2015 CSR Interim Report

AT HOME IN AMERICA 2013 CORPORATE SOCIAL RESPONSIBILITY REPORT INTERIM REPORT | 2015

Volkswagen Group of America has been part of American culture since the first Beetle arrived more than six decades ago. Since that time, we have grown into a family of iconic brands that includes Audi, Bentley, Bugatti and Lamborghini. Across those brands, more Americans are buying our vehicles today than at any other point in our history, and our financial arm, VW Credit, Inc., is providing new financing to record numbers of American consumers. The growth and momentum Volkswagen Group of America has achieved makes it clear that we’re more At Home in America now than ever before. Today, we continue to deepen our American roots through investments in our people, new products, additional production capacity and innovative, green technologies. In fact, by 2019 Volkswagen will have invested nearly $7 billion (USD) in North America. This comes on the heels of earlier investments, including building the only platinum LEED-certified plant in the world in Chattanooga, Tenn. As a family of brands and businesses, Volkswagen Group of America is unified by much more than our dedication to building great cars. We are connected by a shared mission and commitment to putting our engineering expertise, innovation and vision to work for the greater good, to help improve our communities and solve the sustainability challenges of the future. We also care deeply about our employees, partners and the places where we’ve made ourselves at home. Corporate giving and involvement in our communities is deeply rooted in our culture, and we believe that vibrant public-private partnerships are critical to a strong, sustainable economic future. In 2014 alone, Volkswagen Group of America donated approximately $8 million in funding and in-kind donations to organizations across the country, as well as through our newly launched “Get Involved” campaign. Within the pages of this report, you’ll find stories of how we’ve been deepening our roots in America through our commitment to being a good partner on the road and in the communities we serve – making us At Home in America for years to come.

Michael Horn President and CEO, Volkswagen Group of America, Inc.

TA B L E O F C O N T E N T S Volkswagen Chattanooga ........................................................... 2 Environmental Sustainability....................................................... 5 Serving Our Communities .......................................................... 17 Promoting a Diverse and Inclusive Workplace.......................... 27 Global Commitment to Social Responsibility........................... 30 At Home in America, Today and Tomorrow.............................. 33

VOLKSWAGEN GROUP OF AMERICA OPERATION STATISTICS* Nearly 6,500 employees More than 1,500 new hires since 2011

1,018 dealer locations in all 50 states 29 corporate/subsidiary locations *As of January 2015

VOLKSWAGEN CHATTANOOGA THE WORLD’S MOST SUSTAINABLE AUTOMOTIVE MANUFACTURING FACILITY HOME OF THE AWARD-WINNING VOLKSWAGEN PASSAT

LED LIGHTING

$1 BILLION INVESTMENT in the local economy

262,500 kWh

LARGEST SOLAR PARK IN TENNESSEE

720,000 KILOWATTS SAVED ANNUALLY due to insulation made of recycled minerals and rock wool

saved annually

68%

33,000

solar panels on

less energy used due to LED lighting

66 ACRES produces

WETLANDS

13.9 GIGAWATT-HOURS

surrounding the plant were restored to create natural animal and plant habitats

of electricity each year – enough to power

1,200 HOMES

400,000th CAR

annually

produced by plant in August 2014

2,400 DIRECT PLANT JOBS 12,400 FULL-TIME JOBS RAINWATER COLLECTION provides

700,000

toilet flushes a year

COOLS 400 welding machines

6 MILLION GALLONS of water saved in paint shop from dry scrubber tool

created at Volkswagen, at suppliers and in the economy

$643.1 MILLION

13.5 MILLION KILOWATT-HOURS

of green energy generated annually from the on-site solar park, supplying 12.5% of the plant’s energy use

HYDRO-ELECTRIC DAM provides 70.8 million kilowatt-hours of green power

in annual income created

SUPPORTING ENVIRONMENTAL SUSTAINABILITY IN THE COMMUNITY

annual tree-planting initiative in association with the Tennessee Environmental Council and Chattanooga City Forester

EPA RAIN CATCHER AWARD

2014

WORLD ENVIRONMENT COUNCIL AWARD

TRUST FOR PUBLIC LAND

Wetlands Education and Protection

initiative to acquire threatened land and preserve it for public use

Sustainable Practices and Ecomobility PROTECTED

downtown Chattanooga and surrounding neighborhood clean-up program

TENNESSEE TREE PROJECT

PROTECTED

CLEAN AND GREEN

2014

2014

BEST OF THE BEST BEST GREEN BUSINESS voted by members of the Chattanooga Community Award

At home in America and around the world, Volkswagen Group of America places environmental sustainability at the core of our operating philosophy. We don’t just talk about it, we take action, finding inventive ways to be responsible in everything we do – and everyone, including our employees, suppliers and sales partners, is equally committed to ongoing improvements and innovations. As a result, we are on our way toward our goal of becoming the world’s most

ENVIRONMENTAL SUSTAINABILITY


environmentally sustainable automaker by 2018. As part of our commitment to the environment, we ensure that all new facilities are built to the highest environmental standards. To date, several of our buildings around the country have been recognized by the U.S. Green Building Council and certified as Leadership in Energy & Environmental Design (LEED) facilities.

