"The business of business is business." This saying by an American businessman has become legendary. The Nobel Prize-winning economist Milton Friedman was even more explicit. He believed that the social responsibility of companies was solely to generate profits. If this were true, we would be able to end this press conference quickly and there would be no need for us to publish our own report on "corporate responsibility." But why do we nonetheless concern ourselves with matters of business ethics? Because ever since Bosch was founded, we have borne responsibility for more than just our business operations. This report, published for the first time, documents this continuity right up to the present day.

In the words of Robert Bosch, "I would rather lose money than trust." He strove continuously to find "a happy medium between the entrepreneur who needs to assert himself, and the socially-minded businessman." Nowadays, ecological interests have also been added to the equation. Our corporate responsibility now lies at the intersection of business, society, and the concerns of environmental protection and resource conservation. This gives added impetus to our business operations. We look far beyond our own immediate interests – and our business also benefits as a result.

How we see ourselves – values and a long-term mindset

At Bosch, ecology and economy are not mutually exclusive. I would like to give you some examples of this by showing you our products and our production methods. Our goals are long-term. This is indicated by some of our company's key performance indicators. In 2005, we spent more than three billion euros on research and development, in other words 7.4 percent of our sales of 41.5 billion euros. Indeed, in automotive technology this figure even exceeds 9 percent. Were it not for our high level of up-front investments, we would not have been able to achieve such a long list of pioneering technical innovations for the automobile – including sustained innovations such as the electronic stability program and high-pressure diesel injection.

However, we can only maintain this level consistently because we do not have to optimize our figures to satisfy the short-term perspective of quarterly reports. A total of 92% of the share capital of Robert Bosch GmbH is held by the charitable foundation Robert Bosch Stiftung. The entrepreneurial ownership functions are carried out by Robert Bosch Industrietreuhand KG. It is this special ownership structure that enables us to pursue a long-term corporate strategy.

What are the guiding principles of our strategy? The "House of Orientation" provides fundamental answers. It fosters a common understanding of the Bosch Group's guiding principles for our associates across the world. Our corporate values highlight the complex relationship that exists between economic and social responsibility. Future and result focus is key among these. However, openness and trust, fairness, and cultural diversity are equally important. This provides a sound platform for ensuring the strong and meaningful development of our company.

Our location policy – global presence and local sensitivity

The Bosch Group has been globally active for many years. In 2005, we generated 73 percent of our sales outside Germany and 34 percent outside Europe. At present, we are vigorously increasing our share of value added in the emerging countries. At the same time, we are safeguarding manufacturing locations in the industrialized countries wherever possible. In Europe, we are capitalizing on the momentum in the East more than ever without abandoning the strengths of our technology clusters in the West. Our aim is to have a good mix of locations in each part of the triad. This diversified policy is in our company's interest and in the interest of society too – a fact that applies equally to the industrialized countries and the emerging nations. This is a striking example of how economic and social responsibilities can go hand in hand.

We take a sensitive approach to the local characteristics of each country. We have gone further than simply committing to the Global Compact of the United Nations, because an even more important measure of socially responsible practice is concrete action at a local level – especially if it is voluntary. This is the objective of Primavera, an association of present and past Bosch associates who collected more than two million euros thus far and use these donations to fund projects at our Brazilian and Indian locations – ranging from kindergartens to community centers. The Bosch company is also committed to local projects that go beyond its business operations.

To give you just a few examples:
· In Brazil, we have set up our own program to help 20 young people from socially deprived families each year. As a result, almost all of them succeed in finding a career.
· One of our locations in India provided 25 Afghan tradesmen with power tools and training. They will be able to pass on this knowledge to compatriots in their war-torn country.
· In China, we have joined forces with the Technical College in Wuxi to develop a special training program. Two annual Bosch study courses will each provide training for 20 students, aimed first and foremost at prospective mechatronics engineers.

Our priority – developing the talent of the future

We are highly committed to "training" in Germany, too – in the knowledge that a high-cost country can only remain competitive if it remains innovative. To achieve this, we also have to implement our own measures to support talented people and awaken the interest of children and young people for engineering and business at an early age. It is with this in mind that we helped to set up the "Knowledge Factory." In the medium term, we want to enter into 50 educational partnerships with schools and kindergartens. The first six projects began at the start of 2006, including the "Schoolchildren's Academy," in which girls and boys with an interest in science can learn about production processes from the initial idea to the end product by building an electric motor. It would be ideal if we could recruit these young engineers right away. Joking aside, a project of this kind is more than just an educational exercise. It is in the long-term interest of a company like Bosch, which registers twelve patents every day and needs a continuous supply of fresh talent in the future, too.

