Sustainable Finance: A Report on BMW's Value Creation and Engagement

This report delves into BMW Group's approach to sustainable finance, highlighting its value creation strategies and shareholder engagement practices. The company aims to be the most sustainable manufacturer by using renewable energies and implementing environmental and social standards throughout its supply chain. BMW focuses on resource efficiency, aiming to reduce resource consumption by 45% by 2020, and decreasing pollutant emissions. Effective communication with stakeholders through events and individual interactions helps build trust and incorporate stakeholder feedback into decision-making. The report references BMW's Sustainable Value Report 2016 and academic research to support its analysis of BMW's sustainability initiatives and their impact on value creation and stakeholder relations.

SUSTAINABLE FINANCE
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PART A – VALUE CREATION SUMMARY
BMW is a German multinational company which manufactures automobiles and motorcycles. It
was found in 1916 and have its headquarters in Munich, Germany. It is the twelfth largest
producer of motor vehicles in the world. The BMW group believes in reinventing itself and with
new technology, it changes the shape of the industry and the world of automobiles. It desires
to change the entire sector permanently with innovative technologies.
Value creation is the primary objective of any business organisation. When the value is created
for customers, the revenue increases and when the value is created for the shareholders, the
price of stock/share increases and ensures future inflow of funds into the company (Tantalo &
Priem, 2016). The BMW group have up to ten goals regarding its strategy till 2020 which
includes products and services, value creation and production, society and employees. By value
creation, they use resources to gain a competitive advantage which can last longer. Competitive
advantage benefits the company in creating higher value for the customers and itself.
[Source: https://www.slideshare.net/channelinstincts/value-creation-v2]
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The production of consumer goods is continuously increasing thus leading to increasing
emissions of pollutants and CO2. The vision of BMW group is to become the most sustainable
manufacturer and to achieve the same they are using only renewable energies at all the
locations across the world. In the supply chain of BMW, the environmental and social standards
are implemented and by this, they are contributing to the society, reducing the challenges
faced by it and also reducing their production cost and risk (Priem, et al. 2017). BMW Group has
taken various measures for the value creation so that the concept of sustainable management
can be followed; it will reduce the consumption of resources by 45% till 2020. They
continuously aim to increase their resource and energy efficiency and decrease the emission of
pollutants from production. Thus, it can also create a competitive advantage for BMW.
[Source: https://www.bmwgroup.com/content/dam/bmw-group-websites/bmwgroup_com/
ir/downloads/en/2016/BMW-Group-SustainableValueReport-2016--EN.pdf]
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PART B- SHAREHOLDERS ENGAGEMENT ANALYSIS
As BMW group is a global company, its activities whether related to manufacturing or its
products, impact the environment as well as the group of its stakeholders. Vice versa the
decisions, actions and the point of view of stakeholders/shareholders have an effect on the
success of the company. Therefore, the BMW group communicates on a regular basis to all its
stakeholders in all the important markets.
By establishing effective communication with the stakeholders, they are able to build trust and
can have a good understanding of positions of each other (Böckli, et al. 2015). This step helps
the company to understand the expectations of the stakeholders and accordingly, it can be
decided what next step is to be taken by the company.
[Source: https://www.bmwgroup.com/content/dam/bmw-group-websites/bmwgroup_com/
ir/downloads/en/2016/BMW-Group-SustainableValueReport-2016--EN.pdf]
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BMW group organises many events to have a dialogue with their stakeholders and aims to
organise at least one event each year in the region of primary sales such as America, Asia and
Europe. In 2016, they conducted an event in various regions of America to discuss the topic of
urban mobility. In the future years, again urban mobility will be the agenda for events along
with digitalisation. Along with these events, they communicate with stakeholders on an
individual basis also regarding some special topics such as their sustainability standards
(SUSTAINABLE VALUE REPORT,2016). They also include the perceptions and
recommendations of the stakeholders in their reports so that their opinions can be included
and decisions could be taken accordingly. For example, in the case of car sharing the
stakeholders perceived that this concept is not fully understood by them and brand can be seen
as less relevant to schemes of sharing. Whereas the stakeholders recommended that the car
sharing scheme can be used as an introductory platform for new technologies or premium
designs.
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REFERENCES
 Tantalo, C., & Priem, R. L. (2016). Value creation through stakeholder synergy. Strategic
Management Journal, 37(2), 314-329.
 Priem, R. L., Wenzel, M., & Koch, J. (2017). Demand-side strategy and business models:
Putting value creation for consumers center stage. Long Range Planning.
 Böckli, P., Davies, P. L., Ferran, E., Ferrarini, G., Garrido Garcia, J. M., Hopt, K. J., ... &
Winter, J. W. (2015). Shareholder engagement and identification.
 SUSTAINABLE VALUE REPORT,2016 [online available
at:https://www.bmwgroup.com/content/dam/bmw-group-websites/bmwgroup_com/
ir/downloads/en/2016/BMW-Group-SustainableValueReport-2016--EN.pdf]
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