What’s important: The materiality analysis of AUDI AG

As a global company, AUDI AG operates in a complex environment – a continuous review of its own ESG and corporate goals is essential for worldwide success. It is important to the company to keep an eye on the opportunities and risks of its actions in order to strengthen its positive influences on the environment and society and to keep negative impacts to a minimum. An important means to this end is the materiality analysis, which Audi has been carrying out for over 10 years. The company uses the analysis to review its objectives in the field of ESG and compare them with its stakeholders’¹ expectations.

Back in 2021, Audi identified the 16 most relevant sustainability topics for the company, such as “Emissions and energy along the value chain” and “Alternative drives and vehicle emissions.” For this purpose, the company analyzed a number of internal and external sources such as industry standards, regulatory standards, rating criteria, studies and competitor comparisons. An online survey of around 2,200 stakeholders¹ was then used to prioritize the sustainability issues that had been identified.

To develop the materiality analysis further, Audi added an impact rating in accordance with the currently applicable “GRI Sustainability Reporting Standards” of the Global Reporting Initiative.² The requirements of sustainability reporting prompted the company to take a more precise look at its positive and negative impacts on the environment and society. These impacts were evaluated in two steps.

In the first step of the impact rating, the company’s strategy team identified potential positive and negative impacts for all 16 sustainability topics in the form of opportunities and risks. At the same time, the team calculated the period of impact (short-term or long-term), the position in the value chain as well as the source (Audi causes the impact, Audi contributes to the impact, Audi is associated with the impact through its products and/or services) for each impact. In the second step, the individual impacts were evaluated using a scoring method based on their probability of occurrence and their severity (size, scope and reversibility of the impacts, among others). At the end, internal Audi experts in Environmental, Social and Governance (ESG), risk management and strategy validated the impact rating.

This resulted in an assessment of all opportunities and risks, in other words all impacts for each of the 16 topics. These were then used to prioritize the material topics as “very high,” “high” and “medium.” All topics that were rated as particularly important for Audi were given the designation “very high.” One example is the topic “Alternative drive technologies and vehicle emissions.” For this topic, one opportunity (expansion of electric mobility in combination with the use of green electricity promotes environmentally friendly and healthy mobility) and three risks in the areas of environmental pollution and harmful effects on health caused by emissions from vehicles with internal combustion engine as well as negative impacts on the environment and society from the expansion of electric mobility were identified. The evaluation of these four impacts resulted in the very high overall rating of the topic by internal experts.

As the final step, the impact analysis (X-axis of the materiality matrix) was supplemented by the stakeholder perspective from the 2021 materiality analysis (Y-axis of the materiality matrix). As a result of combining stakeholder relevance and the impact rating, Audi identified two main topics: (1) “Emissions and energy along the value chain” and (2) “Alternative drive technologies and vehicle emissions.” A total of six of the 16 topics (see diagram) were rated as “very high.”

Audi uses the materiality analysis as a strategic tool. Within the context of sustainability, it creates transparency: firstly on the ecological and societal impacts of Audi’s actions based on the 16 most relevant ESG topics, and secondly on the relevance of the topics from the perspective of the different stakeholders. This analysis thus makes a contribution to the regular review of objectives and resource usage and therefore to the further development of the company. It provides an even better understanding of the interaction between economic success and sustainable action, thereby helping to mesh these two aspects more closely. The idea is as follows: If the company is aware of its impacts and can manage accordingly, it can act optimally both with regard to risk minimization and opportunity maximization as well as resource allocation.

The materiality analysis is not the only means Audi uses to maintain contact with its stakeholders. Find out more about stakeholder management, dialogue events and the commitment of Audi here.