Integrity and compliance management system (ICMS)

Integrity and compliance are major priorities in the Volkswagen Group. We firmly believe that, for long-term commercial success, it is important that each and every individual complies with laws, regulations and commitments, which is why integrity and compliance are elements of our Group sustainability strategy regenerate+.

Our objective is to be a role model and deepen the trust of our employees, customers, investors and partners in our Company. Our regulations, processes and corporate culture provide guidance for all employees on acting with integrity and complying with the rules at all times. As performance indicators, integrity and compliance must have the same strategic and operational priority in our Company as sales revenue, profit, product quality and employer attractiveness.

The Group Integrity & Compliance organization provides the Group-wide framework for a comprehensive integrity and compliance management system (ICMS) with corresponding programs, guidelines, processes and practical advice on integrity and compliance. The overarching goal here is to ensure uniform standards in the Group and brand companies, supporting the companies worldwide in conducting their respective business activities in an independently responsible and compliant manner while also complying with the relevant laws and internal regulations.

Focus areas

Focus areas relationing to the ICMS include, among others, tackling corruption and preventing embezzlement, fraud, bribery and money laundering.

The starting point for this is the Internal Compliance Risk Assessment (ICRA). It determines the compliance risks in the Group. Compliance measures are defined for each controlled company on the basis of the risk profiles derived from the ICRA, and are then implemented by those companies. These compliance measures also make reference to Group-wide minimum standards for the Code of Conduct, the whistleblower system, integrity and compliance training and communication.

HR (Human Resources) Compliance Policies and Procedures

Integrity and compliance are incorporated into the standard HR processes such as recruitment, training and staff development. In terms of remuneration, misconduct can adversely affect bonus payments. Integrity and compliance are part of annual employee appraisals and a component of the training measures for employees across all levels of the Company.

Awareness Raising and Communication

The Code of Conduct lays out the shared underlying values for integrity and compliance in the Volkswagen Group for all brands and companies. It serves as the main tool for reinforcing awareness of responsible conduct and decision-making and can be used as an aid and as a way of finding the right contact persons. The Code of Conduct is binding for all employees and the obligation to comply with the Code of Conduct as amended is written into every employment contract. Employees, the Board of Management and all governing bodies are obligated to undertake regular mandatory training on the contents of the Code of Conduct. The offerings of the Group Integrity & Compliance organization are supplemented by events within the departments. The communication team regularly addresses practical compliance tasks and case studies. Raising awareness of integrity and compliance topics is supported by information and communication activities such as awareness campaigns, film and dialogue formats, newsletters and interactive games.

The Integrity & Compliance information point has established itself as a central advisory office. The team there answers compliance-related questions, offering advice on internal company guidelines and policies.

Training Courses and Standards

With the ICMS, the Group Integrity & Compliance organization sets uniform standards for integrity and compliance training across the Group. This is to enable brands and companies to provide their employees with a consistent quality of risk-based and target group-specific training that includes predetermined core content. The training courses address the following key topics: the Code of Conduct, anti-corruption, prevention of money laundering and the whistleblower system.

Anti-Corruption

The Volkswagen Group has a zero-tolerance policy on active and passive corruption. This is anchored in both our internal Code of Conduct and our Code of Conduct for Business Partners. Tackling corruption includes developing and implementing mandatory training for employees in companies with a high compliance-risk exposure.

Prevention of money laundering

The Volkswagen Group is committed to strict compliance with statutory requirements for the prevention of money laundering and terrorism financing. The Geldwäschegesetz (GwG – German Money Laundering Act) and the applicable regulations in the individual jurisdictions in which the Company operates form the basis for this. For effective prevention, uniform processes and control mechanisms have been established to identify and avert suspicious transactions at an early stage. These include risk-based checks of business partners and mandatory training for employees of those companies with high exposure to risk according to the ICRA. Compliance with money laundering requirements is regularly monitored and updated in line with new regulatory developments as necessary.

Whistleblower system

The whistleblower system is the central point of contact for reporting cases of rule-breaking involving employees of the Volkswagen Group or suppliers. Employees, business partners and other third parties can report misconduct at any time and in many languages. Various reporting channels are available for this purpose, which can be used completely anonymously, if preferred. An investigation is initiated after a thorough review and in the event of concrete indications of rule-breaking. Appropriate sanctions are applied where misconduct is proven.

The overarching aim is to use binding principles and a clearly governed process to avert harm to the Company and its employees.

REPORTING CHANNELS IN THE WHISTLEBLOWER SYSTEM

M&A and NCS Compliance

In the event of planned mergers and acquisitions (M&A transactions), we audit the relevant companies for risks pertaining to commercial law such as corruption, embezzlement and or fraud, and for human rights risks. This also applies to joint ventures and to industrialization and cooperation projects with external partners. The analyses provide recommendations for the mitigation of the risks identified. The Group Integrity & Compliance organization also supports compliance management as required in non-controlled shareholdings (NCS), i.e. companies that are not controlled by a Volkswagen Group company as the majority shareholder.

Business Partner Due Diligence

In the Business Partner Due Diligence (BPDD) process, our business partners are reviewed with regard to their integrity, possible corruption risks and compliance with ethical standards. The BPDD reviews must be carried out in accordance with a policy for certain business partners using a risk-based approach. The aim is to identify risks for breaches of the law and disregard of ethical standards at an early stage, avoid risk-exposed business partners and, where possible, define actions to minimize risk and implement these jointly with business partners. If this is not possible, the business relationship is not entered into or is terminated as permitted by law.

Product Compliance

The product compliance management system helps our products comply with the legal and regulatory requirements of the exporting and importing country, internal and external standards, contractually agreed customer requirements and externally communicated voluntary commitments over their life cycle.

Environmental Compliance

Statutory environmental regulations and voluntary commitments are binding at all locations and in all business fields. The Group’s environmental and energy policy and the environmental compliance management system stipulate the relevant requirements and responsibilities. They apply to all strategy, planning and decision-making processes in the Group brands and companies. This includes a system of key indicators to determine progress in meeting environmental targets in the fields of renewable energy, CO₂ emissions and resource efficiency. Additional information on the environmental compliance management system is available in the “Introduction to Environmental Management” chapter.