Strategy and concepts
Obligation and mission
Respect for human rights has key importance for the Mercedes-Benz Group and is an obligation as well as a mission for the Group. The company has therefore made upholding human rights an area of action of its sustainable business strategy. The Mercedes-Benz Group also introduced a corresponding risk-based system to ensure ongoing human rights due diligence. The measurable targets and key figures for the system are defined in the sustainable business strategy.
The Mercedes-Benz Group respects the internationally recognised human rights and has committed itself to respect the following standards, among others:
- Universal Declaration of Human Rights
- International Covenant on Civil and Political Rights
- International Covenant on Economic, Social and Cultural Rights
- ILO (International Labour Organization) Declaration on Fundamental Principles and Rights at Work
- UN Guiding Principles on Business and Human Rights
- Ten principles of the UN Global Compact
- OECD Guidelines for Multinational Enterprises1
This is contained in the Group’s Integrity Code as well as in the Principles of Social Responsibility and Human Rights, which are binding for all employees worldwide. The Mercedes-Benz Group has established the Human Rights Respect System (HRRS) for the implementation of human rights due diligence.
Respect for human rights is a fundamental component of responsible corporate governance at the Mercedes-Benz Group. The Mercedes-Benz Group is committed to ensuring that human rights are respected and upheld along the entire value chain in all Group companies and by partners and suppliers. The Principles of Social Responsibility and Human Rights reflect this voluntary self-commitment.
All relevant specialist units of the Group participated in the drafting of the Principles. This included input from internal human rights experts, as well as the perspectives and expertise of external stakeholders. The requirements of the aforementioned international standards and the Supply Chain Due Diligence Act (LkSG) were taken into account.
The Chairman of the Board of Management and other Members of the Board of Management of Mercedes-Benz Group AG signed these Principles, together with the General Works Council, the World Employee Committee and IndustriALL Global Union. They supplement and specify the principles of human rights and good working conditions in the Mercedes-Benz Group's Integrity Code. The Principles of Social Responsibility and Human Rights apply to all employees worldwide. Corporate Audit incorporates the principles regulated therein in its audit criteria on the basis of the Integrity Code in its audit criteria and ensures that its provisions are observed.
With these Principles, the Mercedes-Benz Group commits itself to preventing adverse impacts on human rights in its own business operations and those of its partners and suppliers worldwide and to bring to an end and mitigate these negative effects as far as possible. The Mercedes-Benz Group continues to develop the Principles and to adapt them in accordance with the results of the risk analysis undertaken as part of the HRRS on a regular basis and as required. It communicates it to all employees of the Mercedes-Benz Group as well as to controlled Group companies. The Principles are publicly available in different languages and have been appended to the Integrity Code since January 2023. It is enclosed with every employment agreement.
Requirements for suppliers
That is why the Mercedes-Benz Group is committed to the responsible procurement of production and non-production materials as well as services.
In this context, the Responsible Sourcing Standards (RSS) form the guiding principles for sustainable supply chain management of the Mercedes-Benz Group. These define minimum requirements and expectations for suppliers. They reflect the conviction that companies can achieve a sustainable supply chain only together with their partners. To ensure that this succeeds within the scope of new tenders, the Mercedes-Benz Group has obligated its direct suppliers to comply with the RSS, communicate them to their employees and to their direct suppliers and ensure their compliance within their sphere of influence.
The aim is to prevent, minimise or, where possible, end these negative effects on human rights worldwide. In addition, the standards include requirements for environmental protection: the aim of these is to conserve natural resources and prevent environmental damage caused by economic activity, to repair it when it occurs and to compensate for it if it is unavoidable or not rectifiable. The RSS are focussed in particular on human rights aspects, which the Mercedes-Benz Group has identified in an impact assessment as salient human rights risks. Furthermore, with regard to suppliers, the responsible procurement of raw materials from conflict and high-risk areas (CAHRAs) is an important issue.
The RSS are aimed at all direct suppliers of the Mercedes-Benz Group and are applied worldwide. Since August 2022, the minimum requirements related to human rights and the environment contained in the RSS have been an integral part of new supply agreements with direct suppliers of the Mercedes-Benz Group.
Furthermore, the Mercedes-Benz Group also formulates expectations for suppliers with the new framework: These expectations reflect sustainability targets, which the Group intends to work toward together with its suppliers. The aim is to work together in order to promote solutions for the protection of human rights and the environment. Likewise, processes that help the Group to comply with performing due diligence for responsible corporate action are to be jointly established and continually developed.
The Social Compliance department serves as the centre of competence for human rights. This department works closely with the specialist units responsible for operational implementation of the company’s human rights due diligence obligations, and with the procurement units
Overarching activities relating to human rights issues are managed by the Mercedes-Benz Group AG Board of Management division Integrity and Legal Affairs. The division is responsible for drawing up the Principles of Social Responsibility and Human Rights and it also manages human rights due diligence obligations within the Mercedes-Benz Group via the Group’s Human Rights Respect System (HRRS). The responsible member of the Board of Management regularly obtains information and corresponding reports about the Group’s human rights activities.