Our human resources policy – more than 100 flexible working models

We are also highly committed to developing our own associates. This is an integral element of our human resources policy. Take the following examples:
· We provide vocational training for more than 6,000 young people worldwide. Last year, this was over 30 percent more than we required for our business.
· We sent more than 1,800 associates on international assignments in 2005 and close to 1,600 in 2004. This year it will be 2,200. We provide specific opportunities for our associates to gain international experience.
· We offer more than 100 different models for part-time and flextime work, thus helping associates harmonize the demands of career and family. In Germany alone, one in four Bosch associates work part-time.
These policies have all helped associates to identify strongly with the company. The results of our first global associate survey last year provided visible evidence of this. It revealed that 75 percent of our associates are proud to work for Bosch. This value is well above average. Yet we want to reinforce this identification with the company still further – whether by learning from critical feedback or by increasing the international coverage of our communications. We therefore now publish "Bosch-Zünder," the associate newspaper established by Robert Bosch himself in 1919, in eight languages.

Our innovation policy – more accident and environmental protection

No matter how we communicate with our associates, they identify with our products, not only the wide range of innovations in general, but above all those products that protect the environment and conserve resources. This has been a global concern for some time – both because the days of low-cost energy are gone forever and because stricter emissions standards are being introduced in the emerging nations too. Bosch introduced the "3S program" in the mid 1970's, shortly after the first oil crisis, to make cars safer, cleaner, and more economical. This program has influenced and formed the basis of our innovation policy to date – and it is significant that our pioneering achievements in accident and environmental protection have brought us considerable commercial success, above all our braking control and injection systems. We are continuing this story. Take Denoxtronic, for example, the urea-metering system that reduces nitrogen-oxide emissions in commercial vehicles by 85 percent. Our specific actions to increase the environmental compatibility of our products go beyond automotive technology. For example, we have reduced the water consumption of our washing machines and dishwashers on average by half since 1990. And there are a host of other examples. However, there is no need for me to go into further detail, as the next speaker will examine topics such as recycling, wind energy, and solar energy more closely. The crucial point is that we seek and find technological answers to ecological questions.

Our production policy – use fewer resources

We achieve this not only with our products, but also with our production methods. One hundred and forty-five Bosch locations are already certified to the ISO 14 001 environmental management standard. We spent 125 million euros worldwide on environmental protection measures in 2005 alone. This led to numerous improvements. Take the following key points from our environmental report of last year, for instance:
· We reduced our total energy consumption by 16.6 percent – primarily as the result of a wide range of energy-saving projects.
· The carbon dioxide emissions as a result of our heating requirements have fallen by 39 percent. Bosch is involved in European emissions trading at four of its locations.
· We have reduced our total water use by 10.3 percent. At the same time, the quantity of wastewater produced has decreased by almost 11 percent. This has mainly been achieved through the installation of recycling plants with integrated water treatment.
· The volume of waste produced has fallen by almost 11 percent. This reflects the sustained efforts of our plants to find ways of reducing waste. The proportion of waste recycled increased from 64 percent to 77 percent.

Despite the fact that the sale of the Castings and Special Steels businesses of Buderus had a positive effect on these figures, there is evidence of clear progress in protecting the environment and saving resources. As always, this progress is made up of many small steps. Step by step, we have come closer to our goal of eliminating the use of chlorinated hydrocarbons at Bosch. We achieved this goal in 2005 when also our Indian subsidiary Mico completely replaced its use of chlorinated hydrocarbons. Moreover, we give any new locations we acquire a maximum of two years in which to find a substitute for CHC's. Environmental protection demands resoluteness – all over the world.

The synergies of corporate responsibility ...

A company such as Bosch exhibits the same kind of consistency in its direct business operations too. The examples I have given from our production operations clearly show that the conservation of the environment and resources pays dividends. In other words, responsibility pays off. Of course, both social and ecological interests have a value of their own. But they can also generate economic value – either because flexible working models spur our associates to achieve even more or because energy-saving products are particularly successful in the market. In other words, corporate responsibility creates synergies – after all, "doing good" is also good for our business.

Curriculum Vitae Peter J. Marks

RF60801 - August 2006