Employees and non-employees

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

Employees and non-employees were included in the assessment of significant impacts, in accordance with the ESRS. The employees and non-employees who are or may be affected by activities’ material impacts comprise the following groups: employees, self-employed people, and temporary external personnel.

Employees means anyone with an active employment contract who takes part in the Volkswagen Group’s value creation process, including members of top management, people in the passive phase of partial retirement and vocational trainees. The quantitative disclosures do not include people in dormant employment, such as people on parental leave. Nor do they include employees in academic training, such as interns, student workers, or students studying for a PhD, master’s degree, or bachelor’s degree. Employees are categorized according to different characteristics, such as term of employment and gender distribution.

In addition, another group consists of non-employees, who comprise self-employed people and temporary external personnel. In contrast to non-employees, only employees can exert direct influence in the sense of promoting or mitigating the impacts identified below. For this reason, policies, actions, targets, and stakeholder engagement in relation to employees are described in the following. Where policies exist in relation to non-employees (temporary external personnel and self-employed people) or the involvement of non-employees, these are explicitly described.

The impacts identified by the materiality assessment are concentrated on the Company itself. In addition to the ongoing dialog with employees, for example through workers’ representatives, the materiality assessment process has given the Volkswagen Group an understanding of whether and which groups of employees and non-employees might be more significantly affected by negative impacts.

Impacts in the area of working conditions

The Volkswagen Group’s materiality assessment identified a positive actual and potential impact on employees and non-employees with long-term effect. This impact results from the provision of secure jobs with fair and transparent pay and healthy working conditions. This includes, for example, training programs, health protection, and extensive participation rights. For both employees and non-employees, this can mean a secure income, health, and long-term employment prospects despite changing requirements in the working environment.

In addition, the materiality assessment identified an actual negative impact. This arises if business processes relating to the Group’s working conditions have a negative impact for the individual affected (e.g. in the case of job cuts, restricted freedom of association due to local laws, or unhealthy working conditions). The negative impact is related to isolated incidents. This may mean the loss of their job and a secure income for the individuals concerned and also limited opportunities to represent interests and health restrictions.

Impacts in the area of equal treatment and equal opportunities

In addition to the impacts identified in the area of working conditions, the Volkswagen Group’s materiality assessment identified an actual positive impact on employees and non-employees through the provision of an inclusive working environment and equal treatment of employees and non-employees, including with regard to development opportunities.

This also encompasses the inclusion of persons with disabilities, the promotion of a culture free of discrimination, violence, and harassment, and awareness-raising among employees and non-employees of these topics. For employees and non-employees, this impact is felt through a non-discriminatory approach to the development of potential and the facilitation of development prospects.

Moreover, the materiality assessment also identified an actual negative impact. This is reflected in isolated cases of unequal treatment, including with regard to a shortage of development opportunities due to a lack of or insufficient objective rules on avoiding discriminatory behavior, such as remuneration policies or hiring and promotion processes. The negative impact is related to isolated incidents. Discrimination and unequal treatment can have far-reaching consequences, which may lead to both financial losses and adverse health effects.

Impacts in the area of other work-related rights

In addition, the Volkswagen Group’s materiality assessment identified an actual and potential positive impact on employees and non-employees through the promotion and enforcement of compliance with social and human-rights standards with regard to employees and non-employees (e.g. no child labor or forced labor). The impact is potentially long term.

In addition to the impacts identified for the sustainability report in the context of the double materiality assessment, there are additional personnel risks inherent in the business model. These are described in the “Personnel risks” section in the chapter “Report on Risks and Opportunities” in the Group management report. The actions described below also mitigate the personnel risks mentioned there.

Interaction with strategy and business model

The impacts identified in the materiality assessment have an effect on the Volkswagen Group’s business model and strategies. The consideration of impacts on employees is anchored in the Volkswagen Group’s fundamental corporate values. The Code of Conduct maps out the common set of values for integrity and compliance in the Volkswagen Group and specifies a framework of values for the Group’s strategic direction. An in-depth description of the Code of Conduct is provided under the section “HR Compliance Group policy and Code of Conduct” and in the chapter “Business conduct information”. The balance between the interests of the Company and those of our employees is to be safeguarded by the employee representatives through co-determination processes.

This consideration of the interests of employees has an impact that goes beyond the impacts identified in the short term.

The Volkswagen Group’s sustainability strategy regenerate+ includes the aim of being a socially responsible employer for employees. The strategy describes the path to a sustainable future, focusing on a safe and healthy working environment; a diverse, inclusive, and non-discriminatory culture; attractive jobs; fair wages; and good further training opportunities for the long-term qualification of employees.

In addition to the Group sustainability strategy, the management of impacts on employees is also guided by the Group People Strategy, which is the human resources strategy, for the three brand groups of Core, Progressive and Sport Luxury. The Group strategy describes the guiding principles for the transformation of all employees and their diversity as focus topics. These form the framework for the Group People Strategy.

More detailed information on regenerate+ and the new Group strategy can be found in the “General information” chapter. The Group People Strategy is expanded on in the “Sustainable Value Enhancement” chapter of the Group management report. Implementation of occupational health and safety targets is supported by the Group-wide Safety First strategy. The Volkswagen Group attaches great importance to protecting its employees and creating a safe and healthy working environment in accordance with the applicable international standards. Occupational health and safety are therefore key topics for the Volkswagen Group. The vision of this strategy is to anchor “safety first” as a guiding principle in the actions of all managers and employees. The aim is for all occupational safety processes to be known and applied reliably. All managers and employees are to be informed and trained and act in line with safety requirements. The aim is to ensure the protection and promotion of physical and mental health, taking into account psychosocial risks and their effects. Employees should not suffer accidents when working. The workplaces should therefore be designed with the help of the departments responsible for occupational safety.

The Volkswagen Group plays a role in the material impacts described above through its activities. It uses the actions described in the following paragraphs to promote material positive impacts and respond to the influence of its material negative impacts from the business model, strategy and value chain in the area of employees. These are broadly categorized here, but explained in detail further on in the sections “Actions related to working conditions,” “Actions related to occupational health and safety,” “Actions related to equal treatment and equal opportunities” and “Actions related to other work-related rights”.

With regard to working conditions, the Volkswagen Group wants to strengthen positive impacts through the establishment and ongoing improvement of an occupational health and safety management system at production sites with more than 1,000 employees. This system is not only audited internally but also certified externally. In addition, systematic risk analyses and Group audits of occupational health and safety are conducted in the Group in order to further increase this for employees. The action regarding freedom of association described below enables employees to realize their right to freedom of association in compliance with the laws applicable in the various countries and locations. In addition, digital training for employees is being introduced and gradually expanded so that employees can maintain their long-term employability even when requirements change.

The Volkswagen Group wants to prevent negative impacts relating to working conditions, particularly with regard to business processes that have a negative effect on individual employees, for example, in the case of job cuts – by planning Group-wide plant utilization in the budget planning round. Furthermore, the opinion survey is used to identify and mitigate topics that employees view as particularly critical and to derive actions to improve working conditions. The opinion survey is generally conducted annually but was suspended in the reporting year due to revision.

With regard to equal treatment, the Volkswagen Group wants to strengthen positive impacts by defining actions to create an inclusive working environment and equal treatment of employees. The Group provides the companies with a Group-wide policy to define topics and action areas that must be implemented to promote diversity, equal opportunities, inclusion, and belonging. In addition, the Volkswagen Group uses training and provides work materials to empower managers throughout the Group to create an unbiased working environment and processes geared to equal opportunities. In order to create a direct incentive to comply with diversity targets, the Group management’s remuneration is linked to the diversity index. The Company uses this index to continuously monitor how the diversity of its management is developing.

The Volkswagen Group wants to prevent negative impacts relating to equal treatment by penalizing misconduct and collecting and publishing a statistic on the disclosure of the penalization of misconduct. In addition, a new anti-discrimination rule was created to close gaps in regulation on the avoidance of discrimination in the hiring, remuneration, and promotion process. The Group companies are currently working on introducing this.

With regard to other work-related rights, the Volkswagen Group has strengthened positive impacts by extending a Group-wide process to prevent violations of fundamental human rights in the recruitment process (prohibition of child labor and forced labor).

Due to the positive impact of the promotion and enforcement of compliance with social and human-rights standards (e.g. no child labor or forced labor), any risk of forced labor or child labor in the Volkswagen Group with regard to its activities or the countries, regions, or geographical areas in which the Volkswagen Group operates is essentially mitigated.