During the reporting year, the Mercedes-Benz Group resolved for the first time to designate a Human Rights Officer. The Human Rights Officer is responsible for monitoring compliance with the Principles of Social Responsibility and Human Rights and the HRRS and reports to the
member of the Board of Management responsible for Integrity and Legal Affairs. The Human Rights Officer is also a member of the Group Sustainability Board and reports annually and as needed to the Mercedes-Benz Group AG Board of Management on particularly relevant human rights issues and the status of implementation of the Principles of Social Responsibility and Human Rights. The Chief Compliance Officer serves as the Human Rights Officer at the Mercedes-Benz Group.
In addition, the responsible specialist units reported to the entire Board of Management and various committees – for example, the Group Sustainability Board (GSB) – during the reporting year. The GSB is composed of, among others, the Members of the Board of Management responsible for sustainability.
The purchasing units inform the purchasing managers they report to as well as Members of the Board of Management about their respective measures for upholding human rights. The responsible specialist units report to the GSB on the progress of the raw material assessments on a quarterly basis.
Strategic decisions on human rights issues are taken by the Board of Management. It has oversight over human rights issues and is kept regularly informed by those responsible in the specialist units. In the reporting year, the following topics, among others, were discussed with the Board of Management:
- Outlook on regulatory developments and derivation of corresponding action recommendations for the Group.
- Further development of policies, processes and measures aligned to the requirements of the LkSG – for example, the establishment of the new function of Group Human Rights Officer.
- Presentation and adoption of the RSS.
The Board of Management also informs the Supervisory Board about sustainability issues such as human rights and labour standards at regular meetings.
In 2020, the Board of Management of Mercedes-Benz Group AG decided to make human rights-related annual targets relevant for remuneration. This means that the variable remuneration of the executives as well as the Board of Management also depends on, among other things, whether specific goals in the area of human rights have been achieved. The basis for this is provided by the performance of assessments of raw materials relevant for production which pose a high risk of human rights violations.
Assessment of human rights risks
Human Rights Respect System (HRRS)
The Human Rights Respect System (HRRS) is the Mercedes-Benz Group’s approach to fulfilling its human rights due diligence obligations. It encompasses the protection of the Mercedes-Benz Group’s own employees via the Social Compliance Management System (Social CMS) in Group companies, as well as the processes used to monitor human rights due diligence in supply chains. The Mercedes-Benz Group utilizes this human rights due diligence approach to examine Group companies and their direct suppliers (tier 1) and also, from a risk-based standpoint, indirect suppliers (beyond tier 1).
The HRRS is to be understood as a due diligence cycle that basically consists of four steps: 1. Risk assessment, 2. Programme implementation, 3. Monitoring, and 4. Reporting. It is designed to identify risks and possible and actual negative effects of business activities on human rights early on, to systematically avoid such effects and, if necessary, to initiate countermeasures.
In addition, the Group’s own whistleblower system BPO (Business Practices Office) also contributes to the Mercedes-Benz Group’s human rights due diligence. The BPO protects both the rights holders as well as the Group. The Mercedes-Benz Group aims to enter into an exchange with potentially affected rights holders or their representatives and to take their interests into account even before there is cause for complaint.
The Mercedes-Benz Group continues to expand the HRRS step by step and also involves external stakeholders in the process. These include, among others, rights holders such as employees and their representatives or the local communities. For example, the Mercedes-Benz Group interacts with international non-governmental organisations (NGOs) on human rights risks associated with the extraction of certain raw materials.
Human rights risks
Human rights risks according to the type and scope of the business activity
In accordance with the United Nations (UN) Guiding Principles, the Mercedes-Benz Group has identified salient human rights risks according to the nature and scope of its own business operations. The legal frame of reference relevant to the Group included all internationally recognised human rights – but especially the ILO Core Labour Standards and the International Bill of Human Rights. In the specific context of automotive production, this results in significant human rights risks, which are put into concrete terms in the Group’s Principles of Social Responsibility and Human Rights as well as in the RSS directed at the suppliers. These also comprise the human rights specified in the LkSG.
- Abolition of child labour
- Abolition of forced labour
- Freedom of association and right to collective bargaining
- Equal opportunities and protection against discrimination
- Right to health and safety at work
- Working hours, remuneration and benefits
- Protection of human rights defenders
- Protection of local communities and indigenous peoples
- Security personnel and the protection of human rights
Human rights risks in Group companies as well as in production material and service supply chains
In implementing human rights due diligence processes, the Mercedes-Benz Group follows a systematic, risk-based approach – as laid down by the UN Guiding Principles: to enable the salient human rights risks to be appropriately addressed, the first step for the Group is to identify Group companies as well as supply chains for production materials and services which potentially pose human rights risks. In doing so, the Mercedes-Benz Group takes a different approach depending on the type of business relationship.
