Water

MATERIAL IMPACTS AND THEIR INTERACTION WITH STRATEGY AND BUSINESS MODEL

Impact in the area of water

Water is an indispensable resource in the Volkswagen Group’s value chain and is needed at various points both within our own production processes and, to an especially high degree, in the upstream supply chain for the extraction and processing of raw materials. A relevant level of water consumption can also be observed in the use phase of vehicles, caused, for example, by the washing of vehicles or fuel production. Using large quantities of water, particularly in regions where it is in short supply, leads to water stress and can contribute to the depletion of groundwater reserves, the impairment of ecosystems and the escalation of social tensions. This was identified in the double materiality assessment as a long-term actual impact that negatively affects the environment.

Interaction with strategy and business model

The impacts of water use identified in the double materiality assessment are factored into the Group’s business model, strategy and value chain. The sustainable use of resources, including water, is anchored at an overarching level in the Group sustainability strategy regenerate+. Based on this, increasing resource efficiency is also one of the action areas in the Volkswagen Group’s environmental mission statement goTOzero. The focus here is on systematically encouraging reuse and recycling approaches along the entire value chain.

The closed-loop circulation of process water and the associated reduction in the use of fresh water are anchored in the Zero Impact Factory strategic vision for the Volkswagen Group’s own production sites. Specifically, we are aiming to reduce water withdrawal at passenger car and light commercial vehicle production sites by 30% by 2035 compared with 2018. At selected hot spot locations in areas with water stress, the reduction of water withdrawal will be as much as 40%. Our commitment to achieving this target will help mitigate the identified impacts of water use.

The Code of Conduct for Business Partners requires business partners to take appropriate action to ensure responsible use of water. Business partners confirming that they comply with corresponding sustainability requirements and pass them on to relevant business partners should enable continuous application of the requirements along the upstream and downstream value chain.

POLICY: WATER

Policy for sustainable water management

Water management in the Volkswagen Group is set out in a dedicated policy. One of the focal points of the approach is conservation of water as a resource. In line with the regenerate+ strategy, the Volkswagen Group is working to continually reduce the need for primary raw materials, including water.

As part of its environmental mission statement, the Volkswagen Group also sets itself goals for conserving resources. With regard to water, this involves improving resource efficiency and promoting reuse approaches. Another action area in the mission statement is protecting ecosystems, with the associated goal of reducing harmful emissions into water.

Water is also a focal point of our Group-wide Zero Impact Factory strategic vision. Our production sites must be designed their water use has the least possible negative impact on water as a local resource. The Zero Impact Factory therefore focuses specifically on reducing water withdrawal, increasing reuse of water, using water responsibly (particularly in areas with water stress), minimizing the input of water-polluting substances and preventing deterioration of the ecological and chemical quality of receiving water.

The Code of Conduct for Business Partners also stipulates that business partners have an obligation to take appropriate actions to minimize water consumption at their sites and along the business partners’ own supply chains. These actions should ensure that they do not cause any water pollution that could lead to significant harm to the natural basis for drinking water.

In the downstream value chain, the Volkswagen Group is unable to regulate relevant water consumption by means of its own levers.

Water management at the company

Water is needed for numerous reasons at the production sites, such as for painting, cooling and sanitary purposes. The use of freshwater is necessary in many areas, around two thirds of which is obtained from external suppliers such as municipal water boards. Around a third of water withdrawal is covered through our own wells, rainwater and abstraction from surface water. Production sites are part of the local water cycles and affect the water resources available through water withdrawal, treatment and wastewater discharges.

In this connection, internal water treatment is becoming increasingly important. A growing number of sites are starting to reuse their treated wastewater in production processes, in cooling towers, in sanitary facilities or for irrigation purposes, thereby reducing their need for water withdrawal. A closed loop and recycling of cooling or process water reduces freshwater consumption and wastewater generation and therefore contributes to responsible use of water as a resource. The Volkswagen Group strives to achieve the highest possible technical treatment level and does not release any untreated wastewater into receiving waters. Nearly all sites have pretreatment systems that remove harmful substances from wastewater (for more information, see the “Actions and resources: Pollution” section in the “Pollution” chapter). If wastewater is not treated on site, it is treated in an external treatment plant or, in individual cases, disposed of as waste.

