Mercedes-Benz underlines ESG commitment with substantial achievements and measurable targets
At its ESG (Environment, Social and Governance) Conference 2023 for investors and analysts, Mercedes-Benz underlined measures aimed at reducing the carbon footprint and creating lasting value for all stakeholders.
"At Mercedes-Benz, we want to build the world's most desirable cars. And since there can be no luxury without sustainability, we have flipped the switch towards ESG - especially with our ramp-up of e-mobility. ESG enables long-term value creation. This includes mitigating risks and seizing opportunities in sustainable business. We intend to double down on both."
Ola Källenius, Chief Executive Officer, Mercedes-Benz Group AG
Accelerating electrification with a growing portfolio and a dedicated high-power charging network
Sales of Mercedes-Benz battery electric passenger cars, including smart grew by 67% in 2022. The company expects to approximately double sales of BEVs in 2023 and to reach up to 50% xEV sales by mid decade. To further accelerate uptake, Mercedes-Benz will establish its own-branded global high-power charging network supplied with green electricity wherever possible. Within this decade, a total of more than 10,000 chargers will be installed in North America, Europe, China and other key markets. The network will be open to all brands with exclusive benefits such as pre-booking opportunities for Mercedes-Benz customers.
Decarbonizing the supply chain and conserving resources through green energy and responsible sourcing
Mercedes-Benz is pursuing the goal of a green steel supply chain from 2039 at the latest, together with all its steel suppliers. Low-CO2 steel, made from scrap, was already introduced into Mercedes-Benz vehicles. Furthermore, Mercedes-Benz is testing prototype parts including ultra-high strength martensitic steel from SSAB which contains almost fossil-free direct-reduced iron for series production. Mercedes-Benz was also the first car manufacturer to take an equity stake in Swedish start-up H2 Green Steel. Through this investment, Mercedes-Benz is promoting the transformation of the steel industry and intends to launch various vehicle models from 2025 which utilize almost CO2-free steel. Mercedes-Benz also works on the decarbonisation of its aluminium supply chain. At least a third of the aluminium used in Europe for upcoming electric models will be produced with renewable energy, leading to CO2 reductions of up to 50%. The company also started to test aluminum from Hydro (aluminum producer) with minimum 25% post-consumer scrap for safety-relevant structural castings. The aim is to begin using this material in series-production this year. Its CO2 footprint is around 70% lower than that of conventional aluminium used in Europe. Together with Hydro the company aims to pilot very low CO2 aluminium by 2030. Mercedes-Benz will extend its use of material certified from mine to supplier according to the standards of the Aluminium Stewardship Initiative.
Driving the circular economy and direct sourcing of raw materials
By the end of 2023, the new battery recycling factory in Kuppenheim, Germany, will start ramping up operations. Thanks to an innovative mechanical-hydrometallurgical process, Mercedes-Benz will achieve a recycling rate of more than 96% some months later. Pending the outcome of promising discussions with the public sector - Kuppenheim aims to have the ability to recycle more than 2,500 tonnes of battery modules per year. Mercedes-Benz is also expanding the use of net carbon-neutral cells and batteries. By focusing on the cathode material, Mercedes-Benz aims to reduce the CO2 footprint of cells by 40%. Further reduction is targeted through use of renewable energy to produce and refine raw materials. In 2022, the company signed a contract with Canadian-German start-up Rock Tech Lithium for the supply of an average 10,000 tonnes lithium hydroxide starting in 2026. Rock Tech shall mine the lithium in Canada from sites audited according to the mining standard of the Initiative for Responsible Mining Assurances (IRMA) and refine it in Germany. Moreover, both partners will cooperate in creating a roadmap to achieving net carbon-neutral production of lithium hydroxide by the end of 2030. The ground-breaking ceremony for the plant in Guben took place in March 2023. In China, Mercedes-Benz is also working with strong partners to close the loop of recyclable materials on an industrial scale.
Aiming for 80% fewer CO2 emissions in production by 20301
Since the beginning of 2022, production sites worldwide fully owned by Mercedes-Benz have been net carbon-neutral. Today 45% of overall energy used in production at Mercedes-Benz plants comes from renewable sources, in large part thanks to 100% green electricity supplies. Mercedes-Benz has already achieved its 2030 target of a 50% CO2 emissions reduction2 - as approved by the Science based target initiative (SbTi) - in 20221. The company aims for an 80%1 cut in CO2 emissions by 2030 and intends to increase renewable energy to account for 70% of overall energy needs at own production sites, not least through increased on-site generation capacity. Mercedes-Benz is focusing on the expansion of photovoltaic systems at its own sites: Up to 140 megawatt peak (MWp), equivalent to one million square meters of new solar panels will be installed until 2025. Expanding the energy portfolio to include wind power from onshore and offshore wind farms is another focus in the company's energy strategy. The new solar systems and wind farms will help Mercedes-Benz to secure around 50% of its future total electriity requirements in Germany. In the offshore sector, Mercedes-Benz concluded a Power Purchase Agreement (PPA) with Iberdrola - one of the global market leaders in the renewable energy sector - for the supply of electricity from the Windanker wind farm in the Baltic Sea. This contract alone allows Mercedes-Benz to secure more than 140MW of renewable electricity from 2027 onwards, covering around 30% of the company's electricity needs in Germany. Regarding onshore, Mercedes-Benz will build a wind farm with a double-digit number of wind turbines at its test site in Papenburg, Germany, by middle of the decade. The ambition for all Mercedes-Benz production plants worldwide is to run 100% on renewable energy with zero CO2 emissions by 2039. In logistics, the aim is to avoid and reduce CO2 emissions through process optimization. An important factor is the switch from road to rail, wherever economically possible. Mercedes-Benz is also investigating innovative concepts such as freighters powered by sail. The company has signed a Letter of Intent with Wallenius Wilhelmsen (Global Shipping and Logistic Solutions Company) to transport cars from Europe to the U.S.
