Human rights

Social compliance

Strategy and concepts

Obligation and mission

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Respect for human rights has key importance for the Mercedes-Benz Group and is an obligation as well as a mission for us. We have therefore made upholding human rights an area of action of our sustainable business strategy and have provided measurable targets and key figures for our approach to human rights.

The Mercedes-Benz Group respects the internationally recognised human rights and has committed itself to uphold 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
  • UN Global Compact Principles
  • OECD Guidelines for Multinational Enterprises1

This is contained in our Principles of Social Responsibility and Human Rights. In order to implement international standards, we introduced the Human Rights Respect System (HRRS), which enables us to fulfil our human rights due diligence obligations along the entire value chain.

Our Principles

Respect for human rights is a fundamental component of responsible corporate governance at the Group. We are committed to ensuring that human rights are respected and upheld in all of our Group companies and also by our partners and suppliers. Our Principles of Social Responsibility and Human Rights, which were adopted in September 2021, reflect this voluntary self-commitment.

All of the relevant specialist units contributed to the creation of these Principles. Internal human rights experts were involved and we also incorporated the viewpoints and expertise of external stakeholders. The stipulations of the aforementioned international standards and the Act on Corporate Due Diligence in Supply Chains were also taken into account.

The Chairman of the Board of Management and other members of the then Board of Management of Mercedes-Benz Group AG signed our Principles of Social Responsibility and Human Rights, as did the members of 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 our Integrity Code.

With the Principles, we commit to prevent, and as far as possible bring to an end and mitigate, adverse impacts on human rights within our business operations around the world. Beyond our own Group companies, we also work to ensure that our business partners, especially direct suppliers, respect human rights. We also call on indirect suppliers to do so and take corresponding measures. We are continuously enhancing the Principles and regularly adapting them as appropriate and needed to the results of the risk assessments in accordance with the HRRS. The Principles were communicated to all employees at Mercedes-Benz Group as well as controlled Group companies. Moreover, they are publicly available in a total of 12 languages.

Requirements for suppliers

The Mercedes-Benz Group is committed to the responsible procurement of production and non-production materials as well as services.

The Supplier Sustainability Standards serve as the guidelines for our sustainable supply chain management system. They define our requirements for working conditions, respecting and upholding internationally recognised human rights, environmental protection, safety, business ethics and compliance. These requirements are referenced in the supplier contracts. The Supplier Sustainability Standards focus on the following human rights aspects:

  • Free choice of employment
  • Condemnation of child labour
  • Equal opportunity and non-discrimination
  • Freedom of association and the right to engage in collective bargaining
  • Health and occupational safety
  • Fair remuneration, working times and social benefits

We require that our direct suppliers acknowledge these sustainability standards, communicate them to their employees and to their upstream value chain suppliers and ensure their commitment as well. We also expect them to check whether minimum standards are complied with.

For this purpose, Mercedes-Benz AG developed a prototype blockchain in a pilot project. This blockchain enables users to forward information and documents such as certificates and along their supply chains transparently and in a traceable manner. Mercedes-Benz Cars & Vans has continued to pursue this approach as part of the Europe-wide partnership project Catena X since 2021.

In addition to our Supplier Sustainability Standards, our sustainability requirements are also enshrined in contracts. For example, our special procurement conditions — the Mercedes-Benz Group Special Terms — require suppliers to establish processes that ensure the fulfilment of human rights due diligence obligations in accordance with the provisions of the UN Guiding Principles on Business and Human Rights and the relevant . We also reserve the right to examine and audit these processes. In addition, suppliers are required to inform us of any human rights risks they have identified and countermeasures taken. They must also disclose to us upon request any risk hotspots that exist along their supply chain.

Other examples of our contractual requirements include humane wage levels, the voluntary nature of work, women’s rights and equal treatment, as well as the right to unionise. These are briefly described below.

Freedom of association and collective bargaining
In accordance with our Supplier Sustainability Standards, suppliers must recognise their employees’ freedom of association and effectively acknowledge their right to collective bargaining. Employees must be able to openly discuss working conditions with the corporate management without fear of retaliation. Moreover, suppliers must respect the right of employees to organise, to join a trade union, to appoint representatives and to be elected to a representative body.

These rights are also contained in the contracts we conclude with suppliers. The ILO Conventions number 87 and 98 are of utmost importance here.

Women’s rights and equal treatment
In our Supplier Sustainability Standards, we require suppliers to provide equal employment opportunities and refrain from any kind of discrimination. Among other things, employees may not be disadvantaged because of their ethnicity, origin, nationality, skin colour, religion, worldview, political and trade union activity, gender, sexual orientation, age, disability, illness or pregnancy.

Our contracts with suppliers also stipulate that they have to commit themselves to take measures in order to avoid discrimination as defined by the ILO Conventions number 111 and 100.

Fair wages
In accordance with our contracts, suppliers must ensure that remuneration and benefits are paid in compliance with the basic principles relating to minimum wages, overtime and legally prescribed social benefits.

Forced labour

According to our Supplier Sustainability Standards, forced and compulsory labour is not permissible. Our contracts also stipulate that suppliers may not employ anyone against their will or force anyone to work. According to our contracts, suppliers must ensure that employees have the right to quit their jobs, provided they adhere to an appropriate notice period. Moreover, they may not require employees to hand over their IDs, passports or work permits before they are allowed to work. Suppliers are especially required to abide by the requirements of ILO Convention number 29. They also have to impose such requirements on their own suppliers and sub-suppliers and conduct corresponding checks.

Organisational embedding

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The Social Compliance department serves as our Centre of Competence for human rights. In order to ensure effective implementation of our human rights due diligence approach, which is known as the Human Rights Respect System, this department works closely with the specialist units responsible for operational implementation, in particular with the procurement units.

Group-wide activities relating to human rights issues are managed by the Integrity and Legal Affairs Board of Management division at Mercedes-Benz Group AG. The responsible member of the Board of Management further develops this topic according to a dedicated target agreement and in consultation with the procurement units. Moreover, this member regularly obtains information and corresponding reports about our human rights activities from the Chief Compliance Officer and the Social Compliance department.

