118 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 Climate resilience of the business model The BMW Group actively works on improving the resilience of its business model with the aim of meeting the challenges posed by climate change. Through comprehensive consideration in Strat- egy and Planning, Development (products and production tech- nologies), Purchasing (raw materials and global procurement markets), Production (locations and cooperations), Sales, Fi- nance (profitability and liquidity) and Personnel (training), the BMW Group is able to identify and assess the short-, medium- and long-term adjustments to its business model that are re- quired in response to climate change while taking the necessary actions in all areas of its operations. To this end, the Company regularly reviews and updates its underlying climate scenarios and assumptions in order to make the effects its own business model visible. The BMW Group’s approach to assessing resili- ence extends to the entire value chain (own locations, supplier locations and sales locations) and is based on internal risk re- porting. Corporate planning (twelve-year planning period) is up- dated annually and takes the risks and opportunities arising from climate change into account. The scenario analyses are per- formed to assess physical and transitory climate risks. Further details related to the climate risk analysis process are available in the ↗ Materiality Assessment. The BMW Group takes steps to ensure the long-term viability of its business model by implementing operational measures, con- tinuously updating its sustainability strategy, and following the overarching corporate strategy. Uncertainties in underlying as- sumptions (primarily regulatory requirements, customer expec- tations, technological developments, macroeconomic trends) are recorded on an ongoing basis and any adjustments are made promptly. The results of scenario analyses are incorporated into operational measures and the further development of the sus- tainability strategy as an integral part of the corporate strategy. Sustainability targets are integrated into corporate planning on the basis of current premises and scenarios (including Interna- tional Energy Agency scenarios for energy generation, CO2e emissions from upstream value creation). Starting with sales and volume planning, all subsequent processes are interlinked in a coordinated procedure. Simulating the possible effects of this planning makes it possible for the BMW Group to take the nec- essary actions at an early stage. Assumptions about technolo- gies, customer behaviour and demand trends are taken into ac- count as planning premises. In particular, there are remaining uncertainties in the area of customer behavior and demand. These areas are reviewed on a regular basis in order to reduce this level of uncertainty. The same applies to planned actions re- lated to CO2e reduction, such as further efficiency improvements or the progressive electrification of the product portfolio. These are also included as planning premises. Global market sales forecasts and the planned product and drive portfolio are taken into account as key factors. This means that the resilience anal- ysis assesses the entire planning period based on the latest as- sumptions and forecasts as part of the annual planning process. Resulting actions are identified and taken into account in the fi- nancial planning process. Based on these assumptions, the BMW Group's business model is resilient to the impacts and ad- justments resulting from climate change and climate change ad- aptation. Climate change mitigation and adaptation as key parts of the corporate strategy The BMW Group regards its balance of economic, ecological and social interests as the basis for its economic success. The Com- pany has therefore anchored the material impacts, risks and op- portunities related to climate change mitigation and adaptation in its corporate strategy ↗ Cornerstones of the Strategy. The strategic fields of action of electrification, digitalisation and sustainability/ circular economy are geared towards achieving the sustainability targets. As a global Company, the BMW Group is also in contin- uous dialogue with a large number of external stakeholders in Germany and abroad regarding aspects of climate change. This includes affected communities and indigenous peoples. Stake- holder feedback is taken into account and contributes to the con- tinuous development of the corporate strategy ↗ Stakeholder Engagement, ↗ Social and Environmental Responsibility in the Supply Network. The BMW Group’s Strategy, including topic-specific strategies such as the sustainability strategy, is confirmed by the Board of Management. The CO2e strategy draws on the Greenhouse Gas Protocol, science-based targets and implementation pathways, as well as all relevant regulatory changes. Progress towards achieving these targets is reviewed on a regular basis. All neces- sary actions are discussed in the relevant committees and by the Board of Management. These bodies also reach decisions on the relevance and effectiveness of the actions. Specific decisions, such as overarching targets for reducing CO2e emissions and cir- cular economy initiatives, are addressed in topic-specific meet- ings of the Board of Management. Strategic aspects are imple- mented in the respective departments such as Purchase, Devel- opment, Production, HR and Sales on the basis of defined target processes. In line with established target-setting processes and target achievement monitoring systems, targets are broken down within the organisation to the individual implementation levels. The targets are further detailed as needed with specific requirements (for example within vehicle projects and down to the component level). Taking a coordinated approach and integrating all external and internal requirements enables the BMW Group to develop, im- plement and continuously update detailed guidelines and in- structions based on the strategies. This approach integrates cli- mate change mitigation and adaptation as well as energy use and efficiency. This extends from development guidelines (such as Design for Circularity) through to process specifications for procurement and CO2e reduction requirements for the supplier network*. Internal premises are established on the basis of cor- responding requirements with the aim of implementing the stra- tegic targets. * The BMW Group includes measures that reduce carbon emissions, such as the use of electricity from renewable sources, the use of secondary raw materials, new manufacturing processes for raw materials, and product and material innovations such as biomaterials. Accordingly, compen- sation measures are not included.