A win-win-win situation – for humankind, society and the environment
Key Facts
- Business decisions based on economic, ecological and social aspects
- US Monitorship both as an important element in working through the diesel issue and as a forerunner to the transformation
- Consistent respect for human rights as part of the Audi self-image
Audi believes that operating with integrity means taking its responsibility to society seriously. What follows is value-oriented action geared to sustainability, focusing on humankind, society and the environment. The aim is to achieve a win-win-win situation for all participants. After all, business and integrity are not contradictions in terms – they are two sides of the same coin.
Actively shaping the transformation
Silja Pieh, Head of Corporate Strategy
“In our view, sustainability requires us to take radical and far-reaching action to conserve natural resources so that they can still be used by future generations,” explains Silja Pieh, Head of Corporate Strategy. “There are various examples of this at Audi. These include the Head of Corporate Strategy billions we’ve invested in the electrification of our fleet, the use of state-of-the-art processes for carbon-reduced aluminum production or particularly energy-efficient welding and joining technology, the construction of solar systems to meet the energy requirements of our plants and the use of recycled materials in our product development.
In the long run, Audi will only be successful if the company succeeds in bringing integrity and results, conscience and profit, the environment and sales into sustainable alignment. We consider ecological, economic and social aspects in all our decisions to ensure our long-term competitiveness and thus fulfill our responsibility as a forward-looking employer. Economic efficiency and job protection are equal-ranking goals for us.”
Achieving these goals requires compliance, integrity and an open corporate culture.
“We take the issue of climate protection seriously and are therefore in the midst of a transformation that spans the entire industry. We want to play an active role in shaping this transformation – together with our employees and for our customers – so that we can continue to offer highly attractive products and services in the future, while protecting the environment and conserving resources.“
― Silja Pieh, Head of Corporate Strategy
Systems and processes strengthened
Audi reached an important milestone in terms of compliance, integrity and corporate values in 2020: the successful conclusion of the Monitorship. Volkswagen AG committed itself to the Monitorship under a settlement reached with the U.S. Department of Justice in connection with the diesel issue. AUDI AG was also included within the scope of the Monitorship. Over a period of three years, the company worked together with Independent Compliance Monitor Larry D. Thompson on strengthening its compliance and integrity. “The diesel affair was a watershed for the entire Volkswagen Group on the one hand, but also triggered a transformation that will strengthen the company and make it fit for the future,” emphasizes Holger Schmid, Head of Integrity, Compliance and Risk Management as well as Chief Compliance Officer (CCO) of AUDI AG.
Over the course of the Monitorship, Volkswagen AG and its subsidiaries and affiliates modernized and enhanced structures, processes and systems in many divisions, including Technical Development, HR, Risk Management, Compliance and various legal functions. The Volkswagen Group implemented and expanded its whistleblower system,1 strengthened processes to prevent corruption and antitrust violations and created a due diligence process2 for business partners. Moreover, the company flattened hierarchies, decentralized decision-making and introduced new leadership and collaboration models.
Forerunner to the transformation
“Mr. Thompson and his team have helped us make Volkswagen a stronger company, thus contributing significantly to the Group’s transformation,” said Herbert Diess, former Volkswagen CEO and Chairman of the Supervisory Board of AUDI AG, after the Monitorship was completed. But the journey is not over yet: The Audi Board of Management has placed the topics of integrity and corporate culture on its agenda as a central task. The six board members have made plans to this end, which were then submitted to the Audi Supervisory Board and the US Monitor in the form of personal declarations of commitment that they will pursue on a long-term basis.
But what are the distinguishing features of this “new Audi”? What factors does the transformation entail? Four Audi employees share their insights.
Holger Schmid, Head of Integrity, Compliance and Risk Management as well as Chief Compliance Officer (CCO) of AUDI AG
“An active speak-up culture and an active network of integrity ambassadors characterize the ‘new Audi,’ as do our sustainable risk management and genuine commitment to compliance and integrity”
“We want to set an example in the future – as a modern, transparent and value-based company. Especially now that we’ve successfully completed the Monitorship, we’ll make sure that we don’t lose momentum in rolling out the Groupwide Together4Integrity (T4I) measures and achieving a change of culture in our company. An active speak-up culture and an active network of integrity ambassadors characterize the ‘new Audi,’ as do our sustainable risk management and genuine commitment to compliance and integrity. None of these things are projects that will someday be completed and superseded by others. For me personally, they’re constant themes in my work and permanent fixtures in the company. And we use effective tools and targeted measures to ensure that they’re implemented.
