BMW – Corporate Social Responsibility By Prof. George Reiff, PhD
Taken from:
http://markettiers.com/work/casestudy/bmw-group-centenary--the-next-100-years
Introduction of the BMW Group The BMW Group is one of the largest business corporations of Germany and has an annual turnover of 94,2 billion Euro. Moreover, they have 125.000 employees as of 2016 and with an annual production of 2.36 million cars the BMW Group is among the fifteen largest car manufacturers in the world. 1 Corporate History BMW actually begins in 1913 neither in Bavaria nor with the present name with the founding of the Rapp Motorenwerke GmbH by Karl Rapp. The company was based in Chemnitz in Saxony and it was the predecessor of the world-famous BMW brand. Gustav Otto, who had been a coworker of the same company as Rapp and had cooperated with him in the same sector, incorporated the Bayerische Flugzeugwerke AG 2 in order to develop aircraft engines in 1917. One year later Rapp GmbH (GmbH = limited) took over the Bayerische Flugzeugwerke and changed the name to Bayerische Motorenwerke BMW and changed its status from limited to corporation limited by share ownership in 1918. 3 When Bayerische Motorenwerke was quasi founded twice in these years, the production of aircraft engines was more promising than that of car motors as the railroad was still the undisputed leading means of transport. On the other hand, aviation was a prestigious project, the glory of which was reinforced by the glory of German pilots like Manfred von Richthofen in the First World War. The Versailles treaties in 1919 brought an abrupt end to the trend-setting developments of the first Bavarian Motor Production Plant as BMW´s meaning is literally translated. Germany, who – as war loser - had been allocated the main blame for the war was not allowed to manufacture any aircraft engines during the next five years. 4 While it was becoming increasingly difficult to bridge the time until the end of the ban on aircraft engines, the engineers Max Fritz and Martin Stolle developed a new product line in 1922 and introduced motorcycles in 1923 5. Their basic concept proved so good that it has been carried on to the present day. The first car produced by BMW was built in 1929 - the Dixi 3/15 HP, a license-built Austin Seven. In the same year the Dixi 3/15 DA was also developed. The BMW 328, developed and manufactured from 1936, justified BMW Group's reputation as a sports brand. The car was one of the first self-developed and produced cars and celebrated numerous successes in sports car racing. 6
The BMW 501 was the first model produced after the WWII and was launched in 1952. It cemented the perception of BMW as a car for the well-to-do and increased the value of the brand BMW immensely. 7
Perhaps in line with competitor VW´s original considerations of the 1930s to provide the German worker class with an economic model of the car, BMW tried during the postwar time of WWII to enter the low cost sector with the model Isetta that may well be seen as the first significant step into the generally broader direction of corporate social responsibility in a more society-oriented way. 8 The BMW Isetta was lovingly called “Kissing Bubble” while others called it demeaning “Asphalt Bubble” and the car was manufactured from 1955 to 1962. 9 BMW could not offer anything to the up-and-coming middle class until the industrialist Herbert Quandt contributed the necessary capital to develop cars for the middle class. Thus, in 1962 the successful "New Class" went into series production. An important expansion marked the takeover of Hans Glas GmbH in Dingolfing in 1967. 10 In 1970, Quandt appointed the engineer Eberhard von Kuenheim as CEO. Under his leadership, which lasted until 1993, the workforce increased from more than 20,000 to about 70,000 employees. It was also under von Kuenheim that Corporate Social Responsibility was accepted by BMW in the form of projects to revive the labor market in structurally weak regions and projects like the "Teacher's Workshop" for freshmen teachers or the media project "Tatfunk" for pupils. 11 During the era Kuenheim the product range and sales developed steadily towards a success story without any dramatic ups and downs, during which BMW established a new footing in South Africa, which also led a research and innovation center. This changed when the company management in 1994 with the takeover of the British Rover Group, which was viciously miscalculated. 12 What was intended to strengthen the international competitiveness developed into billions of heavy losses and so BMW withdrew after a costly sixyear period. 13 A more successful decision was the purchase of trademark rights on Rolls Royce models in 2003. Since then the situation at BMW Group has stabilized again for good. Parallel to the economic development after WWII, BMW is increasingly concerned about its corporate social responsibility that is nowadays so firmly integrated into its corporate identity defining philosophy. There are four sectors nowadays where the BMW Group shows its corporate social responsibility: sustainability principle, environmental issues, employees and society. In the following under Paragraph 2.0 we will describe the influences on policy and
decision making at BMW in these four areas, while the following points under Paragraph 1.0 first define the different ways of CSR within Western countries in general.
