The automotive industry is undergoing a huge transformation. Our CASE strategy points the way to the mobility of the future. The expansion of electromobility (the E in CASE) presents new challenges, including with regard to raw materials and supply chains. For instance, lithium, cobalt and nickel are needed for the production of battery cells.
This raises important questions that are critically discussed in the public debate, because some of the necessary raw materials are mined under conditions that are critical on the human rights front. Child labour is a key issue here. The largest cobalt deposits are found in the Congo – a country that is politically unstable and afflicted by humanitarian crises. A great challenge, yet also our ambition as a company: how to ensure that our products are made from materials that come from a sustainable supply chain, i.e. without human rights violations?
The raw material supply chain is complex
First of all, it is important to understand how the raw materials reach us. We do not source the above-mentioned metals, which are needed for the electric drive, directly. Rather, there are several supply stages, so-called "tiers", which in turn may contain numerous suppliers. Our supply chains are thus often very complex and sometimes a supply chain can consist of up to seven supplier stages. We can only achieve our goal of a "clean" supply chain together with our suppliers, because from a legal point of view, only limited action can be taken. It is not possible to access the entire supply chain by legal means alone.
Our ambition is very clear: we want our products to contain only raw materials that have been mined and produced without human rights violations. Due to the complexity of the supply chains and the multitude of raw materials in our products, a risk-based and strategic approach is required. Our human rights experts have therefore developed a systematic approach for the respecting of human rights – the Human Rights Respect System.
Systematic assessment of risks to human rights
Daimler Procurement non-production material, Germany
The Human Rights Respect System (HRRS) is a unique approach in the industry. The aim is to recognize and avoid risks and possible negative effects of our corporate action on upholding human rights at an early stage. For this reason, in future the HRRS will be used both in our supply chain as well as in our own majority held entities. It orientates itself on our proven Compliance Management System and consists of four steps.
The first step is risk analysis. As far as our supply chains are concerned, this means: we have used one of our vehicles as a reference, as it contains a particularly large number of parts. We then compared this with independent lists of risk-related raw materials, for example with the OECD Due Diligence Guidance and the "Child and Forced Labor List" from the US Department of Labor. In this way, we have identified risk-related raw materials.
Transparency all the way back to the mine
For those cases where there are indications of risks, the second step takes a look at the entire supply chain. In so doing, we go beyond the direct suppliers to create transparency, and even go right down to the mine where necessary. Our interdisciplinary teams undertake "supply chain walks" to carry out on-site inspections and audits, while communication and training measures for suppliers are also part of HRRS. Furthermore, we also talk to the local people, the so called right holders. Their perspectives are an important aspect in the implementation of the Human Rights Respect System. Starting point of the Supply Chain Walks is the Tier 1 supplier and then the path goes along the critical points in the supply chain, if necessary to the mine. These onsite checks are carried out by interdisciplinary teams. They consist of representatives of the 700 quality engineers and experts in sustainability, human rights and compliance.
Furthermore, we have had audited the cobalt supply chain of a battery cell supplier. The external auditor RCS Global investigated at all stages of the supply chain according to the OECD standards. The audit included aspects such as child labour, health and safety in the workplace, cobalt material checks and the existence and quality of current existing supplier due diligence systems. For future supply chains, we have entered into a further partnership with RCS Global. An overview of the smelters and refiners in our current supply chains can be found here.
We examine new supply chains, as well as existing ones if needed: this was the case, for example, in the paint supply chain. This concerned the origin of the raw material mica, the mining of which is associated with human rights violations. Mica is needed to achieve a shimmering effect in vehicle paintwork. The company therefore examined the entire paint mica supply chain - from the mine to delivery of the vehicle paints at the plants. This approach was also positively assessed by external stakeholders, such as by the NGO Terre des Hommes.
The third step of the Human Rights Respect System is an evaluation of the implementation and effectiveness of the measures. Of course, we are constantly adapting the system to new findings and challenges. We publish the results, for example in our sustainability report.
Ongoing task and teamwork
It is our goal to bring transparency to the supply chains of the identified potentially high-risk raw materials. This is a great challenge, because transparency cannot be achieved at the press of a button. It is an ongoing task that we keep a close eye on. For this reason, experts from various specialist departments, such as Procurement and Supplier Quality, Compliance and Corporate Responsibility, work very closely together to drive forward the topic from a variety of perspectives. The risk-based approach of the Human Rights Respect System provides us with the means to achieve this. It enables us to act strategically and purposefully while ruling out possible risks at an early stage. This puts us on an excellent path towards guaranteeing respect for human rights in our supply chain.
