Sustainable corporate governance

Sustainability management

Daimler at a glance

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1 | Daimler Group




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Daimler AG is one of the world’s most successful automotive companies. With its business divisions Mercedes-Benz Cars & Vans and Daimler Trucks & Buses, Daimler is one of the biggest manufacturers of premium cars and one of the world’s largest producers of commercial vehicles. The business division Daimler Mobility offers financing, leasing, and fleet management services, investment products, and brokerage of insurance and credit cards, as well as innovative mobility services.

How we define sustainability

At Daimler, sustainability means stably generating economic, environmental, and social value added for all of our stakeholders: customers, employees, investors, business partners, and society as a whole. We therefore design the solutions we offer today to be central components of mobility systems that will be climate-neutral and sustainable tomorrow. Together with players from industry, government, and society, we thus create value added for all of society while also laying the foundation for our future business success. This holistic strategic approach applies not only to our own products and manufacturing locations but also to our entire upstream and downstream value chain.

Sustainable at every level — our business strategies

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The basis of our action is the sustainable business strategies of our divisions, which were adopted by our Board of Management in 2019. This means that rather than being supplements to our business strategies, sustainability issues are integral components of them. The ambitions, goals, and measures we are implementing in order to increase Daimler’s positive value-added contribution to the environment and society are just as relevant as our promising business objectives.

We also orient ourselves according to international frameworks, the needs of our external and internal stakeholders, and global trends. From these points of reference we have derived Group-wide themes and defined areas of responsibility as well as business-specific targets, processes, and measures.

More specifically, our strategic ambitions involve the following six areas of action:

  • Climate protection & air quality: We aim for our new vehicle fleet to be CO2-neutral by 2039, when it will no longer have any relevant impact on air quality in inner cities.
  • Resource conservation: We will decouple resource consumption from business volume growth.
  • Livable cities: We will offer our leading mobility and transport solutions in order to improve the quality of life in cities.
  • Traffic safety: We are working to make our vision of accident-free driving a reality as we develop automated driving systems while also taking social and ethical issues into account.
  • Digital responsibility: Sustainable, data-based business models are our future. In line with these business models, we focus on the needs of our customers and the responsible handling of data.
  • Human rights: We assume responsibility for respecting and upholding human rights along our automotive value chain.

We work closely together with our partners in industry, government, and society at large in order to make these ambitions a reality.

We also rely on the dedication and commitment of our employees, who are helping to shape the transformation. Accordingly, we have defined three “enablers” that are essential for our success in these six areas of action:

  • Integrity: In order to firmly establish integrity at all levels and in all areas, we are engaging in regular dialog. We are also supporting our employees as they make business decisions in order to promote their sense of individual responsibility.
  • People: As an attractive employer, we promote the diversity of our workforce and help our employees acquire the skills they need in order to master the challenges of digitalization.
  • Partnerships: Our principles regarding political dialog and the communication of our interests form the basis of responsible and reliable action that aims at harmonizing our corporate interests with the interests of society at large.

2 | Our brands

Our brands (Graphic)

Materiality analysis: How we assessed our strategic issues

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We conducted a comprehensive materiality analysis in 2020 in order to determine which sustainability issues are particularly relevant for Daimler and its stakeholders. The analysis addressed the existing strategic areas of action and fundamentals as well as further potentially significant sustainability issues and trends. We assessed a total of 15 issues.

The materiality analysis consisted of four components: a document analysis, an SDG impact assessment, a large-scale online stakeholder survey, and interviews with experts.

In the document analysis, we identified the key effects that important sustainability trends are having on Daimler. Our focus here was on external influences such as the regulatory system and the requirements of the capital market. As part of the SDG impact assessment, we evaluated how Daimler’s business activities are helping to achieve the sustainability goals of the United Nations (Sustainable Development Goals — SDGs). In the online survey, various groups of stakeholders had the opportunity to evaluate the relevance of sustainability issues as well as our current sustainability management activities from their particular perspectives. A total of 3,630 individuals from 43 countries participated in the survey. 43 percent of the survey participants came from Germany, 21 percent from China, 16 percent from the United States, and 15 percent from the UK. In addition, we asked 40 internal and external experts to assess key sustainability-related risks and opportunities for our business model. We also asked them to evaluate the crucial effects of our business activities on society and the environment.