Water withdrawal in water risk areas

The use of freshwater in vehicle production may impact water availability in the region. A proportion of water withdrawal by the Volkswagen Group takes place at sites in areas with water stress. Responsible use of water is particularly important in such regions to avoid further shortages. This is why the Volkswagen Group’s Zero Impact Factory strategic vision places particular emphasis on reducing water withdrawal and making water use more efficient in areas with water stress.

Conservation of resources is anchored in the Volkswagen Group’s goTOzero environmental mission statement. Together with business partners, the Volkswagen Group aims to reduce the use of natural resources along its supply chain.

In any comparison between production sites and the supply chain, the largest share of water withdrawal occurs within the supply chain, in particular as a result of the extraction and processing of raw materials. The Code of Conduct for Business Partners requires business partners to take appropriate actions to ensure responsible use of water, with water-scarce regions taking priority.

Business partners confirming that they comply with corresponding sustainability requirements and pass them on to relevant business partners should enable continuous application of the requirements along the upstream and downstream value chain (for more information, see the “Actions and resources: Water” section).

Strategies for sites in water risk areas

The Volkswagen Group’s policies relating to the environment apply to all production sites. The Zero Impact Factory strategic vision addresses the reduction of water withdrawal and the efficient use of water, particularly in areas with water stress.

TARGETS: WATER

Overarching targets

Overarching targets are set for the “Water” chapter based on the goals outlined above (see the “Overarching targets and metrics” section in the “Introduction to environmental management” chapter): By 2025, the production-related environmental impacts at all sites where we produce passenger cars and light commercial vehicles are to be reduced by 45% compared with 2010. As well as other aspects, the UEP metric also includes water consumption per vehicle. Additionally, the topics of water consumption and reuse of water are addressed by analyzing water withdrawal and wastewater discharge as part of the Impact Points method. The Volkswagen Group also considers the topic of water as part of the Site Checklist. Within the water area of activity, specific criteria for improving water management at the production sites are considered.

Group-wide reduction in water withdrawal

The Volkswagen Group has set specific targets for water withdrawal at its production sites. These were defined together with the brands against a backdrop of rising water stress in the IPCC climate scenarios and taking the market situation into account. Among other things, they are designed to help reduce the risk of future supply bottlenecks. Water withdrawal at the Volkswagen Group’s production sites (with the exception of TRATON GROUP and MAN Energy Solutions) is to be reduced by 30% on average across the Group by 2035 compared with 2018 (baseline value: 45.6 million m³). At relevant production sites in areas with moderate to extreme water stress (known as “hot spot” locations), water withdrawal is set to be reduced by as much as 40% (baseline value: 28.1 million m³). The Verisk Maplecroft database is used to identify locations with water stress and hot spot locations (see section “Metrics: Water” for further information). Data on water withdrawal at the production sites is collected in accordance with the internal 98000 standard and reflects the requirements of the ESRS. With these voluntary targets, the Volkswagen Group is contributing to the Sustainable Development Goals SDG 6.4 (Clean water and sanitation), SDG 12.2 (Responsible consumption and production) and SDG 13 (Climate action), among other things.

In the 2024 reporting year, water withdrawal Group-wide (excluding TRATON GROUP and MAN Energy Solutions) was 32.5 million m³, a reduction of 13.1 million m³ compared with the base year 2018, or a target achievement of 94.9%. Along with economies of scale, VW Kraftwerk GmbH’s fuel switching from coal to gas at the Wolfsburg site accounts for a large share of the progress already made in achieving the target. As a consequence of the fuel switching, the quantity of waste heat fell significantly, and with it cooling water requirements, reducing VW Kraftwerk GmbH’s water withdrawal by nearly 2 million m³ since 2018.

Water withdrawal for the hot spot sites in the 2024 reporting year was 17.8 million m³, a reduction of 10.3 million m³ compared with the base year 2018, or a target achievement of 93.2%.

