We focus on human rights
The expansion of electric mobility is also further increasing public interest in respect for human rights within the automotive supply chain, because the production of electric motors and batteries requires the use of raw materials such as lithium and cobalt. These raw materials partly come from countries where there is a risk that they are mined under conditions that could be critical from a human rights standpoint.
We have also noticed a growing interest in human rights on the part of investors, which indicates that human rights are having an increasing influence on investment decisions. Last but not least, legislators, including those in Germany and the European Union, are increasingly addressing this issue. In order to implement our sustainability requirements along the supply chain, we advocate the creation of uniformly accepted standards — ideally at the international level. Legal regulations can help create such standards and provide legal certainty. In this context, it is important that regulations continue to create equal competitive conditions in the future in order to promote fair competition and strengthen human rights in global value chains. To this end, the scope of companies’ responsibility for due care regarding human rights must be clearly defined. Due diligence obligations should be limited to the actual extent of economic and legal influence along the supply chain. This is the only way we can ensure that measures are adequate and can be implemented.
Respecting and upholding human rights is an essential part of our understanding of sustainable and ethical behavior. One important aspect is that the nature of critical human rights issues varies among regions and suppliers and also depends on the raw materials, service providers, and supply chains in question. In our activities related to respecting and upholding human rights, we therefore not only take into account our own plants and facilities but also include risk-based analyses of the entire supply chain.
How we have embedded respect for human rights within the Group
The Social Compliance department, which was founded in 2019, is in charge of the implementation of our human rights due diligence approach (HRRS). Additional cross-functional teams work closely together in order to come up with suitable preventive activities and countermeasures. The teams consist of human rights and compliance experts, as well as staff from the operational procurement units and, when needed, from other specialist units as well. The specialist units are responsible for implementing the measures and following them up.
The Integrity and Legal Affairs executive division of Daimler AG is responsible for the overarching activities related to human rights. In line with her agreed-upon objectives, the responsible member of the Board of Management works with the procurement units on further developing human rights compliance and also receives regular information and reports on human rights activities from the Chief Compliance Officer and from the corresponding specialist units in the Social Compliance and Corporate Responsibility Management departments.
Relevant procurement units also provide information on their respective human rights compliance measures to the Procurement Council and the Board of Management members who are directly responsible for the units in question. The Procurement Council generally meets once each quarter. It is composed of the heads of Daimler’s three procurement units. The entire Board of Management is in charge of human rights issues and is regularly informed about these by all the participating experts who specialize in this field. In addition, the Group Sustainability Board (GSB), which consists of the responsible Board of Management members, meets every quarter. It reviews the progress of our human rights program within the context of our sustainable business strategy, using specially developed key performance indicators. Moreover, the respective specialist units report to the GSB. They also report to the Group Board of Management once per year and as needed.
Another important body is the Advisory Board for Integrity and Corporate Responsibility, which consists of independent external members from the science and business communities and civil society and serves as an important source of momentum for Daimler. The board holds regular meetings with members of the Board of Management and other Daimler executives. During the year under review, it also held a joint meeting with the Board of Management and the Supervisory Board. The agenda included current issues and challenges, such as Daimler’s approach to ensuring respect for human rights in its supply chain.
The following policies and frames of reference provide us with orientation
The following frames of reference are particularly important for our human rights activities and policies:
- UN Global Compact
- UN Guiding Principles on Business and Human Rights
- OECD Guidelines for Multinational Enterprises
- The Universal Declaration of Human Rights, including the relevant provisions from the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights
- Germany’s National Action Plan on Business and Human Rights
- Core Labour Standards of the International Labour Organization
- The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas
The most important human rights issues that we have identified for ourselves were derived from this frame of reference. They include the following:
- Equal opportunity and a ban on discrimination
- Freedom of association and collective bargaining
- Health and safety
- Fair remuneration and working times
- Forced labor
- Child labor
These issues are also reflected in the stipulations of our Integrity Code and the Daimler Supplier Sustainability Standards. Our Integrity Code was approved and adopted by the entire Board of Management as a Group-wide policy. Our key human rights issues also serve as the basis for our human rights due diligence process and for our specific measures in high-risk Group companies and supply chains.