, Va. rters, Herndon U.S. Headqua Plant, Chattanooga Volkswagen . nn Te a, Chattanoog Academy, Volkswagen Tenn. a, og no ta at Ch gional Southe as t Re enter, C n io ut ib D is tr Tenn . y, nt ou C Ro ane lifornia, Test Center Ca . Oxnard, Calif tory, search Labora Electronics Re . Belmont, Calif

AT HOME IN AMERICA: 2013 CORPORATE SOCIAL RESPONSIBILITY REPORT | INTERIM UPDATE | JANUARY 2015

5


»» Volkswagen continued to work with the Surfrider Foundation in 2014 to raise awareness about beach preservation, clean water and coastal ecosystem protection and promoted the cause through the Volkswagen brand’s support of Discovery Channel’s Shark Week. We even got Leonardo DiCaprio hooked on our efforts in 2013, tweeting about Volkswagen’s donation to his more than 7 million followers.

»» Audi of America opened Audi Pacific, the largest Audi showroom in the United States, in Torrance, Calif. It is the first Audi dealership to be LEED Gold certified, incorporating a stateof-the-art design with environmental technology to improve energy efficiency, reduce water usage, and promote the reuse and recycling of materials and waste.

»» Volkswagen is encouraging eco-friendly behavior by partnering with People for Bikes, the United States’ leading advocacy organization for biking, to support the development of bike-friendly communities and create a cleaner environment.

Environmentally Sustainable Manufacturing Our manufacturing facility in Chattanooga, Tenn., serves as a model for increasing energy efficiency and reducing emissions, water and materials usage, and waste for Volkswagen plants the world over. Recognized by the U.S. Green Building Council as “the world’s greenest auto plant” upon its opening in 2011, Volkswagen Chattanooga is the first and only car factory worldwide with a LEED Platinum certification. In 2013, the U.S. Environmental Protection Agency gave our Chattanooga plant a Green Power Leadership Award – making us one of only four organizations nationwide to receive the award for the on-site generation of green power. The Chattanooga facility is the manufacturing home for the Passat TDI® (Turbo Direct Injection), the only clean diesel option in its market segment. The Passat TDI delivers an EPA-estimated 43 miles per gallon (mpg) on the highway with the manual transmission, giving a range of nearly 800 miles. The Passat TDI set the world record for the lowest fuel consumption in the lower 48 U.S. states for a non-hybrid car, according to the 2013 GUINNESS WORLD RECORDS®. The Passat TDI beat the hybrid vehicle record of 64.6 mpg by more than 13 mpg.


As an automotive manufacturer, Volkswagen Group of America is committed to low-consumption, low-emission powertrains for our vehicles and our energy-efficient production facilities. But we’re also promoting environmental sustainability in America in some less-obvious ways. Here are just a few examples:

»» Through VW Credit, Inc., we’ve introduced paperless invoicing, which benefits the environment while adding extra conveniences for customers making online payments.

THINK BLUE IN AMERICA: A HOLISTIC APPROACH TO SUSTAINABILITY Around the globe, the Volkswagen brand encourages customers and employees to Think Blue – a holistic approach to sustainability that encompasses three main areas:

THE CHATTANOOGA PLANT GENERATES MORE THAN 13 MILLION KILOWATT-HOURS OF GREEN POWER ANNUALLY FROM AN ON-SITE SOLAR ENERGY SYSTEM, WHICH OPENED IN DECEMBER 2012. That amount:

»» Blue Mobility – becoming the world’s most ecologically sustainable auto manufacturer. »» Blue Behavior – tips and advice for everyday life. »» Blue Projects – initiatives to promote environmental and social sustainability. Since Think Blue launched in the United States in 2011, it has become the umbrella mission statement for all of Volkswagen’s environmental activities and efforts. One way Think Blue has come to life is through a 15-city tour and interactive display that travelled throughout the United States in 2012. The Think Blue tour not only showcased Volkswagen’s fuel-efficient product range and manufacturing, but also engaged consumers in interactive games and activities that reinforce individual action and eco-conscious behavior.

6

WWW.VOLKSWAGENGROUPAMERICA.COM

Creates the same amount of electricity as about 1,200 American homes annually.

Provides enough green power to meet 12.5% of the facility’s electricity use during full production and 100% during non-production periods.

Equates to avoiding the combined carbon dioxide emissions of nearly 2,000 passenger vehicles driving 7,500 miles per year.


7



CO2 NEUTRAL AND SUSTAINABLE MOBILITY

LIFE CYCLE ASSESSMENTS Production of raw material Production Production of materials

Transport

pipeline refining

Fuel supply

Recovery of energy and raw materials

Production of components

MANUFACTURING

SERVICE LIFE

RECYCLING

CO2-NEUTRAL ELECTRICITY

FUEL CELL

BATTERY ELECTRIC MAINTENANCE

CREDITS

CONVENTIONAL ELECTRICITY

FOSSIL FUELS

PLUG-IN HYBRID Our corporate objective is to drive toward a CO2-neutral and sustainable mobility

HYBRID

DIESEL VOLUME PASSENGER CARS 2014 CO2-NEUTRAL FUELS (LIQUID, GASEOUS)

COMBUSTION ENGINE

30% (41,227) Competitors

70% (96,947) Volkswagen Group* *Percentage includes Volkswagen, Audi and Porsche Source: HybridCars.com

8



9


At Volkswagen Group of America, we are committed to driving progress through better-engineered, efficient vehicles that don’t sacrifice performance. But it all starts with our vision for making cars greener than ever. We take steps to ensure that every vehicle we manufacture is the best it can be in terms of its environmental properties. We constantly strive to improve the efficiency and economy of our engines, minimize the power consumption of electrical components and reduce the weight of our cars. It’s also important to us to measure how we’re doing. We use Life Cycle Assessments to calculate precisely the impact of a specific vehicle model on the environment at various stages of its life: during manufacturing, while being driven and after it is recycled.

