Supplier Environmental Management

We are continually improving our systems for influencing the integration of sustainability throughout our supply chain. ISO 14001 certification is expected of all “Q1,” or preferred, production suppliers as well as 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 extend the benefits of improved environmental performance by requiring their own suppliers to implement environmental management systems as well.

We have added environmental requirements to the formal agreements that we make with our suppliers. These requirements cover a range of issues, such as reducing 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. All recycled materials are evaluated in-house to guarantee that they deliver appropriate mechanical properties and the same level of performance that would be obtained with virgin materials.

We look for opportunities across our organization to purchase environmentally superior goods and services. During 2010, for example, we required 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 in the supply chain, 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. Additionally, we have integrated environmental management content and expectations into the supplier training programs to be conducted from 2011 forward. This was done on a pilot basis for the 2010 Turkish supplier training and feedback has been used to fine tune the content as appropriate for the audience. We feel this is another action we can take to help build supplier capability to manage these issues effectively. This content expansion further aligns our training activity with our Code of Basic Working Conditions.

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.

During the fourth quarter of 2010, we held our annual ABF sustainability meeting in Dearborn, Michigan. It was attended by senior management from Ford and our ABF suppliers. The meeting included a workshop on sustainable supply chains and updates on sustainability management topics including greenhouse gas management. Our update at this meeting provided to ABF suppliers a summary of the results of the supplier GHG emissions survey that Ford conducted in 2010 and provided the suppliers with insight as to next steps.

Industry Collaboration

We work in cross-industry forums to encourage common approaches to the supply chain challenges of our industry. We have been further 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 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.

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.