108 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 PRINCIPLES OF GOVERNANCE BY THE BOARD OF MANAGEMENT AND SUPERVISORY BOARD BMW AG is a stock corporation (Aktiengesellschaft) within the meaning of the German Stock Corporation Act. It has an execu- tive Board of Management and a Supervisory Board that moni- tors how the Company is managed by the Board of Manage- ment. Board of Management – Duties, diversity, expertise The Board of Management has overall responsibility for the management of BMW AG. It defines the strategy and resource framework and takes actions to implement the strategy. The Board of Management decides on product and customer-related issues of particular importance and consequence to the BMW Group, as well as on automobile product strategy. The Board of Management incorporates various sustainability matters into the decisions taken at its meetings and addresses the material im- pacts, risks and opportunities associated with the Company’s course of business. It also monitors the key sustainability-related indicators and targets as well as department-specific sustaina- bility activities and developments. Details are available in the ↗ Rules of Procedure of the Board of Management of BMW AG. As at 31 December 2024, 14% of the seven members of the Board of Management were female and 86% were male based on the composition principles and taking into account the ESRS reporting obligations. In addition to the overall responsibility of the Board of Manage- ment, each member of the Board of Management is inde- pendently responsible for the material impacts, risks and oppor- tunities in their respective department. To ensure that the Board of Management has the necessary level of competence and diversity, the Supervisory Board has adopted a competency and diversity policy for the composition of the Board of Management, which is also aligned with the recom- mendations contained in the German Corporate Governance Code (DCGK). In view of the fact that the Board of Management is a representative body of the Company, the Supervisory Board is careful to consider diversity-related issues when assessing which candidates are most suitable for a seat on the Board of Management. “Diversity” in the context of the decision-making process is understood by the Supervisory Board to encompass various complementary individual profiles and work and life ex- periences at both national and international level, as well as the appropriate representation of genders. In reaching its decisions, the Supervisory Board also considers the following factors: — Board of Management members need to have a long- standing track record of management experience, ideally in a variety of professional fields. An adequate mix of different professional and management skills is sought here. — At least two members should have international manage- ment experience. — At least two members of the Board of Management should have a technical background. — Collectively, the Board of Management should have exten- sive experience in the fields of individual mobility, develop- ment, production, sales, finances and personnel manage- ment. The Board of Management must comprise at least one man and one woman. The Board of Management deals with the impacts, risks and opportunities arising from business development on a continuous basis. In addition to addressing reports related to the latest business developments, the Board of Management regu- larly discusses the current market environment, financial and non-financial risks, the Group risk strategy and the effectiveness of the risk management system and the internal control system. The Board of Management also deals with the development of the workforce, diversity, and ongoing qualification and retraining measures several times a year as part of the transformation pro- cess ↗ Just Transition - Developing expertise for the future. The Board of Management is kept up to date about ongoing compliance activ- ities and potential risks at regular intervals via the Chief Compli- ance Officer’s compliance reports. In addition to discussing the audit results regarding the appropriateness and effectiveness of the Compliance Management System (CMS), the Board of Man- agement also discusses the structural and organisational devel- opment of the Group Compliance Management System (CMS) and the implementation status of corporate due diligence re- quirements relating to respect for human rights and associated environmental standards along the value chain. In addition, the Board of Management holds regular discussions on the pro- cesses and actions involved in implementing new regulatory re- quirements and ensuring compliance with external reporting re- quirements in the area of sustainability, including the extent to which CSRD/ESRS requirements have been implemented. Sustainability considerations are therefore integrated into the BMW Group’s corporate structures and processes in a compre- hensive and holistic manner which involves decision makers at various levels. A decentralised approach is taken to integrate the Company’s strategic objectives. Defined specialist functions in each of the Board departments are responsible for anchoring the targets within the respective organisational structure, measuring their achievement, and ensuring compliance with the strategy. The strategy is translated into an annually revised, long-term corporate plan using a control loop-based planning and man- agement system. A target system monitors their progress, and reports on the targets and performance indicators agreed for the reporting year are submitted to the Board of Management and Supervisory Board on a regular basis. The Board of Manage- ment defines the BMW Group’s strategic objectives related to the sustainability topics. The Sustainability and Mobility function en- sures the high level management of sustainability topics as part of the Group strategy. It identifies areas where the Company po- tentially needs to take action, defines the targets to be achieved, and prepares corresponding resolutions to the Board of Man- agement. The function is also responsible for ensuring that sus- tainability issues and all relevant material impacts, risks and op- portunities are considered in all material decisions made by the Company, including at the level of the Board of Management. This includes significant transactions. The function submits pro- gress reports on the BMW Group’s overarching sustainability tar- gets to the Board of Management at least three times a year. The targets and measures with regard to reducing CO2e emissions in all scopes, the circular economy, environmental and social stand- ards and social sustainability are presented, and the strategic and operational implementation status is discussed. When tar- gets are not met, suitable actions are discussed and approved if