The Mercedes-Benz Group subjected its Group companies to a human rights risk analysis based on an internally developed assessment model. Using recognised country risk indices, it determined the respective human rights risk situation for each Group company. In addition, the Mercedes-Benz Group considered the risk of the respective business models. Each Group company was then assigned to a corresponding risk cluster.
To determine the human rights impacts in production material supply chains, the Mercedes-Benz Group first analysed the raw materials present in the vehicle. It then compared these with the “List of goods produced by child labour or forced labour” of the US Department of Labour. The Group prioritised critical raw materials in several steps – criteria included human rights and environmental risks in the countries where the raw materials are extracted, the relevance of the raw materials for the transformation to electric mobility, the functional relevance of the raw materials in important components and the purchasing scope. The result is a list of 24 raw materials associated with increased human rights risks. These are now being assessed step by step and on a supply chain-specific basis. The list can be viewed in the Mercedes-Benz Raw Materials Report.
In order to identify services that are particularly critical from a human rights perspective, the Mercedes-Benz Group used the following criteria within the scope of an impact assessment:
- The number of untrained employees
- High fluctuations in demand
- The physical difficulty of the task to be performed
- The visibility of the people who provide the services
- The use of HR service providers
- A large number of contract partners
- High economic pressure along the supply chains
The Mercedes-Benz Group compared these criteria with the services relevant to it and as a result identified 27 services. These were prioritised with the help of external expert advice based on the Severity Approach of the UN Guiding Principles. The identified services can be categorised as follows:
- Construction services
- Event services
- Security services
- Maintenance services
- Logistics services
- Services related to work clothing
For the identified services, the salient human rights risks are then identified on a step-by-step and supply chain-specific basis, and corresponding measures are defined – analogous to the procedure for critical production material supply chains.
Identify, evaluate and prioritise concrete risks
In a second step, the concrete risks are identified – those related to Group companies as well as those related to supply chains. These risks are then weighted and prioritised. This requires further process steps that relate to the circumstances of a specific Group company or supply chain.
According to the identification of the salient human rights risks, the human rights risk exposure of the various companies varies depending on the country and business model. With reference to the main risk areas of employee rights, diversity and non-discrimination, as well as security and local risks at the locations, the Mercedes-Benz Group sent a standardised questionnaire to Group companies associated with high and medium risk for the first time in 2021 in order to determine and review concrete risks. It then reviewed the results of the questionnaire with regard to the concrete risks. In this way, human rights risks of the respective Group companies were examined, evaluated and the final social compliance risk classification was determined in direct exchange with the supporting Compliance units in 2022 as well. The analysis results are the basis for the allocation of risk-specific packages of measures.
In addition to Group companies and direct contractual partners, the Mercedes-Benz Group also examines the deeper supply chain due to the higher incidence of human rights risks there.
Which of the major human rights risks occur in raw material supply chains specific to the Mercedes-Benz Group can vary depending on the raw material. It therefore subjects the previously identified 24 critical raw materials to a more in-depth assessment.
In this context, it is guided, among other things, by the so-called Severity Approach of the UN Guiding Principles: accordingly, the Mercedes-Benz Group first assesses which of the salient human rights risks fundamentally arise in connection with the respective raw materials. If the risks do arise, their severity (scale) and the number of people affected (scope) are subsequently assessed. In a further step, based on supplier dialogues, supplier self-disclosures and audits, the Mercedes-Benz Group assesses whether the risk actually arises in its own raw materials supply chain and whether there are opportunities for remediability. On this basis, the Group defines measures and implements them in order to minimise risks.
In the Mercedes-Benz Raw Materials Report, the Mercedes-Benz Group reports on the salient human rights risks and due diligence measures in connection with critical raw materials.
Social Compliance Management System
The Mercedes-Benz Group uses the Social Compliance Management System (Social CMS) to identify and address in particular human rights risks that can arise among employees in its own Group companies.This is based on country- and business model-related risk analyses. The focus is on the human rights main risk areas that have been identified for the Group companies: employee rights, diversity and non-discrimination, as well as security and local risks at the locations.
The aim of the Mercedes-Benz Group is to minimise potential risks in the main risk areas through the systematic approach of the Social CMS.
The Group has integrated the Social CMS and the topic of human rights at its Group companies into the central, systematic compliance risk management process. It derives packages of measures, which are allocated to the affected Group companies and adjusted as needed – the compliance officers of the global compliance network are also involved in this process. Based on this, it prepares an aggregate risk assessment overview for the Group companies.
The system is reviewed and revised regularly and as needed. The reasons for this can be a new or changed business operation of a Group company as well as newly identified, rated or prioritised risks and focal risk areas. In addition, the Mercedes-Benz Group takes into account regulatory requirements on human rights due diligence.
In the reporting year, the Mercedes-Benz Group subjected 100% of the Group companies to this risk analysis.