Furthermore, our Principles of Social Responsibility and Human Rights stipulate that the responsible specialist units report to the Group Sustainability Board (GSB), which consists of the Board of Management members who are responsible for sustainability and monitors the implementation of our Principles. To this end, reports on human rights are made to the GSB every year and for specific cases. In addition, the GSB uses specially developed key performance indicators to review the progress of our human rights approach within the context of our sustainable business strategy four times a year.

Relevant procurement units also provide information on their respective human rights compliance measures to the Procurement Council and the Board of Management members who are directly responsible for the units in question. The Procurement Council generally meets once each quarter. It consists of the heads of the Mercedes-Benz Group’s procurement units.

Strategic decisions concerning human rights issues are taken by the Board of Management as a whole. It is in charge of human rights issues and is regularly informed about these by all the participating senior executives with specialist responsibility in this field. During the reporting year, the following issues were discussed with the Board of Management: the presentation of and vote on the Principles of Social Responsibility and Human Rights, the progress made by the raw material assessments, the integration of human rights into our own units, and the plans of the . 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 target relevant for remuneration. This means that the variable remuneration of our managers and the Board of Management members now depends, among other things, on whether our own human rights targets have been achieved. The basis for this is the KPI for the implementation of the assessments of production-related raw materials that pose a high risk of human rights violations.

Assessment of human rights risks

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The Human Rights Respect System (HRRS) backs up the Company’s approach to implementing its human rights due diligence obligations. This comprehensive due diligence approach encompasses the identification and assessment of our human rights risks, the definition and implementation of measures, the handling of risks and the monitoring of measures taken. We use this approach to review both our Group companies as well as our tier-1 suppliers and, risk-based, sub-suppliers beyond tier 1.

The HRRS is to be understood as a due diligence cycle that basically consists of four phases: 1. Risk assessment, 2. Programme implementation, 3. Monitoring and 4. Reporting. It is designed to identify risks and potential and actual negative effects of our business activities on human rights early on, to systematically avoid them and, if necessary, to initiate appropriate measures.

In addition, the company’s Business Practices Office (BPO) whistleblower mechanism helps us to identify and assess our human rights risks. The BPO protects not only the rights-holders but also the company. As a result, the HRRS also includes consultations and discussions with rights-holders — for example, with our employees and their representatives, as well as with external third parties such as civil society organisations and local residents. We want to communicate with potentially affected rights-holders or their representatives before there is cause for complaint and to take their interests into account.

The Human Rights Respect System (HRRS)

The Human Rights Respect System (HRRS) (Graphic)

External stakeholders are also regularly involved as we continue to expand the HRRS step by step. The stakeholders include rights holders such as our employees and their representatives, as well as local residents. We also hold talks with international NGOs and other organisations concerning the human rights risks arising from the extraction of certain raw materials. For example, we are in touch with NGOs regarding the raw materials cobalt, mica, lithium, aluminium, copper and leather, and we have also asked them for their opinion regarding the measures Mercedes-Benz Group AG has taken to date. In addition, we have asked them to make suggestions for corrective measures and to show us alternatives that help to improve the situation of the affected individuals or communities. The scope and frequency with which we ask NGOs and other civil society organisations for advice depends on the issue in question and the stage of our risk assessment.

Identifying human rights risks

The Mercedes-Benz Group has addressed the human rights issues that are most important for the company in its Principles of Social Responsibility and Human Rights as well as in its supplier requirements. We identified the corresponding topics in human rights impact assessments on the basis of the UN Guiding Principles. In the first step we prioritised the review of all units and supply chains that are associated with our main business activity, automobile production. The legal frame of reference that is relevant for us encompasses all internationally recognised human rights within the context of automobile production, but especially the Core Labour Standards of the ILO and the Universal Declaration of Human Rights. Based on this impact assessment, we identified the most important human rights topics for us:

  • Equal opportunity and non-discrimination
  • Freedom of association and collective bargaining
  • Health and safety
  • Fair remuneration and working times
  • Forced labour
  • Child labour
  • Protection of human rights defenders
  • Protection of local communities and indigenous peoples
  • Security personnel and the protection of human rights

The derivation and the set priorities of human rights risks differ depending on their category, i.e., the respective Group company or supply chain. We regularly discuss the approach for each category with relevant external stakeholders in our annual Sustainability Dialogue. The approach is described in depth below. In this description, we take special account of the reference documents that we drew on for the derivation. We refrain from reiterating the key human rights issues summarised above.

With respect to our Group companies, this initially means that we have used a matrix of country risk and business model. Because human rights risks are often associated with weak governance structures and a high risk of corruption, we assessed the respective country risk on the basis of recognised indices. We then took a closer look at the business model of the respective Group company. In doing so, we were guided by the severity approach of the UN Guiding Principles and evaluated all Group companies according to the scale, the scope (the number of people affected), the remediability and the likelihood of occurrence of a potential human rights violation. Depending on the country and business model, this creates different risk areas for the identified companies which are taken into account and evaluated in a standardised way through regular official surveys as part of our Compliance Management System since 2020. In this context, the particularly relevant risk areas that were identified were employee rights, diversity, non-discrimination, security and local risks at the company locations.

The derivation of the key human rights risks in the relevant supply chains differs from the approach used for our own Group companies: due to the number and depth of existing supply chains, additional risk filters and interim steps were needed.

In automobile production, the main human rights risks are not necessarily on the level of direct contractual partners but instead are increasingly found in the deeper supply chain. The key human rights risks differ depending on the type of supply chain. In order to fulfil the requirements of the UN Guiding Principles and prioritise the most severe human rights risks in line with our business activities, we have analysed the raw materials and services supply chains separately due to their different characteristics.