We systematically assess human rights risks
To ensure that human rights are respected and upheld, we have developed a due diligence approach: the HRRS. We use this system to monitor our own Group companies, our direct suppliers (Tier 1) and, on a risk basis, suppliers beyond Tier 1.
The HRRS due diligence cycle comprises four steps (risk assessment, program implementation, monitoring, and reporting) and is designed to systematically identify and avoid risks and possible negative effects of our business activities on human rights early on and to initiate adequate measures, should this be necessary. This cycle is derived from our policy commitment regarding respect for human rights, which is part of our Integrity Code and as such is valid for all of our employees. Our company’s own complaints mechanism, the Whistle Blower Sytem Business Practices Office (BPO), is available for accepting any complaints. In addition to protecting the company, the HRRS thus also primarily protects third parties (the rights-holders). As a result, the HRRS also involves consultation and discussions with rights-holders — for example, with our employees and their representatives, as well as with external third parties such as civic organizations and local residents.
External stakeholders are regularly involved as Daimler continues to expand the HRRS step by step. Among other things, we hold talks with international NGOs concerning the human rights risks arising from the extraction of certain raw materials. For example, we have invited specialized NGOs and trade unions to give us their opinion regarding the measures that Daimler has implemented to date with respect to cobalt, mica, and lithium. In addition, we have asked them to make suggestions and show alternatives that help to improve the situation of the affected individuals or communities. The scope and frequency with which we ask NGOs and other civil organizations for advice depends on the issue in question and the stage of our risk assessment.
We also conduct an annual “Daimler Sustainability Dialogue”. At this event, we discuss and evaluate our progress as well as the challenges that arise during the implementation of our management approach. The specialist units subsequently evaluate the results and the stakeholders’ suggestions and incorporate them into their work processes. The results are also published on our website.
How we identify and counteract human rights risks in Group companies
As part of the integration of the HRRS into the Group-wide Compliance Management System, the Group companies in which Daimler has a majority holding are examined for possible human rights-related risks, analogously to other compliance areas such as corruption prevention.
In the first step, we classify the Group companies according to fixed criteria, including country-specific and business-specific risks. The focus is on the most important human rights issues that have been identified for the Group companies, including employee rights, diversity, and safety. In the process, we take into account fundamental human rights standards such as those defined in the Universal Declaration of Human Rights and those of the International Labour Organization (ILO).
On this basis we conduct a more thorough analysis every year with the help of a survey regarding human rights and use the findings to derive packages of risk-specific measures. During the reporting period, this newly developed method was used for the first time at Group companies with a higher risk. The local compliance officers, who are part of our global compliance network, provide assistance for the human rights survey at the Group companies. In order to obtain useful insights from the survey, the compliance experts were trained in advance in an in-depth online course that was tailored to their needs. This course enabled them to recognize the human rights risks of our focal areas. It allowed us to identify the specific local risks and explore them further in dialogs with the compliance officers of the respective Group companies.
The results of this more in-depth risk analysis are correspondingly documented and incorporated into the development of targeted measures for minimizing human rights risks. These measures include the provision of documents for the targeted communication of our values and requirements regarding the interaction with employees and business partners as well as the mandatory participation in a comprehensive online human rights training program for managers in high-risk markets. We plan to continuously refine our analyses and risk-minimization measures in the years ahead and to expand them to all Group companies in which we have a majority shareholding. Coupled with this is the development of risk-specific packages of measures that we will supply to the respective Group companies in line with their risk classification. These provide a systematic means of preventing human rights risks.
How we identify and counteract human rights risks in the supply chain for production materials
In addition to our Group companies, we pay special attention to our upstream supply chain of production materials. Here it is especially important to identify and avoid potential human rights risks and negative effects early on.
