With increased prosperity and the associated growth, corporations are challenged to accept broader responsibilities, including those relating to the environment.

Fortunately, it is that very prosperity that allows us to be environmentally conscientious. Although regulatory mandates in the past have driven many of the industry's responses to those challenges, customers increasingly expect companies to act more and more environmentally responsible as a normal way of doing business.

BMW, with its premium products and discerning customer base, is uniquely positioned to accept its responsibility for manufacturing safe, technically sophisticated, high-quality products produced economically while conserving resources.

In building environmentally acceptable products, we believe that safety is a primary concern to our customers. It forms one of the basic parameters for the rational coexistence between people and their automobiles.

BMW's "Fully Integrated Road Safety Technology" (FIRST) addresses this concern by incorporating the most advanced technologies in active safety, passive safety and low-speed collision protection. These technologies are derived from a realistic on-road environment and accident conditions that go far beyond the regulatory mandates.

When fuel is inexpensive, as it is now, people tend to want larger cars with more features and performance. BMW is the only carmaker that has improved consistently its corporate average fuel economy (CAFE) since 1988 by employing advanced technologies.

Because we serve only the premium end of the market, we cannot meet the CAFE mandate set for the total U.S. fleet. But considering the most important vehicle attributes affecting fuel economy such as weight, performance and vehicle acceleration, BMW has demonstrated consistent and significant efficiency gains. We believe that improving the product's efficiency while responding to market demand is an important contribution toward the carbon-dioxide reduction initiative set by the President.

The need to reduce vehicle-exhaust emissions is a long-established policy, and the automobile industry has made significant contributions toward cleaning up the air. At BMW, we've introduced the most advanced emission control technology to not only meet federal requirements, but also the more stringent California standards; all of our U.S. models have met California's mandates since 1980.

For motorcycles, BMW was the first manufacturer to develop and offer for U.S. sale a three-way, closed-loop catalyst motorcycle. These bikes are fun to ride while having the lowest possible impact on the environment, not only in respect to their tailpipes but also their noise emissions, exceeding the world's most stringent requirements, which are set in Switzerland.

The 1987 Montreal Protocol included provisions to phase out chloroflurocarbons (CFCs) by the year 2000 to counter ozone depletion in the atmosphere. At BMW, we completely eliminated CFCs from air conditioners and all manufacturing processes in 1992, including requiring dealers to use CFC-12 (Freon) recycling equipment during air-conditioning servicing.

Another environmental issue that has received major public attention, particularly in Europe, is automotive recycling. Since 1990, BMW has operated its own automotive dismantling plant and now has fully integrated the recycling concept into the design and development process of our vehicles.

By institutionalizing the recycling aspect within our design and development process, we have taken important steps toward making the best use of our material resources. This ensures that all parties involved know what is expected to achieve our long-term recycling goals. It also provides our suppliers with a clear understanding of our objectives relating to our material needs, costs and quality.

To advance state-of-the-art environmentally-compatible drivetrains such as electric vehicles, alternative-fuel vehicles (AFVs) hybrids or hydrogen, is not only part of BMW's commitment to the environment, but from our standpoint is necessary to remain successful. It becomes increasingly clear, however, that as long as these alternative technologies and their associated required infrastructure compete with $20-a-barrel oil, early introduction and widespread application won't be economically viable.

Although these are important developments for the future, the avoidance of environmental burdens today has high priority. In manufacturing our products, BMW has pioneered many production processes and methods to improve energy-use efficiency, paint-coating-transfer efficiency, a reduction in volitile organic compounds (VOCs), waste-use efficiency, waste reduction and hazardous-materials control.

By facing up to our worldwide environmental responsibilities, BMW embraces the concept of environmental leadership.