We will achieve this by:

• Working to provide effective environmental solutions
• Working to continuously reduce the environmental impacts of our business in line with our commitment to sustainable development
• Measuring, understanding and responsibly managing our resource use, especially materials of concern and nonrenewable resources
• Working to eliminate waste

Progress Since Our Last Report

The average fleet fuel consumption of our vehicles sold in Europe has continued to improve. In the United States, the Corporate Average Fuel Economy (CAFE) of our cars and trucks declined 1.0 percent for 2006 model year, as expected. Preliminary data for 2007 model year shows a 5.4 percent improvement in CAFE compared to 2006, with a 1.7 percent improvement for cars and a 5.2 percent improvement for trucks.

For the 2007 model year, Ford has 13 U.S. models that achieve 30 miles per gallon or better (based on the highway fuel economy estimates of the U.S. Environmental Protection Agency (EPA)) and several of our vehicles were recognized in the EPA and Department of Energy Fuel Economy Guide for best-in-class fuel economy (www.fueleconomy.gov). According to the Guide:

• The Ford Focus Station Wagon is the best midsize station wagon
• The Ford Ranger and Mazda B2300 are the best standard pickup trucks
• The Ford Escape Hybrid is the best sport utility vehicle
• The Mazda MX-5 is the best two-seater

The American Council for an Energy-Efficient Economy rates as "superior" or "better than average" for environmental performance the vehicles listed above, as well as the Ford Freestyle, Ford Escape (manual), Ford Focus (manual), Mazda 3 (manual) and Mercury Mariner Hybrid. (See www.greenercars.com.)

We have eliminated nearly 3 million pounds of smog-forming emissions from our U.S. cars and light trucks over the 2004 to 2006 model years. In the United States in 2006, Ford's brands certified more models to PZEV – the cleanest tailpipe pollution standard in the country – than any of our competitors.

Ford of Europe has developed a unique management tool – the Product Sustainability Index – to improve the sustainability performance of newly introduced vehicles.

We have strengthened the management of environmental impacts across our supply chain using the ISO 14001 framework. All of our manufacturing facilities and major suppliers' facilities have attained third-party certification to the standard.

We continue to improve the environmental performance of our facilities. Ford has reduced global energy use by 27 percent and global water use by 25 percent compared to 2000 levels.

The EPA recognized Ford's performance by awarding it Energy Star Partner of the Year in 2006 and 2007, the first time an automaker has received this recognition in consecutive years. In September 2006, for the first time, the EPA awarded 17 U.S. manufacturing plants with Energy Star recognition for their superior energy efficiency. Four Ford plants received the award – Chicago, St. Paul, Norfolk and Claycomo, Missouri – more than any other automaker.