Corporate Citizenship

MATERIAL IMPACTS AND RISKS AND THEIR INTERACTION WITH STRATEGY AND BUSINESS MODEL

Impact on society

The Volkswagen Group’s materiality assessment has identified an actual and potential positive impact on affected communities through the Group’s Corporate Citizenship projects. Through the promotion of education, health, social participation and sustainable infrastructure, Corporate Citizenship projects can have an actual and potential positive impact on affected communities because they aim to improve the quality of life of affected communities and create long-term development opportunities.

As a globally operating company and good corporate citizen, the Volkswagen Group aims to be a source of economic impetus for local structural development and equal opportunities. The Group has always believed in the importance of recognizing its social responsibilities.

Within the Volkswagen Group, Corporate Citizenship is assigned to the new focus area of Societal Impact. Societal Impact means the overall impact of the Group’s own activities and initiatives on society, including economic, social and environmental matters. Corporate Citizenship is a key element of the Volkswagen Group’s social engagement and includes philanthropic activities and the funding of environmental, educational and social projects at numerous sites. The focus areas are based on the Group’s regenerate+ sustainability strategy, and projects that have a direct positive impact on the environment, employees and non-employees, or society are implemented and reported in a targeted manner. The following section includes the full range of Societal Impact topics, with Corporate Citizenship being treated as a material focus, but not the sole focus.

The philanthropic activities are carried out at the Volkswagen Group’s sites. The communities include people or groups who live and work near the Volkswagen Group’s operating sites and are or could be affected by the undertaking’s operations. These also include communities whose living conditions are positively affected by projects or investments. For example, there are community projects at the Group’s production sites. These will continue to exist in the future and can make a positive contribution to the environment and society. The duration of the potential impact is classified as medium term.

Interaction with strategy and business model

The impacts identified in the materiality assessment have an influence on the Group’s business model, strategy and value chain. The topic of Societal Impact is enshrined at an overarching level in regenerate+ under the aspect of society. The focus in the 2024 reporting year was on developing an overarching Societal Impact strategy.

The Volkswagen Group is responding to the effect of its material impacts on its business model, strategy and value chain in the area of Corporate Citizenship by implementing global Corporate Citizenship activities, setting up a Sustainability Impact Fund and making Group-wide donations. These actions are intended to maintain and strengthen the positive impact.

In the area of Societal Impact, the Group also responds to the effect on the strategy through various actions. The brands and local units carry out global Corporate Citizenship projects, and donations are made to social, philanthropic, culture and education projects. The Sustainability Impact Fund will be operationalized for the first time in 2025, having so far only been initiated.

A detailed description of all actions in the area of Corporate Citizenship is provided under “Actions: Societal Impact and Corporate Citizenship”.

POLICY: SOCIETAL IMPACT AND CORPORATE CITIZENSHIP

The Volkswagen Group employs more than 670,000 people in 35 countries in Europe and 37 countries in North and South America, Asia, Australia and Africa, and operates 114 production sites around the world. In all these places, the Group assumes responsibility for employees and non-employees and their families, but also for social and economic development around the sites. The Volkswagen Group handles its business activities’ positive impacts on society with interlinked strategies and Group-wide policies. These policies are set out in Group policies.

A specific policy for Societal Impact is currently still being developed. However, the following section explains which strategies and management policies already address the subtopics of corporate social responsibility at the Volkswagen Group.

Embedding Societal Impact

During the reporting year, the strategic direction of the Societal Impact focus area was initiated within the scope of regenerate+, a strategy that incorporates Corporate Citizenship activities. The initial focus in the 2024 reporting year was on developing an overarching Societal Impact strategy.

In the past, the corporate social responsibility initiatives (the fourth target area with the impact dimension “We@Volkswagen and the world around us”) were presented within the Group People Strategy, which is the cornerstone for strategic expansion and its embedding in regenerate+ (society dimension, Societal Impact focus area).