Human rights risks in supply chains
The Mercedes-Benz Group is aware of its responsibility to uphold human rights. Through extensive measures, it wants to ensure that both production materials and services are procured in compliance with sustainability standards worldwide.
Vehicle production requires many materials. These include raw materials whose mining and processing pose the risk of human rights violations and negative environmental impacts. That is because these raw materials sometimes come from countries that lack sufficient environmental and social standards.
The Mercedes-Benz Group focuses especially on critical raw materials when assessing human rights risks in the production-material supply chain.
The 24 critical raw materials that were identified during a preliminary risk assessment will be gradually examined in more detail between now and 2028. This review basically consists of three steps:
- Increasing transparency along the raw material supply chains – especially with regard to certain key components such as battery cells. To this end, Mercedes-Benz AG contacts the suppliers of the relevant components, for example, and asks them to disclose their structure of subcontractors.
- Identification of risk hotspots in these supply chains, e.g. on the basis of the specific risks in the individual mining countries.
- Definition and implementation of measures for the risk hotspots and review of whether they are effective overthe long term.
The Group publishes the results of these assessments in its Mercedes-Benz Raw Materials Report.
By the end of 2022, the Mercedes-Benz Group assessed raw materials with an increased risk of human rights violations in this way and achieved its target for 2022. The Group intends to gradually increase this percentage further. The target for 2025 is 70%. By 2028, appropriate protective measures are to be defined for 100% of raw materials posing an increased risk of human rights violations. Progress is presented in the context of the Raw Materials Report.
A key principle when deciding on a measure is that the Mercedes-Benz Group does not generally exclude high-risk areas as sources of critical raw materials. Rather, the approach aims to improve the situation on the ground for the people and to strengthen their rights. In doing so, the Mercedes-Benz Group is also following the recommendation of NGOs, policymakers and other relevant stakeholders who advise not to withdraw from critical countries. The Mercedes-Benz Group follows the principle of “empowerment before withdrawal”. This means that it wants to make an active contribution in its supply chains to better protect people and the environment – and not turn its back on problems. It therefore works closely with relevant stakeholders in the raw material-specific supply chains.
The Mercedes-Benz Group also ensures that its service providers share responsibility for respecting human rights and for other sustainability-related aspects. International Procurement Services (IPS) evaluates all new service providers in risk countries and critical procurement segments to determine whether they fulfil social and environmental standards, are ethical in their business operations, and properly implement policies.
The Group used a preliminary risk analysis as a basis for identifying 27 services that are potentially critical from a human rights standpoint. In cooperation with a team of experts, the results of this analysis were then used to create a list of questions. Service providers are required to answer these questions. The goal of the Mercedes-Benz Group here is to identify any increased human rights risks for certain services and sectors. This gives the Group a transparent overview of the risks and enables it to initiate targeted analyses of the status quo and engage in a productive dialogue with relevant service providers.
The Mercedes-Benz Group also audits its service providers’ due diligence activities. These audits focus on assessments of service providers in high-risk countries. The Group supplements its assessments with document checks and database research in order to ensure the information is plausible.
The Mercedes-Benz Group attaches great importance to further developing and implementing its HRRS together with external stakeholders. It is particularly important for it to engage with potentially affected rights holders, for example with employees and their representatives in order to identify human rights risks and develop appropriate measures. But the Group also engages in dialogue with external third parties such as civic organisations or local communities and takes their suggestions into account.
As part of the annual "Sustainability Dialogue“, the Human Rights Working Group in the reporting year discussed the whistleblower system as well as the Mercedes-Benz Group’s approach to implementing human rights due diligence in raw material supply chains. The aim of the Human Rights Working Group at the “Sustainability Dialogue” is to incorporate feedback and expertise from external stakeholders into the further development of the HRRS.
A core group of external stakeholders was also formed under the umbrella of the “Sustainability Dialogue” to support the Mercedes-Benz Group in the further development of the HRRS. The Mercedes-Benz Group also involves external experts on an ad-hoc basis.
It also involves potentially affected stakeholders in the review of its 24 raw materials identified as critical in order to identify actual risks along the respective supply chain. Regional and local NGOs are an important stakeholder group in this context. They often provide a more accurate picture of the situation on the ground and know the concerns of the potentially affected parties. In addition, the Mercedes-Benz Group has begun to establish a process to incorporate the concerns of potentially affected parties even more systematically. In the reporting year, it exchanged views with relevant NGOs on topics including deep-sea mining, leather production and deforestation, aluminium production and bauxite mining, small-scale mining, human rights and environmental due diligence, as well as mining standards.
Together with the Initiative for Responsible Mining Assurance (IRMA), Mercedes-Benz AG collaborated on an approach to create better opportunities for local communities affected by mining to participate in audits. The aim of the project was to test and enhance procedures for effectively engaging affected persons before, during and after the audit of mining sites. Through the effective engagement with affected persons throughout the audit cycle, mining standards can be more effective in reducing risks of mining operations. The year-long project was completed at the end of 2022. The results will be published in the spring of 2023.
