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Environment
Human Rights
Summary
Volkswagen was one of the strongest performers of this year’s Leaderboard, increasing its overall score by 8 percentage points on the back of noteworthy improvements across both the climate and environment and human rights sections. This has enabled VW to rise up in the rankings from 6th to 5th position.
In the climate and environment section, Volkswagen made progress in the General and Batteries subsections due to disclosing additional requirements and systems to improve supplier performance on emissions reductions and environmental management, as well as specific actions the company has taken to reduce the environmental impacts of lithium, cobalt and nickel sourcing.
Volkswagen also performed strongly on human rights this year, improving its score in three of the four subsections. Particularly noteworthy is the company’s score improvement of 21 percentage points on general human rights due diligence, primarily due to greater levels of disclosure on risk identification processes, salient human rights risks, and on supply chain monitoring and grievances. . This has made the company the top improver on human rights overall, jointly with Kia and Geely, and has allowed it to advance from 6th to 5th place in the human rights ranking.
However, Volkswagen’s significant improvements in these areas this year make its lack of progress on Indigenous Peoples’ rights all the more noticeable.
Key Findings
- Has set 2030 and 2050 targets to reduce its upstream scope 3 emissions, and now discloses additional supply chain requirements and processes to accelerate progress towards these targets.
- One of the better scoring automakers when it comes to disclosing how the company addresses and mitigates water and deforestation risks in its supply chain.
- Did not improve its score at all across the steel and aluminum subsections, maintaining a poor score of 9% across these two issue areas.
- Made several improvements on battery supply chain sustainability, including making R&D investments to develop more sustainable cell chemistries without cobalt or nickel, contractually requiring the use of certified power from renewable sources for new suppliers of high-voltage batteries, and disclosing several initiatives to advance more sustainable nickel, lithium and cobalt sourcing.
- Discloses more information on transition and conflict mineral risks, though its progress in this area overall has been more limited.
- Made no progress on Indigenous Peoples’ rights for the second year running: its score is now more than four times smaller than Tesla’s, and more than three times smaller than that of Mercedes and Ford.
- Has strong policies on workers’ rights and now discloses more detailed information on workers’ rights risks in its supply chain. However, does not commit to a living wage, or require suppliers to pay a living wage, and does not disclose how workers’ participate in its due diligence processes.
Score Breakdown
Fossil-Free & Environmentally Sustainable Supply Chains
General
Steel
Aluminum
Batteries
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Human Rights & Responsible Resourcing
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Minerals
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Workers' Rights
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Supply Chain News & Progress
Latest on Volkswagen
Supply chain transformation is a risk management imperative and opportunity for a competitive edge. Leading brands are already securing a first-mover advantage and leveraging their power to transform legacy supply chains into a force for good. The revolution is underway.
Volkswagen AG and Vulcan Green Steel enter into partnership
Volkswagen AG and Vulcan Green Steel have signed a Memorandum of Understanding (MoU) for a partnership for low-carbon steel – a key element of Volkswagen’s green steel strategy.
Illegal rare earth mining in Myanmar linked to supply chain of major automakers
A new report by Global Witness has documented the harmful impacts of illegal rare earth mining in Myanmar, linked to the supply chains of major automakers – including Volkswagen, Toyota, Tesla, Nissan, Ford and Hyundai.
Ford, Tesla and VW nickel partnerships in Indonesia linked to climate rights, environmental harms
A massive, multi-billion-dollar nickel industrial complex in North Maluku and nearby nickel mining is violating the rights of local communities, including Indigenous Peoples, causing significant deforestation, air and water pollution, and emitting massive amounts of greenhouse gases from captive coal plants, Climate Rights International said in a report.
For the 124-page report, “Nickel Unearthed: The Human and Climate Costs of Indonesia’s Nickel Industry,” Climate Rights International interviewed 45 people living near smelting operations at the Indonesia Weda Bay Industrial Park (IWIP) and nearby nickel mines on the island of Halmahera. Local residents explained how companies, in coordination with Indonesian police and military personnel, have engaged in land grabbing, coercion, and intimidation of Indigenous Peoples and other communities, who are experiencing serious and potentially existential threats to their traditional ways of life.
Electric vehicle companies such as Tesla, Ford, and Volkswagen that have contracts to source nickel from Indonesia, including from companies with operations at IWIP, should immediately use their leverage to push suppliers to address harms to local communities and the environment, and if necessary, suspend sourcing nickel from companies responsible for such abuses.
Progress on battery chemistries holds potential to reduce demand for high-intensity minerals
During the first few months of 2023, several automakers have made announcements of investments and / or progress made on new battery chemistries that promise to reduce their demand of high-intensity minerals such as cobalt, nickel and lithium. In March, the JAC Group’s joint venture with Volkswagen in China made history by introducing the world’s first electric vehicle (EV) powered by a sodium-ion battery – a battery technology that, according to the IEA, “has the potential to completely avoid the use of critical metals.” BYD has also said that it plans to use sodium-ion batteries in its vehicles later in the year. In May, Stellantis announced an investment in lithium-sulphur battery developer Lyten, working on a novel three-dimensional graphene material platform that is free from nickel, cobalt, and manganese.
VW invests in resource-efficient battery design and signs agreements for “low CO2” steel and “environmentally-friendly”lithium
VW has taken a stake in 24M Technologies whose battery technology claims to require 40% less production area, is more efficient for recycling, and reduces the CO2 footprint of battery production. VW has also signed agreements for “low-CO2” steel from the end of 2025 with Salzgitter and for lithium with Vulcan Energy Resources. Their process claims to use less land, groundwater and energy.
Allegations of forced labor and human rights violations, and environmental damage in VW’s supply chains
The Business and Human Rights Resource Center has documented multiple allegations of human rights abuses against VW, including forced labor, union busting and health impacts linked to its emissions scandal. Nikkei Asia also reported on environmentally damaging nickel mining in Indonesia that identified VW as an end consumer.
Our Vision
01 — Equitably
Respecting and advancing the rights of Indigenous Peoples, workers, and local communities throughout the supply chain.
02 — Sustainably
Preserving and restoring environmental health and biodiversity across supply chains, while reducing primary resource demand through efficient resource use and increased recycled content.
03 — Fossil-free
100% electric and made with a fossil fuel-free supply chain.