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Sustainability management01 Sustainability management 05 01.1 Strategy and organisation 08 01.2 Stakeholder dialogue 12 01.3 Sustainability in the supply chain 14 01.4 Awards and indices 16 Economics 17 Product responsibility 23 Groupwide environmental protection 37 Employees 47 Society 59

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Building lasting stability: Sustainability needs a solid strategic foundation.

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Sustainability management

With its corporate Strategy Number ONE, the BMW Group is pursuing its vision of being the leading provider of premium products and premium services for individual mobility. The same aim applies to the principle of sustainability. The BMW Groups sustainability strategy focuses on integrating sustainability throughout the entire value chain and its underlying processes creating an added value for the company, the environment and society. KeyBMW Group sustainability strategy and key issues

elements of BMW Groups sustainability management include an environmental radar that is regularly extended to cover additional ecological and social aspects; ongoing dialogue with stakeholders; the inclusion of sustainability criteria in all decision-making processes; and a holistic approach to the entire value chain. The achievements made in this way are communicated clearly and factually to both employees and the general public.

Objective: To be the most sustainable company in the automotive industrySustainability management Environmental radar Key issues Sustainability-based decisions Evaluation of the value chain Transparent communication

EcologyProduct responsibility Group-wide environmental protection

EconomyRisk management Corporate governance and compliance

SocietyResponsibility towards employees Social commitment

of the BMW Group are called upon to help implement the goal of corporate sustainability in their area of responsibility. The Sustainability Board comprising the companys entire Board of Management continuously evaluates progress and determines the strategic direction.BMW Group headquarters in Munich

All employees

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Challenges

To involve all employees in implementing the sustainability strategy To identify topics and forms of dialogue to strengthen cooperation with different stakeholder groups

To understand and promote social and ecological aspects as resource-friendly and efficient alternatives on supplier markets

Page 70 et seqq.

Evaluation of BMW Group sustainability activities* (telephone survey)in %** Very goodNo comment Un satisfactory Satisfactory Very good

Evaluation of BMW Group sustainability activities* (online survey)in %** 37 35 5 2 21No comment Unsatisfactory Satisfactory Very good

Very good Good Satisfactory Unsatisfactory No comment

34 42 16 5 3

Good Satisfactory Unsatisfactory No comment

Good International stakeholder survey in winter 2008 / 2009 among 32 stakeholders from seven countries; multiple answers permitted ** 100 % = absolute number of mentions concerning topics such as environmental protection, product responsibility, employees; from 32 stakeholder interviews* *

Good Online survey in winter 2008 / 2009 among 238 participants; multiple answers permitted ** 100 % = absolute number of mentions concerning topics such as environmental protection, product responsibility, employees; 238 participants

BMW Groups inclusion in sustainability indices (as of July 2009)Carbon Disclosure Leadership Index (CDLI) Dow Jones Sustainability Index (DJSI) World and STOXXFTSE4Good Global Index, Europe Index, Environmental Leaders

not listed 2008 industry leader (Super Sector Leader) listed

Achievements

Objectives

Sustainability strategy adopted, sustainability included in corporate target system, target management for sustainability indicators established Sustainability Board and Sustainability Circle established Mandatory examination of all decision papers submitted to the Board of Management with regard to sustainability criteria First Stakeholder Roundtable in Munich on sustainable mobility and the conservation of resources hosted Sustainability questionnaire as an instrument for supplier selection revised, exclusion criteria defined National and international purchasing conditions updated with regard to social and ecological standards as well as the transfer of responsibility to Tier 2 suppliers

Establish sustainability strategy at subsidiaries and retail organisations worldwide Extend the risk management system to include ecological and social factors Strengthen stakeholder dialogue and develop it at international level Establish evaluation processes for suppliers locations and take sustainability aspects fully into consideration in the concept phase of all vehicle projects and across all supplier levels Raise awareness of ecological and social requirements among purchasers and qualifying suppliers

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01.1

Strategy and organisation. In September 2007, the BMW Group presentedits new corporate Strategy Number ONE. The vision: to be the leading provider of premium products and premium services for individual mobility.

BMW Group Annual Report 2008

To reach this goal, the company needs to focus consistently on growth and profitability, constantly develop new technologies, guarantee access to relevant customer groups, and, most importantly, actively shape the future. These key fields of action are the four pillars of Strategy Number ONE. Why is the term sustainability not part of the vision statement? Quite simply: Because sustainability is an integral part of each field of action defined by Strategy Number ONE. Sustainable actions are already being implemented Group-wide and will continue to be closely integrated into the companys processes from year to year. One example: Last years BMW Group sales were assisted by the success of Efficient Dynamics. This technology package comprises a whole range of innovations and has so far been incorporated into over 1.4 million vehicles. Thanks to Efficient Dynamics, the BMW Group has reduced its fleets fuel consumption more effectively than any other manufacturer in the auto industry. As the following example shows, embracing sustainability is also a key prerequisite for improving the companys profitability. In 2008, the 650,000 MWh of energy saved reduced energy costs by approximately 35 million euros. At the same time, the focus is on the future. BMW Group developers involved in project i are working on new mobility concepts that will show just how sustainable the future of individual mobility could be. The most recent example is the MINI E, with a fully electric drive. It is currently being tested in everyday use by over 600 customers. Collaborations and networks help to ensure that the BMW Group has access to technologies and customers. Potential partners are not only companies in the automotive industry, but also those such as energy providers who will play a crucial role in making electric mobility a viable solution. Sustainability as a corporate principle The BMW Groups basic principles form the foundation of the companys consistent, long-term alignment (see Chapter 02.1 for a detailed description). They establish, among other things, that being a good corporate citizen is an integral part of how the BMW Group defines itself as a company. Furthermore, sustainability is regarded as making a positive contribution to the companys economic success.

Premium and sustainability go hand in hand According to the Dow Jones Sustainability Indexes, the BMW Group is currently the worlds most sustainable carmaker. The company has remained the industry leader in these important global corporate sustainability indices for four consecutive years, most recently in 2008. Numerous other ratings and awards also confirm the companys leading role in the field of sustainability. But for the BMW Group this is only the beginning. It is obvious that sustainability is set to play an even bigger role in defining premium mobility of the future from environmentally-friendly drive trains and resource-friendly production processes to new, sustainable services in the field of individual mobility. In the future, premium will inevitably comprise the concept of sustainability. The manu-

Corporate Strategy Number ONE

Vision

Competitive Advantage

Growth

Shaping the Future

Profitability

Access to Technologies and Customers

Basic Principles

www.bmwgroup.com/guidelines

facturer that offers the most efficient and resourcefriendly production and the most visionary solutions for eco-friendly individual mobility will have the competitive

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a The BMW Group is broadening the definition of premium. Sustainability plays an important part in this, according to Dr. Reithofer, Chairman of the Board of Management of BMW AG, here at the Annual General Meeting in May 2009.

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edge. This is why the companys Strategy Number ONE would be inconceivable without sustainability. Turning vision into reality But how does Strategy Number ONE translate into sustain able actions? What are the companys priorities? Which sustainability targets does the BMW Group have? Which weaknesses have to be overcome and which strengths must be enhanced? All these questions were answered in 2008 when the com pany completely revised its sustainability strategy. The new strategy, which was adopted by the Board of Manage ment in the first half of 2009, directly builds upon Strategy Number ONE and its comprehensive approach applies to all of the companys divisions worldwide. The overriding aim is to make sustainability an integral part of the entire value chain and its underlying processes to create an add