The human rights risks that we have identified for the supply chain are reflected in the standards for our suppliers (Daimler Supplier Sustainability Standards) and, among other things, encompass child labor, forced labor, and employee rights.
We focus on 24 critical raw materials whose specific focal topics are specified and delimited in a more in-depth risk analysis.
The specific risks can differ, depending on a product’s processing stage within the supply chain (e.g. mine, refinery, processing plant or plantation). For example, we have identified child labor, health, and safety as the most urgent human rights risks for cobalt. These risks arise especially in the mining industry. By contrast, the risks associated with the procurement and processing of lithium primarily pertain to the rights of indigenous peoples, which can be affected by the extraction of lithium-bearing saltwater from underground lakes.
We conduct comprehensive human rights assessments for raw materials that pose an increased risk of human rights violations. Our assessment process basically consists of three steps:
- We create transparency along the raw material supply chains — especially with regard to certain key components such as battery cells.
- We identify risk hotspots in these supply chains.
- We define and implement measures for the risk hotspots and make sure that they are effective in the long run.
By the end of 2020 we had assesed 24 percent of all high-risk raw materials in this way, and thus exceeded our goal of 20 percent. We want to gradually increase this percentage. By the end of 2021, we plan to assess 30 percent of all high-risk raw materials. This figure is set to rise to 70 percent by 2025. By 2028, we want to define appropriate measures for 100 percent of our raw materials that pose an increased risk of human rights violations.
With respect to the supply chain, Mercedes-Benz AG and Daimler Trucks AG have also decided to procure only battery cells in the future that contain cobalt and lithium from certified mining locations and at the same time to substantially reduce the proportion of cobalt in the batteries. For this reason, we are making the Standard for Responsible Mining of the Initiative for Responsible Mining Assurance (IRMA), which is recognized throughout the industry, one of the main criteria for our supplier decisions.
You can read more about our measures for respecting and upholding human rights in the supply chain here:
How we raise employees’ awareness of human rights issues
Through our Integrity Code we actively and regularly inform our employees about human rights issues and make them aware of the corresponding risks. The rules contained in the Code are binding for all Daimler employees. Depending on the specific tasks, new employees have to attend mandatory training courses during their induction process. These courses also address human rights issues. The content is also taught in the online training module Integrity@Work, which is mandatory for all employees. In this module, the employees learn, among other things, what significance human rights have for Daimler and what their relevance is in daily work. In September 2020 we also introduced the new training module Sustainability@Work throughout the Group. This module also provides information and raises awareness about human rights issues.
The Local Compliance Responsibles play a key role in upholding human rights within the Group companies. As a result, we developed an online training course in 2020 specifically for Compliance Responsibles and other human rights experts. It raises people’s awareness of human rights risks that can arise within Group companies. The thematic focus is on risk areas that were identified during an initial risk analysis: employee rights, diversity, safety, and local conditions. The latter includes, in particular, country-specific respect for civil and political rights. The training course, which is mandatory for Compliance Responsibles in high-risk markets, has been available since July 2020. The course can also be used by Corporate Security’s global network in order to raise employees’ awareness of human rights risks in security matters and in connection with security services. Employees in administrative units and at controlled Daimler entities completed three different human rights training modules during the reporting year. As a result, employees completed 298,840 human rights-related training courses, which equates into around 25,088 hours of training solely for human rights issues.
Our suppliers are also requested to respect human rights in accordance with our sustainability standards. All of our external suppliers have access to our Compliance Awareness module, which includes a separate chapter dealing with corporate responsibility in the area of human rights.
We rely on high social standards for the work and services contracts of our service providers
Our standards for work service contracts go beyond existing legislation in many areas. These standards define requirements with regard to occupational health and safety, accommodation, remuneration, use of temporary workers, commissioning of subcontractors, and the prevention of illegal false self-employment. These standards are relevant for all contracts that exceed a period of two months and are actually carried out on the business premises of Daimler AG in Germany. All of the relevant work-for-hire contractors or service providers must sign a declaration that they comply with these standards. Only if they fulfill this prerequisite can they receive purchase orders. An auditing team from our procurement department International Procurement Services (IPS) determines whether the standards are being complied with in Germany by selected suppliers.
