Biodiversity and Ecosystems

The Volkswagen Group is endeavoring to increase biodiversity at its production sites and within the supply chain, thereby achieving added value for nature and an improvement in biodiversity.

Material impacts and their interaction with strategy and business model

Interaction with strategy and business model

The impacts identified in the materiality assessment have an influence on the Volkswagen Group’s business model, strategy and value chain. The topics of biodiversity and ecosystems are anchored in the Group sustainability strategy regenerate+, the core elements of which are the preservation of biodiversity and the sustainable use thereof. The topic is therefore also set out in our main policies. The Volkswagen Group has committed to protecting, preserving and promoting biodiversity in its environmental mission statement and also in its Biodiversity Commitment.

Biodiversity and the protection of ecosystems are integrated as relevant sustainability topics in the Volkswagen Group Code of Conduct for Business Partners. The aim is to promote supply chain compliance with the requirements of applicable law and international regulations on the preservation of biodiversity – in particular, the protection of endangered species and habitats and the sustainable use of natural resources. The Code of Conduct for Business Partners applies in principle to direct suppliers and is an integral part of their contract. In order to extend the requirements further down the supply chain, suppliers are also asked to pass them on to their direct business partners. The specifics of how this is implemented may vary depending on structure and sphere of influence.

Implementation of the biodiversity-related actions and other environmental protection actions aims to offset the impacts of the Volkswagen Group’s business activities. Biodiversity actions at the sites, such as sowing flowering meadows or planting green walls, primarily serve to offset land use and, along with other environmental protection measures, contribute to the strategic vision of the Zero Impact Factory. The positive contribution of these projects in and around the Volkswagen Group’s plants is assessed using a metric (see the “Targets: Biodiversity and ecosystems” section). In addition to addressing actions relating to the local and regional impact of its own facilities, the Volkswagen Group addresses impacts at the trans-regional level via its contribution to global voluntary biodiversity projects.

Transition plan and consideration of biodiversity and ecosystems in strategy and business model

A resilience analysis did not identify any significant physical risks, transition risks or systemic risks or opportunities in relation to biodiversity and ecosystems (ESRS E4), but it did identify material impacts. It also included a qualitative assessment of the extent to which the strategy and business model are able to address these material impacts. Criteria such as the scope and quality of existing policies, actions and targets, the consideration of impacts in the Group sustainability strategy, and the challenges of implementing adaptation actions and strategies were used to assess short, medium and long-term resilience. One of the key assumptions is that the requisite access to capital can be provided as planned, irrespective of the economic situation. It is also assumed that the Volkswagen Group’s biodiversity performance will continue to satisfy the expectations of investors and lenders. We also presume that suppliers will provide relevant data pertaining to biodiversity and ecosystems. These assumptions are continuously validated in the relevant planning and steering committees. There is uncertainty regarding the fundamental challenges of unpredictable developments in the global vehicle sales market, as well as the evolution of regulatory requirements relating to biodiversity and ecosystems.

The time horizons considered in the resilience analysis correspond to the time horizons defined in the “General Information” chapter in the “Notes on use of the ESRS” section and also used in the materiality assessment. These are divided into short-term (< 1 year), medium-term (1 - 5 years) and long-term (> 5 years) horizons. The analysis covers the impacts identified as material and their main drivers along the Group strategies and value chain. In particular, this includes the integration of biodiversity and ecosystems into regenerate+, as well as the level of coverage of strategic and operational adjustment actions along the upstream value chain and the Company’s own operations. The downstream value chain was also taken into account in the analysis of the level of coverage of the policies and actions.