1. Corporate Social Responsibility
1.1 The Early Beginnings of Corporate Social Responsibility in General
The responsibility of companies for their social and ecological environment is based on more than 120 years of tradition in Western countries and while literary works like Englishman Charles Dicken’s Oliver Twist in 1839 14 showed the appalling circumstances of the working class and their children and names like the famous German Friedrich Engels 15, who was an industrialist and wishes to improve the lot of the working class are still very well-known today. As we see, during the industrialization, entrepreneurs were already in the 19th century engaged in their employee’s social improvement and assumed tasks for their immediate social environment, for example through housing construction measures or the establishment of schools and cultural institutions in the vicinity of the production sites as German Mr Barthel Heinrich Strousberg 16 did by having 144 houses with 228 apartments for the workers built.
At an early stage, especially SME’s recognized the importance of CSR and it became a fixed part of their corporate culture 17. The "Corporate Citizens" of this period like for example Henry Ford and his famous doubling of the salaries 18 shaped many social and labor-law achievements in cooperation with politics like for example German Imperial Chancellor Bismarck introducing comprehensive health care in 1883 for the workers 19. The cooperative movement and the first social-state approaches such as the introduction of pension, health and accident insurance are a direct result of the cooperation between entrepreneurs and politicians.
1.2 Definition of CSR
The term Corporate Social Responsibility (CSR) comes, however, from the USA, where in the middle of the twentieth century businessmen and research explored corporate social responsibility. At that time, the primary focus was on the social challenges of society. Since the mid-1990s, ecological and societal issues have increasingly been discussed in the context of corporate social responsibility.20 The EU translates "Corporate Social Responsibility" into German as „Soziale Verantwortung von Unternehmen“, which means social responsibility of companies. However, the English word „social“ is used in a broader sense and implements relations to society as a whole as much as the corporate welfare that was initially the main focus of CSR in her early beginnings. In the early 2000s there was a conceptual diversity around CSR, sustainable corporate management as well as corporate citizenship. This variety went hand in hand with varying interpretations of the individual concepts resulting from the different historical roots. Often, the terms Corporate Social Responsibility (CSR) and Corporate Citizenship (CC) have been used synonymously. Others assign very different content to the terms. Loew et al (2004) 21 had for the first time created a self-contained system of terminology that integrates the EU official definitions and those of the UN Rio Conference in 1992 22. CSR is thus a central component of sustainable corporate management. CSR and Sustainable Corporate Governance contribute to overall sustainability. Fields of action in the core business are environmental protection, employee interests, supply chain and product responsibility.
