SUSTAINABLE VALUE REPORT 2017 Introduction ABOUT THIS REPORT 1 Fundamentals 2 The BMW Group Sustainable Value Report (SVR) 2017 – Environmental matters: Products and services has been published to provide stakeholders with compre- Chapter 2 Products and services, page 44, hensive information about the company’s sustainability pages 46–47, pages 59–60, pages 70–72 3 strategy and the progress made in integrating sustainabil- Chapter 3 Production and value creation, Production ity into its corporate processes. The Sustainable Value Re- page 84, pages 86–87, pages 99–100, pages 105–106 and value creation port is published at the same time as the Annual Report on the date of the Annual Accounts Press Conference. – Employee matters: 4 Chapter 4.1 Health and performance, The requirements of the German CSR Directive Imple- pages 115–116, pages 118–119 Employees and society mentation Act (CSR RUG) obligate Bayerische Motoren Chapter 4.2 Long-term employee development, Werke Aktiengesellschaft (BMW AG) to publish a non- pages 115–116, pages 129–130 financial report at company and Group level for financial Chapter 4.3 Diversity, pages 115–116, pages 137–138 Further key indicators year 2017 for the first time. This will be published jointly for BMW AG and the BMW Group as a combined separate – Social matters: non-financial Group report (abbreviated in the following Chapter 1.2 Stakeholder dialogue, page 24 Appendix as “combined separate non-financial report”) within this Chapter 4.4 Corporate citizenship, Sustainable Value Report. pages 115–116, pages 143–145 The legally required information* will be provided before – Respect for human rights: the chapter sub-sections of the voluntary reporting in Chapter 1.3 Compliance and human rights, accordance with the Global Reporting Initiative (GRI) and pages 32–34 identified accordingly. You can find the obligatory infor- Chapter 3.3 Sustainable, resource-efficient supply mation on the blue pages in this report, specifically on the chain, pages 105–106 following pages: – Combating corruption and bribery: – Business model: Chapter 1.3 Compliance and human rights, Introduction, An overview of the BMW Group, page 8 pages 32–34 as well as Annual Report 2017 as well as Annual Report 2017 – In addition we describe in – Integration of top management: Chapter 1.4 our approach to product safety, page 38 Chapter 1.1 Strategy and management, pages 12–13 For further information on our reporting concept, please * Diversity Concept in Board of Management and Supervisory Board is contained in the Statement on Corporate Governance • see Annual Report 2017. refer to the Appendix (pages 207–208). • see Our reporting concept CONTENTS • see page 45 4 Introduction Employees and society Preface 5 4.1 Health and performance 118 An overview of the BMW Group 8 4.2 Long-term employee ­development 129 Key sustainability indicators 9 4.3 Diversity 137 Value chain 10 4.4 Corporate citizenship 143 • see page 69 1 Fundamentals Further key indicators 150 1.1 Strategy and management 12 1.2 Stakeholder dialogue 24 1.3 Compliance and human rights 32 1.4 Product safety 38 • see page 85 1.5 Customer satisfaction 41 Appendix GRI Content Index 171 Our reporting concept 207 2 Independent Practitioners’ Limited Assurance Report 211 Fuel consumption and CO 2­ emissions ratings 213 Products and services Imprint 214 2.1 ­Emissions of CO2 and pollutants 46 2.2 ­Electromobility 59 • see page 104 2.3 Mobility patterns 70 3 Production and value creation 3.1 Consumption of resources 86 • see page 142 3.2 Renewable energy 99 3.3 Sustainable, resource-efficient supply chain 105 · Introduction Preface INTRODUCTION An overview of the BMW Group Key sustainability indicators Value chain 1 Fundamentals 2 Products and services 3 Production and value creation 4 Employees and society Further key indicators Appendix 5 Introduction Harald Krüger: · Preface An overview of the BMW Group ”The BMW Group does not Key sustainability indicators simply talk about new projects, Value chain it also makes sure it implements 1 them.“ Fundamentals 2 Products and services 3 Mr Krüger, how about giving us a tweet and Production describing to us in 280 characters: and value creation What does sustainability mean for your company? For us, sustainability means future viability–for the 4 BMW Group and for society. We know the challenges and are rising to meet them. We develop innovative Employees and society mobility solutions that create additional value for custom- ers, the company and society. #SustainableBMWGroup Further key indicators How exactly did you implement that in 2017? With specific measures and projects along the entire Appendix value chain: Last year, we reduced CO2 emissions in our global new vehicle fleet by 141 grams per kilometre. In Harald Krüger Europe, we now source our electricity free of CO2. Chairman of the Board of BMW AG outside BMW