In order to ensure that relevant stakeholders were taken into account in the resilience analysis in accordance with ESRS E4 paragraph 13(f), internal experts who maintain regular contact and work together with relevant stakeholders were involved in the process. External stakeholders and people with indigenous and local knowledge of affected regions were not included in the process. Regenerate+ serves as the central strategic framework for mitigating material negative impacts on biodiversity and ecosystems. Nature is defined as a core dimension within regenerate+. Topics such as diversity of species and biodiversity are explicitly addressed in the ecosystems pillar, thereby affording the core elements of ESRS E4 the relevant significance in the Group sustainability strategy. In addition, there is an opportunity to address specific topics related to biological diversity and ecosystems at Board of Management level by embedding regenerate+ in the strategy process. The strategic direction and pilot projects in the Group are discussed at a technical level and brought to other relevant bodies in monthly Group-wide dialogue formats on biodiversity and ecosystems attended by experts and representatives for biodiversity from the various brands and plants. The aim is to use metrics to manage these topics in the long term. The Group brands also define different focus areas for biodiversity. For example, specific projects on commodity hotspots are being developed by individual brands in the supply chain with the aim of implementing future pilot projects with suppliers and other partners.

The impact on biodiversity and ecosystems, particularly in the medium and long term, is addressed through the interplay of operational policies such as the environmental mission statement goTOzero or the Biodiversity Commitment, as well as location-based biodiversity actions. In the short term, actions such as the creation of insect hotels, installation of nesting boxes for birds and bats, the construction of other structural elements, and sowing of flowering meadows are intended to mitigate negative impacts. No specific targets for biodiversity and ecosystems were defined for 2025 at Group level; these are currently being developed. In addition, existing targets from strategic focus topics contribute to biodiversity and ecosystems, such as decarbonization and water management.

Negative impacts on biodiversity and ecosystems in the supply chain are to be reduced by appropriate actions. The Code of Conduct for Business Partners helps to address relevant requirements, in particular by way of its inclusion in the contracts with direct suppliers and the stipulation that it be passed on to relevant business partners. While the majority of suppliers do not pose an increased risk in terms of biodiversity and ecosystems, the upstream supply chain is checked in advance, especially where mining or agricultural products are concerned.

Impacts and dependencies in or near biodiversity-sensitive areas

The double materiality assessment process described in the “Procedure for and results of the double materiality assessment” section in the “General Information” chapter was used to identify the material topics. Furthermore, the Company’s activities were analyzed, giving consideration to potential impacts and dependencies. Transition risks, physical risks and opportunities, and systemic risks were not analyzed. A scenario analysis was not applied. Consultations with affected communities were not held as part of this analysis.

Potential impacts and dependencies were identified using the Exploring Natural Capital, Opportunities, Risks and Exposure (ENCORE) online tool. This performs a sector analysis in order to assess potential risks, impacts and dependencies specific to the sector. It focuses solely on the potential impacts that may arise from the Group’s own production, and excludes the associated impacts from the supply chain (for example, metal production). The evaluation looked at the sector’s potential impact with respect to a range of impact categories. Relevant impact categories are land use change (for example, land in use), resource use (for example, water use), climate change (GHG emissions), pollution (for example, harmful emissions to soil, air and water, as well as waste generation) and disruptions (for example, noise or light). Linking these categories shows the potential overall impact of the activity (for example, vehicle manufacturing) on soil, water, biodiversity and the atmosphere. The activities considered are the manufacture of motor vehicles, the manufacture of parts and accessories for motor vehicles, energy generation from fossil fuels, and the manufacture of special-purpose machinery. The existing dependencies of the company’s own activities on biodiversity and ecosystems were also examined. The ecosystem services taken into account in this context are the provision of services (for example, water supply) and regulation and maintenance services (for example, flood control and water purification). The specialized tool Kuyua is used to assess the impact and dependencies of activities on biodiversity. It enables an in-depth analysis of the ecological conditions at and around the sites. This tool helps the Group to obtain a differentiated record of its biodiversity status and to make well-founded statements about the ecological relevance of its business activities. The very high, high and medium impacts and dependencies of the individual activities at the different sites are detailed in the table “Annex: Sites near or in biodiversity-sensitive areas”. Minor and very minor impacts of activities at the sites include land use, the volume of water consumption, GHG emissions and emissions of other air pollutants, as well as the generation and release of solid waste. Low and very low dependencies of activities at the sites relate to global and local climate regulation, mitigation of sensory impacts, control pattern regulation, air filtration, solid waste decomposition, dilution effect through atmosphere and ecosystems, and water supply, for example.

