The move is a bid to repair damage caused to the German company by the dieselgate scandal.
It followed the discovery that VW cars being sold in America had a "defeat device" in diesel engines that could detect when they were being tested.
The emissions recorded were significantly lower than in real life driving conditions, and Volkswagen has admitted that it cheated during American testing.
Reacting to the appointment, Corporate Europe Observatory’s climate campaigner Pascoe Sabido said, “The Barroso and Kroes scandals are still red hot, but Hedegaard’s new role advising Volkswagen will raise eyebrows as well.
“Volkswagen has confirmed to us that Hedegaard’s position on its new ‘Sustainability Council’ is unpaid. But it remains to be seen if Hedegaard will give Volkswagen some tough advice on cleaning up its act following the ‘Dieselgate’ scandal, and how she, as well as the other council members, will avoid being used for VW greenwashing.
“As the European branch of the company is still in denial about the deceitfulness of its illegal cheat devices, it is highly questionable whether Volkswagen is actually committed to making up for its previous foul play.”
The company has confirmed to Corporate Europe Observatory that council members will only get expenses paid and will not receive any additional remuneration for their advice.
Hedegaard held the position of Commissioner between 2010-2014 in the Barroso-II Commission. She was responsible for regulating CO2 emissions from vehicles, and between July 2012 and April 2014 led the EU’s 2020 review of CO2 limits for new passenger cars and vans.
In September 2015, Volkswagen was caught cheating on emission tests using defeat devices in its vehicles’ diesel engines.
The company has been ruled to pay $14.7bn (€13.28bn) to US authorities for buybacks, damages and penalties resulting from dieselgate.
The European Parliament has set up an inquiry into the VW emissions scandal.
The committee of inquiry on emissions measurements will examine whether the European Commission, or member states such as Germany, failed to oversee an explicit ban on “defeat devices”.
The Committee has begun work and will deliver its recommendations by the end of the year.