PROCESSES: ENGAGING WITH EMPLOYEES AND WORKERS’ REPRESENTATIVES ABOUT IMPACTS

Employee participation policy

The Volkswagen Group facilitates the most comprehensive representation of employee interests possible, respects its employees’ perspectives and interests, and addresses these on an ongoing basis. Both managers and HR are contacts for employees in day-to-day business. Additional contacts (e.g. diversity experts) are usually available at the company level for marginalized groups. In addition, the Volkswagen Group maintains a continuous dialog with workers’ representatives (e.g. works councils, trade unions, representation on the Supervisory Board) about material actual and potential positive and negative impacts that the Company has or could have on employees. The Group focuses here on the stable dialog and feedback formats described below, which provide a space for evolving material topics and employee matters. These also include potential negative impacts that could arise from business processes independently of the business area. This enables actual and potential impacts arising to be addressed promptly. Information on any controversies, including in relation to employee matters, is promptly and transparently made available on the Group’s web-based information service.

The most important pillar for including the interests of employees is representation by workers’ representatives. The Volkswagen Group is committed to openly working together with workers’ representatives in a spirit of trust, maintaining constructive and cooperative dialog, and striving for a fair balance of interests. Dealing professionally with workers’ representatives is part of the corporate culture. The workers’ representatives facilitate the indirect representation of employees’ interests, views, and rights to management – continuously and at various levels. This has a long tradition in Germany in particular, but internationally there are also established forms of workers’ representation, as well as a Group Global Works Council in the Volkswagen Group that has existed for decades. Agreements between workers’ representatives and senior management are codified through various documents – such as key issues papers and future proofing programs. Temporary external personnel can use the Group’s interest representation bodies in relation to topics that affect their employment, provided that there are no statutory or company regulations to the contrary.

The formats and channels listed below are intended to ensure that the interests of employees are heard by management at local, European, and global level both directly and through the workers’ representatives.

Employee codetermination in the Supervisory Board

The Volkswagen AG Supervisory Board has equal representation, with an equal number of employer representatives and workers’ representatives. As a rule, it adopts its resolutions within the scope of its responsibilities in meetings of all its members. Equal representation is enshrined in the Aktiengesetz (AktG – German Stock Corporation Act) and the Mitbestimmungsgesetz (MitbestG – German Codetermination Act). Equal representation is also designed to ensure that employee interests are institutionalized over the long term.

The Supervisory Board committees that prepare decisions are also generally based on equal representation, enabling indirect codetermination for employees and ensuring that employee interests are reflected in Supervisory Board decisions. This is designed to help promote the positive impact of the Group’s business operations on employees and mitigate negative impacts on employees. The Supervisory Board holds at least two meetings in each half of the calendar year. The precise number of meetings and the main topics discussed are outlined in the Report of the Supervisory Board.

Operational responsibility for convening Supervisory Board meetings lies with the Chair of the Supervisory Board, while operational responsibility for convening committee meetings lies with the relevant committee chair.

Group European Works Council and Global Group Works Council

The Group European Works Council and Global Group Works Council are central tools for incorporating employee interests. The workers’ representatives and management regularly meet at consultative meetings where the Group Board of Management informs the Group European Works Council and Global Group Works Council on current topics relevant to the workforce. All members of the Group European Works Council and the Global Group Works Council attend at least one joint session every year. In addition, delegation trips and workshops are jointly organized and hosted.

Important international framework agreements have been concluded between these committees and the Volkswagen’s Group management, including the Declaration by the Volkswagen Group on Social Rights, Industrial Relations and Business and Human Rights (the “Declaration on Social Rights” for short). In keeping with the contents of the Declaration on Social Rights, bodies representing workers have been formed in accordance with local law throughout almost the entire Group.

As part of the negotiation and creation of the Declaration on Social Rights, employees’ perspectives were taken into account through their representatives. The annual meeting includes reporting on compliance and the assessment of adjustment requirements. Other charters resulting from collaboration between the Group European Works Council and Global Group Works Council represent binding rules for management. The same applies regarding decisions or activities aimed at managing the actual and potential impacts on the Group’s employees and non-employees.

Other agreements resulting from this collaboration include the Charter on Labor Relations, the Charter on Temporary Work, and the Charter on Vocational Training. They are designed to give employees and non-employees security with regard to their collective rights at the workplace and also set out the principles of the labor policy. The charters also show that the interests of employees and non-employees are taken into account when drawing up human-rights and HR principles and guidelines.

The Charter on Labor Relations gives workers’ representatives in the Group European Works Council and Global Group Works Council precisely defined information, consultation, and codetermination rights – for example, codetermination rights on personnel development or occupational health and safety. These principles, which are set out in the charter, form the Group-wide framework for the representation of employee interests at local level.

The Charter on Temporary Work sets out the principles of temporary work, governs the framework conditions for employment and wages of temporary external personnel in the Volkswagen Group, and is intended to standardize the use of temporary work in the entire Volkswagen Group.

The Charter on Vocational Training was adopted in order to define key aspects for shaping conditions for vocational trainees that must be taken into account when implementing the Charter on Labor Relations.

Operational responsibility for the implementation of the communication format and codification of the results lies with the Chair of the Group European Works Council and Global Group Works Council, with the involvement of the member of the Volkswagen AG Board of Management member for Human Resources, represented by the Group Human Resources International organizational unit.

Opinion survey

An annual employee survey used comprehensively across the Group has provided employees with a direct and established opportunity to give their opinion since 2008. The Company used the so called opinion survey to collect data on employee satisfaction every year. Based on the results, follow-up processes were implemented in which measures were developed and executed. In this way, employees’ views were taken into account when taking action to remediate negative impacts and evaluating its effectiveness. The measurement and publication of the participation rate served as an indicator of the opinion survey’s effectiveness and acceptance. In 2023, the rate was 79% of employees at the participating companies.

In 2024, the opinion survey was suspended in the Group to allow it to be revised. After its revision, it should continue to be provided to all the companies as a tool. Group Human Resources will continue to have operational responsibility for the opinion survey. More information on the new opinion survey design can be found under the section “Actions related to working conditions” and in the “Business conduct information” chapter under “Actions: Corporate culture”.

The Company has established additional formats that employees can use to report their interests and problems. These are direct forms of communication. The formats include the Group-wide whistleblower system and direct reporting to managers, who are required to follow the report up and take action where necessary. The reporting requirement for employees in management is set out in a Group policy. More information on the effectiveness of the whistleblower system is provided in the sections below.

PROCESSES: REMEDIATION OF NEGATIVE IMPACTS AND COMPLAINT CHANNELS

Compliance with legal requirements, internal rules and the Code of Conduct has top priority in the Volkswagen Group. This is intended to avoid and prevent negative impacts on employees and non-employees.

However, the materiality assessment identified actual negative impacts on working conditions, equal treatment and equal opportunities within the Volkswagen Group. These are isolated cases that relate to the topics of job cuts, freedom of association restricted under local law, unhealthy working conditions and unequal treatment, including a lack of development opportunities due to a lack of or inadequate objective rules to avoid discrimination, such as remuneration guidelines or recruitment and promotion processes. As no systematic impacts were identified, but merely individual cases, which are also subject to regional conditions, the impacts are managed at the local level in the companies rather than at Group level.

Specifically, this means that the companies take action when individual cases arise relating to job cuts and unhealthy working conditions. In relation to job cuts, for example, this means creating opportunities at other sites, exhausting the demographic curve to minimize actual redundancies, or adopting a socially responsible approach if job cuts cannot be avoided. With regard to unhealthy working conditions, the relevant circumstances of the reported work-related accidents are responded to locally and actions are taken.

Due to different political and legal conditions, it is not possible to implement the standards of the Organisation for Economic Co-operation and Development (OECD) and International Labour Organization (ILO) at all the Group’s production sites around the world to the same extent as in the European Union. Freedom of association is realized in compliance with the laws applicable in the various countries and locations. The aim is to bridge the tension between the different national conditions and the interest in the greatest possible achievement of the right to organize. A particular challenge arises in states that have not signed the ILO Convention on Freedom of Association and Protection of the Right to Organize. In these efforts, care is taken not to violate local laws and not to put local employees at risk.

In the event of individual serious breaches of the rules, for example in connection with unequal treatment and discrimination, the employees can use the whistleblower system described below to seek redress that, in contrast to the topics described above, is handled on a Group-wide basis.

The Volkswagen Group has established defined complaint channels and remediation processes. If a grievance is identified when a complaint is made, countermeasures are taken immediately – in compliance with national regulations – and the implementation of these countermeasures is monitored in order to put a stop to the potential or actual negative impact and prevent reoccurrence.

Complaint channels

With its binding principles and regulated procedures, the Group-wide whistleblower system is intended to avert damage to the Company and enable both employees and non-employees to draw attention to potential misconduct. It serves as the central point of contact for reporting cases of rule-breaking and is a complaint

procedure provided centrally by the Volkswagen Group.

The Central Investigation Office in Wolfsburg is responsible for coordinating the Group-wide whistleblower system. The employees there process whistleblower information concerning Volkswagen AG and any of its subsidiaries that do not have their own investigation office and also process reports with relevance for the Volkswagen Group. Employees from the Audit, Security and Legal Affairs departments investigate the cases. AUDI AG, Dr. Ing. h.c. F. Porsche AG and TRATON SE each have separate investigation offices for themselves and their subsidiaries. There is also a regional investigation office at Volkswagen (China) Investment Company Ltd. It processes whistleblower information concerning Volkswagen AG’s and Audi AG’s Chinese subsidiaries.

