In 2023, the auto industry went through huge changes in pursuit of lower carbon emission. Some automakers, like Ford, Mercedes, and General Motors, announced their plans to stop selling vehicles with internal combustion engines. The reaction from investment analysts was overwhelmingly positive, despite the fact that the production of electric vehicles (EVs) actually increases emissions in the supply chain.

In contrast, BMW decided to pursue a more flexible decarbonization strategy. Their plans include gasoline and diesel-fueled internal combustion engines, plug-in hybrid EVs, and battery EVs. The goal is to reduce lifecycle emissions across BMW’s supply chain, their production, and tailpipe emissions.

In this episode, Harvard Business School assistant professor Shirley Lu explains how BMW analyzed its sustainability goals alongside market-based risks to formulate their decarbonization strategy. She also discusses how the company’s leadership presented their strategy to skeptical stakeholders.

This is the second episode in a special series highlighting the four best strategy episodes of 2023, curated from across Harvard Business Review’s podcasts.

Key episode topics include: strategy, environmental sustainability, climate change, operations and supply chain management, financial performance measurement, transportation and distribution. 

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.