Corporate Social Responsibility and Governance Assignment

Introduction

The Corporate Social Responsibility  Governance assignment assess the CSR report of world’s leading automobile company Mercedes Benz, Volkswagen and Audi to compare and contrast the various activities undertook by these companies on social and environmental front.

Corporate Social Responsibility and Governance

Volkswagen CSR Report

Volkswagen being the largest car manufacturing company in Europe has taken up the responsibility of maintaining corporate social and sustainability very seriously in their approach. According to the CSR  report of 2012, the company aims to reduce the carbon Di-oxide emission to as minimum as 120 grams per kilometer till the year 2015 and to 95 gram per kilometer till 2020 by increasing the energy and resource efficiency. The company has been doing research to manufacture fuel efficient cars. The XL1 model launched by them which can run around 100 kilometers per liter shows the effort being put by the world’s leading automobile company in manufacturing fuel efficient cars. The amount spent by the company for this purpose is around 50 billion Euros which will be used to produce environment friendly and efficient vehicles.

Some of the goals set up by the company till 2018 so as to be a sustainable automobile company is:

  • To become a leading company in the world in terms of quality and customer satisfaction.
  • Increase their sales to as much as 10 million units per year.
  • To become the top organization compared to other competitors in the field.
  • Reduce carbon Di-oxide emission along with reduction in the consumption of energy and waste compared to yester years.

The company in their aim to reduce the emission of carbon Di-oxide to as low as 95 gram per km by 2020 has already started its work by discussing various social and environmental topics with its stakeholders i.e. analysts, investors, customers, employees, government agencies, etc. and work on their concerns and engage them to increase the long term sustainability of the company (Hahn, 2012).

The management team which works for CSR and sustainability inside the company starts with the Sustainability Board which comprises of the most senior members from the central business unit. The Board is provided the information related to social and environmental related agendas by another body known as the Group CSR and Sustainability Steering Group. It is the job of the Steering Group to set up the goals related to sustainability, define various indicators related to CSR activities and approving the various reports related to CSR and sustainability. At the lowest level CSR teams will operate whose task will be to listen to the concerns of the stakeholders and evaluate their opinions and recommendations and to prepare various reports for CSR activities and sustainability.

According to the 2012 report, the total number of employees working in Volkswagen including all its subsidiaries and joint ventures are around 550,000. The company takes up the responsibility of providing better work conditions to each and every employee of their company by providing them with proper trainings to improve their skill sets, health and medical facilities and ensuring proper management of all resources by the Human Resource management team. The company offers vocational training to its employees to strengthen their skill. They started the German dual model of vocational training under which over sixteen thousand people were trained in December 2012 (Sharma, 2013). Volkswagen also started two educational programs which are the Student Talent Bank and the Academic Talent Pool which produces thousands of graduates each year.

Volkswagen made Power train and Fuel Strategy, which are essential to maintain stable climatic conditions. According to their strategy they have incorporated the following factors:

  • Impose penalties for failing to achieve targets related to emission of harmful gases.
  • Fulfill the demands of customer that arise due to the awareness regarding climatic issues among common masses.
  • The risks involved because of natural disasters like floods or droughts as the company operates globally.

In view of the above three factors, Volkswagen undertook the following measures:

  • To design a product which is fuel efficient and technology efficient which emits minimum Carbon Di-oxide but without compromising on customer taste and requirements. Till 2012, Volkswagen has already launched around 245 models which emits less than 120 gram per km of carbon Di-oxide.
  • High light extra efficient and low emission vehicles through product communication.
  • Taking customer feedback and opinions on how to drive efficiently and in an Eco-friendly manner.

Audi CSR Report

The business strategy related to CSR activities made by Audi revolves around five main aspects. These are: Operations, Employees, Products, Society and Environment. The vision, objective and goals of the company have changed accordingly to incorporate these five fundamental aspects in their working. Audi was received status of Corporate Responsibility Prime Status in the year 2012 for their contribution in the field of social and environment. A separate department was formed inside the company in the year 2011 which was known as Corporate Responsibility also called CR department. The department looks into the various CR strategies and their orientation and directly report to the Managing Board of the company. The employees who are part of this department are in constant touch with other companies to know more about other CSR activities and how improvement can be done on them.

Social and Environmental Contribution of Audi:

One of the prime measures taken by the company is the introduction of a multi stage process which is used to communicate with various stakeholders of the company, understand their concerns and use their opinions and recommendations to set up goals for future sustainability work that needs to be done by the company. According to the company, their main stakeholders are: Employee of the company, customers, investors, business partners, charitable organizations, government communities and agencies and media. The stakeholders listed were identified by the company who are directly or indirectly impacted by the performance of the company.

The CR department of Audi defined some working principles in the year 2012 to gain sustainability. The three principles which form the basis for CSR activities are:

  • Systematically including the stakeholders to understand their concern and take their opinion.
  • Identifying various CSR related topics through discussion with stakeholders.
  • Reacting and executing the various plans which are formed based on discussion with the stakeholders.

