Protection of Whistleblowers

Material impacts and their interaction with strategy and business model

Interaction with strategy and business model

The protection of whistleblowers is a core element of integrity and compliance and is therefore embedded in regenerate+.

The Volkswagen Group enhances its positive impact on its business model and value chain through various actions in the area of whistleblower protection. These are intended to help to maintain and reinforce the positive impact, particularly through training on the whistleblower system and the consequences of misconduct.

Policies: Protection of whistleblowers

Compliance with legal requirements, internal rules, the Code of Conduct and the Code of Conduct for Business Partners has top priority in the Volkswagen Group. The Volkswagen Group’s success is based on integrity and compliance. To achieve this aim, it is important to identify potential misconduct by the Group’s own workforce or its suppliers’ and other business partners’ staff and take steps to prevent it. The Volkswagen Group’s investigation offices therefore operate an independent, impartial and confidential whistleblower system, among other actions, in order to investigate any potential employee misconduct and sanction it if necessary. The whistleblower system is addressed in various Volkswagen Group policies, particularly in the Code of Conduct and Code of Conduct for Business Partners, which are freely accessible on the Volkswagen Group website. The Volkswagen Group also has a Group policy and rules of procedure for the grievance mechanism, providing a framework to protect individuals, including workers’ representatives, against retaliation.

Whistleblower system

The Volkswagen Group’s whistleblower system is a key component of business ethics and is based on the principles of protection, fairness and trust. The whistleblower system is the central point of contact for reporting serious cases of rule-breaking by Group employees or by suppliers and other business partners. All the Group’s employees, business partners and their workforce, customers and other third parties can report information on potential breaches of the rules at any time. They may also do this anonymously if they so choose.

The reporting channels are available around the clock. Reports can be submitted in any language. Reporting channels include an online reporting channel, which accepts reports in more than 60 languages, an app, an international 24-hour telephone hotline and an external attorney who acts as an ombudsperson. Matters that can be reported include in particular white-collar crimes, acts of corruption, tax offenses, environmental offenses, infringements of antitrust and competition legislation, money laundering and terrorism financing, breaches of product safety and licensing regulations, and serious breaches of data privacy. The whistleblower system and its channels are also a means of providing information relevant to the Lieferkettensorgfaltspflichtengesetz (LkSG – German Supply Chain Due Diligence Act) on the Group’s own operations or those of the supply chain.

The reporting channels are communicated to employees in all mandatory compliance training courses and through other communication formats. Employees can also contact the internal workers’ representatives with their concerns. Further information is provided under “Processes: Engaging with employees and workers’ representatives about impacts” in the “Employees and Non-Employees” chapter.

In addition to these complaint channels operated by the Volkswagen Group itself, external grievance mechanisms are also available, such as the Bundesamt für Wirtschaft und Ausfuhrkontrolle (BAFA – German Federal Office for Economic Affairs and Export Control). Reports received by the Volkswagen Group are transferred to the whistleblower system and processed there.

The whistleblower system is for Volkswagen Group and was launched by the Group Board of Management. The whistleblower system is intended to avert damage to the company, the entire workforce and other stakeholders through binding principles and regulated procedures. Another objective of the whistleblower system is to protect the whistleblower, and everyone who helps to uncover, investigate and stop misconduct and rule-breaking.

Departments that act as key contact points (KCPs) play a central role in the whistleblowing process for reporting, investigating and sanctioning employee misconduct. These departments are frequently the first point of contact for reports of possible breaches of laws, regulations, or the Code of Conduct. The contacts in these departments include, for example, local compliance officers, internal auditors, representatives of the Human Resources department, and decision-making and escalation committees for product safety and technical conformity regulations.

The Central Investigation Office in Wolfsburg is responsible for coordinating the Group-wide whistleblower system. It processes whistleblower information concerning Volkswagen AG and any of its subsidiaries that do not have their own investigation office and also processes reports with relevance for the Volkswagen Group. AUDI AG, Dr. Ing. h.c. F. Porsche AG (Porsche AG) and TRATON SE each have their own investigation offices for themselves and their subsidiaries. There is also a regional investigation office at Volkswagen (China) Investment Company Ltd. It processes whistleblower information concerning Volkswagen AG’s and AUDI AG’s Chinese subsidiaries.

In individual cases, the relevant investigation office also commissions investigations by independent third parties, such as law firms or auditors. This may occur especially if cases are exceptionally complex – particularly if they pose the threat of imminent legal consequences for the Volkswagen Group (e.g. in the event of particularly serious corruption or possible breaches of antitrust and competition law). An IT system, internal controls and multiple-party verification assist the investigation offices in handling reports.

Consequences of misconduct

Proven misconduct may, depending on its severity, be sanctioned by a warning, a reprimand, or dismissal. If necessary, following serious breaches of rules that are sanctioned, structured root cause analyses are conducted in order to prevent such and similar incidents in the future.

