Volkswagen to create a new ‘sustainability board’ after diesel emissions scandal

German automaker Volkswagen (VW) will create a ‘sustainability board’ to advise Chief Executive Matthias Müller as part of a host of measures aimed at making amends for the diesel emissions scandal that has rocked the firm over the last few months. Speaking at a news conference at its AGM today, Müller said that along with improving its internal compliance and risk management – the failure of which led to the scandal – the automaker needed to embrace the sustainability. “As a result, we will create a sustainability board comprised of between seven and nine international experts from academia and society.”
According to Müller, the new board will advise the CEO and the rest of VW’s management board on such issues as sustainable mobility (electric cars), climate protection and the future of labour in a digital age. “What I’d like to underscore: This board is neither a fig leaf to cover up our problems nor will it just be a show. Rather, it will influence the way we conduct ourselves and make sustainability a core corporate value,” Müller told journalists at VW’s headquarters in Wolfsburg today (April 28). Candidates for the board are currently being recruited.
News of the sustainability board comes just exactly one week after VW agreed to fix or buy back nearly 500,000 of its diesel vehicles in the US whose emissions were manipulated to meet clean air standards. The settlement, announced by a US federal judge, also calls on the German firm to create an environmental fund worth €1.8bn to make up for the scandal. Asked about the fund’s specific purpose, a VW spokesman told Responsible Investor that the settlement restricted him from providing details. Despite the settlement, the German automaker still faces a possible penalty from the US government of up to $18bn (€15.9bn) as well as numerous lawsuits from investors seeking billions of euros in compensation over the steep fall in VW’s share price caused by the emissions scandal.VW has set aside around €16.2bn in reserves to deal with the financial fallout from the emissions scandal, to include the cost of recalls and buybacks as well as legal costs. Head of VW’s Legal Affairs as well as the new assignment of “Integrity” is Christine Hohmann-Dennhardt, the sole woman on VW’s nine-member management board. Hohmann-Dennhardt joined VW from rival Daimler AG last October. She is a former judge, having served on state and federal courts in Germany. The €16.2bn in reserves prompted VW to report a loss of €4.1bn for 2015. Its operating profit for the year totalled €12.8bn, unchanged from 2014, on sales of €213.3bn.
With respect to the external investigation of the emissions scandal, being conducted by the US law firm Jones Day, Müller said the results would be published in the fourth quarter. The Jones Day report was originally expected this month. Explaining the postponement, VW’s CEO said: “By publishing even excerpts of the report now would give rise to uncontrollable (legal) risks for Volkswagen.”
VW is continuing talks with US authorities to settle other legal consequences related to the emissions scandal.
Added Müller: “We are currently in the middle of dealing with the diesel issue and the burdens associated with it. But I am convinced: We will emerge from this crisis stronger, because our business model and finances are rock solid. And because we know what must be done and how to do it.”