More than five years after the start of the international “Dieselgate” scandal badly damaged Volkswagen’s reputation, the United Nations Global Compact agreed to reinstate the company as a participant in its environmental protection efforts.
The compact dropped the automaker in 2015 as dieselgate gained momentum, raising serious questions about the company’s management and practices.
The scandal has cost the Volkswagen Group more than $30 billion. It became a major inflection point for the global auto industry as it began to move towards electrification.
VW Group rebuilds compliance effort
Volkswagen Group’s completely rebuilt compliance and integrity policy gained the company reinstatement into the group. Acceptance came after VW successfully concluded monitoring supervised by the U.S. Department of Justice, according to Georg Kell, the founding executive director and former CEO of the U.N. Global Compact.
“Volkswagen’s removal from the U.N. Global Compact was a drastic step in the wake of the diesel crisis,” Kell said. “A company that had previously felt almost invincible was publicly excluded from the United Nations respected business community. This wasn’t only a matter of prestige. It was a matter of pride.
“Since then, Volkswagen has worked to renew the company’s value base. The electrification strategy of the Group has put it at the forefront of transformation in the car industry.
“Rejoining the UN Global Compact therefore should have the same symbolic power as its exclusion did five years ago. It shows that Volkswagen, while far from infallible, has learned from its mistakes. It is a moment for every employee at Volkswagen to pause for a second and be proud of what has been achieved together,” Kell added.
VW asked to rejoin compact
Herbert Diess, Volkswagen Group chief executive officer, formally requested in reinstatement last November. The VW Group is now once again officially listed as a participant of the U.N. Global Compact.
The company is currently working on a re-engagement plan with the Global Compact and will publish information on its progress.
Kell said the compact welcomed Volkswagen’s “ambitious” climate protection program positively.
VW’s future plans make good impression
By 2025, the Volkswagen Group plans to cut its carbon dioxide emissions during the life cycle of its passenger car portfolio by 30l% compared to 2015 and aims to be climate-neutral by 2050. In 2016, Volkswagen also appointed an independent Sustainability Council.
Founded in 2000 as a special initiative of the U.N. Secretary-General, the United Nations Global Compact asks companies around the world to align their operations and strategies with the 10 Principles in the areas of human rights, labor, environment and anti-corruption. All participating companies are required to publicly report once a year about their respective activities to implement the principles.
For investors and asset managers in the capital market, participation is an important criterion for investing in shares and bonds of Volkswagen Group. The Volkswagen Group participated in the U.N. Global Compact starting in August 2002 but was encouraged to withdraw in November 2015 due to dieselgate.