Ladies and gentlemen, we warmly welcome you to the fifth annual ESG conference for investors and analysts. ESG is an integral part of Volkswagen. We have an exciting lineup for today covering important aspects of the E, the S and the G. There will be two combined Q&A sessions. If you would like to participate, please ask a question in the chat. We ask you to please take a moment to read our disclaimer. We would now like to kick off today's event with a keynote from our CEO, Oliver Blume.
Dear ladies and gentlemen, it's a pleasure to welcome you to this year's ESG Group Annual Conference. I have now been in my new role as CEO of Volkswagen Group since over a month. It's a great honor to steer this company through its transformation. When I manage a company, whether it's Porsche or Volkswagen, I do it according to five base principles. Brands, products, people, entrepreneurial spirit and sustainability. Team spirit, fairness, and passion are the foundation for all of it. With our NEW AUTO strategy, we have laid the right groundwork. Transparent and accountable implementation of the strategy is now a great importance to me. Looking forward, I have drawn up a 10-point plan of concrete programs operated out of the Group Board of Management.
These programs focus on our financial robustness, sustainability, the capital market, the advancements of our products, software and technologies, and regions like China and North America. I view the capital market as a core stakeholder. Raising the value of our assets sustainably to reward our stakeholders is a key priority of mine. In our transformation towards electric and autonomous driving, we need the best people, future-proof products, access to capital, resilient supply chains, and the trust of stakeholders.
That is why I'm passionate about ESG. In my role as CEO of Porsche AG, we have been driving ESG improvement for many years. We delivered proof points like the early implementation of e-mobility and circular economy solutions. I welcome transparency in reporting, open dialogue and external input from stakeholders like the capital market or our Sustainability Council. Let us have a look on the individual aspects of ESG. First, environment.
We are deeply committed to the Paris Agreement. Our group possesses the technical competence and innovation strengths to develop sustainable mobility solutions and value chains. Our key levers include electrifying the vehicle fleet, charging with green energy, improving battery technology, and extensive use of recycled materials and renewable energy in production. We got off to an early start on e-mobility and are striving for a group-wide BEV share of around 20% by 2025 and 50% by 2030. Our ultimate goal is to be carbon neutral by 2050. Also, in the face of our current energy crisis, we are sticking to these topmost goals. To decarbonize our products and societies fast, we need cooperation on a global scale, especially, policymakers must decide the right framework. Now let's look into social.
We strive to be good corporate citizens and take responsibility to improve the lives of communities and societies as a whole, including our more than 670,000 employees. The important thing for me is to treat everyone with respect. I'm convinced that sustainable success can only be achieved with diverse teams. Together with our workforce, we are adapting to our rapidly transforming business models. We are significantly investing in skill transformation to ensure that our employees have future-proof workplaces. In Salzgitter, for example, our employees are moving from the production of combustion engines to batteries. Protecting human rights with our group and throughout our supply chain is crucial. This is why we have recently appointed a dedicated human rights officer, Kerstin Waltenberg, who will report directly to the Board of Management.
Regarding governance, I am fully aware that there are elements of our governance that can be viewed critically. On the one hand, we have certain boundaries that are not likely to change. For example, the Volkswagen Law or our shareholder structure. In relation to our governance of dual roles, we have implemented proven systems to ensure that no conflicts of interest arise. I am convinced that my two CEO roles complement each other perfectly. For me, personally, linking the two roles is a crucial, well-considered decision for the long-term success of the Volkswagen Group and Porsche. I am closely involved in the processes and technologies of a company in order to be in a position to make the right strategic decisions in the group and harness synergies.
Our compliance, whistleblowing, and risk management systems have been implemented worldwide according to best practice and where possible, externally certified.
Regarding integrity, we have involved our whole organization in our integrity program, which sets the values by which we operate. To wrap up, for me, strong ESG is a key factor for success, and we are committed to improving our performance. I look forward to engaging with you in the future and value your opinions. I hope you enjoy this year's conference.
Thank you, Olive Blume. To me, as heading the IR team, there were two key messages I took away. First one, the capital market is a core stakeholder of Volkswagen, and the second one, ESG is crucial to the success of the Volkswagen Group in the future. Also, Olive Blume talked also about decarbonization, and this is why I welcome our first speaker today, Ralf Pfitzner, a dear valued colleague who will take us through the decarbonization strategy of Volkswagen in the coming years. Ralf, the floor is yours.
Thank you very much, Rolf, and good afternoon, ladies and gentlemen. It's a pleasure to be with you in my role as Group Head of Sustainability. As you heard from our CEO, ESG matters more than ever before. On the one hand, for the resilience of our company, for proper risk management, but also for realizing new business opportunity. That's what we stand for at Volkswagen because we believe sustainability is and should be an integral part of our business and nothing set aside in a separate department. We view sustainability from a strategic perspective, and I'm quite happy to show you here how we integrate sustainability.
You may be very familiar with our NEW AUTO strategy being launched last year and the tech modules on mechatronics, the platforms, how to scale up, the systems on software, on the battery and charging business, as well as our relatively new business on mobility solutions, taking Europcar acquisition as one of the highlights recently. We have additional sustainability initiatives anchored in our NEW AUTO strategy. It's firmly named ESG Decarbonization and Integrity, and we really integrate these aspects in all tech initiatives, but even beyond, in the other departments of the company as well. I'm going to talk in the next 15 minutes about mainly decarbonization. Before I do that, I'd like to briefly highlight our priorities in terms of ESG overall, because as you're aware, sustainability slash ESG is a very, very broad topic.
The crucial part is really to focus on these things that matter, where we do have an impact on our stakeholders and we also have our stakeholders, investors, customers, requests and requirements coming into us, how we react to them. So basically, disaggregating ESG into three parts, we have more or less two top priorities in each bucket. On the environmental side, we have decarbonization, climate change mitigation as first and foremost priority. Second one is resource efficiency, namely circular economy. You heard Oliver Blume talking about circular approaches at Porsche, and we're driving that further down also at Volkswagen Group entirely.
On the S side, it is supply chain responsibility and resilience, including the human rights topics. Same accounts then for diversity, which is important on the board level regarding gender diversity, but also in the entire workforce in management.
Not only gender diversity, also internationalization, for example. People and transformation, you will later on hear a separate presentation from my colleague, Thymian Bramer, so I'm not going deeper into that one. Last but not least, integrity being part of the G pillar as of utmost important for us, not only because of the diesel scandal, which we survived through, so to say. Before I go into decarbonization as core topic right now, it is important to mention from the integration part that what gets measured gets done, and it's also about how we set incentives. I would like to briefly inform you that as of last year, we also included ESG criteria as part of the annual bonus of the top management.
That was introduced last year, and if you look at the ESG performance criteria here in the middle of the slide, it comes from the environmental side with our decarbonization index. It includes the social side on the opinion index / diversity index, plus has another factor on compliance and integrity. It's integrated as of today on top level, and we are also working, bringing down ESG criteria further down in management incentives for all managers. Now, about sustainability, moving to decarbonization as core topic. We've been one of the first / the first large OEM committing through the Paris Agreement back in 2018.
Our ultimate goal is being carbon neutral, net zero by 2050, including the entire portfolio over its life cycle. 2050 is a long way to go. It's important to have that goal, but we also set intermediate goals.