Creating a sustainable retail experience for customers
Mercedes-Benz aims to make its worldwide independent retailer network net carbon-neutral by 2030 at the latest. Measures to achieve this include using renewable energy sources, improving energy efficiency in buildings, expanding electric mobility in retail fleets and developing the charging infrastructure. First steps this year include detailed CO2 emissions calculation of the global retail network and development of tailored regional roadmaps.
Further social engagement investment in young innovators and the prevention of child labor
Mercedes-Benz has donated proceeds from the auction of a Mercedes-Benz 300 SLR Uhlenhaut Coupé to fund beVisioneers: The Mercedes-Benz Fellowship. The initiative aims to empower young innovators with diverse backgrounds who have promising ideas for sustainability projects. Fellows receive an intensive 12-month training and skills development programme with access to mentoring as well as financial support.
To support human rights in mining regions, the company is also continuing existing partnerships with Bon Pasteur in the Democratic Republic of the Congo (DRC) and with Terre des Hommes in India. The focus of both projects is to prevent child labour by addressing its root causes such as extreme poverty, lack of community protection systems and limited alternative livelihood opportunities. Support is being extended to a total of 34 villages from the 12 that have benefitted so far.
For its own supply chains, Mercedes-Benz aims to complete the assessment process of 24 raw materials with elevated human rights risks by 2028. An initial milestone of 70% is set for 2025. The company has strengthened the engagement in the deeper supply chains through extending its cobalt audit program to environmental standards and a broader scope of all critical battery materials. A recent analysis from Lead the Charge (https://leadthecharge.org/) evaluating efforts by leading carmakers to eliminate emissions, environmental harms, and human rights violations from their supply chains gave Mercedes-Benz the highest score in total. The plan for 2023 is to establish risk mitigation measures for all raw materials affected by the future EU battery regulation.
Shaping the just transition for the Mercedes-Benz team in a fair and socially responsible way
Electrification and digitization are historic turning points for the world of work. All job profiles in the company are changing. Mercedes-Benz aims to shape the personnel change in a socially responsible way. Qualification and continuing education are the key to mastering the transformation successfully while empowering the employees. In Germany alone, Mercedes-Benz will invest more than €1.3 billion in the qualification, training and continuing education of its employees by 2030. It is clear that some job profiles, especially in powertrain, will no longer exist. That's why the company promotes flexibility between the plants and enables employees to change locations. Also, Mercedes-Benz takes advantage of demographic change and natural fluctuation in order to further optimize employment at different locations.
Variable executive remuneration system enhanced
Mercedes-Benz understands Corporate Governance as an enabler for the sustainable transformation. To that end, the company has enhanced the variable component of its executive remuneration. There is now one KPI each for E, S and G included as part of short- and long-term incentives. For Board of Management Members, a new penalty clause related to ESG components has been introduced.
"Dark Green" rating for overhauled Green Finance Framework and "A rating" for climate efforts
For the first time, Mercedes-Benz added green asset backed securities to its green financing instruments. The company has also expanded the framework to include green assets at Mercedes-Benz Mobility. These and other revisions have earned the highest "Dark green" rating from CICERO with an "excellent" rating for governance: https://group.mercedes-benz.com/investors/refinancing/green-finance/. This follows the recent announcement by the CDP, which provides a global environmental disclosure scoring system, that Mercedes-Benz has been rated "A" for its climate efforts - a top mark awarded to less than 2% of the around 19,000 participating companies.
The livestream (2:00 p.m. CEST) and the recording can be found on the website: https://group.mercedes-benz.com/esg-conference-2023/
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Mercedes-Benz AG at a glance
Mercedes-Benz AG is part of the Mercedes-Benz Group AG with a total of around 170,000 employees worldwide and is responsible for the global business of Mercedes-Benz Cars and Mercedes-Benz Vans. Ola Källenius is Chairman of the Board of Management of Mercedes-Benz AG. The company focuses on the development, production and sales of passenger cars, vans and vehicle-related services. Furthermore, the company aspires to be the leader in the fields of electric mobility and vehicle software. The product portfolio comprises the Mercedes-Benz brand with the brands of Mercedes-AMG, Mercedes-Maybach, Mercedes-EQ, G-Class as well as products of the smart brand. The Mercedes me brand offers access to the digital services from Mercedes-Benz. Mercedes-Benz AG is one of the world's largest manufacturers of luxury passenger cars. In 2022 it sold around two million passenger cars and 415,300 vans. In its two business segments, Mercedes-Benz AG is continually expanding its worldwide production network with around 35 production sites on four continents, while gearing itself to meet the requirements of electric mobility. At the same time, the company is constructing and extending its global battery production network on three continents. As sustainability is the guiding principle of the Mercedes-Benz strategy and for the company itself, this means creating lasting value for all stakeholders: for customers, employees, investors, business partners and society as a whole. The basis for this is the sustainable business strategy of the Mercedes-Benz Group. The company thus takes responsibility for the economic, ecological and social effects of its business activities and looks at the entire value chain.
The figures are provided in accordance with the German regulation 'PKW-EnVKV' and apply to the German market only. Further information on official fuel consumption figures and the official specific CO2 emissions of new passenger cars can be found in the EU guide 'Information on the fuel consumption, CO2 emissions and energy consumption of new cars', which is available free of charge at all sales dealerships, from DAT Deutsche Automobil Treuhand GmbH and at www.dat.de.
1 Compared to 2018
2 Scope 1 and 2
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