Mercedes Benz : Raw Materials Report

Raw Materials Report

For Mercedes-Benz Group, respect for human rights is a fundamental component of responsible corporate governance. The goal is clear: we only want to supply products that are produced without violating human rights.

Therefore, we are committed to ensuring that human rights are respected and upheld by all of our Group companies as well as by our business partners and suppliers. We are also committed to the responsible procurement of production and non-production materials and services. In fact, we can only achieve more transparency and ­sustainability for our supply chains by working closely with our suppliers in order to achieve our goals.

Our Principles of Social Responsibility and Human Rights bind us to respecting internationally recognised human rights and to prevent, mitigate and as far as possible bring to an end adverse impacts on human rights in our business operations around the world.

Our Responsible Sourcing Standards define our requirements for suppliers in relation to working conditions as well as respecting and upholding internationally recognised human rights.

Some raw materials used in vehicle components are sourced and processed under circumstances that might be critical in relation to human rights. Against the background of the fundamental shift in the automotive industry towards electric vehicles, this becomes even more relevant because some of the raw materials used in their construction can be associated with increased risks to human rights. With our Mercedes-Benz Human Rights Respect System (HRRS) we have developed a due diligence approach to identify and avoid these risks and possible negative effects of our business activities on human rights early on.

Al

Cr

Co

Cu

C

Fe

Aluminium

Chromium

Cobalt

Copper

Carbon

Iron

Page 04

Page 07

Li

Mg

Mn

Mo

Leather

Lithium

Magnesium

Manganese

Mica

Molybdenum

Page 10

Page 13

Ni

Nb

Pd

Pt

Rh

Nickel

Niobium

Palladium

Platinum

Rare Earth

Rhodium

Elements

	Si	Ta	Sn	W	Zn
Rubber	Silica sand	Tantalum	Tin	Tungsten	Zinc
& Silicon
			Page 16	Page 18

The 24 critical raw materials. For further information please click on the links above. Assessments of the remaining raw materials will be published in due course.

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We have identified 24 raw materials that are critical to vehicle production and that also pose increased human rights risks.

To identify the materials we first analyzed the raw materials that are used in the components of an electric drive vehicle and drew on reference documents such as the US Department of Labor's "List of goods produced by child labor or forced labor" or the report "Material Change. A Study of Risks and Opportunities for Collective Action in the Materials Supply Chains of the Automotive and Electronics Industries" from 2018, which identified the 50 most important ­materials used by the automotive and electronics industries.

The resulting raw materials were then prioritised against a number of criteria. These included the human rights and environmental risks in the countries where the raw materials are mined, the importance of the raw material in the transformation to electric ­mobility, the functional relevance of the raw material

in the essential components of electric vehicles as well as our level of influence through supply relationships.

Under the umbrella of the Human Rights Respect System (HRRS), Mercedes-Benz Group is conducting raw material assessments for the 24 raw materials.

We are doing this by researching the respective raw material, its sourcing steps and the general associated risks. We then use this knowledge to identify the related main components used in our products and to initiate the raw material assessments, which consist of three steps:

1. Creating transparency along the raw material supply chains.
2. Identifying risk hot spots in the supply chains.
3. Defining and implementing risk mitigation
   measures­ and reviewing their effectiveness.

Appropriate measures vary according to the risks identified for each raw material and the leverage Mercedes-Benz Group has to prevent, mitigate or bring to an end the respective risks. Measures range from specific requirements for suppliers, for example a certification for the raw material used in components, to collaboration in respective initiatives, for example the Responsible Minerals Initiative, or fostering social projects, for example creating alternative livelihoods with Bon Pasteur in Congo.

The aim of Mercedes-Benz Group is to review 70 percent of the 24 raw materials identified as high-risk by 2025. By 2028, Mercedes-Benz Group intends to define appropriate measures for 100 percent of the 24 raw materials that pose an increased risk of human rights violations.

With this report, we are releasing the results of the first six raw material assessments. We will update the report on a regular basis as we complete assessments for each of the remaining raw materials.

Potential human rights risks

A	Business conduct in conflict-affected and	D Environmental risks with impact on human rights	G	Violence by private and public security forces
	high-risk areas (CAHRAs)
		E Insufficient due diligence processes at (sub-)suppliers	H	Working conditions, including occupational
B	Child labour			health and safety

1. Modern slavery, including forced labour

1. Community and indigenous peoples' rights

Potential human rights risks are categorised as above.

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Al Aluminium

Aluminium is the most abundant metal in the Earth's crust and is extracted from bauxite. It is increasingly replacing steel in vehicle manufacturing because its light weight can make a significant contribution to improving fuel efficiency and decreasing carbon emissions by reducing the overall vehicle weight.

Raw material risks

	D	F
	C	H
Disposal or/		Mining and benefication
and recycling		Main bauxite mining countries according to
		global market share1
		- China
		- Australia
		- Guinea

D	H
Product	Smelting and refining
use

Product	Intermediary products and
manufacturing	component manufacturing

Identified salient risks

1. Community and indigenous peoples' rights
2. Environmental risks with impact on human rights

1. Modern slavery, including forced labour

1. Working conditions, including occupational health and safety

cross-cutting stages: trading, transport, logistics and warehousing

Disposal or/and recycling skips mining and benefication to smelting and refining

1 Based on United States Geological Survey (2022)

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Al

Mercedes-Benz supply chain

Known occurrences of aluminium in the Mercedes-Benz AG supply chain and the risks associated with these occurrences.

Focus parts/commodities	Findings	Transparency
- Direct-sourced aluminium	- Exchange about potential human rights violations in	- Transparency at tier-1 component level
- Wheels (rim)	Guinea resulting from the impact of mining on the	- Transparency on aluminium sourced directly
- Battery case	local population	from suppliers
		- Critical nodes: mining
Supplier dialogue	Stakeholder dialogue about raw material risks
- Dialogue with all tier-1 aluminium suppliers, selected	- Exchanges with international NGO	Identified salient risks
tier-2 suppliers and three mining companies	- NGO confirms human rights risks resulting from the	C Community and indigenous peoples' rights
	impact of mining	D Environmental risks with impact on human rights
	- Developing industry links for the purpose of joint	E Insufficient due diligence processes at (sub-)suppliers
	learning, information sharing and focused exchange	H Working conditions, including occupational health
	with rights holders' representatives	and safety
	- NGO dialogue on prioritisation of risk areas

Implemented measures

Individual measures	Collective measures
- Making Aluminium Stewardship Initiative	- Engagement with the Aluminium Stewardship Initiative
­certification an awarding prerequisite for primary
aluminium used in stamping plants and foundries of
Mercedes-Benz Group in Europe

• Dialogue and communication with senior manage- ment (management level 2) at direct suppliers to raise awareness of identified risks

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