Code of Conduct for Business Partners

Volkswagen Group requirements regarding sustainability in its relationships with business partners

Preambel

The Volkswagen Group’s business partners play an integral part in the Group’s business success. Partnership creates lasting business relationships which are mutually beneficial. Therefore, the Group is focused on close cooperation with its business partners.

Applying the sustainability requirements, we are aware of our responsibility for the economic, ecological and social impact of our actions. We also expect this of our business partners, partic- ularly where human rights, health and safety at work, environ- mental protection and combatting corruption are concerned.

In the spirit of partnership-based collaboration, the Volkswa- gen Group offers its business partners a wide range of practical training opportunities, initiatives and other sources of infor- mation. It is recommended that all business partners use these offers and information sources actively.

The following requirements define the Volkswagen Group’s expectations regarding the mindset and conduct of business partners in their corporate activities and are considered the basis for successful execution of business relations between the Volkswagen Group and its partners.

1. Objectives and scope

In this Code of Conduct for Business Partners (hereinafter referred to as “Code of Conduct”), the Volkswagen Group has set out its aspirations and expectations as well as requirements for business partners of the Volkswagen Group in relation to sustainability (hereinafter referred to as “sustainability requirements”).

Sustainability includes respecting human rights, protecting the environment, conducting business ethically and lawfully and the responsible sourcing of raw materials.

The Volkswagen Group company that uses this Code of Conduct is referred to in general below as the “Volkswagen Group”.

The Code of Conduct is applicable to all suppliers, sales partners and all other B2B business partners (hereinafter referred to as “business partner”) of the Volkswagen Group that do business with the Volkswagen Group.

The business partners are required to contractually pass on all sustainability requirements to those business partners (especially suppliers) that affect the contractual relationship with the Volkswagen Group and to ensure, to the extent possible and reasonable, that the sustainability requirements are passed on to their business partners in the supply chain. The business partners establish appropriate control measures to verify compliance with these sustainability requirements of their own business partners.

In those cases where obligations have been agreed to with busi- ness partners under individual contracts that diverge from the principles in this document, such divergent obligations prevail.

The sustainability requirements are based, amongst others, on the 10 Principles of the United Nations (UN) Global Compact, the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multi National Enterprises, OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and the Conventions of the international Labour Organization (iLO), in particular its fundamental rights at work and the Guiding Principles of the Drive Sustainability Initiative.

Furthermore, this Code of Conduct is based on nationally and internationally agreed standards such as the Universal Declara- tion of Human Rights, codified in particular in the international Covenant on Civil and Political Rights and in the International Covenant on Economic, Social and Cultural Rights.

2. Fundamental sustainability requirements

General information

The Volkswagen Group considers compliance with the sustainability requirements to be essential and fundamental to its business relations.

The Volkswagen Group expects the business partner to inte- grate the values anchored in these sustainability requirements in day-to-day business through structured and competent management. Business partner management must identify and assess legal and other requirements and train employees to ensure compliance with the relevant requirements.

Business partners always comply with the applicable law. inso- far as these sustainability requirements go beyond the require- ments of the applicable law, these must also be observed.

In addition to the obligatory requirements from this Code of Conduct, further recommendations and hints for business partners are given in extra text boxes.

Creation and application of management systems

Those business partners that operate production locations with more than 100 employees have to demonstrate certification  for these locations according to the international standard ISO  14001 or the EMAS Regulation of the European Union.

Corporate statement

Az üzleti partnerek vállalati nyilatkozatot (pl. magatartási kódexet) készítenek, amely kötelezettséget vállal a társadalmi, etikai és környezetvédelmi normák betartására. Ezt a nyilatkozatot a helyi alkalmazottak által értett nyelveken kell elkészíteni.

Sustainability officer

Business partners are encouraged to appoint a sustainability officer or a similar officer who reports to the management of the respective business partner. The officer should develop sustainability objectives and measures within the company.

Training

To support its business partners in complying with the sustain- ability requirements, the Volkswagen Group offers its business partners different training formats free of charge (Trainings and Dialogue vwgroupsupply.com). Participation in this training is obligatory depending on the result of a risk analysis for busi- ness partners carried out in advance. Business partners may be exempted from mandatory participation in such training if they can prove to have already undergone a similar training offered by third parties.

3. Sustainability requirements in environmental protection

Business partners know and observe the Group environmental policy of the Volkswagen Group as described in the Group  Environmental Policy Statement (Environment vwgroupsupply.com).

