Foreword

Board of Management (Photo)

GRI 102-14

Dear readers,

What a number! 2,400,000,000. Worldwide CO2 emissions decreased by 2.4 billion tons in 2020 by comparison with the previous year. That was the biggest absolute decrease ever.1 Under normal circumstances, how joyously we would be celebrating this achievement! But in view of the ongoing struggle against covid-19, speaking of normality is out of the question. The current environmental benefits are mainly based on the necessary, but not permanent, limitations that have been placed on our personal, social, and economic life.

What we need is a fundamental ­“SpurWechsel” — a lane change — that leads to decreasing CO2 emissions even under “normal” circumstances, without a pandemic or a lockdown. It accomplishes this not through the limitation of economic and social life but by means of its decarbonization. At Daimler, we have committed ourselves to this lane change. Our goal is CO2-neutral cars, vans, trucks, and buses. In line with this goal, we have formulated sustainable business strategies for all of our divisions. In the next five years alone, we will invest more than €70 billion to implement these strategies, especially in the areas of electrification and digitalization.

Electrification and sustainability

By means of our “Electric First” strategy at Mercedes-Benz Cars, we are systematically moving toward CO2 neutrality. For example, in 2020 we more than tripled the sales of our plug-in hybrids and all-electric vehicles in the car and van segments. Subject to confirmation by the authorities, this means that we have reached the stringent European CO2 targets. Just as importantly, we are confident that we can also reach the even stricter targets that have been set for 2021. In order to reach this goal, the all-electric Mercedes-EQ family will grow to a total of eight models — ranging from compact models to the S-Class segment — in 2021 and 2022. We are taking the next step by means of the EQA (Combined electrical consumption: 15.7 kWh/100 km; combined CO2 emissions: 0 g/km)2,3 and the EQS. Both of them are setting new benchmarks in their respective segments and demonstrating that contemporary luxury and sustainability are entirely compatible. Our long-term goal is defined by our “Ambition 2039”: We are striving to offer a completely CO2-neutral new vehicle fleet by 2039.

We plan to have a portfolio of series-produced trucks and buses with battery-electric drive systems in our main sales regions by 2022. And our ambition is to offer only new vehicles that are CO2-neutral in driving mode in Europe, Japan, and North America by 2039.

We are already series-producing the battery-electric eCitaro city bus, and this year it will be followed in Europe by the battery-electric eActros heavy-duty truck for urban distribution haulage. We are pursuing two different approaches to achieve zero-emission long-distance transport: battery and fuel-cell drive systems. We presented a glimpse into the future of both of these systems in 2020. The eActros LongHaul truck has a battery-electric drive, and the GenH2 concept truck is powered by a fuel cell and liquid hydrogen — its series-produced variant will have a range of up to 1,000 kilometers and more.

Parallel to these products, our own manufacturing processes will also be CO2-neutral starting in 2022: in our production plants for cars and vans all over the world, and in our production plants for commercial vehicles in Europe. The blueprint for this transformation will be our Factory 56, which is already using CO2-neutral, resource-conserving, and connected production processes, as well as our battery factory in Kamenz.

Digitalization and sustainability

For many people, digitalization was the most visible transformation in 2020. The infrastructure and computing capacity that enabled hundreds of thousands of employees to have mobile workplaces were created practically overnight. Today it’s already becoming apparent that even after the pandemic is over a more flexible work environment will remain. But the real changes will go far beyond that. Thanks to the 360-degree connectivity of our worldwide production network, we are setting new benchmarks for sustainable production. For example, at our Factory 56 alone we are saving about ten tons of paper annually compared to a factory that is not fully digitalized. And by means of services such as Mercedes me Charge and the EQ-optimized navigation system we are motivating our customers to switch to CO2-neutral driving.

