Sustainability 2011/12

Supply Chain

Supplier Environmental Management

At Ford, our aim is to integrate sustainability throughout our supply chain. All of our “Q1,” or preferred, production suppliers’ facilities are expected be certified to ISO 14001, the leading global standard for environmental management systems. In addition, ISO 14001 certification is expected of nonproduction supplier facilities if the supplier has a manufacturing site or a nonmanufacturing site with significant environmental impacts that ships products to Ford. In 2006, we attained our goal of having 100 percent of our Q1 production suppliers gain ISO 14001 certification for facilities supplying Ford. We also encourage our suppliers to require their own suppliers to implement environmental management systems.

The formal contractual supply agreements that we execute with our suppliers specify environmental requirements covering a range of issues, such as reducing or eliminating materials of concern, using Design for Sustainability principles, increasing the use of sustainable materials and using materials that will improve vehicle interior air quality. We ask suppliers to use recycled materials whenever technically and economically feasible. For more information on our use of recycled materials please see the Sustainable Materials section. We look for opportunities across our organization to purchase environmentally superior goods and services. For example, we now require that our new personal computer purchases be certified as meeting comprehensive environmental criteria.

Supplier Engagement on Environmental Sustainability

As we do for other important issues like human rights, we take a three-pronged approach to engaging with suppliers on environmental sustainability issues. We work with individual supplier factories; with key suppliers’ corporate management and in cooperation with other automakers to influence practices across the automotive supply chain.

Supplier Factories

Each Tier 1 manufacturing site providing parts to Ford is required to have ISO 14001 certification. In addition, we integrated environmental management content and expectations into the supplier training programs conducted from 2011 forward. We believe this will help build supplier capability to manage these issues effectively. This content expansion further aligns our training activity with our Code of Human Rights, Basic Working Conditions and Corporate Responsibility and other supplier expectations and guidelines.

Engagement with Suppliers’ Corporate Management

As part of the Aligned Business Framework (ABF), ABF suppliers commit to managing and ensuring responsible environmental management in their facilities and in their supply chain. We regularly address current and emerging environmental issues and solutions with ABF suppliers at annual meetings and in regular communications. During the first quarter of 2012, we held our annual ABF sustainability meeting in Southeast Michigan. The 2012 meeting included an update on the Ford supply chain greenhouse gas management initiative, including 2011 results, 2012 plans and peer-to-peer sharing.

Industry Collaboration

We work in industry forums to encourage common approaches to the supply chain challenges of our industry. For example, we have been integrating environmental sustainability and greenhouse gas management issues into our work with the Automotive Industry Action Group (AIAG). Through the AIAG, we helped to establish common industry guidance and a reporting format for greenhouse gas (GHG) emissions, to be used by global automakers and Tier 1 suppliers. Our initial 2010 survey and results heavily influenced the AIAG guidance and reporting format, as Ford was the only automaker exploring Scope 3 greenhouse gas emissions and related risks and opportunities at that time. Ford continues to be a leader within the automotive industry in supplier engagement on GHG emissions management and reporting. For more information on our supplier greenhouse gas program, please see Greenhouse Gas Emissions.

During 2011, Ford was an active participant in and sponsor of AIAG events such as The Road to Corporate Responsibility: An Automotive Conference, and the Greenhouse Gas and Energy Symposium. These forums brought together representatives from manufacturers, suppliers, governments and service providers across the automotive industry to review current sustainability-related issues, share best practices and review emerging issues. Sessions addressed topics such as corporate responsibility in the automotive industry, supply chain transparency, GHG emissions estimation and reporting and energy-reduction and efficiency techniques.

Since 2007 we have been a member of the Suppliers Partnership for the Environment, an innovative partnership between automobile original equipment manufacturers, their suppliers and the U.S. Environmental Protection Agency. This partnership works to create new and innovative business-centered approaches to environmental protection and provides a forum for small, midsize and large automotive and vehicle suppliers to work together, learn from each other and share environmental best practices.