Human Rights

In 2000, Ford held a meeting with several prominent thought leaders from key stakeholder groups, as part of the development of our corporate citizenship strategy. The stakeholders identified several issues as the most important focus for Ford's strategy. Some issues, such as climate change, were not unexpected. More surprising was the issue of human rights. The stakeholders were asking Ford to take a leadership role in the industry by developing systems and programs to ensure sound working conditions in Ford facilities and our supply chain.

Despite the relative obscurity of the issue (at the time, working conditions in the automotive industry were not in the public eye), we recognized compelling business reasons to take up the cause. We believed then, and we still believe, that people are most likely to excel in an environment that aims for excellence. A safe workplace in which people are treated with respect promotes increased quality, productivity, employee retention and morale. It can also decrease quality problems and health care costs. This is true in our own facilities and in those of our suppliers. Indeed, we think a supplier company's efforts to address working conditions, environmental challenges and other sustainability issues are good indicators of its management's leadership capabilities.

Fast forward 10 years. Ford's Code of Basic Working Conditions (CBWC), adopted in 2003, applies throughout our global operations and $65 billion supply chain. We require our suppliers to ensure that our products – no matter where they are made – are manufactured under conditions that demonstrate respect for the people who make them. This is just as important to us as quality, cost competitiveness and timeliness of delivery. In early 2008, Ford joined the United Nations Global Compact (UNGC), a framework for businesses that are committed to aligning their operations and strategies with 10 universally accepted principles in the areas of human rights, labor, the environment and anti-corruption. This action reinforces our commitment to outstanding performance and transparency in these areas. We also actively participate by invitation in both the Human Rights and Supply Chain Sustainability Advisory Groups convened by the Global Compact. And we are leading an initiative through the Automotive Industry Action Group (AIAG) to develop a common approach to working conditions in the automotive supply chain. We have set goals that reflect our three-pronged approach to the issue:

• Engagement with Individual Supplier Facilities: Training and capability building form the basis of Ford's supply chain working conditions program, supported by assessments of individual factories (totaling more than 600 to date). Through Ford-administered programs and those conducted in conjunction with other automakers and the AIAG, we have trained 1,773 managers from 1,478 supplier companies on systemic solutions to working conditions challenges. Training participants are required, in turn, to cascade the training to their own management and employees as well as to clearly communicate expectations to their suppliers, thereby expanding the impact significantly.
• Engagement with Key Suppliers' Corporate Management: Ford is working with its strategic production suppliers at the corporate level to enhance their policies, verification systems and ability to influence their own supply chains. Our 90 Aligned Business Framework suppliers commit to manage and assure proper working and environmental conditions in their facilities and supply chains, and we are measuring their progress in doing so.
• Collaboration within the Automotive Industry: Ford is driving collaboration between automakers and supply chain companies on global working conditions issues through the AIAG.

The following are among the lessons we've learned in our decade of work in this area.

• Almost without exception, the systems and processes in place at Ford-owned facilities and joint ventures – from health and safety management to collective bargaining agreements – are sufficient to ensure compliance with the CBWC. In 2009, we conducted assessments at older facilities with "legacy" practices put in place by the prior owners. We have worked hard to modify and align those practices to achieve compliance with our Code.
• Our concern for human rights does not end at the factory fenceline. Issues ranging from environmental pollution to economic conditions in the local communities can affect the human rights of individuals. That's why our CBWC addresses community engagement and indigenous populations, bribery and corruption, and environment and sustainability.
• Assessing working conditions at supplier factories is necessary but not sufficient to ensure alignment with our CBWC. Through our efforts, we have learned the importance of helping suppliers build the capability to manage working conditions, rather than simply assessing their compliance with Ford and legal requirements (though assessments continue to provide important learnings).
• Due to the complex and overlapping nature of the automotive supply chain, action on the part of a single original equipment manufacturer (OEM) is less effective than OEMs working together toward a shared vision through joint programs. We see significant potential for collaborative action by automakers to establish a common, effective and efficient approach to ensuring sound working conditions in the automotive supply chain.
• Affecting the furthest reaches of our supply chain can be challenging. We have set the expectation that our direct (Tier 1) suppliers will not only provide sound working conditions in their own operations, but will expect the same of their suppliers, who in turn are to encourage their own suppliers to do the same. We work very closely with our strategic suppliers to cascade this approach through their supply chains. The further removed the supplier is from Ford, the harder it is to determine our influence on working conditions, and so our dialogue with our Tier 1 suppliers is critical.

We continue to adapt our approach as new opportunities and challenges emerge. Some of the issues we are currently evaluating and responding to include the following.

• As the widespread electrification of automobiles moves closer to reality, concerns are emerging over the environmental and social impacts of extracting and processing lithium (which is needed to make the lithium-ion batteries that will be used in battery electric and plug-in hybrid electric vehicles) and rare earth elements (which are used in electric motors for vehicles, wind turbines and other advanced technologies). We are exploring these issues as part of our approach to vehicle electrification. We are also looking at the raw materials used in information technology components, as we increase the capabilities of our SYNC® system.
• We believe that government can play a role in encouraging companies to manage human rights responsibly in their operations and supply chains. We are working with the U.S. Departments of State and Labor to explore this potential. (See the Public Policy section for more on this topic.)
• The availability and quality of freshwater is an issue of increasing global importance. Through work on our water strategy, we are exploring the human rights implications of increasing scarcity of and competition for water.

We are proud of our record on human rights and our leadership in the automotive industry. We will continue to deal with emerging issues responsibly, in line with our commitment to human rights, and to learn from our experience.

This section of our report covers the systems and initiatives we have established to communicate our expectations throughout our own operations and to our suppliers, to assess alignment with the CBWC, to encourage our suppliers to implement similar approaches and to promote a coordinated, industry-based approach to working conditions in the automotive supply chain.