The next step, milestone for us is the year 2030, where we set the goal to reduce carbon emissions of our passenger car portfolio over the entire life cycle by 30% versus 2018 by 2030. The good news is that already last year, we have seen significant improvements in the so-called decarbonization index, reducing average emissions by car by 1.7 tons compared to the previous year. What is important to mention, this is externally verified and certified by the so-called Science Based Targets initiative, and we're quite grateful that this year we got, so to say, an upgrade in terms of the commitment level that our production-related goals are meanwhile according to a 1.5 degrees pathway. The best level possible in terms of fulfilling the Paris Agreement requirements.
What is also important to mention is that we follow a clear hierarchy in terms of how we wanna achieve that goal. The best emissions are those who don't occur at all. Avoiding emissions is the best one. Second one, we're moving to renewable e-energies all across the life cycle. We do have additional aspects of CO₂ offsetting, carbon credits using for compensation. This is, for example, something we do with the handover of our MEB models in Europe, which are handed over as carbon neutral cars to our customers by compensating non-avoidable supply chain emissions. There is a clear hierarchy. A bit of education, if I may, looking at this 30% goal and the levers how to achieve it.
For sure, first and foremost is the portfolio transformation, which you heard from Oliver Blume, and I'm going to talk in a bit about that too. That's a real big lever. The other one is that we have to tackle all life cycle phases. If you look at the 2018 baseline, basically for an ICE portfolio, two-thirds of life cycle emissions over 200,000 kilometers come from burning fossil fuels. That's two-thirds. Another one, 13% roughly comes from the fuel supply chain, so what happens in the oil and gas industry. Totals up to nearly 80% of life cycle emissions coming from the fuels. Another 13% comes from the materials in the supply chain, if you look at an ICE portfolio.
Only 2%, a quite tidy little part, comes from what happens in our manufacturing units in our factories all across the globe. That's the 2% part. We have some remaining parts from recycling and other support process. If we move to the electric world, obviously the tailpipe emissions shrink very much. They go down to 0 in a fully electrified portfolio. On the other hand, the fuel supply chain, namely electricity, gains in importance because it matters if you source electricity from coal, from gas, or from renewables. We're working on really bringing more renewables into the grid that are able to power our battery electric vehicles. The supply chain part will get more important if you imagine another roughly 400 kg coming from the battery itself.
It's a lot of materials associated with energy and emissions, so the battery supply chain brings additional challenges for the supply chain overall, and we're working on that too. Few words about the portfolio. We've seen from last year to this year already a significant increase, so it's going to continue. By next year, basically, we expect to double the overall percentage share on a global portfolio from 5% to roughly 10-11%, and by 2025, we expect to be at least at 20%. Oliver Blume in his statement already said the global target is to achieve roughly 50% by the year 2030. In Europe, we will be more advanced, probably also in the U.S. Other regions are lagging a bit behind. That's the important part of the portfolio.
Why I'm talking about the portfolio, it is because a battery electric vehicle, if you take the decarbonization view on CO₂ emissions, already as of today, is roughly 25% more CO₂ efficient than an ICE. We have compared the Golf 8 with an ID.3 in a certified life cycle assessment. Even with the European grid mix, which still contains some fossil fuels in terms of electricity generation, we have this Q1 . If we then move further down the road in terms of the use phase for our battery electric vehicles and imagine customers purchase a green energy contract from Elli, then you cut the life cycle emissions in half. Really 50% less compared to a BEV powered by average grid electricity.
Moving further down into the supply chain, we are able to further reduce emissions by forcing our suppliers to use green energy for battery manufacturing, and we're moving further down the road in terms of green steel and the likes in the future, plus circular economy approaches. That's the view on an individual car as an example. To bring all these things now together, and this is already the last slide where we might take a moment to have a look at it. I said earlier, for decarbonization, we are really tackling the entire life cycle of our vehicles. We start in the supply chain. We have set the requirements for cell manufacturers, where we purchase the battery cells from to use green energy.
Now, as we have founded the PowerCo, to supply our future cells in Europe and globally for ourselves, the PowerCo intends to build up to six gigafactories with 240 GWh of capacity by the year 2030. All these factories will be powered by 100% renewable energies. We've just been talking with the colleagues about the Spain Valencia factory on the negotiations with the local utility and the on-site generation of green electricity. This is up and running and in the making to assure these 100% renewable power.
We're also moving into the value chain, not only for battery cells, but for the materials for the battery cells, so for cathode and anode production, and just announced a bit more than a week ago a joint venture of the PowerCo with the Belgian-based material supplier Umicore to dig deeper into the battery material value chain to provide us with the appropriate materials, again, with a low carbon footprint. What we do in-house in our factories, we have set the target to reach 100% renewable energies by 2030 globally. China with a bit probably different timeframe as the Chinese energy market is not yet liberalized. We, in Europe, we target 100% renewable energy in the external power supply already by next year, and the good news is that we right now are at approximately 95%.
On top of that, we have already nine carbon neutral sites globally, and more to come in the next years. If you look at the use phase, first of all, the energy supply, I've been talking about the portfolio change so far, the 50% targeted global share, Volkswagen Group in Europe, roughly 60%, BEV share. We are not only targeting the portfolio change, but also to bring more renewables into the grid, which is basically not our responsibility, but we believe it makes sense to drive the energy transition, and energy transition and mobility transition only can go hand in hand.
For example, as part of our activities, we have last year signed a contract with the largest independent PV plant in Germany, in Mecklenburg-Vorpommern, supporting this solar PV plant in Tramm-Gützin and really taking off basically the green energy properties.
On the tailpipe side, we're expanding on the one end via Elli, but also by Electrify America and in the future also on the green energy side with CAMS, the green charging for our customers. As mentioned before, right now as of today, since meanwhile two years since the ID.3 is on the market, we're handing over this vehicle as a carbon neutral vehicle to our customers. If they choose to take a green energy contract from Elli, for example, then they have 100% carbon neutral mobility. In terms of end of life recycling, I've just been visiting the Salzgitter pilot plant yesterday, we're targeting roughly at least 90%, even more, 95% closed loop recycling for used batteries after they're hopefully have had a second life in other applications.
The target is really to close the loop, reducing material consumption and reducing carbon emissions. Last but not least, it's important to mention that we can't do that alone. The energy transition and the mobility transformation have to go hand in hand, and therefore, for example, we have joined forces with a dozen of other European leading companies, founded the so-called CEO Alliance for Europe's Recovery, Reform and Resilience, supporting the EU Green Deal and driving the transformation.
We have a couple of utilities in that. We have also automation companies and others in that group of companies. Partnering on the charging side is important because also we can't build those infrastructures all alone. We're partnering with Enel in Italy, with Iberdrola in Spain, and with BP in UK and elsewhere to provide the energy to our customers. A last word about the supply chain.
Materials are gaining importance. I've been talking about the battery value chain, but also steel matters for cars and our colleagues from the truck business from Scania, they are partnering with H2 Green Steel in a certain shareholding agreement. H2 Green Steel is building greenfield carbon neutral steel manufacturing, so there will be a source for providing CO2 neutral or low carbon steel to us, and same have we done on the group level so far with Salzgitter Steel here, signed an MOU for provision of carbon neutral slash green steel for us. We're working along the entire value chain to decarbonize our operations and the supply chains and the use phase of our customers. That's in a nutshell the decarbonization strategy current status. I have to say thank you and looking forward to the Q&A session.
Very good. Thank you, Ralf, for this very comprehensive overview on where we stay on the decarbonization side. Leads us to the next topic perfectly because a lot of what Ralf and his team has done is the basis actually for our green finance strategy going forward, and here we are right in the middle of the topic. Let's dive in into the topic of green financing. As you can see here, the green finance framework, which the group has published back in 2020, yep, was very much concentrating on the investments into battery electric vehicles and everything what we need in order to produce battery electric vehicles. We had a clear target, yeah, to concentrate on the green bond principles laid out from the ICMA, and here we fall under the category of clean transportation.