In our analysis, we used two different perspectives:

  • Inside out: What positive and negative effects do Daimler’s business activities have on the economy, the environment, and society?
  • Outside in: To what extent do the sustainability issues affect Daimler’s business development, business results, and the company’s situation?

As a result of these parameters, the materiality analysis complies with the reporting requirements of the Global Reporting Initiative (GRI) and the CSR Directive Implementation Act (CSR-RUG).

After our final assessment of the 15 issues, we summarized them in a materiality matrix. The highest rankings went to the issues of climate protection, air quality, and resource conservation. This confirmed the relevance of our strategic areas of action. For the first time, having a sustainable supply chain was deemed to be a very significant issue.

The results of the materiality analysis form an important foundation for the ongoing development of our strategic areas of action. We have discussed them with all of the responsible specialist units and presented them to the Group Sustainability Board (GSB).

3 | Our materiality analysis

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Our materiality analysis (Graphic)

4 | Our materiality matrix

Our materiality matrix (Graphic)

The Sustainable Development Goals are embedded in our strategy

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In 2015 the United Nations defined a blueprint for worldwide sustainable development. It includes 17 sustainable development goals. In order to reach these goals, the business community, with its strong capacity for innovation and investment, is playing a crucial role. We willingly accept this role.

For many companies, it is still a challenge to connect the individual sustainable development goals with strategic key indicators and measures and to implement them. That’s why we teamed up with TruCost to conduct an SDG impact analysis during the reporting year. Our objective was to assess our corporate performance with regard to the 17 SDGs relevant to our company. We analyzed the positive and potentially negative effects that Daimler is having on the individual goals. We also identified the sustainability goals that represent the greatest opportunities and the biggest risks for our company.

We would like to use our findings to further expand the contribution that our business activities are making to the achievement of the UN’s sustainability goals. To this end, we are concentrating on the areas where we can create the most value added.

That’s why our work is focusing on the following SDGs:

SDG 8 (Icon)

SDG 8 Decent Work and Economic Growth: We support the implementation of humane working conditions by developing and implementing a risk-based management approach to respecting and upholding human rights in our own units and in our supply chain. In addition, by manufacturing our products and providing our services we are creating attractive workplaces all over the world.

SDG 9 (Icon)

SDG 9 Industry, Innovation and Infrastructure: We are shaping the sustainable mobility of the future by connecting our CASE areas: Connected, Autonomous, Shared & Services, and Electric. Through the benefits we expect from this process, for example in the areas of safety and climate protection, we are demonstrating the potential of digital innovations for our society.

SDG 11 (Icon)

SDG 11 Sustainable Cities and Communities: Daimler is promoting sustainable mobility in metropolitan areas through its offers such as electrified city buses and trucks, carsharing, , and the multimodal linking of mobility services.

SDG 12 (Icon)

SDG 12 Responsible Consumption and Production: We are working to increase the efficiency of our vehicles and significantly reduce our use of raw materials. One of our tasks is to reinforce the closed material loops for the primary raw materials that are needed for our electric vehicles. In this way we are laying the groundwork for sustainable production patterns.

SDG 13 (Icon)

SDG 13 Climate Action: Through our sustainable business strategy and the associated measures and goals for reducing the emissions of our vehicles, plants, and supply chain, we are making a concrete contribution to global climate protection.

How we are managing the Group sustainably

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Daimler AG is the parent company of the Daimler Group and has its headquarters in Stuttgart. Since the introduction of the new corporate structure in January 2020, the Group’s business operations under the umbrella of Daimler AG are no longer managed in five divisions, but in three. Mercedes-Benz AG is responsible for the business of Mercedes-Benz Cars & Vans, and Daimler Truck AG combines the activities of Daimler Trucks & Buses. Daimler Financial Services, which had already been legally independent for years, has been renamed Daimler Mobility AG. With its new structure, Daimler AG has taken on the steering function and provides services for the Group companies. As the parent company, it also defines the Group’s strategies, makes decisions about strategically significant issues related to our business operations, and ensures the effectiveness of organizational, legal, and compliance-related functions throughout the Group.

