Cobalt. Cobalt is a special focus area for our sustainability management activities because of the potential human rights risks associated with its supply chain. Demand for cobalt will increase in line with the expanding electrification of vehicle fleets. Along with the implementation of our own measures, we also commissioned an external auditing firm to examine one of our future battery supply chains in accordance with OECD standards. The firm audited both downstream suppliers (from the battery manufacturers to the refineries) and upstream suppliers (from the refineries to the mines). This audit provided us with comprehensive cobalt supply chain mapping, which in turn forms the basis for greater transparency and better monitoring and influencing of the supply chain. The audit also included an examination of the systems used to prevent child labor and modern forms of slavery.

In those areas where potential for improvement was identified through the audits, individual corrective action plans were agreed on with suppliers, and we continue to monitor compliance with these plans. The examination of the battery supply chain thus formed the foundation for a process of continuous improvement, and the implementation of the corrective action plans improves our due diligence with regard to both direct suppliers and the entire supply chain.

Plans also call for long-term cooperation with the external service provider in order to safeguard the continuous improvement process. Capacity building at suppliers will be addressed more extensively as a result of supply chain mapping, cobalt supply chain auditing, scoring assessments for individual suppliers and the implementation of the corrective action plans. Our aim here is to support suppliers’ efforts to prevent human rights violations. The aforementioned audit will be expanded to include other cobalt supply chains in the future.

During the year under review, Daimler also published an overview of the cobalt smelting activities in our current supply chain.
Further information about human rights

Mica. Mica, which is used in vehicle paints, is one of the substances identified by our Human Rights Respect System as a critical material. The supply chain for mica has therefore been thoroughly examined – for example by a team of quality engineers and human rights experts who audited three mines and three mica processing plants in India in order to determine whether these facilities comply with standards for protecting human rights. The overall objective of the project was to create transparency across the entire mica and paint supply chain in order to identify any problems that might exist and then define appropriate corrective measures. As a result of the audits, one of our direct suppliers removed a sub-supplier from the paint supply chain. Daimler continues to pursue a dialog with the supplier in order to remain up to date on the company’s sustainability management activities.

Steel, aluminum and precious metals. By conducting supplier surveys, we have increased transparency with regard to the origins of steel, aluminum and precious metals (platinum-group metals — PGM). We paid special attention here to implementing the duties of care with respect to human rights in the respective supply chains. We also engage in dialogs with individual indirect suppliers on the topic of human rights. Mineral-based raw materials such as steel and aluminum are almost fully recyclable and thus help us improve our resource efficiency. At the same time, this can in some cases be associated with social risks in the supply chain. In response to this conflict of priorities we have initiated a dialog with suppliers on the use of secondary raw materials.

Natural rubber. Our Human Rights Respect System has defined natural rubber as one of the focus materials subject to a supply chain analysis. Because natural rubber is used mainly in tires, we not only conduct our own supplier surveys and inquiries but also cooperate with association initiatives and our partners in the tire industry.

Conflict minerals. Within the framework of our Human Rights Respect System, we also examine tin, tantalum, tungsten and gold, which in some cases are mined in potential conflict-ridden regions. We require our suppliers to provide us with transparent information on the origins of such materials. Based on this information, we provide them with suggestions for implementing improvements. In this manner, we make a continuous effort to increase transparency and work towards the responsible procurement of materials from conflict-ridden regions. Our activities in associations and initiatives, such as the Responsible Minerals Initiative, also include the formulation of improvement measures.

Services. In the area of services, we have cooperated with human rights experts on the initiation of measures designed to increase awareness of human rights issues. We offer international web-based information on integrity and human rights, and a cross-functional team of procurement and human rights experts has now held a first “Good Practice Workshop” with logistics providers in Romania. These and other activities increase awareness of the importance of human rights through a constructive exchange of information and experiences and clear communication of what we expect from our business partners in this regard. Thus, we have established the foundation for further discussions, the expansion and systematic improvement of our Good Practice Sharing concept.

Social standards for contracts for work and services. The awarding and performance of contracts for work and services are subject to standards that extend beyond existing legislation in many areas. These standards define our requirements with regard to occupational health and safety, accommodation, remuneration, use of temporary employees, commissioning of subcontractors and freelancing. These social principles are relevant to all orders that exceed a period of two months and are conducted on the business premises of Daimler AG in Germany. All of the relevant service providers must sign a declaration that they comply with these standards. Only if they fulfill this condition can they receive new purchase orders. An auditing team from Procurement determines whether the standards are being complied with.