E Non-Financial Report
E NON-FINANCIAL REPORT CONTENTS203E Non-Financial ReportSustainability at Daimler204Social Issues215Our strategySustainable corporate governanceSustainability management in the supply chain204205205Stakeholder engagementPolitical dialogue and representation of interests215216Environmental Issues206Compliance217Climate protectionClean airConservation of resourcesEnvironmental protection in productionMobility services206207208208209Our Compliance Management SystemAnti-corruption complianceAntitrust complianceTechnical complianceData complianceAnti-financial-crime complianceHuman-rights compliance217220220221221222222Employee Issues210Partnership with the employeesHigh attractiveness as an employerA competitive workforceHealth management and safety at work210210212214Statement on the Review of theNon-Financial Report224On the following pages, we publish the non-financial report in accordance with Sections 289b – 289e, 315b and c of the German Commercial Code (HGB). This reportapplies to Daimler AG and to the Daimler Group. It contains the main information onthe aspects of environmental, employee and social matters, combating corruptionand bribery, and respect for human rights.The information provided in this report is presented in conformity with the GRI Standards of the Global Reporting Initiative, insofar as this complies with applicablelaw. Some aspects are presented in accordance with internal guidelines and definitions.Information on our business model (E page 74 ff of Annual Report 2018) and onnon-financial risks connected with the aspects presented in this report (Riskand Opportunity Report E pages 156, 157 of Annual Report 2018) is provided inthe Combined Management Report in the Annual Report 2018.Further information on our sustainability activities can be found online atw daimler.com/sustainability and in our annual Sustainability Report, which canbe downloaded there as a PDF data file.
204E NON-FINANCIAL REPORT SUSTAINABILITY AT DAIMLERSustainability at DaimlerSustainability is one of the basic principles of our corporate strategy as well as a benchmarkfor our success as a company. This approach means that we take advantage of the opportunitiesassociated with sustainability to enhance our business success, while including environmentaland social effects into our considerations.Our strategyWe believe that a long-term sustainability strategy and effectivesustainability management are the preconditions for ensuringthat we continue to be one of the world’s leading automobilemanufacturers in the future. Sustainability is therefore firmlyestablished as a fundamental principle of our corporate strategyat the implementation level.In order to identify and prioritize the sustainability aspectsthat are relevant to our strategy, we regularly conduct a multistage materiality analysis. This analysis combines our ownassessments with those of our stakeholders, who include ourshareholders and creditors, employees, customers and suppliers, as well as governments, environmental and humanrights organizations and other stakeholders from civil society.Their opinions are also always requested whenever we decideon measures for expanding and adjusting the sustainabilityaspects of our strategy.In the year under review, we conducted a regular internalassessment of current developments, which confirmed the prioritization of key areas of action that we had establishedin 2017.In 2018, we continued to define the concrete details of theSustainability Strategy 2030 that we had formulated in the previous year. As a result, the areas of action that had beendefined in 2017 were even more sharply focused with regardto comprehensibility and clarity. Our activities related to sustainability concentrate on the following focal topics:– Climate protection and air quality– Resource conservation– Livable cities– Traffic safety– Data responsibility– Human rights– Integrity, people and partnershipsThese focal points determine the structure of our sustainabilitymanagement activities and our annual sustainability reporting.In addition, when we identified the material aspects to beaddressed by this non-financial report, we took the focal topicsof our sustainability strategy as our starting point. However,in some cases, we emphasize different aspects because of thedivergent requirements set by the standards and laws thatare relevant to this report.With our strategy, we would like to help achieve the Sustainable Development Goals (SDGs) that were approved by theUnited Nations in September 2015. Our areas of action and thesustainability-related activities that underlie them supportthe following SDGs in particular:– SDG 8 — Decent Work and Economic GrowthBy developing and implementing a risk-based managementapproach to respecting and upholding human rights inour own units and our supply chain, we support the implementation of decent work as defined by SDG 8.– SDG 9 — Industry, Innovation and InfrastructureThrough the advanced development of automated and autonomous driving and the expected benefits for safety andclimate protection, we demonstrate the long-term potentialof digital innovations.– SDG 11 —Sustainable Cities and CommunitiesDaimler promotes sustainable mobility in urban areasthrough its offerings in the areas of car sharing, ride hailingand the multimodal linking of mobility services (Mobility as aService).– SDG 12 — Responsible Consumption and ProductionBy significantly reducing the use of primary raw materialsfor electric drive systems and reinforcing the material cyclesof primary raw materials that are needed for our e-drive system, we are setting the course for sustainable productionmodels in line with this SDG.– SDG 13 — Climate ChangeThrough our initiative “The Road to Emission-free Driving”and the reduction targets it sets for our fleet emissions,we are helping to protect the planet from the effects of climatechange.