Our governance structure, which consists of the Board of Management and the Supervisory Board, corresponds to the dual leadership structure required by German law for a stock corporation. The Board of Management manages the company, and the Supervisory Board monitors and advises the Board of Management. The two bodies work together very closely for the welfare of the company and are guided in their efforts by the German Corporate Governance Code.

The short-term and medium-term variable components of remuneration — the Daimler Company Bonus — have been revised for the Board of Management and Level 1–3 managers, with effect as of January 1, 2020. These components are linked not only to financial targets but also to sustainability-related transformation targets and non-financial targets that focus on employees, customers, integrity, and diversity.

In accordance with our sustainable business strategies, we are managing our work in the six areas of action by means of an internal reporting process that uses detailed scorecards. Our management and organizational structures support this process by establishing clear lines of responsibility in all of our business divisions.

5 | Governance

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Governance (Graphic)

The Group Sustainability Board (GSB) is our central management body for all sustainability issues and reports to the Board of Management of Daimler AG. The GSB has a shared management structure, with Renata Jungo Brüngger (the Board of Management member responsible for Integrity and Legal Affairs and member of the Board of Management of Mercedes-Benz AG) and Markus Schäfer (the Board of Management member responsible for Group Research; also Mercedes-Benz Cars Chief Operating Officer) serving as Co-chairs. The GSB submits progress reports, as well as proposals for decisions regarding the areas of action that are part of the Group’s sustainable business strategies, to the Board of Management. Ultimate responsibility is held by the Board of Management, whose members are appointed by the Supervisory Board. The Supervisory Board decides on the Board of Management’s transformation goals, which include non-financial goals.

The operational work is done by the Sustainability Competence Office (SCO), which consists of representatives from the units managed by the two Co-chairs as well as additional representatives from Corporate Strategy and Corporate Communications. Besides performing its other tasks, the SCO also monitors the progress made in the six areas of action and the three enablers defined in the sustainable business strategies. This progress is reported to the GSB in the form of detailed scorecards at least once a year. With the help of a tracking list, the GSB also monitors the implementation of the activities that have been decided on.

A basic training program regarding sustainability was developed and rolled out in 2020 in order to further sensitize employees all over the world to sustainability issues. This program teaches participants the fundamentals of sustainability at Daimler and the strategic areas of action that are part of the company’s sustainable business strategies.

The Board of Management also informs the Supervisory Board about our sustainability issues at regular meetings. In addition, there is close communication with our external Advisory Board for Integrity and Corporate Responsibility regarding the progress of the implementation of our sustainable business strategies.

Our policies are accessible to our employees on a central platform

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Integrity, compliance, and legal responsibility are the cornerstones of our sustainable corporate governance and serve as the basis of all our actions, as defined by our Integrity Code. The Integrity Code is supplemented by other in-house principles and policies.

The House of Policies is our digital platform for policies. All the internal policies of the Group and all the works agreements are compiled here in a user-friendly database that is accessible to all employees. The policies are available in several languages. Here our employees also can access a compact web-based training course about the policies, and the Group companies can receive advice about local policy management.

We also use the ten principles of the UN Global Compact as a fundamental guide for our business operations. As a founding member and part of its LEAD group, we are strongly committed to the UN Global Compact. Our internal principles and policies are founded on this international frame of reference and other international principles, including the Core Labour Standards of the International Labour Organization (ILO), the OECD Guidelines for Multinational Enterprises, and the UN Guiding Principles on Business and Human Rights. Within the framework of our participation in the UN Global Compact, our specialist units are active in a variety of working groups — for example, regarding transparency, reporting, and responsibility in global supply chains.

Financial and non-financial performance indicators are managed Group-wide

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The Daimler Group is exposed to a large number of risks that are directly linked with the business activities of Daimler AG and its subsidiaries or that result from external influences. A risk is understood as the danger that events, developments or actions will prevent the Group or one of its segments from achieving its targets. This includes financial and non-financial risks. At the same time, it is important to identify opportunities in order to safeguard and enhance the competitiveness of the Daimler Group. An opportunity is understood as the possibility due to events, developments or actions of safeguarding or surpassing the planned targets of the Group or of a segment.

