The "Sustainability in Supplier <br>Relations" concept

The Volkswagen Group's purchasing policy is crucial to achieving corporate objectives. These objectives are not just short- and long-term economic goals, but also relate to environmental protection and minimum social standards in terms of sustainable development. This approach, combining all three dimensions of sustainability, has long been a cornerstone of our corporate strategy and is more important then ever in these times of increasing globalisation. Since the early 1990s, environmental protection has played a major part in supplier management for the Volkswagen Group. Working closely with suppliers, the Volkswagen Group has developed and implemented forward-looking, sustainable supplier policies based on our corporate principles, our quality management agreement "Formel Q-konkret" and a wide range of standards and tools.

Hand in hand with business partners and other stakeholders, the scope for incorporating sustainability into purchasing management was identified for the entire Volkswagen Group. On the basis of this dialogue, collaboration with the University of Oldenburg led to the development of the integrated policy "Sustainability in Supplier Relations", which makes full use of this scope and allows greater account to be taken of environmental and social requirements in the Volkswagen Group's relationships with suppliers. The Volkswagen Group also views this as a significant milestone for future supplier competitiveness, since in our experience an environmentally aware, socially engaged supplier is usually also a reliable partner with above-average economic performance.

"Sustainability in Supplier Relations" - the basic building blocks

1. Guidelines and standards
Supplier sustainability requirements form the essential basis for the Volkswagen Group's collaboration with its suppliers with the aim of common sustainable development. These supplier requirements are based on Volkswagen's guidelines: our Environmental Policy, which defines our environmental goals and environmental specifications, our occupational health and safety policy, our Declaration on Social Rights and Industrial Relationships and the Volkswagen Group's anticorruption system. At the same time, they are geared towards external global standards which are acknowledged by Volkswagen in its role as a multinational group.

In accordance with these guidelines, our suppliers are urged to ensure that their own suppliers in turn implement suitable measures for in-process and product-related environmental protection and social standards. Volkswagen has set out corresponding standards in writing in "Volkswagen Group requirements for sustainable development with regard to relationships with business partners".

2. Early warning
Developing both internal and external systems to provide early warning of risks helps with the timely recognition and prevention of environmental and social irregularities, in particular of supplier weak points. The Volkswagen Group obtains such information not only from international issue screening systems and monitoring, but also as a result of the duty of notification that applies to the Group's own specialist functions. An ad-hoc team of experts investigates any problems which do arise, evaluates the resultant risks and identifies long-term workable improvements.

3. Purchasing process
The B2B supplier platform http://www.vwgroupsupply.com/ makes supplier sustainability requirements an integral part of the purchasing process. When tendering to supply a particular site, a supplier has to make a binding declaration regarding the environmental and social standards mentioned in the requirements and provide for our information an environmental management certificate to ISO 14001 or the European Eco-Management and Audit Scheme (EMAS).

By means of an additional self-check, which each supplier can download from the B2B supplier platform, suppliers can check and improve their current status in terms of compliance with the Volkswagen Group's sustainability requirements. Suppliers who realise that they cannot currently meet the Volkswagen Group's sustainability requirements are offered direct assistance in the form of specialist, process-related support. The B2B platform is also the primary forum for dialogue with suppliers on sustainability issues. A sustainability contact point offers suppliers the opportunity to exchange ideas and provides contacts who can give targeted support to suppliers in implementing the requirements or in solving any problems that may arise.

Another facet of integration into the purchasing process is a plausibility check, which covers issues relating to environmental and social aspects of the quality process audit and is carried out by quality assurance auditors.

4. Monitoring and supplier development
If collaboration is to be successful and sustainable, all the Volkswagen Group's business associates must support our environmental and sustainability standards. Only together can we meet our environmental responsibilities and safeguard the future of all our partners in the value chain. This entails the ongoing integration and continuing development of our business associates in relation to these issues. It is now more than ten years since we began a dialogue with our business associates on environmental protection, a dialogue that was extended to include sustainability issues in 2003.

The B2B platform is Volkswagen's central tool for supplier development. This is where all our suppliers will find the necessary information enabling them to confront global social problems in partnership with Volkswagen. Where necessary, suppliers are urged, in cooperation with our experts, to initiate their own improvement and development process and are obliged to provide evidence of the steps taken, the schedule planned and the results achieved. If it is apparent from the early warning system or other sources of information that environmental or social problems might have arisen at suppliers, our ad-hoc team of experts provides the necessary know-how, helping the companies in question to address and resolve their problems.

 
A pilot supplier development project was implemented in China back in 2008 and further training sessions in India, Mexico, Brazil and Argentina followed in 2009 and 2010. To provide suppliers around the world with an opportunity to engage in training on the "Sustainability in Supplier Relations" concept, implementation of an e-learning tool on the Group Business Platform is planned in 2011.

The Volkswagen Group has set itself the goal of consistently implementing and continuously reviewing the four building blocks described above, as well as pursuing the continuous improvement of our supplier relations in a process of dialogue, to provide a basis for the worldwide integration of "Sustainability in Supplier Relations".

B2B Platform 

Online portal “Responsible Supply Chain Management” 

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