Sustainability 2011/12

Year in Review


For this report and our previous five reports, Ceres convened Stakeholder Committees to advise us. Ceres leads a national coalition of investors, environmental organizations and other public interest groups working with companies to address sustainability challenges. Ford agreed to work with a stakeholder team that was selected for us by Ceres. The Ceres Stakeholder Committee that was selected is an independent group of individuals drawn primarily from the Ceres coalition and representing a range of constituencies that have expertise in environmental, social and governance issues.

In reviewing Ford’s reporting, the Committee considered whether the Company adequately reported on its sustainability performance and key impacts, including goals, targets, systems, data and initiatives. The Committee met once by teleconference to review and comment on the report plan.

The Committee made suggestions based on its review of previous reports and the outline for this report. Major points of feedback and Ford’s responses are shown below.1

Recommendation Response
Sustainability – Taking a Systems-thinking Approach: Many sustainability issues are interconnected and overlap. Ford should demonstrate in its report how its sustainability strategy is built on recognition of the interconnected nature of many sustainability issues; how it balances the complexities of these issues; and how these issues might impact Ford’s corporate strategy, as well as vehicle and sustainability goals. Ford takes a systems approach to many key issues, including climate change and mobility. The issues of water and supply chain were elevated to key material issue status in part because they cut across environmental, community, human rights and other issues. In this report, we have tried to strengthen discussion of these interconnections and the systematic approach we take to understanding and managing them.
Sustainability Governance and Strategy: Stakeholders were pleased to see clear linkages between the sustainability strategy and the Company’s business plan. The group encouraged Ford to more clearly demonstrate ROI on sustainability initiatives and strengthen the business case for sustainability. The Company should also consider how it could further communicate sustainability risk and opportunities to the mainstream investor community, by including key ESG metrics in its 10-K and other investor communications. Finally, the group would like Ford to provide a clearer description of how executive compensation is linked to sustainability performance. For this report, we created a strategy section to show the connection of our ONE Ford business plan to our sustainability strategy. In our executive messages and in the sections on the material issues we discuss the risks and opportunities posed by the issues. We also added some further detail to the discussion in the Governance section of how sustainability performance and compensation are linked.
Public Policy: Stakeholders strongly encouraged Ford to increase disclosure regarding its public policy positions, participation in industry associations and political contributions. In the absence of comprehensive national climate policy, opportunities for support at the state and local level may still exist. Stakeholders suggested Ford seek out these opportunities and continue working to align its public policy with its sustainability strategy. We continue to expand coverage of our engagement on public policy issues. In particular, in the current report we include additional information on our public policy activities in the various global regions in which we work.
Supply Chain Sustainability: Continued progress and leadership in supply chain sustainability was identified as a major opportunity for Ford. Stakeholders look for Ford to continue advancing industry supply chain initiatives and evolving its own approach, based on learning from other sectors and internationally recognized frameworks such as the Guiding Principles on Business and Human Rights. The group looks to Ford to support SEC rules on conflict minerals when published and to discourage unnecessary lawsuits. In this report, we discuss Ford’s three-pronged approach to engaging with suppliers and encouraging a joint industry approach to supply chain sustainability. We also discuss our work with the Organisation for Economic Co-operation and Development and others to develop effective ways to eliminate conflict minerals in the global automotive supply chain.
Water: Stakeholders were pleased to see that Ford intends to sign the CEO Water Mandate, as well as set a 2015 water goal. The group would like Ford to provide greater detail around how it prioritizes water-stressed regions, and noted a leadership opportunity for Ford spearheading, or participating in, efforts to manage water issues beyond its fence line. The Water section, which was new in our previous report, has been expanded in the current report to provide more insight into Ford’s holistic and integrated approach to the issue. We have also provided results of our analysis of water availability.
Diversity, Inclusion and Employee Engagement: The group noted the value of a strong workforce to Ford and the materiality of how Ford engages its employees and creates an inclusive and innovative culture. Ford should increase disclosure in all these areas, demonstrating how it is managing these issues to gain competitive advantage. This year’s report includes new umbrella language in the reorganized People section around the importance of diversity and inclusion and directs readers to for a history of diversity at the Company. The new language addresses the importance of a diverse workforce in terms of meeting diverse customer needs. In addition, the report features a discussion of the Company’s new “Go Further” campaign, which is designed, in part, to better engage employees in Ford’s delivery of innovative products.
Goals, Metrics and Impact: Stakeholders noted Ford’s new water goal and the intent to develop new operational goals. Ford should make those goals public, medium- and long-term, quantitative and measurable and ensure they cover not only environmental issues, but also key issues such as diversity, human rights and supply chain. The group also suggested providing additional context (e.g., total number of suppliers, year-on-year data) when reporting on existing goals; and revisiting and strengthening some goals (e.g., vehicle greenhouse gas goal). Ford should also consider how it can supplement its reporting with more discussion of the outcome and impact of its efforts, including candid descriptions of challenges preventing the achievement of goals and targets. Ford has adopted new mid-term targets for water and energy use, facility greenhouse gas emissions and landfill disposal. Context around these is provided in the relevant sections of the report. We provide extensive discussion of our product greenhouse gas emission goal and progress toward it. We also revised and simplified the goals table.
Report Format: Overall, stakeholders were pleased with the reorganization of the material issues section of Ford’s sustainability report this year and encouraged Ford to consolidate and streamline content, where feasible. The goals and data tables were noted as useful, but could be strengthened (see specific Goals bullet). Stakeholders suggest Ford add an option to its Toolbox that provides readers an opportunity to share direct feedback on the report. This year’s report has been organized around the material issues to emphasize their importance and make information about them more readily accessible. In the course of reorganizing the content, We inventoried all existing content and streamlined report content as possible. For example, we reduced the number of major sections from 12 last year to nine this year. We also reduced or eliminated content as possible, focusing especially on reducing content that is available in other Ford communications such as financial reports. The contact link appears on every page of the report.