The divisions have direct responsibility for recognizing and managing business risks and opportunities at an early stage. As part of the strategy process, they also identify risks that are connected with the Group’s planned long-term development and opportunities for continued profitable growth. The results of their work are included in the decision-making process. In order to identify business risks and opportunities at an early stage and to assess and manage them consequently, management and control systems, which are clustered into a risk and opportunity management system, are applied. Opportunities and risks are not offset.

The risk management system is intended to systematically and continually identify, assess, control, monitor, and report risks threatening Daimler’s existence and other material risks. This system is an integral part of the overall planning, controlling, and reporting process that is performed by the companies, segments, and corporate functions. It is a key factor in the achievement of our corporate targets and the enhancement of risk awareness at the Group.

The opportunity management system at the Daimler Group is based on the risk management system. The objective of opportunity management is to recognize the possible opportunities arising in business activities early on and to use them in the best possible way for the benefit of the Group. This should result in planned targets being met or exceeded. Opportunity management considers relevant and realizable opportunities that have not yet been included in any planning.

As part of the planning process, risks and opportunities are noted within an observation horizon of up to five years. The segments pass along this information to the corporate risk management unit, which presents it to the Board of Management and the Supervisory Board. Furthermore, the employees responsible for risk management have the task of defining measures and, if necessary, initiating such measures to avoid, reduce, or protect the Group against risks. Within the context of opportunity management, measures are to be taken with which opportunities can be seized, improved and (fully or partially) realized.

Sustainability-related risks and opportunities are a fixed component of the Group-wide planning, controlling, and reporting process

Risk and opportunity management is a fixed component of the Group-wide planning, controlling, and reporting process. It is designed to sustainably support the achievement of the corporate targets and to ensure risk awareness at the Group. Sustainability aspects are integrated into the Group-wide risk management process at Daimler. Sustainability-related risks and opportunities are defined as conditions, events or developments related to the environment, society or corporate governance (ESG) whose occurrence could actually or potentially impact the earnings, financial position, asset situation, and reputation of the Daimler Group. Circumstances categorized as environmental issues include CO2 emissions, extreme weather events, waste prevention, and recycling. Labor law standards, product safety, product liability, and suppliers’ compliance with labor law standards are examples of circumstances categorized as social issues. The area of corporate governance is concerned with matters such as honesty in tax affairs, measures taken to prevent corruption, and ensuring data protection.

The ESG-related risks and opportunities are listed according to their causes in the corresponding categories of the Risk and Opportunity Report. With regard to climate-related risks and opportunities, Daimler orients itself according to the recommendations of the . In addition, legal risks or social violations by partners and suppliers can have a negative impact on the reputation of the Daimler Group, on the environment, and on employees at partner and supplier companies. As one of the fundamental principles of its business activities, Daimler therefore places particular priority — also in the selection of partners and suppliers — on adherence to applicable laws and ethical standards.

Further information can be found in the Risk and Opportunity Report.

How we communicate and assess risks and opportunities

The organizational embedding of risk and opportunity management is carried out by the risk management organization that has been established at the Group. The responsibility for operational risk management and for the risk management processes is borne by the segments, corporate functions, organizational units, and companies. They report on the concrete risks and opportunities at regular intervals to their superordinate units. Unexpectedly occurring material risks must be reported immediately. The segments pass along this information to the corporate risk management unit, which presents it to the Board of Management and the Supervisory Board.

The Group Risk Management Committee (GRMC) is responsible for ensuring continuous improvement and evaluating the efficiency and effectiveness of the risk management system. The GRMC consists of representatives from Accounting & Financial Reporting, the Legal Affairs department, Compliance, Technical Compliance, Corporate Security, and the Management Board members responsible for finances at Mercedes-Benz AG, Daimler Truck AG, and Daimler Mobility AG. It is headed by the Daimler AG Board of Management members who are responsible for Finance & Controlling, Daimler Mobility, and Integrity and Legal Affairs. The Internal Auditing department takes into account material findings via the internal controlling and risk management system.