All the Group’s employees, business partners and their workforce, customers and other third parties can report information on potential breaches of the rules at any time, including serious impacts for employees and non-employees and human-rights violations. They may do this anonymously if they so choose.

The Volkswagen Group whistleblower system’s principles, reporting channels and procedures are described in detail in the “Business conduct information” chapter.

The reporting channels and further information on the existing complaint procedures are publicly accessible on the Volkswagen Group website.

The availability and accessibility of the whistleblower system’s reporting channels are checked as part of the internal control system.

Employees can also contact the internal workers’ representatives with their concerns. Further information is provided in the section “Processes: Engaging with employees and workers’ representatives about impacts”.

In addition to these complaint channels operated by the Volkswagen Group itself, external grievance mechanisms are also available, such as the OECD National Contact Point or the Bundesamt für Wirtschaft und Ausfuhrkontrolle (BAFA – German Federal Office for Economic Affairs and Export Control). Reports submitted to the Volkswagen Group are transferred to the whistleblower system and processed there.

Prosecution and monitoring of reported complaints

The Volkswagen Group takes every complaint seriously and handles them in accordance with defined policies and procedures. These are set out in publicly available rules of procedure and in a Group policy.

After a complaint is received through the reporting channels managed by the whistleblower system, it is documented. If the complaint concerns a situation in the Group’s own business area without any employee misconduct, the whistleblower system will immediately forward the complaint to the relevant body within the Group that, based on the complaint’s subject matter, is responsible for handling the complaint.

The relevant investigation office has responsibility for any potentially serious complaints against Volkswagen Group employees.

Every case in which there is the possibility to contact the complainant is discussed with the complainant. The Group informs the whistleblower of the processing and the outcome, aiming for the greatest possible transparency. After completion of the investigation, the department responsible must document the case. The Group has a catalog of actions for taking action against breaches of the rules, which was drawn up taking local legislation into account and is implemented across the Group. In addition, disciplinary actions are documented. A reporting system on this has been established in all companies with five or more employees.

Approach and procedures for implementing remedial action

If the whistleblower system is not responsible for further action, the respective departments and the functional areas are responsible for initiating remedial action.

Group HR Compliance, Group Occupational Health and Safety, and Group Security act in an advisory and monitoring capacity toward the departments and functional areas of the relevant Group companies. As soon as breaches are identified and remedial action is necessary, the department responsible autonomously initiates appropriate remedial action. The remedial action is determined on a case-by-case basis depending on the type, severity, and likelihood of occurrence of the prohibition in question.

Remedial action that results from risk analyses or is necessary for other reasons is also defined and implemented by the aforementioned departments responsible.

The Volkswagen Group checks whether the actions taken are effective at avoiding or reducing negative impacts on a regular and ad hoc basis in what is known as compliance monitoring. This also includes checking whether the Code of Conduct is being complied with and whether complaints have been dealt with.

Effectiveness of the procedure

The procedure for handling complaints in the whistleblower system is based on the effectiveness criteria in the UN Guiding Principles on Business and Human Rights and is clearly described in rules of procedure.

Information is provided in a way suitable for the context and target group. The rules of procedure give the target groups access to the information needed to participate in the complaint procedure, including information on the procedure’s time frame.

Information on complaints received and the remedial action for them is publicly available in the Volkswagen Group’s BAFA report. Decision-makers in the undertaking are regularly informed about serious breaches of duty by the undertaking relating to human rights (see also the “Business conduct information” chapter).

The procedure is checked for its effectiveness. Questions about or suggestions for the improvement of the whistleblower system can be addressed to the Central Investigation Office. Anyone who has been interviewed in an investigation also has the option of giving feedback to the ombudsperson as an independent body.

Employee trust in the complaint procedure

The Volkswagen Group provides web-based training on human rights to ensure that employees are familiar with the structures and procedures and trust them as a way to raise their concerns or needs and have them addressed. This training explains all the available contact options in detail.

In addition, the undertaking focuses on diverse communication activities to raise awareness and promote the use of complaint channels. The whistleblower system is part of all mandatory compliance training courses. Further information on training is provided in the “Business conduct information” chapter. Participation in mandatory training courses is tracked. The proportion of anonymous reports without contact details remains very low.

The Volkswagen Group has a policy regarding the protection of individuals, including workers’ representatives, against retaliation in the form of a Group policy and the rules of procedure for the grievance mechanism. Detailed information on the protection of whistleblowers can be found in the “Protection of whistleblowers” section in the “Business conduct information” chapter.

POLICY: EMPLOYEES AND NON-EMPLOYEES

The Volkswagen Group is a socially responsible employer that follows international frameworks in its HR activities. The Volkswagen Group’s employees are spread across many countries around the world. At some sites, the Group has already been an employer for decades, whereas other sites are more recent. Employees’ working and living conditions and their interests and views are, consequently, diverse. The HR challenge for the Group is to cope with the tensions of this diversity while at the same time also implementing Group-wide standards. In line with ESRS requirements, the focus here is only on content that has global relevance for the Group’s employees. In addition, various brands and companies have additional regional policies, targets and actions that are geared to employees’ local interests and views but are described in their sustainability reporting, for example, rather than here.

The Volkswagen Group handles its business activities’ positive and negative impacts on employees with Group-wide management policies. “Group-wide” means that the management policies are to be implemented in all controlled companies of the Volkswagen Group. The Volkswagen Group’s management policies on employees are primarily set out in Group policies. The following sections explain which management policies address the issues of employees in the Volkswagen Group.

For non-employees in the Group, the aim is also to ensure that they also have appropriate working and remuneration conditions. When Procurement hires temporary external personnel, compliance with the standards of the relevant employment conditions is implemented through Procurement’s management policies. These are described in the “Workers in the value chain” chapter. By means of corresponding requirements for business partners, Procurement’s policies and actions also mitigate and promote the impacts on non-employees identified in the “Employees and non-employees” chapter in relation to fair and transparent pay, healthy working conditions, freedom of coalition, a non-discriminatory and inclusive working environment, equal treatment and the enforcement of compliance with social and human rights standards (e.g. no child labor or forced labor). Where there are procedural deviations, the requirements of the Charter on Temporary Work and thus also the Code of Conduct for Business Partners also apply. These requirements must be met by temporary employment agencies for these to be used. The plan is to also anchor the use of the Code of Conduct for Business Partners in the relevant Group policy issued by Procurement in all deviating cases.

Compliance management system for complying with human rights due diligence obligations

As a Group with a global footprint, the Volkswagen Group recognizes the following international conventions and declarations and reaffirms its agreement with the contents and principles stated in these. These include:

• The Universal Declaration of Human Rights, codified in particular in the International Covenant on Civil and Political Rights and in the International Covenant on Economic, Social and Cultural Rights (in addition to other applicable human rights treaties that are binding under international law, for example the UN Convention on the Rights of the Child)
• The Core Labour Standards of the International Labour Organization (ILO)
• The Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy of the ILO
• The ten principles of the United Nations Global Compact (UN Global Compact)
• The UN Guiding Principles on Business and Human Rights
• The Organisation for Economic Cooperation and Development’s Guidelines for Multinational Enterprises (OECD Guidelines)
• The international covenants on civil and political rights and on economic, social and cultural rights of December 19, 1966

As a signatory of the UN Global Compact, the Volkswagen Group follows international sustainability frameworks and standards in its HR activities, such as the UN Sustainable Development Goals (SDGs). In addition, the Lieferkettensorgfaltspflichtengesetz (LkSG – German Supply Chain Due Diligence Act) came into force in Germany on January 1, 2023. The Volkswagen Group has integrated the topic of business and human rights into its existing compliance management system (CMS) in order to implement its due diligence obligations related to human rights. The topics of child labor, forced labor and human trafficking are addressed indirectly in the Code of Conduct and explicitly in the Declaration on Social Rights and the Code of Conduct for Business Partners.

At Volkswagen, clear responsibilities are established throughout the Group as part of the “three-line of defense model” as a regulatory framework for a holistic governance, risk and compliance management system for managing corporate risks, including human rights risks.

The first line consists of specialist and functional departments responsible for day-to-day operational business. In their operational activities they mitigate risks, including protected legal positions related to human rights, which they detect at an early stage, analyze and actively manage by means of suitable preventive measures. Relevant divisions for ensuring the fulfillment of human rights and environmental due diligence obligations primarily include, in Volkswagen AG’s own business area, the Human Resources, Group Occupational Health and Safety and Group Security divisions, as well as Group Procurement for suppliers.

The second line of defense consists of the advisory departments, at Group level primarily Group Legal and Group Compliance, HR Compliance, Group Environment and Group Occupational Health and Safety. These advisory departments are responsible mainly for ensuring compliance processes and for advising and supporting the operational divisions in their risk management activities.

