Greenhouse Gas Emissions

In 2010, Ford took significant steps to better understand the risks and opportunities of greenhouse gas (GHG) regulation and climate change for our suppliers and, by extension, for our Company. We conducted a pilot project with a select group of our suppliers to better understand the collection and reporting of greenhouse gas emissions data in our supply chain. Our goal is to better understand the carbon footprint of our supply chain and use the data to create a broad-based carbon management approach for our supply chain. We have a comprehensive commitment and strategy to reduce greenhouse gas emissions from our products and operations, detailed in the climate change section, which enhances our competitiveness. We hope to help promote similar competitiveness throughout the automotive supply chain.

Scope 3 Greenhouse Gas Accounting and Reporting

Ford was a “road tester” of the Scope 3 Greenhouse Gas Accounting and Reporting Standard developed by the World Resources Institute/World Business Council for Sustainable Development (WRI/WBCSD). Ford had also been an original participant in the review and development of the internationally accepted Greenhouse Gas Protocol Corporate Accounting and Reporting Standard, which addresses Scope 1 (direct) and Scope 2 (indirect) emissions.

The new draft Scope 3 (corporate value chain) Standard provides a step-by-step methodology for companies to quantify and report their Scope 3-related GHG emissions, and is intended to be used in conjunction with the GHG Protocol Corporate Accounting and Reporting Standard. It will provide a standardized method to inventory the emissions associated with corporate value chains, taking into account impacts both upstream and downstream of the Company’s operations.

The draft standard was developed through a global, collaborative, multi-stakeholder process, with participation from more than 1,000 volunteer representatives from industry, government, academia and nongovernmental organizations. The road testing process was designed to provide real-world feedback to ensure that the standards can be practically implemented by companies and organizations of different sizes and from a variety of sectors and geographic areas around the world. WRI/WBCSD collected feedback from 60 stakeholders and issued a draft standard in November 2010. Ford was the only automotive company to participate. The final Scope 3 Standard is scheduled to be published by WRI/WBCSD in September 2011.

Carbon Disclosure Project’s Supply Chain Program

In 2010, Ford also joined the Supply Chain Program of the Carbon Disclosure Project’s (CDP). Through this effort, Ford worked with selected suppliers to gather qualitative as well as quantitative information about the suppliers’ management of climate risks and emissions. Ford participated to gain experience with the supplier survey and better understand our suppliers’ capability to measure, manage and report their emissions. Ford was the only automotive company to participate in the CDP Supply Chain Program in 2010.

As part of its participation in both the WRI/WBCSD and CDP initiatives, Ford surveyed 35 suppliers regarding greenhouse gas emissions management. These suppliers were identified through a variety of criteria, which included, but weren’t limited to:

• The GHG intensity of the commodities supplied,
• The nature of the business relationship with Ford, and
• The geographic footprint of the supplier’s global operations.

The 35 chosen suppliers represented close to 30 percent of Ford’s $65 billion in annual procurement spending in 2009. We achieved a 75 percent response rate from the surveyed suppliers.

A key finding from the responses was the variability in supplier readiness to measure and report GHG emissions. The qualitative responses received provided valuable insight into the risk management opportunities for the broader automotive supply base. From these results, 80 percent of respondents indicated that they track their GHG emissions, and 50 percent of those companies indicated that they externally report their emissions. The results clearly demonstrated that those high-impact suppliers that we had hoped were paying attention to GHG emissions, in fact were doing so. However, these results may not represent the broader global automotive supply base’s readiness to track, report and proactively manage GHG emissions.

In 2011 Ford is expanding engagement on GHG emissions management by more than 350 percent, engaging with suppliers across a much broader selection of production, information technology, and logistics suppliers.