Audi has been at the forefront of clean diesel since the introduction of Audi TDI technology in 2009. Since then, more than 55,000 Audi TDI vehicles have been sold in the United States, delivering an average of 30 percent better fuel economy and range than gasoline. Continuing our commitment to clean diesel technology and innovative solutions that improve efficiency and driving dynamics, Audi has made a dramatic expansion of TDI technology in the United States in 2014. Available TDI models include the A6, A7, A8 L, Q5 and Q7, as well as the introduction of the A3 TDI sedan. TFSI® Engine Technology: The Balance of Power and Fuel Efficiency Audi is the first manufacturer in the world to develop Turbocharged Fuel Stratified Injection (TFSI) technology. TFSI combines direct injection with forced induction supercharging or turbocharging. This provides higher power output with greater fuel efficiency and reduced emissions.


Environmentally Sustainable Engineering

We’re committed to promoting sustainable mobility and environmentally conscious lifestyles in everything we do, and we’re particularly proud of our green cars and our vision for cars of the future. Here are a few examples of how we aim to offer carbon-neutral mobility through our cars.

LIVING RESPONSIBLY IN AMERICA: TRUTH IN ENGINEERING TDI: Clean Diesel for Everyone Audi and Volkswagen pioneered TDI® clean diesel – and today, the Volkswagen Group of America is the market leader in clean diesel. In 2014, the Volkswagen Group brands, including Audi, Volkswagen and Porsche sold nearly 100,000 clean diesel cars in the United States. Clean diesel delivers more torque, lowers fuel consumption and reduces CO2 emissions compared with equivalent gasoline engines. Volkswagen’s newest and most fuel-efficient TDI clean diesel engine will power the 2015 Golf, Beetle, Passat and Jetta.

Corporate responsibility has long been a part of the culture of Audi, along with the belief that these efforts are essential to ensure a worthwhile future for generations to come. Therefore, corporate responsibility encompasses fuel-efficient products, resource-efficient production processes, a future-oriented and fair personnel policy, effective involvement in society and responsible business operations. This gives our motto of “Truth in Engineering” a new dimension that extends far beyond our products, with the ultimate goal being CO2-neutral mobility.

E-Mobility: The Future is Now Volkswagen Group of America is committed to achieving CO2-neutral mobility through the entire process chain, from sourcing and manufacturing to the cars on the road and beyond. This commitment has been a guide in the company’s holistic approach to e-mobility and the launch of vehicles including the 2015 Volkswagen e-Golf and Audi e-tron. As more of Volkswagen’s models migrate onto the sophisticated MQB (modular transverse matrix) architecture that was developed to accommodate all current and future powertrain types, the range of hybrids and plug-in hybrids will continue to expand. Volkswagen e-Golf In November 2014, Volkswagen added the all-electric e-Golf to its lineup of eco-friendly, fun-to-drive cars, joining the Jetta Hybrid and Touareg Hybrid models. Although the company has sold more than 30 million Golf models worldwide, this is Volkswagen’s first zero tailpipe emissions, fully electric version of the car for the U.S. market. The e-Golf is part of the Golf family of vehicles that won the 2015 Motor Trend Car of the Year award. It has been rated by the Environmental Protection Agency at 126 city, 105 highway, and 116 combined Miles per Gallon of Gasoline Equivalent (MPGe), and given a range of up to 83 miles. Compared with other compact electric vehicles, these ratings make the e-Golf the most efficient car in its class.

10



11


The Future of Automotive Environmental Sustainability We get excited when we think about what the future holds for sustainable, environmentally responsible cars that are also a pleasure to drive. In late 2013, we brought the Volkswagen XL1, the most fuel-efficient and aerodynamic production car in the world, to our Chattanooga plant for its U.S. debut during the Society of Environmental Journalists’ 23rd Annual Conference. The XL1 offers a glimpse into our present and future eco-mobility capabilities. It emits just 21 g/km of CO2, thanks to its high-tech lightweight design, aerodynamic efficiency and a plug-in hybrid system. It achieves an estimated 200 mpg fuel consumption rating and can cover up to 32 miles as a zero-emissions vehicle in all-electric mode.

