Materiality Analysis

To identify and prioritize material issues, we conducted materiality analyses for our 2004/5 and 2006/7 reports. Since our most significant issues are fairly consistent year-to-year, the 2006/7 analysis was used to plan the content of this report. The analysis will be updated for our 2008/9 report.

The materiality analysis followed a three-step process.

Identification of material business issues

We developed a list of more than 500 issues, grouped into 15 topics. The issues were identified by reviewing Ford business documents as well as comments from employees, dealers and our major external stakeholders: customers, communities, suppliers, investors and NGOs. The documents included Ford policies and business strategy inputs, the Global Reporting Initiative G3 Guidelines, summaries of stakeholder engagement sessions, and reports from socially responsible and mainstream investors.

Prioritization of the issues

We noted the frequency with which issues were raised in the source documents and rated each issue as low, moderate or high for 1) current or potential impact on the Company in a three- to five-year timeframe, 2) degree of concern to stakeholders (by stakeholder group) and 3) Ford's degree of control over the issue. For each issue, the ratings were averaged separately for Ford and stakeholders (with extra weight assigned to investors and multi-stakeholder inputs, as they are key audiences of our reporting). The issues and their ratings were then plotted on a "materiality matrix." We consider the issues in the upper right sector of this matrix to be the most material. None of the issues is unimportant; the position of each in the matrix simply represents our understanding of its relative importance to the Company and its stakeholders.

Review of the analysis

The draft matrix was reviewed and revised based on input gathered at an internal workshop of Ford employees representing a variety of functions and geographic regions. It was then reviewed and revised again based on a meeting of a Ceres stakeholder committee that included representatives of environmental NGOs and socially responsible investment organizations.