The Group offers employees and external whistleblowers various channels through which they can report suspected human rights violations and rule violations and also request remedy. These channels thus also help the company identify and assess human rights risks throughout the organization. Both the company BPO (Business Practices Office) whistleblower system and the World Employee Committee are available to receive reports of suspected human rights violations. In addition to contacting the BPO, employees can also seek support from the relevant managers, Human Resources, the social counselling service, the company medical service and the works council, especially in cases of personal violations of rules such as sexual harassment, discrimination or racism. Another contact point is the “Integrity Info Point”.
The BPO whistleblower system is available to all employees, business partners and external whistleblowers worldwide who suspect and wish to report risks to the Group or misconduct within the Group or its supply chains.
In order to constantly increase trust in the BPO whistleblower system and to make it even better known among employees, the Mercedes-Benz Group is continually undertaking communication measures. For example, it provides information materials such as country-specific info cards, pocket guides or an explanatory film, which is available in ten languages. In various dialogue events, it informs its employees about the BPO and encourages them to give feedback. In addition, the Mercedes-Benz Group regularly informs the employees about the type and number of reported violations and provides case studies on a quarterly basis.
With regard to supply chains, suspected violations of the Responsible Sourcing Standards can be reported via the Business Practices Office (BPO). If the misconduct or problem falls within the supplier’s area of responsibility, the supplier must take measures to immediately correct or eliminate the problem. The supplier is furthermore obligated to make known the available opportunities to lodge a complaint within its supply chain. In addition, it must ensure that the information is also passed on to the deeper supply chain. At the same time, the Mercedes-Benz Group requires its suppliers to establish an equivalent complaint format for their own supply chains. They are also to work toward incorporating a similar reporting obligation in contracts with sub-suppliers. According to this, relevant information and reports of violations must be shared by sub-suppliers with the partner.
In addition to the Group’s own BPO whistleblower system, the Mercedes-Benz Group is participating in the conceptual design and planned testing of an industry-wide complaints mechanism as part of the National Action Plan on Business and Human Rights of the Federal Republic of Germany.
Raising awareness of human rights
The Mercedes-Benz Group uses the Integrity Code and the Principles of Social Responsibility and Human Rights to provide its employees with information about the topic of human rights principles and to raise their awareness of human rights risks. The provisions of the Integrity Code and the Principles are binding on all employees. During the reporting year, the Principles were integrated into existing training concepts, such as the mandatory webbased basic module Integrity@Work, in which the Group communicates to all employees the strategic and operational importance of the topic of human rights for the Mercedes-Benz Group and the relevance it has in daily work. Depending on the area of activity, the onboarding process for new employees also includes further function-specific training on human rights issues in the respective work environment.
In 2022, the Mercedes-Benz Group introduced new compliance training courses. These are mandatory for employees of the purchasing and sales organisations as well as for members of management with supervisory functions. The content includes target group-specific human rights issues as well as roles and responsibilities within the framework of the Principles of Social Responsibility and Human Rights. The human rights training is available to all interested employees.
The local compliance and security officers have an important role to play in safeguarding human rights within the Group companies. That is why they have been made aware of relevant human rights risks by means of a web-based training course since 2020. The course focuses on the four main risk areas identified in a risk analysis: workers’ rights, diversity, security and local conditions. The Mercedes-Benz Group also uses this training in the area of corporate security: the aim is to make the employees more aware of the human rights risks in connection with internal security processes and services.
As part of the continuous compliance training programme, the employees of the Mercedes-Benz Group completed 60,129 online training sessions related to human rights topics in the reporting year; this corresponds to 7,782 hours.
Mercedes-Benz AG trains its employees in procurement in a targeted manner: In the reporting year, 114 employees in production materials procurement of Mercedes-Benz AG took part in a sustainability training course. The main focus was on requirements that must be accepted by suppliers in the context of contract awards.
Measures in the Group companies
Mercedes-Benz Group AG monitors and verifies the respect and protection of human rights in all its Group companies. For this reason, the Mercedes-Benz Group performs a systematic risk-based analysis of potential risk factors in the Group companies – among other things, it carries out multi-level risk assessments for this purpose. The results are carefully evaluated and documented.
Based on the risk rating of the Group companies, packages of measures are allocated to the business units. The Group companies implement these measures. To support this, the Mercedes-Benz Group provided the Group companies with communication materials during the reporting period. These include the values and requirements that the Group pursues in its dealings with employees and business partners.
The packages relate directly to the four identified focal risk areas and regulate who is responsible for implementing the measures. For example, one of the packages of measures stipulates that a local diversity representative is to be appointed in Group companies with an increased risk in the field of action of diversity. This is to make it easier to address and remedy any violations.
