Climate protection & air quality
Climate protection in the supply chain
Our commitment to climate protection does not end at our plant gates. In order to become climate-neutral, we also focus on the supply chain. We want to reduce and offset the CO2 emissions that are associated with the procurement of components, raw materials, and non-production materials, as well as with logistics.
The consequences of climate change can only be limited if a variety of players pull together all over the world. That is why we also include our supply chain in our climate and environmental protection measures, and why we work in partnership with our suppliers in order to cut emissions. We are thus also creating the preconditions for achieving the EU’s absolute CO2 reduction targets for the transportation sector. These targets can only be attained if there is a reduction of the emissions that are associated with the entire supply chain, including components, raw materials, non-production materials, and logistics.
The supplier network contributes considerably to value added and is thus extremely important for the achievement of the decarbonization targets. This is one of the reasons why it’s important that we strive to reduce not only the emissions of our production operations but also the emissions of our suppliers.
How we are reducing CO2 and air emissions in the supply chain
In our sustainable business strategy we set the course for sustainable mobility. In order to achieve our long-term goal of becoming climate-neutral, we are not only systematically electrifying our vehicles but also addressing our supply chain.
We expect our suppliers of production materials to operate with an environmental management system that is certified according to ISO 14001, EMAS or other comparable standards. On a risk basis the same also applies to suppliers of non-production materials. Our direct suppliers are required to comply with these sustainability standards, communicating them to their employees and to their upstream value chains, and then checking to ensure that the standards are complied with. We support them in these activities by providing them with targeted information and qualification measures.
In 2019, for example, we held workshops in our passenger car segment with suppliers of steel, aluminum, and battery cells. These inputs account for about 80 percent of the CO2 emissions within the supply chain of an electric vehicle. Steel and aluminum alone account for approximately 60 percent of the CO2 emissions in our entire supply chain. The aim of the workshop was to identify effective CO2 reduction measures. In order to assess the environmental impact of our supply chain and make it more transparent, we are also working together with organizations such as CDP.
In our supply chain, we apply policies and processes similar to those used in our own plants. For example, beginning in 2022 our European plants will get electricity exclusively from renewable energy sources. We also aim to achieve the same goal for our Mercedes-Benz cars supply chain.
Targets and measures for a more climate-friendly supply chain
We pursue the goal of our components and parts from CO2-neutral sources step by step. Mercedes-Benz Cars & Vans, for example, plans to develop concrete CO2 measures with suppliers as well as measures for inbound logistics. We also want to reduce CO2 emissions in the supply chain for the procurement of non-production materials.
Around 16 percent of our CO2 emissions (Scope 1, 2, and 3) at Mercedes-Benz Cars come from the supply chain. That is why we also have to help make our suppliers and partners climate-neutral. To do this, we first have to find out at which contractors and stages of our supply chain CO2 emissions and pollutants are generated. Only on the basis of this information can we define the necessary climate protection measures. In order to make the environmental impact of our supply chains more transparent, we are working with organizations such as CDP. In 2019, for example, we took part in the CDP Supply Chain Program for the first time. As part of this program, we encourage our suppliers to report their environmental impact. CDP provides tools for recording, assessing, and communicating environmental data. We involved our main suppliers, who account for over 70 percent of the annual procurement volume of Mercedes-Benz Cars & Vans, in this program. Almost 80 percent of these suppliers took part in the survey. CDP supplied us with the results in January 2020.
In 2019 we also held workshops with suppliers of Mercedes-Benz Cars & Vans so that we could work together to develop effective CO2 reduction measures. We concentrated on especially CO2-intensive suppliers, such as those in the bodyshell area, and discussed with them the current state and goals of climate protection measures. More workshops will be held next year as part of our order placement process.
We have decided to make CO2 targets an important criterion for decisions regarding the choice of suppliers and the supply contracts of Mercedes-Benz Cars & Vans. In 2019 we began to conduct talks and procurement negotiations at a variety of levels for the purchase of more low-carbon products. We did this primarily with our direct suppliers. We also underscored the importance of CO2 reductions in our supply chain by means of the Daimler Supplier Sustainability Award 2019. This is how we rewarded suppliers, among others, who have implemented exceptional CO2 reduction projects.
CO2-neutrally produced battery cells
With its extensive orders for battery cells up to the year 2030, the company has reached yet another important milestone with regard to the electrification of vehicles to be marketed under the product and technology brand EQ in the future.
In this way, we and our supplier partners plan to use state-of-the-art technologies to safeguard the supply of materials to the global battery production network today and in the future. These suppliers already manufacture battery cells in Asia and Europe and are continuing to expand their operations in Europe and the United States.
In September 2019 we concluded a sustainability partnership with the battery-cell supplier Farasis Energy (Ganzhou) Co., Ltd., a Chinese developer and supplier of lithium-ion battery technologies. In addition to compliance with human rights in the supply chain and the topic of recycling, this partnership also focuses on the procurement of battery cells from CO2-neutral production. In the first proof point, some of the battery cells for the next generation of vehicles for our product and technology brand EQ will be produced using only electricity from renewable energy sources. As a result, future vehicle models of the product and technology brand EQ will have batteries whose total CO2 footprint will be reduced by considerably more than 30 percent. To achieve this goal, the supplier will produce the battery cells with electricity from renewable sources such as hydroelectric power, wind power, and solar energy.
How we assess the effectiveness of our management approach