Annual Report 2017

Non-financial risks

As a company with worldwide activities, Daimler AG is at the focus of public interest. In this context, the relevant stakeholders’ perception is of crucial importance and can affect the reputation of the entire Daimler Group (see Non-Financial Report). A key role in the public’s current perception is played by the company’s approach to environmental, employee and social matters, fighting corruption and bribery, and respecting human rights.

Risks arise above all in connection with the public debate about diesel vehicles and the related fundamental reconsideration of methods for measuring emissions. Due to the replacement of the NEDC (New European Driving Cycle) with the new measuring method WLTP (Worldwide Harmonized Light Vehicles Test Procedure), the fleet CO2 average has worsened. In light of today’s knowledge, this would make it more difficult to achieve the CO2 targets as of 2020. Furthermore, there has been some pressure in the past two years on diesel technology, which is important for compliance with the challenging CO2 targets in the EU, because of air-quality problems in cities (exceeding the NOx limits). For this reason, the Real Driving Emissions (RDE) legislation entered into force in the EU in July 2017. Complying with emission limits under real driving conditions (on the road and not, as previously, only on the test bench) is very ambitious legislation that since September 2017 has required very complex technology for exhaust-gas aftertreatment, as well as detailed documentation. The current public focus on vehicle emissions as well as their measurement and impact on people and the environment jeopardizes the reputation of the automotive industry and in particular of the diesel engine, and could result in damage to Daimler’s reputation. With the development of a new generation of diesel engines, Daimler has found a convincing technical solution with regard to reducing emissions and will successively introduce this innovation throughout the product range.

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Overall assessment of the risk and opportunity situation
Risks from guarantees, legal and tax risks