We also looked at the UN Sustainable Development Goals and picked here the 9, 11 and 13 category. The one which is looking on the sustainable cities, the other one looking here at climate change mitigation, and last but not least, on the innovation changes, which is in particular related to the charging topic. Last but not least, we were looking at the contribution to the EU's environmental objectives, and therefore, we're in the position to build and come up with a comprehensive framework, which was then the basis for the Green Finance Framework. Largely oriented into the past, we looked here at the years 2017 to 2020 and looked which of the investments we did fell exactly under the categories described before.
You see here that we started off on a light footing with about EUR 250 million of CapEx, which was eligible for the green project. Then we build it slowly up to EUR 750 million in the year 2018, and ultimately coming up with about EUR 1.5 billion in 2020. In total, that summed up to EUR 3.6 billion of eligible framework portfolio. On this framework, we were able now to issue. We had basically two major drawdowns, two issuances. One was in September 2020. A bond actually sized in two tranches, totaling EUR 2 billion, with a maturity 2032, and the other one with a maturity 2028.
The second issuance was done as of recent, totaling EUR 1.5 billion. It was done back in June. Also sliced in two tranches with maturities 25 and 27, totaling EUR 1.5 billion, so that we came up in total with EUR 3.5 billion usage of the EUR 3.6 billion green bond financing framework. Usage is therefore 97% and 100% of the investments financed via this green bond frameworks were related to the past. On top of looking into the bond market and what we could finance via the bond market, we also looked at the banking market and had then the first sustainability-linked loan issued in 2021 with a tenure of three years, so it matures in 2024.
It's used for general corporate purpose, and we thought it's a good idea to base it on the CO2 emissions of our fleet, yeah, based on a particular year, which is measured with a WLTP cycle, which is valid in the European Union. You can see here from that slide that we basically have three scenarios. The one is obviously that we would miss the emission regulation target, and then we basically pay a charge, a surcharge, a premium, a step-up coupon. We are within the limits, and the bandwidth was here laid out with 15%, then we are basically neutral and stay to the agreed coupon.
We get a credit in case we are better than the envisaged target under the WLTP, and there is then a step-down in the coupon we are eligible to pay to the respective syndicate over the tenure of the lifetime of the linked loan. When we take the bond framework, we did there EUR 3.5 billion. We had the sustainable linked loan, EUR 1.8 billion. In total, EUR 5.3 billion. We can summarize it largely that the last green bond framework was very much oriented to the past. What have we already done which can be eligible for green financing? Now, for the future to come and for the new green bond framework we are setting up at the very moment, we want to look into the future.
It should be based on the EU Taxonomy and on the ICMA Green Bond Principles as of 2021. How would this look like? First of all, we needed a framework which allows us to exactly say what kind of revenues and what kind of CapEx and R&D is eligible for the green funding topic. Here, the I admit, highly debated EU Taxonomy at least gives us a framework under which we can operate and under which we can categorize the respective revenues. As you know, the companies must report environmentally sustainable contribution under this EU Taxonomy, and there are basically three economic activities they have to report on the sales revenues, the capital expenditures, and the OpEx which is related to those activities.
Volkswagen was the only company in the automotive sector and only one of the few companies across all sectors which reported already a taxonomy alignment voluntarily in 2021. I think this is really due to a great team effort of our colleagues in the accounting team under the leadership of Jens Klingfurt, and really congratulations on that because the frame or the EU Taxonomy, that was not only that we ourselves were very convinced that the calculated amounts are correct. No, we got also from our auditors reasonable assurance that the numbers which were derived are definitely in line with also what the auditors would think is accurate. How did we pursue?
We looked first at the environmental objectives, in particular here, the climate change mitigation and climate change adaptation, which are already valid until 2021. We looked at the future categories, sustainable use and protection of water and marine resources. We looked at the pollution prevention and control, transition to the circular economy, and last but not least, protection and restoration of biodiversity in the ecosystem. We derived from that the taxonomy-eligible revenues, CapEx and OpEx we have. We looked at the three criteria. A substantial contribution to at least one of these criteria mentioned before. Do no significant harm to any of the other environmental objectives which are around.
Obviously the minimum safeguards, yeah, to comply with the OECD, the UN rules, and the rules of the International Labour Organization for fundamental conventions. If all these three criteria are cumulatively positive, then the economic activity is environmentally sustainable. If not, obviously not. This is now the outcome of the analysis. You can see that in total, within the Volkswagen Group, we have about EUR 54 billion of taxonomy-eligible activities. However, ranking it or slicing it further down to the three categories, substantial contribution to climate change mitigation, do no significant harm, yeah, to any of the other objectives, and compliance with the minimum safeguards, this number came down to EUR 14.2 billion, representing roughly 26% of the 54.
We went even a step further and said, "Look, we do not only want to look on what is taxonomy eligible, but let's look at the BEV-only portion." The BEV-only portion, you can see here, is on the CapEx side, totaling about EUR 3.8 billion, and on the R&D expenditure side, roughly EUR 3.5 billion. Taking this all together, the new green bond finance framework could be as high as EUR 7.2 billion. That would be true for the whole Volkswagen Group. Of course, we have then to look at what the different entities are doing in order to determine how big the green bond framework will become for the future. This is largely actually how we proceeded.
To sum it up, we believe that green debt instruments are really an effective tool to channel investments into projects which demonstrate an impact on climate and have a positive impact on climate, and let us stick to the Paris Agreement, as well as to the United Nations Sustainable Development Goals. We target to increase our green debt instruments in the coming years significantly. All our future green bond transactions will be based on the EU Taxonomy and the respective aligned CapEx, and they are also in the future to rise significantly. Last but not least, obviously, we want to stay in regular contact with you, our bondholders, stakeholders. Stay in a frequent dialogue. Tell us where we can do better, where we are doing good.
Keep this continuous dialogue so that we can learn from each other and, yeah, help to make this planet a more sustainable place worth living. With that, I'm very happy actually to directly lead over to a topic which has already been raised by Ralf to a dear valued colleague, Thymian Bussemer, who will tell us a little bit more on how we transform the workforce.
Thank you a lot, Rolf. Good afternoon to anyone, or good morning or good evening, wherever you are. Thanks for having the chance to elaborate here a little on the issue of workforce transformation and what Volkswagen is doing in this realm. I think the basic observation is that there is an imbalance between our current business models and our workforce structure. The NEW AUTO strategy foresees a decline in revenues we do on the ICE base, the internal combustion engine. We see a rise of turnover and revenues and profit pools in the realm of battery-empowered vehicles. We see a new business field entering our business, which we almost hardly had before, software-based turnover.
Those are the three major profit pools of Volkswagen of the future. If you look at on the right-hand side of the chart, on the structure of our workforce, we see that almost half of our current employees still work in the so-called direct area. They are highly skilled workers, but they work on the shop floor in manufacturing. What we see is that our industry becomes even more and more of the knowledge intensity constantly rises. You see that R&D expenditures are still growing, and you see that that code, that software really becomes a central enabler of the car of the future, which of course means that we need people with skills in this realm.
This means that workforce transformation becomes a central strategic objective for Volkswagen in the forthcoming decade. The product strategy affects needed skills and the quantity of work. We don't see a unidirectional process of decline in the size of the workforce, rather side-by-side process of growth, relocation, and dismantling. This process has to be structured, has to be managed. I mean, that this is important is simply shown by the fact that our labor costs at Volkswagen Group almost amount to 20% of the turnover of the entire company. This is the reason why especially the HR department, but with the help of sustainability of the Sustainability Council, has done a lot of systematic research on employment effects in the Volkswagen Group.