Audi e-tron Audi will take an innovative, 50-state approach to the arrival of its first plug-in hybrid vehicle in the U.S. market. The 2016 Audi A3 Sportback e-tron provides the perfect bridge into premium electrification with all-electric, blended hybrid and gasoline modes. Additionally, Audi will offer the Audi energy sustainability package that gives e-tron customers an Audi-designed charger with white glove installation by Bosch Automotive Solutions; ultra-low carbon footprint with CO2 emissions from vehicle assembly through 50,000 miles of driving, offset by 3Degrees, Inc. and a home solar solution option with industry-leading technology by SunPower. Strategic Partnerships for Ultra-Low-Carbon Mobility In 2014, Volkswagen Group of America partnered with 3Degrees, a renewable energy and carbon offset provider, to neutralize emissions created from the production, distribution and recharging of the 2015 Volkswagen e-Golf and 2016 Audi e-tron. This partnership enables Volkswagen and Audi to support forestry conservation and landfill gas capture projects that help increase carbon sequestration and storage, restore natural wildlife habitats, and improve water quality. Volkswagen Group of America is also working with SunPower to provide home solar power systems for qualified e-Golf and Audi customers. A residential SunPower system can help electronic vehicle owners save on annual household electricity costs as well as power their electric vehicles, reducing overall cost of ownership. Staying true to the company’s Think Blue® holistic approach to sustainability, the partnerships with 3Degrees and SunPower make Volkswagen Group of America one of the first high-volume manufacturers to implement a truly comprehensive method to ultra-low-carbon mobility.

12



Advancing e-Mobility with Stanford In November 2014, Volkswagen Group of America announced that it will provide an all-electric 2015 Volkswagen e-Golf to Stanford University for research dedicated to advancing e-mobility and improving the driver experience in electronic vehicles. The collaboration enables researchers from Stanford and the Electronics Research Laboratory (ERL) to study driver behavior, including those that waste energy, to help drivers maximize electronic vehicle benefits and reduce energy usage.

Alternative Fuels We strongly believe that we must develop alternatives to petroleum-based fuels that still work with the internal combustion engine. In 2012, Volkswagen announced partnerships with Solazyme and Amyris, two of the world’s leaders in renewable fuels, to evaluate emissions reductions and demonstrate the performance of TDI Clean Diesel technology when powered by advanced renewable diesel fuel. That research is ongoing with both the Audi and Volkswagen brands. Amyris converts plant-sourced sugars into renewable hydrocarbons for fuel and chemical applications; Solazyme has developed a technology that harnesses the oil-producing ability of microalgae to develop renewable oil products. Working together, our goal is to advance research on renewable diesel solutions for current and future generations of TDI Clean Diesel applications. CO2-neutral mobility depends on the development of sustainable forms of energy that can replace fossil fuels. Audi AG is working with Joule to develop technology that uses energy from the sun to convert CO2 and non-potable water into liquid fuel. This technology is at the core of Audi’s e-diesel and e-ethanol projects. Audi AG and Joule have built a demonstration facility in New Mexico for these projects. For Audi e-diesel, our teams are working to create a sustainable diesel fuel that is free of sulfur and aromatics, and will work seamlessly with existing Audi TDI Clean Diesel systems. With the Audi e-ethanol project, we are developing a product with the same chemical properties as bioethanol but without the use of biomass. This will be blended with fossil-fuel gasoline at up to 85 percent for vehicles that can use E85 fuel.


13



Innovation Labs Electronics Research Laboratory (ERL) The ERL, located in Belmont, Calif., represents Volkswagen Group of America’s applied research and development initiatives in North America. With a focus on advanced technology research and development, the ERL’s mission is to develop innovations for future generations of vehicles, working to transfer technologies from many industries into the automotive domain. Established in August 1998 with three employees, today the ERL has grown to become Volkswagen’s largest research facility outside of Germany, employing more than 150 engineers, social scientists, researchers and product designers. The ERL team is working to identify smart, sustainable solutions for the future, including research in autonomous driving, connected services, and intelligent mobility. With local companies, the ERL collaborates on cloud-based services and renewable energy sources for electric vehicles while identifying other efficient mobility solutions, such as renewable diesel, compressed natural gas, and efficient battery technology. For nearly a decade, the ERL has partnered with local universities to conduct research for the next generation of automotive innovation. In 2009, Volkswagen collaborated with Stanford University to establish the Volkswagen Automotive Innovation Laboratory (VAIL), a more than $5 million commitment. Today the ERL continues its multi-year research relationship with the university, conducting numerous breakthrough research projects in autonomous driving, big data analytics and data security. It also provided an e-Golf for a year-long research project exploring customer habits and expectations of electric vehicles. Test Center California (TCC) Volkswagen’s TCC is located in Oxnard, Calif., and serves as the Group’s only emission test laboratory in North America. As the largest technical center of its kind for the Volkswagen Group outside of Germany, the TCC plays a pivotal role in the product development food chain, acting as the final stop for many products before they are approved for production. Work at the TCC is focused on powertrain product development, governmental compliance and field quality testing. The TCC has more than 50 engineers and technology experts working in a 65,500-square-foot LEED-certified facility. The building features 1,750 solar panels – each 430 kilowatts – that reduce the facility’s energy costs by one-third.

14



15

At Volkswagen Group of America, we are proud to be at home and at work in the United States. We take being a good corporate citizen very seriously, and pledge to do everything we can to invest in and give back to the community. And we know that being a good neighbor is simply the American way. In 2014, Volkswagen Group of America launched “Get Involved,” an initiative that encourages involvement in the community. Our people do remarkable work, within our facilities and beyond. We encourage them to take time to “Get Involved” through our Volunteer Day program, which provides paid time off to get involved in community programs, as well as state and national charitable, service and relief efforts. Our employees bring the passion and energy that makes our organization so successful to their individual volunteering efforts, and we are proud of everything they’ve accomplished to make our world a better place.

