Supply Chain

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 is parts and assemblies used directly 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 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. We have been invited by the U.S. State Department, the International Labour Organization, the United Nations Global Compact, the Organisation for Economic Co-operation and Development and the Interfaith Center for Corporate Responsibility to participate 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. 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 responsible viable alternate source or material.

In the last six years, public awareness of the potential and actual risks regarding raw material extraction has increased, due to investor interest, campaigns by nongovernmental organizations (NGOs), media coverage and greater access to information. In addition, there have been growing calls for transparency in raw material supply chains, in order to inform investors’ evaluations of risk and to help governments and NGOs monitor and address issues in raw material extraction.

Communication is a key aspect of due diligence for responsible sourcing. We are continuing to fine tune all aspects of our communication in this area. Historically, the information that we have shared with stakeholders has been voluntary. We have primarily shared this information through direct communication and through this Sustainability Report. We increasingly face mandates for public disclosure statements, such as those required by the California Transparency in Supply Chains Act of 2010 and the Dodd-Frank Wall Street Reform and Consumer Protection Act, Section 1502 (conflict minerals). Our Sustainability Report will continue to be our primary means of communication with the general public and other stakeholders on supply chain sustainability. We also communicate our positions and requirements on these issues directly to our suppliers through our contract terms, written communications on our expectations, and regular supplier meetings. We reinforce our positions and expectations in communications between suppliers and Ford purchasing and quality personnel. We also hold training sessions on these issues at AIAG industry forums.

Certain raw materials are of particular concern to Ford, and in this section we address two areas in more detail.