Greenhouse gas emissions

Business partners take appropriate measures to reduce air emissions that pose a risk to the environment and health, including greenhouse gas emissions. In order to improve the environmental performance of products and services, business partners provide for proactive reduction of greenhouse gas emissions along the entire supply chain, for instance through increased use of carbon neutral energy sources.

Business partners who supply products to the Volkswagen Group provide information to the Volkswagen Group on request at product level in relation to the overall energy consumption in MWh and carbon emissions in tonnes (scope 1, 2 and 3) so that the Volkswagen Group can improve the environmental performance indicators of its products.

Efficient use of resources

Business partners take appropriate measures to ensure efficient use of energy, water and raw materials, usage of renewable resources and a minimisation of damage to the environment and health.

Registration, evaluation and restriction of substances and raw materials

Business partners implement appropriate measures to avoid or refrain from using substances and materials with adverse effects on the environment or health (for example, carcinogenic, mutagenic, reprotoxic substances) within the framework of the respective applicable law and with due regard for applicable regulations of the Volkswagen Group.

Business partners are obliged to act in conformity with the requirements of the international conventions and other legal instruments pertaining to the production, use, handling and disposal of certain substances (in particular including the requi- rements of the Minamata Convention of 10 October 2013 on mercury, the Stockholm Convention of 23 May 2001 on persis- tent organic pollutants (POPs)) as well as the related applicable implementing legislation at the national and supranational level.

In regard to smelters or refineries of tin, tungsten, tantalum and gold, business partners may only use raw materials from smelters or refineries that meet the requirements of the “OECD Due Diligence Guidance for Responsible Supply Chains of Mi- nerals from Conflict-Affected and High-Risk Areas” as assessed by the Responsible Mineral initiative (RMi) or similar organisations.

Business partners have to take appropriate and adequate measures to exclude raw materials extracted from deep sea mining from their supply chains.

Circular economy and waste management

Business partners take appropriate and adequate measures aimed at avoiding waste, reusing resources, recycling as well as the safe, environmentally friendly disposal of residual waste, chemicals and wastewater. Such measures can be applied in particular in development activities, production, product service life and subsequent end-of-life recycling as well as in other activities. Thereby, the business partners comply with international agreements on the cross-border transport of hazardous waste, in particular the Basel Convention on the Control of Trans- boundary Movements of Hazardous Wastes and their Disposal of 22 March 1989 as well as with the corresponding, applicable implementation rules at national and supranational level.

Water 

Business partners take appropriate and adequate measures to minimise water consumption at their sites and/or along their own supply chains with prioritisation for water stressed regions. The right to water is respected at all times.

Business partners that supply products to the Volkswagen Group provide, upon request, the Volkswagen Group with information on total fresh water consumption on product level

Biodiversity

The protection of the natural ecosystem, especially the protecti- on of endangered habitats of wild animals, and the sustainable usage of natural resources are required to be ensured.

Business partners must strive to ensure supply chains are free of deforestation and conversion in accordance with applicable law and international biodiversity regulations. These international regulations include, for example, the resolutions and recommendations on biodiversity from the Centre for Biological Diversity (CBD) and the World Conservation Union (iUCN).

4. Sustainability requirements in the area of human rights  and employment law of employees

Business partners are required to comply with the conventions of the international Labour Organization (iLO) as amended from time to time, in particular the fundamental rights at work.

Elimination of child labour and the protection of young workers

Business partners must comply with the minimum employment age in their business activities and their supply chain. They ensure that the minimum age for acceptance for employment is determined according to the respective applicable law and that prohibited child labour does not occur.

No modern slavery, no human trafficking and no unethical recruitment

Business partners must take appropriate and adequate measures to eliminate debt bondage, forced and compulsory labour, as well as all forms of modern slavery and human trafficking in their own area of responsibility and/or along the supply chain. Business partners ensure that employment relationships are voluntary and allow employees to give notice of their own volition in observance of a reasonable notice period. Employees of business partners are given a contract at the time of hiring that complies with applicable law and is in a sufficiently documented form (e.g. written or electronic), is written in a language they understand and in which their rights and obligations are truthfully and clearly set out.

Furthermore, business partners must not mislead or defraud potential employees about the nature of the work, ask employ- ees to pay recruitment fees or inappropriate transportation fees, and/or confiscate, destroy, conceal, and/or deny access to employee passports and other identity documents issued by government and/or restrict the employees’ freedom of movement or require employees to involuntarily use accommodation provided by the company for no operational reason.