In order to identify the main human rights risks in raw materials supply chains, we first analysed the raw materials that are in a vehicle. These were then checked against the US Department of Labor's Child Labor List, among others. We have prioritised the resulting raw materials in a number of steps. The criteria here included the human rights and environmental risks in the countries where the raw materials are mined, the relevance of the raw material for the transformation to electric mobility, the functional relevance of the raw material in essential components and the volume of procurment. The result is a list of 24 raw materials that are associated with increased human rights risks and that have to be reviewed step by step for each supply chain. In-depth internal research on the basis of official reference documents such as the Child Labour List, consultations with NGOs, and risk profiles that were created by external specialised service providers served as the foundation for identifying the key human rights risks for each raw material. A detailed listing of the general risks connected with certain raw materials and a supply chain-specific analysis are being created step by step and published on the company website.

We have adjusted the approach for services supply chains and taken the reference documents of the ILO as the basis of the assessment. On the basis of the ILO Conventions, we have identified seven indicators that can provide information about high-risk services. These include the following:

  • 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
  • A high level of economic pressure along the supply chains (low profit margin)

After a comparison with the defined indicators, we have identified 27 high-risk services. We have reprioritised them with the help of external specialised advice on the basis of the severity approach of the UN Guiding Principles. As part of our assessment of the sustainable business strategy, we are identifying the most salient risks of each services sector step by step and are defining corresponding measures in order to prevent or adverse human rights impacts.

The identified high-risk services can be categorised as follows:

  • Construction services
  • Event services
  • Security services
  • Maintenance services
  • Logistics services
  • Services related to work clothing

Social Compliance Management System

We use the Social Compliance Management System (Social CMS) to identify and address the risks that can arise in our own Group companies. The emphasis is on the following risk areas identified for Group companies: employee rights, diversity, non-discrimination, security and local risks at the company locations. The systematic approach of the Social CMS enables us to pursue the goal of minimising the aforementioned risks. In the reporting year, we used the Social CMS to completely integrate the topic of human rights in the central systematic risk-analysis process for the legal entities and majority shareholdings, and derived risk-specific packages of measures that were forwarded to the corresponding Group companies. Like the Principles, this system is reviewed and revised regularly and as needed on the basis of the results of the HRRS. Situations requiring a review might include a Group entity’s new or changed business activities or relationships or newly identified risk clusters. In addition, we take into consideration the dynamically developing global legislation relating to human rights. The Social Compliance department plays a key role in the implementation and further development of the Social CMS. Since 2019 one of the department’s tasks has been to identify and assess the human rights risks in our own Group companies. The Corporate Audit unit is also involved in this process, for example by including sustainability and human rights issues in its audits. The observance of our human rights principles is also addressed in these audits.

We use the identified risk areas as a basis for an annual review of human rights risks at Group companies and majority-owned entities. Here, we employ the two-step procedure that is described in the Compliance Management System — i.e., a preliminary data based classification of risks is followed by a validation process that uses data collected via surveys. This validated risk classification then serves as the basis for the assignment of appropriate measures to each Group company.

After a preliminary classification of the Group companies according to country risk and business model, we conduct a comprehensive annual survey during the second phase of our risk assessment. The goal is to verify the previous risk classification or to adjust it. This survey takes into account the defined human rights risk areas in detail in order to identify specific risks at the entities. On this basis, we create an overall risk statement for the entities and use it to derive specific packages of measures. This is done with the involvement of the compliance officers of our global compliance network.

During the reporting year, 100 per cent of the Group companies and majority interest were subjected to this risk assessment.

Human rights risks in supply chains

The Mercedes-Benz Group is aware of its responsibility to uphold human rights. We employ comprehensive measures in order to ensure that production materials as well as services are procured worldwide in line with sustainability standards.

Production material

Many materials are needed for the production of vehicles. These include raw materials whose mining and processing pose the risk of human rights violations and negative environmental effects. That’s because these raw materials sometimes come from countries that lack sufficient environmental and social standards.

When assessing human rights risks along the supply chain of production materials, we therefore particularly focus on critical raw materials.

We plan to systematically review the 24 critical raw materials that were identified during a preliminary risk assessment in greater depth until 2028. This review process basically consists of three steps:

  1. Transparency: 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 sub-suppliers.
  2. Identifying risk hotspots in these supply chains. This is done on the basis of the specific risks in the individual mining countries, for example.
  3. Defining and implementing measures for the risk hotspots and checking whether they are effective over the long term.

Critical raw materials in the supply chain

Critical raw materials in the supply chain (Graphic)

In this way, the procurement units under the umbrella of the former Daimler AG have in recent years already analysed several of the 24 raw materials that pose an increased risk of human rights violations. They divided up the responsibility for the various raw materials among the different units. Since the Group’s split, the procurement unit of Mercedes-Benz AG has been carrying out this analysis under the umbrella and supervision of the current Mercedes-Benz Group AG.

By the end of 2021 we had used this method to assess 31 per cent of all raw materials posing an increased risk, and thus even slightly exceeded our goal of 30 per cent. We intend to gradually increase this percentage. By the end of 2022, we plan to assess 40 per cent of all raw materials that pose an increased risk. This figure is set to rise to 70 per cent by 2025. Finally, by 2028 we intend to define appropriate measures for 100 per cent of our raw materials that pose an increased risk of human rights violations.

When we decide on a measure, one of our basic principles is that the Mercedes-Benz Group does not completely rule out conflict zones and high-risk areas as sources for critical raw materials. Instead, our approach aims to improve the situation for people in these areas and reinforce their rights. In doing so, we are also following the recommendations of NGOs, governments and other relevant interest groups, who suggest that companies not withdraw from critical countries. Here we are following the principle of “using leverage before withdrawing”. This means that we want to actively contribute to the protection of people and the environment in our supply chains instead of turning our backs on problems. To do this, we are closely cooperating with relevant stakeholders in raw material supply chains.