The Volkswagen Group assures all whistleblowers and people who support the whistleblowers or the investigations of their protection from any reprisals they could experience due to their reports. This protection is set out in the Group policy “Volkswagen Group Whistleblower System” and described in the Code of Conduct. Breaches of these anti-retaliation regulations are treated as suspected serious violations and sanctioned accordingly. Through the provisions of this Group policy, the Volkswagen Group also takes account of international laws on whistleblower protection, such as the EU Whistleblower Protection Directive, the corresponding national transposition laws, and the Lieferkettensorgfaltspflichtengesetz (LkSG).

The Group Integrity & Compliance organization is responsible for the topic of whistleblower protection. It belongs to the Integrity and Legal Affairs function of the Board of Management.

Grievance mechanism for human rights and environmental risks and violations

The procedure for handling complaints in the whistleblower system concerning human rights and environmental risks and violations is based on the effectiveness criteria in the UN Guiding Principles on Business and Human Rights and is clearly described in rules of procedure.

Information is provided in a way suitable for the context and target group. The rules of procedure provide target groups with access to the information needed to participate in the complaint procedure, including information on the procedure’s time frame.

When a complaint is received through the reporting channels managed by the whistleblower system, the first step is to document it. If the complaint concerns a situation in the Group’s own business area without any employee misconduct, the whistleblower system will immediately forward the complaint to the relevant body within the Group that, based on the complaint’s subject matter, is responsible for handling the complaint. Complaints concerning potential employee misconduct in the Group’s own business area are dealt with under the whistleblower system. Every case in which there is the possibility to contact the complainant is discussed with the complainant. The whistleblower is informed of the processing and outcome of the case, aiming for the greatest possible transparency while complying with the need-to-know principle. After completion of the investigation, the responsible department must document the case. The Group has a catalog of actions for taking action against breaches of the rules, which was drawn up taking local legislation into account and is implemented across the Group.

The Volkswagen Group provides web-based training on human rights to ensure that employees are familiar with the structures and procedures and trust them as a way to raise their concerns or needs and have them addressed. This training explains all the available contact options in detail.

The Volkswagen Group has a Group policy and rules of procedure for the grievance mechanism, providing a framework to protect individuals, including workers’ representatives, against retaliation.

Decision-makers in the company are regularly informed on serious breaches of duty related to human rights within the company.

The procedure is checked for its effectiveness. Questions about or suggestions for the improvement of the whistleblower system can be addressed to the investigation offices. Anyone who has been interviewed in an investigation also has the option of giving feedback to the ombudsperson, who acts as an independent body.

Actions: Protection of whistleblowers

The whistleblower system’s primary objective is to enable potential serious misconduct to be reported and investigated in a fair, transparent and efficient way. At the same time, the protection of the whistleblowers, employees, people supporting the whistleblowers or the investigation, and those affected must be ensured.

The Group policy on the Volkswagen Group’s whistleblower system applies to all controlled companies and employees and must be implemented in all controlled Group companies. It conclusively and comprehensively regulates the activities both of the investigation offices and of the investigating units in the investigation of potential breaches of the rules that are received through the whistleblower system’s channels. It contains standards and general codes of practice for the design of the Group-wide whistleblower system and internal investigations in the Volkswagen Group, and sets out the responsibilities to be established to this end. It also specifies the parties involved in the processes of the whistleblower system, including the Legal, Internal Audit, Security, Human Resources, and Compliance departments.

Communication

Within the Volkswagen Group, regular communication takes place on the topics of integrity and compliance in order to increase employee awareness of appropriate conduct and the Group’s rules and values. This particularly entails communication actions concerning the whistleblower system, such as internal and external communication of the reporting channels, and how the whistleblower system works. In addition, the reporting channels and further information are publicly accessible on the Volkswagen Group website at all times.

One separate external format is ComplianceXChange, in which experts share information with other DAX or European companies – following a prior legal appraisal – on various focal points, such as whistleblower systems.

The Volkswagen Group has defined minimum standards based on various legal and professional requirements and best practices that apply depending on the location of the company – inside or outside the EU. Each company is required to check whether there are country-specific or other local legal requirements and whether the corresponding information needs to be adapted accordingly.

The Group Board of Management and the Audit Committee of the Supervisory Board receive an updated statistical report on the Volkswagen Group’s whistleblower system once a quarter at their meetings.

Training on the whistleblower system

To ensure that all employees are informed about the whistleblower system, the company provides training on its use. The Code of Conduct training, which is mandatory for all employees, includes an explanation of the whistleblower system, its reporting channels and its procedural principles. This training also clarifies the legal consequences of retaliation against whistleblowers. Employees who might frequently come into contact with breaches of rules due to their work receive in-depth training. This includes, for example, employees in the Audit, Security, Human Resources, and Legal Affairs departments or those in Group Integrity & Compliance. Participation in mandatory training courses is tracked.

Targets: Protection of whistleblowers

The Volkswagen Group generally develops targets where there is a connection to its strategies. No measurable, outcome-oriented targets within the meaning of the ESRS are currently defined in relation to the protection of whistleblowers. The effectiveness of the management policies and actions related to the positive impact identified in the materiality assessment, which was performed in the reporting year, is currently not monitored.