Volkswagen

Environmental Report 2001/2002Mobility and Sustainability

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Contents

EditorialIntroductionForewordsAt a Glance

Sustainability & Social ResponsibilityChallengesCharacteristicsBusiness StrategiesAdded ValueEconomic Facts and FiguresSocial CompetenceCorporate Social ResponsibilityCooperative Conflict ManagementCorporate Sustainability Verification

Environmental Policy & ManagementEnvironmental PolicyClimate Protection and Fuel ConsumptionLife Cycle InventoriesEnvironmental CostsEco-AuditEmployeesEnvironmental HistoryGoals and Measures

ProductsProduct PolicyFSIOur ModelsExperience with the Lupo 3L TDI

Research & DevelopmentFuel StrategyThe Car and the EnvironmentTechnical Development The One-Litre CarMobile NetworkingElectric Hybrid VehiclesRecycling

Production & PlantsA Worldwide NetworkLogisticsSuppliersInternational Material Data SystemReports and ExamplesEnvironmental Data

Partners & ProjectsEnvironmental Protection in the Service SectorA Profile of the Stipschitz DealershipImplementing the ELV DirectiveMobility ProjectsThe VCD Cars and Environment TableThe EcoTopTen ProjectPartnership with NABUThe Global Reporting InitiativeThe Sustainable Mobility ProjectDrive Carefully Save Fuel

Conclusion & AppendixThe Environmental Report 1999/2000 Auditing the ReportAuditors AttestationGlossary of TermsHow to Contact Us

2

Local Agendas

p. 76

p. 52

The people at Volkswagens production plants are never short of good ideaswhen it comes to demonstrating their responsiblity for local residents andthe environment from finding ways of saving water to acting out plays.

Hydrogen will doubtless power most cars in the future. But until thathappens, natural gas, SynFuels and fuels derived from regenerative rawmaterials are the main alternatives to conventional petrol and diesel.

Fuel Strategy

Partners & Projects

01

United We Stand

p. 40

p. 97

p. 15

p. 30

Sustainability and Social Responsibility

Environmental Policy and Management

Production & Plants

Meeting todays needs without denyingfuture generations the opportunity tomake progress. This is the challengeVolkswagen faces as it strives tocombine social responsibility withentrepreneurial drive.

Apprentices at Volkswagen learn about environmentalprotection in all its many forms. Protecting our climate is thekey environmental task of the future.

Volkswagen is not only a partner to its customersbut also to its dealerships and service outlets.The companys commitment to the environmentand sustainability takes on many different formsat national and international level.

FSI stands for a future with lower fuel consumption andless emissions. With the advent of direct fuel injection, thepetrol engine has become a good deal more eco-friendly.

Prevention is Better than Cure

FSIResearch & Development

Working for Future Generations

Products

Dear Reader,

For the first time our Environmental Report has a sub-

heading: Mobility and Sustainability. There are good

reasons for this innovation. The scope of the environ-

mental debate is constantly being widened to include

additional aspects of corporate sustainability, ultimate-

ly embracing the full ecological, economic and social

dimensions of entrepreneurial activity. Meanwhile the

debate over what a sustainability report should cover

continues. Volkswagen is actively involved in the

national and international dialogue on meaningful

guidelines and indicators for sustainability reporting

and two years from now, we intend to publish a

sustainability report which will match up to your high

expectations and our own.

The complex relationship between sustainability and

mobility is of key significance for us. The Mankind and

Mobility photos in this Report are designed to draw

attention to how, in an ever more interwoven and

densely populated world, mobility is often a value of

truly existential importance. On the one hand, making

mobility possible in an environmentally acceptable way

demands every ounce of our creative resources. On the

other hand, mobility is our everyday business, and so

the Report focuses mainly on the efforts we have made

over the last two years and the goals we are pursuing in

the interests of progress. In these efforts and in this

Report FSI technology has a central part to play.

Of course our readers are not just interested in our top

performers but in the environmental impact of all

Volkswagen models. In our first ever Environmental

Report we set a benchmark for the industry by present-

ing the full portfolio of Volkswagen vehicles. Today,

information technology provides us all with a fast track

to the latest data, and at

we can now provide you with regular and practical

updates on model-specific data. As a result, in the

printed Report we have restricted ourselves more

to the fundamentals, and refer to our web site in the

appropriate places. That leaves more space

for a strategic discussion of the long-term

development of personal mobility symbol-

ised by the car. Accordingly, we have made

Volkswagens drive systems and fuel strategy

one of the focal points of this Report.

Globalisation has brought a further increase

in the number of Volkswagen plants around

the world. In this Report we have concentrat-

ed on four plants from three different

continents and refer anyone interested in

further details of all other plants to our web

site at

www.volkswagen-environment.de/on-the-ground

As always, our Environmental Report is also

an open invitation to talk to us about mobility.

In recent years we have benefited greatly from

this dialogue and we hope that you have too.

Finally, my thanks go to our dedicated

editorial team and to all the colleagues whose

expert input laid the foundations for this

Report.

I hope you enjoy reading it!

Dr. Horst Minte

Product, Environment and Traffic Systems

Editorial

www.volkswagen-environment.de

Introduction

1

Volkswagens corporate policy is geared to the long term.

Safeguarding protability and adding value to our

products are factors which contribute to our success, as

indeed do the introduction of exible working-hour

models and the development of cars with outstanding

fuel economy. Volkswagens heritage and operating envi-

ronment make for an approach to sustainable manage-

ment that is specic to the company an approach

symbolised not least by the Lupo 3L TDI and the four-day

week. Today, FSI technology and the 5000x5000 project

are important milestones along this route.

In future, in a logical expansion of its product portfolio,

Volkswagen will also be bringing luxury cars to market. In

this segment, too, we are aiming to demonstrate the tech-

nology leadership we have established in the other classes

of vehicle. In recent years we have extended our range of

economical cars with low fuel consumption. The three-

litre Lupo which was launched in 1999 is our Formula 1

performer in this category. For the third year in succession

it heads up the Cars and the Environment table compiled

by the German Association for Transport and the Environ-

ment. That said, we have set our sights higher still. Our

uppermost goal in this respect is a 1-litre car which will

cover 100 km on one litre of fuel. We are currently

developing one such model which will set new standards.

For Volkswagen, sustainable mobility is not centred on

individual models. This is illustrated to good effect by the

TDI engine at present our most economical drive

technology. In the long term, the increase in the proportion

of diesel-engined models in the Volkswagen eet to more

than 40 percent will make a tangible contribution to

protecting our climate. In our petrol engines, too, we are

consistently banking on direct injection.

The next few years will see a substantial increase

in the range of Volkswagen models available

with FSI engines. This way, we aim to achieve a

further cut in average fuel consumption across

our eet and to full the Voluntary Agreement

entered into by the European automobile

industry whereby CO2 emissions in the EU are to

be reduced to 140 grams per kilometre by 2008.

Until alternative propulsion systems like the fuel

cell make their breakthrough, we need well

thought-out interim strategies. Volkswagen has

drawn up a fuel strategy to bridge this gap. This

includes improving the overall efciency of our

engines, drawing on alternative energy

resources in the fuel production process and

developing ways of operating vehicles that result

in a neutral CO2 balance sheet. FSI and our fuel

strategy will safeguard Volkswagens success in

the long term, just as the diesel engine launched

at Volkswagen 25 years ago has done.

Success on the stock markets, however, is

often decided by shorter-term factors. But as

developments in the international financial

markets show, sustainable success and

shareholder value need not be contradictory.

Indexes such as the Dow Jones Sustainability

World Index (DJSI World) on the New York

Stock Exchange or the FTSE4Good index on

the London Stock Exchange, both of which

rate companies in line with sustainability

criteria, are beginning to gain ground. We take

it as confirmation of our corporate strategy

that Volkswagen is now included in both of

these indexes.