Services

We also ensure that our service providers share the responsibility for respecting human rights and for other sustainability-related aspects. International Procurement Services (IPS), which is responsible for the procurement of services, evaluates all of the new service providers in high-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. IPS conducts service provider screenings, audits, risk-based due diligence analyses and workshops with selected service providers. Through these measures we want to ensure that social standards and environmental requirements are understood and complied with.

We used a preliminary risk analysis as a basis for identifying 27 services that are potentially critical from a human rights standpoint. On this basis, we cooperated with a team of experts to draw up a list of questions to be answered by service providers so that any increased human rights risks can be identified for certain services and sectors. This gives us a transparent overview of the risks and enables us to initiate targeted analyses of the status quo and engage in a dialogue with relevant suppliers.

Critical services in the supply chain

Critical services in the supply chain (Graphic)

We also subject the service providers to a due diligence assessment. These audits focus on assessments of service providers in high-risk countries. We supplement our list of questions with document checks and database research in order to ensure the answers are plausible. If necessary, we also conduct inspections in order to review the conditions on site.

As we implement these measures, we notify service providers of gaps and potential for improvement that we have noticed during the due diligence assessments. We train these service providers by means of dialogue formats so that they understand our guiding principles and can establish them in their own supply chains.

Stakeholder involvement

For the Mercedes-Benz Group, it is crucial that external stakeholders are included in the further development and implementation of its HRRS. Of particular importance to us are consultations and discussions with rights-holders — for example, with employees and their representatives, as well as with external third parties such as civil society organisations and local residents. These are important for the identification of human rights risks and the development of appropriate measures. Our aim is to enter into an exchange with potentially affected rights holders or their representatives and to take their interests into account."

During the reporting year, we discussed various topics in the Human Rights working group within the annual Sustainability Dialogue in order to further develop the HRRS in these areas. They included human rights reporting, human rights and the environment, and stakeholder engagement in supply chains.

We want to continue and perpetuate this dialogue with external stakeholders about our HRRS — not only during the Sustainability Dialogue but also at other times during the year.

In 2021, for example, we incorporated the viewpoints and expertise of external stakeholders such as NGOs, trade unions and human rights experts into the development of our Principles of Social Responsibility and Human Rights. During a joint workshop, we took up their feedback and either adopted it or gave reasons for not doing so. We have also discussed the Responsible Sourcing Standards, which we are currently still developing and which enhance and extend our existing sustainability requirements for suppliers, with external stakeholders. Moreover, we have asked external experts to provide us with advice concerning environmental issues and human rights. As a result of all these talks and consultations, we have concluded that the process of risk identification and prioritisation should be communicated even more extensively and that potentially affected stakeholders should be involved in the HRRS even more systematically.

When we analysed the 24 raw materials that we had identified as critical, we held consultations with stakeholders at several points in order to identify risks along the supply chain and determine whether potential measures would be effective. Regional and local NGOs are an important stakeholder group in this context. They give us a clear picture of the situation on site and also know the concerns of the rights-holders. But direct and indirect suppliers also provide us with important information about the opportunities and challenges arising from human rights due diligence in certain supply chains. For example, they often know best where along the supply chain transparency regarding the origins of raw materials can be achieved and where it cannot. In many cases, they also know about the technical possibilities for improving transparency along the supply chain.

During the reporting year, we held discussions with relevant NGOs concerning a range of topics, including deep-sea mining, sea transport, leather production and deforestation, copper mining in Ecuador, aluminium and mining standards. One result of these discussions is that with regard to the topic of leather and deforestation we are currently checking to what extent we can base our requirements for the suppliers of leather products on those of the Accountability Framework. We have also taken the feedback from NGOs into account in our development of quality criteria for mining standards. Our suppliers can view these criteria on the Supplier Portal. The discussions with the employee representative body from sea transport have enabled us to find out about the specific risks related to this service, especially in view of the covid-19 pandemic. These findings are now serving as the basis for a survey that we are conducting among our service providers.

Above and beyond that, we have begun to establish a process for involving stakeholders even more systematically in the further development of the HRRS in the future and incorporating the concerns of potentially affected people even more systematically into our risk assessments.

In cooperation with the , Mercedes-Benz AG launched a pilot project in the fourth quarter of 2021 in order to integrate the local population in audits of raw material mines and foster participation. The project aims to develop a process for increasing the involvement of affected local communities before, during and after the assessment of mine sites and ensuring that the process has a positive impact on the situation of the people affected by the mining operations. By using culture- and language-sensitive information documents and working together with the local communities to develop appropriate ways we involve the people affected by the mining operations.

Complaints management

The Whistleblower System Business Practices Office (BPO) accepts reports about misconduct.

The company offers employees and external whistleblowers various channels through which they can report suspected human rights violations and request remedy. These channels thus also help us identify and assess human rights risks at the company. Both our Whistleblower System BPO (Business Practices Office) and the World Employee Committee are available to receive reports of suspected human rights violations.

The BPO is available to all employees, business partners and third parties who suspect there is a case of misconduct or think there are risks for the company or its employees, and who would like to report them. The BPO whistleblower system is responsible for a range of topics, explicitly including possible human rights violations. People can also report suspected violations in the supply chain.

Employees can also receive support from the respective managers, HR, social counsellors, the plant medical service and the works council in addition to the BPO whistleblower system, especially when dealing with people-related violations such as sexual harassment, discrimination and racism. Another point of contact that can give guidance is the Infopoint Integrity.

Reports can be submitted in all languages without restriction. The BPO can be contacted by post, by e-mail or via the Internet by filling in a report form. In selected countries, it can also be reached via external toll-free hotlines. Reports can also be submitted anonymously if local laws permit this. In Germany, whistleblower reports can also be submitted to an external neutral intermediary in addition to the BPO.

In 2021, 33 cases were newly opened in the Group’s whistleblower system. A total of 20 cases, in which 24 people were involved, were closed with merit.

A globally valid corporate policy defines the BPO process and the corresponding responsibilities. This policy aims to ensure a fair and transparent process that protects the company’s interests and takes into account the principle of proportionality for the affected parties, while also giving protection to whistleblowers. It also defines a standard for evaluating incidents of misconduct and making decisions about their consequences.