E NON-FINANCIAL REPORT SUSTAINABILITY AT DAIMLERSustainable corporate governanceOur sustainability objectives and their management are partof our corporate governance system and are also included inthe targets of our executives.The Corporate Sustainability Board (CSB) is our central management body for all sustainability issues. The CSB is headed byRenata Jungo Brüngger (the Board of Management memberresponsible for Integrity and Legal Affairs) and Ola Källenius(the Board of Management member responsible for GroupResearch & Mercedes-Benz Cars Development). The operational work is done by the Corporate Sustainability Office(CSO), which consists of representatives from the specialistdepartments and the divisions.Integrity, compliance and legal responsibility are the cornerstones of our sustainable corporate governance and serve asthe basis of all our actions. We view integrity and values-basedcompliance as firm elements of our corporate culture and ourdaily business activities – elements that contribute to our company’s lasting success. The basis for this is our Integrity Code,which defines guidelines for our everyday business conduct,offers our employees orientation and helps them make the rightdecisions even in difficult business situations. The IntegrityCode is supplemented by other in-house principles and guidelines.The ten principles of the UN Global Compact provide a fundamental guideline for our business operations. As a founding member and part of the LEAD group, we are strongly committed to the Global Compact. Our internal principles andguidelines are founded on this international frame of referenceand other international principles, including the Core LaborStandards of the International Labour Association (ILO), theOECD Guidelines for Multinational Enterprises and the UNGuiding Principles on Business and Human Rights.Sustainability management in the supply chainOur standards and requirementsOur Supplier Sustainability Standards, which are an integralpart of our conditions of business, define our requirements forworking conditions, human rights, environmental protection,safety, business ethics and compliance. We urgently require ourdirect suppliers of goods and services all over the world tocomply with these standards.We expect our suppliers of production materials to operatewith an environmental management system that is certifiedaccording to ISO 14001, EMAS or other comparable standards.We also expect this of our suppliers of non-production mate rials on the basis of our risk assessments. With regard to animalprotection, we require our suppliers to comply with applicablelaws and regulations. We do not tolerate or support the unethical treatment of animals.205We demand that our direct suppliers commit themselves toobserving our sustainability standards, communicating themto their employees and to their upstream value chains, andthen checking to ensure that the standards are complied with.We support them in these activities by providing them with targeted information and training and qualification measures.The central information platform for suppliers is our DaimlerSupplier Portal.Further information is available at:w supplier.daimler.comSupplier reviewOur employees review new suppliers of production materialsto Global Procurement Trucks & Buses in high-risk countriesby means of sustainability-related on-site assessments. AtMercedes-Benz Cars, new suppliers in less risk-prone countriesare also investigated by our procurement and quality employees, with a specific focus on their sustainability performance.We also conduct a more thorough assessment where thisis necessary. The results of the assessment are discussed inmanagement committees and flow into decisions on whetherto award a contract.To ensure that our direct suppliers comply with the sustainability standards, we regularly conduct risk analyses. Weuse regular database research and other measures to discoverany violations of our sustainability and compliance rules byour current suppliers. We systematically follow up all reports ofviolations. With the help of an online survey, we also questionour main suppliers about their sustainability management andtheir communication of these requirements to their upstreamvalue chains. On the basis of the results, we define measuresto improve their sustainability performance.We have established a complaint-management process thatenables individuals to draw attention to possible human rightsviolations at suppliers. In this context, we work togetherclosely with the world employee committee. We bring togetherall the available information and take action if the reportsare well-founded. The suppliers are requested to respond to theaccusations; after that, we assess the facts of the case andtake the necessary measures. This can lead to the terminationof a business relationship. However, it is not always productiveto end cooperation with a supplier immediately after a case ofmisconduct. It often makes more sense to work together withthe supplier to improve the situation. This approach also benefits the people at the location. In addition to the complaintmanagement process, information on misconduct can alwaysbe submitted to the BPO whistleblower system (page 217)established by Daimler.E
