Annual Report 2024

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.