Tomorrow drives Mercedes-Benz: Full commitment to sustainable business strategy goes far beyond products

• On track for CO₂-reduction along the entire value chain and focus on long-term decarbonisation targets
• CO₂-reduced steel, aluminium and recycled materials drive supply chain decarbonisation
• Production makes progress in renewable energies and circularity
• Human rights assessment of critical raw materials is moving forward and ahead of schedule
• People are at the centre of the just transition with the Sustainable People Plan and respect for human rights
• Digital Trust as a key driver of sustainable and competitive digital business

At its third annual ESG Conference, Mercedes-Benz demonstrates commitment to achieving ambitious and measurable goals. Driven by tomorrow and a clear focus on the entire value chain, Mercedes‑Benz firmly embeds sustainability considerations in the daily business. One aspect is the continued global expansion of the electric passenger car portfolio, targeting an up to 50 percent share of xEVs in the new vehicle fleet in the second half of the decade. And by the end of the decade, the aim is to reduce production CO₂ emissions by 80 percent¹. Furthermore, the ambition is to run all fully owned Mercedes-Benz production sites worldwide on 100 percent renewable energies by 2039. By pairing strategic focus with tactical flexibility in this regard, the company remains on course towards a sustainable future on an ecological and economic level. Also, relevant initiatives with respect to social and governance aspects throughout the whole company contribute to a holistic sustainability approach. This includes various measures with which Mercedes-Benz contributes to a "Just Transition", for example our sustainable people plan and several measures, strengthening human rights in the company and along the value chain. By establishing a coordination role for sustainability in the Board of Management in 2023, Mercedes-Benz has strengthened its governance approach to orchestrate its company-wide sustainability management even more systematically and consistently.

“Mercedes-Benz has always been driven by a belief in tomorrow. This pioneering spirit is key so we can play our part in climate protection and to make our business even more sustainable in all respects. We continue to strive for net carbon-neutrality by 2039, and we believe that ESG principles enable long-term value creation.”

Ola Källenius, Chief Executive Officer of Mercedes-Benz Group AG.

“Sustainability and ESG are integral to every aspect of our business, especially in times of transformation. The goal of our sustainability coordination at the Board of Management level is to ensure that all sustainability activities are orchestrated even more target-oriented so that we can consistently implement our sustainable business strategy. This also underlines our holistic approach, which covers the entire spectrum of ESG: From decarbonisation to social topics such as human rights and governance aspects, for example the responsible use of future technologies.”

Renata Jungo Brüngger, Member of the Board of Management, responsible for Integrity, Governance & Sustainability, Mercedes-Benz Group AG.

“Science and policy clearly show that those who stay on sustainability tracks will be the winners in the technology, market and profitability competition.”

Prof. Dr. Johan Rockström, Director of the Potsdam Institute for Climate Impact Research and

Professor in Earth System Science at University of Potsdam

Focus on decarbonisation and sustainable products is on track

At Mercedes-Benz decarbonisation continues to be driven by the company’s Ambition 2039, with the aim of making the fleet of new vehicles net carbon-neutral along the entire value chain and over the entire vehicles’ lifecycle by 2039. Major achievements in 2023 include a reduction in lifecycle carbon emissions to 46.3 tonnes per vehicle² (2020: 49.7 tonnes). Upcoming model generations will accelerate this significantly, with the aim of reducing net lifecycle carbon emissions up to 50 percent per passenger car by the end of the decade. This starts with the development process, which is why the new ‘eCampus’ at the Untertürkheim plant will play a key role in shaping the transition. Due for inauguration in summer 2024, it consolidates the company’s comprehensive development expertise across the entire electric drive spectrum.

CO₂-reduced steel and aluminium and recycled materials drive supply chain decarbonisation

Mercedes-Benz is making strong progress in decarbonising its supply chain. One example is CO₂-reduced steel processed using electric-arc furnaces (EAF) powered by renewable energy. The company is expanding its use in the USA and Europe. For example, Mercedes-Benz and Nucor agreed on the delivery of CO₂-reduced steel for its production plant in Tuscaloosa, Alabama. In addition, the supplier Steel Dynamics is already delivering CO₂-reduced steel to the US production site since last year. This steel contains a high share of recycled scrap content and is being produced with 100 percent renewable energy. Likewise, at least one third of the primary aluminium in MMA models will be produced using electricity from renewable sources in Europe. This can lead to CO₂ savings of at least 40 percent, compared to aluminium normally used in Europe. Use of recycled aluminium is also increasing. A special alloy used by the company’s in-house foundry in Mettingen contains a minimum of 25 per cent post-consumer scrap. Its carbon footprint of 2.8 kg CO₂ per kg of aluminium is around 70 percent lower than the European average for conventional aluminium. Another important planned cooperation in recycled aluminium from end-of-life vehicles is with TSR and Novelis. Using 86 percent content of TSR130 post-consumer recycled aluminium, it reduces CO₂ emissions by 73 percent.