The Volkswagen Group is pursuing two aims with regenerate+: to be a socially responsible employer for its employees and to assume corporate social responsibility. As an active partner in society, the Group aims to work responsibly with local and international organizations in a spirit of partnership and trust. The aim is to use resources and skills for the public good, by taking actions that promote a fair, inclusive and open society and supporting healthy and intact natural ecosystems. At the same time, all communities should have the same opportunities to participate in a forward-looking economy and benefit from sustainable mobility systems.

In addition to the strategic conclusions of the global basic understanding, a new framework consisting of three subtopics has been created. This has a potential effect on the Volkswagen Group’s Societal Impact.

The framework and actions consist of the following topics:

• Global Corporate Citizenship activities
• Sustainability Impact Fund
• Group-wide donations

Through Group sustainability, a common framework is being developed that covers the Volkswagen Group’s social engagement and facilitates actions to make a positive contribution to society and the environment.

A detailed description of regenerate+ is provided in the “General information” chapter under “Business model, value chain and strategy”.

Policies on the management of Societal Impact

Group-wide policies are used to implement the principles and fields of focus anchored in the strategies. The policies relating to corporate social responsibility are described in the following Group policies. The Group policies apply to all the Volkswagen Group’s controlled companies. The department responsible checks whether they are up to date at least once a year and amends them if necessary. The Group policies can be accessed on the intranet by those who are responsible for implementing them.

As previously mentioned, there is currently no policy for the Societal Impact focus area. This will, however, be prepared in the medium term within the framework of the core processes of sustainability management and is also to include management of the material positive impact. For the major components of the framework, however, the existing Group policies relating to sustainability topics, reporting on corporate responsibility and donations are presented below.

As part of Societal Impact, the implementation and description of Corporate Citizenship projects is set out in a Group policy. This Group policy on sustainability management in the Volkswagen Group defines various core processes designed to enable efficient management of and reporting on sustainability in the Group with the aim of continual improvement of the sustainability performance. The CEO of Volkswagen AG has overall functional responsibility for sustainability management, while Group Sustainability is responsible for implementing the policy and the management system at operational level. The reporting requirement for local engagement activities in the form of Corporate Citizenship projects by the respective brands and production sites is also defined in the sustainability reporting process. A detailed description of Group sustainability management and the associated structures, processes and responsibilities is provided in the “General information” under “Sustainability management”.

The rules governing donations and sponsorship, which are part of Societal Impact, are also set out in a Group policy, which has the aim of ensuring that such activities take place within the framework of the applicable legal regulations and the undertaking’s integrity standards. The Group policy therefore describes the requirements as well as the underlying processes and procedures for the initiation, review and approval of donations and sponsorship, taking into account the respective approval limits and responsibilities. The CEO of Volkswagen AG has overall functional responsibility for donations, sponsorship and agreements with brand ambassadors, while the Group Communications – Management and Events department is responsible for implementing the policy and the management system at operational level.

ACTIONS: SOCIETAL IMPACT AND CORPORATE CITIZENSHIP

For the Volkswagen Group, Societal Impact refers to the impacts that projects or investments can have on society. Strategic work on this focus area only began in the reporting year, so it is not yet possible to take actions to measure or quantify the impacts. However, the actions related to Corporate Citizenship that have a positive impact on local communities and the local environment are described below.

Global Corporate Citizenship activities

These are local initiatives tailored to the requirements of the production sites that aim to bring about positive change in society in the medium and long term. These actions and projects are implemented in various areas such as health, education, the environment, social justice and economic development, and contribute to the four dimensions of regenerate+. They encompass a wide variety of activities ranging from provision of resources to the running of programs and the implementation of technology by the Volkswagen Group or its units. These projects are managed locally under the responsibility of the competent units.

In 2024, the Volkswagen Group started to use a standardized questionnaire to collect information annually on the projects implemented by the individual brands and regions.¹ This collects information on existing projects that were being implemented during the reporting year. The Global Corporate Citizenship activities metric takes account of all the Volkswagen Group’s individual brands and regions that carried out relevant projects here in the reporting year and reported them accordingly.

