BMW: Setting the “Green” Standard for the Automotive Industry

Posted on 18. Jan, 2011 by in Business & Policy

In October 2010, The BMW Group was named the automotive industry’s Supersector leader by the Dow Jones Sustainability Index for the sixth consecutive year, and is therefore crowned the world’s most sustainable automobile manufacturer.  At the Opportunity Green Business Conference, Andreas Klugescheid, Vice President of Government Affairs for BMW, revealed the company’s long-standing foundation and interest in sustainability, how it has become and remained a leader in green auto-making, and thoughts regarding the future of emerging markets, impacts of urbanism, hurdles for electric and hydrogen car adaptation and green-washing/consumer fatigue.

Sustainability landed on the radar and in top-level discussions at BMW as early as late 1970′s/early 1980′s.  The company was focused on creating a management system to make automobile production cleaner, and today it remains one of the ten basic principles of the company.  BMW decided it would create the sustainable benchmark for the automotive industry.

To create that benchmark, Klugescheid says, “you must have continuous development within the company, change the mentality of the employees and management, and there must be a clear management priority [in sustainability]“.  It certainly helps that BMW is headquartered in Germany where “green” is more mainstream and was discussed in company boardrooms decades before the United States.  What is interesting now, is that consumer values when purchasing a “premium” automobile have also changed.  BMW manufactures “premium” cars, and the shift in definition of  “premium” has come to include greener companies and greener manufacturing processes among consumers.

So what does the future hold for the global automobile industry?  What effects will the emergence of China and other growing markets, the introduction of electric and hydrogen powered cars, and green-washing have on BMW and the industry?

China and Emerging Markets

Klugenscheid believes that the emergence and increased purchasing power of China presents great challenges and also great opportunities.  Because the Chinese consumer is driven by what the state government wants, consumer mentality is different and harder to reach than the American and European consumer.  However, on the flip side, the Chinese government understands the incredible environmental issues its emergence conjures.  A company like BMW is positioned well because it is already manufacturing cars that are environmentally friendly with a manufacturing process that also leads its competition environmentally.  When considering business in China, BMW not only considers how to build environmentally friendly cars and manufacturing processes, but also about traffic management – getting mobility into a system with a holistic approach.

Cars of the Future

The car buyer of the future won’t buy a car, but mobility.  With a blend of public transport, car sharing, alternative-powered vehicles and more fuel efficient cars, there will be an inter-connectivity of different means of transportation.  Car manufacturers will need to be flexible in responding to the needs of consumers.  BMW sees this as incredible opportunity.

Combustible engine cars will not disappear, however, they will continue to become more and more efficient.  Diesel is already becoming more available in the U.S. (diesel share is 70% in Europe).  Electric vehicles will be available for urban drivers and hydrogen powered cars will be available for mid to long range commuters and travelers.  Further down the road, electric and hydrogen cars will become even better.

Hurdles

Klugescheid sees the highest risk in introducing electric mobility to a broader base.  BMW is investing billions of Euros in the technology, and is unsure how the consumer will react.  There are three main concerns with electric vehicles: range, infrastructure and carbon footprint.  Governments will play a role in reducing these hurdles by offering incentives for consumers to adapt.

Green-washing and Consumer Fatigue

Klugescheid defines three key ways to avoid green-washing and/or consumer fatigue:

  1. Remain credible and constantly prove it
  2. Have substance to what you are saying and doing
  3. Keep dialog with stakeholders, understand your company’s limits and possibilities

Most importantly, don’t sit in ivory towers!   A great company always needs reflection of what’s going on outside its own walls.

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5 Responses to “BMW: Setting the “Green” Standard for the Automotive Industry”

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