Letter from Sue Cischke

The theme for our report this year is "Blueprint for Sustainability: The Future at Work." So what do we think is working?

We are implementing the blueprint and meeting or surpassing our key sustainability goals, including our goal to reduce the carbon dioxide (CO₂) emissions of our new vehicles in the United States and Europe by 30 percent by 2020, compared to a 2006 model year baseline. Our new vehicles are winning numerous awards, and their quality is second to none. We have taken a leadership stance for road safety by being the first automaker to call for a ban on handheld text messaging while driving.

We're also making progress in reducing our environmental footprint and addressing our material sustainability issues, from human rights to mobility. In each of these areas, we're leveraging the enablers of progress: integration, innovation and collaboration.

Driving Steady Progress

The companies that make the most progress in addressing sustainability issues are those that integrate sustainability goals and considerations into their most basic business processes. That integration is now well established at Ford and is thoroughly described in the Governance section.

For this report, I'd like to discuss some results we're seeing from that integration. Throughout our Company, we're addressing risks, reducing negative impacts and seizing opportunities for improvement. We're finding these opportunities because we're looking for them systematically – in our products, of course (which are discussed throughout this report) – but also in our operations and value chain.

Operations

Every Ford plant has targets for reducing its environmental footprint, and managers are accountable for those targets. Since 2005, we have accomplished the following:

• Reduced global energy consumption by 23 percent
• Reduced CO₂ emissions from our facilities by 39 percent
• Cut water use by 49 percent

In addition, in 2006 we adopted the European waste classification system, which has allowed improved benchmarking while we've developed new methods of reducing and better managing waste. Since that time, we have reduced waste to landfill by more than 35 percent.

These results are due to innovative thinking by our plant managers and environmental specialists. For example, we use renewable energy at several plants, including geothermal cooling at the Lima (Ohio) Engine Plant and solar arrays at Valencia (Spain) and Bridgend (England). Ford's Dagenham Diesel Centre in the UK was the first automotive plant in the world to obtain all of its electrical power needs from two on-site wind turbines. At our Genk plant in Belgium, two wind turbines spun into action producing 'green' electricity in October 2009. A third wind turbine will be added to our Dagenham plant in 2010, increasing production of clean wind power at the site by 70 percent.

Our Dearborn (Michigan) Truck plant is covered by one of the world's largest living roofs, a 10.4-acre garden that saves energy and soaks up rainwater. It is one of dozens of pioneering green features at the site.

Value Chain

Increasingly, value chain relationships are about more than economic value. They also reflect suppliers' and customers' mutual interest in aligning their social and environmental values. In our supply chain, for example, we insist that our suppliers align their practices with our Code of Basic Working Conditions, which covers human rights issues in the workplace. We have also worked with suppliers to develop innovative materials for use in our vehicles, like soy-foam seats and recycled fabric for seat covers. We are deepening our engagement with key suppliers around a full range of sustainability issues.

We are pleased to offer our customers a wide range of vehicles that use less fuel. We're also helping them to wring the most out of the fuel they do use: from our pioneering "eco-driving" training in Germany to eco-driving tips on our Web site and in our online drivers' training classes, we're helping customers learn how to drive efficiently. We're also using innovative technologies to coach them in efficient driving. Our hybrids feature SmartGauge™ with EcoGuide, a display that provides drivers with feedback on how well they are maximizing fuel economy, and a similar system is being offered on vehicles in Europe. We recently announced that our next-generation navigation and communication system – MyFord Touch™ – will include EcoGuide to help drivers plan the most fuel-efficient driving route.

We are also encouraging our dealers – who are independent businesspeople – to reduce their carbon footprints by launching a voluntary initiative that includes an energy assessment as well as guidance on tax credits, incentives and the selection of energy-efficient products to help dealers go greener.

Elsewhere in our value chain, our logistics managers are working to document the carbon footprint involved with moving parts and finished vehicles between plants and to market. This work also helps identify ways to reduce that footprint. For example, we reduced inland road-based transport within Spain by 29 percent by expanding from three sea ports of entry to six ports.

Collaboration

Many sustainability challenges can only be successfully addressed by collaborating with the auto industry, governments, academics, NGOs and others to seek solutions to important challenges. For example, during 2009 and early 2010, we:

• Became a founding responder of the Carbon Disclosure Project's Water Disclosure program, which will help the Company assess water use and water-related risks. This is part of our development of a comprehensive strategy that is looking at water issues related to our facilities, the communities in which we operate and our supply chain.
• Announced participation in pilot efforts to measure the carbon footprint of our supply chain.
• Continued cooperation with more than a dozen utilities and other organizations to test our plug-in hybrid electric vehicles and explore issues involved with integrating electric vehicles with electric utilities.
• Announced a partnership to offer the Microsoft Hohm™ energy management application for Ford electric vehicles. Hohm will improve the affordability of electric vehicles by helping owners determine when and how to most efficiently and economically recharge battery electric vehicles and plug-in hybrid vehicles.
• Continued participation in the U.S. Climate Action Partnership, supporting a comprehensive approach to U.S. climate change policy.

These are only a few of the many collaborations that inform and multiply the impact of our own efforts.

Although a lot is working at Ford right now, we have many challenges ahead of us in recovering from the worst recession in decades. And as a society, we've only begun to tackle the most daunting global sustainability challenges. We are pleased that our efforts are showing results, and we will work to continue – and in fact accelerate – the pace of progress.

Sue Cischke
Group Vice President, Sustainability, Environment and Safety Engineering
June 2010