The construction of production sites has a negative impact on biodiversity and ecosystems due to the associated land use change and sealing. Efforts are underway to avoid land use change (land use for production), or to reduce it as far as possible. Unused areas are to be restored and used areas offset. In 2024, the Biodiversity Land Use Indicator (BLI) was rolled out at all passenger car and light commercial vehicle production sites and at associated component manufacturing sites. The aim of this was to make it possible to measure the impact of land use by the Company’s own production sites and their contribution to land enhancement through biodiversity actions. This metric is intended to enable an assessment of land use and setting of associated targets.

A comprehensive assessment was conducted to determine whether Volkswagen Group sites are located near biodiversity-sensitive areas. The assessment covered the Volkswagen Group properties classified as environmentally relevant. These include the production sites where activities relating to the manufacturing of vehicles, components, assemblies or special-purpose machinery take place. A further four environmentally relevant sites such as environmentally relevant external production facilities and a technical development center were also included in the analysis.

The sites classified as material due to their proximity to biodiversity-sensitive areas and the significant activities conducted there are listed in the table “Annex: Sites near or in biodiversity-sensitive areas”. The results show that 68 of the 127 sites analyzed are located near biodiversity-sensitive areas. Based on any relevant operational disruptions that may have occurred, no direct negative impacts caused by the production sites and other sites were identified for the protected areas nearby. The impacts from our own production on changes to freshwater resources and the associated actions are described in detail in the “Water” chapter. The material impacts of production on soil degradation and desertification cannot yet be assessed in detail.

Policy: biodiversity and ecosystems

Biodiversity policy

The production of vehicles and their use by our customers impact biodiversity through emissions, land use and transportation – this can be observed from raw material extraction through to the use phase and on to recycling. The Volkswagen Group supports conservation projects across the globe, including for example the Green Belt reforestation project in China and projects to restore moorland in Germany and Poland. The Volkswagen Group has also been involved in protecting and preserving biodiversity since 2007. As described in the “Material impacts and their interaction with strategy and business model” section, the materiality assessment identified negative impacts, particularly along the upstream and downstream value chain. These are addressed within the scope of the biodiversity policy. The Group’s Chief Sustainability Officer is responsible for coordinating the topic of biodiversity within the scope of the Group sustainability strategy regenerate+. The Group Head of Environment is responsible for activities relating to biodiversity in production. As environmental management officer, he performs the tasks of the Volkswagen AG biodiversity officer.

The Volkswagen Group is aware of the importance of biodiversity and its dependency on ecosystem services and has therefore incorporated their protection as an action area in its environmental mission statement goTOzero. The Group has thus committed to protecting, preserving and promoting biodiversity through its mission statement: The Volkswagen Group reduces harmful emissions to air, soil and water bodies, mitigates the impact of its business operations on biodiversity and ecosystem services and supports projects to conserve these.

As a founding and active member of the Biodiversity in Good Company e.V. initiative, the Volkswagen Group also acknowledges the three goals of the international Convention on Biological Diversity (CBD). These are the conservation of biological diversity, the sustainable use of the components of biological diversity, and the equitable sharing of the benefits arising from the utilization of genetic resources. In the Volkswagen Group’s Biodiversity Commitment, corresponding action areas have been defined to make a contribution to achieving these goals within the framework of the Group’s business activities. A biennial progress report on this matter is published as part of the Biodiversity in Good Company Initiative. Furthermore, the Volkswagen Group supports the CBD’s Action Agenda for Nature and People initiative and has published this commitment on the German Business for Biodiversity platform set up by the German Federal Ministry for the Environment (BMUV), as well as on the CBD website.

The topics of biodiversity and ecosystems are likewise anchored in the Code of Conduct for Business Partners with the aim of protecting natural ecosystems and achieving sustainable use of natural resources. In line with the relevant applicable legislation, and taking into account international biodiversity requirements, business partners must strive to establish supply chains that do not involve logging or deforestation. These international requirements include the resolutions and recommendations regarding biodiversity of the CBD and the International Union for Conservation of Nature (IUCN).

