Mercedes-Benz AG

Mercedesstraße 120
70372 Stuttgart

Phone: +49 7 11 17-0

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

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Sustainability Report 2022

“It’s important to look at the structures that business action creates”

How can the situation of workers and their families in industrial supply chains be improved? Ines Kaempfer, CEO of The Centre for Child Rights and Business, says, through transparency, long-term commitment and addressing the structural causes of inequality. In this interview, the child rights expert reports on conversations with miners and shows what companies can do to give workers and their families at the beginning of the supply chain a perspective for the future.

Ines Kaempfer (Photo)

Ines Kaempfer

Centre for Child Rights and Business

Ten years ago , the Children’s Rights and Business Principles were launched. How has the approach to human rights issues in supply chains changed since then?

What we have seen over the last ten years, is that many companies are moving away from what we call a ‘checklist approach’. They are looking at human rights in a more comprehensive manner, and this includes child rights issues. Additionally, frameworks like the OECD Due Diligence Guidance have helped companies to be more strategic in how they deal with human rights issues in their supply chain. That's a very positive development.

However, we do see the danger that reporting, also due to growing requirements, becomes more important than the actual impact of the human rights activities undertaken. In the meantime, the COVID pandemic has shown that some of the basic inequalities driven by our often unfair economic system have not been solved. And as such, many of the key issues are remaining.

Can you give an example?

General the materials and services – in particularly labour - which are sourced in a developing country, are not expensive and only make a fraction of the production costs. The sales profits however largely stays in the developed countries, while workers further down the supply chain still make very little money. That in turn impacts whether they can afford to send their children to school or afford nutritious food , among others. Child labour is very often just a consequence of poverty. And that poverty is driven by structural elements of inequality - people who are working at the sources of our raw materials or within factories do not have social security or medical insurance. The moment, one parent gets ill, creates a risk for the children to drop out of school and start working to replace their parents. Unfortunately, COVID has just made this more obvious for many people and the gap between those who have money and access to resources and those who have not, widened in many countries.

Terre des Hommes supports partner projects for children in need in 39 countries

Where can businesses step in to support structures that are not there, yet?

Of course building up social structures is mainly a political task. But there are reasons why workers in some countries earn less than in others. And part of it is that the government is not willing or able to provide the right structures, which in turn keeps prices of services and materials low. As a consequence, I see a corporate responsibility, not because companies are always the root cause for those gaps, but because they benefit from them.

Given that, business has a responsibility to – at a minimum - mitigate the situation. They are not the ones to set up social insurance systems but they still create significant impact - for example for young people. Companies can invest in decent work for youth by cooperating with strong local employers to create more work opportunities, give adequate training and ensure social protection and living wages. Providing good vocational training opportunities, as Mercedes-Benz is doing in Germany or China, is a very practical example, how companies can become the mitigating factor. And it’s by far not the only one.

For a study, you published together with the non-governmental organisation (NGO) “Save the Children”, you examined cobalt mining in the Democratic Republic of the Congo (DRC). Among others, you talked to children and young people from families working in the mines. What did you learn in the process?

We learned a lot about living and working conditions and how families had to deal with poverty. This mainly affects the people who work in small, informal mines, outside the automotive supply chains. We were impressed that, despite living in often extremely desperate situations, most parents and children had a lot of faith in education. It went against the widespread assumption that child labour is considered normal in the region and that's why families don't send their kids to school. Instead, we often found that the normalisation of child labour comes out of necessity. You normalise it because it's your only choice. We realised that we don't need to raise their awareness in the first place, but we need to provide the conditions for children to stay in school.

Against this background, how do you assess aid projects, such as “Community Development and Child Protection in Kolwezi, Congo”, which Mercedes-Benz is implementing together with the NGO Bon Pasteur?

It’s a good initiative and Bon Pasteur is a strong organisation that really has the children's wellbeing at heart. So, the engagement of Mercedes-Benz is a recommendable one. Generally speaking, it's important to look at such initiatives with a long-term perspective. We’ve seen children getting into programs, but as the families are not necessarily part of the remediation activities, they had to go back to work after a while. Also, once the children become 14 or 15 years old, the schooling opportunities might be very limited. We need to ensure a continued support for those children, until they can stand on their own feet. That’s a big challenge, not only in the DRC, but in other sourcing countries as well. Consequently, initiatives like Bon Pasteur are an important measure to support local communities for a certain time period. However, on top of that we need stable follow-up processes.

The organisation Bon Pasteur enables children to attend school and also supports the local population in building sustainable agriculture and strengthening their local community.

Apart from addressing the root causes, what other measures are needed to strengthen child rights?

Coming back to what I called a company's responsibility, it’s important to look at the structures that business action creates. If these enable workers and their families to earn a decent income, this will also strengthen all those other outcomes that we want to have. I feel that we should start there and support these necessary structural changes. It’s not an easy challenge to tackle, companies will need to get different actors coming together and collaborate. It’s also one of the main tasks of our organisation.

How can human rights due diligence become a win-win situation for both children and corporate in terms of positive business outcomes?

We have observed that the first steps in this direction are already having a positive impact on corporate performance. For instance, the responsible management of supply chains, meaning the establishment of long-term and trustworthy relationships, will safeguard the company’s supply in challenging times and ensure that the operations are running smoothly. Furthermore, if we go down to a single supplier or factory, data is showing that investments in workforce increases retention and productivity to certain levels. In the end, it's a must for many businesses to start thinking like that and establishing an effective sustainable supply chain management, to really value the workforce and to create a sustainable business. Having ESG criteria integrated in supply contracts in supply is presumably the most important lever – next to transparency, risk management and initiatives on-site.

Ines Kaempfer

has been serving as the Executive Director, and since 2021, the CEO of The Centre for Child Rights and Business in Asia, a social enterprise that helps businesses improve their direct and indirect impact on children, particularly in supply chains. Prior to joining the Centre, Ines was the Director of Learning and Impact at Elevate Ltd., a leading CSR learning and capacity building agency, and she also worked at the Fair Labor Association (FLA). She holds a PhD from the University of Fribourg. The study about cobalt mining from Save the Children Germany and The Centre, cited in the interview can be found here.

Due diligence
In general, due diligence processes involve careful examinations, analyses and assessments of a company. Human rights due diligence encompasses measures that a company employs in order to detect and counteract human rights-related risks in its business operations, its supply chain and the services it uses.
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The acronym ESG stands for Environment, Social and Governance. Within the context of sustainable finance, this abbreviation is used when investment decisions take into account environmental, social and responsible governance aspects, in short: ESG criteria.
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Based in Paris, the Organisation for Economic Co-operation and Development (OECD) is an international organisation encompassing 37 member countries that are committed to democracy and a market economy.
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