Materiality Analysis

For this 2012–13 Sustainability Report, Ford conducted an update of our materiality analysis, adding key inputs, replacing outdated inputs and gathering feedback from internal experts. In addition, a Ceres Stakeholder Committee reviewed this analysis and provided feedback. The analysis will be updated again for our 2014–15 report.

In the current analysis, climate change issues remained at the highest level of concern for Ford and external stakeholders. Water and supply chain issues, which rose to the highest level of importance for both Ford and external stakeholders in the last materiality analysis, remained highly important.

In addition, in the two years since our last analysis, some new issues emerged, some dropped out and others were recast or reorganized. Significant changes included the following:

• Financial issues have been at the highest level of importance to Ford and external stakeholders for the past three materiality analyses (spanning six years). This year, for the first time since 2006, financial issues dropped to the mid level of concern for non-Ford stakeholders, moving them from the “top right” box of our materiality matrix to the “middle right” box. This is likely a reflection of Ford’s strong and consistent improvements in financial performance. Nonetheless, financial health remains a critical issue to Ford and a central focus of our overall strategy and everyday activities. Therefore, we will continue to report on it as a highly material issue in this report.

• The governance issue of Ford’s strategy for addressing human rights in our own operations and throughout our supply chain increased to the highest level of priority for non-Ford stakeholders. This was due to increased importance of this issue to communities, investors and customers. This issue was already at the highest level of concern for Ford, but this change moves the issue to the “upper right” box of the material issues matrix. We already report on governance in detail in this Sustainability Report, including Ford’s approach to human rights, and we will continue to do so based on the increased importance of these issues to external stakeholders.

• Water issues were reorganized to reflect water impacts in three key areas: on local communities; from and on Ford operations, and from Ford’s product design decisions. All three of these issues were of the highest concern to Ford and external stakeholders.

• Vehicle safety moved down in importance to stakeholders to a medium level of concern but remained at the highest level of concern for Ford. This likely reflects a view that automakers, including Ford, are managing vehicle safety issues well.

• Supply chain issues, especially those related to the sustainability of raw materials and the environmental and human rights performance of suppliers, remained at the highest level of importance for Ford and other stakeholders. In this year’s analysis, a new category of supply chain issues was added relating to Ford’s approach to identifying and managing supply chain sustainability risks – including raw materials sustainability – and Ford’s process for promoting, assessing and remediating sustainability performance among suppliers.

• Issues associated with Ford’s sustainability strategy, management and governance also increased to the highest level of importance for non-Ford stakeholders, moving this issue to the “upper right” box on the material issues matrix. In our last sustainability report, we reorganized and increased our discussion of Ford’s sustainability strategy, management and governance processes based on informal assessment that these issues were increasing in importance to Ford and Ford stakeholders. This analysis confirms those informal assessments.