Wolfsburg, December 2001

Dr. techn. h. c. Dipl.-Ing. ETH Ferdinand Pich

Chairman of the Board of Management

Forewords

Sustainable Corporate Success and

Sustainable Mobility

45

1Forewords Introduction

Words which are used frequently in public debate often

risk being devalued in meaning. Sustainability is a

case in point. If no clear-cut definition is provided,

sustainability is understood to mean little more than

permanence or persistence. Neither, however,

comes close to the original meaning of the word. As

used at the Earth Summit at Rio de Janeiro in 1992,

sustainability was supposed to stand for a principle of

social development a principle which demands that

each generation leave as good if not better foundations

for development to the next generation. As such,

sustainability refers expressly to the way in which we

shape the fields of ecology, economics and social

conditions. The big step forward is in drawing attention

to the fact that these three dimensions can only be

shaped together, as an integral whole, and not in

isolation.

The General Works Council naturally feels that its

obligations lie above all in the social dimension of

sustainability and consequently has drawn up central

strategies and initiated agreements and projects with a

focus on these aspects. The following remarkable

examples provide some illustration of the Councils

efforts:

Through the introduction of the four-day week

during an acute job-market crisis in 1994, we avoided

mass redundancies. Instead of people losing their jobs,

employment capacity for future generations, too, was

assured.

Through the Time Asset Bond scheme, a phased

retirement plan and the recruitment and permanent

employment of apprentices, we have put in place a

cross-generation job-creation system at Volkswagen,

similar to an inter-generation social contract.

With its One Hour for the Future

campaign, the General Works Council is out to

underline the global social responsibility of

transnational companies beyond their own

corporate boundaries and point out that

attempting to distinguish between peoples

existential interests by geographical regions is

a thing of the past.

The principle of preventing plant closures

and mass redundancies across the worldwide

Volkswagen Group reflects our understanding

that global social responsibility neither is nor

can be divided.

As these four examples illustrate, in any

approach to social responsibility, sustainabili-

ty is a must. One of its principal targets is the

creation of equilibrium equilibrium

between social obligations and economic

performance, between the vested interests of

the various generations and between the

development needs of the companys plants

in different parts of the world. As a result, the

waste or even destruction of resources is

avoided and new development opportunities

are created. So, in effect, sustainability and

social responsibility are related like an

operating principle and its objective. Each

requires the other and together they can

transform requirements into reality. Conse-

quently, we shall be continuing along our

chosen route.

Klaus Volkert

Chairman of the General and Group Works

Council

Social Responsibility Calls for

Sustainability

At a Glance

Workforce000 (on Dec. 31)

992

12.923

17.756

Production000units

Sales000units

Sales million

Pre-taxprots* millionVolkswagen Passenger Cars

VolkswagenCommercialVehicles

1,999

1,981

+ 0.9

2,396

2,382

+ 0.6

46,544

43,546

+ 6.9

1,671

1,348

+ 24.0

2000

1999

+/- (percent)

18.0

17.5

+ 2.8

247

238

+ 3.7

289

284

+ 1.5

4,562

4,348

+ 4.9

258

249

+ 3.5

2000

1999

+/- (percent)

125.6

122.7

+ 2.3

The Marques Volkswagen Passenger Cars and Commercial Vehicles in gures

Petrol DI*

Diesel DI*

1995 2000 2005 2010 2015

20 %

40 %

60 %

80 %

100 %

PetrolAlternative drive systems

Diesel

*DI = direct injection.

Drive system trends, 1995 - 2015Future market shares

Source: Aachen Technical University

Initial certication

Volkswagen Plant Date

Eco-audit status (EMAS)

09/95

03/96

06/96

07/96

12/96

12/97

12/97

11/98

11/98

07/99

03/01

09/98

09/01

05/99

06/99

11/99

11/99

11/00

01/01

12/01

12/01

04/02

04/02

04/02

03/03

Emden

Zwickau/Mosel

Brunswick

VWK Wolfsburg

Salzgitter

Wolfsburg

Navarra

Kassel

VWK Kassel

Chemnitz

Hanover

Initial certication

planned:

Brussels

Poznan

Re-certication completed:

Emden

Zwickau/Mosel

Brunswick

Salzgitter

Wolfsburg

Navarra

Wolfsburg

Re-certication planned:

Kassel

VWK Kassel

Chemnitz

Zwickau/Mosel

Source: VOLKSWAGEN AG

1995

-40

-30

-20

-10

0ACEA CO2 Agreement

ACEA current status

Volkswagen

2000 2005 2010

%

Drop in CO2 emissions due to falling average eet consumption

Volkswagens contribution to meeting the ACEAs Voluntary Agreement on CO2(0 % = CO2 emissions based on 1995 corporate average fuel economy)Source: VOLKSWAGEN AG

67

*Excluding extraordinary expenses (relating to the EU End of Life Vehicle Directive).Source: VOLKSWAGEN AG

56

Sustainability & Social Responsibility

2

Since the notion of sustainable development was first

formulated in the Brundtland Commissions 1987 report

and tabled at the 1992 UN Conference on Environment

and Development in Rio de Janeiro, the concept has

become a global political model. For all the frequency,

however, with which the term figures in political

debates, its precise meaning has nevertheless remained

remarkably open. So before sustainable development

can be adopted as a corporate guideline, the underlying

concept must first be clearly defined.

As set out by the Brundtland Commission, the concept of

sustainable development primarily targets a just and

equitable state of affairs between present and future

generations, that is to say it means development that

meets the needs of the present without compromising the

ability of future generations to meet their own needs. In

Volkswagens view, this is a call to pursue a corporate

policy geared to the long term and designed to respond

not only to economic challenges but at the same time to

ecological and social challenges, as well. To that extent,

sustainable development ranks among the new chal-

lenges which companies now face in the policy sector.

In their efforts to shape sustainable development,

companies are governed by legislative frameworks and in

addition to being responsible for their own activities, they

must work in partnership with other institu-

tions and organisations.

For Volkswagen sustainability is made up of

three core elements:

maintaining a balance within the economic,

ecological and social system and pursuing

the long-term reconciliation of divergent

interests

taking responsibility for ones own activities

at regional, national and global level

practising transparent communication and

fair cooperation.

Sustainable development meansnetworked thinkingThe process of sustainable development

involves all sectors of society the general

public and the state, companies and their

customers, associations and political parties.

Sustainability means no longer considering

ones own interests in isolation but against a

backdrop of economic, ecological and social

aspects.

Direct responsibility

GuidelinesVoluntary agreements

Legal framework

Stakeholder requirements

Market requirements

Legal requirements

Companies, NGOs, employees,investors, consumers

International organisations,associations

EU, nation states

cd

cd

cd

cd

Changing political processes pose new challenges

Sustainability A Challenge

for Business Practices

Source: VOLKSWAGEN AG

2Challenges

89

Companies in particular are expected to shoulder a

proactive role. In economic terms, companies and their

workforces are the generators of social prosperity. In

technical terms they are the locomotives of progress. In

the production of goods and services they draw upon

natural resources. At the same time they also create and

safeguard jobs and social security, and offer their

employees a means of personal fulfilment. In ecological

terms, companies make demands upon the load-

bearing capacity of the biosphere. Thus, companies are

economic, ecological, technological and social players

who can contribute to sustainable development across

the board.

As a corporate citizen, Volkswagen forms an integral

part of society. As a global player, we are confronted

with different social structures and expectations in

different countries and cultural environments and in

each case play our part in local societal development.

As an active participant in the 1992 UN

Conference on Environment and Develop-

ment in Rio de Janeiro and as a founding

member of the World Business Council for

Sustainable Development (WBCSD), we have

been giving thought to the subject of

sustainable development and the challenges

it poses for the corporate sector for a long

time now. For Volkswagen, the concept of

sustainable development is not to be

considered solely against the backdrop of

societys ethical expectations of the corporate

sector but also as a key contributory factor in

consolidating and enhancing the global

competitiveness of the Group as a whole. To

an increasing extent, economic success is

achieved not least through the long-term

integration of ecological and social goals.

Ten years after what became known as the Earth Summit (the 1992

United Nations Conference on Environment and Development in

Rio de Janeiro) the World Summit on Sustainable Development

(WSSD) will be held in Johannesburg in September 2002. There, the

UN will draw up a balance-sheet setting out the agreements reached

in Rio and the subsequent outcome of those agreements. The most

urgent task on the agenda will be to give fresh impetus to global

environmental policymaking and drive forward efforts towards sus-

tainable development. Governments and business enterprises alike

will give an account of the contribution they have made over the

past decade to fighting poverty, conserving natural resources and

shaping our lives in such a way that future generations will inherit a

world worth living in.