In line with the company’s ‘Design for Circularity’ approach, work continues to increase the share of secondary raw materials in series-production vehicles. The aim is to reduce the use of primary resources by 40 percent by 2030 compared to a conventional approach. By 2030, the share of secondary raw materials for the passenger car fleet is to be increased to an average of 40 per cent. For instance, the front and rear bumpers of the first MMA vehicle use nearly seven kilograms of mechanical recyclate – a share of 35 percent.

Concept CLA Class points the way with 40 percent smaller carbon footprint

At IAA 2023, Mercedes-Benz presented the Concept CLA Class, offering an insight into the family of vehicles based on the upcoming MMA platform. Along the entire value chain, the carbon footprint of MMA vehicles will be 40 percent lower compared to the preceding architecture. The MMA platform also offers benefits beyond the vehicle through bidirectional charging. This enables the vehicle to function as part of the electricity grid either Vehicle-to-Home (V2H) or Vehicle-to-Grid (V2G). For example, it can supply the home during a power cut. Likewise, it can store excess solar energy during the day then feed it back into the grid at night. Through the option of bidirectional charging at home, Mercedes-Benz is fulfilling the desire of many customers to combine their own individual mobility with a more sustainable way of living. The use of bidirectional charging may be subject to market-specific conditions subject to legislation and the requirements of energy suppliers.

Widely accessible charging network drives future of electric mobility

Mercedes-Benz is contributing to the development of a widely accessible charging infrastructure wherever possible. Already today, Mercedes-Benz customers have access to over 1.6 million charging points worldwide via Mercedes me Charge. In addition, Mercedes-Benz is making a decisive contribution to the development of a worldwide charging infrastructure by setting up its own Charging Network as well as joining forces with other car manufacturers in several charging joint ventures. In total, around 45,000 charging points will be built by the end of the decade.

Green Charging as key aspect within public charging solutions

In line with its infrastructure initiatives, Mercedes-Benz is promoting the use of electricity from renewable energies. Green Charging³ is an integral part of Mercedes me Charge and within its own Mercedes-Benz Charging Network. Since 2024, Green Charging uses Energy Attribute Certificates for Mercedes me Charge that are generated exclusively from wind and solar plants which are less than six years old. If possible, the certificates are bought and redeemed in the same country where the customer has charged. Thereby Green Charging contributes to the further expansion of renewable energies and is an important step on the road to CO_2-neutrality.

Production makes progress in renewable energies

The Mercedes-Benz production network is in execution mode to achieve its ambition to run all plants worldwide on 100 percent renewable energy by 2039. During 2023, CO₂ emissions in production fell further – by a total of 72 per cent compared to 2018⁴. Regarding renewable energies Mercedes-Benz Cars increased the share to 47 percent. The company is thus well on track to achieve its target CO₂ reduction of 80 percent and to increase its renewable energy share to 70 percent (Cars) or 80 percent (Vans) at own production sites by 2030. Ongoing initiatives include the on-shore wind farm in Papenburg (Germany)⁵ and the Windanker off-shore wind farm in the Baltic Sea⁶. Further expansion of solar power is likewise underway. To balance the volatility of renewable energy generation with electricity consumption, Mercedes-Benz is also expanding its energy storage facilities. Entering a new partnership with the German cleantech company CMBlu Energy AG, its first Organic SolidFlow battery storage facility is scheduled for 2025 at its Rastatt (Germany) plant. The technology offers high potential in terms of scalability and sustainability.

Circularity projects underway include battery recycling, water multi-reuse and waste recycling

Phase one of the Mercedes-Benz battery recycling plant in Kuppenheim is currently ramping up. This phase will include the shredding facility for initial mechanical processing of end-of-life batteries. Phase two, the hydrometallurgy facility, is scheduled to start this autumn, subject to the outcome of promising discussions with the public sector. Regarding water multi-reuse, Mercedes-Benz Cars implemented its first project at its Sindelfingen plant, saving up to 350.000 cubic meter per year and is evaluating further projects. Mercedes‑Benz Cars achieves an overall recycling and recovery rate regarding waste material from production of approximately 99 percent in its own production plants worldwide.

Commitment to Just Transition: Mercedes-Benz places people at the centre of the transformation

Decarbonisation is one of the most important transformation goals at Mercedes-Benz. At the centre of this transformation, however, are the people who actively shape this transition or are affected by it. Therefore, Mercedes-Benz drives a Just Transition as an integral part of its sustainable business strategy with a focus on people, human rights, as well as its policy engagement.