Managing environmental and occupational safety risks at the local level

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Local risk management plays a key role at our locations with regard to environmental and occupational safety risks. In order to identify and address local labor protection and environmental risks, we operate an Environmental & Safety Risk Management system at our Group-owned production facilities. By means of this system we regularly assess the extent to which we have fulfilled our obligations. We do this by visiting each location approximately every five years and using a standardized process to find out whether our corporate policies regarding environmental protection and in the area of health and occupational protection have been duly implemented. Risk assessment is carried out in the following theme fields, among others:

In the occupational safety area:

  • Safety and accident management and occupational safety organization
  • Performance of hazardous work
  • Hazards due to fire and explosion
  • Risks due to machines and plants

In the environmental protection area:

  • Environmental management
  • Emissions into the atmosphere
  • Discharge into bodies of water
  • Waste management
  • Contamination of soil and groundwater

Common risks in both areas:

  • Handling of, and exposure to, substances hazardous to the environment
  • Risks due to ambient conditions

The results of the risk assessments are communicated to the plant and divisional management in the form of reports that define appropriate correction measures. The implementation of these measures is monitored annually in a controlling process.

We utilize management systems to ensure clear areas of responsibility as well as transparent and standardized reporting at our production facilities around the world. Approximately 98 percent of our employees work at locations with environmental management systems certified according to ISO 14001. Approximately 40 percent of our workforce at our own production locations — about 100,000 employees — work at production facilities with occupational safety management systems certified according to ISO 45001 or OHSAS 18001.

The risk assessments at individual locations that had been scheduled for 2020 could not be carried out as planned because of the covid-19 pandemic and the associated travel restrictions and lockdown regulations. In order to return to the five-year cycle in the future, we intend to carry out the skipped assessments in the years ahead. However, we are continuing our controlling of the degree of implementation of the improvement measures, as usual. We are also continuously refining our method of risk assessment.

Making strategic decisions in a dialog with stakeholders

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We consider it important to engage in a continuous dialog with all of our interest groups. This allows us to consider various perspectives on our involvement with sustainability issues, identify and address new trends, and share experiences. We also want to engage in constructive discussions of controversial themes at a very early stage. We always focus on conducting a dialog that is fruitful and productive for all the parties involved.

In order to conduct this kind of dialog, we need to identify our stakeholders. We define stakeholders as individuals and organizations that have legal, financial, ethical or ecological expectations regarding Daimler. Whether an individual, organization or group is a stakeholder of our company depends on the extent to which our decisions influence them or, conversely, the extent to which they can influence our decisions. Thus our primary stakeholders are our customers, employees, investors, and suppliers. We also communicate regularly with groups in civil society such as nongovernmental organizations, as well as associations, trade unions, the media, analysts, municipalities, residents in the communities where we operate, and representatives of science and government.

6 | Examples of instruments of our stakeholder dialog

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Examples of instruments of our stakeholder dialog (Graphic)

We use the following instruments for the dialog with our stakeholders

We use various instruments to engage in a dialog with our relevant stakeholders. On the one hand, we use our own dialog formats, which includes the “Daimler Sustainability Dialogue”. We also conduct stakeholder surveys, specialist conferences, and thematic dialog sessions that can also take the form of workshops or are held by our Advisory Board for Integrity and Corporate Responsibility. On the other hand, we keep ourselves up to date on the latest discussions and the associated expectations by participating in industry-specific and cross-industry networks and initiatives. We also evaluate studies and other scientific publications and conduct our own media analyses. These measures help us to identify developments and the associated expectations in areas beyond the dialog events we have initiated.

How we conduct the dialog at the Group level

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In order to implement the dialog with our stakeholders throughout the Group, we have defined clear areas of responsibility, communication channels, and specific dialog formats. These proactive dialog activities are initiated by experts from the Integrity and Legal Affairs division and other players such as the External Affairs (EA) unit. For example, EA organizes political dialogs. The Integrity and Legal Affairs unit also works together with Corporate Communications to coordinate the “Daimler Sustainability Dialogue”. Our sustainability committees, the GSB, and the Sustainability Competence Office manage other dialog activities.