When a new report is received, the BPO generally confirms its receipt to the whistleblower within 24 hours. After a risk-based initial assessment by two authorised persons, the BPO forwards the case to an in-house investigation unit or to the department responsible for the subject of the report. If a case is categorised as “high risk” for the company or its employees, the BPO provides support for the subsequent investigation until the case is closed. Examples of high-risk rule violations include offences related to corruption, breaches of antitrust law and violations of anti-money laundering regulations, as well as violations of engineering specifications and/or technical safety, or environmental protection regulations. Person-related matters, such as incidents of sexual harassment or human rights violations, can also be considered high-risk rule violations. If necessary, a report is filed with government enforcement authorities, with whom we cooperate fully.

The report from our in-house investigation unit serves as the basis for making a labour law-related assessment of recognisable violations. Human Resources can then impose appropriate personnel measures in line with applicable labour laws. The rule violation policy describes possible personnel measures resulting from rules violations so that they are transparent for all employees.

The investigation report can mention not only misconduct but also favourable associated circumstances and possibilities for further improving processes as well as specify measures that have a mitigating effect or prevent a repeat offence. In order to contribute to the creation of a “learning organisation”, individual cases of rules violations that pose a high risk for the company are regularly presented within the Group as anonymous examples. Every quarter, we also publish statistics about the number of cases in each category in order to make employees more aware of this issue.

The company protects whistleblowers who report a possible violation on the basis of clear evidence. We ensure their statements remain confidential. The policy classifies penalties imposed on whistleblowers as a high-risk rules violation. As a result, whistleblowers who have been discriminated against for their reports should contact the BPO. If a whistleblower is penalised or intimidated for submitting a report, we will take personnel measures in line with applicable law.

Whistleblowers may also contact government authorities (such as the police, public prosecutor’s office and supervisory bodies for financial services). There are no in-house requirements or measures that would hinder or prevent such a step.

In an effort to constantly increase trust in our BPO whistleblower system and make it even better known to our employees, we continuously engage in various communication measures. For example, we provide informational materials such as country-specific information cards, pocket guides and an instructional video that is available in ten different languages. We also hold various dialogue events in which we provide our employees with information about the BPO and encourage them to give us feedback. In addition, we regularly inform employees about the type and number of reported violations. In order to determine the effectiveness of all these measures, the company’s regularly conducted employee surveys include questions regarding the employees’ familiarity with and confidence in the BPO. All employees worldwide can also give us feedback in this regard. In the reporting year 2021, direct communication on this topic also took place across hierarchies and functions during a roadshow.

Every quarter, the BPO reports to the Board of Management and the Supervisory Board on newly opened and closed cases. The efficiency and effectiveness of the BPO are subject to internal process audits by the Corporate Audit unit and are externally inspected in the course of the certification of the Compliance Management System.

Measures

Locations and Group companies

The United Nations Guiding Principles on Business and Human Rights have increased many stakeholders’ awareness of human rights-related incidents. Increasingly, companies have to address the associated risks within their own operations. To this end, the Mercedes-Benz Group has initiated a comprehensive set of measures for increasing our employees’ awareness of potential human rights violations and carefully evaluating our management tools to make them more effective.

Making employees more aware of human rights

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We inform our employees about the principles of human rights and increase their awareness of the corresponding risks by means of the Integrity Code and the Principles of Social Responsibility and Human Rights. These stipulations are binding for all of our employees and are communicated to them in online training courses. These courses include the mandatory online training module Integrity@Work, in which we convey to all employees the strategic and operational importance of human rights for the Mercedes-Benz Group and how they are relevant to daily business. Depending on their specific tasks, during their induction process new employees also have to absolve mandatory training modules that address human rights issues relevant to their respective work environment. Corresponding content is also taught in compliance courses for those responsible on the boards of management of the various units worldwide. These courses specifically address the managers’ role and responsibility in the implementation of human rights due diligence. These “CEO onboardings” are held whenever someone takes on an executive position. In addition to human rights issues, the courses address further compliance-related topics. A new feature during the reporting year was the integration of the new Principles of Social Responsibility and Human Rights into the existing training concepts in order to increase employees’ awareness of the main human rights issues within the Group.

In addition, the employees learn about human rights issues in function-specific training courses. In 2021 we developed additional online courses for topics related to Integrity and Legal Affairs. These courses are targeted at different groups, which include among others the members of executive management, the CFO and people with supervisory functions as well as employees in the sales organisation. Relevant human rights issues and other compliance topics are addressed here in a target group-specific manner and the roles and responsibilities are communicated within the scope of the Principles of Social Responsibility and Human Rights. Plans call for the courses to be rolled out at the Mercedes-Benz Group in 2022.

The Local Compliance Responsibles play a key role in upholding human rights within the Group companies. In 2020 we developed an online training course specifically for them. We also offer this course to other experts at the Compliance unit. The online course, which is updated annually, raises the participants’ awareness of relevant human rights risks that can arise within Group companies. The course focusses on four risk areas that we previously identified during an initial risk assessment. These are employee rights, diversity, security and local conditions. The latter particularly include country-specific respect for civil and political rights. Compliance Responsibles from high-risk markets are required to take part in this course, and all new employees from this target group attend the course when they start to work in this position. During the reporting year, the online course was part of the package of measures designed to create awareness of risks at units with increased risk — completion of the course was mandatory for all managers, including the executive management. Since July 2020 the training course has also been available to all interested employees within the Group. It is also used at Corporate Security in order to make employees more aware of human rights risks associated with internal security processes and security services. Respect for human rights is a relevant risk area for the security staff’s danger assessment and prevention. As part of our Social CMS, we therefore also take the required care to examine security issues and the implementation of security processes. During the reporting year, we made an online training course about human rights risks in a business context available to our Regional Security Officers. This course also includes a module dedicated specifically to human rights risks in the field of security.

