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Interview with Dr. Garcia Sanz on E-Raw Materials

Editor: Janina Seit

The heart of an e-car is its battery. And an important component of the battery is the raw material cobalt. However, 60 percent of the world’s cobalt comes from the Congo, which is currently the focus of attention by human rights organizations and the general public owing to the disasterous working conditions in the small-scale mines there. In an interview, Francisco Javier Garcia Sanz, member of the Board of Management with responsibility for Procurement, explains how Volkswagen engages the raw materials topic.

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“We want to have even greater transparency in our supply chain!” said Francisco Javier Garcia Sanz, member of the Board of Management with responsibility for Procurement.
“We want to have even greater transparency in our supply chain!” said Francisco Javier Garcia Sanz, member of the Board of Management with responsibility for Procurement.
(Source: Volkswagen AG)

The automotive industry is undergoing radical change. E-mobility will be one of the dominant forms of drive in the future. This presents manufacturers with enormous technological and infrastructural challenges. At the same time, this change also requires additional efforts on the part of all those involved to guarantee human rights, social standards and thus a sustainable raw materials chain.

The Volkswagen Group has now extended the company's guidelines on raw material procurement to give its global suppliers even more precise and stricter rules. In addition to the already existing regulations such as adherence to clearly defined labour, environmental and safety standards as well as human rights, they now explicitly demand once again the strict prohibition of all forms of children and forced labor in the extraction of raw materials such as cobalt and mica.

Francisco Javier Garcia Sanz, Member of the Board of Management of VW Procurement, explains the details in an interview.

In the discussion of e-mobility, criticism is levied at raw materials like cobalt. What is the Volkswagen Group doing to ensure a sustainable, clean delivery chain?

The Volkswagen Group collaborates with around 40,000 suppliers worldwide, placing great emphasis on sustainability, human rights and environmental standards. These requirements form part of our contracts – whenever we receive tip-offs about violations, we immediately get to the bottom of them. This is why we are taking a closer look at our sourcing of raw materials and sub-suppliers like mine operators in particular. As a first step, we recently broadened our corporate policy on raw material procurement and drew up even more precise, more stringent regulations for ourselves and our suppliers on an international level.

What do the new regulations provide for?

The new regulations have been intensified and tailored to the topic of raw materials. We want maximum transparency when it comes to origin and mining conditions. They also demand that we strictly reject any and all forms of child or forced labor and investigate every suspected case of this. We expect maximum transparency from our suppliers and to be notified of all suspected cases, and we will also systematically keep track of their handling. To be completely clear on this point: If a supplier or sub-supplier does not adhere to these specifications and does not introduce the necessary measures, we will, if in doubt, have to end the partnership. Incidentally, the new rules are only part of our efforts to ensure a sustainable, socially responsible supply of raw materials.

What else are you doing?

The concept of sustainability in the supplier relationships is an integral part of our actions. This covers human and labor rights, environmental protection, transparent business relationships and fair market behavior. We make sure that our suppliers adhere to these standards and also demand this from their sub-suppliers. To this end, we conduct regular supplier audits. We also offer our suppliers online and classroom training on sustainability standards. In addition, we introduced special regulations governing minerals from conflict zones as recently as 2016.

What do these specifications entail?

We are aware of the problem of sub-suppliers in the field of raw materials. Our specifications therefore clearly state that our suppliers must not source any products from conflict-ridden smelting works. Up to now, this has mainly involved the minerals tin, tantalum, tungsten and gold. Due to the changing regulatory framework, raw materials such as cobalt and mica are now being added, since the mining of these materials is, in some cases, connected with human rights abuses.

Is Volkswagen considering any direct investments in mines?

We are, first and foremost, an automaker and not a mining company. We do not have a prime interest in buying into mines at this time. We focus on developing the most attractive vehicles and mobility offerings possible for our customers.

The Volkswagen Group held talks with raw material suppliers for electric vehicles of late. What were these specifically about?

The objective was to create a joint forum for Volkswagen and the upstream supply chain to conduct an efficient dialog in an exchange as equals. We can only make a difference if all partners in the value chain are on the same page. With Roadmap E we have declared the most extensive electrification drive the automotive industry has ever seen. The procurement volume of over EUR 50 billion entails huge social responsibility, a responsibility we intend to live up to. One of the areas of focus was therefore transparency of the raw materials chain. We have clearly stated that we see and demand accountability for sustainability among mine operators.

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