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.