The virtual “Daimler Sustainability Dialogue” has met with a great response

One essential tool of the dialog with our stakeholders is the “Daimler Sustainability Dialogue”, which has been held annually in Stuttgart since 2008 and brings various stakeholder groups together with members of the Daimler Board of Management and executive management. The participants attend a range of workshops, where they discuss selected issues related to sustainability and work together to further develop their approaches. Our personnel responsible for specific themes take up the impulses generated by the participants and work together with the stakeholders to incorporate these ideas into their work. They then report at the event in the following year on the progress made in the interim. Due to the covid-19 pandemic, we held our “Daimler Sustainability Dialogue” via a digital meeting platform for the first time in 2020. Four representatives of the Board of Management of Daimler AG presented a comprehensive status report. More than 200 external and Daimler participants split up into eight working groups to discuss themes such as human rights, environmental protection, livable cities, and the topic of “Employees and Integrity.” The meeting was concluded with a discussion of the sustainable transformation of mobility by the Chairman of the Board of Management, Ola Källenius, and renowned experts.

As a globally operating company, we have set ourselves the goal of establishing sustainability at our business units and specialist units all over the world. For this reason, we organize “Daimler Sustainability Dialogue” events in other countries and regions as well. Such international dialog events have been held in China, Japan, the United States, and Argentina. During the reporting year, more than 300 stakeholders attended the eighth “Daimler Sustainability Dialogue” in China — which here too was held virtually for the first time. The participants discussed topics such as green manufacturing, urban mobility, and social responsibility.

The Advisory Board for Integrity and Corporate Responsibility supports us with constructive criticism

The Advisory Board for Integrity and Corporate Responsibility has been an important source of input for sustainability activities at Daimler since 2012. The board’s members — who are independent external experts from the fields of science and business, as well as from civic organizations — offer us constructive criticism in questions related to integrity and corporate responsibility at Daimler. The board meets at regular intervals and also holds discussions with members of the Board of Management and responsible personnel from the specialist units. During the year under review, the Advisory Board also held a joint meeting with representatives from the Supervisory Board. The Advisory Board’s members have extensive experience and possess diverse specialized knowledge regarding environmental and social policy, various human rights and ethical issues, and the development of transport, traffic, and mobility. During the reporting year, the Advisory Board focused in particular on the transformation of the automotive industry, the further development of Daimler’s sustainable business strategies, and measures for dealing with the covid-19 pandemic.

We actively participate in associations and committees

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Daimler maintains regular contact with representatives of business, government, and other interest groups that advocate for sustainable development. In addition to the dialogs we initiate, we also participate in various associations, committees, and sustainability initiatives. Some of the most important initiatives here are the UN Global Compact, econsense – German Business Forum for Sustainable Development (Forum Nachhaltige Entwicklung der Deutschen Wirtschaft e. V.), and the World Business Council for Sustainable Development. Within these initiatives we also hold discussions with representatives of civil society.

We use our media and committee work to help us make operative and strategic decisions

We also utilize online and print media, discussions with experts, workshops, and local and regional dialog events for our dialog with stakeholders. We also receive inquiries from individual stakeholders concerning various sustainability-related topics. These inquiries are addressed directly and locally by specific specialist units and business units. This approach brings our stakeholders closer to our business operations and makes it possible to directly incorporate specialized knowledge into the dialog. Individual inquiries from stakeholders are also reported at the meetings of our sustainability bodies and are thus taken into consideration in our strategic decisions. Our sustainability bodies also coordinate the dialog with our stakeholders on interdisciplinary issues. The discussions conducted during the reporting period focused on themes such as climate protection, electric mobility and the battery value-added chain, respect for human rights, livable cities, data responsibility, and .

Open-ended dialogs at the local and regional levels

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We also engage in a dialog with the stakeholder groups at our business locations. In connection with specific occasions and projects, we address questions, concerns, criticism, and suggestions made by stakeholders and conduct an open-ended dialog with them. We also stage dialog and information events on current topics. The results of all of our dialog measures are incorporated into decision-making and decision implementation processes at the company.

