Public power in private enterprises: the case of Volkswagen and the human rights responsibilities of Lower Saxony

Abstract

This thesis examines the legal and ethical responsibilities of public shareholders in transnational corporations, focusing on the German federal state of Lower Saxony and its substantial stake in Volkswagen AG. Specifically, it investigates whether and to what extent Lower Saxony can be held accountable for human rights violations linked to Volkswagen’s global operations, including in China, Brazil, and Russia. Using a hybrid methodology that combines legal framework analysis, case study research, and critical reflection, the thesis situates the analysis within evolving international, European, and national human rights instruments. These include the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, the German Supply Chain Due Diligence Act, and the EU Corporate Sustainability Due Diligence Directive. Particular attention is paid to the role of supervisory board structures under German corporate law and the unique powers granted to Lower Saxony under the Volkswagen Act. Drawing on academic critique from Nicola Faith Sharpe’s analysis of governance failure during the Dieselgate scandal, the thesis argues that Lower Saxony’s structural influence and board-level representation dismisses any claim of having a passive role in Volkswagens business conduct, including but not limited to accountability and responsibility to safeguard certain human right standards. Ultimately, this thesis concludes that public shareholders must be held to a heightened standard of engagement in company’s decision-making processes, and that Lower Saxony has a legal duty to proactively monitor and mitigate human rights risks in Volkswagen’s operations by fully exercising the rights they are granted by the Volkswagen Act. Keywords: Business and Human Rights, state responsibility, public shareholders, human rights due diligence