At the 1992 conference in Rio de Janeiro, Volkswagen was represented

by, among others, the then Chairman of the Board of Management,

Dr. Carl Hahn. In preparation for the forthcoming follow-up confer-

ence, management and plants are taking stock of progress. At the same

time, above all at the companys production plants in newly industri-

alising countries, new initiatives are getting under way. At many

plants, involvement in working groups for a Local Agenda 21 provides

a means of working together with the authorities and local residents

to help safeguard the future of the plants concerned.

As part of Volkswagens commitment to the Mobility

Forum of the United Nations Environmental

Programme (UNEP), the company has joined forces

with other international automobile manufacturers to

prepare a status report for the WSSD in Johannesburg

covering all activities implemented since the conference

in Rio, and is planning other initiatives. In addition,

as part of the German governments Rio+10

Transparency Initiative, together with other German

companies, ministries, associations and interest groups

Volkswagen is analysing the contribution made by the

German business sectors foreign investments to

improving the living conditions of people in developing

and newly industrialising countries. This study is also

designed to trigger a learning process, the outcome of

which will be presented within the framework of the

conference in South Africa.

www.johannesburgsummit.org

World Summit on Sustainable Development 2002 Rio+10

Sustainability & Social Responsibility

Characteristics of sustainable corporate development In our view, sustainability is a process of ongoing

learning, distinguished by the following characteristics:

Evolution: The sustainable development of each company

draws on its own particular history, culture and operating

environment, leading to a company-specic approach.

Volkswagens approach to sustainability is founded on four

factors: a cooperative style of resolving conicts; our

employees co-determination rights; our strong regional

roots and deriving from our post-war experience our

frugal approach to precious natural resources.

Integration: Instead of improving the economic, social

and ecological aspects of the company in isolation, we

try to take a holistic view. One example here is the

AutoVision project (see page 17). Here, the principal

aim of halving the level of unemployment in Wolfsburg

by means of economic measures which foster new

business start-ups and technical innovations,

is combined with qualitative ecological

objectives.

Communication: Members of society must

communicate and coordinate their respective

contributions to sustainable development.

This calls for a will to communicate, learn and

cooperate. Our environmental reports, envi-

ronmental statements and Life Cycle Assess-

ments all document the fact that, for

Volkswagen, the need for transparent com-

munication goes without saying. The company

demonstrates its commitment to sustainable

development topics at a number of external

forums: One key project in which we are involv-

ed in conjunction with the WBCSD goes by the

name of Sustainable Mobility (see page 109).

Volkswagen is also an active participant in the

Mobility Forum set up by the United Nations

Innovative environmental policy group-wide environmental

goals environmental management

system ecological product innovations open environmental

communications external collaboration

Enhancing labour flexibility four-day week Time-Asset bond pension fund training personnel services agency 5000x5000 project

Safeguarding the corporate future module strategy in production sector efficient engine technology lightweight design mobility servicesEconomic promotion Innovation Campus "Promotion" start-up competition supplier establishment

SocietyEcology

Economy

Increase in company value

SynergiesIntegration

Strategic contributions to sustainable development at Volkswagen

Source: VOLKSWAGEN AG

1011

Environmental Programme (UNEP). In the eld of corpo-

rate social responsibility, we are collaborating with other

European rms under the auspices of CSR Europe.

Volkswagen is a founding member of the Sustainable

Development econsense forum of the Confederation of

German Industry (BDI). In the eld of environmental

protection, Volkswagen collaborates with the Institute

of Applied Ecology in Freiburg, Germany, (see page 106)

and with NABU the German Society for Nature

Conservation (see page 107).

Innovation: Our integral perspective of sustainability

leads us to undertake an ongoing critical review of what

we have already achieved, thereby opening up new

scope for innovation. The results of this way of thinking

include the factory that breathes for example (see

page 17), the Time Asset bond (see page 17) and the first

3-litre car (see page 50).

Business strategies and sustainability Strategies designed to safeguard long-term corporate

success must take account not only of technical and

market developments but also of social and environ-

mental challenges. Under the heading of sustainable

development and its ecological, economic and social

dimensions, Volkswagen can point to the strategic

approaches and achievements of many corporate divi-

sions, all of which help to ensure that the company is

managed for sustainability and plays its part in a society

geared to sustainable development. However, these

contributions must also be integrated into an overall

sustainability strategy. The basic principles which guide

us in this process of integration are set out earlier in this

chapter.

Ecology lies at the heart of this Report and it is to ecologi-

cal concerns that the chapters which follow are dedicated.

Hence, this is still the Volkswagen Environmental Report

rather than a sustainability report. That said, in this

chapter on sustainability we have set out to open a win-

dow for you on the economic and social dimensions of

Volkswagen. At present, the economic pillar of sustainabil-

ity is made up of marque and product strategy, module

strategy and fuel strategy.

Marque and product strategyThrough its multi-marque strategy and

product development strategy, Volkswagen is

constantly expanding its portfolio by adding

high quality technological products including

highly ecologically efficient and economical

vehicles and thereby helping to increase the

value of the marque and exploit existing

market and earnings potentials.

Module strategyThe module strategy is a product-develop-

ment and production concept which enables

a number of selected modules to be used as

components in several different classes of

models. The resultant synergy effects lead to

savings not least on the development and

procurement fronts. The module concept also

reflects Volkswagens cross-facility integrated

development process which calls for a

comparable level of technology at all of the

Groups facilities and thus provides a strong

impulse for technology transfer.

Fuel strategyThrough its fuel strategy, Volkswagen is

preparing for the anticipated long-term

shortage of conventional energy resources.

This is a transitional strategy, as new drive

technologies are not developed overnight.

The fuel strategy demonstrates a three-

pronged approach, involving the constant

pursuit of more efficient engines, the

inclusion of alternative energy resources in

the fuel production process and the develop-

ment of drive concepts with a neutral carbon-

dioxide balance-sheet. The introduction of

FSI technology is just one module in this

comprehensive strategy (see page 52).

www.volkswagen-environment.de/knowledge/partners-projects

2Characteristics/Business Strategies Sustainability & Social Responsibility

2000 1999 1999 Year-on-yearchange

Year-on-yearchange

Added value and sustainable growthFor several years now, the Volkswagen Annual Report has

documented the value added by the Group. The

introduction of added value accounting was an

important step forward in our accounting practices

since it enables the company to set out in its annual

nancial statements the value generated not only for the

shareholders but also for other important stakeholders,

such as our employees and the state. This in turn brings

about a substantial improvement in the transparency of

the social dimension of Volkswagens performance. The

ecological dimension, however, is not yet included in

the added value accounts.

The term added value stands quite literally

for the value which a company adds through its

own efforts to the goods or services provided to

society. The market value of these products,

and thus the revenue posted by the company is

determined by the most important stakeholder

group for any business enterprise: the cus-

tomers. The resultant earnings are distributed

among the various other stakeholders in the

company, such as its employees, shareholders,

creditors or the state. In the context of

43,447

3,612

37,980

9,079

2000 1999 Year-on-yearchange

40,094

3,063

34,711

8,446

+ 3,353

+ 549

+ 3,269

+ 633

Year-on-yearchange

+ 8.4

+ 17.9

+ 9.4

+ 7.5

507

6,608

1,278

369

317

9,079

2000

5.6

72.8

14.1

4.0

3.5

100.0

327

6,327

1,283

184

325

8,446

3.9

74.9

15.2

2.2

3.8

100.0

+ 180

+ 281

- 5

+ 185

- 8

+ 633

+ 54.8

+ 4.4

- 0.4

+ 100.2

- 2.3

+ 7.5

Sources and allocation of funds of VOLKSWAGEN AG

Source: VOLKSWAGEN AG

Sources in million in million in million in percent

Sales

plus other income

less expenditures

Added value

Appropriation in million in percent in million in percent in million in percent

to stockholders (dividend)

to employees (wages, salaries, fringe benets)

to the state (taxes, levies)

to creditors (interest)

to the company (reserves)

Added value

sustainable growth, this distribution endeavours to take

due and equitable account of the contributions of the

various stakeholder groups.

