Volkswagen Management

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					Volkswagen Responsible Supply Chain Management
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The following pages contain the contributions to the metrics inspired by the HP supplier engagement
model. Due to the metric “Sustainability in Supplier Relations” which is used inside Volkswagen and is
organized alongside different, though not competing, principles challenges arise to restructure these
components.
In spite of the same objectives, the components of the Volkswagen way are therefore not easy to
incorporate into the stages within the HP metric (“Engagement Model”). It is even harder not to lose
the inner structure of the concept.




1 Introduction (Contract clauses, procurement                                            Guidelines,
  introduction packet, awareness raising)
1.1   Normative Requirements
Suppliers also have to ensure that their own sub-suppliers can guarantee suitable measures for
company and product-related environmental protection and for social standards. Volkswagen has set
up corresponding measures in its "Volkswagen Group requirements concerning sustainability in the
relationships to business partners". The content of these supplier requirements for sustainable
development is based on Volkswagen's internal guidelines, the environmental policy, the resulting
environmental objectives and environmental specifications, the occupational safety policy as well as
the declaration on social rights and industrial relationships. At the same time, it is oriented to external
international standards which Volkswagen has accepted as a multinational company.




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1.2       B2B Platform: www.vwgroupsupply.com
For an appropriate provision of information on the subject of sustainability for our suppliers and
business partners, Volkswagen mainly communicates via the B2B-supplier platform
www.vwgroupsupply.com. Here, suppliers can find all requirements that Volkswagen has set up for its
supplier relations. It is to be found in the section "Environment and Social Issues" and is available in
the public and personal (=extranet via login) area. The requirements include specifications and
guidelines of Volkswagen as a multinational company and detailed information on the common
dialogue that we aim with our suppliers in the area of sustainability. Additionally, further information,
for example the Volkswagen Group Sustainability Report, can be downloaded.

For a long time now, the Volkswagen Group has been running supplier training courses as one way of
meeting its social and environmental responsibilities. Communications and the exchange of
experiences between the Volkswagen Group and its suppliers on the subject of sustainability are
grouped together under the logo „Priority A – partners fort he environment and sustainability“. So far,
over 150 training events have taken place involving more than 1500 participants.

      •    Bidding and Sourcing Criteria
From our point of view, the supplier requirements for sustainability provide an important basis for the
collaboration with our suppliers towards a corporate sustainable development. The suppliers are
expected to acknowledge the environmental and social aspects named in the requirements inform of a
declaration. Suppliers should indicate their production plants the acknowledgement is valid to. In
addition to this notice, suppliers will provide his ISO 14001 environmental management certificate or
the European Eco-Management and Audit System (EMAS) as information.


1.3       Supplier Programme “Priority A”
Next to the specific case-related information and support, general trainings for business partners are
an important instrument for expanding our collaboration. Seminars of the training course "Priorität A -
Partner für Umwelt und Nachhaltigkeit" give our suppliers the opportunity to learn about environmental
and sustainable topics in workshops and seminars. Volkswagen has been offering these events, which
are organized by the Volkswagen Coaching GmbH, for its business partners and other interested
parties since 1997.As a part of the annual quality awards for suppliers, an environmental award is
placed to innovative and exemplary suppliers. We want to strengthen the cooperation with our
suppliers in order to reach a trustful relationship. Therefore, the purchasing department is supported
by global experts at the company. They are also able to provide on-site process related support and
help with environmental and social issues as an additional option for our business partners.



1.4       Information Matrix (Website, Brochures, Sust.Report, contact persons)
The internal and external reporting channels are manifold. Volkswagen uses both print and online
media to report about “Sustainability in the Supply Chain”. Besides the Brochure and Flyers, the
Volkswagen Group Sustainability Report is used to transport our concept. The Volkswagen Standards
have been printed and distributed to our suppliers as well. Suppliers are updated about new
developments through mail, the essential material is sent to all suppliers free of charge. All printing
material is available in English and German. Further languages are planned. Alternatively the internet
portals can be used to either download the brochures, get into contact with the VW sustainability group
or gather further information on the websites. For the suppliers, the B2B platform has a pivotal
function.



2 Assessing (Self Assessment, Risk Assessment, Improvement
  Plans)
2.1       Self-Assessment for all suppliers
With the aid of an explanation in the form of a questionnaire, suppliers can carry out a self-check to
determine their current status with regard to fulfilling sustainability requirements.
The self-assessments can also be downloaded at the VW B2B-Platform (www.vwgroupsupply.com).

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2.2     Improvement Plans if necessary
Suppliers, who recognise that they currently cannot achieve the Volkswagen AG sustainability
requirements, will be offered help in the form of direct coaching. A contact point for sustainability
(umweltdialog@vwgroupsupply.com) has been provided for suppliers and supports them in reaching
the requirements or solving any problem. In case of a demand from the supplier side, a VW Team of
experts, consisting of the departments environmental protection, human resources, health and safety,
purchasing as well as quality assurance, is available for assistance.