In the reporting year, 35,176 online training units concerned with human rights, which correspond to 3,709 hours of human rights training, were completed by employees of the Mercedes-Benz Group as part of the continual Compliance Training programme. In 2020, three online training formats were newly developed for this purpose and completed by employees in administrative units and at controlled Mercedes-Benz Group AG entities. As a result, 298,840 human rights-related training courses were already completed in 2020, which corresponded to around 25,088 hours of training solely for human rights issues.2

In addition to its suppliers, Mercedes-Benz Cars & Vans specifically trains its employees in the procurement unit. During the reporting year, 377 employees at the procurement unit for production materials of Mercedes-Benz AG took part in a new sustainability course. The core of this course was devoted to the sustainability requirements that the suppliers have to accept in order to be eligible for the awarding of contracts. The training course prepares employees to explain the background of the individual requirements in order to raise suppliers’ awareness of them during the contract negotiations and ensure that the requirements are accepted. The employees from the services procurement unit are also trained in the sustainability strategy and the relevant measures of the procurement processes when they are hired and onboarded. During the reporting year, we also developed an online compliance course for all procurement employees that will be introduced in 2022. In addition to other compliance topics, it will teach procurement employees about the role of procurement in upholding human rights in global supply chains.

Measures in Group companies

The Mercedes-Benz Group AG is responsible for respecting and upholding human rights in all Group companies. That’s why we conduct risk-based and systematic monitoring to ensure that human rights are respected by our units. Among other things, we carry out a two-stage survey-based risk assessment at the Group companies and at companies in which we hold a majority interest. The results are carefully evaluated and documented.

During the reporting year, this risk assessment classified 87 per cent of the corporate units (within Mercedes-Benz AG, Daimler Truck AG and Daimler Mobility AG) as low-risk units, eight per cent as medium-risk units and five per cent as units with an increased human rights risk.2 It confirmed the investigated human rights topics of Employee Rights and Diversity in particular as areas of action, while Security and Local Conditions were identified as relevant areas of action at a small number of units.

We allocate risk-based sets of measures to the business units on the basis of a unit’s evaluation and classification as a low-, medium- or high-risk unit. The local units are required to implement these packages. Among other things, during the reporting period we provided communication materials regarding our values and requirements for interaction with employees and business partners. Another measure was the mandatory online human rights course for managers in high-risk markets. We comprehensively enhanced the packages of measures for all risk categories during the reporting year. These will be introduced in 2022 at all units on the basis of their individual risk classification. The packages of measures address all four of the identified areas of action and specify clear responsibilities for implementation of the measures. One of the sets of measures specifies, for example, that a Local Diversity Representative must be appointed for units in which an increased risk was identified for the diversity area of action. This will make it possible to address violations more easily and create specific structures to help remedy the situation.

Employee rights in Group companies

Remuneration and benefits
At the Mercedes-Benz Group we are committed to paying an appropriate wage that amounts at least to the legally prescribed minimum wage and in addition enables our employees to at least have a secure livelihood.

We remunerate work in accordance with the same principles at all Group companies around the world. Our global Corporate Compensation Policy, which is valid for all groups of employees, defines the framework conditions and minimum requirements for the design of the remuneration systems. Compliance is determined by means of in-house 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. We are committed to abolishing child labour and are organising our employer practices accordingly.

Working hours
The Mercedes-Benz Group applies the principle that working hours must comply with the respective local legislative requirements and the respective industry standards. Within the scope of applicable law, we make sure that working conditions are safe and healthy and that breaks are provided, working hours are appropriately limited, paid rest leave is regularly offered and the applicable international standards concerning working times are complied with, at least those of the ILO Conventions that are applicable to the place of employment.

Abolition of forced labour
At the Mercedes-Benz Group we strictly oppose forced and compulsory labour as well as every kind of slavery, including modern forms of slavery and human trafficking. All of the employee 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.

The employees are paid at agreed-upon times in accordance with local requirements. In Germany, for example, this is governed by employment and collective bargaining agreements. Every employee receives a salary statement in which the remuneration and statutory deductions (e.g. social insurance payments) are transparently listed in a comprehensible manner.

Freedom of association and right to collective bargaining
At the Mercedes-Benz Group, we acknowledge our employees’ right to form employee representative bodies and conduct collective bargaining in order to regulate working conditions. We also recognise their right to strike in accordance with the respective applicable laws. The founding, joining or membership of a trade union that is recognised on the basis of applicable law may not be used as a reason for unjustified discrimination or punishment.

Health and occupational safety
As an employer, we at the Mercedes-Benz Group ensure health and safety at the workplace at least within the scope of applicable law and also support a process of continuous further development in order to improve the working environment with the goal of preventing job-related accidents and illnesses.

Equal opportunity and protection against discrimination
At the Mercedes-Benz Group, we are committed to providing equal employment opportunities and refraining from any kind of discrimination. We stand up for the fair treatment of all employees and do not tolerate any kind of discrimination or unjustified unequal treatment — for example on the basis of gender, ethnicity, origin, nationality, religion, worldview, political, social or trade union activity, sexual identity or orientation, physical or mental disability or age.

Supply chains

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We employ a diverse range of measures and concepts in order to fulfil our due diligence obligations regarding the supply chain. These include supplier screenings, audits, risk-based due diligence analyses and qualification modules for suppliers of production materials. We use these tools to increase the transparency of the supply chain and ensure that the internationally recognised human rights are upheld and other social standards and environmental requirements are met. Our Procurement units play a central role in this process.

Production material

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The Mercedes-Benz Group systematically examines whether and to what extent its production material suppliers respect human rights.

For example, the procurement unit Mercedes-Benz Cars Procurement and Supplier Quality evaluates all new suppliers on site before any possible orders are placed. Our sustainability standards are used as the basis for this process. Our auditors ask questions regarding social standards, including working hours, remuneration and freedom of association in particular. In countries with an increased risk of human rights violations, such audits are even more thorough and include a review of child labour, occupational safety and free choice of employment as a standard procedure.