Protection of bodily integrity, no corporal punishment

Business partners attach the utmost importance to the protection of bodily integrity and introduce appropriate measures to ensure respect for this legally protected right. Business partners ensure in their area of responsibility and along their supply chain that any involvement, including complicity or participation in kidnapping, torture, killing or similar acts, is excluded and that no corporal punishment is applied as part of their disciplinary practices. In addition, business partners ensure in their own area of responsibility and along the supply chain that other serious human rights violations and abuses, such as sexual violence, as well as war crimes or other serious violations of international humanitarian law, crimes against humanity or genocide, are prohibited.

Compensation and benefits

Business partners pay their employees a reasonable wage. A reasonable wage is at least the minimum wage established under the applicable law and is otherwise measured according to the law of the place of employment. This wage should at least, as far as possible, cover the basic needs of employees and enable a decent standard of living for employees and their families (living wage). Business partners are required to pay employees directly, in full and on time.

Occupational health and safety, fire protection

Business partners comply with the applicable occupational health, safety and fire protection legislation. Business part- ners establish a process enabling the continuous reduction of work-related health and safety risks and improvement of occupational health, safety and fire protection. All occupational health and safety measures must not involve any expenditure for the employees.

In particular, business partners will:

• inform employees of identified hazards and the associ-  ated preventive and corrective measures put in place to  minimise risks. The information must be available in an  appropriate language.

• Conduct sufficient training measures on the prevention of  work-related health disorders and of accidents at work, as  well as first aid, chemicals management and fire protection.

• Provide suitable protective equipment and protective  clothing free of charge.

• Provide appropriate fire protection measures (technical, struc-  tural or organisational) to reduce damage in the event of fire.

• Monitor and control work-related health and safety haz-  ards (e.g. chemical, biological, physical and physiological  dangers) as well as the corresponding protective measures.

• Label chemicals used according to the Globally Harmonized  System of Classification and Labelling of Chemicals (GHS)  or, in European countries, the Classification, Labelling and  Packaging (CLP) regulation. Chemicals must be stored,  transported and handled in accordance with the applicable  legal and contractual requirements.

• Fully explain appropriate emergency plans and provide  the corresponding first aid, fire protection and medical  assistance, as well as materials and adequate transport for  further treatment.

• Ensure an appropriate number of emergency exits, escape  routes and emergency assembly points, all of which are  marked with sufficient signage.

In case of an accident, first aid and medical assistance must be provided. in the event of work-related health hazards, such as pandemics, the business partners take all appropriate measures to protect their employees and the company. Thereby, any mea- sures issued by the local authorities have to be fully observed and complied with.

Working hours

Business partners ensure that working hours comply with national law and/or the national requirements in force in the respective economic sector.

Working and living conditions

Business partners provide their employees with toilet facilities and access to clean drinking water. All facilities for the consumption and preparation of food as well as for food stora- ge comply with applicable minimum hygiene requirements. If the nature of the work requires the provision of dormitories for employees, sufficient space, cleanliness and safety is ensured. Their access must not be restricted inappropriately.

No harm to land, water, air

Business partners ensure that they do not cause harmful soil modification, water pollution, air pollution, harmful noise emission or excessive water consumption, which may lead to significant impairment of the natural foundations for food and drinking water or the health of a person.

No forced eviction

Business partners comply with the prohibition of unlawful eviction and the prohibition of unlawful deprivation of land, forests and waters in the acquisition phase, development or other use of land, forests and waters.

Human rights defenders

Business partners must not tolerate or engage in any form of threats, intimidation or attacks against human rights and environment defenders, including those exercising their rights to freedom of expression, association, peaceful assembly and protest against the business activities of the business partner. They guarantee access to their grievance channels without the threat or imposition of retaliatory measures.

Freedom of association and collective bargaining

The business partners recognise the right of all employees to form trade unions and employee representation bodies and to join them. in this context, the business partners commit to sa- feguarding neutrality. This precludes any form of discrimination or retaliatory measures based on union activities. Business part- ners recognise the right to collective bargaining and the right of trade unions to be allowed to operate freely and in accordance with the law of the place of employment. This law includes the right to strike and the right to negotiate collectively.

