From raw material extraction to paint finish, thousands of people around the world are involved in the production of a vehicle. Daimler uses a risk-based approach to ensure that the rights of these people are protected. Three experts tell how this works in everyday life.
Hubertus Biegert knows the social challenges in the supply chain at first hand. As Head of Supplier Quality for Battery Systems, he not only maintains close contact with suppliers from all over the world, but also conducts regular on-site audits. In addition to product- and environment-specific issues, these also involve looking at labor and social standards. "All our business partners have committed to complying with specific sustainability standards," he relates. "But sometimes paper is patient. In our audits we therefore specifically check social aspects, where we have identified the risk of a violation in advance," says Biegert. This can be the adequacy of the qualifications of employees in a rapidly growing high-tech start-up. Or the risk of injury from open machines in a production hall. "We talk to the people in charge, get them to show us evidence, and check the protective equipment." If there are significant concerns in any area, the audit is repeated after three months.
After decades in the profession, Hubertus Biegert has developed a sense for where something might be wrong. Is the desired information available immediately and without gaps? Do the facts documented in advance match what the auditors see and hear on site? If he notices any inconsistencies, the chemical engineer knows exactly where to look.
The framework: UN Guiding Principles
Human rights encompass many different issues. They include the protection of privacy and self-determination, as well as the right to physical integrity and the condemnation of child labor, torture and slavery. These are rights that are enshrined in the constitutions of most countries. And companies are also responsible for ensuring compliance with them, as laid down in the United Nations Guiding Principles on Business and Human Rights.
"The UN Guiding Principles are the framework we use to guide us," says Marc-André Bürgel, who heads the Social Compliance department at Daimler, which was established in 2019. Based on these principles, the company has developed its Human Rights Respect System: an approach to safeguarding the rights of people in the value chain while minimizing risks for the company. These include the prohibition of child labor and forced labor as well as, for example, the right to freedom of association, fair wages and working hours, health and occupational safety or equal opportunities. The aim is to protect human rights not only within the several hundred majority-owned Group companies worldwide, but also to demand this from suppliers and sub-suppliers. How does this work in practice?
"Put simply, a company's responsibility extends as far as its influence. There are various gradations here, of course. First of all, it's about value creation in our own plants and units, and then about activities at our direct suppliers," explains Marc-André Bürgel. "But our approach to protecting human rights also involves the deeper supply chains. Sometimes it can be as many as six or seven steps to the so-called risk hotspot, which will often be in the areas where the raw materials are extracted. Even though we do not have any direct influence here, we are gradually increasing transparency and also want to have a positive impact on the supply chain beyond our direct business relationships. However, given the immense complexity, only a phased and risk-based approach is expedient here."
The focus: Systematically anchoring social responsibility
Daimler is not alone in its clear commitment to actively promoting human rights in the supply chain. Marc-André Bürgel describes the development in recent years: "Ten years ago, human rights issues in the supply chain were addressed mainly by human rights organizations. We were already starting to talk to non-governmental organizations at that time and involving them in our work - for example in the human rights working group of the annual Daimler Sustainability Dialogue. Since then, interest has also grown significantly among other stakeholders. Customers are asking critical questions, the capital market is demanding more and more specific information, and politically we are seeing increasing regulation."
Current developments have also helped to ensure that human rights issues are managed even more systematically at Daimler. Alongside CSR departments and purchasing departments, the traditional risk management sector is now also taking an interest in human rights standards along the supply chain. It is not without reason that this development is happening in parallel with the ramp-up of electric mobility: Some of the central components of the lithium-ion battery come partly from risk areas. In particular, the focus is on cobalt, a mineral ore used in the cathode. In 2018, more than 60 percent of the cobalt mined worldwide came from the Democratic Republic of the Congo (DRC), a politically unstable country where the raw material is partly extracted in small-scale mining operations under conditions that are in many cases critical in terms of human rights.
On the ground in Congo
Two teams from Daimler traveled to Congo and South Africa themselves in 2018, to the beginning of the supply chain. "Together with the audit company RCS Global, we investigated the mines from which the material processed by our battery cell suppliers comes," says Hubertus Biegert. "And we checked transport routes to track whether a shipment of cobalt from a mine that is safe from a human rights perspective actually arrives at the production site."