Specifically, my team and I are concentrating on four priorities:
- We’ll continue to implement the Group-wide compliance and integrity program Together4Integrity until 2025.
- We’ll advise and support the members of our Board of Management in fulfilling their personal declarations of commitment.
- We’ll continue to comply with our obligations under the EPA Administrative Agreement.
- Our Corporate Risk Management along with the Risk Management System (RMS), our corporate policies, the Internal Control System (ICS) and the Compliance Management System (CMS) will continue to be supporting pillars of our work in the future. All of this is designed to sustainably safeguard the company’s goals, create transparency and reinforce awareness of risks, compliance and integrity.”
Jasmin Lotze, Compliance Specialist for the topic of Business and Human Rights
“Audi has more than 40 entities worldwide with almost 87,000 employees and tens of thousands of business partners – this means the company has an extremely high level of responsibility. Consistent respect for human rights is essential for Audi. That is why they are firmly enshrined in the Audi Code of Conduct.”
“The term ‘human rights’ covers a wide range of issues, including the right to health and safety at work, the right not to be discriminated against and, naturally, the prohibition of child and forced labor as well.
We must consistently ensure that we take respect for human rights into account in all corporate processes. Our Compliance Management System (CMS) helps us do this, since we use it to record, assess and manage compliance risks, among other things. We’re fulfilling our duty of care by continually adapting processes, training our employees and partners and having set up a whistleblower system for instance.The globally operating automotive industry with its distributed supply networks is considered a high-risk industry with respect to human rights. That’s why Audi is also actively involved in the ‘Automotive Industry Dialogue’ as part of the German government’s National Action Plan (NAP) for Business and Human Rights – together with representatives from academia, politics and civil society.
The ‘new Audi’ therefore not only sets high standards internally, but also endeavors to uphold our values and principles along the entire value chain as well, for example within the scope of its supplier management. Ultimately, it’s always a matter of putting the focus on the human being and on respecting their rights.”
Carsten Vortanz, Business Process Management, Quality Management/Risk Management and Head of the Product Integrity Committee
“We find ourselves in times of rapidly increasing complexity, both regarding regulations in the global markets as well as our products and their technical interdependencies. Added to this is our customers’ increased need for mobility. The key to success here lies not only in the innovative strength of our products and services, but also in their reliability during everyday use. Against this background, the integrity of our products is a top priority.”
“Product integrity is a legal obligation, and we are committed to complying with the applicable legal and official provisions of the respective countries of export and import. The same applies to specifications resulting from internal and external standards. Our products and product-related services meet the customer requirements that have been contractually agreed – taking into account the voluntary commitments3 by Audi.
For the implementation of the ‘new Audi,’ product integrity compels every employee to comply with two major issues in their daily work: product safety and product conformity. Product safety dictates that a product that is already available on the market must not endanger the safety or health of individuals under proper or foreseeable conditions of use.
Product conformity means that the Four Rings adhere to all legal and official regulations of the respective countries of export and import and meet all specifications resulting from internal and external standards. These include work and process instructions or general standards relating to rules of technology as well as contractually agreed customer requirements.”
Ralf Turanli, Head of Quality Management, Product Integrity Requirements and Chief Executive of the Product Integrity Committee
“First and foremost, it’s important to note that achieving product integrity is an overall corporate responsibility. It concerns all divisions of the company. Only then can AUDI AG be effectively protected against legal and financial risks.”
“To this end, we’ve created a regulatory framework that describes the processes, principles and measures for ensuring product integrity: the Product Compliance Management System (PCMS). The PCMS is integrated into the organization as a dual function shared by Technical Development and Corporate Quality.
In terms of setup, it’s based on a compliance management system in accordance with the requirements of the auditing standard IDW PS 980. The introduction and sustainable integration of the PCMS at Audi was a requirement within the scope of the US Monitorship.
Like the whistleblower system and the Audi Code of Conduct, the PCMS is a key pillar of our ‘new Audi’ corporate culture. It will help us bring products with integrity to markets around the world.”
