Conflict Minerals

Conflict Minerals Background

On August 22, 2012, the U.S. Securities and Exchange Commission (SEC) adopted the final rule to implement reporting and disclosure requirements concerning conflict minerals, as directed by Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The congressional mandate was designed to further the humanitarian goal of ending violent conflict in the Democratic Republic of the Congo (DRC) and adjoining countries.

back to top

Our Journey

Our approach to managing conflict minerals compliance is consistent with our supply chain sustainability approach, and we are working closely with our suppliers to increase supply chain transparency. We are many layers removed from the smelters and refiners in our supply base, therefore, we must survey our direct suppliers and request our suppliers, in turn, to survey their suppliers until the point many layers down in the supply chain where the smelters or refiners of the 3TG (tantalum, tin, tungsten, and gold) are known. Once the smelters or refiner are identified and reported to us, we then work with a cross-industry group called Conflict-Free Sourcing Initiative (CFSI) to determine if the smelters reported by our supply chain have been confirmed to be conflict free. In order to be confirmed as conflict free, the smelters and refiners must pass an independent third-party audit.

Since it is important to develop industry and cross-industry solutions, we work with the Automotive Industry Action Group (AIAG) to develop tools and processes to help educate our suppliers. We also participate in the cross-industry smelter outreach program to encourage smelters to join CFSI. Finally, we are active participants in the Public Private Alliance (PPA) and Multi-Stakeholder Group (MSG) to develop in-region solutions for certified conflict free minerals. While it may take years to get to the level of transparency that we desire, we are committed to the journey.

back to top

Definitions

• “3TG” means tantalum, tin, tungsten and gold
• “Conflict minerals” means gold as well as Columbite-Tantalite (coltan), cassiterite, wolframite, or their derivatives, which are limited to tantalum, tin and tungsten
• “DRC conflict free” means that a product does not contain conflict minerals necessary to the functionality or production of that product that directly or indirectly finance or benefit armed groups in the Democratic Republic of the Congo or an adjoining country

back to top

Supplier Conflict Minerals Reporting Requirements

Starting in May 2014, and annually thereafter, Ford is required to comply with the SEC’s conflict minerals reporting requirements, including filing a specialized disclosure report (Form SD) and conflict mineral report with the SEC that describes our due diligence efforts. All suppliers globally that provide parts contained in Ford vehicles, service parts, or other parts sold by Ford are required to support this effort. Specifically, suppliers are required to complete an annual Conflict-Minerals Reporting Template (CMRT) to identify whether products they manufacture or contract to manufacture for Ford (including, for these purposes, all of our subsidiaries and joint ventures that produce Ford-badged vehicles) contain any conflict minerals necessary to the functionality or production of their products. If any conflict minerals are contained in any product supplied to Ford, the supplier is required to report the names of the smelters or refiners used to process the minerals. We assess the status of the smelters and refiners in our supply chain utilizing the audit information available through CFSI.

When reporting, we encourage our suppliers to use the Organization for Economic Co-operation and Development (OECD) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas to conduct due diligence on the chain of custody of the conflict minerals provided to Ford.

Reference the OECD website for the current OECD Due Diligence Guidance document.

back to top

Conflict Minerals Policy

Suppliers are expected to comply with Ford’s Conflict Minerals policy.

Conflict Minerals Policy

To the extent tin, tungsten, tantalum, and gold are contained in our products, it is Ford’s goal to use DRC conflict free minerals while continuing to support responsible in-region mineral sourcing from the Democratic Republic of the Congo and adjoining countries. As defined in Rule 13p-1 of the Securities Exchange Act of 1934 (the “Rule”), “DRC conflict free” means that a product does not contain conflict minerals necessary to the functionality or production of that product that directly or indirectly finance or benefit armed groups in the Democratic Republic of the Congo or an adjoining country.

Our suppliers are expected to conduct due diligence to understand the source of the conflict minerals used in Ford products, source responsibly, and not knowingly provide products containing minerals that contribute to conflict as described in the Rule. Suppliers are required to comply with Ford’s annual conflict minerals reporting requirements and are encouraged to use validated DRC conflict free smelters and refiners for procurement of tin, tungsten, tantalum, and gold contained in Ford products.

The information provided by our suppliers is used to conduct our due diligence including assessing reports for completeness and consistency. We compare the smelter list provided by our suppliers with the Conflict-Free Sourcing Initiative (CFSI) list of compliant smelters to determine which smelters are DRC conflict free. Information provided by our suppliers is used in the development of our SEC filing documents.

back to top

Our In-Scope Suppliers for 2013

In designing our Reasonable Country of Origin Inquiry (“RCOI”), we have focused on direct suppliers in either of the following two categories (“in-scope suppliers”):

1. Suppliers of components or parts to our assembly plants if such suppliers have reported in the International Material Data System (“IMDS”) that their components or parts contain 3TG; or
2. Suppliers that in the aggregate represent the top 80 percent of our expenditures for direct components and parts.

back to top

Smelter Details

Ford’s supply chain includes 189 identified smelters based on supplier-submitted reports for calendar year 2013 (as of April 9, 2014).

Ford’s 2013 Smelter List

back to top

Conflict Minerals Industry and Cross-Industry Leadership Efforts

We have led the development and sharing of best practices on key supplier issues within our industry and other industries. For example, we have sought membership and leadership roles at relevant conflict minerals working groups and organizations. Some of these memberships and leadership positions include:

• AIAG – Ford is an active participant in the Automotive Industry Action Group (AIAG), leading efforts to develop processes and tools to educate suppliers and improve reporting consistency.
• CFSI – We are an active member of the Conflict-Free Sourcing Initiative (CFSI), participating in cross-industry smelter outreach efforts to identify true smelters and encourage smelter participation in the audit program.
• MSG – Ford participates in Multi-Stakeholder Group (MSG) efforts to develop actions that can lead to improvement in the Congo and that can contribute to the development of efficient solutions to obtain conflict free materials from the Congo.
• PPA – Ford actively serves on the Governance Committee of the Public Private Alliance (PPA) to contribute to the development of in-region solutions for certified conflict free minerals.
• IMDS – We request our suppliers to expose the use of 3TG fully when reporting product content in the International Material Data System (IMDS). We encourage other companies to adapt an aligned approach to IMDS reporting expectations.

back to top

Conflict Minerals Measurable Goals for the Future

As we continue on our conflict minerals journey, we have set the following measurable goals for the future:

• 100 Percent response rate from in-scope suppliers for annual reporting
• Year-over-year improvement in the percent of suppliers providing smelter lists
• Year-over-year improvement in the percent of suppliers using CFSI compliant conflict free smelters
• Participate in CFSI Smelter Outreach efforts to identify true smelters and encourage smelters to participate in the CFSI audit process

back to top