Hubertus Biegert inspected the shipment of cobalt at the transhipment port in South Africa. Some time later he received the cargo at the port of destination. "We were able to work with Customs to verify that the cargo was declared correctly and that the containers arrived at their destination undamaged," he says. RCS Global has conducted a total of 60 audits targeted at risk hotspots in the cobalt supply chain since 2018. Currently, auditing for a limited number of mines is being expanded to include the Initiative for Responsible Mining Assurance (IRMA) mining standard. Daimler's goal: to source cobalt in the future only from certified mining sites.
Partners: IRMA sets new standard
For the concept to work, the company needs partners: these include, for example, strategic battery cell suppliers who have already committed to processing only certified cobalt. Other suppliers are set to follow. IRMA itself is also an important ally in the enforcement of human rights. The multi-stakeholder initiative has developed a comprehensive and globally unique standard for responsible industrial-scale mining that certifies mines directly.
"Everyone uses metals, yet many people are opposed to the impacts of mining," says IRMA Executive Director, Aimee Boulanger. "This is a very complex business with many risks for companies, workers and local communities." The standard developed by IRMA addresses these risks by being comprehensive and covering all issues related to mining, even when the most significant risks differ by region: in one mining region, for example, the focus may be on the issue of water scarcity, while in another country the main concern could be the protection of the rights of the indigenous population. In Congo, there has been a particular focus on labor rights and the protection of children from dangerous work in mines.
In IRMA, a mine’s performance against the standard is measured using a points system covering four main areas with numerous sub-aspects. For example, a mine operator may meet occupational safety criteria to a level of 75 percent and achieve 20 percent on the requirements related to water. The result creates transparency and allows both outside stakeholders and mining companies themselves to understand how the mine performs in relation to IRMA’s rigorous standard. "We want to support mining companies on their way to greater sustainability," says Aimee Boulanger. "In doing so, we're shifting the discussion and seeking to make a difference through collaborative efforts that encourage continuous improvement."
There are still no cobalt mines that have been assessed against the IRMA standard. However, together with Daimler and RCS Global, IRMA has developed a step-by-step approach for assessing in such challenging situations. This approach will be taken with a limited number of cobalt mines within the Mercedes-Benz supply chain in the DRC, auditing them against a series of specific sets of requirements in the IRMA Standard for Responsible Mining over time. The common goal: empowerment before withdrawal.
"We don't think that for large companies to withdraw completely from high-risk areas is the right way to go," says Marc-André Bürgel. There is a risk that this could further aggravate the situation for the local population. Families could lose their livelihoods and end up worse off. Instead, companies should stay engaged locally and drive substantial change and improvement. Aimee Boulanger reinforces this stance: "Our aim is to create awareness for the people there on the ground who are directly affected. We want their interests to be heard. That's why the dialog has to happen right there, at the beginning of the supply chain."
The goal: to be effective on the ground
In addition,cobalt is far from the only issue preoccupying Daimler's human rights experts. All in all, the company has identified 24 critical raw materials whose supply chains are to be systematically reviewed for human rights risks by 2028 - including for example mica and natural rubber in addition to cobalt and lithium. A challenging task for the purchasing departments and the social compliance team: "We first have to find out which of our components include these raw materials in their processing," Bürgel explains.
"In the next step, we then work with the respective suppliers to make the widely ramified supply chains more transparent and to identify the respective risk hotspots. On this basis, appropriate measures are defined and implemented." It is a complex, intricate and continuous task. But one that is worthwhile. "At the end of the day, we want what we do to reach local people in the form of sustainable improvements."
Aimee Boulanger sees it the same way: "It took us ten years to develop our sustainability standard and include as many perspectives as possible. The challenge was to meet the expectations of civil society, while acknowledging the realities of mining. In the end, the will to find common solutions prevailed." Human rights need teamwork. This starts with a collaborative corporate culture and continues with industry- and commodity-specific initiatives.
For quality engineer Hubertus Biegert, two other aspects are crucial when it comes to human rights: education and open communication. "In personal terms, I am dismayed to see how inadequate the legal labor standards are in some countries. There are health hazards that have led to strict regulations in Europe, that people there are not even aware of." During his audits, the Mercedes-Benz expert takes plenty of time to explain limit values and point out the long-term risks of specific violations. "If you want to change people's behavior, you first have to change their motivation," Biegert says.