Mercedes Benz : Climate Policy Report 2023

Foreword

Dear readers,

The Mercedes-Benz Group wants to build the most desirable cars in the world. For us, this aspiration is also inextricably linked to a responsibility towards the environment and society. The transport sector continues to account for a significant share of global CO₂ emissions.

In order to reduce this, we as an automobile manufacturer want to do our part and thus live up to our responsibility.

The "Ambition 2039" therefore formulates our goal: to offer a net carbon-neutral fleet of new vehicles by 2039 and thus make an important contribution to climate protection. This means: We are working tirelessly to make electric vehicles more attractive to our customers, for example by increasing range, expanding charging infrastructure and continuously improving battery technology.

Mercedes-Benz Group is taking the necessary steps to go all-electric. Customers and market conditions will set the pace of the transformation. We are working on making the production of our vehicles more ecologically sustainable and taking further steps towards "Circular Economy", to increasingly decouple the consumption of resources from the growth of the production volume.

Specifically, we are building a recycling plant for batteries in Kuppenheim in order to return as many materials as possible to the cycle. We are also planning a wind farm at our test site in Papenburg, with which we intend to cover around 20 percent of the electricity requirements of our German production plants in the future.

In addition to its responsibility for climate protection, the Mercedes-Benz Group is also facing up to its social responsibility during the transformation. For example, job security was agreed for the employees of Mercedes-Benz Group AG, Mercedes-Benz AG and Mercedes-Benz Intellectual Property GmbH & Co. KG until the end of 2029. This works agreement generally excludes dismissals for operational reasons until December 31st, 2029.

It is important that German federal and state politicians as well as the European Union (EU) are committed to promoting electric mobility and at the same time ensuring that the transformation is more environmentally compatible and socially responsible. This is the only way to fully exploit the potential in the transport sector in order to make an important contribution to climate protection.

Last year, financial incentives and subsidies for the purchase of electric vehicles have proven to be particularly beneficial in order to support demand in the transition phase from the combustion engine to the electric era. Furthermore, government programs dedicated to the expansion of the charging infrastructure for electric vehicles mitigate anxiety and make electric mobility more attractive. Unfortunately, the transformation is still hampered by a charging infrastructure that is often inadequate - especially in rural areas. To solve this problem, the Mercedes-Benz Group is already making considerable efforts to offer suitable charging solutions in both public and non-public spaces. One focus is on the joint expansion of a public fast-charging infrastructure in all relevant markets.

Sourcing raw materials for batteries is also a challenging issue, as it is often associated with environmental and social impacts. The European Union is increasingly relying on a regulatory framework for this topic and is defining due diligence obligations for companies even in deeper supply chains. On the one hand, they ensure clear expectations and planning security; however, the associated administrative burden and the limited scope of the influence of companies in complex supply chains must not be lost out of sight.

In order to counteract climate change, politics, business and society must act together on many levels. It is important that companies position themselves. Political engagement is an essential part of democracy. Because when we bring our company's interests into the political process, it also means that we provide our expertise. Our experience shows: Early information helps policy- makers make effective political decisions.

The Mercedes-Benz Group is convinced that the public has a right to be informed about the processes of political influence and advocacy activities. We are also of the opinion that companies which position themselves transparently are more successful than others in the medium and long term. We publish our positions on important strategic issues that affect our company on our corporate website. In this way, it is clear to everyone what arguments Mercedes-Benz Group is bringing to the political process.

This is where the Mercedes-Benz Group Climate Policy Report comes into play, providing a comprehensive overview of our company's position on climate change and the measures taken to reduce greenhouse gas emissions. Investor groups that measure their investments against ESG-criteria and thus contribute to the fight against climate change will also find transparency on the most important political issues of the moment, positions and activities of Mercedes-Benz Group.

We hope that our Climate Policy Report 2023 will be helpful for all readers and convey that the Mercedes-Benz Group takes climate protection into account in all lifecycle phases of its automobiles and has made it a key element of its business strategy.

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4 Review of industry associations' positions on climate-related policies

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5 Mercedes-Benz Group sustainability governance and memberships

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The Mercedes-Benz Group wants to create sustainable value - economically, ecologically and socially. This is one of its central guiding principles. It applies not only to the Group's own products and production sites, but also encompasses the Group's upstream and downstream value chain. The Mercedes-Benz Group translates this approach into its sustainable business strategy and thus anchors its sustainability issues at the center of its daily business. The Group is taking opinions and expectations of its customers, employees, investors, business partners, non-governmental organisations (NGOs) and society as a whole into account.

One of the most important goals of the Mercedes-Benz Group is decarbonisation. The Group has firmly established this goal in its sustainable business strategy. In the Mercedes-Benz Group's strategy, this goal is reflected in the "Ambition 2039": By 2039 the entire Mercedes-Benz new vehicle fleet is to be net carbon-neutral across all stages of the value chain1.

1 Net carbon-neutral means not causing any CO₂ emissions and compensating any CO₂ emissions that do occur through certified projects to offset emissions.

Mercedes-Benz has set itself the task of fulfilling the growing global need for individual mobility in a sustainable way. In this way, we want to make our contribution to the transition to a CO₂- neutral society. We already have one of the widest ranges of electric cars and will continue to expand it in the coming years with fascinating and efficient vehicles. We are also investing heavily in expanding the charging infrastructure. Among other things, we want to install more than 10,000 of our own fast-charging points worldwide by the end of the decade. For a rapid ramp-up of e-mobility, we need the right framework conditions, which we are discussing in close cooperation between business and politics.

Ola Källenius - Chairman of the Board of Management of Mercedes-Benz Group AG on the occasion of the seventh annual Top Level Meeting of the Strategic Dialogue for the Automotive Sector Baden- Württemberg in Berlin, December 7, 2023

The Mercedes-Benz Group acts on the basis of the sustainable business strategy adopted by the Board of Management of Mercedes-Benz Group AG with the approval of the Supervisory Board in 2019. Sustainability topics form an integral part of the business strategy. With its sustainable business strategy, the Mercedes-Benz Group takes into account the regulatory requirements relevant to its business activities as well as recognised international frameworks, the expectations of external and internal stakeholders and global trends. It regularly carries out materiality assessments in order to identify the strategic fields of action.

The Mercedes-Benz Group is also guided by the 17 Sustainable Development Goals (SDGs) of the United Nations, in particular SDGs 8 and 9 as well as 11 to 13, and concentrates on the areas where it can create added value. The Group discusses the key areas for action with the involvement of relevant stakeholder groups. In the reporting year, the Mercedes-Benz Group confirmed the following six areas of action in this process and, where necessary, specified the associated strategic ambitions.

THE 17 GOALS | Sustainable Development

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