What's Happening?
Volkswagen is reshaping its manufacturing processes by integrating sustainability into its procurement strategy. The company has implemented a Raw Material Due Diligence Management System to ensure that suppliers meet stringent environmental and human
rights standards, particularly for high-risk materials like lithium, nickel, and cobalt. This system requires suppliers to provide transparency and adhere to responsible sourcing practices. Volkswagen's approach includes risk-based measures to identify and mitigate potential issues in environmental or labor practices. The company also emphasizes battery recycling at its Salzgitter site in Germany to recover critical materials and reduce reliance on virgin inputs. Additionally, procurement teams are tasked with tracking and reducing supplier emissions, with a focus on energy-intensive materials such as steel and aluminum.
Why It's Important?
Volkswagen's procurement strategy is significant as it aligns with global sustainability goals and addresses increasing consumer and regulatory demands for environmentally responsible practices. By enforcing strict supplier standards, Volkswagen not only reduces its environmental footprint but also sets a precedent for the automotive industry. This approach could lead to a more sustainable supply chain, potentially influencing other manufacturers to adopt similar practices. Suppliers who fail to meet these standards may lose business opportunities, highlighting the growing importance of sustainability in securing contracts. Volkswagen's efforts contribute to its net-zero trajectory and climate commitments, positioning the company as a leader in sustainable manufacturing.
What's Next?
Volkswagen's continued focus on sustainability in procurement is likely to drive further innovations in recycling and emissions reduction. The company's commitment to renewable energy and lower-carbon manufacturing processes may lead to new partnerships and technological advancements. As Volkswagen progresses towards its net-zero goals, other automotive companies may follow suit, potentially leading to industry-wide changes in procurement and manufacturing practices. Stakeholders, including investors and consumers, will likely monitor Volkswagen's progress closely, as it could impact the company's market position and reputation.
