ESG: From trend to value driver
Talking Business – Key Facts
- Audi integrates ESG criteria into the long-term management process.
- Environment: The company plans to be completely carbon-neutral by 2050.
- Social: In order to accomplish the transformation, the training budget was increased to €500 million up to 2025.
- Governance: The compliance and integrity program has already reached more than 90 percent of all Audi employees worldwide.
ESG and performance – a mutual relationship
Clown fish and sea anemones live in a perfect symbiosis. The anemones’ stinging cells offer protection against predators. In turn, the clown fish ensure that the anemones have clean tentacles and ventilate them with oxygen when the corresponding levels in the water are low. The relationship between corporate success and sustainability in the automotive industry is currently evolving into a similar symbiosis. A mutual relationship that relies not on short-term success, but on a long-term, healthy cooperation that is ultimately profitable for both sides.
Learning from the mistakes of the past
Based on its own experience, Audi can assess how severe the effects of ESG can be on a company’s value: The diesel crisis has burdened the company in many respects. “Something like the diesel scandal can never be allowed to happen at our company again,” says CEO in the 2019 fiscal year Bram Schot. “To this end, over the past years we have reorganized many processes and established what are known as the Golden Rules.”
“Investors first” is now “purpose driven”
Management according to ESG is not just active risk management, but also the basis for long-term economic success – especially in today’s world, in which society’s values are changing sustainably. Established business models are being replaced and new, sustainable products are ensuring growth. Companies that are managed according to ESG are economically more successful and secure valuable market shares. Efficient processes and a
circular economy reduce environmental impact, save resources and cut costs.
Sustainability has become a key element of company management – and thus a value driver instead of just a trend. Audi has formulated a clear commitment to this through its vision to “unleash the beauty of sustainable mobility.” To further advance the integration of ESG criteria, various sustainability core topics are assessed according to the significance they have for overall business success. To this end, we use materiality analyses to survey our internal and external stakeholders regularly for their assessment of relevant action areas. The insights we gain from these surveys are continuously compared with our corporate strategy.
“E” is for environment: When it comes to alternative drive technologies, Audi pursues a broader base and is promoting e-mobility with the goal of offering 30 electrified models by 2025, of which 20 will be all-electric. The share of electrified vehicles will then amount to 40 percent of our total sales. Yet the brand is also continuing to develop conventional engines, relying increasingly on mild hybrid powertrains and a 48-volt electrical supply. Plug-in hybrids are also an important part of our electrification efforts.
And Audi is going one step further: In 2019, the new key indicator “Return on investment after CO₂ effect” was introduced. This measures the financial impact of the influence of vehicle projects on average CO₂ emissions. This should ensure that the carbon footprint of all Audi models is reduced, step by step, by about 30 percent by the year 2025 (compared with the reference year 2015) – across their entire life cycles. That applies not just to the vehicles themselves, but also to Audi production facilities:
By 2025, all plants will be carbon-neutral, following in the footsteps of the pioneering plants in Brussels and Győr. By 2050, Audi wants to achieve a carbon-neutral balance throughout the entire company. As Bram Schot emphasizes, the brand’s acceptance and relevance depends on this. “And with it, the value of the Audi brand as well.”
Expenditure for training increased by one-third
“S” is for social: Social criteria are also becoming a value driver for Audi. One focal point is training and development. For instance, in 2018 more than 36,000 AUDI AG employees took part in training measures. They mainly attended training in the fields of electric mobility and digitalization. Their training time amounted to around 1.8 million hours worldwide. Audi invests 80 million euros annually in the training and development of its staff. This represents a considerable increase on previous years. Overall, Audi has increased its training budget to €500 million up to 2025.
Rule-compliant and values-oriented corporate management
“G” is for governance: Governance is the foundation of sustainable business. In concrete terms, this is about risk and reputation management, about anchoring sustainability management at Board of Management and Supervisory Board level as well as about compliance and integrity.
At Audi, the Volkswagen Group Essentials, the Audi Fleadership principles and the Audi corporate values – appreciation, openness, responsibility and integrity – are the foundation of our values and our corporate culture. They are intended to offer employees orientation for their daily work. The focus is on dialogue and exchange. For example, the integrity and compliance program Together4Integrity (T4I) has already reached 82,000 of 90,000 employees at Audi.
Planned share of total sales in 2025
Increase in training budget to
up to 2025
Integrity and compliance program:
employees already reached by “Together4Integrity”
ESG is the concrete expression of the paradigm change currently taking place in business and society. Audi has recognized this, and is laying important groundwork for the integration of the ESG topics into corporate management. Now it is a matter of implementing the measures in order to achieve the goals we have set. In other words: The symbiosis must be lived in practice.