1.3 Socio-Economic Set and Setting in Central Europe
Due to the different historical background (NATO members versus former Warsaw Pact members) the Social security systems in the EU vary greatly and there are huge differences in the way different EU countries have organized benefits, healthcare and other social security services. That being said, it comes as no surprise that every EU country has its own laws determining what benefits a citizen may receive, how long a citizen has to work before qualifying for benefits like unemployment benefits and what for what duration and what amount may be paid. The EU rules only determine which country's social security is liable for a citizen when 2 or more countries are involved and as a rule the citizen is just covered by the legislation of one country at a time 23. On the other hand the citizen also only contributes to the social system in that country and every EU citizen should be treated the same as nationals of the respective country.24 The Human Development Index is very high for Europe and only the South Eastern nations like Romania and Bulgaria lag somewhat behind. 25
1.4 Corporate Social Responsibility in the EU
In early 2000, the European Union (EU) took up the idea of corporate social responsibility. In the form of corporate social responsibility the EU sees an opportunity for companies to make voluntary contributions to social and environmental sustainability apart from legal requirements. The EU Green Paper on CSR, published in 2001, stresses the equal importance of environmental protection and social concerns, demonstrating that CSR is to contribute to the implementation of the EU's strategic objectives (Lisbon 2000) and to its sustainability strategy (Göteborg 2001). The CSR definition of the EU, which emphasizes "the responsibility of companies for their impact on society" (EU Communication 2011) influenced national discussion decisively. 26 In abovementioned 2011 EU communication, the Commission announces regulatory measures in various areas like "green" advertising, public procurement, disclosure of investment fund investment rules, etc. As demanded by NGOs, a duty to report is also to be introduced, this time being the economic associations which are not satisfied with the intentions of the EU. Companies are supposed to integrate economic, ecological and social aspects within their whole distribution chain. They are supposed to look for guidance by stakeholder groups and understand CSR as basis of long term action.
The concept of sustainable development has evolved from environmental protection. At the 1992 UN conference in Rio de Janeiro, sustainable development was established politically as a whole society-oriented mission statement. It was not until the mid-1990s that a concept for companies emerged. Among other things, the first sustainability reports were issued. Today it is clear that there is no difference between CSR and sustainability reports or CSR management and sustainability management (Loew, Rohde 2013) 27.
2. Four Main Sectors of CSR at BMW
2.1. Sustainability as Principle at BMW
Many changes are caused by the process of market globalization. Corporate responsibility now encompasses not only the needs of employees, but also the environment and society as a whole. You are also asked to share the benefits of your growth with members of society, as the industry grows in strength and importance. "The world economic system needs to have a more human face." 28 Therefore, companies have to ensure that their traditional focus on corporate profits and shareholder value is accompanied by equal concern for the needs of the environment and society. The creation and safeguarding of lobs and commitment to the environment and society are as important as innovation, problem-solving ability and open dialogue 29.
The principle of sustainable development is based on the fundamental belief that no generation should live at the expense of successive generations. Recently, this economic principle has become a key factor that determines business management. Companies that are committed to sustainability have the same importance in economic, ecological and social concerns in formulating their business strategies.
Therefore, BMW has been a member of the "Dow Jones Sustainability Group lndex" since 1999; which is the most important stock index for companies with sustainable business management. The above-average increase in this index shows that companies are also able to reap financial
benefits through active participation in environmental and social concerns. BMW has been repeatedly sector leader of the index. 30
This achievement is considered as a validation of the long-term and value-oriented corporate philosophy by the BMW Group 31. As an industry leader, BMW is strongly committed to applying the principles of sustainability in all efforts dedicated to increasing the value of the company. Real contributions to finding solutions to the problems of tomorrow are very important for BMW, whose aim is to develop local and global perspectives of the future and meet the expectations of the company. In its fulfillment of social, environmental and political responsibility, BMW Group seeks to set an example of responsible corporate commitment. 32 2.2. Protecting the Environment