The added value accounts of VOLKSWAGEN AG as part

of the added value accounting of the Group show a sum

of approximately EUR 9 billion. The distribution pattern

of the resultant earnings reveals that the employees

play a major part in the creation of added value and

therefore harvest the lions share (72.8 percent) of the

returns. Payments to the state in the form of taxes and

duties are also high in the automotive industry. These

represent that part of the companys contribution to

society the ultimate use of which is determined not by

the company itself as is the case in sponsoring

activities, for example but by the elected representa-

tives of the people at the companys various locations

around the world. For their part, the shareholders have

benefited from a substantial increase in dividend on

account of the positive development of our business

and the increase in annual income. Finally, the com-

panys high reserves stand for Volkswagens efforts to

underpin the substance of the enterprise and thereby

safeguard its long-term future.

Added value cannot be geared unilaterally either to the

prot margin or to the shareholders dividend. Sustain-

able commercial success is a long-term consideration,

founded upon the quality and high rate of investment in

a companys people, processes and plant, that is to say

in its principal assets. In a transparent market economy,

these assets also include the trust and condence of the

companys customers, the general public and the state

institutions of the countries in which it operates.

1213

In this sense, Volkswagen is striving for

sustainable growth. In the process, share-

holder value, stakeholder value and work-

holder value are not mutually exclusive but

all part of the practice of value-based

management which takes due account of

the contributions of the various stakeholder

groups and provides each with its

commensurate reward.

Economic facts and gures for the Volkswagen MarqueIn terms of the number of vehicles built and

sold, Volkswagen is Europes largest automak-

er. Although Volkswagen was founded in 1938,

it was only after the Second World War that the

company began production of the rst ever

Volkswagen (peoples car) which was to

make automotive history as the Beetle. Since

1950, Volkswagen has also built vans. Over the

six decades of the companys history, the range

of different models has seen strong growth, not

only in the commercial vehicle sector

(Transporter, Caravelle, Multivan, LT) but also

on the passenger car front (Lupo, Polo, Golf,

Bora, New Beetle, Passat and Sharan).

Along with its main plant in Wolfsburg and

many production facilities in Europe,

Volkswagen maintains production and assem-

bly plants all over the world, including fac-

tories in Brazil, Mexico, South Africa and China.

2Added Value/Economic Facts and Figures Sustainability & Social Responsibility

992

12.923

17.756

Workforce000(at Dec. 31)

Output000 units

Sales000 units

Sales million

Pre-taxprot millionNorth America Region

South America/Africa Region

Asia Pacic Region

*including nancial services a positive result was reported.

x: change of more than 100 percent

Source: VOLKSWAGEN AG

18.0

17.5

+ 2.8

426

410

+ 3.8

728

649

+ 12.2

15,459

11,561

+ 33.7

684

372

+ 83.9

2000

1999

+/- (percent)

36.8

37.3

- 1.3

628

523

+ 20.1

643

552

+ 16.5

7,029

5,088

+ 38.1

- 4*

- 363

x

2000

1999

+/- (percent)

2000

1999

+/- (percent)

17.0

15.9

+ 6.7

332

314

+ 5.8

394

367

+ 7.5

4,297

3,139

+ 36.9

320

243

+ 31.6

Workforce000(at Dec. 31)

Production000 units

Sales000 units

Sales million

Pre-taxprot* millionVolkswagen Passenger Cars

VolkswagenCommercialVehicles

*Excluding extraordinary expenses (relating to the EU End of Life Vehicle Directive).

1,999

1,981

+ 0.9

2,396

2,382

+ 0.6

46,544

43,546

+ 6.9

1,671

1,348

+ 24.0

2000

1999

+/- (percent)

18.0

17.5

+ 2.8

247

238

+ 3.7

289

284

+ 1.5

4,562

4,348

+ 4.9

258

249

+ 3.5

2000

1999

+/- (percent)

125.6

122.7

+ 2.3

The Marques Volkswagen Passenger Cars and Commercial Vehicles in gures

1415

When it comes to demonstrating a commitment to social

responsibility, the German people expect more of

Volkswagen than of virtually any other company in Ger-

many. According to a representative survey conducted by

the Munich-based IMAS Institute in 2001, Volkswagen

enjoys a very positive social image among the German

population. The high regard in which we are held is both

a reward and a challenge a challenge to maintain the

companys social performance in an increasingly

competitive global arena and drive it forwards through

new, innovative solutions and projects. For Volkswagen,

social responsibility is both a source of competence and

an integral part of successful entrepreneurial activity.

Our employees are the driving force behind the

commercial development of the company. So fostering

the social security of Volkswagens people and their

families is not only a moral obligation but also in the

companys own best interest. In generating motivation

and commitment among employees, a healthy

atmosphere at the workplace is essential. Consequently,

the individual rights and dignity of our employees

regardless of gender, religion, nationality or race are

central to our corporate culture. They are also anchored

in a factory agreement entitled Partnership-Based

Conduct at Work.

As a global player, Volkswagen operates at

locations in various countries where different

cultural and political circumstances may

prevail. We see ourselves as a partner to the

regions in which our facilities are located and,

through a number of projects, are actively

involved in shaping the wider social picture

there.

When a company considers itself part of a

society it must also be prepared to promote

institutions and organisations in the cultural

sector or which help the socially underprivi-

leged, for example. In 2000, Volkswagen

bundled its diverse sponsorship activities in

the arts and culture sector under the wing of

the Volkswagen Art Foundation. Major

sponsorship activities in recent years have

included backing the dokumenta X

contemporary art exhibition in Kassel (1997)

and supporting Weimar as the Cultural

Capital of Europe (1999). Since 1997, the

Volkswagen Sound Foundation has been

dedicated to fostering young rock and pop

musicians, aiming to help talented youngsters

get off to a good start in their careers.

One Hour for the Future is the name of an initiative

triggered by Volkswagens General and Group Works

Council to help streetchildren. Since 1999, the project

has brought in EUR 2 million in donations. The aim

is to provide long-term support for local project man-

agement organisations in cities where Volkswagen is

based in Brazil, South Africa, Mexico and Germany.

The initiative has drawn broad-based support not

only from within the company but also from

Volkswagen suppliers and customer clubs.

Social Competence

A Success Factor for Volkswagen

www.volkswagen-environment.de/magazine

Employee Initiative: Giving Streetchildren a Future

2Economic Facts and Figures/Social Competence Sustainability & Social Responsibility

CSR the social dimension of sustainabilityThe social performance of corporate enterprises is

increasingly being subsumed under the heading of

corporate social responsibility (CSR). The loose deni-

tion of CSR has come to take in not only a companys

social responsibilities but its economic and ecological

responsibilities as well. As a result, CSR is now en-

croaching on the territory of the established concept

of sustainable development.

For Volkswagen, CSR solely covers the social dimension

of sustainable development. This comprises the

willingness of an enterprise to invest its capabilities in

nding innovative solutions to social problems both

within and beyond the bounds of the company, thereby

increasing its commercial success. In this sense,

corporate social responsibility means far more than

doing good deeds in a social context and becomes a

conceptual approach to business. Volkswagens social

competence is reected in a number of different projects.

Since 1995, Volkswagen has been actively involved in

the European business initiative CSR Europe

formerly the European Business Network for Social

Cohesion (EBNSC). The aim of CSR Europe is to support

companies on their way to greater profitability,

sustainable growth and social progress. In the first

European survey to assess the status quo of

socially responsible corporate activities,

commissioned by CSR Europe, independent

research institutes studied the contributions

made by 46 companies to enhancing the

employability of the unemployed and school

leavers (Employability); how these companies

helped to promote start-ups (Entrepreneur-

ship); how they demonstrated their adaptabil-

ity in dynamic markets (Adaptability) and

what they did to foster equal opportunities for

men and women (Equal Opportunities).

Volkswagen emerged from this appraisal of

socially responsible performance with flying

colours.

Volkswagen has caught the public eye with a

number of social innovations. One such eye-

catcher is the concept of the factory that

breathes. Given the uctuating nature of

market developments in the automobile

industry, the degree to which the companys

capacity is taken up is not always the same.

Volkswagen can react to these uctuations fast

and exibly thanks to a working-time model

based on a four-day week which enables the

company to adapt to market developments

Social responsibility is an

important value which European

society can contribute to a

process of globalisation which is

otherwise primarily marked by

economic criteria alone.