In the reporting year, more than 200 global projects were reported as local engagement activities at Volkswagen Group sites around the world. Around 69% of the projects have a potential positive impact on the community or region directly adjacent to the site, such as Wolfsburg, Ingolstadt/Germany, Bologna/Italy, Verona/Italy, Aurangabad/India, Chattanooga/USA, Puebla/Mexico, Guanajuato/Mexico or Polkowice/Poland. In addition, approximately 25% of the projects have a potential positive impact at national level (for example within China, France, Spain, or the Czech Republic) and around 4% even at international level.

There are over 200 global projects that contribute to one or more impact categories of regenerate+ at an overarching level and are intended to promote positive impacts on society and the environment. The focus of the outcome is on the “Strengthening local communities and resilience” and “Poverty reduction and social security” Societal Impact categories. In addition, the projects are expected to have positive impacts on the Group’s own employees (for example in the areas of “Education and knowledge transfer,” “Health and well-being” or “Gender equality and inclusion”) and on nature (for example in the categories of “Healthy ecosystems and biodiversity” or “Climate change mitigation”).

Sustainability Impact Fund

In the reporting year, the Volkswagen Group set up a Sustainability Impact Fund to achieve positive impacts on local communities and the local environment by supporting internal projects promoting environmental, social and economic sustainability at production sites. The Sustainability Impact Fund can promote not only positive environmental effects, such as the optimization of energy and water consumption, increased use of renewable energy, insulation of buildings and sustainable mobility, but also social advantages, such as local recycling programs and partnerships with NGOs. These actions strengthen social cohesion and reduce social inequalities.

The Sustainability Impact Fund will be operationalized in 2025 and is intended to support projects and actions by the Volkswagen Group that help to attain the Group’s sustainability goals. A project or action must cover one of the four dimensions – nature, our people, society and business. This means that from 2025 onward, the exact outcome can be derived in more detail on the basis of the projects supported.

Group-wide donations

Donations are voluntary contributions to a scientific, charitable, cultural, political, or religious cause which are made without receiving anything in return from the recipient. Donations can have beneficial effects – for example, in tackling social problems, responding to humanitarian crises, reducing negative environmental impacts, and strengthening the resilience of communities. The Group-wide donations metric takes account of all the Volkswagen Group’s companies that are subject to mandatory reporting and made donations in the reporting year. The donation amounts are reported centrally through the finance tool in accordance with the Group policy.

The Volkswagen Group made donations totaling €61.37 million in 2024.² This includes large donations as part of emergency humanitarian aid, which were decided on and provided immediately. Donations are made annually. In 2023, i.e. before the scope changed, Volkswagen AG donated a total of €27.69 million to these types of projects.

TARGETS: SOCIETAL IMPACT AND CORPORATE CITIZENSHIP

The targets in the area of Societal Impact will be developed on the basis of the Group sustainability strategy in the future. The Societal Impact Strategy, which is part of the Group sustainability strategy, has been approved by the Group Board of Management with the involvement of experts from the Group Sustainability department and other Group departments, as well as from the brands’ specialist and sustainability departments.

There are currently no tax-related targets with regard to Societal Impact, including the underlying topics of global Corporate Citizenship activities and Group-wide donations. Phased targets were also developed for the Sustainability Impact Fund. The Volkswagen Group aims to make an annual allocation of up to €20 million through this fund through 2029. In 2025, cost allocations of up to €5 million are to be made to promote sustainable development in all dimensions of the regenerate+ strategy.

The setting of these strategic (intermediate) targets and their further development for measuring the impact, and hence the effectiveness of the policies and actions in relation to the material sustainability-related impacts, is planned for a medium-term time horizon.

1 In past years, the methodology was adapted to collect data on global projects. A standardized questionnaire was drawn up in the 2024 reporting year that recorded the direct reference to the Group sustainability strategy and the scope of the project, as well as the input used and the output achieved. Along with predefined metrics, project-specific indicators can be specified here. In addition, the responsible person also matches the project to the Sustainable Development Goals (SDGs) and provides a subjective assessment of the project’s impact.

2 In relation to the amount donated, the scope was expanded to the Group, which means that this is now requested centrally from the consolidated companies via the financial metrics.