VW rebuilt supply chain human rights checks before Germany's 2023 law
Ahead of a new German supply chain law, VW built systematic human rights risk analysis across 59,000+ suppliers, rating 75% of procurement spend.
What was changed
In 2022 Volkswagen Group ratcheted up its analysis and due diligence to prevent and root out human rights violations in its supply chain for key materials, per its third responsible raw materials sourcing report. The overhaul was in part preparation for a German law adding supply chain due diligence requirements on companies doing business in the country, which took effect early in 2023.
The new approach aims to prevent or minimize human rights and environmental risks through systematic risk analysis based on suppliers' business models, combining internal and external risk data and rating suppliers on country-level risk alongside their individual profiles. VW Group — including Porsche and Audi — sources steel, copper, aluminum, battery ingredients like lithium and cobalt, and conflict materials including tin, tungsten and gold from more than 59,000 suppliers across 90 countries.
By its 2022 sustainability report, VW held more than 12,600 sustainability ratings covering 75% of procurement spend, more than half A-rated. Its grievance process handled 145 reports of breaches, and four suppliers were blocked from new contracts over serious breaches. That year VW joined the Initiative for Responsible Mining Assurance, certified most supplier sites with the Leather Working Group, deepened battery supply chain engagement, contributed a hydrological study to a Responsible Lithium Partnership in Chile, and visited cobalt and copper sites in the Democratic Republic of Congo.
Why it worked
The German law made supply chain human rights due diligence a legal requirement for companies doing business there, effective early 2023.
VW's board member for procurement states the most severe human rights and environmental risks sit at the mining level, in upstream tiers where oversight is hardest.
Systematic risk analysis lets a 59,000-supplier network be prioritized: country risk and supplier business profiles flag where audits matter most.
Enforcement gives the system teeth — four suppliers blocked from new contracts signal that ratings and grievance findings carry consequences.
What can be applied
Compliance done as a system — risk-rated suppliers, grievance channels, contract enforcement — turns a legal obligation into leverage over the deepest tiers of a supply chain.
Aftermath
As of the July 2023 reporting, the system was operating at scale: 12,600+ supplier sustainability ratings covering 75% of procurement spend, 145 grievance reports handled, four suppliers blocked from new business, and new certifications and mining-sector engagements in leather, lithium and cobalt. Procurement board member Dirk Große-Loheide said VW keeps working with indirect suppliers in upstream chains, 'where the challenge is greatest.'