206E NON-FINANCIAL REPORT ENVIRONMENTAL ISSUESEnvironmental IssuesProtecting the environment is a primary corporate objective of our Group. Environmental protectionis not separate from other objectives at Daimler, but is an integral component of a corporate strategyaimed at long-term value creation. The environmental and energy-related guidelines approved bythe Board of Management define the environmental and energy-related policy of the Daimler Group.They also express our commitment to integrated environmental protection that addresses theunderlying factors with an impact on the environment, assesses the environmental effects of production processes and products in advance, and takes these findings into account in corporatedecision-making.Climate protectionTargetThe Paris accord on climate protection aims to limit globalwarming to significantly less than two degrees Celsius comparedwith the preindustrial level. It requires a significant intensifi cation of measures, in particular more stringent CO2 targets forall countries and sectors. We are in the process of derivingspecific targets for all of our business divisions regarding thereduction of our products’ CO2 emissions. These targetsrefer to the period until 2030 and will be binding on the DaimlerGroup worldwide.Our current reduction target for driving operation (tank-to-wheel)is -44 % (2007 – 2021) for cars in the new-vehicle fleet in Europe.We are steadily continuing our efforts to reach this target.MeasuresOur goal is to also safeguard mobility for the generations tocome. That is why we strive to offer our customers safe, efficientand low-emission vehicles and services. A core element of ourapproach here is to achieve a drive-system mix that is tailoredto the market requirements. Our “Road to Emission-free Driving” initiative defines the primary focal points for developing new,extremely fuel-efficient and environmentally friendly drive- system technologies at all of our automotive divisions:– further development of our vehicles equipped with stateof-the-art combustion engines in order to achieve significantreductions in consumption and emissions,– further efficiency increase through hybridization, and– electric vehicles with battery and fuel-cell drive.Due diligence processesAn environmental protection guideline passed by the Boardof Management formulates our approach: We develop productsthat are especially environmentally friendly and energy-efficientin their respective market segments. A vehicle’s environmentalimpact is largely decided during the first stages of its devel opment. The earlier we integrate environmentally responsibleproduct development (Design for Environment, DfE) into thedevelopment process, the more efficiently we can minimize theimpact on the environment. That is why continuous improvements in environmental compatibility are a major requirementin the creation of the product performance specifications. Forevery vehicle model and every engine variant, we have requirement specifications that define the characteristics and targetvalues that must be achieved. These specifications includerequirements concerning fuel consumption and emissions limitvalues for CO2 and nitrogen oxides. During the development process we regularly monitor compliance with these specifications.In a committee situated directly below the Board of Management level, the managers responsible for each vehicle modelseries evaluate the results of this monitoring process anddecide on any necessary corrective measures. If corrections areneeded, the managing body of the respective division is includedin the decision-making. If the situation continues to escalate,the responsible member of the Board of Management is alsoincluded.The CO2 process in vehicle developmentAll of the divisions integrate all vehicle-related goals, includingthose that are relevant to the environment, into their vehicledevelopment process according to a similar pattern. The chart E.01 shows the Mercedes-Benz Development System (MDS)as an example. In many markets there are fleet targets for thefuel consumption and CO2 emissions of cars and light commercial vehicles – in other words, overall targets for all the newvehicles sold in a given market. The corresponding controllingprocess for reaching the CO2 fleet consumption target forCars Europe (EU 28) is shown as an example.The key factors for determining the target values for fuel consumption and CO2 emissions are the technological possibilities,the legal requirements including the fleet targets for fuel consumption, and customer wishes. The body responsible forcomplying with these goals and for transparency regardingthe target attainment level is the CO2 steering committee, whichis headed by the Board of Management member responsiblefor Group Research and Mercedes-Benz Cars Development.The fleet values for CO2 emissions are calculated on the basisof the fuel economy numbers of the vehicles available on themarket and the fuel economy specifications and prognoses forvehicles that are still in the development phase. These valuesare combined with the sales forecasts in order to arrive at theprojected fleet values for CO2 emissions.The actual values may deviate from the projected target valuesbecause of various external factors such as alterations in thesales structure, changes in the political framework conditionsor changes in the fuel consumption target values of the vehiclesthat are still in the development phase. In case of a deviation,the CO2 steering committee organizes an assessment of variousoptions and then decides on the measures to be initiated.If the need for adjustment is especially urgent, the process isescalated to the responsible managing body. From a strategicstandpoint, this process takes place over a period of approximately ten years.
