Executive Summary
This paper primarily delves into the topic of CSR implementation in BMW and GM and the inherent differences between the two. When it came to implementing CSR on an operational level such as in its outsourced manufacturing plants or in its corporate decision making capabilities, there was evidence of a distinct lack of CSR on the part of GM.
BMW on the other hand did suffer from some of the same setbacks but did have considerably better CSR integration as evidenced by its factories which had better conditions for its workers and were less susceptible to environmental degradation.
Introduction
Corporate Social Responsibility (CSR) can be described as the process wherein corporations incorporate ethical methods of operation, aside from their profit oriented structure, into their business model.
This process involves the addition of ethical business practices, contributing towards community and social development as well as taking a long term stance towards helping members of the local community that a company finds its operations in (Homburg, Stierl & Bornemann 2013).
Graphic 1
Brief Information about General Motors and BMW
GM (General Motors) and BMW are two of the largest automobile manufacturers in the world and have been noted as being two of the most highly regarded companies when it comes to CSR practices. GM established the GM Foundation that contributes millions of dollars a year in reforestation efforts as well as in educating children in economically disadvantaged communities.
BMW on the other hand is tied in the number one spot for CSR Company of the year for 2013 with other companies such as Disney, GE, etc. Both companies have been noted as having stellar CSR programs in place when it comes to assisting a variety of communities.
In the case of GM and BMW, this manifests in acutely similar methods of CSR implementation. For instance, GM and BMW both implement a culture of open communication and ethical treatment of employees from both a factory level to those belonging to members of upper management.
This manifests itself in some of the best health insurance policies money can buy, maternity leave benefits, continuing education benefits (i.e. paying for the employee’s education) as well as benefits related to creating a business environment that is ethically oriented via corporate social responsibility directives and internal HR personnel whose jobs focus on ensuring the development of ethical behaviours within the company.
The end result is that employees within GM and BMW are treated equally and fairly resulting in the creation of an ethical work environment that facilitates moral decision making within the company (Glavas & Kelley 2014).
Based on an evaluation of the current production infrastructure of GM and BMW, it was determine that the framework for analysis will focus on the Triple Bottom Line and the category “Caterpillars” which defines a corporations activity as being relatively local on its impacts, single minded, ultimately unsustainable, capable of change, already operate in sector where others have evolved.
This particular framework was based on an examination of the operations of GM which was evaluated as being unsustainable in the long term.
Business Ethics
Business ethics can be described as the ethical framework that a company abides by when it comes to its operations. This encompasses not only in the way in which it sells its products but the manner in which it manufacturers them and how it addresses the long term impact of the company’s operations on society and the environment.
For BMW, one of the manifestations of business ethics the company has shown comes in the form of its various charitable donations wherein it has given well over $30 million to educational campaigns, community development initiatives and has even backed various art projects.
The same can be said for GM wherein the company has given well over $25 million over two decades to various charitable organisations through the GM Foundation. Other aspects of adherence to proper business ethics in the case of GM and BMW takes the form of their current development cycle where an emphasis has been placed on developing products that are considered to beneficial to the environment.
Hybrid vehicles, hydrogen fuelled cars as well as more fuel efficient vehicles are some of the products that have been developed within the past decade due to the current internal consensus within the companies that ecologic sustainability should be focused on (Schmeltz 2014). While the CSR programs of both companies are widely lauded for their contributions and a focus towards community building, from a business ethics standpoint there are some issues that need to be taken into consideration.
For instance, despite its much vaunted CSR programs which contribute towards reforestation, GM has actually been accused multiple times by the EPA (Environmental Protection Agency in the U.S.) as well as various environmental rights groups due to its operational activities that contribute towards environmental destruction (i.e. release of pollutants into the air, improper disposal of industrial waste, improper usage of dangerous chemicals etc.) (Hack, Kenyon & Wood 2014).
In comparison, BMW has been recognised since 2012 as the world’s most sustainable automotive company in relation to its production process, its emphasis on recycling and lower emissions on its factories and vehicles as well as its emphasis on better treatment for its workers. From this particular standpoint, it can be seen that BMW is “ahead” so to speak when it comes to its adherence to CSR standards.
It should be noted though that adherence to environmental sustainability is not wholly indicative of a company being better than the other when it comes to CSR. The difference between the two operations matters since it showcases what can be defined as a case of corporate “white washing” which is a practice where corporations showcase that they are behaving in an ethical fashion and contributing towards social and economic gains when in reality this aspect is merely a façade and is not a reflection of the entirety of the company’s operational activities (Sadler 2003).