The third line of defense is the Internal Audit department as an objective auditing body.

This management policy is in line with the due diligence process in the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises and the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work. Compliance with these is monitored using the human-rights risk management system.

If infringements of the frameworks are identified, remedial actions must be initiated and checked for their effectiveness. Furthermore, a process has been defined to ensure that the policies on the Group website, such as the Code of Conduct, are reviewed annually, so that any updates necessary are made.

The management policy for compliance with human rights due diligence is available in the Group policies of the relevant areas for anyone who needs help with its implementation. The management policy is available to all potential stakeholders on the Group homepage in the “Group” category under “Ethics, Risk Management & Compliance” and then under “Human rights”. This is where the declaration of principles on compliance with human rights due diligence in accordance with the LkSG is also published.

A process to take what action is needed and appropriate in response to particular actual or potential negative impacts has also been defined in the management policy. This sets out who is responsible for developing preventive and remedial actions and will formulate appropriate actions.

The compliance management system for Human Rights makes a significant contribution to the management of the actual and potential positive impacts identified in the double materiality assessment, which include fair and transparent pay, extensive participation rights, healthy working conditions, an inclusive working environment, equal treatment of employees, and the promotion of a culture free from discrimination, violence and harassment. This also concerns the promotion and enforcement of compliance with social and human-rights standards with regard to employees and non-employees (e.g. no child labor or forced labor). The actual negative impacts identified are also mitigated in this way. These include if business processes concerning the Group’s working conditions have a negative impact or if there are isolated cases of unequal treatment in the employment relationship. This also applies with regard to a shortage of development opportunities for employees due to lack of or insufficient objective rules on avoiding discriminatory behavior.

Group policies

Other management policies addressing the Volkswagen Group’s employees are described in the Group policies set out below. 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 updates them if necessary. The Group policies can be accessed on the intranet by those who are responsible for implementing them. For affected stakeholders, the public documents enacted with the Group policies are available on the Group website – for example, the Code of Conduct and the occupational health and safety policy.

HR Compliance Group policy and Code of Conduct

The HR Compliance Group policy sets out the organizational framework conditions, the organization of and responsibility for proper operation, the involvement of HR Compliance, and the requirements for the implementation of HR compliance in the Volkswagen Group’s controlled companies. The local legal, collective-bargaining and operational regulations are taken into account here, and the workers’ representatives’ existing participation rights are safeguarded.

The Group policy is managed by the HR Compliance organizational unit, which is an integral part of the overall strategic and operational HR work in the Volkswagen Group. Application of the Group policy systematically promotes and enhances integrity and compliance in HR tools, actions and processes. It also contributes significantly to the attitude, conduct, and actions of employees with regard to honesty and compliance with the law and concerning full compliance with human-rights due diligence obligations and the Code of Conduct, which is firmly embedded in the Group’s HR Compliance guidelines. This also applies with regard to preventing and taking action to prevent discrimination and promote diversity and inclusion.

In addition to further content, which is addressed in particular in the context of management policies under “Corporate culture” in the chapter “Business conduct information”, the basic values with regard to diversity and respect for the human rights of employees are enshrined in the Code of Conduct and the Group HR Compliance policy. This describes that the Volkswagen Group promotes diversity and works to create an inclusive working environment. The aim is to ensure equal opportunities for everyone and prevent all forms of discrimination. This applies, in particular, to discrimination due to ethnic or social origin; skin color; gender; nationality; language; religion; belief; age; physical or mental limitations; gender identity; sexual orientation; political beliefs, provided these are based on democratic principles and tolerance towards those who hold different views; or other, legally protected characteristics. The Volkswagen Group respects and protects the rights of vulnerable groups such as persons with disabilities; people with a migration background; older employees; and ethnic, religious, or comparable minorities and promotes teamwork characterized by mutual respect. The Volkswagen Group respects the right to freedom of conscience, expression and religion. In cases where these rights are subject to state restrictions, it strives for societal dialog.

The Volkswagen Group does not tolerate any form of harassment. This applies, in particular, to violence and harassment that occurs during, in relation to, or as a result of work being carried out. For the Group, different life stages and ways of life form another aspect of employees’ diversity that it is important to support with regard to work-life balance. By creating clear minimum standards and standards of conduct in the two documents referred to above for diversity, equal opportunities, and equal participation, anchoring them in the awareness of employees, and promoting them through qualified managers whose awareness of the issues has been raised, discrimination and harassment can be prevented, contained and combated. At the same time, matters such as diversity and inclusion are expected to be promoted.

Another substantive element of the Code of Conduct is the commitment to openly working together with workers’ representatives in a spirit of trust, maintaining constructive and cooperative dialog, and striving for a fair balance of interests. Safeguarding the future of Volkswagen and its workforce takes place in a spirit of cooperative conflict management and social commitment based on and with the goal of ensuring economic and technological competitiveness. Economic efficiency and job protection are equal-ranking and shared goals. The Code of Conduct and the HR Compliance Group policy thus make a significant contribution to management of the actual and potential positive impacts identified in the double materiality assessment process. These include the provision of secure jobs, an inclusive working environment, extensive participation rights, and the equal treatment of employees, including with regard to development opportunities in the Group, the inclusion of persons with disabilities and the promotion of a culture free of discrimination, violence, and harassment. This likewise involves the promotion and enforcement of compliance with social and human-rights standards for employees. The actual negative impacts identified are also mitigated by the Group policy. These include if business processes concerning the Group’s working conditions have a negative impact or if there are isolated cases of unequal treatment in the employment relationship, including with regard to a shortage of development opportunities for employees due to lack of or insufficient objective rules on avoiding discriminatory behavior, such as remuneration policies or hiring and promotion processes.

The Chief Human Resources Officer has overall responsibility for the topic of HR compliance. The Head of Group HR Policy and Governance is responsible for the operational implementation of the management policy.

Group policy on occupational health and safety

Another Group policy defines the responsibility for occupational health and safety and specifies the binding requirements for occupational health and safety for all the Group’s controlled companies.

It is the task of Health Services to ensure that the protection of its employees’ health at least meets the nationally applicable legal requirements. This needs to be carried out by qualified medical personnel (company physicians).

Occupational safety experts have the task of advising senior managers, line managers, workers’ representatives and others responsible for occupational health and safety on occupational safety and accident prevention, checking the safety of facilities and technical equipment, in particular before these are put into operation, and checking the safety of work processes, in particular before these are introduced. In addition, they are to monitor the implementation of occupational safety and accident prevention, check its effectiveness and work towards ensuring that the conduct of all of the business’s employees is in line with the requirements of occupational safety and accident prevention.

Occupational health and safety is organizationally assigned to the Chief Human Resources Officer and reports to this individual. Health care is managed at Group level by the Head of Group Occupational Health and Safety, who is also Volkswagen AG’s senior physician. In organizational terms, the management of occupational safety at Group level is assigned to Group Occupational Health and Safety. The Head of Occupational Safety also reports directly to the Chief Human Resources Officer.

In the Board of Management conference on occupational health and safety, in addition to defining fundamental health policy issues and strategies, a report is also given by the Head of Group Health and the Head of Group Occupational Safety. Among other things, this is used to track the Group policy on occupational health and safety, with the respective head’s report primarily covering external and internal regulatory topics. In addition to serving the purpose of information, this also makes it possible to point out possible decision-making needs and prevailing problems. The participants in the Board of Management conference on occupational health and safety include representatives of the Board of Management and the Works Council, the Head of Group Occupational Health and Safety and the Head of Group Occupational Safety. The participation of workers’ representatives enables employees’ interests to be taken into account.

The Group policy on occupational health and safety also includes the Volkswagen Group occupational health and safety policy. This documents the Group’s responsibility to ensure the health and safety of its employees and communicates this aim externally. The occupational health and safety policy is available to employees and non-employees on the Volkswagen Group’s website.

The occupational health and safety Group policy thus makes a significant contribution to the management of the actual and potential positive impacts identified in the double materiality assessment, including the provision of jobs with healthy working conditions and a strong focus on health protection.

WORKING CONDITIONS

This section covers the sustainability topics of secure employment, adequate wages, social dialog, freedom of association and collective bargaining, training, and skills development, which are specified in ESRS 1.

Actions related to working conditions

The organizational units of the Volkswagen Group responsible for implementing actions relating to the working conditions focus area are Group HR Policy and Governance and Volkswagen AG’s Volkswagen Group Academy, which use human and financial resources on an ongoing basis to have a positive effect on the material impacts for employees and to contribute toward achievement of the targets set.

Budget planning round

What is known as the budget planning round (medium-term planning), in which Group-wide plant utilization is also planned, generally takes place annually as a key instrument of investment planning. The staffing situation of the individual sites is also taken into account.

The results of the medium-term planning are subject to approval by the Supervisory Board as regards the investment programs and investments included in it. Employee representatives on the Supervisory Board are also involved in the Supervisory Board’s decision on approval. Involving employee representatives is designed to help ensure that the goal of safeguarding jobs is achieved.