Employee rights in the Group companies
The Mercedes-Benz Group integrates and reviews the following employee rights in a systematised and risk-based manner in Group companies as part of its Group-wide Social Compliance Management System.
Remuneration and benefits
The Mercedes-Benz Group is committed to an appropriate wage that amounts at least to the legally prescribed minimum wage established under the applicable law and, in addition, enables employees to have a secure livelihood.
Worldwide, the Mercedes-Benz Group remunerates work performed in all Group companies according to the same principles. The Group’s own global remuneration policy, which applies to all employee groups, defines framework conditions and minimum requirements for the design of remuneration systems, whose observance is checked through internal audits.
Abolition of child labour
The Mercedes-Benz Group is strictly opposed to any kind of child labour as specified by the pertinent ILO Conventions number 138 and 182.
It is committed to the effective abolition of child labour and aligns its employer practices accordingly.
The Mercedes-Benz Group applies the principle that working hours must comply with the respective local legislative requirements and the respective industry standards. It ensures, to the extent permitted by applicable law, that safe and healthy working conditions prevail, that work breaks, reasonable limitation of working hours and regular paid rest and recreation leave are guaranteed, and that applicable international standards on working hours, but at least the relevant ILO agreements at the place of employment, are observed.
Abolition of forced labour
The Mercedes-Benz Group is strictly opposed to forced or compulsory labour and any form of slavery, including modern forms of slavery and human trafficking. All employer practices must, at the very least, be based on the ILO Core Labour Standards. Employment relationships are always voluntary in nature. All employment relationships can be terminated, provided there is an appropriate notice period.
According to local regulations, for example in Germany according to labour and collective agreements, workers receive remuneration at the agreed times. Every employee receives a salary statement, in which the remuneration and the statutory deductions (for example social security contributions) are presented in a transparent and comprehensible manner.
Freedom of association and right to collective bargaining
The Mercedes-Benz Group recognises the right of its employees to form employee representative bodies and to collective bargaining to regulate working conditions, as well as their right to strike, in accordance with the respective applicable law. The founding of a trade union recognised under the applicable law, joining one or membership in one, shall not be used as a reason for unjustified unequal treatment or retaliation.
Occupational health and safety
As an employer, the Mercedes-Benz Group ensures safety and health protection in the workplace at least within the framework of the applicable law. It supports continuous development to improve the working environment with the aim of preventing work-related accidents and illnesses.
Equal opportunities and protection against discrimination
The Mercedes-Benz Group is committed to safeguarding equal opportunities among employees and refraining from any form of discrimination. The Group is committed to the fair treatment of all employees and does not tolerate any form of discrimination or unjustified unequal treatment – for example on the basis of characteristics such as gender, descent, origin and nationality, religion and world view, political, social or trade union activity, sexual identity and orientation, physical or mental limitations or age.
Measures in supply chains
The Mercedes-Benz Group uses a variety of measures and concepts to ensure the fulfilment of its due diligence obligations in the supply chain. These include supplier screenings, audits, risk-based due diligence analyses and qualification modules for production material suppliers. The Mercedes-Benz Group uses these tools in order to increase the transparency of the supply chain and ensure that the internationally recognized human rights are upheld by business partners as well, and that other social standards and environmental requirements are met. Procurement units play a key role here.
The procurement units systematically examine whether and to what extent their production material suppliers respect human rights.
For example, the Mercedes-Benz Cars Procurement and Supplier Quality unit evaluates suppliers on site before a possible order is placed. This is based on the Group’s own sustainability standards. In particular, the auditors ask questions about social standards – for example working hours, remuneration and freedom of association. In countries with an increased risk of human rights violations, the unit monitors even more comprehensively: In such instances, the topics of child labour, occupational safety and free choice of employment form an integral part of the audit.
The Procurement department of Mercedes-Benz AG monitors the human rights compliance of direct suppliers of production materials. Procurement regularly conducts risk analyses that also include on-site CSR audits and an annual database research procedure. Its objective here is to identify possible violations of sustainability and compliance rules at an early stage on the basis of the latest supplier data. Should any red flags be revealed, Mercedes-Benz Procurement initiates an extensive examination of the situation.
The Group asks the affected supplier a number of specific questions – for example about its sustainability management, its due diligence measures with regard to human rights issues or the involvement of its own suppliers. If deficiencies are found, it requires the supplier to improve the corresponding processes.
If the supplier does not sufficiently remedy the criticized processes, the company makes individual decisions regarding the next steps. In especially serious cases, these decisions can also be made by management bodies. As a last resort, this can also lead to the discontinuation of Mercedes-Benz AG's business relationship with a supplier.
For effective, sustainable supplier management, it is important that supplier ratings are comparable. To ensure this, the Group uses standardised instruments from external sources: One example of this is the industry-wide sustainability Self-Assessment Questionnaire developed by the European Drive Sustainability initiative. Mercedes-Benz AG requires all its suppliers to complete this questionnaire.