We have published a scientific article on the effects of digitization in the knowledge work. We have done a rather huge study with a very well-renowned Fraunhofer Institute on the employment effects of electromobility. We have just completed a study for which we have been one and a half year in the field on how work and qualification at 2010-2030 at Volkswagen will look like. We are advising as well the federal government of Germany in managing the transformation process of the automotive industry. This is a little example of the results of our researches. Here you see the employment effects of the new mix because we will not stop to produce ICE vehicles right now.
This will be a process of years. In the mix, according to our planning of ICEs and battery-empowered vehicles, we will lose. I'm not talking about jobs. This is important. I'm talking about work volume, so hours of work. We will lose something like 12% of work volume. If you look at the prognostic mix of electric powertrains versus ICE powertrains, we see we lose 60%, and with gearboxes it's almost 70%. Bearing in mind half of our workshop is still in those direct areas, it's really a field of concern. We answer with organizing the biggest cultural and skill shift in the history of Volkswagen.
We really want to mobilize our entire workforce to make them aware of the changes, to make them open for acquiring new skills, finding new workplaces which are in line with our future profit pools, sorry about that. We in HR as we are the one who are centrally organizing this process all over the world, in all plants, all entities, we have learned that we really need a paradigm shift in our strategic approach. We learned we can't do any longer type of a strategy variety focusing just around HR. We need a group people strategy which holistically takes into account all people and culture issues which are relevant in this big ongoing transformation process of Volkswagen.
Here you see the most upper layer of our strategy. The four core goals we have defined. Me at VW Group, this is the micro level about the individual employee. Teams, this is the meso area. Those teams, the very core of our company consists of teams, of groups of 5 to 15 people, working every day closely together. They are the very cultural and social core for the company. All of us at VW Group, we say this is a family goal. We have a very strong company culture at Volkswagen, and the brand, Volkswagen as well as in the group. There is a sense of belonging, and we systematically want to play that strength in the future.
We are aware we are not alone in the world, so we at Volkswagen Group and the world around us. This is having Volkswagen peacefully aligned with its stakeholders. Now I already listed almost the goals. Or every target area has a goal. On the MEB, even it's excellent employee experience. I think that wellbeing at work is a very crucial factor. Best performing teams. This is in our industry really essential that they perfectly perform. Outstanding culture, I already mentioned that. Sense of belonging and aligned with society and environment. Under this goal system, of course we have a huge very complex structure with which we refine those goals and roll them out everywhere in the group.
I just brought here some of the guiding questions to the goal areas. On the me level, what motivates me to do my job, and how do I sustain my fitness to work? On the team level, what helps us to achieve the best team performance? On the all of us level, what makes Volkswagen unique, and why do we love to work here? At the outer goal, how do we convince our customers and stakeholders that Volkswagen is corporate responsible? As you can see here, we learned in our research that those goals boost very positively the ESG profile of Volkswagen, that the capital market rates diversity very high and sees this as a key indicator that you do know better than I.
We learned as well that if in terms of culture, there's a strong tone from the top, if people learn that a CEO, a board really cares about having a healthy, good culture in the company, this boosts performance. We know, of course, that the trust in each other, but trust in leadership is a booster which leads to an increase in engagement. We do know as well that a strong employee experience or good employee experience has a positive impact on the performance. What do we do concretely in the Volkswagen Group? I just wanna focus on two things. One instrument we are currently group-wide, we have established and which we do roll out group-wide is a strategic workforce planning approach.
A rather complex process, because it's linked to many negotiations between business divisions, estimations of experts, statistic calculation. With the very goal to come to a two-sided analysis, that is, the future workforce supply simulation. How many people with what skills do we have on board? The workforce demand planning according to our production planning, how many people with what skills do we need. In the strategic workforce planning process, those two sides are being fitted into each other. The result is a gap analysis, which helps us to identify qualitative and quantitative surpluses and gaps, and is our very, very basic instrument for workforce planning.
Helps us to learn which skills do we need to bring into the company from outside. What type of graduates do we need? Do we have potential to shift teams between different plants if they are rather closely located together, which if in certain cases, the case. It really, one could say, before we were kind of blind at least with regard to an overall picture of how this workforce development will relate itself to the demand. This instrument greatly helps us to bring light into this question. The second answer, and this is already my last slide, is of course education and skilling.
We have just launched the product is called Degreed, a 24/7 learning platform, divided into many, many stores. Each job family finds there its own store and gives every employee the chance to learn future critical knowledge in a self-determined way. You can access it any time. There are no boundaries. You don't need to apply. It's not time-bound. It's very easy to renew the content because it's a digital platform. This is, I think, really in times of transformation, very important instrument because I said we rely on the self-initiative of people to reskill, to actively care about their future jobs. The second thing are two very innovative projects, the Faculty 73 and 42 Wolfsburg. Those are two IT schools.
One is an internal one, the other one is external, where, besides the fact that they provide excellent IT knowledge crucial for the automotive industry, there are no formal boundaries for accessing it. It only works by assessment. The assessment is very hard, but if you master it, you are in there. This means those are mechanism as well for direct workers or shop floor workers to re-qualify if they master to enter in one of those institutions. They have the chance to move from the occupation on the shop floor into the knowledge work of which we know that we need much more of this in our transformation process. Well, this was it from my side. Thanks for listening.
Very good. Thank you, Thymian, yeah, for this insightful presentation on how we transform our workforce. We start with the first Q&A session, I would suppose. We have about 15 minutes, so please don't be shy. Put your question into the chat so that we can have a vivid discussion here on the floor. What I can see is there is already first questions coming in. The first one is from Morgan Stanley, and I think it's for you, Ralf. The question is: Is the company using internal carbon price to manage its projects investments? What is the price currently, and how is it updated with the market?
An excellent question, to be honest. We would be stupid if we would not follow a cost abatement curve also with regard to measures on decarbonization. As I mentioned, we have this goal set to reducing lifecycle emissions 30% by 2030 versus 2018. In order to sort these measures, what we do when we follow a cost curve, so we apply in our planning round internal carbon pricing for all those measures that go into the vehicle projects. The good news somewhat is also in terms of cost efficiency, that right now we have measures that are around EUR 10-15 per ton, and they already bring quite a lot of substantial carbon reduction.
We have a cost curve behind it, also upper limits which we're targeting by 2030. For confidentiality reasons, I won't disclose the outlook of carbon pricing, which we are having in mind for 2030, but it's a steadily following curve of measures. We start with the cheap ones, with the best ones, and then gradually move up the curve, until we achieve our goal.
Thank you, Ralf. The next question would be for Thymian. Thymian, the question is: How is employee retraining organized at plants converting from ICE to BEV?
Well, we have taken a lot of care, and I have been at many assembly assemblies and plants, of which it was unclear that they would be converted. We really try to create a positive mood of the workforce towards e-mobility. We brought products there. They had the chance to dismantle and reassemble those electric cars so that they really had the chance to learn what it's all about with a new product. Of course then there was a systematic training, so I think Zwickau, which was the first plant which was converted, we reskilled almost 8,000 people there. It's a very systematic, well-planned process.
The planning of the company gives us a chance because you have enough time ahead in advance to go the systematic way. According to my impression, until now this went very well and people there are really enthusiastic about it. They have a future-proof attractive product.
Was there any direct feedback from the employees trained on the training tools and on the training itself?