Other Committee recommendations will be considered for future reporting.

Data Assurance

Some of the data in our reports have been subject to various forms of internal and third-party verification, as follows.

  • Financial data were audited for disclosure in the Ford Annual Report on Form 10-K.
  • Nearly two-thirds of Ford’s global facility greenhouse gas (GHG) emissions are third-party verified. All of Ford’s North American GHG emissions data from 1998 to 2010 were externally verified by FINRA, the auditors of the NASDAQ stock exchange, as part of membership in the Chicago Climate Exchange. In 2011, Ford became a Climate Registered member of The Climate Registry. All of Ford’s North American GHG emissions are now also verified under The Climate Registry. The Climate Registry is a nonprofit collaboration among North American states, provinces, territories and Native Sovereign Nations that sets consistent and transparent standards to calculate, verify and publicly report greenhouse gas emissions into a single registry. In addition, all emissions data covered by the EU Emission Trading Scheme (EU-ETS) and voluntary UK Climate Change Agreements are third-party verified. All EU-ETS verification statements are provided to Ford by facility from BSI for UK facilities, Lloyds for Spain and the Flemish Verification Office for Belgium. North American facilities are verified against the World Resources Institute’s GHG Protocol. European facilities are verified against the EU-ETS rules and guidelines.
  • Ford voluntarily reports facility CO2 emissions to national emissions registries or other authorities in Argentina, Australia, Brazil, Canada, China, the Philippines, Taiwan and the U.S.
  • Various environmental data are reported to regulatory authorities.
  • Ford’s facility environmental data are managed using the Global Emissions Manager database, which provides a globally consistent approach to measurement and monitoring.

The kind of assurance used for each data set is noted in the data charts.

  1. This summary draws from a summary of the stakeholder engagement process prepared by Ceres; however, it does not cover every point raised and was not reviewed by the participating stakeholders.