One of the main concerns of society from any carmaker is the safety aspect. This concern though may looks small, had compelled various carmaker companies to change their business strategy and models. A car company like Audi who is famous for making super cars has always tried to design cars which are fuel efficient. But, in view of the recent CSR activities undertaken by the company, the social aspect compels the company to incorporate safety measures, which resulted in adding more weight to the cars body and hence compromising on fuel efficiency. This has hampers Audi a lot as the company used to use ‘Audi Space Frame’ technology which uses lightweight material for building cars since 1994.

Audi follows International standard series ISO 14040 ff for its life cycle assessment (LCA) (Schmidt, 2004). According to the latest assessment which was done on Audi A3 1.4 TFSI, it was found that by implementing effective technologies, reducing the weight of body parts, more optimized process of production and better management have resulted in a decrease of around nine percent of greenhouse gases that is emitted compared to some previous models launched by Audi Some of the environmental concerns, which the company keeps in mind while manufacturing cars are the depletion of ozone layer, formation of smog in summers and eutrophication of various rivers, seas and oceans. Thus, it can be seen that Audi not only looks at some of the common discussions like greenhouse effects but also keeps other environmental issues in mind while designing and manufacturing the cars.

The various efforts made by the company to avoid environmental hazards are:

  • Reducing the weight of body part: It has been observed that light weighted vehicles can effectively contribute in increasing fuel efficiency. The company involves great deal of engineering in mixing and using various alloys of various strengths and weight in right ratio and at right places to come up with the best possible result in order to provide both strength for accidental safety as well as fuel efficient cars (Nunes, 2010).
  • Other fuel sources: Audi since 1996 is running a small business of vehicles which run on batteries made up of nickel-cadmium. Keeping in mind the future aspect i.e. driving concerns of greenhouse effect, Audi is already working to design more hybrid models which are more environment-friendly in nature.
  • Renewable energy sources: Audi has already started to set up a e-gas plant in Germany which is the first of its kind which will produce synthetic methane, which can be transferred from one place to another just like CNG and can be used as substitute for natural gas (Bosche).

Mercedes Benz CSR Report

Mercedes Benz follows the slogan “Nurturing the World of Tomorrow” under which it follows five pillars for CSR activities which have been integrated in their values of day to day working. The five pillars are:

  • Protection of Environment
  • Providing education
  • Encouraging music
  • Promoting art and sports
  • Charity and relief funds

The China based subsidiary of Mercedes Benz started a charity known as the Mercedes Benz Star Fund by collaborating with China Youth Development Foundation. The start-up fund raised by the organization was 30 million Renminbi (Chinese currency), which is the largest start-up fund in the world. The organization works in establishing the five pillars of CSR effectively in China. This initiative has helped Mercedes to build good and long term relationship with Chinese and thus increase their sustainability in terms of social and environmental aspects.

Mercedes has been working in eradicating various deadly diseases like HIV, Tuberculosis and Malaria for more than a decade now. Mercedes was also awarded the Workplace Award in the year 2002 and the Expanded Community Initiatives Award in the year 2008 because of their contribution in fighting these diseases.

Another big contribution done in the field of Social and Environment Front by Mercedes Benz is the Mercedes Benz Driving Academy which was started in 2009 in the United States and now operates in Germany, United Kingdom and Netherlands. The academy focuses on training teenagers how to drive safely and avoid accidents as it was observed that the teenagers are more prone to accidental hazards. The program started with around 4,500 students in a three stage process namely the Provisional Learner permit, the Provisional License and the Adult License. Thus, the students were expected to pass all three processes with proper grades in order to get a proper driving license.

Mercedes Benz in South Africa also known as MBSA has done immense contribution in CSR activities. The three main aspects of MBSA are:

  • Fight against HIV: Mercedes was the one of the first company which started new programs about on HIV at workplace which not only teaches the employees about the disease, but also teaches the employees not to discriminate the people suffering from the disease. MBSA has been successful in minimizing the HIV patients in South Africa by their continuous efforts for which they were awarded International Stevie Business Award in 2010. The program further extends its support to vulnerable communities and also provides funds to many social organizations operating in South Africa (Panter).
  • Education: The Company aims to promote education in South Africa which is the building block towards economic development in the country. The company has started various schools in many rural and urban parts of the country. The company also runs various institutes to develop the skills of many people in the field of science and technology.
  • Voluntary participation of employees: Mercedes is known not only for its cars, but also as a company who cares about people. The company looks for voluntary participation from its employees to guide and provide coaching to various students in the various schools and institutes that are running.

In order to preserve the various worlds’ heritage sites in China, Mercedes Benz in China launched a Green Legacy Program with cooperation from UNESCO. Gradually, the Program became more famous to the masses which were made aware of the various environmental issues and how to protect it (Seaman, 2013). Thus, it can be seen that Mercedes have been one of the leading country to provide both social as well as environmental help while operating its day to day working.

