focal point. This concerns not only adherence to legislation and internal requirements, but also close dialog and cooperation with stakeholders. The Volkswagen Group places emphasis on involving its employees, customers, suppliers, legislators, authorities, neighboring communities and other stakeholders. The Group aims to enhance its understanding of their expectations and requirements in relation to the environment. Their suggestions are entered in the ECMS, carefully assessed, and subsequently reflected in the Group’s processes, products and services.

The Volkswagen Group has created an environmental policy that sets out guidelines for environmental decision-making, for the management of projects and for the Group’s environmental stewardship. This policy actualizes the overarching environmental mission statement and sets parameters for the conduct and working methods of management and employees in five areas: management behavior, compliance, environmental protection, collaboration with stakeholders and continuous improvement. The environmental policy highlights, for example, the integration of renewable energies, decarbonization, sustainable supply chains and energy efficiency. The Volkswagen Group also intends to reduce the environmental impacts of its processes, products and services, and to continuously improve its ECMS and environmental performance.

Based on the environmental mission statement and the environmental policy, environmental protection is firmly entrenched in the Volkswagen Group divisions including Production, Logistics and Sales. As part of the strategic vision of the Zero Impact Factory initiative, the Volkswagen Group is developing specific steps towards more sustainable production. The vision is an idealized factory which employs manufacturing methods that are as climate, resource and environmentally friendly as possible, thereby reducing any environmental impacts of vehicle and component production. The brands and locations have been using the measurement methods and management tools developed for this purpose. Further information on this is provided in the “Overarching targets and metrics” section. These measurement methods and management tools enable the quantitative environmental impact of the production sites to be recorded and reduced, particularly in the action areas: climate change mitigation and energy, emissions, water and waste. We are also focusing on qualitative aspects such as the appearance of the factories, the commitment to biodiversity, protection of the soil, a functioning environmental compliance management system, improvement of resource efficiency, and environmentally friendly mobility management for employee and goods transport.

As part of the Zero Impact Logistics initiative, all of the Group logistics departments are working to support the realization of the Volkswagen Group’s environmental mission statement. By continually optimizing the transport network and logistics processes – for example by means of digitalization – unnecessary shipments are avoided and emissions reduced. In addition, the use of new low-emission technologies and energy sources for transporting production materials and vehicles is examined, piloted and expedited.

The Volkswagen Group’s sales network extends globally to more than 150 markets with over 17,000 dealer and service locations. In addition to the broad range of all-electric vehicles and hybrid models, we kicked off the goTOzero retail project that is focused on decarbonizing our entire sales network and increasing its ESG performance, helping our sales partners to move over to a climate-neutral business model.

A Group policy for the ECMS sets out the requirements, tasks and responsibilities with regard to the environment and compliance. It provides the framework for implementing ECMS across all phases of the business and the entire life cycle of vehicles in the brands and companies. The policy defines the minimum requirements for the companies and gives them the flexibility to implement them in a way that suits their business activities. The systematic implementation of requirements from the Group Policy on the ECMS reinforces the effectiveness and robustness of the environmental compliance management systems at the Volkswagen Group sites. Defined roles and responsibilities allow for clear allocation of tasks and competencies. In addition to internal audits, external certifications enable objective assessments of these management systems and ensure their continual enhancement. The ECMS is also used to regularly check the effectiveness of the actions. A detailed explanation can be found in the “Actions and resources” section in each of the chapters under Environmental information. The Volkswagen Group provides regular training for its employees on environmental protection and environmental compliance. In line with the Group Policy, all production and development sites in the Group are also requested to have their environmental management systems certified to ISO 14001 or validated by the Eco-Management and Audit Scheme (EMAS).

The Volkswagen Group implemented a responsible supply chain system in 2022 to comply with international frameworks and requirements. The system aims to identify particularly high risks in the supply chain in connection with human rights violations and the environment and to manage these appropriately.