One important example of a regional dialog was the virtual interim results conference of the strategic dialog for the automotive industry in Baden-Württemberg in September 2020. At this conference, the participating partners presented current projects and information related to the transformation of the automotive sector to a wide audience. We used this opportunity to inform the audience about the latest trends in training and professional development, as well as our activities in the area of urban mobility. In a chat area the participants could engage in discussions with the virtual visitors.

Sustainable investment is increasing its impact

The volume of managed assets invested on the basis of sustainability criteria () has been increasing steadily over the last few years. This trend is also reflected by the increasing number of investors who have committed themselves to the (PRI). One of the drivers of this development is the realization that investors’ portfolios are more resilient if the companies represented in the portfolios are also assessed from the standpoint of sustainability. It is also becoming evident that this approach is not expected to cause any loss of return compared to conventional assessment methods. As a result, the ESG criteria are becoming increasingly important in capital investment processes. This development offers companies the opportunity to differentiate themselves in the competition for equity and debt. The crucial elements of this opportunity are sustainable business strategies, ambitious goals, and transparent reporting on sustainability aspects along the entire value-added chain. We are also seeing increasing interest on the part of legislators and society at large in a more sustainable organization of economic processes. People now expect financial streams to flow into sustainable corporate activities that serve the interests of society and the environment. As a result, companies and players in the capital market are being increasingly called to account regarding the environmental and social impacts of their business activities.

They are also facing increasing demands and formal obligations to disclose information related to sustainability. Investors expect them to publish reports conforming to standards such as those of the TCFD (Task Force on Climate-related Financial Disclosure) and the . Meanwhile, the extent of statutory disclosure obligations is continually growing — for example, as a result of the new EU taxonomy and the ongoing development of legislation concerning non-financial reporting.

Daimler is distinguishing itself as a sustainable issuer

Our sustainable business strategies, such as Ambition 2039 for Mercedes-Benz AG, are the fundamental reason why Daimler is viewed as a sustainable investment object on the capital market. Our focus is on a continuous dialog with players on the capital market as representatives of investors in equity and debt. We conduct this dialog via platforms such as ESG conferences and roadshows as well as individual talks with investors and investor initiatives. The Investor Relations unit at Daimler AG works closely together with the company’s in-house sustainability experts. To support this cooperation, in 2019 we set up a new function at Investor Relations that focuses on managing communication with sustainability-oriented investors and analysts. This is our response to the fact that sustainable investment has become a central investment strategy — especially for institutional investors, who set especially high standards of transparency for external reporting according to ESG criteria.

We are closely monitoring developments at the standard-setting bodies (such as TCFD, SASB, GRI) as well as our capital investors’ changing requirements regarding ESG reporting. This enables us to identify early on the growing requirements regarding transparent reporting by capital market players.

In 2020 we published a reference table for climate-related reporting for the first time. Our approach here complies with the recommendations issued by the Task Force on Climate-related Financial Disclosure (TCFD).

In view of the present-day diversity of reporting standards, initiatives that serve to harmonize standards should be welcomed by the companies involved. These initiatives include the joint statement of intent of the standard-setting bodies mentioned above ( Statement of Intent to Work Together Towards Comprehensive Corporate Reporting) and the recommendations made by the IFRS Foundation.

ESG rating agencies such as MSCI, Sustainalytics, ISS, and CDP are additional important players in the capital market and in the sustainability-oriented investment process. Daimler has been publicly reporting the details of its climate-related business activities in line with the CDP standards for more than 15 years. Since 2018, the CDP has adapted its questionnaires on climate change to conform with the recommendations of the TCFD and adopted its anticipatory approach to the disclosure of climate-related risks. In 2020 Daimler was once again in the Leadership category with an “A-” rating. Today the rating results of most suppliers are made available to the public on the companies’ respective websites. At Daimler, we rely on cross-unit cooperation to provide the rating agencies with the information they require. We intend to continue the ongoing development of our external reporting, close any gaps, and initiate internal change processes.

