Daimler promotes and supports responsible raw material acquisition processes with regard to battery cell materials such as cobalt, and also for traditional raw materials such as aluminum, mica, and steel.
In general, and before any agreements are signed, all new Mercedes-Benz suppliers undergo potential analyses in which our more than 700 quality engineers assess a supplier’s sustainability performance through onsite inspections. The objective, and thus the inherent component, of the potential analyses is to ensure that the provisions of our Supplier Sustainability Standards (e.g. with regard to the prevention of child labor) are met. We also conduct random checks to determine whether suppliers require their sub-suppliers to comply with our sustainability standards. If necessary, we define measures for improvements that suppliers must implement as quickly as possible. In the 2018 reporting year, more than 1000 Corporate Social Responsibility audits were carried out on potential and existing suppliers.
Our due diligence process is designed to support compliance with our sustainability standards. In the first phase of the process, we identify the sustainability risks that exist at the supplier’s location. Our suppliers also complete a sector-wide questionnaire on their sustainability activities. In addition, Daimler has developed a questionnaire on critical raw materials that contains specific sustainability-related questions for the suppliers. The questionnaire is based on the OECD’s Five-Step Framework for Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. Daimler uses the results of the questionnaire to plan and conduct additional targeted due diligence operations onsite. Along with members of its global team of quality engineers, Daimler also sends sustainability experts to supplier locations under certain circumstances. A?er a due diligence audit has been conducted, certain measures may be defined that the supplier will be required to implement, with such implementation being monitored.
We are currently in the process of awarding supplier contracts for the cells to be used in the electric models from our EQ product and technology brand, which we plan to launch in 2019. In order to be considered here, a supplier must provide information on its entire supply chain all the way down to the metal mine (supply chain disclosure). Our quality engineers and sustainability experts regularly make visits to supplier sites to verify that correct information is provided. In order to avoid the possibility of human rights risks such as child labor in the supply chain for our future battery-electric vehicles entering the market, we closely monitor cobalt and all other high-risk raw materials — among others through child labor — contained in battery cells, for example lithium, nickel, and manganese. In the next step, our quality engineers and sustainability experts examine not only the direct suppliers but also key sub-suppliers on the basis of their risk profiles.
Supply chains consist of many sub-suppliers, and in some cases that makes them very complex. At times we have identified as many as seven sub-suppliers in a supply chain; this can make it difficult to confirm the origin of some raw materials. In other words, we cannot exclude the possibility of a risk remaining that a raw material might not have been procured in accordance with sustainability principles. We are aware of our responsibility to ensure that the components we receive from suppliers are manufactured in accordance with sustainability principles, and we take action to promote compliance in this regard.