Dr. Peter Hartz,

Member of the Board

of Management of

VOLKSWAGEN AG responsible

for Human Resources

www.volkswagen-environment.de/knowledge/sustainability-social-responsibility

1617

without having to recruit or dismiss permanent staff. This

not only permits Volkswagen to safeguard jobs and retain

the intellectual capital vested in its employees, it also

means, for example, that the transaction costs associated

with a corporate policy oriented solely to the short term

are not incurred.

Providing for the futureVolkswagen has now transposed the concept of the

factory that breathes to the working lives of its

employees in what is called the Time Asset bond

scheme. During their employment with the company,

employees can choose to save up long-term Time Assets

which then enable them to shape their personal working

lives more exibly in line with their individual wishes. In

contrast to conventional exitime accounts, employees

can choose to invest both working-hour credits and

portions of their gross pay in the scheme and earn

interest on their investments. Taxes and duties only

become payable when the Time Assets are actually used.

The savings are invested on the capital market in a

special fund which is professionally managed in order to

achieve maximum asset growth. The Time Assets saved

are then used to enable employees to take early

retirement or to fund an increase in their company

pensions.

Large companies are often the prime movers of

economic development for a whole region and as such

have a responsible part to play in regional decision-

making. The exceptional importance of Volkswagen for

the City of Wolfsburg led the company to take a

remarkable step: together with the City of Wolfsburg,

we have set ourselves the goal of creating a dynamic

and self-sufficient entrepreneurial environment in the

region, thereby halving the number of people out of

work. Since the AutoVision project was initiated in

1998, 3,700 new jobs have been created. The project

comprises supporting start-ups, attracting suppliers,

training the unemployed and redeveloping Wolfsburg

city centre. One key element of the start-up support

scheme is the InnovationsCampus where start-up

entrepreneurs can find office space, advice and

services. There is also a supraregional start-up competi-

tion by the name of promotion in which experts with

a brilliant idea for a new business related to

the subject of mobility can obtain funding.

At the same time, Volkswagen is also helping

to attract new employers (mainly automotive

suppliers) to the region. This targeted

relocation scheme includes the provision of

development sites and buildings as well as a

range of service offerings. In order to fill the

newly created jobs, a personnel agency which

was created as part of the AutoVision project

offers services including temporary and

permanent staff recruitment, employee

training and human resources consultancy.

In future, the AutoVision concept is to be

introduced at the Kassel and Emden plants,

as well.

Creating jobsThe 5000x5000 project will enable some 3,500

job seekers to find work in Wolfsburg where

an innovative labour scheme has been

developed for the production of a new multi-

purpose vehicle under the aegis of the newly

founded company, Auto 5000 GmbH. It was

only thanks to this scheme that the new

model could be built in Wolfsburg. Another

1,500 unemployed people will be taken on if

production of the Microbus in Hanover gets

the go-ahead. The cornerstones of the scheme

are a remuneration program which varies

according to working hours and in which the

end of the working day depends on meeting

production targets. Regular, value-adding

working hours average out over the year as a

whole at 35 hours a week. Each week, every

employee receives an average of three hours

customised training, half of which is paid at

training-time rates. The monthly wage

amounts to DEM 4,500 plus a minimum

bonus of DEM 500 a month. Employees also

get to participate in profits. Thus, the

5000x5000 project not only helps safeguard

Germanys future as an industrial location but

also helps to cut unemployment.

2Corporate Social Responsiblity Sustainability & Social Responsibility

Cooperative conict management andsocial securityFounded on Volkswagens German and European

heritage, personal development, social security and

employee participation in the corporate decision-

making process all form important aspects of the

companys human resources policy.

In accordance with German legislation (Works

Constitution Act) Volkswagens employees participate

in the corporate decision-making process via the

companys Supervisory Board and the Works Councils

at the various plants and subsidiaries. This involvement

is an expression of the internal democratic process and

cooperative conflict management practised at

Volkswagen. Employee and employer representatives

have an equal number of seats on the companys

Supervisory Board. The Chairman of the Supervisory

Board representing the employer has two votes, so

that in the event of a tied vote, a decision can always be

reached. The Works Council is elected by the employees

for a four-year term. The role of the Works Council is to

monitor compliance with laws and regulations,

collective bargaining agreements and factory agree-

ments. It also has co-determination and participatory

rights and can formally object to management deci-

sions. The practice of involving the employees in the

decision-making process at Volkswagen has shown that

responsible employee participation is an important

success factor for the company.

Pioneering the World Works Council When Volkswagen founded its European Works Council

in 1990 it was one of the first global players to have its

own transnational employee representative body. Since

then, the Group companies and plants in Central and

Eastern Europe which are not yet members of the

European Union have become fully fledged members of

the European Works Council. In 1999, Volkswagen

became the first company in the automotive industry to

set up its own Group World Works Council in which the

Groups companies and plants outside

Europe are also represented. The core

objective is to ensure ongoing global dialogue

among the various employee representative

bodies and with the company.

Socially responsible behaviourCooperation between Works Council and

management has led to various agreements,

including those governing Environmental

Protection (see page 22), the Principles of

Advancement for Women, and Partnership-

Based Conduct at Work. The aim of the Factory

Agreement on the Principles of Advancement

for Women, concluded in 1989, is to increase

the proportion of women in the workforce and

to ensure that women are also trained for

management positions. The Factory Agree-

ment on Partnership-Based Conduct at Work,

which dates from 1996, makes it clear that

sexual harassment, mobbing and other forms

of discrimination on grounds of gender, race

or religion, will not be tolerated at Volkswagen.

A declaration of social standards at

Volkswagen, to be drawn up by the end of this

year, will provide comprehensive regulation of

social rights and labour relations at the Group.

Employee social security ranks high among

Europes political priorities and is widely

regulated by law. It forms a central pillar of

what is meant by the term social market

economy. To this extent, Volkswagen

considers itself a European company. In

Germany, the hub of the companys world-

wide activities, the scope of employee social

security prescribed by law includes the

following benefits:

1819

Health insurance: provides the insured with

benets such as medical treatment, medicines,

hospital treatment and sickness benet.

Long-term nursing care insurance: provides

benets in the event that the insured requires

long-term nursing care.

Annuity insurance: in addition to disability and

retirement pensions, this also assures employees of

medical or work-related benets such as rehabilitation.

Industrial accident insurance: provides cover in the

event of accidents at work.

Unemployment insurance: in the event of the insured

becoming unemployed, this provides financial

support over a period of at least four months and at

most two years, in order to help the insured through

the transition period before other employment is

found.

The contributions to the legally prescribed health,

nursing care, pension and unemployment insurance are

met in equal parts by the employer and the employee.

In the field of voluntary company pension plans,

Volkswagen is breaking new ground. For more than 50

years, the company has granted its employees voluntary

social benefits in the form of a company

pension. In 2000, 10.6 percent of labour costs

were accounted for by company pensions. In

2001, this additional form of provision for old-

age was converted to an in-company pension

fund. As a result of the associated financing

via the capital market, only one percent of the

cost of wages and salaries is now required to

safeguard our company pensions. All invest-

ment income is allocated directly to the capi-

tal stock, thereby increasing employees

company pensions.

In the autumn of 1998, uniform minimum

standards and procedures were laid down for

all plants across the Group in order to protect

and promote health and safety at work. In

2000, the production plants of VOLKSWAGEN

AG reported an average attendance level of

95.9 percent. Our long-term efforts to improve

industrial health and safety helped to reduce

the number of industrial accidents in 2000 to

a total of 724.

Number of industrial accidents(German plants)

1997 1998 1999 2000

300

600

900

1,200

Industrial accidents at VOLKSWAGEN AG

Source: VOLKSWAGEN AG

2Cooperative Conflict Management Sustainability & Social Responsibility

www.volkswagen-environment.de/knowledge/sustainability-social-responsibility

Corporate sustainability vericationThe growing importance of sustainability for the inter-

national financial markets provides clear indication

that sustainable corporate policies are built around

a core of profitability.

When it comes to evaluating companies, no matter

where they are based, economic aspects are increasing-

ly being joined by ecological and social metrics.

Volkswagen was quick to identify this trend and has

supported it by applying for a number of validations. In

sustainability-oriented financial markets, a companys

sustainability performance joins the appraisal of other

stakeholder parameters to provide an important exter-

nal measure of its past performance and a basis for

confidence in its ability to master future challenges in

sustainable fashion.

