Report: Sustainability in Audi AG

This report covers Audi AG’s current operational and strategic procedures for environmental sustainability. It looks at sustainability as part of the company’s Corporate Social Responsibility and views critical analysis of the automobile industry to enable making balanced conclusions. Introduction A report by the United Nations entitled Our Common Future (1987) defined sustainable development as ‘development, which meets the needs of the present without compromising the ability of future generations to meet their own needs. In addition to this, so called ‘intergenerational equity’ has remained a theme in defining environmental sustainability. Essentially it means seeking the minimization of any adverse (long-term) impacts on future generations. The aim of this report is to investigate the actualizations of the aforesaid principles in the corporate actions of Audi AG. Audi AG is a motor vehicle manufacturer, which comprises of the brands Audi, Ducati and Lamborghini. It is a multinational company (MNE) that employs some 46,000 people and has an annual output of over 1,3 million units.

Audi AG is part of Volkswagen Group, headquartered from Ingolstadt, Germany. 1. Audi AG Sustainability Procedures 1. 1 Technologies Audi admits that a car manufacturer can never claim to have a positive impact on the environment. They are, however, investing billions of pounds in responsible technologies. These include lightweight space frames, diesel engines and Start-Stop technologies. The purpose of these is to reduce fuel consumption and hence cut CO2 emissions. 1. 2 Waste & water management Audi’s slogan ‘Advancement Through Technology’ essentially outlines the company’s principle of constant innovation.

The brand values also state that corporate activities are “shaped by the desire to preserve resources and take a responsible approach to the environment”. They have undertaken numerous actions to introduce these principles. For instance, assembly line waste is separated & sorted on-site and packaging is optimized in the planning stage, which reduce transport needs substantially. Audi uses various sources of energy, such as a local waste processing plant and the Combined Heat, Cooling and Power production facility (CHCP) in the Ingolstadt factory.

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Together they save the company 37,000 tons of CO2 a year. For car production the company collects rainwater. They also feed 96. 3 per cent of total water into a closed-loop system, so only a very small amount of water is lost. Moreover, Audi encourages recycling vehicle parts and batteries. As a result their production output has substantially increased in the last two decades but overall energy use has remained virtually the same. Figure 1. 3. Figure 1. 3 illustrates the decrease in waste water volume per vehicle in Audi’d main production plants in Germany between the years 1990 and 1999.

The total decrease is 4,5m3/vehicle in Neckarsulm and correspondingly 2,3m3/vehicle in Ingolstadt. 2. Sustainability as a part of Audi’s CSR 2. 1 Audi Environmental Foundation Audi’s commitment to the environment and society is an integral part of their Corporate Social Responsibility (CSR). The most compelling evidence is the Audi Environmental Foundation Ltd. , which takes voluntary action in environmental, social and economic issues by conducting and funding research projects. 2. 2 Environmental Pact for Bavaria & EMAS

Audi was a founder member of the Environmental Pact for Bavaria, which now includes around 1,350 companies. The Pact was formed in 1995 as a voluntary agreement between the Bavarian industry and government to do more for the environment. The Pact includes Audi’s European plants participating in the EC Eco-Management and Audit Scheme (EMAS). The purpose of this is to introduce an environmental management system, which helps improve operational environmental protection on site. 2. 4 Recognition

Based on the above-mentioned policies it can be stated that as a car manufacturer Audi is advanced in promoting sustainability. Audi has also received recognition for this, such as the 2012 Logistics Sustainability Prize. Audi works diligently to improve its image as a “green” company. Audi of America President Johan de Nysschen’s spoke at the company’s 100th Anniversary celebration in 2009 (Audi MediaServices, 2009): “We and our consumers (also) want to drive at something better – a more sustainable future.  The company also published a commercial for the 2010 Super Bowl entitled “Green Police” where they track down Americans who stick to carbon-unfriendly practices. This was seen as a change of marketing strategy and it received mixed reviews. 3. Criticism 3. 1 General criticism towards the automobile industry The arrival of thousands of motor vehicles in large cities has given the pollution problem completely new dimensions. Research shows that car exhaust contributes half of the (atmospheric) pollutants in large cities and contributes to the “Greenhouse effect” raising the Earth’s temperature.

Among other manufacturers, Audi has hence carried out developments of alternative power sources such as electric and internal combustion engines, which gives them a competitive edge. 3. 2 “Greenwashing” Greenwashing is a form of propaganda in Public Relations (PR) where green marketing is misleadingly used to create an illusion of an organization's aims and policies being environmentally friendly. After publishing their 2010 Super Bowl commercial “Green Police” Audi was accused of greenwashing. Creating what is perceived as a genuinely environmentally friendly strategy in all their functional areas is one of their largest current challenges.

A quote from Jamey Boiter's Brand Innovatr blog (Fast Company, 2010): “…Audi are evolving - - They must commit to this evolution in everything about their brands, from product development to communications to industry involvement, to prove they are not greenwashing. ” One of Audi’s strengths is that they have been involved in responsible projects for years, dating back to as long as 1960. That being said, their most significant competitors such as BMW & Mercedes Benz are increasingly starting to embrace sustainable strategies, which forms a possible threat to Audi.

Conclusions The automotive industry is still perceived as one of the largest agents of adverse effects to the environment. As a result of consumers becoming more sophisticated and educated on environmental sustainability, the competition in the industry gets more intense. It can be recommended for Audi to shift their marketing strategy even more towards sustainability and practice product differentiation to this direction whenever possible. Audi should try shaking off the “greenwashing” claims and coming across as a genuinely responsible corporation.

Taking advantage of the decades’ worth of experience and data that they have gathered could do this and possibly gain them a head start from their competitors.

References

1. Abuelsamid, S. 2009. Autobloggreen: Audi to add solar power to Ingolstadt factory,(online) Available at: http://green.autoblog.com/2009/12/16/audi-to-add-solar-power-to-ingolstadt-headquarters-factory/ (Accessed 21. 11. 2012)
2. Audi AG, 2012. Audi Environmental Foundation Ltd. , (online) Available at: http://www. audi-umweltstiftung. de/auws/brand/de. html (Accessed 22. 11. 2012)

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