The procurement unit of the Mercedes-Benz Group audits the human rights compliance of direct suppliers. In addition to on-site CSR audits, among other measures that are part of our regular risk analyses we conduct an annual database review in order to identify any violations of our sustainability and compliance rules at an early stage on the basis of our current supplier data.

If the database review or the on-site audits discover suspicious activity, the procurement unit initiates a more thorough investigation. To this end, we ask the affected supplier a number of case-specific questions regarding sustainability management, as well as due diligence measures with respect to human rights issues or the inclusion of its own suppliers, for example. If shortcomings are detected, we require the supplier in question to improve the corresponding processes.

If the supplier does not sufficiently remedy the criticised processes, we make individual decisions regarding the next steps. In especially severe cases, these decisions can be made by management bodies. As a last resort, this can cause us to discontinue business with a supplier.

Supplier assessments have to be comparable if supplier management is to be effective over the long term. Standardised tools from external sources are helpful in this regard. One example of this is the industry-wide sustainability Self-Assessment Questionnaire developed by the European Drive Sustainability initiative. Mercedes-Benz AG requires all of its suppliers to complete this questionnaire. The suppliers who had completed it by the end of 2021 represent more than 53 per cent of our annual procurement volume.

In addition, between now and 2028 we are taking specific measures step by step for the 24 raw materials that we have defined as critical. These measures aim to reduce the human rights risks associated with the mining and processing of raw materials in the supply chains of Mercedes-Benz AG.

Services

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We use key questions to evaluate the entire services portfolio with the objective of finding out in which commodity groups we can expect an increased risk of human rights violations. We regularly repeat this risk mapping in order to address current developments and dynamically adapt our risk classification. We subject service providers with increased risks to a due diligence assessment so that we can determine their integrity, identify potential for improvement and communicate our expectations regarding holistic processes for upholding human rights as well as our own standards regarding the case in question.

In addition, IPS examines all of the existing service providers to check their compliance with human rights standards. In this process, we conduct an annual database research of current service-provider data in order to identify any violations of our sustainability and compliance rules early on. The regular checks are meant to prevent violations and ensure that the service providers stay vigilant.

If the database review discovers suspicious activity, the Procurement unit initiates a more thorough investigation. If the service provider does not sufficiently remedy the criticised processes, we make individual decisions regarding the next steps. In especially severe cases, these decisions can be made by management bodies. As a last resort, this can cause us to discontinue business with a service provider.

Besides making our own risk assessments, we also consider indices such as the Corruption Perceptions Index (CPI) from Transparency International. They help us to identify countries with increased human rights risks in the services sector and concentrate our measures on the service providers who operate in these countries.

We have signed work and services contracts with service providers for our locations in Germany. The requirements in these contracts often surpass those of the legal stipulations. We have particularly high standards with regard to occupational health and safety, accommodation and remuneration, the use of temporary workers and the commissioning of subcontractors. We also demand that false self-employment of any kind must not be tolerated. These standards are relevant for all contracts that exceed a period of two months and are physically carried out on the business premises of Mercedes-Benz Group AG in Germany. All of the relevant work-for-hire contractors or service providers must declare in writing that they comply with these standards. Only if they fulfil this prerequisite can they receive purchase orders. An auditing team checks whether the standards are being complied with at selected service providers in Germany.

In order to make our service providers more aware of the importance of responsible behaviour with regard to human rights and explain to them what we expect of them in this connection, we conduct Good Practice Sharing Workshops, which have also been held online since the spring of 2020. At these workshops, cross-functional teams from procurement meet service providers to openly and constructively discuss various issues. Through this measure, we also want to make our business partners more aware of the importance of the responsible handling of human rights and explain to them what our expectations are in this regard.

Improving suppliers’ awareness and qualifications

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The successful management of sustainability topics, such as respect for human rights in the supply chain, requires a shared system of values. Know-how regarding the correct implementation of the applicable requirements is just as necessary. Accordingly, the Mercedes-Benz Group has sensitised and informed our suppliers by means of corresponding training modules for many years. Where appropriate, we have also done so as part of our involvement in sustainability and human rights initiatives.

Since 2018, we have been cooperating with the Drive Sustainability initiative on the implementation of measures to sensitise and inform production material suppliers in various focus countries. We selected the respective countries jointly with the initiative. In training courses, suppliers are taught about human rights and working conditions, including topics such as working hours, fair remuneration, freedom of assembly and forced labour. In the reporting year, the courses that had been envisioned for suppliers in India and Argentina were replaced by online events due to the covid-19 pandemic.

The Mercedes-Benz Group also developed the Compliance Awareness Module on the basis of its supplier sustainability standards and its Integrity Code. This publicly available training module helps suppliers handle possible integrity- and compliance-related risks in a responsible manner. It is intended to provide suppliers with an overview of our currently valid compliance principles and inform them of the company’s expectations with respect to human rights issues and other topics. The module also contains various case studies concerning our compliance theme fields in order to provide assistance and guidance. In addition, it clearly stipulates what we expect of our suppliers when it comes to integrity and provides information about legal requirements and ethical standards. All suppliers can access the module at our Supplier Portal at any time. We also inform them that they can recommend this module to their business partners in the supply chain.