The budget planning round prevents business processes from having actual negative impacts on the working conditions of individual employees (e.g. job cuts) through workforce planning that stabilizes employment. The action is not tracked.

Due to the collective bargaining at Volkswagen AG that lasted until the end of 2024, it was not possible to complete this standard process in the reporting year.

Opinion survey

There is a direct opportunity in the Volkswagen Group for employees to speak up about their own and the Company’s interests, which has been used extensively in recent years, in the shape of the opinion survey. As part of the opinion survey, various aspects were highlighted in relation to an improvement in working conditions, including opportunities for employee development and qualification, a healthy work environment, participation opportunities and a good work-life balance. Within the organizational units employees had the opportunity to work with their line managers to develop actions in these areas on the basis of the survey results. Global measures were also derived in the last years from this employee survey in order to improve working conditions and participation opportunities. In the reporting year, the opinion survey was suspended for the purpose of revision.

Revising the opinion survey is intended to continuously strengthen dialog with employees. Furthermore, the interests of employees should be heard and taken into account in order to give the Group a well-founded pool of data for deriving effective actions on above-mentioned topics. Another employee survey is planned for 2025. Further information can be found in the chapter “Business conduct information” under “Corporate culture”.

The opinion survey is an important instrument for enabling mitigation of actual negative impacts of business processes. This is done by identifying, deriving, and taking actions relating to topics employees perceive as particularly critical.

The extent to which the tool is accepted by employees using employees’ rate of participation in the opinion survey will be tracked again in the future after its reintroduction. This can be used to assess whether the derivation of actions at critical points covers a broad base of employees and can accordingly be assessed to be effective.

Creation and expansion of digital training

The Volkswagen Group invests in training, which helps to enable employees to maintain long-term employability even when requirements change. In 2024, the focus was on creating and expanding a program of digital training to be able to provide more varied learning content for a larger number of employees. The Volkswagen Group is implementing and integrating the Success Factors tool and the learning platform Degreed as a learning ecosystem for digital learning and self-directed training. This creates a common framework for the qualification of all employees in the Volkswagen Group based on and controlled by the Volkswagen Group Academy. The global rollout is taking place in defined stages. The plan is to complete the rollout to the Group companies included in Success Factors by the end of 2028. On the learning platform Degreed’s “Volkswagen Group” subsection, for example, seven new companies were added in the reporting year, and user numbers increased by more than 25% from over 30,000 in 2023.

The Volkswagen Group’s efforts in the area of further training and qualification are also a response to the automotive industry’s far-reaching technological transformation in order to live up to rising societal expectations, international treaties, and political regulations that require targeted decarbonization of products and business processes. In this transformation process, the Company is also opening up new fields of business and business models for which the employees concerned are trained.

This action contributes to the actual and potential positive impacts on employees by providing secure jobs. This is achieved through the development and expansion of digital training courses to strengthen employee qualifications for the purpose of improving their employability.

The development and expansion of digital further training and the traditional training format offering are tracked through the strategic target of increasing average further training hours. Further information on this can be found under section “Targets related to working conditions”.

Actions related to freedom of association

The Volkswagen Group is committed to global compliance with freedom of association and recognizes the right of all employees to form trade unions and workers’ representation. Employees’ right to negative freedom of association is also respected. The recognition of the right of all employees to form trade unions and workers’ representation represents a key component of the Declaration on Social Rights.

The metrics collected in the reporting year for the first time on the coverage of employees by collective bargaining agreements of 92.0% (European Economic Area/EEA only) and on the rate of employees covered by a workers’ representative of 99.1% (European Economic Area/EEA only) show that the Volkswagen Group has created an environment that enables effective representation of interests. This effective representation of interests is the basis for the negotiation of fair and transparent pay by the collective bargaining parties. The negotiation process usually takes place within the framework of collective bargaining autonomy and is therefore governed by local regulatory conditions. Further information on the metrics can be found under “Metrics related to collective bargaining coverage and social dialog”.

Due to different political and legal conditions, it is not possible to implement the OECD and ILO standards at all Group’s production sites around the world to the same extent as in the European Union (EU). Freedom of association is realized in compliance with the laws applicable in the various countries and locations. The aim is to bridge the tension between the different national conditions and the interest in the greatest possible achievement of the right to organize. A particular challenge arises in states that have not signed the ILO Convention on Freedom of Association and Protection of the Right to Organize. In these efforts, care is taken not to violate local laws and not to put local employees at risk.

The Volkswagen Group maintains regular communication with and makes annual inquiries to, in particular, selected risk regions and risk markets in which it operates and in which a local legal right to freedom of association does not exist or is restricted.

Through this continuous measure, the Volkswagen Group contributes to the actual and potential positive impacts on employees in terms of comprehensive participation rights. In a restrictive environment, this takes place through regular communication with and inquiries to risk regions and risk markets.

Targets related to working conditions

Targets in the Human Resources business unit were developed deductively from the Group People Strategy, which was in turn developed in accordance with the Group sustainability strategy regenerate+ and the Group strategy.

The Group People Strategy and its targets were developed by the Group HR strategy department with the involvement of additional central organizational units of the Group HR divisions of Volkswagen AG and the HR strategy departments of selected Volkswagen Group brands. Employees and non-employees were not involved in the process for defining the targets. A new Group strategy was adopted in December 2024, as part of which the Group HR strategy was also adapted. The Human Resources business unit’s targets are analyzed at least once a year and discussed with the Board of Management and the brands’ board of management members responsible for HR at regular intervals. They are reviewed to determine whether the targets or actions for achieving the targets need to be adjusted.

With regard to tracking the undertaking’s performance against the achievement of these targets and identifying lessons or improvement opportunities arising as a result of the undertaking’s performance, no process for codetermination by employees or their representatives is planned.

Target related to training and skills development

The Volkswagen Group aims to promote employees’ employability. This is intended to facilitate secure employment in the long term. The Volkswagen Group therefore offers its employees extensive training opportunities.

Independently of the metrics required by the ESRS in this focus area, the Volkswagen Group has already had a strategic metric on training hours for several years.

In contrast to the definition of employees set out in the chapter introduction under “Material impacts and their interaction with strategy and business model”, the active workforce is used for the strategic KPI, but excluding employees in the withdrawal phase of the time asset bonds (time asset bond: time credit from deferred compensation). The active workforce covers all employees excluding vocational trainees and employees in the passive phase of their partial retirement. In addition, the Chinese joint ventures are not taken into account in the strategic KPI. The different calculation bases mean that the strategic KPI differs from the metric average number of training hours per employee in accordance with the ESRS, which is listed further below in the text.

The goal is to increase the average number of training hours per employee in the active workforce (here excluding employees in the withdrawal phase of their time asset bonds) in the Volkswagen Group by 35% to 30 hours per year by 2030. The baseline value is 22.3 hours and represents the average for the base years 2015 to 2019. These years were chosen as the baseline due to the Covid-19 pandemic, which temporarily curtailed training activities in 2020 and 2021.

The target for this strategic KPI for the reporting year was 26 hours. With an average of 20.8 hours per employee, the target has not been met. The decrease in the number of training hours is due to the prioritized implementation of efficiency programs in the Group, with the result that the departments did not focus on measures to increase the number of training hours. In the 2023 reporting year, 22.1 hours per employee were achieved.

This target was developed as part of the Group People Strategy and the associated Group strategy and was included in the Group sustainability strategy regenerate+ as a top KPI. Due to the momentum in this focus area and the varied training needs and regulatory requirements in the various local companies, no extended, Group-wide regulation of this focus area has been put in place beyond the strategic direction, with the exception of the Charter on Training with its scope of application. Since the target was set, no changes have been made to the target itself.

The strategic metric of the Group People Strategy covers the employees’ training hours, including the digital self-guided training hours that are time-independent. The annual average was calculated on the basis of the data from January 1 to December 31 until 2023. In the course of the transition to using the requirements of the ESRS, the calculation was adjusted to the effect that the annual average is now calculated on the basis of data from December 31 of the previous year to December 31 of the reporting year. As a result, the KPI will in the future correspond to the metric in this aspect.

By 2023, the strategic HR planning implementation status was reported as a KPI of the same name, which has helped to provide secure jobs. Strategic HR planning supplements operational HR planning by adding a qualitative, long-term and strategic planning perspective. It allows to identify qualitative and quantitative surpluses and shortfalls in parts of the Company at an early stage and derives necessary qualification, vocational training and restructuring requirements designed to help support the transformation. To map progress in strategic HR planning, we measure the percentage of the active workforce included in the strategic HR planning from 2023. The targets are being adjusted as part of the Group strategy revision, and reporting of the KPI has been suspended for 2024 due to the ongoing efficiency programs.