No discrimination or harassment

Business partners ensure that all forms of discrimination, inti- midation, harassment or unwarranted disadvantage towards their employees and in the work environment are avoided. in particular, unequal treatment is prohibited, for example due to ethnic or social origin, skin colour, gender, nationality, language, religion, physical or mental limitations, gender identity, sexual orientation, health status, age, marital status, pregnancy/ parenthood, union membership or political persuasion, to the extent that it is based on democratic principles and tolerance of dissent, unless it is justified by the requirements of employ- ment. Unfair treatment shall include, in particular, unequal pay for work of equal value.

Use of security forces

Business partners ensure that the commissioning or deploy- ment of security forces does not lead to violations of human rights. Business partners ensure not to contribute directly or indirectly to supporting private or public security forces that unlawfully exercise control over mining sites, transportation routes and upstream stakeholders in the supply chain

Minorities, vulnerable groups and indigenous people

Business partners respect the rights of minorities, vulnerable groups and local communities to decent living conditions.

5. Sustainability require-ments for business ethics

Business partners act with integrity at all times and take adequate and appropriate measures to end violations if they are identified.

Avoiding conflicts of interest

Business partners make their decisions solely on the basis of objective criteria and must not allow themselves to be influenced by extraneous interests or relationships.

Prohibition of corruption

Business partners reject and prevent all forms of corruption, including what are known as facilitation payments (payments to speed up the performance of routine tasks by officials). Business partners ensure that their employees, subcontractors and agents do not grant, offer or accept bribes, kickbacks, improper donations or other improper payments or benefits to or from customers, officials or other third parties.

Free competition

Business partners respect fair and free competition and comply with the applicable competition and antitrust rules. In partic- ular, they must not enter into anti-competitive arrangements or agreements with competitors, suppliers, customers or other third parties nor abuse a possible market dominant position.

Business partners ensure that no exchange of competitively sensitive information or any other behaviour that restricts or could potentially restrict competition in an improper manner takes place within their area of responsibility.

Import and export controls

Business partners strictly comply with all applicable laws for the import and export of goods, services and information. Furthermore, the respective applicable sanction lists will be followed.

Business partners ensure that all taxes, duties and royalties lev- ied in connection with the mining, trade and export of minerals in conflict and high-risk areas are remitted in accordance with respective applicable law.

Prohibition of money laundering

Business partners ensure compliance with the applicable legal provisions against money laundering within their business operations.

Intellectual property rights

Business partners respect intellectual property rights and pro- tect associated information.

Protection of confidential information

Business partners ensure that sensitive data (trade secrets and personal data) is properly and lawfully collected, processed, saved and deleted. Business partners impose a corresponding obligation on their employees. Sensitive data must not be, transmitted to a third party or made available in any other form without the necessary authorisation and must be protected in this respect.

Usage of artificial intelligence

Data privacy and security are crucial requirements for the use of Artificial intelligence (Ai). Business partners ensure that all developments using AI are subject to applicable laws and regulations.

AI systems are to be created reliable and without any discrimination. Control of AI applications always remains with human beings.

No support for armed groups

Business partners exclude that their business contribute directly or indirectly to supporting non-state armed groups.

Disclosure and information

Business partners record information regarding their business  activities, working methods, health and safety and environmen-  tal practices. Such information is disclosed, when requested by the Volkswagen Group, insofar as the disclosure does not violate legal requirements.

6. Sustainability require-ments for responsible supply chains

Transparency

To identify and mitigate sustainability risks in the supply chain, business partners, on request, disclose information on their supply chains to the Volkswagen Group that are required by the Volkswagen Group to fulfil its legal obligations. The business partners are also obliged to impose a corresponding disclosure obligation on their suppliers, which they in turn are required to pass on to their suppliers.

This may require in particular that business partners disclose their supply chain to the Volkswagen Group up to the mate- rial origin (including choke points like smelters and refiners) and provide evidence of management systems or third-party verifications demonstrating processes that prevent or mitigate sustainability risks in the supply chain.

Raw material supply chains

Due to their significant impact on people and planet, raw ma- terial supply chains, in particular, require special due diligence from all actors along the supply chain both in terms of compliance with human rights and protecting the environment.

Therefore, business partners comply in particular with their due diligence obligations as described in the “OECD Due Diligen- ce Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas” regarding relevant raw materials.

7. Verification of comp-liance with the sustain-ability requirements by Volkswagen Group

General information

The Volkswagen Group reserves the right to verify compliance with sustainability requirements regularly, randomly or for specific events and using appropriate and adequate means before awarding a new contract and throughout the business relationship.