In order to reduce human rights risks in connection with the extraction and processing of raw materials in the supply chains of Mercedes-Benz AG, it is also gradually taking specific measures between now and 2028 for the 24 raw materials that are rated as critical. Read more in the Mercedes-Benz Raw Materials Report.
Service Procurement continuously evaluates the entire service portfolio. This is to identify product groups that pose an increased risk of human rights violations. The Group carries out this risk mapping on a regular basis in order to pick up on current developments and adjust the classification of risks. Service providers associated with increased risk are subject to a due diligence review. This enables their integrity to be examined and reveals potential for improvement. At the same time, the Group trains the suppliers concerned on the basis of specific cases – it makes clear what its expectations are with regard to holistic processes for respecting human rights and which standards must be complied with.
In addition, IPS examines all of the existing service providers to examine their compliance with human rights standards. To this end, it conducts an annual database search on sustainability and compliance violations. Through the regular assessments, the Mercedes-Benz Group aims to detect violations at an early stage, prevent them and ensure that service providers remain vigilant.
If the database research discovers any suspicious activity, the procurement units initiate a more thorough investigation. If the service provider does not adequately improve the processes that have been criticised, the Group decides on the further steps to be taken on a case-by-case basis – in particularly serious cases also in management committees. This can ultimately lead to the Group parting ways with a service provider.
The Mercedes-Benz Group has concluded contracts for work and services with service providers for its own German locations. The requirements in these contracts often surpass those of the legal provisions. In particular, the Mercedes-Benz Group sets high standards for occupational health and safety, accommodation and remuneration, the use of temporary workers and the hiring of subcontractors. It also requires that no pseudo self-employment be allowed. These standards are relevant for all contracts covering more than two months that are physically executed on the business premises of Mercedes-Benz Group AG in Germany. All of the relevant work-for-hire contractors and service providers must declare in writing that they comply with these standards. They are only considered for orders if they fulfil this prerequisite. An audit team conducts reviews of selected services in order to determine whether the standards are met in Germany.
Improving suppliers’ awareness and qualifications
In order to successfully manage sustainability issues such as respect of human rights in the supply chain, having a common understanding of values is not the only important aspect. Know-how regarding the correct implementation of the applicable requirements is just as necessary. Accordingly, the Mercedes-Benz Group has been raising awareness and informing its suppliers through appropriate training modules and – where appropriate – also as part of its cooperation with sustainability and human rights initiatives for many years.
Since 2018, the Mercedes-Benz Group has been cooperating with the Drive Sustainability initiative on the implementation of measures to make production material suppliers in various focus countries more aware of the importance of sustainability, for example by providing such suppliers with information on this issue.The Group selected the respective countries jointly with this initiative. As part of the training, suppliers are trained in human rights and working conditions, among other things – including topics such as working hours, fair remuneration, freedom of association and forced labour. During the reporting year, the training sessions scheduled for suppliers in Mexico and the USA were held as web-based events due to the COVID-19 pandemic.
Based on its sustainability standards for suppliers and its Integrity Code, the Mercedes-Benz Group has also developed the Compliance Awareness Module. This publicly available training module helps suppliers to handle possible integrity- and compliance-related risks in a responsible manner. All suppliers can access this module via the Supplier Portal at any time. In addition, the Mercedes-Benz Group points out to them the possibility of recommending the module to their own business partners in the supply chain.
Industry associations and initiatives
The Mercedes-Benz Group has long been active in a variety of automotive and industry associations that address the issues of sustainability and human rights in the supply chain. These memberships help it to make complex supply chains more responsible through joint action. They include the following:
- UN Global Compact: The Mercedes-Benz Group is a member of the Compact and a participant in two of its Action Platforms (Decent Work in Global Supply Chains and Reporting).
- German Global Compact Network: The Mercedes-Benz Group participates in the Human Rights Peer Learning Group.
- econsense – Forum for Sustainable Development of German Business e.V.: The Mercedes-Benz Group is the theme sponsor for human rights issues and a member of the Human Rights & Value Added cluster.
- World Business Council for Sustainable Development (WBCSD): The Mercedes-Benz Group is a member of this global business initiative for sustainable development, where its activities include participation in programmes for the promotion of a circular economy and for business and human rights.
- Responsible Supply Chain Initiative RSCI e.V. (RSCI): The Mercedes-Benz Group is a founding member of this association initiated by the German Association of the Automotive Industry (VDA). The RSCI aims to help all players in the automotive industry use on-site inspections and corresponding follow-up measures to improve and further develop the sustainability of their supply chains. Among other activities, the RSCI is developing a standardised monitoring mechanism in order to evaluate companies’ sustainability performance.
- Drive Sustainability: The Mercedes-Benz Group is a LEAD partner of the Drive Sustainability initiative of the European automotive industry, which promotes sustainability in the supply chain. Shared guidelines – the Automotive Industry Guiding Principles to Enhance Sustainability Performance in the Supply Chain – play an important role here. These guidelines were updated and published in the reporting year. The Raw Materials Outlook published in 2021 has been further expanded and is used as a basis for the collaboration with stakeholders.
