Handling risk raw materials

Mercedes-Benz Group pursues a risk-based approach. This means that we aim to create as much transparency as possible in our raw material supply chains that carry a risk for human rights violations. In this way, we identify areas that are critical to human rights and define and implement targeted counter-measures.

In order to produce vehicles, we need certain raw materials that can, in some circumstances, be mined or processed under conditions that are critical to human rights. That is why the supervision of these supply chains has a high priority for us. Under the umbrella of the Human Rights Respect System (HRRS), we analyze 24 critical raw materials for human rights risks, create transparency in our supply chains and take measures to reduce risks. Learn more about our goals here .

Our commitment regarding battery raw materials

Battery-electric drive systems are a key element on the way to achieving CO₂-neutrality. This is associated with a changing and increasing demand for specific raw materials, in particular cobalt and lithium, but also nickel, graphite, manganese, and copper. These raw materials for batteries are among the 24 raw materials, which we have identified as being potentially critical in terms of human rights in their use, extraction or further processing. In order to counter possible environmental and human rights risks we carry out comprehensive reviews of these raw materials in the form of raw materials assessments.

In addition to an initial review of the situation, important elements of our assessments include the intensive analysis of our supply chains and the involvement of our direct suppliers and further stakeholders from science, industry, and civil society.

Our raw materials assessments consist of three steps:

  1. We create transparency along the respective raw material supply chains.
  2. We identify risk hot spots in these supply chains.
  3. We define and implement risk mitigating measures and make sure that they are effective.

By the end of 2025, we plan to review 70 percent of all high-risk raw materials. By 2028, we intend to define appropriate measures for 100 percent of our raw materials that pose an increased risk of human rights violations.

The raw materials assessments of the battery raw materials named above have all at least started in the year 2021. We report on the results of the assessments here.

We identify and prioritise risks in our raw material supply chains in line with the United Nations (UN)  Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidelines  for Minerals from Conflict and High-Risk Areas¹.

We use different criteria for the analysis like the number of processing steps within our supply chains as well as the technical methods of raw material extraction and the origin of raw materials. Another criterion is the future relevance of a raw material for our products with regard to the transition to electric mobility. Because raw material and service supply chains are very different we look at them separately.

In order to be able to develop and design targeted measures, we evaluate all 24 critical raw materials based on nine identified risk fields. These are derived from our sustainability standards, taking into account the international frameworks relevant to raw material supply chains, such as the OECD Due Diligence Guidelines for Minerals from Conflict and High-Risk Areas:

Risk Areas Definition
Working Conditions incl. Occupational Health and Safety Working conditions with (potential) negative effects on the physical and mental health of workers.
Child Labour Illegal or exploitative employment of children (potentially) depriving children of their childhood and education.
Modern Slavery incl. Forced Labour (Potential) exploitation of workers who cannot refuse or leave due to violence or threats.
Community and Indigenous Rights (Potentially) adverse impacts on the rights and livelihoods of affected local and indigenous communities.
Excessive Violence by Public and Private Security Forces (Potential) human rights abuses committed by private and public security forces to which a company can become complicit.
Environmental Risks with Impact on Human Rights Adverse impacts on the environment, which (potentially) affect the enjoyment of human rights.
Business Conduct in Conflict and High Risk Areas (Potentially) adverse impacts of a company's operation, contributing to conflict, which result from a company's own activities or its relationships with third parties including suppliers.
Serious Human Rights Abuses The most serious violations of human rights to which a company can (potentially) become complicit.
Supplier DDMS Inadequate due diligence processes in companies along the supply chain.

A detailed list of the general risks of relevant raw materials as well as a supply chain-specific analysis is currently under development and will be published in the Mercedes-Benz Raw Materials Report on our website.

Evaluation of the risk fields

For the assessment of risk fields, we put the logic of the UN Guiding Principles on Business and Human Rights into practice and analyse the extent of a risk ("scale") as well as the number of people affected ("scope").

For this purpose, we take into account relevant reports, studies, expert interviews as well as collaborative work. One example is the Raw Materials Outlook  platform, which we developed jointly with other automotive manufacturers as part of the "Drive Sustainability" initiative. The aim of the collaboration was to create a cross-industry online portal that helps automotive manufacturers identify their human rights and environmental risks in the supply chain.

With the assessment, we identify and prioritise the most salient risks and adjust our measures accordingly. We reflect on the result of our assessment and the risk reduction measures with external stakeholders who have special expertise in the individual raw materials as well as with potentially affected persons and their representatives.

With the assessment, we identify and prioritise the risks with the highest relevance and adjust our measures accordingly. The risks are assessed based on a four-level scale from 0 = minor to 3 = critical Risk.

Risk Rating not
applicable
0
Minor
1
Moderate
2
Major
3
Critical
Scale:
How serious is the negative impact on those affected?
not
applicable
Other human rights impacted than bodily / mental harm May / May not result in bodily / mental harm through other human rights impacted Serious bodily / mental harm Loss of life
Scope:
How many people are affected?
not
applicable
Under 100 rightsholders impacted Between 100 and 500 rightsholders impacted Between 500 and 1000 rightsholders impacted More than 1000 rightsholders impacted

¹ OECD Due Diligence Guidance to Promote Responsible Supply Chains for Minerals from Conflict and High-Risk Areas.

Industrial mining is always linked with interventions in the environment and thus also with potential effects on the living conditions of the local population. The risks identified in the context of previous raw materials assessments include, for example:

  • risks to the health of employees and the local population around the mine sites, e.g. through emissions of dust due to the large-scale transfer of materials and transport operations,
  • effects on the surrounding agriculture due to changes in or pollution of groundwater and open water,
  • effects on the way of life of the local population, including indigenous communities, in individual cases including resettlement, e.g. due to the land requirements of large mines.

In addition to our own raw material assessments, from which we derive material-specific measures, the use of recognized external standards is a central instrument in order to meet our own due diligence responsibilities. The Standard for Responsible Mining of the Initiative for Responsible Mining Assurance (IRMA)  is of particular importance for us here. The IRMA standard is currently the widest-ranging standard and comprehensively covers the risks associated with the extraction of raw materials. The fact that the results of the audits are published transparently and in full enables the subsequent participation of all the relevant stakeholders in the continuous improvement of the sustainability performance of the audited mining sites.

Since 2021, we have specified the IRMA standard as a precondition for all battery-related contracts, and we require our suppliers to use cobalt, lithium, nickel, graphite, manganese, and copper exclusively from IRMA-audited mines in newly awarded projects. Because the industry-wide application of the IRMA standard is still in its early stages, we are making use of transition periods. With our clear requirement, we accelerate the establishment of the standard in the market under realistic conditions: We are gradually moving towards increasingly responsible practices, with the medium-term objective of a robust certification. We thus expect the supplier to provide at least proof of “IRMA Transparency” at the respective start of production of the respective procured part and of the achievement of “IRMA 50” or higher three years later. See here  for details of the IRMA achievement levels.