Cobalt from the Democratic Republic of the Congo, rubber from Southeast Asia, plastics from China — a car consists of several thousand components and raw materials from all over the world. This is why we need to closely examine our complex supply chains. Some of the challenges exist in exactly those places where vehicle manufacturers have limited monitoring possibilities. So the first step to more sustainability is transparency.
Daimler has approximately 60,000 direct suppliers, many of which have sub-suppliers, which in turn may have their own sub-suppliers and so on. The result is a highly complex global network that develops dynamically. We establish transparency with the help of blockchain technologies, for example, in order to ensure that we can identify risks and address them when we need to. Blockchain technologies link digital data sets by means of encryption. Here, all participants in the supply chain can retrace the integration, transfer, and confirmation of information at any time, even as confidential information remains protected.
We require the raw material suppliers we cooperate with to meet high environmental and social standards — in the area of cobalt mining, for example, all the way back to the mine. An important step for Mercedes-Benz suppliers in this regard involves signing the Ambition Letter in which they pledge to supply CO2-neutral products in the future. Battery cell production is energy-intensive and therefore has an effect on the CO2 balance of electric mobility.
But it takes more than just the minimization of environmental risks to achieve sustainability in the supply chain, which also needs to be free of potential human rights violations. Our approach here is "using leverage before withdrawing". This means that instead of simply withdrawing from places with human rights issues, we can often do more to help people in these places by staying and establishing working conditions that ensure respect for human rights. In the future, for example, we plan to only use battery cells that are made of raw materials from certified mines. We are also involved in numerous raw materials initiatives that promote greater transparency and the application of more stringent climate, environmental, and human rights standards.
A large number of new regulations and laws are now being planned and implemented as well. The Due Diligence Act is expected to be passed soon in Germany, for example. Other countries are working on sharpening their regulations, and new EU-wide due diligence legislation is also planned. We support such progress, but we also believe that regulations must be aligned with one another in order to avoid a patchwork situation on the international level. In addition, the people affected must benefit from the measures, and it must be possible for companies to implement them without suffering a competitive disadvantage.
Our holistic approach to supply chains enables us to make an effective contribution to achieving the Sustainable Development Goals:
Every company needs to examine its value chain in order to determine the impact it has on human rights. Obviously, no automaker can solve all of the problems alone. Nevertheless, automakers have a responsibility to help shape change — especially in the pandemic, which has been particularly hard on groups that are already vulnerable.
Laura Curtze Head of the Human Rights & Labour section at the
German Global Compact Network (DGCN)
Three questionsGunnar Güthenke
What do you do if you identify human rights risks in the raw materials supply chain for your electric vehicles?
Human rights are non-negotiable — and it’s important to us that our raw materials are obtained from responsible mining operations. That’s why we create transparency as a first step, conduct audits in line with OECD guidelines, and also use the mining standards of the Initiative for Responsible Mining Assurance (IRMA), which are recognized throughout the industry, as a key criterion for our supplier decisions and contracts in raw materials supply chains. We aim to use leverage rather than withdraw. In other words, we do not exclude critical countries of origin as sources of raw materials but instead want to improve the situation for local residents and strengthen their rights. In addition, our supplier agreements have included respect for human rights as an integral component for many years now.
How do you plan to reduce the CO2 footprint in your supply chain?
We include our suppliers in our “Ambition 2039” measures to achieve climate neutrality. Specifically, this means that beginning in 2039 at the latest, Mercedes-Benz will only work with suppliers that provide us with CO2-neutral components exclusively. More than 75 percent1 of our suppliers have already agreed to do this. Until we have achieved this long-term goal, we will consistently raise the bar year after year and focus particularly on addressing CO2-intensive areas. Because we at Mercedes-Benz take sustainability in the supply chain very seriously, our approach to it doesn’t end with reducing greenhouse gases. We also plan to systematically reduce the use of primary raw materials in procured components in order to conserve valuable resources. Here as well, we are focusing on specific components and continuously increasing the required proportion of recycled materials.
1 On the basis of the annual procurement volume
What drives your team?
The work we do has a significant impact on profitability and the standard of quality at Mercedes-Benz. In addition, sustainability is now a firm component of our procurement strategy. It’s very important to us to cooperate closely with the specialist units we work with around the world — and especially with our suppliers. With our measures for reducing CO2 emissions, ensuring that human rights are respected and upheld around the world, and conserving resources in the supply chain we are making an important contribution not only to the sustainability of our vehicles but also to the entire automotive industry and society as a whole. That’s because our suppliers can use the measures we implement in cooperation with them to govern their relationships with the other customers they serve.
Dr. Gunnar Güthenke has been the Head of Procurement and Supplier Quality, Mercedes-Benz Cars since July 2019. This unit, which is responsible for managing approximately 2,000 direct suppliers worldwide, is based at the central Stuttgart location and operates regional hubs in China and the United States and other procurement offices in Mexico and India.
Daimler has identified 24 risk raw materials that are now being closely examined to determine their impact on human rights.
Promoting education, ensuring respect for human rights — Daimler stands up for children
Daimler and the NGO Terre des Hommes Netherlands launched a joint project in 2020 to help put a stop to child labor. Daimler is providing financial support to the child welfare organization in order to help eliminate child labor in mica mines in Jharkhand, India. These minerals, which Daimler does not purchase directly, are what give vehicle paints their shine and sparkle.
Daimler and Terre des Hommes Netherlands are making it possible for children in Jharkhand to go to school, which increases their chances of being able to earn a living later on in life — and thus ensure that their own children will not have to work in mines. The families of the children participating in the project also receive financial support to compensate for the lost income. In addition, local partners of Terre des Hommes Netherlands work to strengthen local structures by providing information on children’s rights, for example.
Daimler also works with the Responsible Mica Initiative to develop standards to improve working conditions in India and strengthen the legal framework for mica mining. The initiative seeks to prohibit child labor in the mica supply chain by 2022, and to this end it also works closely with Terre des Hommes Netherlands.
What we do here needs to help people locally
For me, sustainability means keeping an eye on the consequences of our actions — not only for the environment but also for society. Respect for human rights is a particularly important issue to me. That’s because the key challenges here exist mostly in those places where we have very little influence and control, and this applies both to Daimler as a global company and to me as a consumer. Complex value chains develop very dynamically, which means it’s not always easy to identify and address human rights risks. So it’s all the more important for us as an automaker to take active measures to help improve things — and this is exactly what we are doing at Daimler. We are committed to ensuring that certain regulations and standards relating to human rights are complied with not only at our locations but also to the greatest extent possible in our supply chains, and we are developing the processes and measures that are needed. Specifically, this means that we use our Human Rights Respect System to implement the principles defined by the United Nations and other organizations. This approach, which we developed ourselves, makes it possible for us to systematically address human rights violations in our supply chain and at an early stage. Ultimately, what we do here needs to help people locally.
Marc-André Bürgel is the Head of Social Compliance at Daimler AG. He has been supporting human rights campaigns since he was a teenager.