The Dow Jones Sustainability World Index (DJSI World)

was established in 1999, and the European Dow Jones

Stoxx Sustainability Index in 2001. From the outset,

Volkswagen has been among the listed companies in

both these indexes. In 2000, Volkswagen was also named

Sustainability Leader in the Auto Manufacturers

category by the Zurich-based rating agency SAM

Sustainability Group and has since retained this status.

The DJSI is the first global index to reflect the perfor-

mance of companies which meet the criteria laid down

by SAM. Among the aspects verified are technology

leadership, social and environmental compatibility and

productivity. Based on this comprehensive

analysis and a comparison between the DJSI

and the conventional Dow Jones Index, for

the first time the success of managing for

sustainability has become evident.

Since 2001, Volkswagen has also been

included in the FTSE4Good index, a major

index on the London Stock Exchange. The

FTSE4Good index lists companies which, to a

special extent, work towards environmental

sustainability, uphold and support universal

human rights, take account of social consid-

erations and develop positive relationships

with stakeholders. Volkswagens shares are

included in many socially responsible and

sustainability-oriented funds, ensuring the

companys presence in this growth sector.

In 2000, the company returned the best results

in its corporate history. In conjunction with

its exceptional sustainability ratings, this is an

indicator for Volkswagen that shareholder

value is not diametrically opposed to the

notion of stakeholder value, but that the two

actually complement one another in a

meaningful way.

Contact:

VOLKSWAGEN AG

Environment, Industrial Safety and Traffic Systems

Rudolf Stobbe

Letter box 1896

38436 Wolfsburg, Germany

Tel. +49 5361 923248

VOLKSWAGEN AG

Reinhold Kopp

Head of Corporate Government Relations

Letter box 1882

38436 Wolfsburg, Germany

Tel. +49 5361 978622

2021

56

Environmental Policy & Management

3

Volkswagen Environmental Management System

STEP* Environmental Marque Committee (EMC)

Chief Environmental Ofcer of theVolkswagen Marque

EnvironmentalManagement Ofcer,Product

EnvironmentalManagement Ofcer,Production

EnvironmentalManagement Ofcer,Sales

Environmental Policy and Management

for the Volkswagen Marque

Boa

rd M

emb

er, R

esea

rch

and

Dev

elop

men

t

Hea

d o

f R

esea

rch,

Env

iron

men

t and

Tra

nsp

orta

tion

Product, Environmentand Trafc Systems

Environment, IndustrialSafety and Trafc Systems

EnvironmentTechnology

Lupo Polo Golf NewBeetle

Passat OtherModels

Wolfsburg Emden Hanover Mosel Pamplona OtherPlants

VehicleRecycling

TrafcSystems

Life CycleAssessment

SustainabilityStrategy

Environmental Project Supervision

UmweltpprojektverfolgungPlant Environment Ofcers

Distributors Dealers Importers

UmweltpprojektverfolgungEnvironmental and Consumer Protection

*STEP, the Strategic Task Force for Environmental Protection, is a Group-wide body responsible for coordinating environmental policy amongst theindividual companies and regions within the Volkswagen Group

Source: VOLKSWAGEN AG

Environmental Planning

Industrial Safety (Work Environment)

It is the declared aim of Volkswagen in

all its activities to restrict the

environmental impact to a minimum

and to make its own contribution to

resolving environmental problems at

regional and global level.

It is Volkswagens aim to offer high-

quality automobiles which take equal

account of the expectations of its

customers with regard to environmental

compatibility, economy, safety, quality

and comfort.

In order to safeguard the long term

future of the company and enhance its

competitive position, Volkswagen is

researching into and developing

ecologically efficient products, processes

and concepts for personal mobility.

Providing frank and clear information

and entering into dialogue with

customers, dealers and the public is a

matter of course for Volkswagen.

Cooperation with policy-makers and

the authorities is based on a fundamen-

tally proactive approach founded on

mutual trust and includes provision for

emergencies at each production site.

In keeping with their duties, all

Volkswagen employees are informed,

trained and motivated in respect of

environmental protection. They are

under obligation to implement these

principles and to comply with statutory

provisions and official regulations as

these apply to their respective activities.

Those responsible for environmental

management at Volkswagen shall, on

the basis of the companys environmen-

tal policy, ensure that in conjunction

with suppliers, service providers,

retailers and recycling companies, the

environmental compatibility of its

vehicles and production plants is sub-

ject to a process of continuous improve-

ment.

The Volkswagen Board of Management

shall, at regular intervals, check that

the companys environmental policy

and objectives are being observed and

that the Environmental Management

System is working properly. This shall

include evaluation of the recorded

environmentally relevant data.

2223

3Environmental Policy Environmental Policy & Management

In 1995, Volkswagen replaced its Environmental

Guidelines with a Corporate Environmental Policy. As

practical implementation of this policy can only be

achieved through ongoing dialogue with the workforce

and its representatives, a Factory Agreement on

Environmental Protection was also concluded with the

Company Works Council.

Our efforts in the direction of the widely

debated concept of sustainability are based

on our Corporate Environmental Policy. Right

now, in what is a fascinating process for us all,

we are considering how to make better use in

this context of the particular expertise and

experience developed at Volkswagen in the

fields of work and social responsibility.

1

3

5

7

4 6

Basic Principles

Contact:

VOLKSWAGEN AG

Environment, Industrial Safety and

Traffic Systems

Rudolf Stobbe

Letter box 1896

38436 Wolfsburg, Germany

Tel. +49 5361 923248

2

Preamble to Volkswagens Environmental Policy

Volkswagen develops, manufactures and markets motor vehicles worldwide with the aim of safeguarding personal mobility.

The company accepts responsibility for the continuous improvement of the environmental compatibility of its products and

for the increasingly conservative use of natural resources, with due regard to economic aspects. Accordingly, the company

makes environmentally efficient, advanced technology available worldwide and brings this technology to bear over the full

life cycle of its products. At all its corporate locations, Volkswagen works hand-in-hand with society and policy-makers to

shape a development process that will bring sustainable social and ecological benefits.

The international community has set itself the goal of

reducing worldwide anthropogenic emissions of

greenhouse gases (i.e. those caused by human activity).

In December 1997, it was decided at the United Nations

Conference on Climate Change in Kyoto to reduce

emissions of the six greenhouse gases

carbon dioxide (CO2)

methane

dinitrogen monoxide (laughing gas)

fully halogenated chlorofluorocarbons (CFCs)

partially halogenated CFCs

sulphur hexafluoride

over the period 2008 to 2012 by at least five percent with

reference to 1990 levels. The European Union commit-

ted itself to a reduction of at least eight percent and

Germany 21 percent. Following the meeting of the

signatories in July 2001 in Bonn, ratification of what is

known as the Kyoto Protocol came closer to becoming a

reality.

CO2 is the main cause of climate change. Twelve

percent of total anthropogenic emissions of this gas

come from road traffic, with cars accounting for 5.5

percent. But with the steady growth in mobility

requirements throughout the world, this proportion is

likely to increase. In industrialised countries, the main

reason for higher emissions is the fact that more and

more people prefer to live in the country and commute

to and from work, and leisure activities are becoming

ever more popular. In newly industrialising countries,

the growth in emissions from road traffic is largely due

to greater prosperity bringing higher levels of car

ownership. Both developments indicate that the

automobile is set to remain a central element in

transport systems throughout the world. Consequently,

reducing fuel consumption and with it CO2 emissions

is now a major development objective for automakers.

Volkswagens drive systems and fuel strategy (see page

52) reflects this focus.

Efforts to develop vehicles and drive systems

for the future are, however, subject to a com-

bination of ecological and economic con-

straints. Technological innovations have to be

scrutinised for environmental compatibility,

and their cost/benefit ratio and practical

value must be assessed. Yet it is becoming

increasingly clear that some of the demands

made of development processes are poten-

tially incompatible. Car design has to take into

account customers wishes for higher levels of

equipment and comfort in terms of ergono-

mic interior design, ride quality and interior

acoustics, for example along with attractive

design and high performance. On the other

hand, engine and vehicle developers have to

fulfil increasingly strict active and passive

safety criteria, while at the same time ensur-

ing a further improvement in environmental

compatibility by respecting more rigorous

exhaust emission standards and taking

account of the introduction of recycling

systems. These conflicting goals can only be

met by achieving a proper balance between

environmental measures which increase

direct costs and the tangible cost savings

which result from improved consumption,

without compromising on performance.