Sector associations and initiatives

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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 us to shape complex supply chains through the responsible use of joint measures. 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 is the theme sponsor for human rights issues and a member of the steering committee.
  • econsense — German Business Forum for Sustainable Development: 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 & human rights.
  • Responsible Supply Chain Initiative RSCI: The Mercedes-Benz Group is a founding member of this organisation, which was initiated by the German Association of the Automotive Industry (VDA). The RSCI aims to help all of the 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 to evaluate companies’ sustainability performance.
  • Drive Sustainability: The Mercedes-Benz Group is a LEAD partner of the European automotive industry initiative Drive Sustainability, which promotes sustainability in the supply chain. The joint Automotive Industry Guiding Principles to Enhance Sustainability Performance in the Supply Chain play an important role here. They were updated during the reporting year. In 2021 Drive Sustainability increasingly included companies from the supply chain. For example, it created the much sought-after Drive Plus, a new section for tier-1 suppliers of the automotive industry. In addition, the initiative published the Raw Materials Outlook, a publicly accessible platform that provides information about value chains and the associated environmental and human rights risks of a total of ten raw materials. The objective of both activities is to discuss the joint challenges more extensively with supply chain representatives and find possible approaches to solving them.
  • Automotive industry dialogue of Germany’s National Action Plan on Business and Human Rights (NAP): The Mercedes-Benz Group takes part in the automotive industry’s NAP dialogue. The aim is to work together with representatives of civil society, the science and business communities, associations and government to develop solutions for strengthening human rights in supply chains.

Effectiveness and results

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Locations and Group companies

During the reporting period, the Mercedes-Benz Group regularly reviewed its human rights measures and adjusted its management approach as needed. Among other things, we have greatly expanded our risk-based measures for Group companies. In early 2022 we plan to roll them out in all Group companies in which we have a majority interest.

The implementation of the associated measures will subsequently be monitored by means of an annual effectiveness assessment within the scope of the Social CMS. In this way, we want to ensure that our human rights approach for Group companies is effective and that the methods and processes are continuously enhanced.

We also use the annual Sustainability Dialogue in order to assess the effectiveness of our approach. There we present our progress and challenges and discuss them with representatives from business, government and society at large. The specialist units subsequently evaluate the results and the stakeholders’ suggestions and incorporate them into their work processes. The results are also published on our website.

During the further development of our management approach to human rights, we also incorporated the feedback from our stakeholders at the human rights working group of the Sustainability Dialogue.

Supply chains

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GRI 409-1

GRI 412-1

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The Mercedes-Benz Group uses comprehensive measures to ensure that production materials as well as services are procured worldwide in line with sustainability standards. It is also important to us to ensure that the measures’ effectiveness is regularly reviewed and that they are realigned or refined when needed.

Production material

During the reporting period, we further refined our approach to the assessment of risk-related raw materials and supplemented it with additional tools and processes. To ensure that we take a targeted approach to addressing the human rights risks of our raw material supply chains, we are orienting our activities in line with the Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. In cooperation with the consulting company RCS Global, we have examined our processes in order to determine what adjustments have to be made in order to conform to the OECD guidance. In 2021, we revised our Supplier Sustainability Standards, in part to ensure that our expectations regarding suppliers comply with the OECD guidance to the greatest possible extent. Publication of our new procurement guideline is scheduled for 2022.

We continued to conduct our audits at production material suppliers in 2021, when a total of 805 on-site audits were performed. Some of these audits were conducted virtually due to the covid-19 pandemic. Anomalies were detected with regard to working hours, occupational safety, business ethics, the communication of our sustainability standards and other topics. During the reporting year, our on-site inspections at direct suppliers to Mercedes-Benz Cars & Vans discovered no specific suspected cases of child labour or forced labour, nor were there any indications of violations against the right to collective bargaining or freedom of association.

Service providers

The IPS unit’s on-site examinations and supplier screenings of our direct suppliers did not discover any suspected cases of child labour or forced labour during the reporting year. Moreover, there were no indications of violations against the right to collective bargaining or freedom of association.

Sales and investments

During the reporting period, we further refined our approach to the assessment of human rights risks related to sales and investment processes. The development of appropriate tools and processes was initiated in cooperation with the responsible specialist units to ensure optimal process and system integration in the future. We utilise corresponding risk assessment approaches in order to directly identify and address human rights risks in our sales and investment processes. For sales processes, these approaches take into account country-specific risks as well as risks arising from products and customer-related risks, for example. With regard to investment processes, we are not only addressing country risks but will, in the future, also make a human rights-focussed assessment of the business models and business partner structures of our potential investment partners and their own human rights-related due diligence approaches.

1 Chapter IV (Human Rights) of the OECD Guidelines for Multinational Enterprises

2 The data encompass Mercedes-Benz Group AG, Mercedes-Benz AG and Daimler Truck AG.

Provider/Privacy

Mercedes-Benz AG Mercedesstraße 120
70372 Stuttgart
Germany
Phone: +49 7 11 17-0
E-Mail:
dialog@mercedes-benz.com

Represented by the Board of Management: Ola Källenius (Chairman), Jörg Burzer, Renata Jungo Brüngger, Sabine Kohleisen, Markus Schäfer, Britta Seeger, Hubertus Troska, Harald Wilhelm

Chairman of the Supervisory Board: Bernd Pischetsrieder

Court of Registry: Stuttgart; commercial register no. 762873
VAT ID: DE 32 12 81 763

Code of conduct

A company’s code of conduct provides employees with guidance and encompasses guidelines for responsible, ethical and legally compliant behaviour. In most cases, the guidelines also apply to third parties such as business partners and suppliers.

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OECD

Based in Paris, the Organisation for Economic Cooperation and Development (OECD) is an international organisation encompassing 37 member countries that are committed to democracy and a market economy.

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Initiative for Responsible Mining Assurance (IRMA)

The Initiative for Responsible Mining Assurance (IRMA) was created in response to the global demand for socially acceptable and environmentally compatible mining. IRMA provides independent inspections and certifications according to a comprehensive standard for mined raw materials. The standard covers the entire spectrum of risks associated with the effects of industrial mining.

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Initiative for Responsible Mining Assurance (IRMA)

The Initiative for Responsible Mining Assurance (IRMA) was created in response to the global demand for socially acceptable and environmentally compatible mining. IRMA provides independent inspections and certifications according to a comprehensive standard for mined raw materials. The standard covers the entire spectrum of risks associated with the effects of industrial mining.

All glossary terms

OECD

Based in Paris, the Organisation for Economic Cooperation and Development (OECD) is an international organisation encompassing 37 member countries that are committed to democracy and a market economy.

All glossary terms