SERVING OUR COMMUNITIES


But that’s not all. At the corporate level and through our brands, we’ve committed significant time and money to aid many charitable and not-for-profit organizations across the country, from the Boys & Girls Clubs of America to the Juvenile Diabetes Research Foundation. As you’ll see on the following pages, we’ve mentored young people, supported veterans, raised awareness for people with disabilities, and provided in-the-moment disaster relief contributions.


17


Our impact on our communities is highly visible through our corporate presence and economic contributions to local economies. But the human impact we make is even more important than the financial one. Volkswagen Group of America has a comprehensive approach to philanthropy based on four pillars:

»» »» »» »»

Partners in Education Volkswagen Foundation Charitable Contributions Committee Matching Donations Program

Partners in Education The strength of any community depends in large part on how well it educates its young people. That’s why our flagship Partners in Education program is so near and dear to the hearts of everyone at Volkswagen Group of America. We’re not just preparing students for America’s future workforce, we’re helping them realize their full potential. Partners in Education is designed to support students and teachers interested in advanced automotive technology, technician training and training for our future business leaders. Partners in Education began in 2008 with a five-year, $2.1 million initiative to create a comprehensive education partnership with schools and technical institutions throughout the greater Washington, D.C., area. Together, we’re making a positive difference in the educational experience of students. In 2014-2015, Volkswagen Group of America announced an additional $2 million, five-year expanded commitment to education focusing on automotive technician education and business management education with schools such as Howard University and George Mason University’s School of Business, as well as through the INROADS program.

THE EXCEL INSTITUTE AND VOLKSWAGEN GROUP OF AMERICA: EDUCATING AT-RISK YOUTH AND ADULTS Through The Excel Institute, Volkswagen Group of America is helping at-risk youth and adults in the Washington, D.C., area to think about their future careers. Our partnership supports some of the most vital, but costly parts of Excel’s curriculum, including computer literacy and one-on-one academic tutoring. Volkswagen and Audi technicians train Excel Institute teachers about new technologies, maintenance and repair via the Train the Trainer program. This initiative apprises educational automotive instructors of Volkswagen Group of America’s latest technology so they can relay the information on to their students. In 2014, the District of Columbia honored Volkswagen Group of America with a proclamation for their work with the Excel Institute.


Philanthropy: Committed to our Communities

Volkswagen Group of America is also working with The Excel Institute to develop reciprocal shadowing and has hosted seminar opportunities for employees and students to visit job sites. This support has enabled more than 410 students to participate in The Excel Institute’s Life Skills program – and several graduates have gone on to work for Volkswagen dealerships.

Beyond Partners in Education, we support education in other ways, too. As a long-time supporter of DC SCORES and its Adopt-A-School program, Volkswagen Group of America encourages underserved students in schools throughout the Washington, D.C., metro area to become physically fit, feel part of a team and express themselves as agents of change. DC SCORES combines after-school creative writing, soccer and service for more than 1,500 students at 47 schools. Volkswagen Group of America also supports the DC SCORES Poetry Slam, showcasing the talents and work of these students. Additionally, Volkswagen Group of America fields a competitive team of employee soccer players for one of DC SCORES’ biggest fundraisers, the DC SCORES Cup. Volkswagen Foundation Because we’re so deeply embedded within our communities, we care deeply when disaster strikes and are committed to helping rebuild communities in need. We formed the Volkswagen Foundation to make grants to organizations that specifically provide disaster relief. For instance, in the wake of Hurricane Sandy in 2012, the Volkswagen Foundation donated $500,000 to provide immediate support for the American Red Cross’s relief efforts. Likewise, after the devastating Oklahoma tornadoes in 2013, the Foundation contributed $250,000 to the American Red Cross and Habitat for Humanity. These donations – along with the funds we matched for employee donations to the cause – helped cover the costs of shelter, food, recovery and other assistance to families affected by these storms.

18



19


Matching Donations Program Giving back to our communities and supporting individual philanthropic causes is an integral part of the Volkswagen Group of America culture. Our matching donations program allows our employees’ financial contributions to go even further. Volkswagen Group of America will match dollar for dollar up to $5,000 per employee per year designated to the organization of their choice. In 2014, encouraged by the company’s “Get Involved” program, Volkswagen Group of America matched nearly $190,000 in employee donations to charities across the country.

$193

0

• 20

VOLKSWAGEN GROUP OF AMERICA MATCHING DONATIONS BY YEAR

,0 0

Audi of America Creating Job Opportunities for Veterans Audi of America launched the “Veterans to Technicians Program” in 2013 to provide job opportunities for skilled former military technicians. The goal of the program, which supports the Veterans Opportunity to Work to Hire Heroes Act passed by Congress in 2011, is to help veterans leaving the armed forces transition back to civilian life by connecting them to Audi-certified service department roles in dealerships across the country. Audi developed this program with CALIBRE, a management and technology services company that helps the U.S. Department of Defense and Department of Veterans Affairs develop transition support policies and programs for veterans and service members leaving the military.