We consistently investigate complaints
Employees and external third parties can use various channels to report suspected human rights violations and obtain “access to remedy” as defined by the third pillar of the UN Guiding Principles on Business and Human Rights. These channels include our Whistleblower System BPO and the World Employee Committee.
Daimler employees as well as external persons can report suspected violations of laws and internal regulations to the BPO. A globally valid corporate policy ensures a fair and transparent approach and takes into consideration the principle of proportionality for affected parties, while also giving protection to whistleblowers. The policy also sets the standard for evaluating suspected violations and defining the consequences. The BPO can be contacted in any language by post, by e-mail, and via the Internet by filling out a special form. An external toll-free hotline is also available in the respective national language and English in Brazil, Japan, South Africa, and the United States. Reports in foreign languages are translated. Reports can also be submitted anonymously if local laws permit this. In Germany, whistleblower reports can also be submitted to an external neutral intermediary in addition to the BPO. Whistleblowers can also contact this intermediary if they have clear indications of violations that are connected to Daimler.
After a report is submitted, the BPO makes a risk-based initial assessment of the possible violation. A preliminary legal review is carried out if a case poses a high risk for the company. If a suspected violation is confirmed, the case is forwarded to the responsible investigative unit, which is specifically ordered to investigate the matter.
One of the issues for which the Whistle Blower System BPO is responsible explicitly concerns possible violations of human rights, including violations of the principles of the UN Global Compact. Other human rights-related responsibilities of the BPO include severe cases of sexual harassment, discrimination, and racism.
According to our analyses, there were no cases of suspected child labor, forced labor, or violations against the right to collective bargaining or freedom of association within the Daimler Group in 2020. During the reporting year, the BPO received a small number of reports concerning sexual harassment, discrimination, and racism, which were assessed by the responsible units, such as Corporate Security. Appropriate and adequate consequences were taken in cases in which a suspicion was confirmed.
How we assess the effectiveness of our management approach
We are consistently moving ahead with our efforts to ensure that human rights are respected and upheld at our Group companies and in our supply chains. We made considerable progress during the reporting year: the Board of Management of Daimler AG decided to make human rights-related annual goals relevant for remuneration. Beginning in 2021, the variable remuneration of managers will also be linked to whether the KPI targets for respecting and upholding human rights were met in connection with the procurement of production materials.
During the reporting year, we also started to develop a separate human rights policy, which will apply to all Group companies that are controlled by Daimler.
In addition, we are planning a large number of measures worldwide to ensure that human rights are respected and upheld even more strongly than before and to embed them in the organization. At its core, the aim is to create more transparency, raising awareness for the issue, and measure the effectiveness of our commitment. For example, we want to make the relevant raw material supply chains more transparent, expand our risk analyses for our Group companies, and develop concrete measures for minimizing human rights risks at our service providers as well.
Within the reporting period, we regularly reviewed our human rights measures and adjusted our management approach as needed. Among other things, we have revised our risk analysis for Group companies as well as our human rights questionnaire. We have also taken an initial step toward expanding this more in-depth risk analysis to other Group companies. In addition, we have further refined our approach to the assessment of risk-related raw materials and supplemented it with additional tools and processes.
To enable us to take a targeted approach to addressing the human rights risks of our raw material supply chains, we are orienting our activities on the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. Our goal is to make our processes coincide as well as possible with the requirements of the OECD guidelines. To this end, we have analyzed our processes in cooperation with the consulting company RCS Global. Moreover, we directly address the identified potential for improvement, e.g. by revising our Supplier Sustainability Standards, which we plan to do in 2021.
During the further development of our management approach for human rights, we also incorporated the feedback from our stakeholders at the human rights working group of the “Daimler Sustainability Dialogue”.