Ford Motor Company

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Through its "Aligned Business Framework", Ford works with suppliers to establish targets and processes in line with Ford's own environmental and energy commitments. Ford has piloted the collection and reporting of data with key suppliers, known as the Supplier Greenhouse Gas Survey Program, and has played a leading role in sector initiatives to introduce carbon reporting such as Carbon Disclosure Project, the Automotive Industry Action Group (AIAG), and introduction of the Scope 3 Value Chain Standard. The introduction of the environmental management standard ISO 14001 is required of all suppliers.

SCI Information

Activity types Reporting and Monitoring, Capacity building and implementation support, Audits
Organisation leading the initiative Ford Motor Company
Region from which the initiative is led
Supplier's location Global

Suppliers are located in over 60 countries, including 36 emerging markets.

Supply chain sectors targeted Equipment and machinery, Iron and steel, non-specified, Textile and leather

Automotive parts and machine suppliers. Ford has 1,400 Tier 1 suppliers [*1], with more than 100,000 parts made at more than 4,000 manufacturing sites.

Program or partnership linkages Automotive Industry Action Group (AIAG), CDP Supply Chain Program, ISO 14001, WRI-WBCSD GHG Protocol Scope 3 Value Chain Standard, UN Global Compact
  • Ford participates in Carbon Disclosure Project’s Supply Chain Program [*2] and the WRI/WBCSD scope 3 Value Chain standard and engaged with suppliers on collecting data for this program.
  • Ford sits on the UN Global Compact’s Supply Chain Sustainability Advisory Committee [*3].
  • Ford works with the internationally recognised Automotive Industry Action Group (AIAG) to establish common industry guidance and a reporting format for greenhouse gas emissions, to be used by global automakers and Tier 1 suppliers.  
Policy linkages California Transparency in Supply Chains Act of 2010 (SB 657)

Ford was the first automaker to issue a disclosure statement for the California Transparency in Supply Chains Act of 2010 (SB 657). Reporting under the Act is mandatory for companies with gross receipts over $100 million, who operate in California. The Act focuses more on social rather than environmental reporting.

Objective Buyer objectives:

The objective of the Aligned Business Framework is for suppliers to be able to implement broader policies and initiatives across their sites, rather than Ford engaging with multiple factories or sites belonging to the same supplier. Ford's goal is to better understand the carbon footprint of its supply chain and use the data to create a broad-based carbon management approach for its supply chain  The ABF approach also supports Ford’s goal to ‘reduce the supply base so that it can develop deeper and more transparent relationships with a fewer number of suppliers for the long term’.

The objectives of the Supplier Greenhouse Gas Survey Program are to understand the state of the supply chain, assess supplier readiness to report GHG emissions, establish a baseline and identify opportunities for GHG reductions. Ford can mitigate business risk by understanding potential climate change impacts. [*4]



Supplier's drivers:
Ford is currently consolidating its supply base. Suppliers have an incentive to participate in the program in order to gain or maintain their position as a strategic supplier in the Aligned Business Framework.
Date

The Aligned Business Framework was launched in 2005.

Initiative Summary

Description of the scheme

Ford has undertaken a number of different initiatives to engage with suppliers in reducing emissions. This includes reporting emissions, training  and purchasing approaches.

 

Aligned Business Framework

Ford's Aligned Business Framework (ABF) is Ford's initiative to work with a selection of suppliers to match the environemtnal and energy performance efforts of Ford's suppliers with its own. Ford has selected approximately 90 suppliers  for long-term relationship and closer collaboration. The ABF expects selected suppliers to develop training and compliance systems within their internal facilities and their own supply chains that reflect Ford’s own systems and requirements. An Executive-level representative from the supplier company is required to lead the development of the suppliers' processes and report on progress against mutually agreed metrics.
 

Summits and training

Ford holds an annual ABF sustainability meeting in the US between senior management from Ford and its ABF suppliers. The meeting includes a workshop on sustainable supply chains and updates suppliers on sustainability management initiatives (including supply chain working conditions, sourcing of minerals from conflict zones and greenhouse gas management) that are in progress by Ford and at the industry level. In 2011 onwards, Ford introduced environmental performance in the training it provides to all its Tier 1 suppliers.
 
 

Supplier Greenhouse Gas Survey Program

Beginning in 2010, Ford conducted a pilot project with a select group of suppliers to better understand the carbon footprint of its supply chain and use the data to create a broad-based carbon management approach for its supply chain. 

As a first step, Ford surveyed 35 suppliers representing close to 30% of Ford’s $65 billion in annual procurement spending in 2009 [*4].  Ten of its suppliers were also asked to complete the Carbon Disclosure Project Supply Chain questionnaire [*2], while the remaining suppliers were asked to help Ford to 'road test' the Scope 3 Greenhouse Gas Accounting and Reporting Standard developed by World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) [*5]. Ford was the only automotive company to participate in this road test.  Ford achieved a 75% response rate from the surveyed suppliers.

From these results, 80% of respondents indicated that they track their GHG emissions, and 50% of those companies indicated that they externally report their emissions.