No other measurable outcome-oriented targets within the meaning of the ESRS requirements have been set in connection with adequate wages, social dialog, freedom of association, or collective bargaining. The effectiveness of the policies and actions in relation to the impacts identified through the materiality assessment performed this year for the first time is not monitored.

METRICS: EMPLOYEES AND NON-EMPLOYEES

Metrics related to the characteristics of employees

A total of 614,082 employees were employed at the Volkswagen Group at the end of the 2024 reporting year; the number of employees is given in headcount The definition of employees covers anyone with an active employment contract who takes part in the Volkswagen Group’s value creation process, including members of top management, people in the passive phase of partial retirement, and vocational trainees. The quantitative disclosures do not include people in dormant employment, such as people on parental leave. Nor do they include employees in academic training, such as interns, student workers, or students studying for a PhD, master’s degree, or bachelor’s degree. Both full-time and part-time employees are counted as employees. A full-time employee works the maximum number of hours per day, week, or month that are defined for the employee category in question in accordance with the national laws, collective bargaining agreements, or company regulations. Any deviation from the collectively or non-collectively agreed full-time weekly working hours is deemed to constitute part-time employment. Permanent employees do not have an end date in their employment contracts. Temporary employees means all of the respective undertaking’s employees that have a temporary contract with an end date. Non-guaranteed hours employees are classified as temporary employees. They are employed without a guarantee of a minimum or fixed number of working hours. A non-guaranteed hours employee must make themselves available for work as required, but the employer is not contractually obligated to offer the employee a minimum or fixed number of working hours per day, week, or month.

In the reporting year, 37,516 employees left the Volkswagen Group. The staff turnover rate was 6.1%. It is calculated by dividing the number of people who left by the average number of employees in the reporting year. The calculation is based on the data from December of the previous year to December of the financial year regarding employees of the Volkswagen Group’s reportable entities in the future in the context of the requirements of the ESRS. The reference base is the average number of employees in this period. The following groups are included in employees leaving: employees who have left the Volkswagen Group due to dismissal, retirement, death or resignation.

The following tables show the distribution of employees by gender, country of employment and contract type.

Workforce disclosures are also contained in the Group management report under “Sustainable Value Enhancement” chapter under “People” section. Discrepancies between the figures are due to the inclusion of the workforce of the Chinese joint ventures in the Group management report. The total number of employees includes 33 employees (“Not disclosed”) who have made use of their local legal right not to disclose their gender.

Gender is disclosed as specified by the employees themselves. The total number of employees includes 33 employees who have made use of their local legal right not to disclose their gender.

EMPLOYEES BY CONTRACT TYPE, BROKEN DOWN BY MARKET

As of Dec. 31, 2024

Metrics related to non-employees

Non-employees include self-employed people and people provided by undertakings primarily engaged in employment activities (known as temporary external personnel). The total number (headcount) of non-employees working in the Group was 25,162 at the end of the reporting year.

Metrics related to collective bargaining coverage and social dialog

A total of 92.0% of the Volkswagen Group’s employees are covered by collective bargaining agreements. This number only relates to employees in countries in the European Economic Area (EEA) in the first reporting year in accordance with the ESRS. A collective bargaining agreement means a written agreement between trade unions – or, in their absence, duly elected workers’ representatives – and employers, which, among other things, governs working hours and wages as core components. A total of 99.1% of the Volkswagen Group’s employees in the EEA are covered by workers’ representatives. There are agreements with employees regarding representation by a European Works Council (EWC, EWC SE, EWC SEC).

Metrics related to adequate wages

The statutory minimum wage of a country or, where this is not defined, a benchmark that is not lower than the minimum wage of a neighboring country with similar socioeconomic status is used as a benchmark for adequate wages in accordance with ESRS requirements within the EEA. As there is no uniform methodology for setting a minimum wage outside the EEA, the benchmarks from the Wage Indicator Foundation’s Living Wage database, which is cited in the requirements of the ESRS as a possible data source for countries outside the EEA, are used. The benchmarks for all the countries outside the EEA where the Volkswagen Group has employees are obtained from this database. The underlying benchmarks were last updated for this report in October 2024.

The salary components used to calculate the lowest gross hourly wages in each case are specified in accordance with the requirements of the ESRS and uniformly defined throughout the Group. Only the base salary and guaranteed additional payments are included in the calculation. However, in many cases, there are other remuneration components in the Volkswagen Group that are not included in this calculation. From the Company’s perspective, these other remuneration components may represent a fundamental proportion of wages but are not taken into account in accordance with the ESRS.

For the following metrics, the lowest gross hourly wages for each company are compared to the respective country’s benchmark. These comparisons were used as a basis to ascertain that near enough all of the Group’s employees are paid a wage above the respective benchmarks and therefore receive an adequate wage in accordance with the ESRS definition. The few exceptions here are listed in the table below, which lists the countries and the number of Volkswagen Group employees who receive a wage below the set ESRS benchmark. In addition, the table shows the proportion of these Volkswagen Group employees who receive a wage that is below the respective benchmark in relation the total number of Volkswagen Group employees in the country in question. The employees listed in the table are still remunerated in accordance with existing local statutory requirements and the provisions of collective bargaining agreements. Furthermore, other remuneration components that do not fall within the definition of income according to the ESRS mean that the employees’ actual wages are higher than those depicted in this comparison. These additional remuneration components include, for example, sales commission (e.g. in Singapore), additional contributions to pensions and/or health insurance, and free catering (e.g. in Morocco). Further temporary effects also come into play, such as lower wages paid during a specific probation period (e.g. three to six months in Mexico). Similar practices are used in Albania, Brazil and Sweden, as well as Austria to a certain extent, where employees are generally moved to a higher wage group after a short induction period. The other employees in Austria mainly work on a part-time basis. The two cases in Germany relate to trainees, who fall within the scope of the Berufsbildungsgesetz (BBiG – German Vocational Training Act).

Metrics related to training

The average number of training hours per employee in accordance with the requirements of the ESRS was 18.9 hours. The calculation is based on the employee data from December of the previous year to December of the reporting year. Time-bound and non-time-bound classroom and online training with or without a trainer (self-guided) count as training. In time-bound learning, primarily the precise qualification time is recorded. If this is not technically possible, the stored target value per non-time-bond training measure is evaluated.

OCCUPATIONAL HEALTH AND SAFETY

This section addresses the sustainability topics of occupational health and safety in accordance with ESRS 1.

Actions related to occupational health and safety

A Group policy ensures that the senior managers of each company make adequate financial, human and material resources available to fulfill the tasks in the focus area of occupational health and safety and ensures sufficient qualification and training of skilled staff. Volkswagen AG’s Group Occupational Health and Safety organizational unit is tasked with standard-setting, information provision, communication and monitoring.

Mandatory establishment and ongoing improvement of an occupational health and safety management system

The Group has issued a Group-wide policy requiring the companies to introduce and obtain certification for an ISO 45001 management system at all production sites with more than 1,000 employees, which must be implemented to promote occupational health and safety. The certification itself is the responsibility of the respective companies. As part of the Group audit program, internal audits are conducted on the basis of ISO 45001 requirements and Group policies. Four (three) Group audits were conducted in 2024. Completion of the required ISO 45001 certifications by 2026 is planned.

Certification of the management systems on occupational health and safety has also been underpinned by a target. Information on the action’s progress and effectiveness can be found under section “Targets related to occupational health and safety”.

Conducting a systematic health & safety risk analysis

To evaluate the Group companies’ current performance in occupational health and safety, in this reporting year the Volkswagen Group conducted a risk analysis based on self-assessment questionnaires at the level of the companies. The scope of the 2024 risk analysis was defined on the basis of risk-based criteria, incorporating the previous year’s results. As a result, it was possible to identify improvement potential and introduce measures to reduce sustainability-related risks, for example. In addition, regular dialog took place as part of communication with the companies. The good practices identified give rise to potential for the Group companies.

The Volkswagen Group conducts systematic analyses of the status quo of occupational health and safety in the Group each year. From these analyses, it derives measures to minimize work-related risks where a need for action is identified. These cover all the Volkswagen Group’s employees and are made accessible to them through targeted communication.

Through the two actions described, the Volkswagen Group promotes employees’ occupational health and safety and, in this way, contributes to the actual and potential positive impacts on employees by creating healthy working conditions.

The effectiveness of the risk analysis and the actions derived from it to minimize work-related risks is tracked using spot checks of the companies – even those without identified risk indicators.

Targets related to occupational health and safety

The Safety First strategy and the Group policy on occupational health and safety require all Volkswagen Group production sites to comply with the standards of ISO 45001 occupational health and safety management systems. All production sites (including the Chinese joint ventures) with more than 1,000 employees are to be certified in accordance with ISO 45001 by 2026.

The development of the target was intentionally advanced in accordance with the ILO recommendation on the certification of occupational health and safety management systems and the sustainability reporting standards prevailing at that time.

At the same time, the development process took account of the particular local characteristics of the location and industry through the restriction of the target to production sites with more than 1,000 employees. Specific capital market requirements that were brought to the Volkswagen Group’s attention through ESG ratings were also integrated into the reporting through additional reporting on the coverage of the certified management systems.

