By Maitane Sardon

German auto giant Volkswagen AG said Thursday that it has been reinstated as a participant in the United Nations Global Compact, joining more than 10,000 companies pledged to a set of guidelines on anti corruption, human rights, labor rights and the environment.

Volkswagen's readmission, which comes after the auto maker was ousted from the imitative in 2015 due to its emissions scandal, means the company may be added to ESG funds and benchmarks. Funds that are built following ESG criteria often exclude companies that aren't signatories to the UN Global Compact.

Volkswagen was a pariah of sustainability investors since it admitted in 2015 that it had rigged 11 million diesel vehicles with software that allowed them to evade government emissions tests. Since then, the world's largest auto maker has focused on developing cleaner vehicles and has ramped up disclosure of climate-related financial data. It has also promised to become climate neutral by 2050 by removing from the atmosphere the same amount of carbon dioxide it emits.

Volkswagen said Chief Executive Herbert Diess requested in November to rejoin the group, of which it had been a member since 2002 until it was ousted.

Some of the reasons for its reinstatement include its commitment to a climate-protection program and the creation of an independent sustainability council, the car maker said.

"The electrification strategy of the group has put it at the forefront of transformation in the car industry," said Georg Kell, founding director of the UN Global Compact and chairman of sustainable intelligence company Arabesque.

Mr. Kell, who is also a member of Volkswagen's sustainability council added: "Rejoining... shows that Volkswagen, while far from infallible, has learned from its mistakes."

The company, which has also promised to cut the CO2 emissions over the life cycle of its passenger-car portfolio by 30%, said it is currently working on a re-engagement plan with the Global Compact. It added that it will report on its progress on adopting the group's guidelines.

Write to Maitane Sardon at maitane.sardon@wsj.com

(END) Dow Jones Newswires

02-25-21 0818ET