Yeah, of course this was evaluated. I'm not too much into detail there. After all what I heard, and if I travel to the plant, the feedback is very positive about the way we have done it.
Very good. Okay. The next question is again for you, Ralf, so you're very highly in favor. It's a bit more critical one, again, from Morgan Stanley. VW did not sign up for the COP26 to only sell zero emission cars and vans by 2035. Could you please explain the rationale and if anything could change under the new CEO with regards to this matter?
Yeah. Another great question. Happy to allude a bit on that. We have been intensively discussing that zero emission vehicle declaration, which was launched at COP26. We have a key principle that we only sign commitments, these letters or things if we believe we can achieve it credibly. This declaration, while it goes towards OEMs, but also other parts of the declaration go to countries, communities, and so forth. In this specific case, we said, well, really achieving 2035 already zero emission vehicles in all major markets globally, we don't believe this can happen, especially with regards to different paces in the shift. For Europe, I think it's more or less a no-brainer. U.S. might be achievable too.
If you look at China, there is a question mark if this is really feasible by 2035 in a credible way. There are a couple of other, well, leading important markets, such as South America. In a nutshell, we decided as long as we can really fully credibly sign on to this, let's better not do it. We are working really heavily on the transformation, accelerating the speed. It's, in this case, we decided not to sign it. If political boundaries also on country level change, I think we might reconsider that. In one word, also the transformation then makes most sense if we have also green energy in these respective countries. Powering a battery electric vehicle with lignite-produced electricity doesn't really make sense. There's also some trade-offs to be considered.
Very good. Thank you, Ralf. The next question I think would be to myself. It's about the green finance framework, and it says: Would you consider doing a social bond within the green finance framework, or are the sums too small? I think we, as you could see from the presentation at the very start, obviously concentrate on what counts most, and that's here the battery electric transformation we are going through. In particular with the sums here you have seen looking at the 20% target in 2025 and then the 50% target in 2030.
On the other hand side, I always wonder why Volkswagen in particular on the S side is not scoring higher given for all what we do here for the employee workforce, in particular in Germany. I know that we are a global company and that you can be very critical on some of the activities obviously which are outside of Europe. On the other hand side, when I look how we invest in training into the workforce, when you look at the whole transformational topic we have here on the workforce side. Long story short, would not rule out that at a certain point in time, we could also consider doing a social bond. The green bond framework would allow for it. For the time being, we are very much concentrating on the BEVs.
With that, I would go through the list here and, yep, there is another one for you, Ralf. The question is: Could you give more color on the use of sustainable renewable fuels? Will any brand focus on this technology specifically?
Yeah, heavily debated also in the public and probably the author of this question might have also followed the development at Porsche. Renewable fuels, or let's phrase it's basically about e-fuels, I think, and probably some bioethanol questions around countries like Brazil or so. Well, first and foremost, we have electrification strategy, and this is in place, and we fully rely on the electrification of the portfolio. Nothing should basically endanger this. Second one, Porsche invests in a small scale in Chile in producing renewable fuels or e-fuels based on wind power and electrolyzers and so forth.
I think it's a good showcase, and if you look at some, let's say, legacy cars and especially those who will basically survive forever, it makes sense to have a certain amount of fuels powering them based on alternative fuels. I don't believe this is something for the mass market if we talk about passenger cars. We need e-fuels. We need these fuels for aviation. We need them for shipping. We need them for high temperature appliances, applications in industry where you can't electrify processes. There will be a demand. It's important to scale them up, but I don't believe they play a major role in passenger cars.
You can basically say it's complementing our.
It's complementing, but I rather believe it will stay in a niche.
In a niche.
It's probably not our job to scale these.
Okay. Very good. Ralf, I'm sorry, you are in very high favor here.
It's about ESG and sustainability, yeah.
Exactly. The question here comes from Santander. Do you have both intensity and absolute emission objectives, including Scope 3?
Yes. Well, this goes even to the expert level. We have for our manufacturing, so which is Scope 1, Scope 2, technically speaking, a 50% goal, also in absolute terms by 2030. This brings us to the certification 1.5 degrees aligned. In terms of Scope 3 emission, with this decarbonization index goal, we currently have an intensity-based goal of these 30% reduction, so not yet an absolute cap. Because also we believe for the cars itself, in order to manage the decarbonization process, it's rather good to have by car percentage goals and not an absolute for the overall portfolio.
While I have you here for another 5 minutes. Next question is from Union Investment, and they are asking: On your 100% renewable energy battery supply contracts, A, does this include the cathode material? And two, what is the share of new contracts as a percentage of total purchase volume, measured against the existing contracts?
Wow. That's so you're really challenging us.
You can start with A, and then I'll repeat.
I start with A. We start basically now with a, let's say, tier one suppliers, so the battery cell manufacturers, also for the PowerCo. That's the first goal where we have the contractual obligations. As I mentioned earlier, we have founded a JV with Umicore, where we're working on cathode materials, so we're also going further upstream, so to say. This is not yet contractually binding, but our life cycle assessment experts, since they know where the emissions come from in the value chain, they are also heavily working on cathode and anode materials, but it's not contractually signed yet. The percentages I would forward, well, to you or to our supply chain team.
No, I think we take this off, yeah, and we'll definitely follow up on the second part of the question. What else is left here as questions, again, for you, Ralf. It's likely the last question as we have to watch a little bit the time to continue then within the respective timeline. To what extent is the company putting pressure on suppliers to reduce emissions and invest in the use of recycled or recyclable materials? Have any of the company's suppliers announced targets for emission reductions or recycled material use?
Well, we're right now developing circular economy strategy and first steps will be to also set internal goals to use recycled materials in new car projects, develop similar as we do this for decarbonization. We have for example at Audi for aluminum already some closed-loop aluminum applications which save also up to 95% of CO2 emissions compared to virgin material. We are walking and basically down that path, it will be next step, it's not yet contractually obliged, but this will be the next part of our, let's say, product-related strategy. Since circular materials they have two advantages. They save materials, they increase the resilience of the supply chain, so it's basically three advantages, and they help us reducing the carbon footprint.
More to come on this.
Very good. I think that concludes the first Q&A session. Thank you very much actually to the two presenters. I would take it in particular with Thymian Bussemer's presentation that everything was answered through the presentation. Ralf, you have to speed up actually next time because there are so many questions on the sustainability.
Yeah, happy to do that.
Very good.
Thanks.
With that, I think we are handing over now to the next presentation, and I welcome very much on stage, Hagen Reppke, who is now presenting on the risk management and internal controls at Volkswagen. Hagen, the floor is yours.
Thank you very much, Ralf. A sunny good afternoon from Wolfsburg. I would like to spend the next 50 minutes or so to talk about how Volkswagen Group is using and enhancing its existing enterprise risk management and internal control system to also identify, assess, and manage ESG-related risks. Let me however, start on a general note. Volkswagen Group has set up its internal governance based on a so-called Three Lines Model. Where in the business units, as the first line, are responsible for executing their business plans, but also are responsible to identify and manage the risks they face in pursuance of those business objectives. The second line, like for instance, group risk management, is defining, monitoring, advising on the general principles, the general policies and processes and controls that apply to the first line.
The third line of defense, or the third line, is internal audit, who independently then checks if the second line, like risk management, is performing its job adequately, and also if the first line is actually acting within the parameters set by the second line. This governance framework is also used for the enterprise risk management system, which I would like to talk about in a bit more detail right now. One of our key processes in our enterprise risk management is the so-called quarterly risk management process. We use this process to identify the relevant risks of our subsidiaries, of all of our brands, and at Volkswagen Group level. This process is actually done on a quarterly basis, fully digital, by over 3,000 people every quarter. We use this process also to, of course, track ESG-related risk.