Collecting metrics is a core element for assessing the effectiveness of our actions. To monitor the target, an analysis is done each year of how many of the Group-wide production sites with more than 1,000 employees are ISO 45001 certified and how high the associated coverage of employees is. At the end of 2024, a total of 80 (72) Group production sites (including the Chinese joint ventures) were certified in accordance with ISO 45001. This corresponds to coverage of 74 (51)% of the employees at the Group production sites (including the Chinese joint ventures) with more than 1,000 employees. The metric is calculated by dividing the number of employees at certified production sites with more than 1,000 employees by the total number of employees at production sites with more than 1,000 employees.

Since the target was set, no changes have been made to the target itself or to the underlying methodology. Based on targeted and constant communication with the companies affected in the relevant steering committees, we are not currently aware of any significant obstacles to achieving the target.

In addition to the number of ISO 45001-certified production sites and their level of coverage of employees, the Volkswagen Group also uses the lost time injury frequency rate (LTIFR) for employees as a key performance indicator for reporting. This is recorded as an accident frequency index and provides information on the number of accidents at work as a proportion of the total of all hours worked. It is calculated as the number of accidents at work reported with at least one day lost multiplied by 1 million divided by total number of hours worked. In 2024, the accident frequency at the Volkswagen Group was 6.4 (3.6). Compared with the previous year, the metric’s scope was expanded in the reporting year from all production sites including the Chinese joint ventures previously to employees of the Group’s consolidated companies excluding the Chinese joint ventures. In addition, the Group switched from weekdays to calendar days for the calculation of days lost. Comparability with the prior-period figures is not possible due to the change in methodology.

The Volkswagen Group attaches great importance to reducing the LTIFR to below 1 for all brands and companies by 2040. This target was set as part of the Group sustainability strategy regenerate+ and is a strategic metric in its own right, and the accident frequency target was developed taking account of ESG rating requirements. The documentation obligation for work-related accidents that is necessary for obtaining the metric is set out in the occupational health and safety Group policy.

The target referred to above also addresses ILO recommendations on occupational health and safety and the Global Reporting Initiative (GRI) sustainability reporting standards used at the time of development. The targets of ISO 45001 certification and the number of work-related accidents are not measured against either a specific baseline or a specific base year, as the Volkswagen Group measures itself against the aim of having as few work-related accidents as possible each year, and none of them fatal.

The Group uses Group regulations to provide Group-wide information in the event of fatal accidents involving employees or non-employees who work at the Volkswagen Group’s sites. On this basis, actions can be taken to prevent similar accidents across all sites in the future. Accidents are analyzed locally and appropriate measures are introduced to prevent further accidents.

As part of the sustainability reporting based on the requirements of the ESRS, the metric for the calculation of accident frequency in the reporting year was switched from the lost time injury frequency rate (LTIFR) to the total recordable injury rate (TRIR) so that significant work-related accidents are now included in the calculation regardless of the employee’s absence. In the reporting year, the TRIR at the Volkswagen Group was 11.7.

Employees and non-employees were not involved in the process for defining the targets.

Metrics related to occupational health and safety

A total of 83% of employees are covered by the Group’s health and safety management system based on legal requirements and/or recognized standards or guidelines. 46% of employees are covered by such a health and safety management system that has been audited or certified by an external party.

There were four deaths in the reporting year. Of these, three deaths concerned Volkswagen Group employees. One death concerned other workers, such as workers in the value chain at Volkswagen Group sites.

In the reporting year, employees had 10,819 recordable work-related accidents, which equates to a rate of 11.7 for the TRIR. It is calculated as the number of significant accidents at work reported multiplied by 1 million divided by total number of hours worked.

EQUAL TREATMENT AND EQUAL OPPORTUNITIES

This section addresses the sustainability topics of diversity, gender equality and equal pay for work of equal value, action against workplace harassment and inclusion of persons with disabilities in accordance with ESRS 1. The sustainability matter of training and skills development in terms of equal opportunities is included in this section. The employability aspect is addressed in the “Working conditions” section.

Actions related to equal treatment and equal opportunities

The organizational units of the Volkswagen Group responsible for implementing actions relating to the focus area of equal treatment and equal opportunities are Group Diversity and Advancement of Women, Volkswagen Group Academy and Volkswagen AG’s Group HR Management. They use human and financial resources on an ongoing basis to have a positive effect on the material impacts for employees and to contribute toward achievement of the targets set.

The Volkswagen Group has a varied employee structure around the world. This results in a need for specific actions to ensure equal treatment and equal opportunities. It is therefore up to the brands and companies to create and ensure an inclusive working environment based on their respective needs.

Actions to create an inclusive working environment and equal treatment of employees

The Group uses the HR Compliance Group policy that applies throughout the Group to stipulate action areas to the companies to promote the topics of diversity, equal opportunities, including regarding work-life balance and inclusion. These action areas encompass the integration of these topics into corporate values, processes and communication and the appointment of a contact person. From a certain size of company, the role of a diversity expert needs to be created. Awareness-raising measures for employees and managers are required to be implemented in the above-mentioned action areas. The scope and depth of the actions are geared to the size of the Company.

This contributes to an actual positive impact on employees through the provision of an inclusive working environment, the equal treatment of employees, including with regard to development opportunities in the Group, and increasing awareness among employees and managers for a culture free of discrimination, violence and harassment. Overall, this is a continuous measure.

The effectiveness of this action is not tracked centrally but, due to the diversity of the actions, is generally tracked at local or company level.

New anti-discrimination rule

In addition, in 2024, the Group provided the companies with a new anti-discrimination rule developed in 2023 to close gaps in the rules on the avoidance of discrimination in the hiring, remuneration and promotion process.

In 2024, the anti-discrimination rule was communicated to 106 Group companies that have implemented no or insufficient rules on avoiding discrimination.

Group companies are not required to introduce this rule, but it is recommended by the Group.

The new anti-discrimination rule is intended to provide a remedy to the actual negative impact on employees of unequal treatment in the employment relationship. HR Compliance also revised the specific Group policy with regard to the Volkswagen Group’s potential negative impacts in relation to unequal treatment of employees. For the recruitment process, it was amended to stipulate that decisions on recruitment will only be made on the basis of the applicant’s level of qualification.

The effectiveness of this action is not tracked centrally but, due the differences in the implementation of the action, is generally tracked at local or company level.

Preparation of materials for managers

The Group trains and empowers management and managers across the Group regarding their impartiality and the preservation of equal opportunities. In addition, the Group promotes sustainable discussion of the topic of unconscious bias among all managers in order to promote the creation of an unbiased working environment and processes geared to equal opportunities. Based on their training, they should be empowered to analyze their own department-specific processes and derive and implement suitable measures to ensure equal opportunities and reduce prejudices and stereotypes in their department. In addition, supporting materials are developed centrally and made available to the brands and companies. The Group suggests making local adjustments and integrating the methods into existing training and processes while maintaining the described target.

This contributes to an actual positive impact on employees through the provision of an inclusive working environment, the equal treatment of employees, including with regard to development opportunities in the Group, and the promotion of a culture free of discrimination, violence and harassment. This is a continuous measure.

The effectiveness of this action is not tracked centrally but, due to the diversity of the actions, is generally tracked at local or company level.

Linking Group Board of Management and management remuneration to the diversity index

Among other things, the short-term variable remuneration of the Group Board of Management (annual bonus) is linked to the ESG factor, including the diversity index, so as to create a direct incentive at the Group Board of Management level to achieve the diversity targets. The diversity index’s relevance to remuneration is described in more detail in the “General information” chapter.

In addition, an ESG factor was included in the short-term variable remuneration (annual bonus) for management below the Group Board of Management in 2023. As part of this ESG factor, the proportion of women in management relevant to the index is embedded in the short-term variable remuneration.

Creating an incentive to promote diversity in the undertaking contributes to an actual positive impact on employees through the equal treatment of employees, including with regard to development opportunities in the Group, and the promotion of a culture free of discrimination, violence and harassment.

The effectiveness of this action, but also the promotion of diversity itself, is tracked through the development of the diversity index, which is composed of the proportion of women in management and the internationality of top management. Both components of the diversity index are underpinned by a strategic target. More information on this can be found under the section “Targets related to equal treatment and equal opportunities”.

Collecting and publishing the statistic on penalizing employee misconduct

Each year, the Volkswagen Group collects and publishes a statistic on the disclosure of the penalization of employee misconduct in the relevant reporting year. The regular reporting on the disciplinary statistic is used firstly to create transparency and secondly to enable countermeasures to be taken as soon as possible if there are any anomalies. Publishing the disciplinary statistic internally additionally contributes to transparency and increased awareness, but also encourages employees to directly address or report misconduct.

In 2024, 32 Volkswagen Group employees were dismissed due to breaches in the area of discrimination, bullying, or stalking.