The supply chain and sustainability

Our lane change also involves our entire supply chain. That’s why, from now on, we at Mercedes-Benz only want to work together with suppliers who commit themselves to systematically reducing their emissions. About half of the companies in our Mercedes-Benz supplier network have already confirmed that by 2039 they will only be providing us with CO2-neutral components. In the period until then, they will reach interim targets. We are also making respect for human rights a fixed component of our contracts with suppliers. Companies that wish to be our business partners must commit themselves to ensuring transparency regarding potential risks to human rights and confronting such risks by means of appropriate measures. In the future, our suppliers will only obtain cobalt and lithium for Mercedes-Benz cars — and, step by step, for Daimler Trucks too — from certified extracting companies. Battery cells will only be obtained from suppliers using CO2-neutral production. At the same time, we are working to minimize our use of critical raw materials. In this connection, our path toward a circular economy is becoming increasingly significant. Many Mercedes-Benz cars are already almost completely recyclable today. In the future we aim to further decrease energy needs, water consumption, and waste volumes throughout our supply chain, analogously to the changes we are making in our own production processes. In this way we will increasingly decouple growth from resource consumption.

The capital market and sustainability

Another development of recent years has been the capital market’s noticeably growing interest in sustainability issues. There has rarely been this much demand for information about ESG issues4 in the past. Investors are now using non-financial criteria to assess the financial opportunities and risks in their portfolios and in potential investment projects. We welcome this development. A convincing sustainability performance should also pay off financially — and vice versa. At the same time, we are preparing for a growing demand for green investments. In 2020 we developed a Green Finance Framework that defines the basic principles that we applied, for example, when we issued our first green bond worth more than €1 billion. This bond was in great demand, and it was oversubscribed several times.

Optimism and sustainability

In the public debate regarding sustainability, what we sometimes miss is optimism — not only with regard to technological progress. Admittedly, the necessary transformation to self-determined and sustainable mobility is one of the biggest renewal projects of our time. But it’s also one of the most important and most inspiring ones. It goes far beyond our company and even beyond the automobile industry. It requires new alliances between science, government, investors, automakers, suppliers, energy providers, and society. The players who systematically promote transformation can create not only environmental but also economic and social value added.

We at Daimler are firmly committed to do just that. We want to do everything in our power to promote this development and take on responsibility for it. You can find out what this means in concrete terms by reading the following pages. We wish you a stimulating reading experience, and we look forward to continuing our constructive dialog with you.

Sincerely,

Signature Ola Källenius (Signature)
Ola Källenius Chairman of the Board of Management
Daimler AG and Mercedes-Benz AG
Signature Renata Jungo Brüngger (Signature)
Renata Jungo Brüngger Member of the Board of Management
Daimler AG and Mercedes-Benz AG
Integrity and Legal Affairs
Co-chair of the Group Sustainability Board
Signature Markus Schäfer (Signature)
Markus Schäfer Member of the Board of Management Daimler AG
Group Research & Mercedes-Benz Cars
Chief Operating Officer
Co-chair of the Group Sustainability Board

1Figures from the Global Carbon Project: Coronavirus causes ‚record fall’ in fossil-fuel emissions in 2020

2Electricity consumption and range were calculated on the basis of Commission Regulation (EC) No. 692/2008. Electricity consumption and range depend on the vehicle configuration.

3The actual range is also dependent on individual driving style, road and traffic conditions, outside temperature, use of air conditioning/heating systems etc. and may therefore differ.

4As a rule, sustainability operates on the capital market under the acronym ESG: E = Environment, S = Social, G = Governance.

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Daimler AG Mercedesstraße 120
70372 Stuttgart
Germany
Tel.: +49 711 17 0
E-Mail: dialog@daimler.com

Represented by the Board of Management: Ola Källenius (Chairman), Martin Daum, Renata Jungo Brüngger, Wilfried Porth, Markus Schäfer, Britta Seeger, Hubertus Troska, Harald Wilhelm

Chairman of the Supervisory Board: Bernd Pischetsrieder

Commercial Register Stuttgart, No. HRB 19360
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