Just to give you a couple of examples what ESG-related risk we collect in these quarterly risk reports, you can think of the CO2 fleet emission targets being at risk. You can think of operational risk from our supply chain, especially from natural disasters or our access to sufficient raw materials for batteries. Some of our ESG-related risk, however, I must say, are more specific of nature and therefore require specific risk assessments, which is why we have added to our general enterprise-wide risk management system more tailored risk assessments, which cover risks like money laundering risk or water-related risk in our plants or cybersecurity risks in our products and so forth.
However, we make sure whenever in those specific risk assessments there are very material risk detected, they are linked back into our enterprise risk management. Another key element of our enterprise risk management are scenario-based risk assessment. We at Volkswagen Group are nowadays using more and more scenarios to assess possible future outcomes and to assess related risks, and I will talk about that in a second more detail. In addition, Volkswagen Group has a well-established crisis management organization under the leadership of our group security and crisis management, which really has helped Volkswagen Group during the many crisis we've seen over the past two and a half years. Let me give you an example first on how we look at risks and new scenarios for assessing those risks.
One example you can see on this slide, where we, with the increased importance of our battery electric vehicles, ran a detailed risk analysis with all the relevant departments back in 2019 to understand the key risks related to the battery business, really, making sure we understand the risks, related to the BEV, ramp-up we are planning and how are they managed, by the different departments. The chart shows you a high-level risk map, including also ESG-related risk, like for instance, human rights risks, material compliance risks or, for instance, environmental risks. We use this 360-degree risk map to run different scenarios across it. Like for instance, we looked at a major change in battery technology, or we looked at different scenarios on the demand side and how these risks would develop in these scenarios.
This really helped the departments responsible for managing the different risks to proactively look back to 2019, look for mitigation strategies, including very flexible factory layouts and also flexible procurement contracts. Another example of how Volkswagen Group is managing risk is our crisis organization. We use it actually to manage extraordinary crisis situations like we've seen with the COVID-19, with the Ukraine war, and also with the gas and energy situation in Europe right now. This crisis management organization helps us to have all the relevant departments in one room, at least virtually, including always one or two Group Board members from the Executive Board, and it helps us to exchange information from the different areas of the company quickly, get a very comprehensive overview, and also take fast decisions.
As for the Ukraine war, we closely monitored the situation already in 2021 and actually performed a scenario-based risk assessment in January 2022 before Russia started its invasion into the Ukraine. As part of the scenario analysis, we looked at different potential levels of oil prices, gas prices, ruble prices, but also looked at supply chain dependencies from Russia and Ukraine, and also looked at different sanction scenarios. When the invasion started, we were actually able to quickly put the crisis organization in active mode and met then on a daily basis for the next couple of week to manage the risks linked to that crisis. The first priority, of course, was the safety and health of our staff in Ukraine, which is why we brought the expats out of the Ukraine very quickly.
We also supported the local employees who remained in the Ukraine by providing them with emergency packs, also offering jobs abroad to them. Finally, it's of course also very important to us that the employees of our suppliers are safe. This is the reason why our senior board member for procurement very early on went to the Ukraine to visit the local suppliers and check on the emergency and safety measures that had been taken. I must say in general, Volkswagen Group and also its employees have been very active in donating money, helping refugees who came from the Ukraine to Europe. I think that's a very important message we've sent there.
Another risk which you are obviously very aware of was the risk of not having a proper and functioning supply chain because very key components called wiring harnesses came from Ukraine, and there was a disruption at some point in time in the supply chain. To manage this out of the crisis management team, there was a sub-task force initiated, which was then run by the procurement department with the representatives of all the major suppliers, all the relevant departments. They met physically in the Wolfsburg soccer stadium, not far away from here, and sat together there in order to find alternative supplying locations and also to make sure that the suppliers in Ukraine would get online as fast as possible.
Today, production levels in Ukraine are back at 100% approximately, and also for all of them, there have been alternatives set up outside Ukraine. In addition, cars that we couldn't sell in Russia or Ukraine were then quickly rerouted to other markets, and the same was actually true with parts and semiconductors. Another measure we took in response to the Ukraine situation was that the Treasury Department did wind down ruble position in parallel to the business wind down. We have also obviously seen, not focused on Volkswagen, but in very general terms, that there was a big increase in politically motivated cyberattacks.
Our cyber security team was also, and is also part of the crisis management team, and they are working very hard to make sure that our software is patched as quickly as possible. Maybe as a last example, we have now shifted obviously the focus of the crisis management organization from the Ukraine war to our gas and energy supply. This includes identifying measures to reduce our gas consumption, to switch from gas to other alternative energy supply sources in our plants where this is possible, and we are working very closely together with our suppliers to understand how they are affected and what mitigations they're putting in place.
To sum it up, this crisis management organization as part of the wider risk management effort of Volkswagen Group has really helped us to reduce the impacts of these very severe crisis on our Volkswagen Group and made us more robust. Just give you another example of an important step we took last year to improve our resilience and to really monitor our overall risk position. We introduced what we call a quantitative risk appetite statement, and that is really a euro value. For this, we analyze our risk-bearing capacity in the first place, and we compare it now every six months with our total risk position. For that, we aggregate all the risks that are reported to our risk management system using a Monte Carlo simulation and looking at a value at risk of 99%.
This then allows us to monitor our liquidity position, and how this is comparing to our overall short-term risk. We use our overall midterm risk exposure to compare to our equity position. This, of course, also includes all the ESG-related risks that we are capturing in our risk management system. Another key element of our approach to control risk is our standard ICS, our standard internal control system. It is designed to reduce process risk rather than the business risk I talked about earlier on. Actually, based on the lessons learned from the diesel situation, we developed for each core process, like production, development, sales, and so forth, a standard set of process risk and process controls. This includes many ESG-related risk and controls. For example, in the production space, we talk about environmental and product compliance-related risk and controls.
We talk about product safety risk and controls. We also talk about health and safety risk and controls. We talk about human rights, risk and controls, fraud-related risk and controls, and so forth. These 25 control catalogs are rolled out to all the brands and the major companies of our group and are tested regularly for their effectiveness. When weaknesses are identified, then they are fixed quickly and we, as group risk management, make sure that we follow up and check if they are really fixed. Another growing area of focus for the automotive industry, for Volkswagen, and for us as risk managers are cyber risks. For that, Volkswagen Group has implemented a very systematic approach, and we call it our cybersecurity management system.
This system helps us, our engineers, our developers, our production experts, our sales staff to really identify, assess, and deal with the core cyber risk we face. That includes the infrastructure we use, that includes our suppliers and dealers, the backend IT, but of course also the cars itself. To make this as real as possible, the group responsible for that just did a fire drill. They ran a real-life test where they pretended that some of our cars were hacked, and they checked how the organization reacted on this incident. The results were very positive. Of course, we always identify some areas for improvement, and that's just another chance to improve our overall risk management system.
In fact, from this year on, having such a cybersecurity management system is now a regulatory requirement to get our new products, our new cars approved by the relevant competent authority. In preparation for that, we had had a successful external test of our management system. You can see the certificate on the slide, and we are very proud that we now have a certified system in place to keep our products safe also in terms of cyber risks. Finally, also in the context of ESG, I would like to mention that we continue to work on our compliance management system. We continue to implement our compliance organization in new business lines that are being created, like our PowerCo. We continue to have a state-of-the-art whistleblower system, which was just recently externally audited.
