Mercedes-Benz Cars has taken the next step for a sustainable raw material supply chain. The company exemplarily examined the entire supply chain for mica – from the mine to the painting of vehicles in the plant. The aim of the project was to increase transparency throughout all steps of the value chain, to ensure all aspects of sustainability amongst indirect raw material suppliers. Mica is used in vehicle paints to achieve a shimmering effect. The mining of glimmer has repeatedly been connected with child labor in India. The company consistently pursues such indications. Within the framework of the systematic approach developed by Daimler to respect human rights, the Human Rights Respect System, mica was classified as potentially risky. Therefore Mercedes-Benz Cars has decided to make the supply chain transparent.

Mercedes-Benz Cars does not procure the raw material mica directly. The supply chains involve many sub-suppliers beyond the primary supply level. To safeguard the sustainability aspects in the paint supply chain, a team of quality engineers, compliance and human rights specialists audited three mines in India from which mica for Mercedes-Benz paint is sourced. After auditing the mines and converters, the team followed the path of the mica to the respective processors to exclude the possibility of mica from non-audited mines being added. In the view of the sustainability experts at Mercedes-Benz Cars, the way from the mine to the processor is the most critical phase.

“Our initiative for a sustainable raw material supply chain continues: In a pilot project we followed the path of the raw material mica back to its source and increased transparency in the mica supply chain. Further raw materials will follow this lighthouse project,” said Renata Jungo Brüngger, Member of the Board of Management of Daimler AG, responsible for Integrity and Legal Affairs. During its on-the-spot visits to different stages in the mica supply chain, Mercedes-Benz Cars discovered and assessed isolated abuses and took corresponding measures. In close cooperation with direct partners one sub-supplier was excluded from the paint supply chain, for example. The company is engaged in further dialogue with this supplier to monitor possible progress.

Dr Klaus Zehender, Member of the Divisional Board of Mercedes-Benz Cars, Procurement and Supplier Quality: “At Mercedes-Benz Cars we purchase finished paints from suppliers, and therefore do not procure mica ourselves. Nonetheless we recognise our responsibility for a sustainable supply chain right down to the raw material level. Constructive cooperation with the Indian suppliers was an example of on-the-spot raw material audits on a worldwide basis.”

Due diligence process for sustainability in the Mercedes-Benz Cars supply chain
Generally, the around 700 quality engineers examine existing suppliers by means of audits and verify compliance with sustainability standards by making on-the-spot visits to potential suppliers before contract placement. Around every two years after contract placement, series production suppliers are subjected to regular inspections. Together with compliance and human rights experts, specific measures to prevent child labor, securing free choice of employment and to pass on sustainability standards to subcontractors are examined.

In addition Daimler develops the Human Rights Respect System, which is based on the group-wide Compliance Management System. It aims to identify and avoid risks and possible negative impacts of business activities on the respect for human rights at an early stage.

Exchange with direct suppliers
A supplier day at Mercedes-Benz India in early April 2018 was under the sigh of sustainability in the supply chain. Almost 130 representatives from the 75 direct Indian suppliers who deliver to Mercedes-Benz worldwide were sensitised to the subjects of integrity, compliance and sustainability during the event and shared Best-Practice examples of their experience. The presentation covered the following aspects: ethical business practices, environmental protection, human and employee rights, elimination of child labour, sustainability standards and the obligation to pass these on to sub-suppliers.

“The talk to the Indian suppliers on integrity, compliance and sustainability is the first outlook on a new training programme which we will be offering all suppliers on a global basis. This training is a new offer from the Supplier Academy,” said Zehender. “Not only the direct suppliers play an important role – the entire supply chain must subscribe to sustainability.”

Source: Daimler AG