Also noteworthy is the fact that the Volkswagen Group was the first automotive manufacturer to join the LEAF Coalition (Lowering Emissions by Accelerating Forest Finance) in the year 2024. Together with governments and companies around the world, the initiative supports the protection of tropical rainforests, thereby making an important contribution to achieving the Paris climate goals, protecting biodiversity and realizing sustainable development.

The Volkswagen Group is also a member of the DRIVE Sustainability Partnership, which is involved in the development of a Raw Material Outlook Platform. This included the material change risk analysis on raw materials and their extraction and processing. One of the 16 criteria applied concerned overlaps with areas important for preserving biological diversity. The direct impacts of production on biodiversity and ecosystems also play a key role. Specific details regarding biodiversity management at production sites are provided in the strategic vision for the Zero Impact Factory. This vision includes, for example, voluntary biodiversity offsets and ongoing assessment of the impacts of the production sites on biodiversity. In 2024, the BLI was rolled out as a new Group-wide performance indicator to help determine the company’s contribution to biodiversity from creating near-natural areas at and around the sites.

The Volkswagen Group engages in dialogue with expert partners and promotes networking within and between the fields of politics, economics, science, government authorities and associations in order to improve its own and society’s knowledge surrounding biodiversity and biodiversity management. The Volkswagen Group relies on knowledgeable partners such as Non-Governmental Organizations (NGOs) and other local players to realize its biodiversity projects.

Impacts of biodiversity loss and the state of species and dependencies on ecosystem services

The vision of the Volkswagen Group is to have a positive impact on people and nature and to make a sustainable contribution. The focus on ecosystems and preserving biodiversity is a central pillar of the Group sustainability strategy regenerate+. The production of our vehicles, and their use by our customers, impact biodiversity through emissions, land use and transportation. We aim to counter this impact through actions such as reducing land use. We are also implementing additional environmental enhancement measures that protect biodiversity and promote it where possible. The Volkswagen Group has set itself the goal of increasing biodiversity at its production sites and within the supply chain. In accordance with the Biodiversity Commitment, the Volkswagen Group pursues these goals as follows: Risks and opportunities are assessed with respect to business activities that have an impact on biodiversity and ecosystem services. Biodiversity is also integrated into the Volkswagen Group’s ECMS. Projects are also being implemented to protect and preserve biodiversity.

Sustainable raw material sourcing in the value chain

The Volkswagen Group is aware that its suppliers’ business activities can have an impact on people and the environment. The extraction and processing of some raw materials for the automotive industry is associated with environmental risks such as deforestation and air and water pollution. The Volkswagen Group published its first Responsible Raw Materials Report in 2021. It provides detailed information on the methodologies and activities in the context of the Raw Materials Due Diligence Management System for raw material sourcing. The current report covers the period from January to December 2024 and gives an insight into the scope, the methodology and the implementation of activities and results concerning due diligence for raw materials classed as a priority by the Volkswagen Group. This also involves memberships in various initiatives.

Social consequences of biodiversity impacts and sustainable land use practices

The Code of Conduct for Business Partners emphasizes the issue of damage to soil, water and air. Business partners commit to ensuring that they do not cause any harmful soil changes, water pollution, air pollution, harmful noise emissions or excessive water consumption that could lead to significant harm to the natural basis for food and drinking water or human health. They must also comply with the prohibition of unlawful eviction and unlawful deprivation of land, forests and water bodies in the acquisition, development or other use of these resources.

Biodiversity-sensitive areas

The Volkswagen Group carried out an evaluation of biodiversity-sensitive areas close to Group sites in order to determine the impacts on biodiversity of the production sites and rule out potential risks (see the “Impacts and dependencies in or near biodiversity-sensitive areas” section).