This is particularly important to take into consideration since “whitewashing” merely implies that a corporation is attempting to be more sustainable but in the end its operations are not directly affected resulting in unsustainable practices. It is based on this that the next section will delve into a comparison of their management techniques and their measurement based on G3 guidelines.
Comparison of Management Techniques
Business
Businesses under the triple bottom line focus on the economic benefit that a society gains from the business operating within that particular sector (Werhane & Freeman, 1998).
While this aspect does include financial culture to a certain extent, this paper will focus primarily on factors related to the corporate culture towards sustainability that GM and BMW adopt, the aims of their current corporate strategies (i.e. are they focusing towards sustainability) and the possible routes towards sustainability that they are focusing on.
GM
Corporate Culture towards Sustainability
The primary focus of GM’s corporate culture towards sustainability focuses primarily on energy savings and waste reduction in its factories. So far, the company has been able to save $20 million in energy costs per year due to waste saving measures (Korschun, Bhattacharya & Swain, 2014).
Aim of current corporate strategy (i.e. focus towards sustainability or not)
Based on an evaluation of GM, the focus is towards sustainability, however, it is oriented more towards cost savings than due to CSR.
Possible routes towards sustainability
One of the current endeavors that GM has been focusing on when it comes to more sustainable practices takes the form of developing alternative fuel vehicles that would help to lower dependence on fossil fuels (Korschun, Bhattacharya & Swain, 2014).
BMW
Corporate Culture towards Sustainability
BMW’s current corporate culture towards sustainability focuses primarily on ensuring the company has a small environmental footprint due to its operations. This comes in the form of:
a.) Lowering the use of and the diversity of the resources that goes into its products to ensure sustainable extraction processes
b.) Making sure that the materials that go into their vehicles are recyclable during their end of life phase
c.) Avoiding almost all usage of environmentally damaging materials during the production phase
d.) Researching new methods of car development that are in line with lower pollution rates and are more viable in terms of resource utilisation
Aim of current corporate strategy (i.e. focus towards sustainability or not)
The current aim of the corporate strategy of BMW is a focus on sustainable production processes as well as the creation of cars that have a minimum adverse impact on the general environment. This aim manifests itself in the fact that cars from BMW are regularly stated as being some of the most fuel efficient cars in the market.
Not only that, the company is actually tied in first place with several other corporations (i.e. Disney and others) as being one of the most sustainable companies in the world that implements proper CSR practices in nearly all levels of its operations (Korschun, Bhattacharya & Swain, 2014).
Possible routes towards sustainability
The main route that the company will focus on when it comes to sustainability takes the form of the various fuel efficient and alternative fuel vehicles that it is currently developing. These come in the form of its hybrid cars, hydrogen powered cars and even electric powered cars that have a far lower environmental impact as compared to cars that are primarily powered via fossil fuels. Though it should be noted that due to the current development cycle of the company, these cars are still in the testing phase, however, BMW is orienting itself to primarily produce such vehicles due to its focus on sustainable corporate activities.
Social
Under the social aspect of the triple bottom line, businesses are evaluated based on their impact on the individuals within a company (i.e. the employees) and the people that are outside the business (i.e. members of the local community).
Thus, when it comes to evaluating the adherence of a business to the concept of CSR, the social aspect of the triple bottom line examines whether a business is operating in a way that benefits the local community and that people within the business (i.e. the employees) are not being endangered or exploited in any way shape or form through normal company operations (Burlingame & Young 1996).
Thus, in this section of the examination between GM and BMW, what will be examined are factors related to wages, working conditions, labour utilisation during operations, and the contribution of either company towards the living standards of the local communities in which they operate.
GM
Wages
When examining the wage scale for employees at GM, it was noted that entry level employees at the company earn an average of $19.28 per hour and were given a $5,000 signing bonus once they are formally made employees of the company.
Aside from this, GM also provides $4,000 per year in inflation protection for its employees. In comparison, the average minimum wage salary within the U.S. is $7.25 per hour for entry level positions within a company. From the perspective of Meiners, Ringleb & Edwards (2000), when it comes to triple bottom strategies, wages are considered one of the first indicators of adherence to proper CSR strategies since people have a right to what can be defined as “a living wage” (i.e. the amount needed to be able to survive).
When examining the case of GM, it can be seen that it adheres to this concept by providing wages that are more than half of the prevailing minimum wage rate for entry level employees which enables them to have a comfortable living.
On the other hand, it should be noted that when it comes to the scaling of the wages, it was noted by Rahim & Alam (2014) that GM did not scale the income levels of its workers proper wherein factory line workers rarely, if ever, reached the first tier of salary payments which encompass $30 to $40 per hour.
