The Responsible Raw Materials Report provides an annual report on progress in transparency and risk mitigation in raw materials supply chains, with a focus on human rights.
Among the priorities of the automotive industry is the responsible sourcing of raw materials. The Volkswagen Group is 100% committed to leading by example and continually improving its operations, and regularly reports on its progress in this regard. The Responsible Raw Materials Report for 2022 focuses on adjustments to existing management systems and processes in line with the Supply Chain Due Diligence Act, effective January 1, 2023, and the introduction of the Responsible Supply Chain System (ReSC), in which the new Human Rights Focus System (HRFS) plays an important role.
Indeed, the latter aims to identify situations where risks are highest, both to human rights and the environment, and to put in place quick and appropriate actions. And in this direction goes the appointment of Kerstin Waltenberg as Human Rights Officer - in her role, she is primarily responsible for checking compliance with human rights due diligence.
"The Responsible Raw Materials Report highlights not only our progress in terms of transparency and risk mitigation in the raw materials supply chains, but also outlines challenges. With this approach, we go well beyond our legal obligations," says Dirk Große-Loheide, Member of the Brand Board of Management of Volkswagen responsible for Procurement and Member of the Extended Executive Committee.
"We take our responsibility for sustainable procurement of raw materials very seriously and are continuously working with indirect suppliers in upstream supply chains, because it is where the challenge is greatest. This is where our Raw Materials Management System comes in, including specific measures to identify and mitigate risks. With the report we document our efforts and show that sustainable procurement is possible, with the hope of inspiring others".
PowerCo and Salzgitter
Another focus in 2022 was the continuation of close cooperation with the companies that supply batteries to the Volkswagen Group and their respective suppliers, with the goal of progressively increasing transparency in what can be very complex supply chains - from the mine to the cell.
Among the tools used are targeted audits, to verify the proper and responsible sourcing of raw materials. With the foundation of the new battery company PowerCo SE and the construction of the first gigafactory in Salzgitter, the exchange with stakeholders has intensified, in order to address human rights and environmental risks, but also to push for the certification of certain mines.
Mining and hides
In March 2022, the Volkswagen Group joined the Initiative for Responsible Mining Assurance (IRMA), an alliance that brings together nongovernmental organizations, unions, affected local communities, investors, mine operators and raw material customers to achieve better conditions in industrial mining. The Group has committed to gradually implement IRMA standards in its battery supply chains. Another important step in expanding the Volkswagen Group's engagement in sustainable supply chains was joining the Leather Working Group (LWG), an initiative for sustainable leather sourcing.
Since 2021, the Volkswagen Group has been publicly and voluntarily disclosing the measures it has taken to mitigate risks related to human rights and the environment in particularly high-risk supply chains.
The report follows industry best practices, is oriented to the five steps of the Due Diligence Guidance for Responsible Business Conduct from the OECD - the Organization for Economic Cooperation and Development - and implements the requirements of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.
Raw Materials and Batteries
In the Responsible Raw Materials Report, the Volkswagen Group details its methodology and activities with regards to the Raw Materials Management System for responsible sourcing. The report covers 16 high-risk raw materials, including those needed for batteries such as lithium and cobalt.
The Group has a total of more than 59,000 suppliers, from over 90 countries, who produce thousands of components using a wide range of raw materials. Since 2019, all relevant direct business partners of the Volkswagen Group are mandatorily evaluated according to a sustainability rating, in which environmental and social standards are assessed on an equal basis with other parameters such as costs or quality. Since 2020, the Volkswagen Group has demanded suppliers to make full disclosure of the entire supply chain as a requirement for all new contracts for raw materials needed for batteries.
You can read the full version of the Responsible Raw Materials Report 2022 here.
Source: Volkswagen Newsroom
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