Mercedes has laid out its €60billion sustainability plans | GRR
Mercedes-Benz has finally announced its withdrawal from Russia this week, which will perhaps hurt Moscow’s inhabitants more than Renault’s absence. But I’ve been more interested in Mercedes' sustainability report this month, which breaks down into governance, the environment and society. Under ‘governance’ we have partnerships, integrity and compliance, while the ‘environment’ section looks at climate protection, air quality and resource conservation, and ‘society’ dwells on people, sustainable urban mobility, human rights and social commitments by the brand.
Consider some of their key facts and figures in these areas. First, Mercedes is investing €60billion between now and 2026 in “the transformation to a CO2-neutral and software-driven future”. Big statement, big budget. It essentially means that in order to make the remaining ICE cars as green as possible, and everything electric from 2030, it will cost Mercedes a lot to fiddle with powertrains and architecture. It will cost them much, too, to “green up” their just-in-time procurement process and supply chain, which involves working with external companies, logistics businesses and energy suppliers, across borders.
Part financing this €60billion investment is the introduction of green bonds for environmentally keen investors. These bonds will be securities with a fixed interest rate. They will be used expressly to raise capital for the adoption of renewable energy and sustainable mobility solutions by the brand.
Interestingly, since 2020, CO2 fleet targets are a factor in determining the annual bonus for Mercedes-Benz group board members and executives, which is comforting to see; there’s nothing wrong with fiscal incentives to get us all where we need to be.
Mercedes is determined that almost 90 per cent of its suppliers will deliver solely CO2-neutral products by 2039. Why the focus on suppliers? Partly because consumers are interrogating the entire cradle-to-grave carbon footprint of the products now but, crucially in the case of cars, it’s because the production of an electric car creates twice as much carbon dioxide as that of a petrol or diesel car (most of that is thanks to the manufacture of lithium-ion batteries).
Steel and aluminium are also carbon-heavy in their production, which means OEMs like Mercedes will become increasingly reliant on start-up and disruptor suppliers such as the new Swedish brand, H2 Green Steel. Early birds will conquer the castle and secure huge OEM supplier contracts, as long as they can tick all the right boxes about carbon-neutral energy sources on the procurement forms Mercedes sends them (in May last year, Mercedes asked all its key suppliers to formally declare how much of their electricity came from renewable sources). And points mean prizes: Big River Steel, an American firm, was awarded the Daimler Sustainability Recognition merit last year for its “outstanding achievement in climate protection and resource conservation” in the manner in which it manufactures steel.
The one question that remains is exactly what Mercedes means by “CO2 neutral”; it can be a slippery automotive-industry phrase, requiring offsetting policies and carbon credit swaps that fudge the issues (planting trees, in particular, needs careful consideration again about which trees and which soil are involved – the disruption of soil is always a bad idea because it stores twice as much carbon as all the vegetation on earth, according to the genius that is Pete Smith, Professor of Soil and Global Change at Aberdeen University).
I’d also like to see far more transparent communications to the public by European governments about the true environmental benefit of electric cars. We can’t blame the OEMs – they didn’t ask for the 2030 cut-off on the sale of petrol and diesel new cars and have never claimed that electric cars are the answer to climate change; it’s a political bandwagon, so let the politicians explain to the public that while their EVs emit no CO2 from their tailpipes, they produce twice as much in their manufacture.
One last point from Mercedes’ report: it is gunning for 39 per cent less waste for disposal per car. Landfill, in other words, is a target. Less water, less energy, and fewer raw materials. The good news is that, for all three elements here, managing resources better will also mean financial savings, too – efficiencies across the board. Like the executive bonus link to carbon targets, linking environmental targets with fiscal ones is a good idea (you’ll notice that when Stellantis talks about its circular economy, the company talks foremost about the impressive global revenue stream from that new economy). Everyone needs an incentive to keep chasing carbon targets, and we should absolutely recognise that and reward it because we simply must not give up, or lose sight of the goal, which is avoidance of the biggest existential threat humanity has yet faced.