Charitable Contributions Committee Employee involvement is at the heart of our philanthropic programs. Our Charitable Contributions Committee, comprised of Volkswagen Group of America employees, works to identify and select community partners and organizations located near our facilities. We focus on helping underserved communities and providing volunteer opportunities for our employees. In 2014, we donated a total of $500,000 to worthy organizations around the United States.

14

Volkswagen of America Investing in America’s History Being At Home in America means we care about preserving this nation’s storied history. The National Mall is where our country’s history, politics and culture unite. Volkswagen Group of America has invested $10 million in the Trust for the National Mall’s efforts to restore and improve the National Mall in Washington, D.C. The donation, which will be granted over a five-year period, is designed to help sustain and advance efforts to preserve and protect America’s most visited national park – often considered “America’s Front Yard.” In 2014, Volkswagen of America contributed more than 250 employee volunteer hours to help clean up the National Mall. In order to help with the ongoing efforts, Volkswagen also has provided the Trust with a Volkswagen Touareg Hybrid to aid in ongoing clean-up efforts. Volkswagen Group of America’s $10 million donation is not the first gift from the company for a project on the National Mall. In August 2011, Volkswagen Group of America committed $1 million to the Martin Luther King, Jr. National Memorial Project Foundation for the construction of the memorial.

“AT HOME” IN HAITI: REBUILDING AFTER THE 2010 EARTHQUAKE

Philanthropy Across the Group We believe corporate social responsibility is a collective effort, involving every aspect of our business, including each individual brand. Among our brands and locations across America, we make philanthropy a priority by promoting employee volunteerism, making financial and in-kind contributions, and partnering with employees to support causes they personally care about. Across the United States, our employees participate in numerous volunteer and philanthropic efforts in their communities. The Portland Service Center supports the Lambert House, Auburn Hills’ employees volunteer at Grace Centers of Hope, the ERL participates in Bike MS and Herndon is committed to the Boys & Girls Clubs of Greater Washington – showing that philanthropy and service is an intrinsic part of who we are as a company. Here’s a snapshot of how we serve the communities in which we work and live, as well as in places in need around the world.

20


Two Volkswagen Group of America employees – Tony Cooke and John Ellefson – are part of a group of volunteers from all over the country that get together two to three times per year to build a house in a weekend with a local Habitat for Humanity affiliate. In 2013, they traveled to Haiti to build 100 homes in just one week alongside other volunteers as part of the Jimmy & Rosalynn Carter Work Project to help victims of Haiti’s devastating 2010 earthquake. The Habitat for Humanity relief effort helped rebuild the town of Léogâne, the epicenter of the quake, making it possible for many families to move from tents and makeshift shelters into concrete and wood houses. To support Tony and John’s work, the Volkswagen Foundation gave Habitat for Humanity $40,000. Additionally, Tony and John raised $5,000 each for construction supplies and then rolled up their sleeves to build the homes. Their efforts gave earthquake victims new hope, allowing them to plant vegetable gardens and start small businesses in their new living situations, as well as enroll their children in schools and embrace futures that seemed unimaginable before the new buildings went up.


21

We help out in places where we are based, where we work and where our employees live. Here in the U.S.A., we are not just a business partner and employer but also see ourselves as part of society – as a good neighbor and a good corporate citizen. Christian Dahlheim Chief Executive Officer and President of VW Credit, Inc.


Helping Children in Need For VW Credit, Inc., helping those in need has become an integral part of its annual meeting. In 2012, more than 130 VW Credit, Inc., employees carved time out during the annual meeting in Phoenix to make bicycles for Native American children living in the Gila River Indian community. For 24 kids ages six to nine, many of whom never had a bike before, these employees opened doors to new possibilities. As one eight-year-old put it, “Is this bike really for me?”


Using Art to Inspire People to Embrace Environmental Sustainability Launched in 2011, Volkswagen’s multi-year cultural and corporate social responsibility partnership with New York’s Museum of Modern Art (MoMA) and MoMA PS1 has provided a platform to highlight our Think Blue holistic sustainability initiative. A key milestone of the partnership is our 2012 donation to MoMA PS1 of the “VW Dome 1,” which houses various artistic programming, lectures and special performances. Following the aftermath of Hurricane Sandy, Volkswagen donated “VW Dome 2,” which served as a temporary geodesic relief and culture dome in Rockaway Beach, N.Y., an area heavily impacted by the storm. “VW Dome 2” later served as a center for cultural exchange and education about the future sustainability of cities. In 2013, Volkswagen and MoMA launched “EXPO 1: New York,” an exhibit that explores the ecological challenges of the early 21st century, and that reflects the fundamental corporate values of Volkswagen Group of America – to take responsibility for our environment and society. VW Credit, Inc. Hands-on Approach to Financial Literacy What better way to teach middle-school students about personal finance than to give them a budget and then ask them to build a life – complete with housing, furniture, food and, of course, a car? VW Credit, Inc., has partnered with Junior Achievement of Greater Washington to help teach teenagers about the economics of life. This collaboration includes a high-tech, high-touch Volkswagen Transportation “Storefront” at the Junior Achievement Finance Park. Managed by a team of VW Credit, Inc., volunteers, students use interactive computers to see how far their dollars can go in securing vehicles and which payment plans would work within the confines of their assigned budgets.

