Holistic integrity and compliance management system

Integrity and compliance are major priorities in the Volkswagen Group. We firmly believe that, for long-term commercial success, it is important that each and every individual complies with laws, regulations and commitments. Compliant behavior must be a matter of course for all Group employees. This is why integrity and compliance remain key elements of our Group’s NEW AUTO strategy and a focus topic in matters of sustainability.

Our objective is to be a role model and deepen the trust of our employees, customers, shareholders and partners in our Company. Our regulations, processes and corporate culture are designed in such a way that all employees are able to act with integrity and comply with the rules at all times. As performance indicators, integrity and compliance must have the same strategic and operational priority in our Company as sales revenue, profit, product quality and employer attractiveness.

With the Together4Integrity (T4I) program, we have built a holistic integrity and compliance management system (ICMS) for all Group and brand companies, which brings together virtually all the Company’s integrity and compliance activities under one roof. This system was set up in line with the five internationally recognized ECI (Ethics and Compliance Initiative) principles: strategy, risk management, a culture of integrity, a speak-up environment and resolute accountability. The aim of T4I is not only to strengthen uniform corporate governance throughout the Group in relation to integrity and compliance, but also to advance the culture of integrity. This includes steadfastness in adhering to principles of integrity regardless of economic or social pressures. T4I and the ICMS therefore contribute significantly to increasing sustainability in the Volkswagen Group. Implementation by 2025 was originally planned. However, given that the roll-out had already made more progress than expected at the beginning of the reporting year and that the consistently high approval scores for the question on integrity in the annual Stimmungsbarometer employee survey pointed to the program’s success, we decided in the reporting year to bring the centralized management and control of the program to an early end during 2023. Responsibility for continuing to implement the measures and embedding them now lies with the Group brands and companies and with the responsible Group departments.

Focus areas

Compliance with the rules must be a matter of course for all employees of the Volkswagen Group. The Group Integrity & Compliance organization provides support with this worldwide in the form of programs, guidelines, processes and practical advice. It helps the Group and brand companies to comply with the rules when carrying out their business activities and to comply with the relevant laws and internal regulations. Among other things, its work concentrates on anti-corruption and preventing embezzlement, fraud and money laundering.

The starting point for this is the Internal Compliance Risk Assessment (ICRA), which identifies compliance risks in the Group. Compliance measures are developed and defined for each controlled company on the basis of the risk profiles derived from the ICRA, which the companies have to implement depending on their risk classification. The ICRA also sets standards relating to the Code of Conduct (CoC), the whistleblower system, compliance training and communication.

HR (Human Resources) Compliance Policies and Procedures

The aim of this key initiative is the integration of integrity and compliance into the standard HR processes such as recruitment, training, promotion and remuneration (bonus payments). Integrity and compliance are also a compulsory topic in annual employee appraisals and are a component of the training measures for employees across all levels of the Company.

REPORTING CHANNELS IN THE WHISTLEBLOWER SYSTEM

Awareness-raising and Communication

The Code of Conduct (CoC) forms the basis for integrity and compliance in the Volkswagen Group. It serves as the main tool for reinforcing awareness of responsible conduct and decision-making and can be used as an aid and as a way of finding the right contact persons. The CoC is binding for all employees and has been part of every employment contract since 2019. We and our employees undergo regular mandatory training on its key contents.

Events in the departments round off the offerings of the Group Integrity & Compliance organization. The communication team regularly examines practical compliance tasks and case studies. Awareness-raising on compliance topics is supported by information and communication activities such as awareness campaigns, film and dialogue formats, newsletters and interactive games.

The Compliance Infopoint has established itself as the central help center. The team there answers compliance-related questions, establishes internal guidelines and directives and gives advice on process standards.

Training Courses and Standards

With the ICMS, the Group Integrity & Compliance organization sets uniform standards for compliance training across the Group. This is to enable brands and companies to provide their employees with a consistent quality of risk-based and target group-specific training that includes predetermined core content. The training courses address two key topics: the Code of Conduct and anti-corruption.

Protection and Prevention: the Whistleblower System

The whistleblower system is the central point of contact for reporting cases of rule-breaking by Group employees or by direct and indirect suppliers. This includes white collar crimes, acts of corruption, tax offenses, environmental offenses, human rights violations, infringements of antitrust and competition legislation, money laundering and terrorism financing, breaches of product safety and licensing regulations, and serious breaches of data privacy. Employees and third parties can report misconduct at any time and in many languages. A wide range of channels is available for this purpose, and the information can be lodged completely anonymously, if preferred. The aim is to use binding principles and a clearly governed process to avert damage to the Company and its employees.

M&A and NCS Compliance

In the event of planned mergers and acquisitions (M&A transactions), we audit the relevant companies for commercial risks such as corruption, breaches of trust or fraud, and for human rights risks. This also applies to joint ventures and to industrialization and cooperation projects with external partners. The analyses provide recommendations for the mitigation of the risks identified. The Group Integrity & Compliance organization also supports compliance management in non-controlled shareholdings (NCS), i.e. companies that are not controlled by a Volkswagen Group company as the majority shareholder. This includes the Chinese joint ventures.

Business Partner Due Diligence

In the business partner due diligence process, the integrity of business partners and suppliers is reviewed, especially with regard to corruption risks and compliance with ethical standards. The aim is to identify these risks at an early stage, to avoid such business partners, and to define measures to minimize risk and implement these with the business partner. If this is not possible, we refrain from entering the business relationship or terminate it as the law allows.

Product Compliance

The product compliance management system (PCMS) helps our products comply with the legal and regulatory requirements of the exporting and importing country, internal and external standards, contractually agreed customer requirements and externally communicated voluntary commitments over their life cycle.

Environmental Compliance

Statutory environmental regulations and voluntary commitments are binding at all locations and in all business fields. The Group’s environmental policy and the environmental compliance management system stipulate the relevant requirements and responsibilities. They apply to all strategy, planning and decision-making processes in the Group brands and companies. This includes a system of key indicators to determine progress in meeting environmental targets in the fields of renewable energy, CO₂ emissions and resource efficiency.

Anti-Corruption

The Volkswagen Group has a zero-tolerance policy on active or passive corruption. This is anchored in both our internal Code of Conduct and our Code of Conduct for Business Partners. Our investigation offices look into and process any reported violations of our principles, and sanctions are imposed on the employees concerned. Tackling corruption also includes developing and implementing mandatory training for employees in divisions or companies with a high risk exposure.

For more information on integrity and compliance, as well as the topic of business and human rights, please see our 2023 Group Sustainability Report.