Biodiversity impact assessments are performed when seeking new locations for production sites. When extending existing production facilities or building new ones, protection of natural capital requires that priority be given to land already used for industrial purposes in order to minimize land use and soil sealing as far as possible (for further information, see the section on “Transition plan and consideration of biodiversity and ecosystems in strategy and business model” and the “Biodiversity-sensitive sites” table in the Annex).

Deforestation

In line with the relevant applicable legislation, and taking into account international biodiversity requirements, suppliers must strive to establish supply chains that do not involve logging or deforestation. These international requirements include the resolutions and recommendations regarding biodiversity of the CBD and the IUCN. In addition, the Volkswagen Group is currently making preparations for the implementation of the EU Deforestation Regulation.

Targets: biodiversity and ecosystems

As described under the section “Policy: Biodiversity and ecosystems”, the topics of biodiversity and ecosystems are anchored in the Group sustainability strategy regenerate+, the Biodiversity Commitment and the environmental mission statement goTOzero. In order to record developments and progress, the Volkswagen Group is involved, for example as a founding member of the Biodiversity in Good Company e.V. initiative.

The topic of biodiversity is part of the strategic vision of the Zero Impact Factory. The Volkswagen Group has created a Site Checklist featuring quantifiable targets on the topic of biodiversity and ecosystems. With regard to biodiversity management, the Site Checklist contains criteria such as the consideration of local protected areas or the provision of funding schemes for biodiversity and environmental education. The Site Checklist also acknowledges specific actions such as planting regional plant species at sites, designing green spaces in harmony with nature, and promoting biodiversity through the creation of habitats inside or outside the site.

Furthermore, a new metric for measuring biodiversity – the BLI – was introduced in 2024 at the production sites for passenger cars and light commercial vehicles. This was measured again in 2025 and a specific BLI target will be set in the future. This metric aims to increase the proportion and quality of near-natural areas at the sites.

Actions and resources: biodiversity and ecosystems

Actions at the production sites

The sites each independently identify, plan, perform, uphold and evaluate the biodiversity actions for their particular site. The decentralized implementation of a range of nature-based actions enables the local knowledge available at the site to be harnessed. Local service providers are normally involved in implementing the actions.

It is also important to the Volkswagen Group that employees become involved in the biodiversity projects and in doing so improve their awareness of the issues involved. The Zero Impact Factory Award for biodiversity issues, for which submissions were opened in 2024, is a highlight in this respect. Three outstanding biodiversity measures implemented at production sites in 2024 received awards. The Palmela site in Portugal is among them. Its RENASCER program launched an environmental initiative aimed at reforestation, waste reduction and biodiversity protection. By involving employees and local communities, more than 2,500 trees have been planted and 15.5 tonnes of waste removed since 2022. The aim is to plant a total of 20,000 trees by 2030 and motivate around 200 people to take part each year. The Kariega site in South Africa was also recognized. Under the “Show of Hands” program, Volkswagen employees and their families were involved in protecting biodiversity at the Van Stadens Wildflower Reserve. The project involved removing invasive species, improving infrastructure and expanding educational and visitor offerings – contributing to the long-term conservation of endangered ecosystems and strengthening the local community. The site in Hanover, Germany, also received an award: at the Ottensen landfill site, a population of crested newts was successfully relocated, and two replacement bodies of water were created along with suitable vegetation for biotope development. The action promotes biodiversity and creates new habitats for endangered species on the former forest land.

Of the more than 200 Corporate Citizenship projects implemented in fiscal year 2025, over 21 projects serve to promote and protect biodiversity. These projects include tree planting, preserving and developing ecosystems, actions to promote biodiversity, refuse collection campaigns and environmental education.

In the reporting year, the Volkswagen Group also launched a Sustainability Impact Fund, which supports in-house projects around the world that promote environmental, social and economic sustainability. The fund is therefore a Group-wide instrument for the targeted promotion of projects related to regenerate+ and thus also for supporting biodiversity work at the sites concerned.

In 2025, six biodiversity projects were supported via the Sustainability Impact Fund. The actions being promoted focus on the preservation and development of ecosystems, including in the supply chain; the restoration of areas at sites; environmental education and awareness; and targeted tree planting.