EPA auditorship
On August 13, 2019, the U.S. Environmental Protection Agency (EPA) entered into an administrative agreement with VW AG, AUDI AG, VW Group of America and VW Group of America Chattanooga Operations. This also extends to MAN Energy solutions, which is among the subjects of the auditorship due to its business dealings with the US government. The term of the agreement is set to end on August 15, 2022.
This agreement recognizes the extensive measures Volkswagen and Audi have taken since the end of 2015 to strengthen the compliance and risk management system and allows all Group companies to continue pursuing business relations with the US government.
Above all, the agreement requires further compliance with existing diesel settlements and to keep the whistleblower system and the Audi Code of Conduct in place. John Hanson has been appointed as an independent auditor to verify compliance with this agreement and submit an annual audit report to the EPA.
All employees are required to comply with the administrative agreement along with all other legal provisions, directives, corporate policies and work instructions.
Together4Integrity (T4I)
“Together4Integrity” (T4I) is the integrity and compliance program of the Volkswagen Group and was introduced at AUDI AG back in 2018. The program is based on the principles of the Ethics & Compliance Initiative (ECI), a globally recognized standard for ethical corporate principles.
T4I will be rolled out across the entire Volkswagen Group by 2025. The ECI principles feed into the “T4I Toolbox” together with the recommendations of the US Monitor4 and other measures. This toolbox contains around 130 division-specific and general initiatives that reinforce integrity and compliance and promote cultural change. These include the Code of Conduct (CoC) and the associated training measures, as well as the whistleblower system.
The Code of Conduct gives employees a firm handle on how to operate with integrity, thus also further implementing the change of culture at Audi. A large number of the T4I measures have already been implemented at the German sites of AUDI AG. At the same time, AUDI AG is responsible for rolling out the T4I program at its subsidiaries and participations.
US Monitorship successfully completed
Independent Compliance Monitor Larry D. Thompson has confirmed that AUDI AG, as part of the Volkswagen Group, has met its obligations under the diesel issue settlement with the U.S. Department of Justice to extensively revise and further develop its compliance program. The program is designed to prevent and detect violations of anti-fraud and environmental laws. The successful completion of the Monitorship was certified by Larry D. Thompson in September 2020 and applies to Volkswagen AG and its subsidiaries and affiliates – with the exception of Porsche AG and Porsche Cars North America, which were not part of the Monitorship.
The cooperation with Larry D. Thompson, who was appointed Independent Compliance Monitor by the US authorities in June 2017, was coordinated by the Audi Monitor Project Management Office. Larry D. Thompson and his team assessed and oversaw the fulfillment of the conditions from the agreements with the US agencies on the diesel issue.
The Monitor regularly made recommendations for action, which were adopted and implemented in a timely manner. Some requirements and suggestions, such as Together4Integrity or the Board of Management’s declarations of commitment, extend far beyond the end of the Monitorship.
The Compliance Management System in the Audi Group
As part of its organizational duty, the Audi Board of Management has established a Compliance Management System and a Compliance Organization.
A Compliance Management System (CMS) refers to the principles, measures, processes and structures of an enterprise to assure permanent compliance with the laws and internal regulations by corporate bodies, employees and third parties acting on behalf of an enterprise. In addition to AUDI AG, the CMS also covered 44 subsidiaries and participations worldwide in the year under review, with predominantly local compliance officers acting as multipliers. The AUDI AG CMS consists of the following seven core elements.
Effective anti-corruption
The Audi Group places a high priority on preventing corruption, with the Integrity, Compliance and Risk Management department contributing to sustainable anti-corruption efforts.
In the year under review, the compliance organization of AUDI AG supported 44 national and international participations in the compliance focal area of anti-corruption in the course of consultancy inquiries, the implementation of policies and the execution of training programs.
Fundamentally, all those entities where AUDI AG holds a majority interest or management responsibility or that are of particular importance are included in the process.
To ensure sustainable prevention of corruption and effective and efficient risk management, Audi offers its employees Web-based training (WBT) courses on “Anti-Corruption” and “Dealing with Public Officials,” in addition to the “Policy on Gratuities for the Avoidance of Conflicts of Interest and Corruption.” These training measures serve to protect all employees as well as the company.