In 1993, the German Association of the

Automotive Industry (VDA) undertook to

reduce the average fuel consumption of its

new cars by 25 percent by the year 2005,

compared with 1990 levels.

At European level, in 1995 the Association of

European Automobile Manufacturers, ACEA,

gave an undertaking that it would reduce

average CO2 emissions from new vehicles to

140 g/km by 2008. This, too, represents a 25

Climate Protection and Fuel Consumption

1995

-40

-30

-20

-10

0ACEA CO2 Agreement

ACEA current status

Volkswagen

2000 2005 2010

%

2425

3

percent reduction and thus complements the undertak-

ing made by the VDA. Progress so far indicates that,

between 1995 and 2000, Volkswagen succeeded in

reducing corporate average fuel consumption by some

twelve percent. Apart from improved engine and vehicle

design, one contributory factor here has been the

increase in sales of new vehicles with diesel engines in

recent years. Given the current state of the art, we can

now define four key development factors which will

help to achieve these highly ambitious fuel consump-

tion and CO2 goals.

The Lupo 3L TDI and Lupo FSI are the first

mass-produced vehicles in which a combina-

tion of various technical measures has

reduced fuel consumption per hundred

kilometres to three and five litres respectively.

Moreover for the first time ever in a diesel

vehicle exhaust emissions have been

reduced below the limits laid down by the

Euro 4 regulation due to become law in 2005.

It is now up to Volkswagens engineers to

transfer these innovative technologies to

other models. Each model will require a

specific blend of modifications to the vehicle

itself and its engine to compensate for the

individual factors responsible for increasing

consumption levels. Direct injection

technology is likely to play a key role in

fulfilling the undertakings made for 2005 and

2008. But to operate efficiently, direct

injection requires sulphur-free fuels.

Drop in CO2 emissions due to falling average eet consumption

Key development factors for fuel-efcient vehicles

Volkswagens contribution to meeting the ACEAs Voluntary Agreement on CO2(0 % = CO2 emissions based on 1995 corporate average fuel economy)Source: VOLKSWAGEN AG

Improvedcombustion

Reduzierung derReibung und des Luftwiederstandes

4

Lightweight design

1

3 4

Source: VOLKSWAGEN AG

Reduced friction and drag

Gearboxmodications

2

Climate Protection and Fuel Consumption Environmental Policy & Management

Vehicle life cycle inventoriesSince the first life cycle inventory for an entire vehicle

was published in 1996 (for the Golf A3), Volkswagen has

drawn up three further inventories: for the Lupo 3L TDI,

the petrol-engined Golf A4 (55 kW) and the diesel-

engined Golf A4 TDI (66 kW).

Drawing up life cycle inventories has now become a

routine matter for Volkswagen. Between the rst and

fourth inventories, the cost and effort involved were

reduced by more than 50 percent ample demonstration

of the technical progress made on this front. The data

acquisition process is becoming more and more

comprehensive and the system for deriving the input

data for production operations from the development

specications has proved highly effective. Moreover, the

program which evaluates the vast collection of data

leaves little to be desired.

Given our thorough knowledge of the

individual stages in the manufacture of a car it

is their weighting in the overall balance sheet

which constitutes by far the most complex

part of a life cycle inventory. The initial

production of materials reflected in the

inventory process in vast volumes of data for

steel, plastic, aluminium, etc. is of greater

environmental relevance than the actual

process of transforming them into a car.

By contrast, drawing up a life cycle inventory

for the service life of a vehicle (driving,

refuelling, servicing) is relatively simple. As

the basis for this part of the assessment,

Volkswagen assumes a driving pattern based

on the statutory New European Driving Cycle

(NEDC) for measuring consumption and

emissions. All the required data for this cycle

is available for each vehicle. Analysis clearly

shows that with the exception of nitrogen

oxides in diesel exhaust emissions of

hydrocarbons, sulphur oxides and particu-

lates account for only a tiny proportion of the

respective total emissions. The majority in

terms of volume is accounted for by carbon

dioxide (CO2).

Curriculum Vitae

www.volkswagen-environment.de/knowledge/environmental-management

As the rst stage in a life cycle assessment, a life cycle inventory

involves an overall environmental assessment of products, pro-

duction processes and services across their entire life cycle. This

begins with the extraction of the raw materials and continues

all the way to completion of the nished product, including its

packaging. The inventory identies the total raw material

requirements and includes data on their processing, not least the

quantities of energy required and resultant emissions to air and

water. In the case of consumer goods, the life cycle then continues

via the retailer and the consumer right down to disposal or post-

consumer recycling. All transport processes involved are also

analysed. Life cycle inventories are drawn up in line with the

international standard ISO 14040/41.

Life cycle inventories supply environmental management sys-

tems with important data that can help improve the environ-

mental characteristics of a product throughout its life cycle.

What Is a Life Cycle Inventory?

Why Draw Up a Life Cycle Inventory?

2627

3

It is relatively difficult to compare the four models for

which life cycle inventories have been drawn up to date

because the Lupo belongs to a different category than

the Golf. The most similar inventory results are those

for the Golf A4 petrol and diesel models. A comparison

here shows that, over its entire life cycle, the TDI Golf

(diesel) emits three tonnes less CO2 than its petrol-

engined counterpart. In addition, on the fuel front, the

production and distribution of petrol for the Golf A4

generates 40 kilograms more hydrocarbons than in the

case of diesel. However, these advantages of the diesel

engine are offset by higher NOx and particulate

emissions.

The business of drawing up an inventory for

the manufacturing stage of the vehicles life

cycle takes up too much time and effort for it

to be feasible for each and every model.

Instead, the scope of the existing Internation-

al Material Data System for cars (see page 74)

is to be extended in future by adding further

environmental data. This will lead to

optimised data acquisition for the car

production phase.

Comparative life cycle inventory

Primaryenergy

545 GJ

10

20

30

40

50

60

70

80

90

100

%

Steel

722 kg

Plastics

253 kg

Lightmetals

132 kg

CO2

36 t

NM VOC

162 kg

SO2

34 kg

NOx

77 kg

PM

15 kg

Car production

Service life, recycling

Petrol and dieselproduction

Materials production

Columns from left to right: Golf A3 (petrol), Golf A4 (petrol), Golf A4 TDI, Lupo 3L TDI(100 % = values at foot of diagram)PM: particulate massNM VOC: non-methane organic compounds (incl. propane, butane and benzene)Source: VOLKSWAGEN AG

Life Cycle Inventories Environmental Policy & Management

Innovative environmental protection cuts costsThe cost of end-of-pipe environmental technology

which treats pollution rather than preventing it, can be

clearly defined. Today, though, such technology is

progressively being replaced by fully integrated

measures which aim to ensure that pollution is kept to a

minimum from the outset by tackling root causes. On

the financial side, this makes it increasingly difficult to

specifically identify and report environmental costs. As

a result, such details of costs as are published provide

only a limited and increasingly inadequate picture of

Volkswagens efforts to protect the environment.

Investment in environmental protectionIn the year 2000, Volkswagen invested EUR 27.1 million

in environmental technology. In one current example of

the companys integrated approach to environmental

protection, dry machining is being introduced in the

mechanical engineering sector in Wolfsburg to replace

some of the existing metal-cutting machines. This does

away with the need for cost-intensive cutting com-

pound reprocessors, chip centrifuges and demulsifiers,

and thereby frees up floor space. This particular

integrated environmental protection measure will make

it possible to operate near-dry mechanical manufactur-

ing processes in future. In addition, replacing the

machines and components that use cooling lubricants

will create a more pleasant working environment for our

employees.

Environmental protection operating costsIn 2000, the introduction of a new system of

parameters for recording the operating costs

of environmental protection measures was

completed at Volkswagens six German plants.

The system records the percentage of total

operating costs accounted for by environ-

mental protection in a specic area or for a

particular cost centre. When changes take

place in structures or processes, the para-

meters can be adjusted accordingly.