The Volkswagen Group’s environmental responsibilities are clearly defined. The Group-wide management of operational environmental protection is the responsibility of the Chief Executive Officer of the Volkswagen Passenger Cars brand and of the Group Steering Committee Environment and Energy, which is supported by numerous specialist bodies. The Group Steering Committee Environment and Energy regularly informs the Group Board of Management on environmental and energy-related topics. It coordinates Group-wide dialog and makes decisions on environmental and energy issues. Its tasks include implementing resource efficiency programs and monitoring target achievement. As the highest environmental body in the Volkswagen Group, the Group Steering Committee Environment and Energy plays a key role in decision-making concerning environmental matters. Other bodies are responsible for managing important individual aspects, such as the Group Steering Committee for Fleet Compliance. Climate-related topics are coordinated and managed by regular meetings of the Group steering committees (at least six meetings per year) and by continuous communication with the heads of the Group’s and the brands’ various research and development units and other Group functions. Cross-divisional and cross-brand working structures have been developed at Group level to support this coordination process. These structures build on the work of committees such as the Group Steering Committee for the Environment and Energy, the Group Steering Committee for Product Recycling and the Group Platform Sustainability Product. Group Regulation Management is the key contact for Group policies and monitors the entire Group Policy process. A responsible division must verify at least once a year that the Group Policies and annexes it manages are up to date, and revise them if necessary.

OVERARCHING TARGETS AND METRICS

Reduction of specific environmental impact of production

The Volkswagen Group aims to improve its own Umweltentlastung Produktion (UEP – environmental improvement production) metric in the area of passenger cars and light commercial vehicles by 45% per vehicle or component part by 2025 as compared with 2010. The UEP is derived from the weighted average of five metrics: energy consumption, CO₂ emissions, water consumption, solvent emissions or volatile organic compounds (VOCs) – and waste for disposal.

In base year 2010, energy consumption was 2,519 kilowatt hours (kWh) per vehicle, CO₂ emissions 1,096 kilograms per vehicle, water consumption 4.54 m³ per vehicle, production-specific waste for disposal 23.3 kilograms per vehicle, and VOC emissions 4.13 kilograms per vehicle.

The targeted reduction of the environmental impacts follows a trajectory from 2010 to 2025 with annual intermediate targets. Progress is monitored, reviewed and publicly communicated on an annual basis.

In 2024, many successfully implemented actions continued to have a positive impact on the specific environmental indicators per vehicle. The UEP improved from −44.2% in 2023 to −48.5% in 2024. The target of a 45% improvement by 2025 was thus already achieved in 2024. The table below shows the changes in specific environmental indicators per vehicle, and illustrates the changes compared to base year 2010.

The UEP target is in line with the environmental mission statement goTOzero and supports the achievement of climate targets and improvement of energy and resource efficiency. The target also contributes to achievement of the United Nations’ Sustainable Development Goals (SDGs), in particular SDG 6 (clean water and sanitation), SDG 7 (affordable and clean energy), SDG 9 (industry, innovation and infrastructure), SDG 12 (responsible consumption and production), SDG 13 (climate action) and SDG 15 (life on land).

The UEP metric is directly connected with the environmental standards ESRS E1, E2, E3 and E5. The metrics energy consumption and CO₂ emissions per vehicle are considered in the UEP with respect to climate change (E1). The UEP considers the VOC emissions per vehicle with respect to topical standard pollution (E2). Water consumption per vehicle is included under water and marine resources (E3). Finally, the UEP addresses Circular economy (E5) via the assessment of waste for disposal.

Reduction of absolute environmental impact of production

The aim of the Volkswagen Group’s Zero Impact Factory strategic vision is to measure and assess the environmental impacts of its production sites worldwide in a uniform and holistic manner. Two independent methods were developed for this purpose: the Site Checklist analyzes qualitative aspects of a site in eleven action areas, while the Impact Points method facilitates a quantitative assessment of the absolute environmental impacts of a site.

The Volkswagen Group’s specific objective through the impact points method is to gradually reduce the absolute negative environmental impacts of its production sites for passenger cars and light commercial vehicles and components by 37.5% by 2030, by 68.8% by 2040, and ultimately towards net neutrality by 2050, all compared to 2018 levels. This target will replace the UEP target in 2025. Progress is monitored and reviewed on an annual basis, and will be publicly communicated from reporting year 2025.

