Strong for human rights – Daimler goes on the offensive for a sustainable raw material supply chain

“Daimler stands up for human rights,” says Renata Jungo Brüngger, Member of the Board of Management of Daimler AG, responsible for Integrity and Legal Affairs. “We want to prevent violations of human rights effectively at an early stage, and have created the necessary tools to do so. With several tens of thousands of suppliers and even more sub-suppliers, we need to proceed in a risk-oriented manner, and our Human Rights Respect System provides the systematic foundation for this.”

Sustainability is one of the basic principles in the corporate strategy of Daimler AG, and also a measure of corporate success. As a globally active automobile manufacturer, the company is faced with industry-specific challenges. For sustainable business success it is necessary to utilise the opportunities and limit the associated risks. This is why Daimler is strengthening its activities with respect to human rights. In doing so, the company is taking a further major step to make mobility sustainable. This also includes the responsible procurement of raw materials. Accordingly the company has developed a systematic approach for the respect of human rights – the Human Rights Respect System. With its risk-oriented and systematic methods, it increases the effectiveness of existing measures and also takes further effect along complex supply chains.

To meet its responsibilities towards society, Mercedes-Benz Cars is raising the sustainability standards in the supply chain to the next level. To this end Mercedes-Benz Cars is working together with 1500 suppliers worldwide. Dr Klaus Zehender, Member of the Divisional Board of Mercedes-Benz Cars, Procurement and Supplier Quality says: “The Mercedes-Benz Cars supplier strategy is based on innovation, top quality and partnership. Sustainable procurement of raw materials and the protection of human rights have the utmost priority for us.” For this reason, the measures go beyond direct suppliers. Sabine Angermann, Head of Purchasing and Supplier Quality for Raw Materials and Strategy at Mercedes-Benz Cars: “We actively create transparency in the supply chain, right down to the mine if necessary. Amongst other measures, we carry out audits with our teams of experts on site.” This applies to materials in battery cells such as cobalt – but also to classic raw materials such as steel, aluminium or mica.

Sustainable supply of raw materials

Lithium, cobalt and nickel are the main materials needed for the switch to electro mobility. These metals are not procured directly by Mercedes-Benz Cars. The supply chains involve alarge number of sub-suppliers beyond the primary supply level. Daimler AG requires its direct suppliers to vigorously communicate and monitor the sustainability standards within the supply chain. These sustainability standards have already been defined in the Daimler Supplier Sustainabily Standards for years. Major components of these are requirements relating to working conditions and respect for human rights. Child labour is explicitly forbidden. In order to promote the transfer of requirements to suppliers in downstream stages of the value chain, the company relies on its own inspections and audits as well as on communication and training measures. “It is not only the direct supplier who must operate sustainably, but the entire supply chain,” says Angermann. To monitor the supply chains, Mercedes-Benz Cars carries out risk-based “Supply Chain Walks”: Starting point is the Tier 1 supplier and then the path goes along the critical points in the supply chain, if necessary to the mine. These onsite checks are carried out by interdisciplinary teams. They consist of representatives of the 700 quality engineers and experts in sustainability, human rights and compliance. For example, Mercedes-Benz Cars has made the cobalt supply chain transparent for the award of contract of battery cells.

Systematic monitoring of threats to human rights

With the Human Rights Respect System, Daimler is meeting the requirements of the German federal government’s National Action Plan on Business and Human Rights, which envisages the establishment of systems for the protection of human rights for at least half of the large companies in Germany by 2020.

The Human Rights Respect System at Daimler is oriented upon the Group-wide Compliance Management System. It is intended to identify and avoid risks and possible negative impacts of business activities on the respect for human rights at an early stage. Renata Jungo Brüngger: "The Human Rights Respect System comprises the systematic assessment of potential human rights risks, the definition of the measures required to mitigate the risks, the evaluation of implementation and comprehensive reporting.“ This system will be implemented step-by-step both for Daimler’s majority shareholdings and for the business partner audits in the supply chain. The basis for this are the requirements for respecting human rights from the UN Guiding Principles on Business and Human Rights, the OECD Guidelines, the UN Global Compact and the National Action Plan for Business and Human Rights.

A complaints management process, involving for example the whistle-blower system of the Business Practice Office and the world employee committee, allows to draw attention to possible human rights violations in the supply chain. The company investigates such reports with a team of buyers and experts in human rights and compliance.

Participation in initiatives reinforces the effects

In addition to its in-house measures, Daimler AG has joined further initiatives. The company has specific goals with each of these initiatives. In the interests of an end-to-end sustainability strategy, the entire lifecycle of a product is examined – from the supplier to production and eventual recycling.

With the Responsible Cobalt Initiative, Mercedes-Benz Cars is developing measures to counter social and ecological risks throughout the entire cobalt supply chain. The aim is especially to reduce the risk of child labour, and increase transparency and governance.

Additionally Daimler has joined the non-profit Aluminium Stewardship Council to advance the development of an independent certification scheme for the entire aluminium added value chain. The Responsible Steel Initiative is pursuing greater transparency in the supply chain by developing a certification scheme.

Daimler is also involved in numerous other initiatives to help shape the political and social framework conditions for corporate responsibility. In this sense, Daimler is an elected member of the steering committee of the German Global Compact Network and a sponsor of the human rights group of econsense, the sustainability initiative of German business.