142 BMW Group Report 2024 To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor’s Report Remuneration Report Other Information Sustainability Statement Holistic approach for the transition to a circular economy The circular economy is one of the strategic focus areas for the BMW Group as an automobile manufacturer. Making greater use of secondary material is therefore a pillar of ↗ The BMW Group Strategy. The BMW Group is committed to reducing its use of pri- mary materials and fostering the circular economy in order to re- duce CO2e emissions as well as the environmental and social im- pacts associated with the extraction and processing of primary raw materials. At the same time, dependencies on critical pri- mary raw materials will be reduced. In addition, using secondary materials can provide economic advantages and hedge against geopolitical risks and regional restrictions by reducing our reli- ance on primary materials. BMW Group vehicles are already manufactured with recycled and reused materials. Against the backdrop of volatile raw ma- terials markets and increasing global competition for limited re- sources, the BMW Group is implementing further measures to in- crease the proportion of recycled materials that it uses and thereby promote the expansion of the circular economy. These efforts are supported by guidelines for product, material and sup- plier requirements. The circular economy necessitates holistic thinking – from product development to vehicle recycling. For the BMW Group, the responsible use of raw materials is an important part of our daily activities as a manufacturing com- pany. ↗ Responsible raw material management The material impacts, risks and opportunities associated with the use of resources arise primarily from their procurement markets, climate change miti- gation targets, regulations relating to product or process require- ments, and the opportunities related to a reduction in the de- mand for raw materials. The BMW Group considers the use of resources to be closely linked to the preservation of biodiversity, particularly when it comes to land use and pollution. ↗ Commitment to protecting Biodiversity Information on the supply chain, such as due diligence in the supplier network (including waste manage- ment), is available in ↗ Social and Environmental Responsibility in the Supplier Network. The BMW Group’s objective is to reduce its dependency on pri- mary raw materials. The automotive industry uses a wide range of raw materials, particularly steel, aluminium and thermoplas- tics. Electrified vehicles use raw materials like lithium, nickel and cobalt in their batteries. The BMW Group has introduced a raw materials management system, including an annual risk analysis for critical raw materials, for the responsible procurement of raw materials. One approach is to reduce the use of critical virgin raw materials. ↗ Responsible raw material management The BMW Group’s secondary raw materials usage strategy (Secondary First) is of vital significance in this context. The waste disposal and recycling industry already recycles end- of-life vehicles, but only together with other products. A large pro- portion of the recycled materials obtained from these products are therefore no longer suitable for use in automotive engineer- ing. This results in downcycling in the material cycle. To reduce the automotive industry's dependency on primary raw materials, it is therefore vitally important to improve the quality and availa- bility of recycled materials across the board. The complex chal- lenges posed by the limited availability of high-quality secondary materials and the need to make entire economies and busi- nesses less dependent on the use of primary raw materials can only be met by policy makers working together with industry, raw material producers, recyclers and recycling companies. The BMW Group’s Strategy in the area of sustainability therefore has a particular focus on reducing its consumption of primary raw materials. This is mainly achieved by making increased use of secondary materials with lower CO2e emissions and the optimi- sation of resource efficiency. The four strategic core elements covered below have been approved by the Board of Manage- ment. The core elements relate to the material impacts, risks and op- portunities related to resource use and the circular economy. ↗ List of material Impacts, Risks and Opportunities. The strategy has a di- rect impact on suppliers and recycling companies in the up- stream and downstream supply chain. The underlying material- ity assessment is updated annually. The progress that has been made with implementing the strategy is reviewed on a regular basis. Information about how the concerns of different stake- holder groups are taken into account can be found in ↗ Stakeholder Engagement. Milestones along the road to the circular economy The BMW Group has set clear decarbonisation targets for itself ↗ Climate change mitigation and adaptation as a key part of the corporate strategy. To achieve this, the BMW Group is reducing CO2e emis- sions throughout the whole life cycle of its products. Increasing the use of secondary materials and implementing new processes in the production of primary raw materials, such as CO2e-reduced steel production, are helping to achieve the BMW Group’s CO2e emission reduction targets in the supply chain as planned. Already today, BMW Group vehicles are manufactured using re- cycled and reused materials to varying degrees. In line with the Secondary First approach, we aim to increase the use of second- ary materials going forward, starting with the NEUE KLASSE. This approach will take both technical feasibility and market availability into account. The BMW Group is currently working on a data model and Group-wide metrics and targets that will make the use of resources even more transparent and help to close material cycles. The Group’s aim is to transparently map and manage the complex relationships between market availability, internal and legal requirements as well as the material flows of secondary materials. A corresponding target is currently being defined at the Group level. Expected new legislation, such as the proposed regulation on the follow-up legislation to the current EU End-of-Life Vehicles Directive, are taken into account alongside international standards.