In the world of automobile and transportation equipment manufacturing, corporations don’t get much bigger than Volkswagen Group (VW). With 12 brands and 106 manufacturing facilities in 27 countries around the world employing more than 570,000 people (some 40,000 engineers alone), VW produced a record-high 9.73 million vehicles in 2013 (a 12.8 percent share of the global passenger-car market), €197 billion (~$268.5 billion) in revenue and an after-tax profit of €9.3 billion (~$12.68 billion). In Western Europe, nearly one-in-four new cars (24.8 percent) is a VW brand.
It’s fair to say that no other automobile and transportation manufacturer has gone as far as VW in adopting and instilling social and environmental, as well as economic, sustainability at the core of its organizational values and priorities. Once again ranking No. 1 on the Dow Jones Sustainability Index in 2013, VW was the first automobile manufacturer to commit to reducing the carbon dioxide (CO2) emissions intensity of its European new vehicle fleet to 95 grams per kilometer (5.36 oz/mi). Last year, the group was able to “drive” its average vehicle emissions intensity below 130 g/km for the first time.
More broadly, VW on May 16 released its third annual group sustainability report. Organized along three principal facets of sustainability–economy, people and environment–it shows that when it comes to enhancing the sustainability of its business, VW is looking well beyond improving the quality, performance and fuel efficiency of its conventional, fossil-fuel vehicle fleet. The company is a member of the United Nations Global Compact and Extractive Industries Transparency Initiative; its 2013 sustainability report shows that the group is well on its way toward achieving the key 25 percent-by-2018 improvements set out in its “Think Blue” strategic sustainability plan.
Sustainability as a core organizational value
VW management is keenly aware of how social, natural resource and ecosystems pressures, threats and vulnerabilities can and do affect its business, and that it is committed to improving the situation on all three fronts.
VW Group’s triple bottom line principles are encapsulated and elaborated – quantitatively and qualitatively – in “its 2013 sustainability report, and in “Think Blue,” a long-term sustainability strategy in which enhancing the social and environmental sustainability of its business ranks equally with improving the quality and efficiency of its business operations and financial performance.
The result of some broad-based, comprehensive and painstaking organizational soul-searching and analysis, VW’s “Materiality Matrix” is used to identify and provide management perspective and insights spanning internal and external stakeholder groups’ ideas and views regarding sustainability. Much more than a static snapshot, the Materiality Matrix represents the summation of a continual process of sustainability assessment, planning and actions, the results of which are used to guide, help craft and prioritize the group’s strategic sustainability goals and plans.
VW and ecological sustainability
Environmentally, the auto maker’s 2013 sustainability report details the progress VW is making and the challenges it is confronting in terms of water and materials conservation, waste reduction, and carbon and greenhouse gas emissions reductions. As the report shows, the multinational auto manufacturer is going beyond minimizing the negative ecological impacts of its own activities by contributing to the restoration and conservation of wild ecosystems and services that ultimately underlie and support the foundations, not only of its own business, but of entire regions.
Progress to date is encouraging. As of year-end 2013, the group as a whole was over halfway towards reaching most of the 25 percent-by-2018 “Think Blue” environmental sustainability reduction targets.
- Energy consumption: -12.5 percent
- CO2 emissions: -19.5 percent
- Water consumption: -4.6 percent
- Solvent emissions: -12.3 percent
- Waste for disposal: -13.8 percent
“Green” manufacturing: VW’s “Think Blue. Factory.”
Built according to the environmental and production standards set out in the “Think Blue. Factory.” facet of its sustainability plan, VW’s manufacturing plants, such as those in Puebla, Mexico, Chattanooga, Tennessee, and its latest, in Foshan, China, are models of environmentally and socially-conscious design, construction and organizational development and management.
In all, VW opened nine new manufacturing facilities around the world in 2013. Some 3.400 resource-saving measures are being implemented in each, enabling all of them to earn the highest levels of various “green” design and building certifications.
VW’s sustainability initiatives extend far beyond factory doors and facilities’ grounds, however. In Puebla, Mexico, VW recently announced that as part of its “Think Blue. Nature.” program it is participating in the launch of a pioneering biodiversity and youth education project that will establish a protected biological corridor that will assure wildlife of all kinds has the habitat and migratory paths required for their survival.
