Volkswagen quits UN Global Compact amid emissions scandal

Crisis-hit car giant had previously withdrawn from CDP

The fallout from the emissions rigging scandal at Volkswagen shows no signs of letting up. Responsible Investor has learnt that along with its decision earlier this month to stop having its environmental record assessed by the CDP, the German auto giant has cancelled its membership in the United Nations Global Compact, the UN’s corporate sustainability initiative.

Global Compact spokeswoman Carrie Hall told RI: “Volkswagen has decided to withdraw its participation in the UN Global Compact while they work to address the serious issues at hand.”

Last month, RI reported that the Global Compact, the world’s largest corporate citizenship initiative, had contacted VW to find out what it is doing to remedy the situation and what steps it is taking to prevent the event from reoccurring. It comes amid closer cooperation between the Global Compact and investor bodies such as the Principles for Responsible Investment (PRI), demonstrated by a joint project on anti-corruption announced this month.

VW had been a member of the New York-based initiative since 2002, pledging to uphold the Compact’s 10 principles and file regular progress reports. The principles call on signatory companies – of which there are now 10,000 – to respect human and labour rights, protect the environment and root out corporate corruption. Prior to the scandal, VW trumpeted its record on the Compact’s ninth principle, which asks signatories to “encourage the development and diffusion of environmentally friendly technologies.”For example, VW told the Global Compact in 2008: “In the USA, we started marketing clean TDI (turbo direct injection) vehicles fitted with the latest catalytic converter technology to reduce particulate and nitrous oxide (NOx) emissions to such an extent as to meet the strictest demands of the US market.”

In its sustainability reports, a function of its membership in the Global Compact and in the CDP, VW claimed significant decreases in the emissions of NOx and carbon dioxide (CO2) from its fleet.

In October 2013, the Global Compact even included VW in a 100-member sustainable equity index on the basis of its record on that initiative. The index (the Global Compact 100) was launched with environmental, social and governance (ESG) firm Sustainalytics.

In September VW was forced to publicly admit that it had cheated during emissions tests in the US using a defeat device. It has vowed to get to the bottom of the scandal and win back the trust of its customers and shareholders.

The Global Compact’s Hall said that once VW got over the scandal, the body would be happy to welcome it back. “Given our mission to advance responsible business and integrity, we stand ready to continue dialogue with Volkswagen if and when the company is prepared to renew its commitment to principles on sustainability and business ethics in due time,” she said.