Sustainable raw materials: the Volkswagen Group's commitment

Sustainable raw materials: the Volkswagen Group's commitment

The "Responsible Raw Materials Report" details all the progress in terms of transparency and risk mitigation in the Volkswagen Group's raw materials supply chains.

Responsible sourcing of raw materials is a priority for the sustainability of the automotive industry, and the Volkswagen Group is at the forefront of continuously improving its operations and leading by example.

Last year, the Group had published its first Responsible Raw Materials Report, detailing its methodology and activities within a newly implemented due diligence framework. This year's Report, with data referring to 2021, takes an overview of the important progress made and explores future challenges.

The supply chain

The Responsible Raw Materials Report is a first for the automotive industry, as it is specifically dedicated to address mitigation measures against risks in the fields of human rights and environment in particularly exposed supply chains.

Specifically, the report focuses on 16 high-risk raw materials, including materials for the batteries of electric vehicles such as lithium and cobalt. In most cases, the highest risks for human rights and the environment occur in the upstream supply chain, at a level where the car manufacturer itself does not have direct contractual relationships, making it particularly demanding to ensure transparency and implementation of standards.

360-degree commitment

In the report, the Volkswagen Group discloses for the first time the list of smelters included in its supply chains for tin, tantalum, tungsten, and gold, with their respective countries of origin. In 2021, the Group also defined even more binding sustainability requirements for its suppliers, covering materials such as leather and natural rubber, among others.

It also joined the pledge for a moratorium on deep sea mining, which poses potentially severe environmental risks, and the Global Platform for Sustainable Natural Rubber (GPSNR), while supporting the development of reporting requirements for companies in the rubber supply chain.

Lithium, responsible extraction

In early 2021, the Volkswagen Group and other partners activated the Responsible Lithium Partnership, launching a project in the Salar de Atacama, Chile, which along with Australia is one of the two regions where the Group purchases the lithium needed for its production. The partnership involves several sectors and BASF, Daimler and Fairphone are also part of it; the goal is to facilitate a common understanding of the current status quo and to define a shared vision for the salt marshes in this area, developing a joint action plan to improve long-term natural resource management and fostering dialogue among local stakeholders.

As a result of this project, two local mines have committed to achieving certification to the IRMA standard in 2021. The goal for the coming years is to involve more stakeholders throughout the battery value chain, promoting certification based on reliable industry standards.


Cobalt, controlled supply

The Volkswagen Group purchases cobalt in Australia, China, the Democratic Republic of Congo, Russia and Turkey. In 2019, it activated a mapping and audit program for responsible cobalt sourcing in close cooperation with two major battery suppliers. Through this program, more than 200 suppliers were identified and then, using a risk assessment approach, 25 of these were prioritized with the aim of subjecting them to responsible sourcing audits aligned with OECD (Organization for Economic Cooperation and Development) standards.

The outcomes showed no critical human rights violations, and most of the suppliers performed well. In general, the Volkswagen Group constantly requires its partners to improve their policies, and the related systems, for risk prevention and management.

From mine to cell

A key priority for the Volkswagen Group in 2022 is to intensify collaboration with companies in the battery supply chain - from mining to cell production - to promote responsible sourcing and mining through credible certification schemes.

The Group's membership in the Initiative for Responsible Mining Assurance (IRMA), followed by its commitment to the gradual implementation of IRMA standards in its battery supply chains, has been very important in this regard.

Leading by example

Murat Aksel, Volkswagen Group’s Board Member for Purchasing, expressed confidence about the progress made since the introduction of the first Responsible Raw Materials Report and thanked the Group's suppliers for their cooperation: "On the one hand, we are setting a good example: to identify, assess and mitigate human rights risks and ensure responsible raw material sourcing, we have implemented dedicated management systems. On the other hand, we have high expectations towards our business partners and suppliers in terms of sustainability. Our business relationships have non-negotiable fundamentals, such as our Code of Conduct for Business Partners, Sustainability Rating, and a grievance mechanism. To overcome global challenges while protecting the environment and human rights, we need to collaborate with all stakeholders and our business partners along the supply chain".

SourceVolkswagen AG

VGI | Responsible OU: VP | Creation date: article date | Class 9.1

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