E NON-FINANCIAL REPORT ENVIRONMENTAL ISSUES207E.01Vehicle product creation process for individual vehiclesConceptInitialArchitecture Projectspecifica- specificadecisionstarttionstionsJIHBasic development of the overallvehicle, validation modulesLaunch of Launch ofbody-in-white productionproductiontestApproval of specificationsGFEDCBJobNo. 1ASeries support measuresVehicle-specific integration and validationCustomer appealFunctionalityTestworthinessConcept suitabilitySeries productionsuitabilityPrinciple suitabilityResultIn the year under review, the average CO2 emissions of thetotal fleet of Mercedes-Benz Cars in Europe (EU28 Iceland)increased to 132 (2017: 125) g/km (NEDC).The transition from the NEDC to the WLTP as the legally stipulated CO2 emission measurement cycle for individual vehicleshas led to a significant increase in our fleet emission values. Atthe same time, the shift of sales from vehicles with dieselengines to cars powered by gasoline engines, as well as a furtherincrease in sales of large SUVs and all-wheel-drive vehicles,have contributed to a higher CO2 value for our fleet.Because all vehicle models will have been certified in accordance with the WLTP by September 2019, we expect only aslightly lower CO2 value for our fleet in 2019, in spite of furtherprogress in reducing our vehicles’ fuel consumption. Our vehicle electrification measures are expected to lead to a significant decrease in our fleet’s CO2 emissions in 2020.The new WLTP test cycle. Since September 2017, all of ournew car types in Europe have been certified according to theWorldwide Harmonized Light Vehicles Test Procedure (WLTP).This test procedure includes numerous changes compared tothe previous New European Driving Cycle (NEDC). The changesinclude higher average and maximum speeds, more dynamichandling, gliding inertial masses instead of inertia classes, asmaller standstill share of total fuel consumption, and con sideration of special equipment and the quiescent current requirement. Overall, these changes are leading to more real istic, but also higher, fuel economy values.According to the legal requirements, until 2021 automakersmust calculate the CO2 emissions of their vehicle fleets inEurope by using a predefined formula to convert the vehicles’WLTP values back into NEDC values. This explains why everynew vehicle is certified according to the WLTP although theEuropean CO2 emission value of the automaker’s fleet isstill indicated as the NEDC value. The legislators want to ensurethe comparability of the automakers’ fleet values in theperiod until 2022, when a new limit value will come into force.X Quality gateWe continue to work hard to meet all statutory CO2 requirements, including the very challenging EU limits for 2021. However, reaching these fleet targets will depend not only onoffering appealing and highly efficient vehicles with electricdrives, but also on our customers’ actually deciding to buy thosemodel
Information on our business model (E page 74 ff of Annual Report 2018) and on non-financial risks connected with the aspects presented in this report (Risk nd ay t t RproeOpi nu t pro E pages 156, 157 of Annual Report 2018) is provided in the Combined Management Report in the Annual Report 2018.
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ANNUAL REPORT 2020 ABOUT THIS REPORT With the Annual Report 2020, adidas communicates financial and non-financial information in a combined publication. The report provides a comprehensive overview of the financial, environmental and social performance of adidas in the 2020 financial year. We publish our Annual Report exclusively in a digital .
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