PROVIDING OPPORTUNITIES THROUGH ART: SUPPORTING ARTISTS WITH DISABILITIES

A PERSONAL COMMITMENT: WORKING TO ERASE ILLITERACY

Volkswagen Group of America supports VSA, an international nonprofit organization founded in 1974 by Ambassador Jean Kennedy Smith. Its goal is to create a society where all people with disabilities learn through, participate in and enjoy the arts. This organization is an affiliate of the John F. Kennedy Center for the Performing Arts. Volkswagen Group of America has partnered with VSA since 2001 to recognize these accomplished artists, underscore our own commitment to diversity and inclusion, and support the visual and performing arts. We have provided more than $1 million in funding during the 12-year partnership.

David Bruce has devoted more than 10 years of his life to tackling a major societal issue: illiteracy. Outside of his role as director of human resources for VW Credit, Inc., he serves as vice president of the board of directors for the Loudoun Literacy Council, a private nonprofit organization in Loudoun County, Va., that teaches adults and children from disadvantaged families to learn to speak, read and write English. Adults who do not have basic literacy skills are twice as likely to be unemployed, have increased chances of relying on public assistance, and are more prone to committing crime.

In 2014, the fifth annual VSA art exhibition was held at Herndon Headquarters and featured artwork by artists ages 16 to 25 around the theme “In/Finite Earth.”

24


Bruce and the 800-plus trained volunteers at the Loudoun Literacy Council make a difference through classroom-style curricula and a book donation program that encourages reading outside of the classroom. Their time and dedication has helped more than 4,000 adults and young people improve their literacy skills. Volkswagen Group of America has also made a donation to help support the Loudoun Literacy Council.


25

Our employees are the heart and soul of our company, and we’re proud of the work they do for the company as well as the work they do on their own time to make the world a better place. We support our employees and the contributions they make to our communities by promoting important corporate values: respect for hard work, diversity and inclusion, and social responsibility. We strive to make Volkswagen Group of America a rewarding and meaningful place to work, which is all part of how we make a difference in the communities we call home.

A Commitment to Our Current and Future Employees Our employees are inspired to make meaningful contributions to the world around them in part because we inspire them with meaningful work on the job, too. We celebrate achievement, teamwork and inclusion to establish a healthy and fulfilling workplace environment. Our ultimate vision is to become known as a company that:

»» Values and respects the contributions of men and women of all backgrounds; »» Embraces diversity of thought as a critical factor in our future success; and »» Substantially reflects the diverse populations of the United States.

PROMOTING A DIVERSE AND INCLUSIVE WORKPLACE


MAKING A DIFFERENCE: PROVIDING GREATER ACCESS TO INTERNSHIPS Volkswagen Group of America works with INROADS, an organization that provides internships to students from underserved backgrounds, to offer paid internships to students and connect them with mentors who provide exposure to the cultural and social aspects of working in corporate America. The program provides internships for 10 students in three locations: Chattanooga, Tenn.; Libertyville, Ill.; and Herndon, Va. As a result, students gain real-world work experience and are exposed to potential career opportunities in the automotive industry.

We know that Volkswagen Group of America will benefit from diversity through better understanding of and relationships with customers, dealers, employees and business partners. Therefore, diversity is critically important to our employee culture, and our Five Pillars of Corporate Diversity Strategy speak to the value we place on honoring all backgrounds and points of view.

»» Corporate Commitment Our involvement in and support of communities where we do business, corporate contributions, and sponsorships of community and civil rights organizations.

»» Workplace Climate Diversity awareness training, employee networks and activities that promote an inclusive work environment.


27


Including minority- and woman-owned businesses in our dealer and supplier network.

»» Talent Management The recruitment and retention of a multicultural workforce.

»» Leadership Accountability Visible support of corporate diversity initiatives and goals from senior leaders and the executive board. To implement this strategy, we established a Corporate Diversity Council. The 25 members of this Council serve as personal diversity champions, advising the organization on key issues. The Council’s charter is to:

»» Help set priorities among strategic diversity issues; »» Monitor business plans and actions; »» Identify and report diversity progress and assess results; and »» Share and implement diversity best practices. Volkswagen Group of America also currently has three Employee Resource Groups that unite employees and allow them to contribute their unique perspective and passion to helping the company reach its diversity goals. The three groups currently active are:

Becoming a Leader in Diversity and Inclusion At Volkswagen Group of America, our goal is to be recognized as a top company for diversity and inclusion practices. Part of our diversity effort involves partnering with organizations such as the National Urban League and the National Association of Minority Automobile Dealers. Our commitment to diversity and inclusion supports our overall goal to become one of the Fortune 100 Best Companies to Work for in America by 2018, as well as a Top 50 Company for Diversity. Volkswagen Group of America has already received multiple awards and recognition for our efforts, including:

»» First automotive company to sign the National Association of Minority Automobile Dealer’s “15% Formula for Success,” committing to improve the percentage of majority ownership that ethnic minorities have in new car dealerships

»» 100 percent score on the Human Rights Campaign Corporate Equality Index for the past six years. »» Impact Award from Tennessee Minority Supplier Development Council for 2012 Corporation of the Year

»» 2012 National Association of Minority Automobile Dealer’s Woman of the Year: Machelle Williams, general manager of Diversity and CSR, Volkswagen Group of America

