Corporate Governance Essay

Topic: CSR and Sustainability of BMW

Instructor: Prof. Dr. Lila Schuercks

Student: Dea Elmas

1. Business Overview

Bayerische Motoren Werke AG, usually known under its abbreviation BMW, is a German

automobile company, founded in 1916 and has its headquarters in Munich, Bavaria. The

BMW Group is one of the most popular car and motorcycle manufacturers in the world, and

its premium brands BMW, MINI, and Rolls-Royce are three of the most powerful in the

industry today. In addition to its automotive brands, the BMW Group is a profitable financial

services company and has a good market place in the motorcycle industry. In recent years,

the company has also established itself as one of the leading brands for the production of the

most luxurious vehicles for individual mobility. It employs approximately 96,000 people

across 24 manufacturing facilities in 13 countries, as well as a global distribution network

that reaches over 140 countries.

2. Organizational Culture

BMW Group distinguishes itself from other firms not just in terms of technological

capability. Its corporate culture is consistently high-efficient, which make the company the

best to be in line with product quality expectations. The company looks for workers who have

a strong sense of teamwork and personal initiative, as well as an unwavering commitment to

frequently develop their skills. BMW Group’s transparency promotes a culture of innovation

and creativity where employees are encouraged to express their thoughts and ideas. This is

only possible with a strong sense of teamwork. Only a well-functioning team allows for

critical thinking and self-critical development. This is usually done through informal listening

sessions, sometimes referred to as a “freewheeling idea factory,” where employees from

various departments join together to collaborate on a project.

3. Management Style

BMW Group’s management style is participative, in which the company is able to engage

and include its staff in decision-making processes and managerial decisions. This also helps
the leaders to engage with staff and various managerial groups on a regular basis in order to

recognize and resolve any future disputes, as well as receive input on strategic methods and

tasks. This model is extremely successful in achieving the organization’s business goals and

vision. Using participative management, BMW Group is able to boost employee engagement

and organizational commitment and ownership among workers and other stakeholders.

Employees believe they are active members of the company, and their ideas, opinions, and

efforts are respected.

2. Legal Compliance and Human Rights

The BMW Group is conscious of its environmental and social obligations, and has signed a

joint statement on human rights and working conditions with national and foreign employee

representatives. This statement, the Legal Compliance Code, is aimed for the company to

take the necessary measure so that its executive bodies, administrators, and workers behave

in accordance with the law, that is the BMW Group to have “legal compliance.”

2.1 Data Privacy

When managing the personal data of its clients, staff, and business associates, BMW Group

considers data security concerns. In this regard, personal information is only collected, stored,

or used if the law allows it or if the person concerned has given their consent. This also

applies to employees’ personal lives. BMW Group does not intrude on an employee’s

personal matters and provides them with the necessary privacy if and when needed, as well as

providing assistance.

2.2 Non-Discrimination

Given that BMW Group has an international presence, the company encourages a culture

with diversity and internal policies that eliminate discrimination. As such, no one is

discriminated against, favored, or threatened because of their ethnicity, skin color, gender,

religion, disability, age, sexuality, or other legal protected characteristics. This doesn’t
exclude harassment in the workplace, which is strictly forbidden by law. Everyone has the

right to be free of abuse, regardless of whether the alleged harasser thinks his or her behavior

is justified or whether the alleged victim is capable of preventing it. Hence, every manager

has a responsibility to lead by example and ensure that the environment they are responsible

for is free of prejudice and harassment.

2.3 Workplace Safety

BMW Group prioritizes occupational safety and health management. To avoid health risks,

worker welfare and occupational health and safety requirements must be strictly followed.

Everyone’s main responsibility at work is to keep themselves healthy. In this regard,

managers serve as effective role models. BMW Group’s facilities are designed and operated

in full accordance to safety regulations. This decreases the likelihood of an accident and

ensures that their processes work smoothly. Managers must be mindful of their personal and

organizational responsibilities in terms of workplace safety. This means that they must make

certain that workers in a facility are carefully chosen and trained in a proper way.

3. Corporate Social Responsibility (CSR)

A key component of the BMW Group’s basic business strategy is to assume responsibility.

The company believes that in today’s economy, every business’ long-term performance is

determined by its ability to behave responsibly and gain social acceptance. Climate change

and urbanization are two global challenges that empower and encourage the company to

create creative products and services.

4. Sustainability Issues and Challenges

The BMW Group incorporates sustainability through the entire value chain and into all of the

basic processes to add value to the business, our climate, and the community we live in. The

2009 sustainability strategy, which is based on Strategy NUMBER ONE, is applicable

globally as the central strategy for all corporate divisions. The key goal is to create added
value for the business, the environment, and society by establishing sustainability across the

value chain and in all basic processes. In 2019, the company’s special-purpose Sustainability

Board was fully active in daily Board of Management meetings, enabling sustainability

concerns to be incorporated even more consistently into decision-making processes. Since

then, sustainability issues have been treated as any other matter, with fortnightly Board of

Management meetings being held to discuss them as required. Atmospheric pollution and its

consequences on human health, global warming, lack of freshwater, raw materials, and land

availability are the main environmental issues that we face today.

Resource Efficiency and Recycling

Raw material shortages are a medium-term challenge due to emerging technologies, vehicle

designs, and recycling processes. Furthermore, the use and discovery of new materials such

as titanium, magnesium, plastics, and recycled fibers reduces the chances of a commodity

shortage. As a result, the BMW Group has set ambitious sustainability targets for itself, and it

is making a significant contribution to environmental and climate protection by continually

enhancing energy and resource quality and reducing CO2 emissions in manufacturing

processes. First, in order to reduce water consumption and wastewater, the company relies on

optimized processes and cutting-edge technology. Second, the company designs recycling

and reprocessing concepts that are tailored for waste streams in various facilities, varying

legal requirements, and current disposal systems in order to reduce waste.

Renewable Energy

The BMW Group uses clean energy and energy-efficient systems to contribute to climate

conservation and reduce CO2 emissions in development. The company intends to use only

renewable energy to power all of its manufacturing plants around the world. Continuous

energy reductions, as well as a policy of generating energy or drawing it from local

renewable sources, improve the BMW Group’s autonomy and supply protection. As a
consequence, the likelihood of energy bottlenecks affecting the company’s production lines

decreases. One innovation in this aspect is the installation of solar capacities at different

facilities. These are combined heat and power systems which can be used to produce energy

and waste heat. By 2019, BMW Group has expanded its use of renewable energy to 87%

(BMW Group Sustainability Value Report, 2019).

5. Managing Sustainability

In all areas of the organization, the BMW Group conducts its business in compliance with

prudent corporate governance standards geared toward long-term value development. The

Board of Management regulates the company on its own behalf, acting in the BMW Group’s

best interests in order to achieve long-term value growth. As a result, it sets the company’s

strategic direction and ensures that it is carried out. The Board of Management is also in

charge of ensuring that all legal and internal legislation are followed, as well as proper risk

management and risk control. In carrying out its functions, the Supervisory Board advises

and supervises the Board of Management.