Instead, wages are scaled based on company metrics wherein the difference in wages between an entry level factory worker and someone that is experience is basically $1.
Working conditions
The analysis Rahim & Alam (2014) of explained that workers within the various international factories of GM are subject to dangerous working conditions. In fact, a recent explosion in one of GM’s factories in China showcases the lack of sufficient safety protocols, insufficient installation of safeguards as well as a lack of protection for workers at the company for the various chemicals and fumes they are exposed to.
The end result was that even the Chinese government which is known to turn a blind eye towards the implementation of safety protocols in factories actually prevented the expansion of GM’s factory in Shenzen due to safety concerns.
Labour utilisation during operations
One of the main problems with the labour utilisation of GM is that workers within its various factories have been noted by Wagner, Lutz & Weitz (2009) as being overworked and underpaid as compared to their counterparts in the U.S. The case of GM in Mexico shows that workers are paid $4 an hour and are subject to 12 hour work shifts in order to keep up with the production demands of the company.
While this is higher than the standard minimum wage within Mexico (86 pesos per day), the fact remains that wages paid do not reflect the skills of the workers and the amount of time put into their jobs. This case is not limited to Mexico but actually extends to its factories in China as well.
Contribution towards the living standards of the local community
The primary contribution that GM has had towards the living standards of local communities comes in the form of its preferential career sourcing that targets local talent instead of bringing in workers from outside the state. This comes in the form of local career fairs, utilising local employment firms and a variety of other strategies that focus on ensuring that members of a local community are hired by the company.
Aside from this, GM also contributes extensively to local education funds so that potential scholars are included under the GM Foundation scholarship program which provides subsidies for their college education. Lastly, the company also contributes to various local environmental organisations that focus on tree planting and other ecologically beneficial operations.
BMW
Wages
In comparison to GM, BMW actually pays its low skilled workers a far lower rate as compared to its German workers in its primary manufacturing facilities in Germany. German workers are normally paid $30 an hour while their American counterparts are paid $15 an hour.
This wage situation is even worse in other countries such as in China where the ages average $3 to $4 for non-skilled employees on the factory floor. While it is understandable given the fact that skilled workers should be paid more, the fact remains that BMW only pays its employees the modicum allowed to place them under the category of having a “living wage”.
This is despite the fact that the company constantly emphasises the fact that it treats its workers fairly.
Working conditions
Based on the examination of Wagner, Lutz & Weitz (2009), it was noted that BMW places a considerable emphasis on the safety and security of its workforce.
This manifests in strict guidelines being enforced when it comes to the condition of its factory in relation to how safe it is to work in it, what methods have been implemented to ensure the protection of the employees that work there as well as avoiding the use of potentially toxic chemical compounds that could cause serious health problems.
Labour utilisation during operations
When it comes to labour utilisation, BMW is often cited as having the best labour conditions in the world wherein the company ensures that workers only work 8 hours a day with substantial increased payments being given if overtime is required due to tight deadlines.
Aside from this, the company also implements a variety of “build from within” strategies when it comes to talent management wherein employees that have proven themselves to be capable hard workers are earmarked for further training and advancement within the corporate ranks of the company.
This adheres to proper to CSR oriented operations since it showcases that the company actually cares about the various workers it hires and focuses on improving the state of its workforce.
Contribution towards the living standards of the local community
The contribution that BMW primarily makes to the living standards of the local community comes in the form of various donations to art and education programs. These scholarships help to support local artists and students in order to promote what is known as “the common good”.
Aside from this, the company often donates money to disaster relief efforts in their regions whenever a natural disaster strikes.
Environment
Under the concept of the triple bottom line, companies attempt to improve their level of environmentally sustainable practices whenever possible (Ottman, 1998).
While this normally comes in the form of reducing the amount of pollution produced by the company, this also manifests in other aspects such as the total lifecycle impact of the products they produce (i.e. the amount of resources used to produce and distribute their products) as well as the environmental footprint of the products they sell.
GM
Methods utilised in reducing pollution
Some of the present day methods that the company has attempted at reducing pollution comes in the form of lowering the energy costs associated with its various factories.
A recent report showed that GM was actually able to meet the EPA’s (Environmental Protection Agency) Energy Star Challenge for Industry which focused on a reduction of a company’s carbon and energy use (Komodromos & Melanthiou, 2014). GM was actually able to reduce its total energy usage in its U.S. based factories by 20 percent within a period of 5 years.