The publication of the statistic on penalizing misconduct in the area of discrimination, bullying, or stalking is a measure to promote awareness of the consequences of unequal treatment and thus prevent discrimination and actual negative impacts on employees as a result of isolated incidents of unequal treatment.

The effectiveness of this action is tracked by constant monitoring of the development of case numbers by the Group’s responsible department and taking action where necessary.

Targets related to equal treatment and equal opportunities

The topic of diversity and equal opportunities is enshrined in the HR Compliance Group policy. The particular importance of this action area is also underlined in the Volkswagen Group by its introduction of the diversity index as a strategic metric of the Group People Strategy, the Group strategy, and the Group sustainability strategy regenerate+, which also has direct remuneration relevance at Group Board of Management level. The Volkswagen Group is endeavoring to increase diversity in the Company (further details can be found under the heading “Linking Group Board of Management and management remuneration to the diversity index”). This includes setting targets for the percentage of women in management and for the internationality of top management. Both of these figures have been combined in the diversity index since 2017. It is compiled for the employees of the entire Volkswagen Group, but excluding employees in the withdrawal phase of the time asset bonds (time asset bond: time credit from deferred compensation), vocational trainees and employees in the passive phase of partial retirement. In addition, and as a departure from the requirements of the ESRS, the Chinese joint ventures are included in this strategic KPI. This index is used to measure and steer the implementation of the targets.

The proportion of women in management, comprised of management, senior management and top management (including members of the Group Board of Management and brand boards of management), amounted to 19.9% in 2024 and was 0.7 percentage points up on the prior year (19.2%). The intermediate target of 19% for 2024 was thus achieved. The Volkswagen Group wants to increase the proportion of women in management to 20.2% by 2025. This represents an increase of 8.1 percentage points compared with our baseline of 12.1% from 2016. The target of at least 25.0% by 2025 has been defined for the international composition of top management, the uppermost of the three management tiers. Achievement of the target would represent an increase of 8.0 percentage points compared with the baseline of 17.0%, also from 2016. This stood at 29.1 (25.6)% in the fiscal year now ended. The intermediate target of 24.1% for the reporting year was thus achieved. The figures for the proportion of women in management and the internationalization of top management are incorporated with equal weighting into the diversity index, which was set to 100 for 2016. For 2024 it was planned to increase this index to 149. This target value was exceeded with a score of 168 (154).

The diversity index was created in 2017 and was continued as a KPI in the applicable Group strategy and Group People Strategy. Recently, the associated sub-index “Proportion of women in management” was also incorporated into regenerate+ as a top KPI. The Supervisory Board has decided to define the diversity index as the performance criterion for the Social subtarget within the framework of the ESG factor for the variable remuneration (annual bonus) of the members of the Board of Management. The interests of the workforce are represented in this decision through the participation of the employee representatives. No changes were made to the methodology for collecting the metrics relevant to the target during the year.

No measurable outcome-oriented targets have been defined within the meaning of the requirements of the ESRS with regard to the employment and inclusion of persons with disabilities, the promotion of a culture free of discrimination, violence and harassment, and the raising of awareness among employees. The effectiveness of the policies and actions in relation to the impacts identified through the materiality assessment performed this year for the first time is not monitored.

Metrics on diversity

The following tables show the gender distribution of employees in number and percentage at top-management level and the distribution of employees by age group. In contrast to the percentage of women included in the diversity index, the gender distribution at this point only includes top management (including the Group and brand Boards of Management) and not senior management or management.

Metrics related to pay gaps and annual total gross remuneration

The Gender Pay Gap describes the difference in the average pay for women and men. In this report, the unadjusted Gender Pay Gap is disclosed. It shows the percentage difference in the average gross hourly pay level of men and women without taking structural differences into account. In the reporting year, the difference at the Volkswagen Group was 13 percent.

The unadjusted Gender Pay Gap is determined by calculating the difference between the average earnings of male employees and the average earnings of female employees. This difference is then divided by the average hourly earnings of male employees and multiplied by 100 to produce this figure as a percentage.

The average hourly earnings per gender are calculated on the basis of employees’ annual total gross remuneration. This includes remuneration for work performed in the reporting year (remuneration of working hours including overtime, shift allowances) and the remuneration of lost hours/absence, i.e. vacation pay, public holidays, illness and other absences, for example. This total gross remuneration is divided by the annual working hours, including overtime registered in the time recording system, according to gender.

Unlike the unadjusted Gender Pay Gap, the adjusted Gender Pay Gap takes account of factors such as qualification, professional experience, job system or position. It therefore shows the remaining pay gap between men and women with comparable characteristics. On the basis of available economic data, this figure is usually significantly lower than the unadjusted figure.

The ratio between the annual total gross remuneration of the highest paid individual and the median annual total gross remuneration for all employees (excluding the highest-paid individual) was around 195.

An approximation method based on the median remuneration, the companies’ average pay level, and the distribution of pay within the companies was used to calculate the median. For the calculation of employees’ average pay levels at the companies, the same definition of annual total gross remuneration was used as for calculating the pay gap between women and men.

OTHER WORK-RELATED RIGHTS

This section addresses the sustainability topics of child labor and forced labor in accordance with ESRS 1.

Actions related to other work-related rights

The organizational units of the Volkswagen Group responsible for implementing actions relating to the focus area of other work-related rights are Group HR Compliance at Volkswagen AG and the relevant operational HR departments at company level, which use human and financial resources on an ongoing basis to have a positive effect on the material impacts for employees and to contribute toward achievement of the targets set.

Minimum standards to prevent violations of human rights in the recruitment process

To better implement social standards and respect human rights, various basic measures were introduced and actions that had already been initiated were expanded to include a focus on protecting human rights. In this way, identity and age checks are carried out for all employees who enter into a temporary or permanent training or employment contract with a Volkswagen Group company as part of Volkswagen’s recruitment process for external hires. In addition, the local minimum age limit for employment is checked. Furthermore, when the contract is concluded, the voluntary declaration of intent is documented and a confirmatory signature in the form of a job offer letter is provided.

In the event of deviations from the standard recruitment process, documentation is prepared and a decision is made in accordance with the principle of multiple-party verification. Discrepancies from the minimum age limit check are not permitted so as to ensure that child labor is avoided. The action applies in the recruitment process for potential new employees across the Group and in implementation for HR department employees. The measure is implemented continuously.

Through the actions to improve the recruitment process, the Volkswagen Group contributes to the actual and potential positive impacts on employees by promoting and enforcing compliance with social and human-rights standards.

The effectiveness of these actions is tracked by reviewing compliance with the actions each year using a risk-based approach.

Targets related to other work-related rights

No measurable outcome-oriented targets within the meaning of the requirements of the ESRS are currently defined in connection with child labor and forced labor. The effectiveness of the policies and actions in relation to the impacts identified through the materiality assessment performed this year for the first time is not currently monitored. On the basis of our corporate values, the Volkswagen Group does not tolerate any child labor or forced labor.

Metrics related to other work-related rights

A total of 3,555 reports were received through the investigation offices in the reporting year.

Cases received regarding discrimination and harassment are treated as potential serious regulatory violations of the rules. 37 cases that were categorized as potential serious regulatory violations of the rules concerned discrimination and/or harassment in the reporting year. In the reporting year, 22 cases were confirmed as serious regulatory violations of the rules concerning discrimination and harassment.

In the disciplinary statistics, 250 sanctioned cases were recorded in the discrimination/bullying/stalking and sexual harassment clusters in the reporting year. In some cases, these already include the serious violations identified. Taking this duplication into account, a total of 257 cases regarding discrimination and harassment were thus identified.

A further 15 cases that the investigation offices categorized as potential serious regulatory violations of the rules concerned workforce issues other than discrimination or harassment in the reporting year. In the reporting year, two cases were confirmed as serious regulatory violations of the rules concerning these workforce issues other than discrimination or harassment. The National Contact Points for OECD Multinational Enterprise submitted no cases in relation to workforce issues other than discrimination or harassment to the investigation offices.

The total amount of fines, penalties and compensation for damages including the incidents and complaints on discrimination, including harassment, was €9 thousand. This amount is reported under other operating expense in the income statement but not disclosed individually and can also include items from previous years.

During the reporting year, potential relevance to the LkSG was identified for 15 reports, specifically related to the protected human rights in the employment relationship. In this period, there were no confirmed violations of the human rights protected by the LkSG. This disclosure can also be based on reports received by the relevant investigation office in the previous year, but for which a check of whether a violation was confirmed was only performed during the reporting year. This also means that there are no cases of severe human rights violations within the meaning of the ESRS. Since the LkSG is based on the United Nations Guiding Principles on Business and Human Rights, the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work and the OECD Guidelines for Multinational Enterprises, it can therefore be assumed that the indications of potential LkSG relevance correspond to potential violations of these frameworks in this respect. No fines, penalties or compensation for damages were incurred in connection with severe human rights incidents.