Shaping transformation with the Mercedes-Benz Sustainable People Plan

Mercedes-Benz is shaping the transformation in a future-oriented, socially acceptable and responsible manner with its HR-Strategy – the ‘Sustainable People Plan’. With its three pillars – Re-Shape, Re-Skill and Re‑Charge – the company seeks to empower its employees to stay successful in a digital and electric future. Re‑Shape focuses on the streamlining of the organization based on new products, technologies and fields of competence and the socially responsible transformation of the company. With Re-Skill, Mercedes-Benz cultivates learning and future-ready development through training and qualification. As part of its initiative “Turn2Learn”, Mercedes-Benz plans to invest more than €2 billion in the qualification of its global workforce until 2030. In 2023, the total global qualification time increased year-on-year by around 19 percent to more than 2.3 million hours. In the pillar Re-Charge, Mercedes-Benz nurtures an attractive and inspiring working environment that values diversity, equity and inclusion. This also includes the ambition of 30 percent women in senior management positions worldwide in 2030. By the end of 2023, the company with the star had already reached a share of 25.7 percent of female senior managers and is therefore well on its way.

The scope of the transformation is particularly noticeable in the “Powertrain Network” and the associated areas. To even better inform, engage and support employees in these areas in the transition, Mercedes‑Benz has therefore launched the initiative TransformatiON in 2022. As part of this initiative, a new app was rolled out at the end of September 2023 to keep employees in the powertrain network up to date on the transformation. At various locations, additional workshops, guided tours, and market stalls were offered to show employees different perspectives how to develop, how to participate in change, and to provide them with insights into future job profiles.

Human rights assessment of critical raw materials is moving forward and ahead of schedule

The effects of the transformation must also be taken into consideration along the value chain. Therefore, Mercedes-Benz is dedicated to actively tackling human rights risks along its supply chains. The company is ahead of schedule in its assessment of 24 critical raw materials. By the end of 2023, it had achieved 57 percent of the overall assessment process. The Raw Material Report published in November 2023 advances transparency, with 15 raw materials now reported (vs. six in 2022). Community and indigenous rights have been prioritized across materials. For that reason, the company focuses and engages directly with people on the ground. Mercedes-Benz is also joining forces with other stakeholders to tackle systemic risks that cannot be solved by a single company alone, for example by supporting a cross-company grievance mechanism starting in Mexico this year.

Adaptive governance builds Digital Trust

Digital products and services are driving the transformation. The trust of our customers', employees' and other stakeholders is paramount to the success of digital innovation, particularly in an age shaped by rapid technological change and regulatory dynamics. Mercedes-Benz is committed to the responsible and secure handling of data to build ‘Digital Trust’. In addition, the company applies its established set of AI principles: Responsible Use, Explainability, Protection of Privacy and Safety and Reliability. Utilizing “Adaptive Governance”, Mercedes-Benz wants to drive innovation, meet the requirements of regulatory dynamics, and foster Digital Trust at the same time. This approach enables the company to find the right balance in the constant challenge between risk management and business innovation.

Focus on sustainable finance and continuous upgrades in ESG ratings

Sustainable finance is a core aspect of the Mercedes-Benz sustainable business strategy. With it, the company continues to demonstrate resilience, profitability and growth in a challenging environment. Financing needs for the transformation are covered by the current vehicle portfolio. Meanwhile, the cost base is able to deliver strong performance during the transition and in an electric world. Regarding the EU Taxonomy, the taxonomy-aligned revenue share for cars and vans increased to 14 percent in line with our xEV sales and taxonomy-aligned capital expenditure increased 29 percent year over year. Thanks to this development and the efforts of the entire Mercedes-Benz team worldwide, the company has seen continuous upgrades in its ESG rating results since 2019.

IT as significant contributor to carbon reduction by 2025

Mercedes-Benz IT aims to be net carbon-neutral by the end of 2025 in its own operational business measured in the areas data centres, workplace and cloud. Recent initiatives have improved the energy efficiency of the global data centres by up to 30 percent since 2022. One example is the Nordics Data Centre in Norway, which uses an innovative natural cooling system and is powered entirely by green energy. In the workplace, conversion to energy-efficient equipment, such as laptops, is expected to deliver an improvement in carbon efficiency of up to 30 per cent. And Mercedes-Benz is working closely with its cloud providers to operate its cloud services entirely using renewable energy by the end of 2025.

The livestream (1:00 p.m. CET) and the recording can be found on the website:

https://group.mercedes-benz.com/esg-conference-2024

Further information about Mercedes-Benz is available at www.mercedes-benz.com.

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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 166,000 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 Mercedes‑AMG, Mercedes‑Maybach, and G‑Class with their all-electric models 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 2023 it sold around two million passenger cars and 447,800 vans. In its two business segments, Mercedes‑Benz AG is continually expanding its worldwide production network with more than 30 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.

¹ Scope 1 & 2, compared to 2018

² concerning vehicle lifecycle (value chain stages: procured goods, production, logistics, fuel and energy generation, driving operation, disassembly and treatment processes)

³ In Europe, the US and Canada, Mercedes-Benz ensures that an equivalent amount of electricity from renewable energy sources is fed into the power grid for charging processes in Mercedes me Charge, if no electricity from renewable energy sources is provided.

⁴ Mercedes-Benz Cars, Scope 1 & 2

⁵ Power Purchase Agreement (PPA) with UKA

⁶ Power Purchase Agreement (PPA) with Iberdrola

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