For the BMW Group, mobility and sustainability are inextricably linked: "The careful use of resources is a permanent element in corporate philosophy, a concept that is lived and implemented by all employees." 33 The BMW Group is concerned with the ecological optimization of products and production, with its wide range of processes
With respect to its products, one of the main environmental aspects that the BMW Group focuses on is reducing the fuel consumption of the fleet. With modern engine technology and "lightweight smart construction" to optimize the weight of cars, BMW can meet this goal. 34
In addition, environmental and recycling requirements are integrated into the product creation process from the outset by BMW, using the tools "Design for Recycling" and "Life Cycle Assessment", BMW always refines the technologies for recycling used cars. 35
ln order to make sure that production is environmentally compatible, the BMW Group's production plants are certified according to the international environmental management systems laid out in ISO 14001, or validated under EMAS, the European Union's ecological audit system. BMW is the first - and so far the only - car manufacturer to have established internationally valid environmental standards throughout its production plants worldwide. 36
2.3. Considering the Employees The BMW Group was repeatedly honored as the most attractive employer in Germany with the Randstad Award. Based on the largest employer branding study in the world, the Randstad Awards annually honors the most attractive companies. For the Randstad Award 2016 more than 7,100 employees and job seekers between 18 and 65 years were interviewed in Germany. The Randstad Award and the underlying survey is the largest study in this field and it is awarded in 25 countries around the world. In Germany, the winners among the 150 largest German employers are determined by an external and independent institute, using a specially developed survey. Companies are assessed in ten different categories. With the award, the BMW Group has again confirmed that, in addition to their brands and products, their jobs are also very popular. "This award is due to the passion of our employees, which makes the appeal as an employer authentic," said Oliver Ferschke, Head of Personnel Marketing and Employer Branding at the BMW Group. "In order to remain attractive, we will continue to develop measures that enable extensive dialogue and the experience of the company, the brand and the people behind it." 37
In line with aforementioned study BMW offers excellent working conditions in terms of salary and benefits, according to its concept of "give and take". This makes the BMW Group one of the world's most attractive employers and the work they render together form the basis for the success of the company: this philosophy is at the center of the value-oriented and value-based personnel and social policy of the BMW Group. The BMW Group has been honored in Germany by the Deutscher Unternehmenspreis. 38 The BMW Group provides health care and healthy lifestyle facilities that include fitness courses and other sports activities as well as nutrition seminars and courses on work safety as well as ergonomics and stress management. The current international campaigns “Healthy drinking”, “Safe walking” and “Mental resilience” show employees how even small changes can improve their everyday lives. Regular special events draw attention to important topics such as resilience, cancer prevention and addiction hazards. They are designed to motivate employees and executives to become proactive in these areas.39
2.4. Being a part of World Society and protecting Human Rights
BMW assumes responsibility: this is the philosophy behind the BMW Group's involvement in society and social programs, which have such goals as increased road safety, promoting understanding among peoples and opposing violence, educational projects in kindergartens and schools' creating understanding and mutual trust in communities where they is located. According to the 2017 CSR Value Report, BMW Promotes intercultural understanding and social inclusion. As a global corporation with a multinational workforce, the BMW Group has been working for many years now to promote understanding between different nations, religions and ethnic groups. ….. BMW sets “out to a total of one million people by 2020 with …activities in the areas of intercultural understanding and social inclusion. This goal was, however, achieved much sooner: by the end of 2015, we had already reached out to more than one million people worldwide through exchange programmes, online platforms, educational projects, and in particular through the • Intercultural Innovation Award. According to a survey by the United Nations Alliance of Civilizations, the number had reached over 1.2 million by the end of 2016. The activities vary from country to country and are geared toward local needs.”40