In 2020, we developed a company-wide Green Finance Framework in order to even more effectively position Daimler as a sustainable investment object and enable us to exploit the opportunities that sustainable financing offers for corporate development. The Green Finance Framework makes it possible for us to finance investment in sustainable technologies through bonds and loans, for example. On the basis of the Green Finance Framework, Daimler issued a green bond with a volume of €1 billion at the beginning of September 2020. The framework is based on the voluntary process guidelines — the Green Bond Principles — of the International Capital Market Association (ICMA). The Green Finance Framework was presented in a virtual roadshow and has attracted a great deal of interest among investors. The framework has received certification with the highest rating — “Dark Green” — from the Center for International Climate and Environmental Research (CICERO).

We manage pension assets in line with sustainability criteria

Daimler operates as an investor itself when it invests the company’s pension assets. ESG criteria are playing an increasingly important role in our selection process for capital investments. When we make sustainable investments, we also take the associated risk and return aspects into account.

In Germany, the capital investment process for most of our German pension assets is handled by investment managers to whom we grant individual mandates. We are increasingly making sure that the investment process takes sustainability aspects into account and makes them transparent, and we work exclusively with investment managers who have signed the UN Principles for Responsible Investment. Sustainability is also one of the investment principles of Daimler Pensionsfonds AG.

We also use a negative list to exclude investing in companies that do not fulfill our core requirements. Furthermore, we are striving to integrate ESG aspects even more closely into our own processes, and in 2020 we developed a sustainability concept for this purpose. We are now implementing individual elements of this concept step by step in our investment processes. In addition to taking the ESG ratings into account in our investment process, we also aim to expand our ESG-themed investments. The measures we have implemented as part of our sustainability concept are regularly assessed and adapted to current developments.

For our investments abroad, we take the country-specific requirements into account.

How we fulfill our tax obligations

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Daimler views itself as a responsible company that strives to meet all of its global tax obligations while also taking into account its corporate values and its sense of social and ethical responsibility.

In line with our Group management strategy, we are operating in line with the following principles in particular:

  • We ensure that the Group companies meet all of their tax obligations and that they comply with our integrity standards through the use of suitable measures such as efficient, high-quality, and reliable expertise, processes, systems, methods, and controls.
  • We have established an active risk management system for the Daimler Group and its relevant employees by means of an adequate Tax Compliance Management System (Tax CMS).
  • In line with the principle of being a good corporate tax citizen, we conduct legal and proactive, but also non-aggressive, tax planning activities on the basis of economic considerations (“tax follows business”). We also strive to work cooperatively, transparently, and constructively with the tax authorities. In the process, we maintain our legal standpoints and defend our interests wherever we believe such actions are appropriate and legitimate.

The Group’s tax strategy defines the limits of our actions, and this strategy is further specified and implemented by means of organizational and content-related policies, provisions, and instructions.

The tax policies define responsibilities, tasks, and obligations and also contain specific provisions for ensuring that legal requirements are met. In this manner, they also make the responsible employees throughout the Daimler Group more familiar with tax issues. Our Code of Conduct stipulates that all intentional violations of internal or external tax provisions, as well as any failure to make corrections to procedures performed in an erroneous manner, are to be reported and investigated in line with our internally valid rule violation policies.

The Corporate Tax department has established a Tax CMS in order to ensure effective tax compliance. The Tax CMS is a separate sub-unit of the Compliance Management System (CMS). The Tax CMS also operates an active tax-risk management system and monitors and checks the fulfillment of tax obligations. The goal of this consistent Group-wide risk management system is to effectively identify and reduce tax risks at the Daimler Group, and thus the associated personal risks that may be faced by the employees active in this area. The system comprises numerous measures that include a permanent tax risk review and the incorporation of tax risk issues into the internal control system (ICS) and the Group-wide risk management process in line with our risk management policy. No significant violations of these regulations regarding the tax laws became known to us in the reporting year.


Daimler AG Mercedesstraße 120
70372 Stuttgart
Tel.: +49 711 17 0

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
VAT registration number: DE 81 25 26 315

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