Wiesbaden, May 28, 2021. By joining the United Nations Global Compact (UNGC), companies commit to promote an inclusive and sustainable global economy. However, VW has shown over the past five years that the UNGC is not a one-way street. Because of the emissions scandal, the company was kicked out – but came back recently with a lot of work. How did that work out?

by Justus Fischer

Anyone who chooses to become a member of the United Nations Global Compact (UNGC) signs up
to ten universal principles covering topics such as respecting human rights, abolishing discrimination and promoting environmental protection. But signing is not enough: words must be followed by actions, and signatories of the sustainability initiative must implement and support certain goals. For this reason, UNGC members must produce an annual Communication on Progress (COP) report, in which they document progress in implementing the various goals. If a member falls into disrepute in the public eye because it is not pursuing the goals after all, or is even working against them, the UNGC can suspend the membership. For VW, the sustainability initiative made use of this.

VW on the black list

2015 was a difficult year for VW, although it was only the beginning of the emissions scandal that was to drag on for several years and permanently damage the company’s reputation. VW, but also various other car manufacturers, manipulated their vehicles in such a way that they officially complied with the limits for car emissions, although they actually exceeded them. This approach is not compatible with the UNGC principles, which emphasize environmental protection. As a consequence of the affair, the UNGC removed the automotive group from its membership list.

As a reaction, VW worked toward reinstatement from the beginning. The Group continued to publish COP reports and conducted extensive compliance monitoring under the supervision of the U.S. Department of Justice. The automaker also established an independent Sustainability Advisory Board in 2016, whose members include Georg Kell, founding director of the UNGC, and committed itself to a comprehensive climate protection program. By 2050, the company aims to be balance sheet carbon neutral.

Sustainability efforts are rewarded

And the work paid off: in 2020, VW applied for readmission to the UNGC – with success. The UNGC confirmed the readmission at the beginning of 2021. VW has thus learned from its mistakes and recognized that sustainability should be at the top of the agenda, instead of just sales. Not only because otherwise it can do massive damage to a company’s reputation, but also because sustainability is now an important criterion for a wide range of stakeholders and thus for the successful future of any company.

The UNGC and the dealings with VW are just one example of how companies must comply with their ESG commitments – or at least communicate openly if they do not. It is not for nothing that it is also considered transparent and quite positive in sustainability reports when a company honestly admits that it has not achieved certain goals. The company can learn from this and do better – just transparently and self-critically.

Does your company need help on how to better communicate your ESG successes (or failures)? Get in touch here.

Justus Fischer: Senior Consultant
Justus Fischer has gained experience in various ESG and IR communications projects. He coordinated a cross-media content marketing campaign for an international technology group. Justus studied media studies, rhetoric and literature at the universities of Tübingen, Bielefeld and La Plata (Argentina).