Within the framework of corporate citizenship the BMW Group has been bestowing the Intercultural Innovation Award since 2011, in collaboration with the United Nations Alliance of Civilizations (UNAOC). Also within the framework of corporate citizenship fall the Junior Campus of the BMW Group, which promotes understanding and enthusiasm for technology and sustainable mobility among children and adolescent. Its concept of “using all senses to discover mobility and sustainability” was developed in cooperation with prominent educators and scientists. The first Junior Campus was opened in 2007 at BMW Welt in Munich. 41 The BMW Group has been recognizing the volunteer work by employees since 2011 with a “Social Responsibility Award”, under the auspices of Board of Management member Milagros Caiña Carreiro-Andree. BMW writes on its website that it has chosen these areas for its sociopolitical commitment because they reflect its corporate culture and goals The BMW Group claims that its view is that children and young adults are particularly important because they will shape the society of the future. 42
3. Evaluation of BMW's CSR 3.1. Efficiency in regard to the Environment
The improvements of environmental issues demonstrate the effectiveness of BMW's strategy. Production plants around the world in general follow the environmental standards and uniform quality of the BMW Group as defined in the ISO 9001 and ISO 14001, which have been established accordingly. The "Cleaner Production Program" of the United Nations Environment Program (UNEP) is one of the core foundations of this program and the BMW group introduced voluntarily the practice of preventive environmental management as a leading principle for the own production 43. The focus of environmentally responsible production in the BMW Group is on the conscious use of natural raw materials and the reduction of emissions in production plants around the world. With respect to this crucial environmental issues and in line with the legislation of the EU´s Climate Action 44 the BMW Group can report excellent progress: In the five-year load of wastewater production has estimated at 16% CO2 emissions per vehicle produced have fallen by 15%, the use of solvents by 29% 'and the fuel use per car by 25%. 45 The BMW Group is directing her focus to "clean energy" by considering hydrogen, which may be received from renewable energy sources, as the clean energy carrier of the future. The world's first group of 15 cars that are equipped with 750h1 hydrogene combustion engines have demonstrated the feasibility of this system in practical use since 2007. 46
3.2. Efficiency in regard to Employees BMW has four main programs in order to fulfill the social responsibility of the companies towards their workers. Firstly, it has ergonomically designed work places in the administration offices and in manufacturing that help to a great extent avoid physical exertion. The BMW Group invested more than 25 million EUR in ergonomically optimized workplace design at the Munich plant at the occasion of the launch of the new BMW 3 Series production. 47 Secondly, there are gyms and fitness courses in all plant locations and a life-long health program was being launched in 2007 as a pilot project, which helped detect diseases and promotes health awareness.48 Thirdly, due to the demographic over-aging of society, the retirement age has been reset by the German government at 67 years and this is logical in terms of the national economy. However, not all workers in the company will be able to - or want to - continue to perform at full capacity,
up to this late age of retirement and therefore it is necessary to make early retirement pensions along with the standard age limit possible. The BMW Group says that it implementing and working on programs that allow early or gradual retirement in the future. Fourth, lifelong learning is becoming increasingly important and the company promotes, for example, ways of learning that are oriented to the work in the context of the training courses that are directly linked to the professional activity. An additional example is the qualitative planning of personnel, in which the BMW Group establishes the need of their entity in the future regarding skills at an early stage. In total, the company invests around 200 million EUR per year in training and the continuous professional development of its workforce. 49 As mentioned before, BMW won the past repeatedly international awards as the best employer and proved it did meet the objectives and expectations following its policy regarding employees
3.3. Efficiency in regard to Society
According to the BMW Group philosophy, "sheer driving pleasure" and traffic safety go hand in hand. BMW takes on responsibility for traffic participants in general and does not only invest in the active and passive safety of its vehicles. BMW Group works together with other specialists to carry out traffic safety programs for children, teenagers, and young drivers; additionally, general driver-safety training programs for holders of driving licenses are offered. 50 As China 51 and Argentina 52 has a very high number of people killed during traffic accidents, the BMW Group is organizing a series of lectures on traffic safety for older high school students in Argentina. The BMW Group's goal is to provide both young and future drivers, as well as teachers and parents, information on safety and self-protection in road traffic. The aim of the BMW Group is to offer young and future drivers, as well as teachers and parents, information on safety and self-protection in road traffic. Moreover, the BMW and MINI Driving Academy in Maisach offered free driving safety training for 110 young drivers. This makes a decisive contribution to increased traffic safety in 2015. The program is continued but has to be paid for now although with a reduced rate. In difficult traffic situations the participants have a tangible increase in security. 53 BMW also shows its corporate social responsibility by running the Foundation Herbert Quandt and the Foundation Eberhard von Kuenheim, which are nowadays merged. 54
