Sustainable Raw Materials

As automobiles incorporate more advanced technologies, the material content of vehicles becomes more varied. Ford has a long history of seeking to use sustainable materials in our products and source from suppliers that demonstrate sustainable business practices, including respect for human rights and the environment. Although the majority of what we buy are parts and assemblies directly used in vehicles, there is a need to take a closer look at the farthest reaches of the supply chain, including raw material extraction.

The extraction of raw materials can have significant social and economic impacts – both positive and negative. Extractive processes for raw materials can create employment and economic growth, but also have the potential to disrupt or displace communities and endanger public health. Raw material extraction may result in environmental impacts, such as water scarcity, air and water pollution and waste generation that must be minimized and mitigated. If the extraction is managed by unscrupulous operators, workers risk exploitation, and the economic, social and environmental risks are multiplied. In addition, the concentration of strategic materials in a limited number of locations can present significant geopolitical risks to companies all along the supply chain.

Most raw materials are not supplied directly to Ford; rather, they are provided to our suppliers or our suppliers’ suppliers. On average, raw materials pass through six to 10 suppliers before reaching Ford. (See, for example, the known supply chain stages associated with conflict minerals.) This makes tracing the source of raw materials very challenging. We have analyzed several select raw materials from a strategic perspective to identify sustainability risks and opportunities related to extraction, use and end-of-life treatment. Our approach to promoting sustainable raw material supply chains includes the following:

• Advancing transparency in our supply chain by working to better understand the relative material content of our products. We will strive to know – where possible – the original source of the raw materials that reach us through our supply chain and to know and influence our direct suppliers’ policies and practices.
• Engaging with policy makers and global stakeholders. Upon invitation from the U.S. State Department, the International Labor Organization, the United Nations Global Compact, the Organization for Economic Cooperation and Development and the Interfaith Center for Corporate Responsibility, Ford has participated in forums on eradicating forced labor, child labor, trafficking and other issues that can result from abuses in the extractive sector.
• Collaborating with others in our industry and related industries through the Automotive Industry Action Group (AIAG) and other forums, to promote effective industry-wide approaches.
• Promoting recycling by maximizing the economic viability of recycling, where feasible.
• Seeking flexibility of supply through the proactive identification of potential supply and material alternatives and their impact. In those instances where the continued use of a material or supplier is impossible or misaligned with Ford’s stated values, we will explore the potential of a viable alternate source or material. In such cases, due regard will be given to the potential side effects to local communities in the extraction area.

In the last six years, public awareness of the potential and realized risks regarding raw material extraction has increased, due to NGO campaigns, media coverage and greater access to information. In addition, there have been growing calls for transparency in raw material supply chains, in order to help governments and NGOs monitor and address issues in raw material extraction. Certain raw materials are particularly relevant for Ford, and in this section we address two areas in more detail.

First, the extraction and transport of certain minerals known as “conflict minerals” originating from the Democratic Republic of Congo and neighboring countries are believed to fuel conflict in the region. Ford is working with multiple stakeholders, including the automotive industry, to address the supply chain concerns.

Second, a range of other products and materials sourced from specific geographies have been identified and described by the U.S. Department of Labor as posing potential human rights concerns. Included on this list is charcoal from Brazil – a finding consistent with NGO and media concerns that were brought to Ford’s attention in 2006. Charcoal can be used to make pig iron, a key ingredient in steel production. Given the persistence of risks associated with this material, Ford is working toward a multilateral solution with key players. Please see Forced Labor in the Pig Iron Supply Chain in Brazil for more information on our approach to this issue.