- Automotive industry dialogue in the National Action Plan on Business and Human Rights (NAP): The Mercedes-Benz Group actively participates in the NAP dialogue of the automotive industry. The aim is to work together with representatives from civil society, academia and politics, business and associations to develop solutions to strengthen human rights in value chains. For example, in the reporting year, instructions on the implementation of the five core elements of human rights due diligence in the automotive sector were developed and published.
- Catena-X: Since 2021, the Mercedes-Benz Group has been involved in the cooperation project Catena-X. The aim is to enable secure and cross-company data exchange between all participants in the automotive value chain. In the year under review, more than 100 companies joined this collaborative project to advance the digitisation of automotive supply chains. Catena-X should, among other things, support the Mercedes-Benz Group to verify whether and to what extent suppliers comply with prescribed sustainability requirements. This is made possible by completing the data chain to the upstream and downstream stages of the value chain, from the mines of the raw materials to the recyclers, with information that provides insights on aspects relevant to human rights – for example the origin of the respective raw materials or mining certifications.
Effectiveness and results
During the reporting period, the Mercedes-Benz Group reviewed its measures in the area of human rights and adjusted its management approach as needed.
In 2022, the Mercedes-Benz Group introduced packages of measures for all main risk areas in Group companies based on their individual risk ratings. A concept for the annual review of the allocated measures is currently being developed within the framework of the Social CMS. In this way, the Mercedes-Benz Group wants to ensure that its human rights approach for Group companies is effective and efficient and that the methods and processes are advanced continuously.
The Group also uses the annual “Sustainability Dialogue” to evaluate the effectiveness of the approach: at this event, it presents progress as well as challenges and discusses them with representatives from business, politics and society. The specialist units subsequently evaluate the results and the stakeholders’ suggestions and incorporate them into their work processes. In addition, the results are published on the Group’s website.
The Mercedes-Benz Group uses comprehensive measures to ensure that production materials as well as services are procured worldwide in line with sustainability standards. In doing so, it considers it important to regularly review the effectiveness of the measures and realign or further develop them if necessary.
In the reporting period, the Mercedes-Benz Group published its Responsible Sourcing Standards. In addition, it further developed tools and processes with which it reviews its direct suppliers in general and as well as its high-risk raw material supply chains in particular.
The Mercedes-Benz AG also continued to conduct audits at production material suppliers in 2022, when a total of 825 on-site audits were completed. Some of these audits were conducted virtually due to the Covid-19 pandemic. Among other things, there were apparent issues in the units Disclosure of Sustainability Requirements, Compliance and Business Ethics, Work Safety and Working Hours. The on-site audits at the direct suppliers of Mercedes-Benz AG revealed no suspected cases of child or forced labour and one indication of violations of the right to collective bargaining or freedom of association in the reporting year.
Since 2018, the audit and consulting company RCS Global has been creating transparency for Mercedes-Benz on the complex cobalt supply chains of battery cells and auditing them across all stages in accordance with OECD due diligence guidelines. After initial progress in the cobalt supply chains, the commitment was extended to other battery raw materials in 2022 – specifically to lithium, nickel, graphite, manganese and copper. The The Mercedes-Benz Group also wants to increase transparency and conduct audits in these supply chains. In addition, the audit scope of human rights aspects is expanded to include environmental aspects.
Through the end of 2022, the Mercedes-Benz Group continued to assess raw materials with an increased risk of human rights violations and thereby achieved its intended target for 2022.
During the reporting period, it completed the assessment of the critical raw material aluminium. The identified and prioritised risk areas include: modern slavery (including forced labour), community rights and indigenous rights, and environmental risks with impact on human rights. The The Mercedes-Benz Group intends to further supplement the measures already in place in 2023 according to the risk profile.
Furthermore, Mercedes-Benz AG as part of the new awarding of contracts for selected components containing aluminium (aluminium raw materials, wheels and battery housings) has been reviewing the corporate due diligence measures of potential Tier-1 suppliers in raw material supply chains since 2022. If it is not adequately performed, the company requires obligatory measures as a prerequisite for contract awards.
The Mercedes-Benz Group has set itself the goal of assessing all 24 critical raw materials by 2028. In the reporting year, the Group also made progress on raw materials, which have not yet been conclusively assessed: For example, it collected important data required for the assessment – on reserves, production quantities, extraction and processing of the raw materials, as well as on the trade with them.
During the year under review, the on-site audits and screenings of direct suppliers of the Mercedes-Benz Group that were conducted by IPS discovered no specific suspected cases of child labour or forced labour, nor were there any indications of violations of the right to collective bargaining or freedom of association.
1 Chapter IV on Human Rights in the OECD Guidelines for Multinational Enterprises.