Similarities in the CSR activities  of  the three companies

Being the car manufacturing companies, all the three companies aims to produce car which are fuel efficient as well as Eco-friendly in terms of less emission of harmful gases. All the three companies are looking for other alternatives of energy sources which are carbon-neutral. Volkswagen and Audi are looking for other alternatives like clean diesel source. In their attempts, they sold clean diesel to 75 percent of the U.S population in the year 2013, which provided fuel efficiency as well as emits lesser carbon containing harmful gases.

All the three companies aim to take proper safety measures which can arise due to road accidents. It is the responsibility of the car manufacturing company to make special arrangements so that accidental safety can be achieved. Though it has been a tough ask, all the three leading companies have included safety as one of the main objective of their business strategies while they have to compromise on many other things like fuel efficiency and cost related to extra material.

Since, all the three companies are globally recognized and established, all of them share a diverse work culture which has been properly managed by the Human Resource management team inside the organization. All the three companies provide better work culture to its employees and also make efforts to develop the potential of its employees by providing various training development programs inside the organization.

Another common activity performed by all the three companies in order to understand the amount of carbon emission is the life cycle assessment method. The method looks into the complete life from manufacturing till dumping or recycling the vehicle and calculates the amount of carbon content being emitted by the vehicle. This approach helps the company to identify places where it can reduce these emissions and hence develop environmental friendly vehicles.

Though being big rivals to each other, all the three companies have shared their knowledge and expertise and consulted each other on many occasions in order to solve the various social and environmental concerns that were raised by common people due to daily operations of these companies.

Differences in the CSR activities of the three companies

The difference between the three companies has been in the difference in their approach related to various CSR activities. Though, the objectives of all the three companies have been same, yet their functionality differ greatly. For example: though all the three companies aim to provide accidental safety, Audi has been more focused to design cars in such a way that they can avoid accidental hazards by providing strength to the cars. Statistics suggested that most of the accidents involved teenagers which were a result of rash and insensible driving. Therefore, Mercedes Benz started with various driving lesson to teenagers so as to make them understand the importance of sensible and good driving thus improving the driving skills at a very young age.

Another difference in the CSR activities of Mercedes is their contribution to fight against diseases like HIV and Malaria. Though both Audi and Volkswagen run several educational programs which are essential to educate and train people especially in developed nations, yet Mercedes went a step ahead where it started various programs to educate and make them aware about such diseases.

A key difference which can be seen in the CSR activities of all the three companies is that all the three companies concentrate more in designing fuel efficient and low carbon emission cars related to environmental issues and challenges in front of them. The various electric vehicles and hybrid vehicles are examples of eco-friendly vehicles, but, Audi has been keen in identifying other energy and renewable energy sources which can be used as substitute for natural gas, thereby minimizing the emission of harmful greenhouse gases into the atmosphere.

Reference to International Standards and Guidelines

Global Reporting Initiatives provide guidelines which can be followed by the organizations while maintaining their social, environment and economic activities. It has been seen that most of the organizations including the three companies discussed above follow these guidelines and make sure they are implemented effectively.

ISO 4001 is an environment management system which provide certain steps and process which can be adopted by the organization in order to minimize environmental hazards caused because of their daily operations. All Mercedes Benz, Audi and Volkswagen follow ISO 4001 while performing LCA for their products.

Conclusion

Thus, it can be concluded that the world’s leading companies have understood the importance of CSR activities and sustainability and have incorporated them in their daily operations. These companies are looking into the social and environmental concerns that are arise because of the manufacturing of vehicles and trying their best to find suitable solution to minimize these concerns. The companies might follow different approaches but the sole objective is same for all of them.

References

D’Amato, A., Henderson, S., & Florence, S., 2009. Corporate social responsibility and sustainable business. A guide to leadership tasks and functions, Greensboro: Centre for Creative Leadership.

Bosche, E., Ponder, A. N., & Thomas, H. Power-to-Gas: The Legal Framework for a Long-Term Energy Storage Technology in Germany.

Brown, A., & Evans, K. 1994. Changing the training culture: lessons from AngloGerman comparisons of vocational education and trainingBritish Journal of Education and Work7(2), 5-15.

Hahn, T., Figge, F., & Liesen, A. 2012. Assessing TradeOffs in Investments for the Environment–The Case of a VOCReduction Investment at AUTO Group.Corporate Social Responsibility and Environmental Management, 19(2), 114-128.

Nunes, B., & Bennett, D., 2010. Green operations initiatives in the automotive industry: an environmental reports analysis and benchmarking study.Benchmarking: An International Journal17(3), 396-420.

Panter, C. Occupational Safety and Health and Corporate Social Responsibility in Mercedes Benz South Africa: A Case Study. Occupational Safety & Health and Corporate Social Responsibility In Africa, 143.

Rogmans, B. 2009. Corporate Social Responsibility: Fuel Efficiency and the Auto Industry.