Welt in Munich. We increased the share of electric vehicles in our product portfolio and sold over 100,000 electric vehicles in 2017. We are the market leader for electric vehicles in Europe. And there are more examples in other areas: We opened a battery farm in Leipzig, Germany. We considerably increased the transparency of our cobalt supply chain. We continued to support a large number of social pro- jects. I could go on with this list for quite a while. The BMW Group does not simply talk about new projects, it also makes sure it implements them. 6 Introduction Nevertheless: 2017 was not an easy year for the Is the criticism of diesel warranted from your point of · Preface car industry. view? Does diesel even have a future? An overview of the BMW Group That’s true. Not all companies in our industry have under- I can understand that a technology such as diesel would Key sustainability indicators stood that words alone are not enough. You have to deliver. come under critical discussion in public. We are open to Value chain People have lost trust in cars. People have lost trust in the that. However, I think the discussion has often left objec- automotive industry. We have to take measures to coun- tivity behind and overshot the mark. 1 teract this. As an industry, we have to do even more, while at the same time steering the public discussion back into If we want to shape mobility patterns of the future Fundamentals more objective waters. in a more sustainable way, we should not prematurely exclude a mature technology like diesel. Especially in 2 view of the fact that this technology offers what many Products and services You’re talking about the diesel discussion in Germany. people wish for. Diesel is highly efficient, as our vehicles This discussion was very prominent of course. A few show. 3 years ago, there was a strong international focus on CO2 emissions. Then, in 2017, NOx emissions were often at Production the forefront – especially in our home market here in Many carmakers argue that they support sustainability. and value creation Germany. There were a number of discussions about Critical stakeholders, on the other hand, doubt the potentially banning diesel vehicles in cities. motivations of the manufacturers. How do you answer 4 these critics? Employees and society We have to take these discussions seriously. We have Why would we want to resist a more sustainable future? It spoken to many stakeholders in metropolitan centres wouldn't make sense. On the contrary, we are looking at around the world. People in the cities are increasing the opportunities it can create for our company. This is in Further key indicators pressure on their municipal governments to provide new line with our corporate culture. mobility concepts. And in turn, the municipalities are demanding the same from carmakers. That’s under- Awareness of sustainability is on the increase all over the Appendix standable. world. More and more people are asking questions about the products they buy and the supply chain behind them. The key thing is for us to be able to offer solutions that The framework conditions are changing. Sustainable man- improve quality of life in the cities – with our products, agement is not an altruistic idea, it’s essential for our com- but also with new and innovative mobility services. pany to be successful. Take, for example, the environmental measures we’ve already taken: our increasingly efficient use of resources has gained us €161 million since 2006 – that’s a great motivator. 7 Introduction What are the key sustainability goals of the BMW Group? All the more reason to continue to foster dialogue with · Preface We remain committed to the principles of the United our stakeholders in all our regions. Discussions can only An overview of the BMW Group Nations Global Compact, which we have consistently take the right direction if there is a mutual understand- Key sustainability indicators implemented at all our locations since 2001. We pursue ing of the needs and room for manoeuvre. Value chain an integrated sustainability strategy. We have set ten long-term goals along the entire value chain: from the I am confident that we will take a further large step 1 areas of “Products and services”, “Production and value towards sustainable mobility in 2018. This will benefit creation” as well as “Employees and society”. all of us. Fundamentals 2 What goals do you have for 2018 specifically? Products and services First of all, we aim to continue to add substance to sus- tainability within the company: in terms of our products, 3 on the production line, in our supply chain, and of course in our interaction with employees and society. Production and value creation You will find numerous examples in this report: We will Harald Krüger continue to increase the number of electric vehicles in Chairman of the Board of 4 our product range.