This can be done, for example, by means of a risk assessment of the relevant business partner’s area of responsibility, a self-assessment by the business partner and/or by deploying experts locally (on-site assessment). An on-site assessment of this nature is only carried out in the presence of representatives of the business partner during regular working hours and in accordance with applicable laws, in particular with regard to data protection. The business partners take appropriate and adequate measures that give the Volkswagen Group the right to carry out similar assessments of their business partners if this is necessary for the fulfillment of legal obligations .

Assessment prior to entering a contract

If sustainability risks are identified during pre-contractual assessments referred to above may also take place before enter- ing a contract or before awarding a new contract, the resulting measures, if any, shall then be binding on the contract to be concluded. in this case, the business partner is obliged upon entering into the contract to assess any deter- mined or imminent violation of the sustainability requirements in its own business area or in its supply chain within a rea- sonable period and to remedy any such non-compliance at no additional cost to the Volkswagen Group.

The findings of the pre-contractual assessments for compliance with the sustainability requirements constitute a criterion rele- vant to the award of contracts.

Violation of sustainability requirements by business  partners

If a violation of the sustainability requirements by the business partner has occurred or is imminent, the Volkswagen Group is entitled to take prompt and appropriate measures to prevent, stop or minimise the extent of such violation.

The business partner is obligated in this case to take all appropriate measures to prevent, stop or minimise the extent of such violation.

The business partner will participate in one or more training formats of the Volkswagen Group, provided that participation in the training may lead to the termination or minimization of the violation.

If the nature of the violation is such that it cannot be termi- nated in the foreseeable future, the business partner prepares and implements a plan (including a specific schedule) to stop or minimise the violation without undue delay. if required by law, the Volkswagen Group shall be appropriately involved in the preparation of the plan.

Violation of sustainability requirements in the business partner’s supply chain

If there are material grounds (substantiated information) for believing that a human rights or environmental obligation may have been violated in the upstream supply chain (with direct suppliers of Volkswagen Group), the business partner shall, without undue delay:

1. Participate in a risk analysis by the Volkswagen Group,
2. Embed appropriate prevention measures with respect to
3. respective business partner , and
4. Appropriately support the Volkswagen Group with the  preparation and implementation of a plan to prevent, stop  or minimise the violation.

Other consequences

If a business partner violates or does not comply with the sustainability requirements, the Volkswagen Group reserves the right to take appropriate steps to maintain its rights, such as

• Requesting implementation of improvement measures
• Verifying highlighted improvements/measures
• Excluding the business partner from new orders and
• Terminating the contract up to extraordinary termination

The Volkswagen Group may waive the exercise of its right of termination if the business partner can credibly affirm and prove that it has immediately initiated countermeasures to prevent future, similar violations.

8. Reporting Misconduct

Reporting Misconduct

Misconduct must be identified at an early stage, dealt with and remedied without delay in order to protect employees, business partners, third parties and the Volkswagen Group. This means that everyone needs to be aware of all compliance regulations, and pay attention and be ready to point out potential serious violations of the rules in case of concrete evidence.

Business partner grievance mechanism

Business partners establish a grievance mechanism adequate to their business.

The mechanism allows for concerns related to business ethics, human rights or the environment to be raised by both their own employees as well as other potentially affected people anonymously, confidentially and without fear of retaliation.

Business partners shall not undertake any actions that hinder, block or impede access to the complaints procedure. Business partners undertake to contractually pass on the obligations referred to in the preceding sentence to its suppliers and to en- sure, to the extent possible and reasonable, that the obligations are passed on in the supply chain.

Volkswagen Group Whistle-blower System

The Volkswagen Group values confidential, relevant tip-offs from business partners, customers and other third parties.

In the event of specific indications of potential misconduct by employees of the Volkswagen Group, or of the business partner or its business partners in turn in the context of collaboration with the Volkswagen Group, the Volkswagen Group offers all stakeholders the possibility to report such misconduct to the Volkswagen Group Whistleblower System.

All information and contact channels can be found at Whistleblower System (www.volkswagenag.com).

Business partners should provide their employees with unhin- dered access to the Whistleblower System implemented by the Volkswagen Group and not perform any actions that obstruct, block or impede access. Business partners undertake to con- tractually pass on the obligations referred to in the preceding sentence to its suppliers and to ensure, to the extent possible and reasonable, that the obligations are passed on in the supply chain.

Wolfsburg, January 01st, 2023