Climate protection in the supply chain
Strategy and concepts
Climate-protection goal: CO2 neutrality
Through its Ambition 2039, the Mercedes-Benz Group aims to achieve CO2 neutrality in less than 20 years. In doing so, the company is taking into account the entire value chain, including its partners and suppliers. That’s because our supplier network plays a crucial role in the attainment of the climate-protection goals. For example, the production of an all-electric vehicle generates about twice as much CO2 as that of a conventional combustion-engine vehicle. This is primarily due to the lithium-ion batteries.
Environmental impact in the supply chain
Mercedes-Benz Group AG implements various projects and measures in order to avoid and reduce CO2 emissions in its supply chains for services as well as for production and non-production materials.
In 2020, Mercedes-Benz AG also began to send an Ambition Letter about CO2 neutrality to its suppliers of production materials. By signing this document, they commit themselves to supply Mercedes-Benz AG only with products that are CO2 neutral over their life cycle — and thus to pursue our climate-protection goals — by 2039 at the latest.
On the way to climate neutrality, Mercedes-Benz Cars & Vans also pursues selected focal points for production materials. In a first step, we investigated which players and which stages of the supply chain produce large amounts of CO2 emissions. We then defined quantitative intermediate targets for CO2 emissions in our supply chains. These targets were derived on the basis of the results of our supplier talks and set with the help of external experts. We are focusing on materials and components that emit large amounts of CO2 during production, e.g. steel, aluminium, certain types of plastic and batteries. To conclude, we integrated the target values into our criteria for the awarding of contracts. When awarding contracts for our Mercedes-Benz Modular Architecture (MMA) electric vehicle platform for compact and mid-range models, we employ the CO2 and recyclate requirements as key criteria for all areas. During the reporting year, suppliers assured us that they would fulfil our targets for more than 40 contracts awarded for this model series alone. This means that they will continuously reduce the CO2 emissions of materials and components that cause high CO2 emissions in particular, as well as increasing the amount of secondary raw materials.
In 2021, we developed requirements and guidelines for the calculation of CO2 emissions in order to provide suppliers with guidance and obtain uniform, and thus comparable, supplier data.
The Mercedes-Benz Group is also cooperating with organisations such as CDP (formerly Carbon Disclosure Project) so that it can depict the environmental impact of its supply chains even more transparently. In 2021, for example, we took part successfully in the CDP Supply Chain Programme for the third time. As part of this programme, we ask our suppliers to report to us about their environmental impact and climate protection efforts. CDP provides the corresponding tools for recording, assessing and publishing environmental and climate data. We contacted our main suppliers regarding this in 2021. They account for around 84 per cent of the annual procurement volume of Mercedes-Benz Cars & Vans. Around 90 per cent of them took part in the survey.
We also expect our suppliers of production materials to operate with an environmental management system that is certified according to ISO 14001 or EMAS. Depending on the specific risks, this also applies to suppliers of non-production materials and services. If a supplier does not have a certified environmental management system, the supplier is given two years to set up such a system and have it certified. If this is not done, the supplier may be excluded from receiving new orders.
Depending on the risk, environmentally sensitive contracts for the purchase of non-production materials and services will, in future, also require proof of an energy management system, in the form of ISO 50001, for example. Moreover, suppliers of services and of non-production materials for CO2-intensive commodities will also be requested to sign the Ambition Letter that requires them to make their production CO2 neutral or to provide their services in a CO2 neutral fashion by no later than 2039. Depending on the project in question, CO2 reduction measures will also be agreed upon during the contract award process for suppliers of non-production materials and service providers, for example by utilising electricity from renewable energy sources when fulfilling the order.
CO2 neutral production materials
The Mercedes-Benz Group is working together with suppliers to develop measures for reducing the CO2 emissions of the procured production and non-production materials and the supply of goods to the plants (inbound logistics). Beginning in 2039 we want Mercedes-Benz AG to procure only production materials that have been manufactured in a CO2 neutral fashion.
To this end, Mercedes-Benz AG has signed agreements with its strategic battery cell partners for the procurement of battery cells whose production is CO2 neutral. Two of these partners began to supply Mercedes-Benz in 2021, commencing with battery cells for the EQS. The production of these battery cells is CO2 neutral, which enables us to reduce the emissions for a cell by about 30 per cent. The inspection and certification organisations SGS and DEKRA have examined and confirmed that the cells are manufactured in a CO2 neutral manner by the suppliers.
We have also launched similar initiatives in other parts of our supply chain so that we and our partners can jointly reduce CO2 emissions step by step. An example of this is our involvement in the Swedish startup H2 Green Steel. The results also benefit the other business units of Mercedes-Benz Group AG.
Supplier survey regarding green electricity
The generation of the electricity consumed also plays a major role for the CO2 emissions in the supply chain. From May to June 2021, Mercedes-Benz AG asked its key suppliers how much of the electricity they consume comes from renewable energy sources. The survey covered both the electricity that suppliers generated themselves and the power that they procured from external producers. We use the results for environment-related analyses of our supplier network and for concrete supplier assessments and dialogues.
Award for suppliers
The Mercedes-Benz Group considers climate protection and resource conservation in the supply chain to be an element of its cooperative partnership with suppliers. The public recognition of good performance in this regard is also important to us. During the reporting year, we therefore presented the Daimler Sustainability Recognition to suppliers for outstanding sustainability achievements in the categories of climate protection and resource conservation. In 2021, we honoured the American steel supplier Big River Steel for its especially sustainable steel production. A total of three suppliers were nominated for their innovative concepts for the use of secondary materials and for CO2-reduction measures at their production facilities.
Effectiveness and results
We continuously monitor the progress that we make with our Ambition 2039 targets for cars. One of the reference points that Mercedes-Benz Cars Procurement and Supplier Quality uses for this is the number of suppliers who have agreed to the letter of intent regarding Ambition 2039. The results show that Mercedes-Benz AG’s supplier network has largely agreed to the Group’s climate-protection goals as formulated in Ambition 2039. Around 90 per cent of our suppliers (as measured on the basis of the annual procurement volume) have signed the Ambition Letter to express their commitment to supply the Group only with CO2 neutral products by 2039. Climate neutrality is incorporated into the terms of contract, and the Ambition Letter is a key criterion for the awarding of contracts. This means that if a supplier refuses to sign the ambition letter, we will not consider this supplier for future contracts. By 2039 at the latest, only production materials that are CO2 neutral at all stages of the value chain will be allowed to enter the plants of Mercedes-Benz.