Welcome to the Audi Report 2024! The combined annual and sustainability report of Audi brings together the topics of strategy, finance as well as Environmental, Social and Governance (ESG).
As a global company, AUDI AG operates in a complex environment – a continuous review of its own ESG and corporate goals is essential for worldwide success. It is important to the company to keep an eye on the opportunities and risks of its actions in order to strengthen its positive influences on the environment and society and to keep negative impacts on the company to a minimum.
Since 2024, the Corporate Sustainability Reporting Directive (CSRD) has governed the sustainability reporting requirements for companies in the EU.* Companies now have to provide detailed non-financial information on environmental, social and governance issues in their management reports. While the CSRD provides the regulatory framework for this reporting, the European Sustainability Reporting Standards (ESRS) define the content to be reported and the reporting structure. As with financial reporting, sustainability reports should focus on meaningful information and topics that are relevant and assessable for stakeholders.* This limitation is referred to as materiality. The sustainability reporting standard of the Global Reporting Initiative (GRI) also requires ESG reporting to be organized by material topics.
Audi voluntarily publishes an integrated report that combines financial and ESG aspects. The Audi Report is based on the internationally established GRI standard, but also takes up aspects of the European CSRD, including in particular the required key figures, and addresses the material topics specified by the GRI and CSRD.
The materiality analysis that Audi has been conducting for over 11 years serves to determine these topics, since it creates transparency on relevant ESG topics in the context of sustainability. A significant change in the reporting year is the introduction of the concept of double materiality. This principle requires companies to consider the materiality of sustainability topics from two perspectives. The inside-out perspective (impact materiality) is used to determine the actual and potential positive and negative impacts of the company’s activities on various sustainability topics. The outside-in perspective (financial materiality) is used to determine the opportunities and risks that sustainability topics pose for the company’s financial performance.
Audi uses the double materiality analysis as a strategic tool. It makes a contribution to the regular review of objectives and resource management and therefore to the further development of the company. It provides an even better understanding of the interaction between economic success and sustainable action, thereby helping to mesh these two aspects more closely. The idea is as follows: if the company is aware of its impacts and can manage accordingly, it can act optimally both with regard to risk minimization and opportunity maximization as well as resource allocation.
Double materiality analysis for more transparency
The materiality analysis that AUDI AG conducted in 2024 was the first to be carried out in accordance with the CSRD guidelines. This approach also meets the GRI requirements for materiality analyses. In terms of the materiality analysis’s content, Audi took its lead from the ESRS and the Volkswagen Group’s requirements.
The double materiality analysis covers the company’s impacts on the environment and society (impact materiality, inside-out) along with the opportunities and risks for the company arising from environmental and societal impacts (financial materiality, outside-in), taking into account the perspectives of both internal and external stakeholders.
The double materiality analysis covers the company’s impacts on the environment and society (impact materiality, inside-out) along with the opportunities and risks for the company arising from environmental and societal impacts (financial materiality, outside-in), taking into account the perspectives of both internal and external stakeholders.
Four-step approach
The ESRS are divided into 37 subtopics, which form the basis for the company’s materiality analysis. During the reporting year, the company also carried out a comparison with the topics used by competitors and the Volkswagen Group as well as those found in external ESG frameworks and ESG ratings. Two additional topics were derived from this comparison that go beyond the ESRS: social commitment and sustainable corporate development.
As a second step, stakeholder interviews* were conducted to identify potential positive and negative impacts of Audi business activities on the environment and society for each subtopic (impact materiality). In addition, opportunities and risks for the company were identified for each subtopic (financial materiality).
The third step was to have the subtopics evaluated by internal experts. Topics that fell short of the “informative” threshold in terms of both financial and impact materiality were deemed immaterial by the Audi experts in the course of the analysis. This was the case for the nine topics of soil pollution, pollution of living organisms and food resources, substances of concern, marine resources, economic, social and cultural rights of communities, civil and political rights of communities, rights of indigenous peoples, social inclusion of end users and animal welfare.
For example: The inside-out analysis (impact materiality) for the topic “Working conditions – own workforce” (ESG topic area: social) identified the opportunity “Modern forms of work lead to a higher quality of life for employees” and the risk “Insufficient work instructions for new employees lead to a risk to life and limb, for example in the context of hazardous materials or safety requirements” and rated them both as important. The outside-in analysis (financial materiality) for the topic “Working conditions – own workforce” identified the opportunity “Guaranteeing the health and safety of our own workforce can reduce employee fluctuation, which saves costs for recruitment and induction training” and the risk “Reputational and legal risks in the event of child and forced labor.” An evaluation of these factors, among other things, led to the assessment “very important” for the success of AUDI AG.
In a fourth step, the results of the Audi materiality analysis were synchronized within the Volkswagen Group and approved by the Board of Management of AUDI AG. The Audi Strategy team then assigned the 39 material topics to a total of 17 topic clusters and the three fields of environmental, social and governance (ESG).
The matrix visualizes how the 17 relevant topic clusters are evaluated in terms of the impact of the company’s activities on the environment and society (impact materiality, x-axis) and in terms of their opportunities and risks for the company’s financial position (financial materiality, y-axis). The 17 topic clusters of the materiality analysis are addressed in the chapters of the Audi Report.