»» 2014 Emerging Leader Award: Rainbow Push Global Automotive Summit

»» Women in Motion

»» 2014: DIVERSITYPLUS Top 30 Supplier Diversity Programs

»» Black Employee Resource Group

»» Established a robust Supplier Diversity program and achieved the 10 percent target for inclusion

»» Young Professionals


»» Economic Development

of women and ethnic minorities in our supplier network

»» Designated 33 percent of corporate giving in 2013 to organizations that benefit underserved communities

28

VOLKSWAGEN GROUP OF AMERICA DIVERSITY WEEK: CELEBRATING DIVERSITY AND INCLUSION

WORKING TOGETHER: TEAM VOLKSDRAGON

Diversity Week gives Volkswagen Group of America the annual opportunity to learn from our broad spectrum of colleagues who come from different cultures, heritages and backgrounds. During this week in November, Volkswagen Group of America brands and locations across the country, including Chattanooga and the regional offices, plan activities that highlight our diverse employee base. The theme for 2014 was “Diversity & Inclusion: Belong, Collaborate, Innovate.” Whether it was a cultural celebration potluck luncheon, hosting an event to honor employee military veterans, participating in the Group-wide “Dignity & Respect Campaign,” or collecting donations or goods for a local charity, Volkswagen Group of America sites nationwide celebrated Diversity Week to recognize our diverse community and promote inclusion across the company.

Our employees often rely on one another like teammates do, but Volkswagen Group of America colleagues recently took the teammate mentality to a new level when they formed a Dragon Boat race team. Team Volksdragon is composed of employees from Volkswagen, Audi, Bentley and VW Credit, Inc. For four months, the team trained together to compete in the annual Ritz Carlton Cup in Wolfsburg, Germany. The experience is best summed up by team member Stevi Honaker: “We worked hard, believed in our team from day one. That is the same philosophy we have at Volkswagen Group of America. We believe in the products we are selling and work hard individually and as a team to achieve our goals and objectives.”



29

GLOBAL COMMITMENT TO SOCIAL RESPONSIBILITY

Commitment to social responsibility has long been at the heart of Volkswagen AG’s corporate culture. Globally, Volkswagen supports a broad spectrum of projects that foster social development, culture and education while serving the needs of regional structural development, health promotion, sport and the conservation of nature. The following world map shows select projects from around the world.

GERMANY - SOUTH

GREAT BRITAIN

Thinking of tomorrow, today, with the Audi “Urban future” initiative

Environment-friendly: The Bentley “Green travel” programme

SPAIN Frugal technology: SEAT ecomotive

GERMANY - NORTH Volkswagen – NABU fuel saving training courses

RUSSIA

SWEDEN

Economic revival in Kaluga

Volkswagen’s Fun Theory

USA - EAST “Green from the start”: The new plant in Chattanooga

USA - WEST

CHINA

The pulse of research: The electronics research lab

GLOBAL



Most environment-friendly manufacturer in China

Volkswagen is greening up

MEXICO Practical environmental protection on the Popocatepetl

BONAIRE

INDIA

Energy transition on an island paradise using MAN technology

The Škoda Prize promotes artists

JAPAN Volkswagen engages in Business and Biodiversity Initiative

BRAZIL Volkswagen is investing in renewable energies

POLAND Impressive women’s promotion

ARGENTINA Excellent performer: Volkswagen Argentina at UN Global Compact

MALI Development aid in co-operation with Tamat e.V.

CZECH REPUBLIC Top training at Škoda Auto University

ISREAL

SLOVAKIA

Supporting the Hadassah-Neurim youth village

Inventory of flora and fauna

SOUTH AFRICA Offering people a future: The Volkswagen Community Trust

“Audi creativity”: How can a car move without fuel

TURKEY

AUSTRALIA Fuel saving tips, not only for Australia

Volkswagen importer promotes road safety

ETHIOPIA MAN promotes car mechanic training and SOS Children’s Village

ANTARCTICA Volkswagen importer sponsors the first “zero emission” station

Source: KARMA Kommunikationsdesign GbR, Wolfsburg

30



31

TODAY AND TOMORROW

AT HOME IN AMERICA, TODAY AND TOMORROW Throughout this report, you’ve seen that we’ve built a strong presence in the United States, which continues to grow as our investment in North America expands. You’ve seen the way we’ve championed environmentally sustainable approaches to mobility and our operations, proving that we’re “green” both inside and out. You’ve seen how our people care deeply about others, giving back our time and our money to the communities we serve, as well as our belief that diversity and inclusion are imperatives for a successful company. Volkswagen is more At Home in America than ever before, and we couldn’t imagine it any other way. Because when you feel at home, you feel empowered to make the world around you a better place. That’s how we approach our work every day, both here and abroad. We continue to look to the future to identify what more we can do, how we can engineer even more environmentally sustainable cars, how we can more effectively support our communities, and how we can further diversity and inclusion at Volkswagen Group of America. We’re proud to be a good partner on the road and in the communities we serve, and plan to be for years to come.


33

By investing in on-site green power, Volkswagen Chattanooga is generating cleaner electricity and reducing harmful carbon pollution, and providing a clear example of an organization thriving on innovation and sustainability. Gina McCarthy Administrator of the Environmental Protection Agency