ACTIONS AND RESOURCES: WATER

Actions in the value chain

As already mentioned in section “Policy: Water”, the Code of Conduct for Business Partners requires business partners to take appropriate action to ensure that water withdrawal is continually minimized. A particular focus is on improvements in regions with water scarcity or water stress. Appropriate actions may include in particular the effective reduction of water withdrawal, reuse and recycling, and responsible and effective treatment of wastewater to protect the environment and improve water quality overall. Business partners should ensure that people affected by their business activities have secure access to affordable water in sufficient quantities for personal use. On request, business partners that deliver products to the Volkswagen Group are additionally required to provide information on their total freshwater consumption at product level.

The Lithium Partnership initiative in Chile is one example of responsible water management. In 2021, the Volkswagen Group co-founded the Responsible Lithium Partnership in Chile, a multistakeholder platform coordinated by development agency Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and financed by several companies. The aim of the initiative is to strengthen dialog between local stakeholders from different sectors and promote the responsible management of water. For the first time, representatives from indigenous communities, mining, tourism, agriculture and public authorities are working together to find solutions to the water problems in Salar de Atacama, where around a quarter of the world’s lithium is extracted. In spring 2024, the members of the multistakeholder platform agreed to protect the catchment area’s water resources through a joint action plan and to manage them more sustainably. This includes a register of all water rights holders, geological and hydrological mapping, water scarcity campaigns, the provision of drinking water to local communities and the recycling of gray water.

Actions at the production sites

Continuous optimization of water-saving processes is a goal at all of the Volkswagen Group’s production sites. Close cooperation between the brands worldwide is deemed essential.

Responsible use of water as a resource is particularly relevant in areas at water risk. Approximately 42.3% (around 14.5 million m³) of Group-wide water withdrawal is attributable to sites in areas of high or extreme water stress. However, closed-loop circulation or recirculation of cooling and process water means that water withdrawal and the quantity of wastewater can be reduced. The San José Chiapa/Mexico site, which can be considered a wastewater-free site due to closed-loop circulation, provides a good example of this. Various actions have been taken in recent years to reduce water withdrawal at our site in Kariega in South Africa, which is a high water-stress area. Among other things, the engine production cooling towers have been fed with rainwater since 2022. A recycling system for production wastewater has also been in operation since 2023, which is expected to reduce water withdrawal at the site by around 15% in the future.

Other sites are beginning to reuse their treated wastewater in production processes, in cooling towers, for toilet flushing or for irrigation purposes. Closed loops and recycling of cooling or process water therefore reduce water consumption and wastewater generation and therefore help ensure the responsible use of water as a resource. A total of approximately 3.9 million m³ of water was reused at the Group’s production sites in 2024. Significant portions of this were attributable to the sites in Ingolstadt (Germany) (0.7 million m³) and Puebla/Mexico (0.6 million m³). The two sites mainly use a combination of ultra filtration and reverse osmosis in their wastewater recycling.

METRICS: WATER

Measurement methodologies

Internal Group standard 98000 defines how water-related metrics are expected to be collected consistently at all sites worldwide. If flow volumes are measured, this is usually done continuously using analog or digital flow measurement devices.

Hot spot sites

The Volkswagen Group has defined especially ambitious targets for “hot spot” sites related to water (see section “Targets: Water”). A total of 25 production sites are currently considered to be hot spot sites. To identify them, all production sites that Verisk Maplecroft found to be in the categories of medium, high or extremely high water stress were included. In addition, they were prioritized according to water withdrawal in the base year 2018. Sites that are in the upper median in the Group’s internal comparison were taken into account. TRATON GROUP and MAN Energy Solutions sites were excluded because they are outside the scope of the target.

Sites in water risk areas

For many years, the Volkswagen Group has used the water stress index from the Verisk Maplecroft database to define areas at water risk. Sites with high or extreme water stress are considered here.

Maplecroft identifies areas as affected by high water stress when the ratio of water withdrawal to water availability is greater than 40%, following the standard scientific definition. This percentage corresponds to a value of 5 in Maplecroft’s non-linear scaling. Extreme water stress (80% or greater) is shown on the scale from a value of 2.5 or lower. The same scale range is used to determine areas at water risk as would be the case when using the World Resources Institute Aqueduct database (see ESRS Annex II, to be used for areas with water risks of 40% −100%), although Aqueduct also covers other physical and regulatory risks (e.g. water quality) as well as reputational risks, in addition to water stress. These are not currently factored into the analysis using Verisk Maplecroft. Nevertheless, other water risks are also being addressed by the Volkswagen Group, for example, implicitly improving water quality using the impact points method (see “Overarching targets and metrics” section in the “Introduction to environmental management” chapter).