The targets for reducing the impact points are in line with the environmental mission statement goTOzero. They support the achievement of internal and external climate targets, improvement of energy and resource efficiency, and reduction of harmful emissions to air and water. The targets contribute to achievement of the United Nations’ SDGs, in particular SDG 6 (clean water and sanitation), SDG 7 (affordable and clean energy), SDG 9 (industry, innovation and infrastructure), SDG 12 (responsible consumption and production), SDG 13 (climate action) and SDG 15 (life on land).

Measuring the environmental impacts of production by means of impact points forms the methodological foundation for achieving our vision of production with minimal effects on the environment. The following graphic illustrates the transition from using the UEP performance indicator to using the Impact Points method.

The Impact Points method was developed in close cooperation with partners from the scientific community, primarily the Technical University Berlin, and published in two scientific papers. These are publicly available at https://www.sciencedirect.com/science/article/abs/pii/S0959652622052209 and https://www.mdpi.com/2071-1050/16/7/3011. The Impact Points method is based on the ecological scarcity method, which assesses the environmental impact of pollutant emissions and resource extraction. The method also compares current environmental impacts with impacts considered socially acceptable. These environmental carrying capacities were derived for the Impact Points method from national legislation, international targets and scientific principles. The Impact Points method includes six overarching environmental aspects:

• Primary energy and power plant emissions relate to the provision and transmission of energy through the energy infrastructure, as well as emissions from power plants such as VOCs, sulfur oxide (NO_x) and dust (particulate matter (PM).
• CO₂ emissions comprise greenhouse gas emissions (GHG emissions) emitted directly from the site (Scope 1) and indirectly through the use of energy (Scope 2).
• Air pollutants comprise the local emission of pollutants such as VOCs, sulfur oxide and dust directly from the site.
• Water withdrawal refers to the local abstraction of water and use of the external freshwater infrastructure.
• Wastewater refers to the discharge of pollutants such as nitrogen (N), phosphorus (P), nickel (Ni) and zinc (Zn) into local waters and the use of the external wastewater infrastructure.
• Waste includes both transportation and the processes for disposal of waste generated in production (e.g. landfill, thermal and material recycling, and use as a substitute raw material).

The Impact Points method uses a standardized procedure similar to life cycle assessment to determine the environmental impact. The first step is to compile a data inventory (life cycle inventory). The environmental impacts of each environmental aspect are then determined by multiplying this by eco-factors (impact assessment). The level of an eco-factor illustrates the relevance of the respective environmental aspect, such as CO₂e emissions, as compared with other aspects. The eco-factors take account of both planetary limits and the political objectives of the countries in which Volkswagen Group’s production sites operate. For instance, water withdrawal at a site with low local water risk generates fewer impact points than at a site with high local water risk. This results in a weighting of environmental aspects.

The following graphic provides a schematic illustration of the impact point calculation method.

The Impact Points metric is directly connected with the environmental standards ESRS E1, E2, E3 and E5. With respect to Climate change (E1), Impact Points address both the environmental aspects of primary energy and power plant emissions and CO₂ emissions. The method includes air pollutants and wastewater as regards Pollution (E2). The water withdrawal environmental aspect is considered with respect to Water (E3). Finally, impact points address Circular economy (E5) via the environmental aspect of waste.

Addressing qualitative environmental aspects in production

The Site Checklist developed in-house is the second assessment method after the Impact Points method, aligning with the strategic vision of the Zero Impact Factory. The checklist is used to monitor implementation of defined criteria regarding the environmental characteristics of a factory in eleven action areas. The Volkswagen Group aims to achieve an average compliance rate of at least 60% of the Site Checklist at its production sites by 2030. This is set to increase to 73.4% by 2040 and to 87.2% by 2050. This objective applies to sites producing passenger cars as well as light commercial vehicles or components. The springboard in base year 2022 was a Group-wide average of 44.5% achievement of the site checklist. Public reporting on target achievement will begin in 2025.

The targets contribute to achievement of the United Nations’ SDGs, in particular SDG 6 (clean water and sanitation), SDG 7 (affordable and clean energy), SDG 9 (industry, innovation and infrastructure), SDG 12 (responsible consumption and production), SDG 13 (climate action) and SDG 15 (life on land).