Expenditure was assessed at EUR 190.3 million

for 2000 a signicant rise, largely explained

by the use of the more precise method of data

acquisition. With the new system, costs can be

calculated much more easily than in the past.

In 2001, the system was also introduced at

Volkswagens other European plants.

Product-related environmental costsAs part of a long-term research project to

record product-related environmental costs

we have carried out two pilot studies to

analyse process-related environmental costs,

the costs of material residues and external

recycling costs in respect of a plastic fuel tank

in one case and a painted vehicle body in the

other. Because of the high cost and effort

involved in separate environmental cost

accounting, we are currently looking into

alternative methods of incorporating

environmental cost data into existing systems

in a way that makes strategic sense.

Less Is More

Capital investments and operating costs for environmental protection

34

86

1998 1999 2000

42

150

27

190

Capital investments

Operating costs

Figures in EUR millions, German plants excl. Zwickau/Mosel and Chemnitz Source: VOLKSWAGEN AG

2829

3

Auditing environmental managementThe process of establishing environmental manage-

ment systems has been completed at most Volkswagen

plants. In Europe, these systems are largely based on

the European Unions Environmental Management

and Audit Scheme (EMAS). Outside Europe, ISO

standard 14001, which is equivalent to EMAS in many

key aspects, is used. Our plants in Hanover (Germany),

Polkowice (Poland), Uitenhage (South Africa), Crdoba

(Argentina) and Puebla (Mexico). achieved initial

certification during 2000.

Some plants are currently being restructured or in the

process of setting up new production activities and

have not quite achieved their goals yet but they will

soon follow suit. We are concentrating our activities on

the plants in Taubat (Brazil), Changchun (China),

Martin (Slovakia) and Brussels (Belgium).

Internal audits are regularly carried out by trained

personnel in order to check the effectiveness and

efficiency of our environmental management systems.

At present no serious inadequacies have been identi-

fied, but management has received many suggestions

relating to technical, organisational or financial

improvements. These have mainly focused on saving

energy and resources and protecting the soil and

groundwater.

Along with training courses in Wolfsburg and

consultation sessions at other plants, what we

call international audits are also carried out

to help plants to set up their own environ-

mental management systems. These have

been taking place since 1999, when environ-

mental experts from Volkswagen Argentina,

Volkswagen do Brasil, AutoEuropa (Portugal)

and Volkswagens German headquarters

investigated the environmental situation in

Anchieta (Brazil). In addition, colleagues from

across the Group are frequently involved in

audits at the companys German plants.

Today, these audits runs very smoothly and

offer a number of benefits for all concerned:

They enable a transfer of know-how to

take place.

They ensure a high uniform international

level of auditing.

They enable closer personal contacts to be

established between environmental experts

from the various plants on different

continents.

They provide local colleagues with support

in the run-up to external environmental

certification processes.

Once each plant in Germany has been

certified at least once, the next task is to

establish and maintain such environmental

management systems at all of the Groups

plants worldwide.

Passing the Test

www.volkswagen-environment.de/on-the-ground

Environmental Costs/Eco-Audit Environmental Policy & Management

Volkswagen employees help the environment On the next few pages, we aim to keep you informed about the progress of the programmes and initiatives

described in our 1999/2000 Environmental Report, as well as reporting on new projects.

Pulling Together

Human Resource Development and Environmental Communication Programme

Management seminarsSince 1997, 205 out of a total of 943

senior and junior managers have

received training in 13 half-day semi-

nars (Volkswagen Marque, Germany)

Training of supervisorsTraining of 733 out of 2,021 VOLKS-

WAGEN AG supervisors in 2-day

workshops.

Environment specialists Training of 549 specialists from

VOLKSWAGEN AG as environmental

specialists in 37 seminars since 1990.

All participants act as multipliers in

their capacity as supervisors, special-

ists or section managers.

Recycling-friendly design:13 seminars with 128 participants.

Eco-Centre becomes Environmental Service Centre (ESC): The ESC provides a location for theoret-

ical instruction and a base for the

many environmental service activities

of the apprentices at the Wolfsburg

plant. An average of 20 to 24 appren-

tices (industrial/technical or commer-

cial) attend the Centre at any one time

making for a total of around 510 a

year.

e.g.

Recycling Initiative (see page 31)

Internal Environmental Award

competition (siehe Seite 32)

Environmental Service Centre

Company newspaper Autogramm

Environmental Report

Environmental statements

Umweltbrief

Environment Newsletter

Poster campaigns

Factory meetings

Open days

Green factory tour

Intranet

Internet

Suggestions scheme

Green factory rally for apprentices

HR development Initiatives/projects Information/motivation

Measuring noise levels in the production sector: (from left) Patrik During, Sandra Hackel, Fabian Haufe,Klaus Krolik (ESC trainer), Christian Camehl, Jens Klinner

3031

Recycling-friendly designIn the seminar entitled Recycling-friendly Design, our

design engineers learn how the decisions they make

when developing new vehicles inuence the nature,

efciency and economics of the end-of-life-vehicle

recycling process. They are introduced to the statutory

regulations on vehicle recycling, material recycling from

end-of-life vehicles, the goals and basic principles of

recycling-friendly design and the use of dismantling

studies as an aid to the design process.

A workforce initiative becomes aninstitution(as reported in 1997 and 1999)

Progress and goals

The scheme has been in existence since 1994

and involves the collection of packaging mate-

rial such as plastic caps, plastic film and card-

board packaging and its resale to the original

suppliers or recycling companies. The project

involves employees who, for age or health rea-

sons, are not able to work in the production

sector. This way we take some of the strain off

the environment and at the same time safe-

guard the jobs of older or disabled colleagues

in a way that makes economic sense, says

Norbert Loeper, initiator of the project.

Results for 2000Cost cutting through resale of recyclable packaging

or reduction of material requirements

Plastics EUR 0.72 million

Cardboard packaging EUR 0.36 million

Nopa foam EUR 0.12 million

Total EUR 1.2 million

Waste reduction

Cardboard packaging 219,110 kg

Plastics 117,814 kg

Nopa foam 37,447 kg

Total 374,369 kg

Savings per vehicle

1996: EUR 0.09

1997: EUR 0.14

1998: EUR 1.23

1999: EUR 2.33

2000: EUR 1.96

2001: EUR 2.46 (1st quarter)

Green Team Recycling Scheme

The 13 seminars already staged in collabora-

tion with Volkswagen Coaching GmbH for a

total of 128 participants have been a resound-

ing success. The long-term aim is to provide

training for some 1,000 engineers.

Employee projects

3Employees Environmental Policy & Management

First internal Volkswagen Environmental AwardThe Environmental Award is intended to

underline our commitment to the principle of

sustainability. We have to achieve a balance

between ecological and economic considera-

tions and social responsibility if the lives of

future generations are to be assured. The Envi-

ronmental Award is a way of rewarding

achievements, enhancing motivation and

demonstrating that sustainability represents a

daily challenge for each and every one of us.

This was how Uwe Bartels, member of the

VOLKSWAGEN AG Group Works Council, and

Rudolf Stobbe, Environment, Industrial Safety

and Trafc Systems explained the reasoning

behind the introduction of the Environmental

Award.

Three projects have so far been singled out for

an award: employees at the Brunswick plant

succeeded in reducing varnish consumption in

the brake disc paintshop; at the Emden plant

the use of salt on the roads in winter was mini-

mised; and at the Wolfsburg plant the use of

salt-bath hardening techniques in the tool

hardening bay was drastically reduced and

replaced by gas heat treatment. In future, the

award will be presented every two years.

Environmental pro-

tection at Volkswagen

depends to a very

large extent on the

willingness of the

workforce to get in-

volved. Many of our employees have

displayed a commitment to protect-

ing the environment that goes well

beyond the call of duty. The

Environmental Award was created to

help the company to reward that

commitment.

Rudolf Stobbe,

Chief Environmental Officer of the

Volkswagen Marque

Volkswagen Environmental Award 2001: (from left) Uwe Bartels, Herbert Engel, Frank Ludewig, Wolfgang Feder, Uwe Hentschel, Oliver Frey, Rudolf Stobbe

3233

Environmental history projectThe 1950s saw one production record after another

being broken at the Volkswagen plant in Wolfsburg.

Demand for the Beetle, the symbol of the German

economic miracle, was buoyant, and production

capaci