Total Lifecycle Impact of Products
When examining the total life cycle impact of GM’s various vehicle brands, it is noted that other car manufacturers such as Toyota, BMW, Kia and Hyundai have actually be cited as having better fuel efficiency than GM’s vehicles.
While GM has stated that its various vehicles are fuel efficient, independent testing from nonprofit organisations as well as government agencies around the world have shown that they are not as fuel efficient as compared to their counterparts. It should also be noted that in terms of emissions, GM cars are notorious for their high level of emissions (usually due to the size of their vehicles) (Komodromos & Melanthiou, 2014).
Do note though that most of the materials that go into a GM car makes its 75 percent recyclable, a factor often cited by GM, however, they neglect to take into consideration the sheer amount of processing required which would make it more expensive to recycle than to actually make a new car (Komodromos & Melanthiou, 2014).
Taking these factors into consideration, it can be seen that the total life cycle of GM’s products do have a significant adverse environmental impact which impacts its adherence to CSR.
Environmental Footprint
Despite the fact that over 100 of GM’s factories have attained the “zero waste mark” which is a standard for indicating adherence to lower emissions, resource utilisation and waste materials, the fact remains that this is not indicative of all of the company’s operations.
An examination of GM’s operations in China reveal substantial environmentally damaging practices due to high emission rates, improper waste disposal as well as a variety of safety concerns. One of the reasons behind these actions was due to the lax environmental and worker safety standards in China which enabled GM’s operations to continue despite the potential long term damage to the environment.
BMW
Methods utilised in reducing pollution
Based on an examination of the work of Sharma & Khanna (2014) which examined the efforts of BMW towards sustainable operations, it was noted that the company has recently implemented more efficient methods of operation to reduce the amount of pollution its factories produce.
This has manifested in a 60.9% reduction in the amount of waste produced by its global factories that go into landfills, a reduction of 55.1% of industrial waste water that is utilised in its production processes as well as a reduction of 31.3% when it comes to the amount of pollutants it expels into the atmosphere (Weisheng, Chau, Hongdi & Wei, 2014).
Total Lifecycle Impact of Products
Through the analysis of Sharma & Khanna (2014), it was noted that the total lifecycle impact of BMW’s products is actually quite low due to its current focus on environmental sustainability. This comes in the form of utilising recycled and sustainable materials for its cars which helps to lower the overall amount of waste material that the company sends to landfills.
Aside from this, BMW is often cited as having some of the most fuel efficient vehicles in the world which minimises their overall carbon footprint due to lower emissions. Aside from this, the company has also endeavoured to make sure the various parts of its cars are recyclable resulting in a 70 to 80 percent recyclability rate for the entirety of the vehicle.
Aside from this, the company has also implemented a buyback program for its cars which enabled the company to purchase old vehicles back from its consumers and recycle them into new cars. This enables the company to further lower its overall environmental footprint by minimising the amount of waste material that finds itself into a local junk yard.
Environmental Footprint
The factories the company has all over the world conform to global standards in worker safety, environmental preservation and the various workers of the company are actually paid above the going rate as compared to other factories.
As mentioned earlier, the company actually implements extensive emissions testing requirements along with implementing a broad worker safety program that encompasses all its global operations. What this means is that compromises in quality and environmental sustainability due to a lack of sufficient local regulation are not done (Montana & Charnov, 2000).
Instead, the company focuses on creating a sustainable manufacturing infrastructure regardless of the possible opportunities for greater profit via compromises in work safety and environmental sustainability.
What this shows is that the company adheres to proper employee care, community assistance and ensuring the continued preservation of the environment
Evaluation of both Companies
Based on what has been shown so far, it can be seen that GM has issues when it came to proper CSR implementation. While it may be true that the company does have programs in place that apparently show that they are a strong advocates for CSR, when looking at the company from an operational standpoint utilising the information that has been presented in this paper.
It is immediately obvious that CSR implementation under the triple bottom line is lacking when it comes to its manufacturing processes, product life cycle and employee wages. In comparison, BMW has exemplary product life cycles, environmentally sustainable manufacturing processes but has issues when it comes to the wages paid to employees.
Conclusion and Recommendations
In order to orient GM with the proper triple bottom line CSR initiatives, the following are recommended:
- Increase the employee pay scale to reach $25 to $30 for experienced workers within its U.S. factories as well as increase the pay scale and implement reasonable working hours for its workers in its international factories.
- Implement better working conditions in its factories located in other countries.
- Increase observance of environmental sustainability in its foreign factories.
In the case of BMW, the following is recommended:
- Apply a better pay scale to its employees.
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Appendices
Graphic 1
