Supply Chain

During 2010, we took significant steps to better understand the risks and opportunities of greenhouse gas (GHG) regulation and climate change for our suppliers and, by extension, for Ford. We have worked hard to reduce GHG emissions from our products and operations, which enhances our competitiveness, and we hope to help promote similar competitiveness throughout the automotive supply chain.

Ford was a “road tester” of the World Resources Institute/World Business Council for Sustainable Development (WRI/WBCSD) Scope 3 Greenhouse Gas Accounting and Reporting Standard. Ford had also been an original participant in the review and development of the internationally accepted Greenhouse Gas Protocol Corporate Accounting and Reporting Standard, which addresses Scope 1 (direct) GHG emissions and Scope 2 (indirect) emissions.

The new Scope 3 standard provides a step-by-step methodology for companies to quantify and report their corporate value chain-related (Scope 3) GHG emissions, and is intended to be used in conjunction with the GHG Protocol Corporate Accounting and Reporting Standard. It will provide a standardized method to inventory the emissions associated with corporate value chains, taking into account impacts both upstream and downstream of the company’s operations. The standard covers outsourced activities, supplier manufacturing and product use. The draft standards were developed through a global, collaborative multi-stakeholder process, with participation from more than 1,000 volunteer representatives from industry, government, academia and nongovernmental organizations. The road testing process was designed to provide real-world feedback to ensure that the standards can be practically implemented by companies and organizations from a variety of sectors, sizes and geographic areas around the world.

The final Scope 3 Standard is scheduled to be published by WRI/WBCSD in September 2011.

In order to facilitate Ford’s road-testing activities during 2010, Ford requested GHG emissions data from selected Tier 1 production suppliers, representing close to 30 percent of Ford’s $65 billion in annual procurement spending. Based on this experience, Ford provided feedback on practical aspects of using the Scope 3 Accounting and Reporting Standard.

Ford has also joined the Carbon Disclosure Project’s Supply Chain program. Through this effort, Ford is working with selected suppliers to gather qualitative as well as quantitative information about the suppliers’ climate risks and emissions and how they are managing them.

We believe that supply chain GHG emissions represent both risks and opportunities for our Company and our suppliers. Thus, our continued leadership in working to better understand our full lifecycle GHG footprint is increasingly important as we seek to jointly realize operational efficiencies and reduce our emissions footprint across our corporate value chain.