The electrification of its new vehicle fleet is a key component of Mercedes-Benz's "Ambition 2039" and a prerequisite on the way to net carbon- neutrality over the vehicles’ entire value chain. Responsibly mined and processed raw materials provide the foundation for a genuinely sustainable electric vehicle fleet. The Mercedes-Benz Procurement is now setting new standards, with an approach that encompasses cobalt, lithium, nickel, graphite, copper and manganese.
The heart of a battery is the battery cell. Its production involves a wide range of materials – including cobalt and lithium. Both are at times strongly criticized in terms of human rights as well as environmental aspects.
Our aim is to further reduce the use of critical raw materials. In the coming generations of battery cells, for example, the cobalt content is already being reduced to less than ten percent. The long-term objective is even to be able to dispense with materials such as cobalt entirely through post-lithium-ion technologies with new material compositions.
Procurement of battery cells with cobalt, lithium, nickel, copper, graphite and manganese from audited sources
Part of a comprehensive approach being taken by Mercedes-Benz for its overall battery strategy is a decision by the Mercedes-Benz Procurement promoting the socially acceptable and environmentally sound extraction of raw materials in the battery cell.
The company will in future only source battery cells with cobalt, lithium, nickel, graphite, copper and manganese from mining-audited sites. To achieve this, the Mercedes-Benz Procurement will in future only work with suppliers who purchase raw materials from audited sources in accordance with the recognized mining standard of the Initiative for Responsible Mining Assurance (IRMA)
Since 2021, we have been using IRMA as a precondition in all battery-related awardings and require our suppliers to exclusively use cobalt, lithium, nickel, graphite, manganese and copper from IRMA-audited mines in newly commissioned scopes of supply. Because IRMA is still at the beginning of industry-wide application, we are relying on transitional periods. With our clear requirement, we accelerate the establishment of the standard under realistic conditions: We are gradually moving towards increasingly responsible practices with the medium-term goal of robust certification. For example, we expect at least proof of "IRMA Transparency" at the start of production of the corresponding purchased part from the supplier and three years later the achievement of "IRMA 50" or higher. For details on the IRMA ratings described, see here
Currently (as of 09/22) there are currently 65 mining companies with 76 locations in various phases of the IRMA process. More information can be found here
With the strategic decision to work only with suppliers who agree to the requirements of IRMA in the future, Mercedes-Benz seeks to ensure that its products contain only materials that have been mined and produced without violating human rights or environmental standards.
Mercedes-Benz deliberately has decided not to generally exclude countries of origin viewed as high-risk - such as the Democratic Republic of the Congo - as sources of supply. Instead, the holistic approach aims to improve the local situation for the people working there and to strengthen their rights. This is the only way to achieve long-term social changes.
By doing so, the company is also following the recommendation of non-governmental organizations, governments and other relevant interest groups not to withdraw from high-risk countries in general. The principle of “using leverage before withdrawing” is a maxim of action that can be found in different forms in various frameworks for respecting and upholding human rights, on which Mercedes-Benz is oriented, for example in the National Action Plan on Business and Human Rights of the German federal government.
Consequent selection process in the battery cell supply chains
Already in 2018, Mercedes-Benz commissioned the auditing and advisory firm RCS Global
Auditing by RCS Global
The supply chains of Mercedes-Benz's battery cell suppliers are controlled by RCS Global across all stages - from the battery cell supplier to the mine. This audit includes, among other things, aspects such as the avoidance of child labor and modern slavery, occupational health and safety measures, material control and existing due diligence systems. If necessary, corrective action plans are agreed with suppliers by means of individual plans; the implementation of which is continuously monitored. The corrective actions and their regular review are intended to ensure that a continuous improvement process takes place in the supply chain. The aim is to ensure that the cobalt for the battery cells comes from responsible sources that meet the requirements of Mercedes-Benz AG.
- Transparency and review of the company's battery cell supply chain at every stage from battery cell supplier to mine site
- Review and improve supplier due diligence management systems and sourcing practices in battery cell supply chains
- Initiating a process of continuous improvement by controlling the implementation of corrective action plans and training for suppliers
- Increase transparency and experience in environmental protection, e.g. by obtaining specific information, e.g. CO2 footprint, green electricity content, recyclate, etc.
- Awareness-raising measures and follow-up of the contents of the Mercedes-Benz Responsible Sourcing Standards
The audit requirements are tailored to the different supplier levels and are based on international standards that are relevant for the due diligence of raw materials. The criteria evaluated under the programme include:
- Due diligence management systems including material control, risk management and mitigation, and public reporting, based on the five-step criteria of the OECD Due Diligence Guidance for Responsible Sourcing from High Risk Areas as well as the Chinese Due Diligence Guidelines for Responsible Mineral Supply Chain (Chinese Guidelines), CCCMC, RCI, the RMI Pilot Cobalt Refiner Supply Chain Due Diligence Standard and the Joint Due Diligence Standard for Copper, Nickel and tin.
- Human rights, including child labour; modern slavery; gross human rights violations, based on the OECD Due Diligence Guidance Annex 2, the Chinese Guidelines, and the UK Modern Slavery Act (2015).
- Health and safety, based on ISO 18001, OHSAS 18001 or ISO 45001 Certification. At the level of mines: Responsible Business Alliance, Code of Conduct, Version 6.0 (2018), Provision B.1 Health and Safety; IRMA Critical Requirements.
- Ethics and transparency, including disclosure of supply chain information and audit cooperation.
After seven months, by the end of January 2023, 399 different suppliers and sub-suppliers, from battery manufacturers to the mine for the raw materials cobalt, lithium, nickel, graphite, copper and manganese, had already been identified. 35 of the 55 audits planned so far have already been successfully completed. The remaining ones are to be followed by the end of June 2023. In addition, two training courses in the area of due diligence management and two training courses for upstream suppliers with newly developed ESG criteria have already been conducted.
- Human Rights Due Diligence Audits: Battery cell suppliers have faced particular challenges with the expansion of the audit scope (from cobalt to lithium, nickel and graphite). On average, they performed worse in the due diligence management system and risk assessment in the supply chain. In principle, however, all of them were able to achieve very good results in the areas of compliance with human rights and health and safety requirements. Cathode and anode manufacturers also had the largest findings in the area of risk assessment in the supply chain, but met all requirements in the areas of child labor and audit integrity. The refiners fared slightly worse overall. Mainly due to a lack of guidelines in the area of OHS as well as employee training. Also, not all sub-suppliers could always be disclosed.
- New Extensive E-Module Audit: By the end of January, 4 E-module audits had already been completed. These were carried out at two cathode manufacturers, one anode manufacturer and one cobalt refiner, each based in China. The suppliers achieved high scores in the areas of environmental management system, water quality and handling of hazardous substances / waste. Lower results, especially in the area of environmental due diligence, mainly due to insufficient validation of key sub-suppliers. Corrective Action Plans (CAP):
Almost 40% of the CAPs issued are currently in the processing process. This means that some of the findings from the audits have already been processed, some of which are currently being held by RCS for testing the CAP evidence. 60% are currently in the design or acceptance phase. This is due to the short duration since the beginning of the new project phase.
This article was updated on July 16, 2023 to include new information about the cobalt supply chain.