3 Validation (Audit, corrective action)
3.1     VW Team of experts and Corrective Action
In the event risk or problems have been detected, case-related spot checks are made. Suppliers, who
cannot meet the environmental and social requirements, are asked to initiate their own improvement
and development process with the proof of the individual steps, the schedule and the respective result
status. Information on the improvement process or current developments should be provided to the
VW Team of experts by the supplier himself as soon as possible.


3.2     Risk Assessment System

•     International issue-screening and reporting liability of business units
A second step is the installation of an internal and external early detection system for risks. This allows
the identification and avoidance of future environment-related and social problems at the suppliers
side. Volkswagen obtains both corresponding information by means of international issue-screening
and also through the reporting liability of business units which are in permanent contact with the
suppliers.

•     Plausibility Check by Quality Insurance
The monitoring concept for environmental and social standards covers both a quality assurance
plausibility check and an intensive case-related check at the supplier's site by the Ad-hoc-Expert-
Team. Individual questions on specific issues have been integrated in the regular quality process audit
for the plausibility check.




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4 Reporting (awards and recognition, reporting internal, reporting
  external)
4.1       Reporting Internal & External

•     Brochures (e.g. “Sustainability in Supplier Relations at Volkswagen”1)

•     Sustainability Reporting (e. g. Volkswagen Group Sustainability Report
      2007/20082 and corresponding Group Sustainability Website3)

•     B2B-Platform (www.vwgroupsupply.com)

•     Intranet
The internal and external reporting channels are manifold. Volkswagen uses both print and online
media to report about “Sustainability in the Supply Chain”. Besides the Brochure and Flyers, the
Sustainability Report is used to transport our concept. The Volkswagen Standards have been printed
and distributed to our suppliers as well. Suppliers are updated about new developments through mail,
the essential material is sent to all suppliers free of charge. All printing material is available in English
and German. Further languages are planned. Alternatively the Internet Portals can be used to either
download the brochures, get into contact with the VW sustainability group or gather further information
on the websites. For the suppliers, the B2B platform has a pivotal function.


4.2       Award for best-practice supplier
As a part of the annual quality awards for suppliers, an environmental award is placed to innovative
and exemplary suppliers. We want to strengthen the cooperation with our suppliers in order to reach a
trustful relationship. Therefore, the purchasing department is supported by global experts at the
company. They are also able to provide on-site process related support and help with environmental
and social issues as an additional option for our business partners.




5 Sustaining (Metrics, Stakeholder                                    Engagement,               Country
  Roundtables, Suppliers Days)
5.1       Regional conferences
Along with our Environmental Policy and Environmental Management System, the Regional
Conferences on Environmental Protection also form a central pillar of the Group’s environmental
structures. Following on from venues in Mexico and South Africa, in March 2005 a Regional
Conference on Environmental Protection was staged in China for the first time. The aim of these
meetings is to improve environmental protection at our production plants by raising awareness,
transferring expertise and agreeing targets. This provides us with a kind of environmental controlling
that reduces liability and image risks and helps cut costs.


5.2       Supplier Days
      •    Internationale Zuliefererbörse
      •    Workshops (z.B. InWent)
      •    PrioA-Seminare


1
  http://www.volkswagenag.com/vwag/vwcorp/info_center/en/publications/2006/10/sustainability_in.-
bin.acq/qual-BinaryStorageItem.Single.File/Sustainability%20in%20Supplier%20Relations.pdf
2
  http://www.volkswagenag.com/vwag/vwcorp/info_center/en/publications/2007/09/sustainability_report.-
bin.acq/qual-BinaryStorageItem.Single.File/sustainability_report_07-08_engl.pdf
3
  www.volkswagen-sustainability.com

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5.3   Stakeholder Engagement
The “Priority A” Workshops are designed not only to give information or guidance to the suppliers.
Instead of a top-down concept of these workshops, the objective is to interact on a level with suppliers.

A company cannot develop a sustainable corporate strategy in isolation. The requirements imposed
on globally active companies by politicians, the public and other stakeholders are simply too complex.
Consequently, the Volkswagen Group welcomes and indeed actively seeks dialogue with stakeholder
groups. In this way, we can gather information on the public perception of our behavior, projects and
strategies and identify any potential conflict areas at an early stage. Joint solutions can then be
developed in a process of constructive dialogue. These dialogues include but are not limited to
neighborhood dialogues, dialogues with scientists and with NGOs.

In external forums of sustainability, Volkswagen is involved in the World Business Council for
Sustainable Development (WBCSD, www.wbcsd.org) as a charter member. On the European level
Volkswagen is committed in the Initiative "Corporate Social Responsibility Europe" (CSR,
www.csreurope.org) and in the "European Alliance for Corporate Social Responsibility". Volkswagen is
an active member of the Forum for Sustainable Development of the German Economy (econsense,
www.econsense.de) and a member of the Mobility Forum of the UN Environment Program (UNEP).
This sets the central challenge of integrating environment-related as well as social aspects in supplier
relations. A comprehensive list of membership and engagement of Volkswagen can be found in the
            4
references.




4

http://www.volkswagenag.com/vwag/vwcorp/content/en/sustainability_and_responsibility/Gesellschaft/Stakehol
derdialog/Mitgliedschaften_und_Allianzen.html

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