In March 2011 Ford expanded this process, entitling it the Ford Supplier Greenhouse Gas Survey Program. As part of this expanded program Ford surveyed the Scope 1 and 2 energy use and carbon emissions of 128 global suppliers. The selected suppliers represent ~60% of Ford's annual procurement spend. Ford received an 86% response rate from suppliers. Ford expects to conduct the survey annually.

 

Automotive sector guidelines

Ford has also led development of an automotive industry-wide guideline tool for estimating and reporting manufacturing facility-based GHG emissions. It has helped convene automotive companies at the Automotive Industry Action Group including Chrysler, General Motors, Honda of America, Lear, Toyota, TRW and other Original Equipment Manufacturers (OEMs) and Tier 1 suppliers in order to inform the supply base of this consensus guideline for the industry. [*6]

 

EMS ISO 14001

Ford was also the first global automaker to require suppliers to have certification of the environmental management standard (EMS) ISO 14001.
Requirements on or activities undertaken by the target group

In the Aligned Business Framework suppliers must select an Executive-level representative to report to Ford on compliance with sustainability expectations. ISO 14001 is required for all suppliers. Ford was the first automaker to require this.

Verification/certification

It does not appear that Ford undertakes additional verification of the data provided by suppliers. However, those suppliers who respond to the Carbon Disclosure Supply Chain questionnaire must discuss the extent to which their data has been verified. Ford also requires suppliers to have achieved ISO 14001 certification, which requires independent certification by ISO accredited organisations.

Tools and resources (includes use of external platforms for capturing suppliers' data)

As part of its Aligned Business Framework Ford has developed in-depth resource guides and coordinated presentations by subject matter experts to give suppliers information and background on human rights and greenhouse gas emissions estimation. It has provided tools such as worksheets for emissions tracking and reporting and code of conduct development.

Impacts, Costs & Benefits

Costs

No information available

GHG Impact

No information available on GHG impacts.

Benefits

As part of this strategy Ford has engaged with 128 suppliers, representing 58% of their total spend in 2010. Since 2006, all "Q1"[*8], production suppliers have ISO 14001 environmental management system certification for facilities supplying Ford. The data collected from select suppliers will be used to create a broad-based carbon management approach for the supply chain. Of participating suppliers, 80% of respondents indicated that they track their GHG emissions, and 50 percent of those companies indicated that they externally report their emissions.

Footnotes & References

  • [*1]

    A Ford "Tier 1" supplier is a supplier who directly provides goods and services to Ford including (a) production and service parts, components, assemblies and accessories; (b) raw materials; (c) tooling; and (d) design, engineering or other services that are covered by the Global Terms.

    [*2]

    The Carbon Disclosure Project (CDP) is an independent not-for-profit organization working to drive greenhouse gas emissions reduction and sustainable water use by business and cities. It provides a platform for companies and cities around the world to measure, disclose, manage and share environmental information. The CDP runs a Supply Chain Program in which companies disclose information on the impact of their supply chain and engagement with suppliers to manage this impact.
    Carbon Disclosure Project Supply Chain Programme - https://www.cdproject.net/en-US/Programmes/Pages/CDP-Supply-Chain.aspx
    To read Ford's submission to the programme register for free with the Carbon Disclosure Project to download the report in full: https://www.cdproject.net/en-US/MyCDP/Anonymous/Login.aspx?ReturnUrl=%2fen-US%2fProgrammes%2f_layouts%2fAuthenticate.aspx%3fSource%3d%252fen-US%252fProgrammes%252fPages%252fCDP-Supply-Chain.aspx&Source=%2fen-US%2fProgrammes%2fPages%2fCDP-Supply-Chain.aspx

    [*3]

    The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption. The Global Compact is a practical framework for the development, implementation, and disclosure of sustainability policies and practices. The Global Compact Office has established an advisory group of participants and stakeholders to develop guidance material on sustainable supply chains. http://www.unglobalcompact.org/Issues/supply_chain/advisory_group.html

    [*5]

    The Scope 3 Greenhouse Gas Accounting and Reporting Standard allows companies to assess their entire value chain emissions impact. The Greenhouse Gas Protocol (GHG Protocol) was jointly convened in 1998 by the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI). The World Business Council for Sustainable Development (WBCSD) is a coalition of 200 international companies united by a shared commitment to sustainable development via the three pillars of economic growth, ecological balance and social progress. The WRI is an environmental think-tank launched in June 1982 as a centre for policy research and analysis addressed to global resource and environmental issues.

    [*6]

     Bosch et al, Supply Chain Greenhouse Gas Management Strategy for Ford Motor Company, April 2011 

    [*7]

      Energy Performance Evaluation and Assessment Tool http://www.epeat.net/who-is-epeat/

    [*8]

    Q1 is the highest designation a Ford supplier can achieve. Ford awards Q1 status to suppliers who show that their facility achieves excellence in four areas: capable systems, continuous improvement, ongoing performance, and satisfied customers. Q1 companies are considered before non-Q1 companies for new sourcing.