We are setting up new compliance management structures for new topics like human rights, and like Oliver Blume mentioned earlier, where we have appointed a human rights officer for the entire group. With that, I would like to thank you for your attention and hand it back.
To me.
To you, Rolf. Thank you.
Thank you, Hagen. Yeah, thank you, Hagen, actually, for this comprehensive presentation on the risk management side. I think I can confirm two things. The first one is, yeah, the quarterly risk management works. I just signed off the part for treasury today. The second thing is really that the task force during the Ukraine war was highly effective and really a great team effort of more than 50 people working on a weekly basis, yeah, in order to mitigate the risk for Volkswagen, and highly successful. With that, we are coming to the last part of today's session, and I would like to hand it over to Tobias Heine, who gives us an update on integrity at Volkswagen. Tobias, the floor is yours.
Thank you very much. My name is Tobias Heine. I'm responsible for our program Together for Integrity, and I'm really happy to share what we are doing. If you're already aware of what we are doing, I would like to give you, with this presentation, also an update since our last touch point. Acting with integrity is a key priority at Volkswagen and is anchored also in our strategy, NEW AUTO. Together for Integrity, or short T4I, is a program to anchor integrity and compliance measures across the group. The program consists of several components which I would like to share with you. T4I is actually our comprehensive program, which reaches all employees across the globe in Volkswagen Group. It's not only about processes, it's about touching people. It bases on our group values, which are shown here.
As I said, integrity and compliance are core elements of our Volkswagen's NEW AUTO strategy and one of six focus topics of Volkswagen ESG program. T4I is actually the enabler to embed integrity and compliance in Volkswagen's DNA. The program actually carries integrity and compliance content into the Volkswagen entities, tracks the implementation progress, and what's also important for us, enables open dialogue across hierarchies, bundles relevant initiatives, and ensures the continuous involvement and the commitment of the board of management.
We have started with our program in 2018, and it lasts until 2025. You may ask yourself, why so long? Because the group is so huge on the one hand, and second, we take it really serious what we are doing, and this needs time. That's the reason for this long stint. The core of the program, what we are doing, is structured along so-called key initiatives.
11 we have. This is, for example, HR compliance, the code of conduct, environmental compliance, product compliance, or business partner due diligence. Each key initiative actually consists of a set of clearly defined and described deliverables which need to be implemented by every entity. The corresponding deliverable fact sheets lists all relevant information of how to implement and also how to document. What is important for us that employees do have access to the content and are also regularly trained on this. For example, here, the code of conduct. We've got the role model program or our Integrity Skillset.
The program is consistently rolled out across Volkswagen Group. 850 entities we have got in our scope, and it's tracked in the T4I reporting suite. As of end of September 2022, the program has been rolled out to approximately 86% of all entities.
Here, what's important for us, each entity follows the same entity journey consisting of different approaches. At first, the implementation phase. We have got the perception workshops, which we use for determining the fields for action. These perception workshops are not carried out once, but on a regular basis, approximately once per year, implementation period of three-four years over the time of the project. Three-four perception workshops we have got in each entity to see are we advancing or are we not. I give you details on this later. The self-assessment, which marks the formal completion, and lastly, the effectiveness assurance.
The progress is reported on a regular basis to the Board of Management, either to the brand or on the Group level, 12 times in the board meetings this year, and also to the Supervisory Board 3 times we are planning in this year. We are rolling out T4I across the group. The progress is really very well. We are glad about this. Again, as of September 2022, we have reached more than 535,000 people, or the processes have reached and impacted 535,000 employees. We have actually gathered approximately 100,000 employees in our engagement formats, and we are active in more than 68 countries worldwide in parallel. That's the breadth of the program. As it's about implementation, it sounds like a journey, but we want to actually have impact.
Impact, the processes are up and running. This is confirmed by a self-assessment. For each key initiative, a self-assessment is conducted. It's signed off by the respective responsible, for example, in case of HR compliance, the HR director, together with the local CEO. Really high-level approval of up-and-running systems. So far, we have carried out 1,200 self-assessments. They are following a bundle logic. That is what you see on the graphic. The remaining bundles will be completed until end of 2025. Let me use an analogy that we are having with our cars. We would never hand over a vehicle to our customer prior to a quality assessment. The same we are doing with our processes. Once when the processes are implemented, we apply the so-called effectiveness assurance.
Effectiveness assurance conducts a risk-based testing at selected entities to ensure actually that the effectiveness of the key initiatives are in place and the security we are looking for with these processes are actually available to the entity. Deviations can occur. If deviations are identified, remediation measures are put in place and tracked until they are mitigated. They are retested by our team again and then set free. On the one hand, we want to implement. On the other hand, we want to create impact. The question of the overall embeddedness of integrity and compliance in our company culture is assessed by us by different means. We have got here shown four examples.
The perception workshops on the one end, the integrity and the compliance survey, the opinion barometer, which is carried out on an annual basis, and the Integrity Skillset.
Across all the measures, more than 100,000 employees were reached. Approval rates, we are really glad about, ranked between 86% and 89%. Let's go into a deep dive of two of these measures. Let's start with the perception workshop. I said the perception workshop is carried out on a regular basis and recurring, approximately once a year in every entity we are active in. The perception workshop actually reflects the integration of integrity and compliance into everyday working life. To do so, selected or randomly, that's important, randomly selected employees are asked to assess whether everyday practice of integrity and compliance at Volkswagen. Here, the comparison of the results of the initial perception workshop carried out in 2017 and the recurring results now in 2022 show an improvement of 37%.
Obviously we make an impact in the working life reality of our colleagues, there are changes. Another deep dive, the opinion barometer. In the opinion barometers, employees are asked to assess several questions. We've got 23 questions. One question is about integrity. The integrity question asks whether it is possible to act with integrity within their organizational unit. The opinion barometer actually is carried out in 165 entities in 40 countries. With this, we cover approximately 78% of our Group employees. Also important to mention, the results of the opinion barometer have an impact on the remuneration of the board of management. Also here we are glad that integrity has been consistently among the highest rated attributes, and the agreement rates continue to improve markedly. Since inception, we started with this in 2017, always under the top three questions.
In the last year, 2021, we had also the highest hike in absolute figures. 2022 figures we are looking for. We are at the moment undergoing the opinion barometer poll. It's going to finish in a couple of days. Also here we have got an improvement of 40%. We change, we have an impact. We are really glad on this, although we still have some years to go until 2025. I thank you very much for your attention on Together for Integrity, and I'm really glad to answer your questions in the subsequent Q&A session. Thank you.
Thank you, Tobias. With that, I think we can slowly move over to the second Q&A session. We have already a couple of questions coming in via the chat, and if you want to ask another question, then please feel free to put it in. I would like to start it, I think, here looking through the questions, Hagen. The first question would be to you. Do you think ESG risk will play a greater role in the future?
It's sort of an easy question, I guess, for me. I would definitely say yes. Why would I say so? There are a couple of reasons. One reason is we see a regulatory regime that is asking for more risk assessment of ESG. Two, we are seeing more ESG risks actually materializing, and I will give you an example in a second. Just two or three weeks ago, we met with all the risk managers from the DAX 40 companies here at Volkswagen to talk about the current issues and ESG-related risk were really the number one or two discussion topic. What do we see materializing?
Just to give you an example, last year's Texas winter storm, some of you may remember, had a real impact on the supply chain when it comes to semiconductors, which is already a supply chain under stress. These climate-related impacts just made it even more difficult to get sufficient semiconductors. I think all the corporations are well advised to really look hard and understand what ESG-related risk may mean for their supply chain or for their business model overall.
