Case study 12.2: BMW makes the case for environmental sustainability
In developing its environmental strategy, the BMW Group has long embraced the philosophy
of ecological modernisation. In 2003, Dr Helmut Panke, the then Chairman of the Board of
Management, said ‘the experience of the BMW Group shows that economic efficiency and
sustainability can be compatible with one another1.’ Also in 2003, Board member, Dr-Ing
Burkhard Göschel, commented that ‘innovations create success and safeguard the future
viability of companies. They are also essential for sustainable development1’. Ten years later,
the company’s 2013 Sustainable Value Report stated that ‘sustainability is seen as making a
positive contribution to the business success of the company. ... sustainability measures have
led o cost savings or generated revenue – thus validating the business case for sustainability’.
At the end of 2013, the BMW Group operated 28 automobile production and assembly
facilities in 13 countries worldwide and produced almost two million vehicles. The company
aims to imbue an integrated strategy across all its operations, wherever they are in the world,
transferring and implementing best practice developed in one location to all plants and
demanding high sustainability standards from all suppliers throughout its supply chain.
The company has a policy of flexible capacity management in an integrated production
network. For example, changes to a particular model can be made almost simultaneously
throughout the world and production can be balanced across the Group by changing the
output of individual production lines to different models, thereby enabling the Group to react
swiftly, flexibly and efficiently to market requirements. This has become extremely important
in view of the seemingly constantly shortening production cycles, greater technical
complexity of the product and continuing internationalisation.
All existing and future BMW production facilities and central planning units are required to
operate an environmental management system (EMS). In 2013, all plants had ISO14001
certification - the Manaus motorcycle plant in Brazil was the exception but this plant is
expected to acquire the necessary certification in 2015. Moreover, all German and Austrian
sites have undergone external audits and meet EMAS standards (see below).
An increasingly common practice among vehicle and other manufacturing MNEs is to
consider the quality and management systems in the selection of suppliers. In order to ensure
sustainability throughout the supply chain, BMW has been doing this for some time.
Suppliers must meet the same environmental standards as BMW facilities and, as part of their
contractual arrangements with BMW, they must implement an EMS. This applies not only to
first-tier suppliers but also to sub-suppliers. If a supplier is considered to be at high risk of
breaking BMW sustainability principles or is suspected of non-compliance, that supplier can
be required to undergo an independent audit into its sustainability performance. A finding of
non-compliance will initially lead to the joint development of a plan to remedy the problem.
Non-co-operation or severe breaches of sustainability requirements can ultimately lead to a
termination of the contract between BMW and its supplier.
Sustainability is wholly integrated into product development and all activities within the
BMW Group which produced its first overarching environmental plan in 1993. The current
strategy is geared to meeting the objectives set out in Table 12.1.
Table 12.1: BMW’s key environmental sustainability outcomes and targets
Activity
Reduction of resource
Performance
Target
Reductions per vehicle –
consumption and emissions
By 2020
2006-13 (%)
Energy consumption
-
Reduce consumption of
Water consumption
31.0
resource per vehicle by 45%
Process wastewater
-
compared to 2006
Non-recyclable
33.1
waste
-
Solvent emissions
42.7
CO2 emissions
69.7
36.7
35.2
The following, far from exhaustive, examples demonstrate how BMW is working to achieve
these targets.

Electromobility: BMW has developed its ‘i’ brand as a separate brand: in 2013, it
introduced its first fully electric premium vehicle, the BMWi3, into the European market
and was launched into the markets of the Americas and Asia in 2014. The BMWi3 is
designed to generate at least 50 per cent fewer greenhouse gas emissions over its full life
cycle than conventional internal combustion engines and is suitable for urban driving.
The ‘i’ range is to be developed further and the hybrid sports car, BMWi8, began
production in 2014. The company is also expanding its range of electric motorcycles.

Efficient dynamics and driver management: the company’s Efficient Dynamics strategy
has resulted in a number of technological advances that help increase fuel efficiency and
reduce emissions. More specifically, these innovations include intelligent energy
management, lightweight construction, optimal aerodynamics, forward-looking drive
control, air flap control, etc. The results of the Efficient Dynamics Strategy have been
incorporated into all new vehicles since 2007. The company sees potential for further
significant reductions in fuel consumption by combining Efficient Dynamics with
ConnectedDrive, a package of intelligent technologies that, through interacting with the
driver, help him/her make more environmentally positive decisions during the course of a
journey and adjust driving styles accordingly. Active Coating, brought to the market in
2012, is but one example of such technologies: by releasing pressure on the accelerator,
the driver automatically disconnects the engine from the gearbox and the vehicle slows
down via air resistance and the rolling resistance of the tyres alone. Operated in
conjunction with the Proactive Driving Assistant which uses data about road conditions
and accumulated knowledge about an individual’s driving style to give the driver tips on
how to drive in the most fuel efficient way, can be particularly effective.

Logistics: the rapid growth of its business in North America and China and the need to
transport raw materials and components to its production facilities and to transport
finished vehicles to the customer means that BMW itself has a large demand for
transport. Wherever possible, BMW utilises the more carbon efficient rail system over
road transport. Where road transport is unavoidable, BMW requires carriers to use the
most energy efficient vehicles available.

Energy consumption at production facilities: all BMW sites are required to use the most
sustainable energy resource available to it. By 2013, 48 per cent of electricity consumed
by BMW (up from 28 per cent in 2011) was from renewable electricity. This was
achieved by production facilities generating their own power or by using local sources.
For example, combined heat and power is utilised at eight locations – not only does this
utilise the electricity generated but also the waste heat from the process. In 2013, four
wind turbines were commissioned at the Leipzig production plant to feed into the
production of the BMWi3. Also since 2013, about 30 per cent of the heat required by the
Steyr engine plant has been supplied by a neighbouring biomass thermal power plant
fuelled by timber waste from the region. Two bonuses flow from this strategy: first, auto
generation and drawing energy from locally produces renewable sources increases the
Group’s energy security and the risk of production losses arising from any disruptions in
the broader energy supply network. Secondly, the utilisation of more sustainable energy
and improvements in energy efficiency is, according to BMKW’s 2013 Sustainable Value
Report2, ‘a significant business opportunity’. This arises from the expected evolution of
the EU’s Emission Trading System (see below) which is expected to reduce the emissions
allocation allowance year on year. Therefore, every unit of energy saved or emission
avoided pays off in terms of fewer allowances that need to be purchased.
Case questions
1. ‘For us, sustainable operations constitute a long-term business case: sustainability means
making a lasting positive contribution to the company’s economic success.’2 – page 12 Using
the information from Table 12.1, from the rest of the case and any further information
you can uncover about BMW, consider why BMW makes this claim.
2. What challenges might BMW encounter in extending its sustainability strategy to its firsttier suppliers and sub-suppliers?
3. This case study only touches upon a few of the many sustainability initiatives undertaken
by the BMW Group. What other possibilities can you identify (through brainstorming
and/or further researching the company and/or industry)?
4. The case study explicitly refers to two European initiatives - EMAS and ETS - which
have a direct impact on BMW. Research other areas where EU environmental policy
impacts on BMW’s operations.
1
BMW Group Sustainable Value Report, 2003-4
2
BMW Group Sustainable Value Report, 2013