Sustainable Supply Chain Management

Ford’s suppliers are critical allies in helping our Company to achieve success in the marketplace and meet our sustainability goals. We promote long-term relationships with our suppliers and seek alignment with them on sustainability-related issues such as greenhouse gas emissions management and human rights.

The basis of our work with suppliers is the Ford Code of Basic Working Conditions. This Code was formally adopted in 2003 and applies to our own operations as well as our $65 billion supply chain. It addresses workplace issues such as working hours, child labor and forced labor as well as non-discrimination, freedom of association, health and safety, the environment and other issues.

We work to ensure that Ford and our suppliers have management systems in place to mitigate potential risks, ensure continuity of supply and improve the overall sustainability of the complex global automotive supply chain. Our aim is to leverage our supply chain – and our industry – to make a positive impact in the markets in which we do business.

We take a three-pronged approach to engagement with suppliers on sustainability issues:

• Building Capability at Individual Supplier Facilities: We work with suppliers to encourage the management of sustainability issues. We conduct supplier training supported by assessments and remediation at individual factories.
• Engagement with Strategic Suppliers: Ford and our strategic production suppliers work together at the corporate level to align and enhance approaches to a range of sustainability issues.
• Collaborating with Peers in the Automotive Industry: To achieve truly lasting change, we are leading work with our counterparts in the automotive industry, often through the Automotive Industry Action Group (AIAG), to develop common approaches to a full range of sustainability issues.

Accomplishments

In 2010, our human rights and environmental responsibility accomplishments in the supply chain included the following:

• Independently, Ford trained suppliers in Romania on systemic solutions to working conditions challenges and assessed 136 supplier factories around the world for compliance with Ford and legal requirements. Ford global totals now exceed 1,655 suppliers trained and 751 suppliers assessed.
• Together with other automakers through the AIAG, we trained 463 supplier companies in Turkey and Brazil. The industry total across five countries now exceeds 1,260 suppliers trained.
• We continued to work with our strategic suppliers to ensure that they have robust Codes of Conduct and supporting management systems and engage with their suppliers. This work also supports responsible purchasing practices in the raw material supply chain.
• We surveyed 35 suppliers regarding greenhouse gas emissions and achieved a 75 percent response rate. Eighty percent of respondents said they track their emissions, and 50 percent said they externally report their emissions.
• 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.
• We expanded the scope of the AIAG’s industry supplier training to include business ethics and environmental responsibility and helped to secure additional sponsorship by European-based automakers.
• We were asked to join the United Nations Global Compact’s Supply Chain Sustainability Advisory Committee and contributed to the landmark publication of the Supply Chain Sustainability: A Practical Guide for Continuous Improvement and its associated website.

In 2010, Ford initiated a holistic risk assessment of direct and indirect raw material supply chains. Ford feels strongly that cooperation within industry, as well as with multiple stakeholders, will be required to effectively address the human rights and environmental impacts of mining and other raw material production processes.

This section provides background on our relationships with our suppliers and details our supply chain work to support human rights, promote environmental sustainability and explore human rights and environmental issues related to raw materials. The complexity of issues surrounding raw material supply chains are discussed in a case study of Forced Labor in Brazilian charcoal production. We also detail our efforts to promote diversity among our suppliers.