Contribution to global voluntary biodiversity projects

To promote biodiversity beyond its own value chain, the Volkswagen Group launched a biodiversity fund for external nature and biodiversity projects in 2025. The fund has an annual allocation of up to €25 million and a planned term of five years (from 2025 to 2029). The aim is to facilitate effective actions to protect and promote biodiversity beyond the Group’s sites and supply chain. To ensure that funds are allocated in a way that is professionally sound and impactful, projects are selected and reviewed by an interdisciplinary decision-making body made up of internal and external experts.

In the 2025 reporting year, the focus was on the conceptual development of the fund, the definition of funding criteria and the establishment of the aforementioned interdisciplinary decision-making committee. The final selection was made based on a joint evaluation of the projects by the expert committee and within the administrative office. The first projects are contractually agreed and operational funding is to start in 2026.

The Volkswagen Group is already supporting biodiversity projects worldwide:

Volkswagen de México has been supporting conservation and reforestation projects since 2008, in order to preserve ecosystems. The actions are aimed at creating habitats for wild fauna and promoting the development of biodiversity. The reforestation actions aim to prevent soil erosion and promote groundwater storage. Construction of infiltration ditches also helps rainwater infiltration. This serves to protect the soil and promote groundwater recharge, for example on the volcanic slopes of Popocatépetl and Iztaccíhuatl, where years of logging, livestock farming and fires have created open land.

The Group works with partners such as UNESCO and the Seabird Life organization to support sustainable mobility projects and to remediate storm damage in UNESCO biosphere reserves in Spain, as well as other projects to conserve and restore moorland in reserves in Poland and Germany.

Volkswagen Group China, along with the Volkswagen, Audi and Škoda brands, has initiated the Green Belt reforestation project to protect habitats and promote sustainable development. More than 8.5 million trees are to be planted by 2030 on a total area of over 40 million m² in ten environmentally sensitive regions in the north of China. Reforestation serves to establish carbon sinks, supports biodiversity and helps to prevent wind erosion and soil losses.

Škoda has launched the Gardens of the Giant Mountains project via the Škoda Auto Endowment Fund. The fund is an addition to the company’s long-term Škoda Trees initiative and supports projects aimed at water retention, supporting local biodiversity and promoting awareness for nature conservation. In 2025, various actions were taken to reintroduce the Apollo butterfly (Parnassius apollo), which is on the Red List of Threatened Species and is at risk of extinction in the Czech Republic.

Metrics: Biodiversity and ecosystems

Biodiversity land use indicator

As a vehicle and component manufacturer, the Volkswagen Group has an impact on land use. Plant construction usually involves building on and permanently sealing large areas of land. To determine the contribution of production to land use and reduce it in the future, a new metric for production sites for passenger cars and light commercial vehicles was established at Group level in 2024 – the BLI. It builds on the EMAS biodiversity guide and the No Net Loss/Net Gain (NNL/NG) approach of the IUCN.

The BLI provides information on the proportion of near-natural areas at the site and also takes into account their quality. These near-natural areas may be located on the site premises or within a 30 km radius, providing they are owned or managed by the site and serve primarily to promote biodiversity. Areas managed in conjunction with partners may also be considered where the scope of the joint management is clearly regulated. The ecological quality of each area is classified as low, medium or high. The areas are weighted according to this quality factor. A calculation tool (BLI tool) and accompanying guidelines are provided for determining the site result. The Group-wide survey of the BLI in 2025 showed a result of approximately 53.4 (28.6)%, taking into account the quality of the area. The improvement on the previous year is mainly due to a methodological adjustment: a derogation modeled after German eco account regulations means that areas with particular ecological value outside of the defined 30-kilometer radius can now also be taken into account. As a result, two Mexican sites were able to include long-established areas that had previously been excluded.

Sites near or in biodiversity-sensitive areas

The sites near or in biodiversity-sensitive areas metric provides information on the number and area of sites that are in or near protected areas or in important areas for biodiversity. For 2025, the Volkswagen Group is using a radius of 4.5 kilometers, as in the previous year.