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September 15, 2020

VW teams with RCS Global for supply chain analysis

Volkswagen has partnered with RCS Global, an agency specialising in supply chain analysis.

By Rhodri Morgan

Volkswagen has partnered with RCS Global, an agency specialising in supply chain analysis.

The focus is on auditing suppliers for conformance with human rights, safe working conditions and environmental protection along the supply chain all the way back to the mines.

The Group introduced a sustainability rating for direct suppliers a year ago and a comprehensive system developed by RCS Global now also tracks adherence to sustainability criteria at sub-suppliers, refineries, smelters, mines and recyclers.

New guidelines for improvements issued to suppliers make an active contribution to achieving improvements when risks and shortcomings are identified. Serious audit violations may even lead to the disqualification of suppliers from the supply chain.

That applies, for example, to small-scale mining operators when child labour cannot be ruled out. The approach builds on the Due Diligence Guidelines of the Organisation for Economic Co-operation and Development (OECD).

In the cooperation with RCS Global, it has already been possible to identify 134 sub-suppliers and 18 mines in the Volkswagen Group's battery supply chains and the majority have already been audited.

The expanded partnership has also enabled the development of due diligence measures for each type of relevant raw material by means of a comprehensive management system, despite the large number of companies in the supply chains.

"The cooperation with RCS Global helps us to better understand which raw material sources and suppliers are in our supply chain and to measure their responsibility performance," said head of procurement strategy, Ullrich Gereke.

"In direct contact with our sub-suppliers, we can better explain and monitor our expectations of responsible sourcing and better follow up on agreed measures following our sustainability audits."

The Volkswagen Group's corporate guidelines expressly prohibit any form of child labour or forced labour in the extraction of raw materials such as cobalt and these guidelines are constantly being strengthened, for example with the sustainability rating and, most recently, the closer cooperation with RCS Global.

The automaker maintains sustainability is a factor in the production of all Volkswagen models. In addition, the ID.301 and the ID.402 are produced with a neutral CO2 balance and handed to customers with a carbon-neutral footprint. All outsourced electricity delivered to the Zwickau factory and the production location for both ID. models, is 100% green power.

The plant also operates a block-type thermal power station with combined heat and power generation.

Production of the battery cells, purchased externally by Volkswagen, is energy-intensive. For that reason, Volkswagen has stipulated its cell suppliers must exclusively use green power in their manufacturing processes.

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