The Foundation Herbert Quandt carries out a compact program of high- profile events, which seek to foster transatlantic cooperation' to support the pan-European unification process' to strengthen relations between Europe and the emerging economic regions of Asia and Russia' to promote in-depth discussion of topics such as globalization' mobility and the environment' and to develop global networks between young leaders from the business community' the world of politics, academia and the media. 55 The Herbert Quandt Foundation carries out a compact program of high profile events, which seek to foster transatlantic cooperation "to support the pan-European unification process" to strengthen relations between Europe and the emerging economic regions of Asia and Russia.56 The Eberhard von Kuenheim foundation promoted people who think and act entrepreneurially, while demonstrating skill' initiative and a sense of responsibility. It wants to initiate change where it is needed: in socially and economically underperforming areas. It claims to promote pilot projects aimed at finding solutions for societal problems that are creative and are carried out and tested under rear conditions. It supports people who are willing to risk such pilot projects because they demonstrate initiative, are particularly skilled and willing to take on responsibility. 57
As shown, BMW is doing several very effective activities for the society and for the achievement of its corporate social responsibility and develop global networks among young leaders of the business community "from the fields of politics, academia and the media." 58
4. Summary and Conclusion
In terms of environmental issues BMW has improved the own production plants and the own vehicles. An area for improvement in BMW's response to environmental questions would be the financial support of a huge international environmental organization in order to participate at the general protection of the environment With regard to environmental issues, sometimes I hear that BMW should theoretically not let a team compete at the Formula One as the consumption of fuels according to the environmental guidelines of BMW. However, we must not forget that CSR mean more than doing good. It is not limited to doing well to the workers. It is not limited to doing well to the environment. CSR is meant to serve human society with all its needs. As the Formula One races excite huge portions of society and as they are a part of motorized sport, the MBW team´s participation in the Formula One is a contribution to motorsport world-wide and therefore part of CSR. In order to remain successful in the long term, evolutionary approaches are necessary, which are used to develop ongoing initiatives and projects. The BMW Group therefore also strengthens its product portfolio through further technological developments.
At the same time, the company is working on revolutionary developments such as alternative drives like the hydrogen engines that would definitely change the face of car manufacturing in the world and this, again, is practical CSR as the whole humanity would benefit from the change to the clean Hydrogen technology. Every cent spent for the development of hydrogen engines and hydrogen-based energy generations is helping mankind to overcome environmental pollution in order to secure our future. Electro-mobility is right now of crucial importance here and represents a fundamental technological change for the automotive industry. The BMW Group needs both the evolution and the revolution for the individual mobility of the future and the shaping of technological change and through its CSR projects for her workforce in the realm of health care and life-long learning, BMW makes sure to always have a leading position when it comes to future developments. BMW does also a lot a lot CSR in the form of traffic safety and with this we can conclude that the BMW Group shows indeed a healthy interest to benefit her customers, to benefit her workforce and even to benefit society as a whole in a global context. Way showing initiates like the Design for Recycling or the participation in the United Nations Alliance of Civilizations (UNAOC) in order to promote one world for one mankind, simply accomplish the picture of a modern, responsible and truly humane company.
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53. http://www.bmw-stiftung.de/en/info/press/media-information/press-release/article/titel/ 54. https://www.press.bmwgroup.com/deutschland/article/detail/T0246623DE/partner-fuermehr-verkehrssicherheit-in-der-region:-bmw-und-mini-driving-academy?language=de 55. BMW Stiftung Herbert Quandt 56. Krysmanski Hans Jürgen,1 % - Das Imperium der Milliardäre, p. 164 57. Kuenheim Foundation 2007 http://www.kuenheim-stiftung.de/ 58. http://www.bmwstiftung.de/fileadmin/user_upload/Dateien/4.Informationen/About_the_4th_World_Young_Lead ers_Forum.pdf