The Site Checklist was developed in cooperation with various Group departments, brands and companies and is based on internal and external requirements, such as the EU Green Deal and the EU BREF documentation for the best available techniques.

The Site Checklist comprises eleven action areas with a total of over 140 largely qualitative environmental criteria: Environmental compliance, architecture and perception, planning, digitalization, water, energy and CO₂, materials, soil, biodiversity, pollutants and mobility.

The action areas and criteria contained in the Site Checklist are regularly evaluated and updated as necessary. The sites assess each criterion as met or not met. Criteria may be assessed as met only if appropriate evidence is provided. The permitted forms of evidence and minimum criteria are defined in an internal manual. Achievement of individual criteria for each of the 11 action areas produces a fulfillment level from 0% (no criteria met) to 100% (all criteria met). The site results are calculated as the average of the fulfillment levels, with each of the action areas weighted equally. The result for the Group is determined as the average of all site results.

The Site Checklist method and its eleven action areas are directly related to the environmental standards ESRS E1 to E5. The energy and CO₂ and mobility action areas in particular relate to topical standard Climate change (E1). The soil and pollutants action areas have a direct link with topical standard Pollution (E2). The site checklist has an action area named water which addresses the topical standard Water (E3) with relevant screening criteria. The biodiversity action area relates to topical standard Biodiversity and ecosystems (E4). Finally, the materials action area addresses the topical standard Circular economy (E5).

Increasing the number of suppliers with environmental certification

The Volkswagen Group is pursuing the aim of improving its environmental impacts in the upstream supply chain. This has involved setting a target as part of regenerate+ of proving by 2040 that more than 95% of direct suppliers, based on their sales revenue percentage of the total procurement volume, have established a certified environmental management system (e.g. pursuant to ISO 14001 or EMAS). The target applies to suppliers with production sites that employ more than 100 people. 2023 serves as the base year for measuring progress; in that year, 80% of suppliers already had certified environmental management systems. In the reporting year, the share was increased to 85%.

The target was also documented in the Code of Conduct for Business Partners. Evidence based on the Volkswagen Group sustainability rating (S-Rating) has also been required since 2022.

Annual progress is monitored by the sustainability management team in Procurement to ensure that the target is reached by 2040. The methodology is based on a standardized self-assessment questionnaire, with the responses and documents reviewed and validated centrally by an external service provider. A risk analysis is also performed using data from external service providers and risk-based audits. This is intended to work towards target achievement and identify any deviations at an early stage.

Uniform collection of environmental data

Environmental data from the sites forms an important basis for determining quantitative metrics that are reported in the sections ESRS E1 to E5 (for a description of the scope of reporting, see the chapters under Environmental information, see the scope of reporting of the “General information” chapter). The internal Group standard VW 98000 sets out how these environmental indicators are to be uniformly determined and documented within the company. A total of around 200 environmental indicators are recorded at site level and reported via the internal environmental information system (EIS). Each site is responsible for providing the environmental indicators.

The following are acceptable methods of recording environmental indicators. Direct measurements of physical quantities should be given the highest priority, such as wastewater volume by means of a flow meter, the volume of waste using a scale, or energy consumption by means of energy meters. If direct measurement is not technically or economically feasible, the environmental indicators can be calculated based on measured variables. This method has a lower priority. This applies, for example, to the volume of CO₂ emitted from the use of combustible materials, or emissions of pollutants into wastewater, which are generally extrapolated based on random sample measurements. The permissible method with the lowest priority is an estimation of indicators based on transparent assumptions, such as the proportional dependency between waste volume and the number of manufactured units. All processes used must be transparent and verifiable by independent third parties such as certifiers or auditors.

Environmental data is collected in the chapters under Environmental information in accordance with the ESRS requirements for E1-5 (energy), E1-6 (GHG emissions), E2-4 (emissions to air and water) and E4-SBM3 (biodiversity-sensitive areas) for the Volkswagen Group and companies with operational control (in accordance with the scope of reporting of the “General information” chapter). Metrics that go beyond these disclosure requirements are reported voluntarily for the companies with operational control.