By conserving and protecting wild ecosystems, the “Corredor Ecologico Sierra Madre Oriental” (Eastern Sierra Madre Ecological Corridor) will also reduce environmental pressures and risks from the degradation and pollution of air, land and water resources that threaten the sustainability of VW’s manufacturing facility–the largest in the Americas–as well as the livelihoods and quality of life of communities throughout the region.
The progress VW is making when it comes to reducing energy consumption and powering its business from clean, renewable energy sources is also helping alleviate environmental pressures, risks and threats. At its manufacturing plant in Chattanooga, a 9.6-megawatt (MW) DC/7.6-MW AC solar photovoltaic (PV) system is designed to supply 12.5 percent of the plant’s electricity needs.
As a group, VW expects to invest some €600 million (~US$780 million) in renewable energy generation by 2018. As Eduardo Barrios, head of legal affairs and board member of Volkswagen do Brasil responsible for sustainability, explains in the 2013 sustainability report, “Our long-term aim is to meet up to 80 percent of our energy requirements from our own sources.”
Sustainability at VW: The social factor
VW’s sustainability plan also incorporates high social standards. For example, VW has instituted the German dual model of vocational training in all its manufacturing plants. These intensive, three-year “work/study” programs entail new hires earning their university degrees while undergoing rigorous training in the use of the latest auto manufacturing methods and technologies. Thereby, they earn VW and German national technical qualifications. On the recruiting side, VW is making extra efforts to attract women and under-privileged minorities to the program, initiatives that have been yielding encouraging results.
As a corporate and world “citizen,” VW’s commitment to sustainability is also made apparent in its membership in the U.N. Global Compact and Extractive Industries Transparency Initiative. As VW explains in its 2013 sustainability report, its role as a participant in the U.N. Global Compact,
“has given a worldwide undertaking to uphold human rights, foster good working conditions, protect the environment and combat corruption…In the regions in which we operate, we aim to be an attractive employer, a respectful business partner and a good corporate citizen.”
VW’s vision of “Sustainable Mobility”
Directly or indirectly, VW’s investments in environmental and social sustainability ultimately flow through and contribute to its economic profitability and sustainability, the third key aspect of VW Group’s “Think Blue” sustainability plan. Much of VW’s economic sustainability efforts focus on continually striving to improve the quality, efficiency, safety and value of its vehicles from “cradle-to-cradle.” Those and other such efforts are coalescing around an VW’s emerging vision of “sustainable mobility.”
As noted in its 2013 sustainability report, VW invested over €10 billion (~$13.6 billion) in research and development (R&D) last year alone. Reducing resource consumption and waste are integral to all such endeavors. VW Group R&D teams, for example, are working to design and build new types of vehicles and transportation equipment using less in the way of water, energy and materials, as well as minimizing waste and its use of potentially damaging and harmful industrial solvents.
Part-and-parcel of its sustainable mobility initiatives, the multinational auto manufacturer is working to develop new solutions and vehicles for urban environments, where growing populations, strained infrastructure, ecological degradation and climate change are all putting ever greater pressures on the ability of government, private and social systems to cope with them. The results of such initiatives to date include VW’s expanding line-up of “electric mobility” vehicles, which now includes the e-up!, e-Golf, Audi A3 e-tron, and Porsche Panamera S E-Hybrid.
VW management has laid out a “carbon-neutral” road map that guides its R&D efforts, the ultimate goal being “carbon-neutral sustainable mobility.” The road map lays out carbon-neutral electricity and carbon-neutral liquid and gaseous fuel pathways that include R&D for fuel-cell and battery-power vehicles, plug-in hybrids and hybrid-drive vehicles, in addition to internal combustion engines.
Another core facet of VW’s sustainability strategy is communications. VW has been keen to reach out publicly and share news and developments regarding the evolution of, and progress being made regarding, its Think Blue sustainability strategy. 3P, in turn, has been keen to follow and report on them. Click here to find out more.
Images courtesy of Volkswagen Group