Water consumption

Water consumption is generally calculated using the following formula: water consumption = water withdrawal minus volume of wastewater. Consequently, water consumption describes the water that is no longer available for further use, for ecosystems or for local communities. For the Volkswagen Group, water consumption results mainly from evaporation losses that arise during the production processes. The metrics water withdrawal and volume of wastewater that are used to determine water consumption are described in the following.

Water withdrawals

Water is withdrawn to supply the Volkswagen Group’s production sites with water. This includes volumes of water that are either procured from third parties or extracted from our own sources.

Externally procured water is the volume of water obtained from public or private water suppliers and other non-Volkswagen Group organizations. This may be high-quality drinking water or lower-quality water used as process water. Externally procured wastewater is water that is fed in by an external water supplier for use at the site and that had already been used. As regards externally procured water, reports on water quality are prepared in accordance with local or national requirements. The quantity of externally procured water at the sites is usually recorded on the basis of billing.

Water extracted from own sources refers to the volume of water pumped and collected by the site. This includes utilized rainwater, surface water and groundwater:

• Rainwater refers to water in the form of rain, snow or hail, for example, that falls on the grounds of the site and is used in its water supply. The annual volume of rainfall is usually collected by official sources, such as KOSTRA-DWD, or by own weather stations.
• Surface water refers to the water taken from open bodies of water (lakes, rivers, oceans) and supplied to the site for use. Use for once-through cooling with subsequent direct recirculation is not considered to be water withdrawal.
• Groundwater refers to the water taken from underground bodies of water (aquifers) and supplied to the site for use. Groundwater withdrawn solely for groundwater treatment or remediation is not considered to be water withdrawal.

The scope and frequency of the analysis of water extracted from the Group’s own sources are based on withdrawal approvals or national regulations, such as the German Drinking Water Regulation (TrinkwV), but they are performed at least once a year.

Approximately 86% of the water samples taken at the Volkswagen Group’s sites are measured directly and approximately 9% are calculated. Approximately 1% is determined by estimates. No information is available for 4%. This information on the data collection methods is based on information provided by the sites and is not validated externally.

Volume of wastewater

The volume of wastewater is the amount of water that leaves the site after use or treatment. A distinction is made between direct and indirect discharge. Direct discharge is taken to mean the discharge of treated wastewater directly into a receiving body of water (receiving water), while indirect discharge refers to the discharge of wastewater into a sewer system or wastewater treatment plant or its transportation by tanker to a third-party treatment plant.

Approximately 55% of the volume of wastewater is determined by measurement, approximately 26% by calculation and approximately 14% by estimates. No information is available for approximately 5%. This information on the data collection methods is based on information provided by the sites and is not validated externally.

Water intensity

Water intensity is calculated based on the total water consumption and sales revenue. Sales revenue is taken from the consolidated financial statements, where more detailed information can be found. This metric water intensity is reported excluding the companies with operational control.

Reuse of water

The reuse of water metric covers water that is reused and recycled. Reuse means water used again at the site without being treated, whereas recycling refers to water that is used again following treatment. Reuse of water can help to reduce the amount of freshwater needed, which is of particular relevance in areas experiencing high water stress or water scarcity. Reuse of water also includes utilized rainwater and wastewater produced by other organizations and supplied to the site for use (see water withdrawal). Reuse of water solely comprise actions that are cross-plant or cross-process. Water that is reused in the same process or in the same plant (with or without prior treatment) and only leads to an increase in its service life is not included. This includes, for example, closed-loop circulation in car washes and recirculated water for the flushing process in the paint shop.

Approximately 64% of the reused water volume is directly metered, approximately 24% is calculated and approximately 6% is determined using estimates (e.g. recycled water used in sanitary facilities). No information is available for approximately 6%. This information on the data collection methods is based on information provided by the sites and is not validated externally.