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.