Rising significance of risk control in ESG. Tobias, the second question is for you and is about, in such a large organization as Volkswagen, how can it be ensured that actions and decisions are taken according to integrity and compliance principles, and that all employees are well educated regarding these subjects?
Yeah. Thank you very much for the question, or these questions.
Let me focus on the education topic. We have got in our toolbox, but also outside of these, a big catalog of trainings, mandatory trainings, for example, web-based trainings, also code of conduct or anti-corruption. There is a big catalog. We also do have an escalation procedure in case the employees are not participating, so that is also tracked to ensure that the participation is there. We have got at the end also in the majority of the trainings, a test to assess whether the content was also delivered. That is technically speaking. On the other hand, we have got what I said, these perception workshops. These perception workshops are really so important for us.
It's a platform where randomly selected employees are gathering and discussing with their respective board of management how integrity and compliance are taking part. It's not only a few employees, we gather there. Per year, this approximately 14,000 employees. After the end of the program in 2025, starting in 2018, we have really gathered a material number of persons in these workshops, and it's not about 5 minutes, no. Depends on the organization, between 3-5 hours. It's really very much about creating sensitivity, setting the tone from the top, and reaching the employees.
Thank you, Tobias. The next question is a bit delicate one, and I will take it myself. It's about the dual roles. Your governance appears to have worsened due to the CEO of Volkswagen Group and Porsche is now in the same hands, and how do you manage potential conflicts of interest? I'd say that first of all, Oliver Blume himself said, yeah, that's obviously something which he thinks is in the best interest of Volkswagen. I'm always a very pragmatic guy and would say, let's give him the benefit of the doubt. I think he will be the most watched person by the media within the next couple of months and quarters. Whenever he makes a mistake at the Volkswagen side, the media will cry out loud and say, "Look, we told you.
It's because of the dual roles, and you can't manage it capacity-wise." The biggest pressure basically put himself on the topic himself. In case it works out well, yeah, I think there is no reason to moan because then it's not only in the best interest of Volkswagen but also in the best interest of Porsche and ultimately then for all the stakeholders involved. How do we cope with the potential conflict of interest? I think there is already since many, many years, a well-established process lived here on Volkswagen side. Whenever there is a potential conflict because of a dual mandate, the respective party is just simply abstaining in votes or is just simply stepping out in case the conflict would arise.
This was in particular how this was handled, all the way through the Porsche IPO. Whenever there was a question with regard to Porsche and how the IPO should be handled, Oli stepped out and was not involved in the voting at all. I hope this somewhat pragmatic answer is answering the question and would continue with the next one, which is coming here again from the audience to Hagen. Hagen, how is Volkswagen assessing the risks from the current gas and energy crisis?
Well, thanks for the question. I think it's a very relevant question right now for us. As I explained earlier, we have a crisis management organization, and there are a couple of work streams there. One work stream actually looks at the different scenarios which we can imagine that could occur over the next 12-24 months. As part of those scenarios, we think in different energy price levels and also in different availability levels. Using that, we then look at our production situations or which plants are producing what, using what sort of energy. The procurement department is really looking very detailed at the supply chain. They have contacted over 6,000 suppliers to understand how they are prepared to deal with different scenarios.
If you summarize the results of that, I would say, we definitely see some risk this winter, but it's decreasing, given the level of gas reservoirs we are seeing, given the level of gas consumptions already being reduced. We as a corporation have taken a number of steps to reduce consumptions, lowering hall temperatures, et cetera. We also looking at the next winter, because depending on how much we use this winter and how well the LNG terminals are being brought into operation, and this is something we need to keep an eye on.
Finally, we also look at the price level definitely, because that's something where we have seen luckily the prices coming back over the last few days, but they are much higher than we used to see them. There is definitely a cost and price risk on our side and also on the supplier side, which we need to mitigate going forward.
Yeah, I think it's fair to say that everything which is in the hand of Volkswagen, we carefully manage and monitor. However, there is definitely also risk with regards to the supply chain and our suppliers, which is unfortunately not really in our control. With regards to the additional cost, I think we said at least for the year 2022, this is a foreseeable amount, yeah, adding maybe up to EUR 1 billion to the existing cost basis. From there on, yeah, we just simply have to wait and see how gas prices will evolve into the future. Very good. Tobias, the next one for you.
Can you give us an update on the situation of the joint venture in Xinjiang plant in China? Well, I said before, I thought that the delicate questions are to me, but this one is obviously here for you.
Yes, of course. Thank you very much. As rightly pointed out it's a joint venture plant yeah. At first, in all our facilities and all our plants of Volkswagen Group we ensure compliance with all regulations, with all requirements. It's a joint venture plant so it's not ours directly. We have already made certain statements, they remain. What I understood lately is that there were also changes applied for example considering cultural differences, halal canteens were opened so there is also a change. Yeah there is nothing more new to add to what we had already previously stated.
When you say it's a joint venture so it's majority owned by another party. I think that's the important element as well. We have limited influence. The influence we can take we are taking. Yeah. Apart from that, we also have to acknowledge that this is not our operation.
No.
Yeah. Okay. Hagen there is another one coming in for you. Do you also have a whistleblower system for your tier two suppliers and below so any N-tier suppliers? How far do you manage your supplier risks, tier one and below? Where do you see the main challenges when it comes to supplier risk management? Can you give us some examples here?
Well, in fact, we have a very well-established whistleblower hotline which is open to anyone, so that obviously includes the tier one, tier two and tier N supply chain as well. It is being advertised also on the procurement portal. It's advertised on our other media. There is a 24/7 hotline in different languages. There are lawyers who can then take anonymous tips. We actually see it works because we get more than 1,000 hits or hints every year, which are then very prudently investigated and followed up. I think, you know, that side is pretty well covered. Things like human rights issues and business conduct topics are certainly things that are being reported in that channel.
In terms of risk management on the supply chain side I think it's a very diverse topic. It starts from their financial liquidity where we can imagine or we see some suppliers now are having a bit solvency as they used to have maybe because the pressure is there in terms of costs. You have something like, are they following business conduct rules? That is in the contracts there are auditing clauses where the procurement department has teams going out there doing sustainability audits.
On the other end, you see we're not talking only more about tier suppliers, but we talk about software suppliers, for instance where we're now using software certificates that need to be shown by the suppliers so that they actually can demonstrate that they are making sure their products are also cyber secure. The question of risk management of the supply chain is a very wide one, but I think we have many dedicated teams so either in IT or procurement or in risk management looking at this.
Very good. Yeah looking here at the remaining list of questions there is a lot which goes in the direction of human rights and also on the upcoming German supply chain law. Here I think I would not distribute it to the participants here in this Q&A. We will brief actually Ms.
Reserve it for a later point in time. With that I think we are coming to the end of the second Q&A session. I thank the two of you very much Tobias and Hagen for being with us here today. It's greatly appreciated, and we are looking forward to seeing you at the latest then next year at the sixth ESG conference. To wrap up today's event, as said, there are several ESG-relevant reports which can be found on our corporate website. Many thanks for your participation in today's event. A replay and the slides will be available on the investor relations website so that you can assess them. If you have any open topics that haven't been covered today or you would like to give us feedback please feel free to contact the investor relations team.
We very much look forward to your continued dialogue. Please keep us employed. Before I come to the take care and have a good day I really want to thank Helen and the team for the excellent preparation of this day. I hope you enjoy it as well and thank you very much and at latest to October 2023. Thank you.