U.S. Environmental Protection Agency
Ford Motor Company
Sector: Automobile
Years Engaging Supply Chain: Since 2007
Percent Supply Chain Engaged: 66 percent of total spend
(engaged through CDP climate change questionnaires)
Brings Suppliers Along for the Ride: Carrying forward the values
established by Henry Ford in 1903, Chairman of the Board William
Ford Jr. advances the company's vision of sustainable
transportation. Several Ford Board of Directors members serve
on the Sustainability and Innovation Committee, collaborating
directly with Ford's Supply Chain Sustainability and Global
Sustainability teams. As an auto manufacturer with
approximately 11,000 suppliers in over 60 countries, Ford's
supply chain largely influences its environmental and social
impacts and values. Ford's long-term environmental management
strategy has expanded from reducing greenhouse gas (GHG)
emissions and developing a market for reduced, product-related, GHG emissions to active supply chain
engagement. Ford's 2016 materiality matrix listed "supply chain management, assessment, capacity building, and
performance" as the second-most critical topic to the company and its stakeholders.1
Outline Expectations and Provide Pathways to Report Progress: In 2003, Ford became the first automaker to
develop a code of conduct, which outlines policies for employees, contractors, and suppliers on topics such as
health and safety, anti-corruption and anti-trust, workplace ethics, asset and data safety, and product quality, and
environmental issues. Ford's Code of Conduct Handbook references Policy Letter 24—a supply chain call-to-action
published in 2007, which asked suppliers to adopt the same environmental and sustainability policies as those
Ford applied to its own operations. To further establish mechanisms for encouraging suppliers to report on
environmental performance, sharing best practices with suppliers, and verifying suppliers' environmental and
social performance, Ford adopted three frameworks: CDP's (formerly the Carbon Disclosure Project) Supply Chain
Program; its own Partnership for A Cleaner Environment (PACE) Program; and the Responsible Business Alliance's
(RBA) third-party, validated audit process. Due to extensive engagement efforts, including technical guidance, 84
percent of Ford's requested suppliers—worth 66 percent of Ford's annual spending—responded to the CDP's
Supply Chain Climate Change questionnaire in 2016. Through its PACE program, Ford shares its best practices,
such as GHG and water management initiatives that suppliers can replicate. Through the RBA, Ford conducted 31
audits among Tier 1 suppliers in 2016 to determine compliance with its sustainability expectations.
Focuses on the Highest Impacts and Continued Growth: Ford's environmental supply chain engagement strategy
focuses on suppliers with the highest impact on the environment. Ford first participated in CDP's Supply Chain
program in 2010, requesting that 10 of its suppliers respond to the Supply Chain Climate Change questionnaire. By
2016, Ford requested that 242 suppliers respond to the CDP Climate Change questionnaire and that 196 respond
to the CDP Water Security questionnaire; 84 and 71 percent responded, respectively, helping Ford identify
2016 Supply Chain Case Study
Key Lessons Learned
•	Benchmark your supply chain to find the
highest-impact suppliers and to prioritize
their engagement.
•	Develop a management team and outline
guidelines to support suppliers on
environmental and social issues.
•	Establish a culture of shared understanding
and learning with suppliers.
•	Reduce survey fatigue by establishing
consistent reporting practices that align
with well-established frameworks.
•	Engage and educate C-suite leadership to
increase internal support for environmental
1 Ford 2017 Corporate Sustainability Report, Materiality Matrix,

The PACE Process for Supplier Responsibility
1.	Develop long-term strategies and initiatives
to reduce environmental impacts.
2.	Commit to recording baseline water and
GHG emissions data.
3.	Replicate and expand successful initiatives.
4.	Measure and report progress achieved by
sustainability initiatives against baseline
5.	Communicate best-practices and share
knowledge with the greater supplier
supplier impacts. To determine whether a supplier has a large
environmental footprint, Ford examines its GHG and water
intensity as well as where the supplier's facilities are located,
especially those in water-stressed regions. Ford works with
suppliers in India, China, and other water-stressed locations
to raise awareness about water security and to help
incorporate environmental responsibility into the suppliers'
business strategies. Ford uses CDP data to invite PACE
participation among strategic suppliers that demonstrate high
GHG emissions or water use. Ford considers that continued
engagement growth requires continued dialogue. Ford's
Aligned Business Framework (ABF) provides a method for
Ford to engage with key strategic suppliers and to streamline
best practices for responsible sourcing and environmental management. The 105 suppliers that make up the ABF
network have committed to aligning their Code of Conduct documents with Ford's Policy Letter 24, conducting
internal trainings on Policy Letter 24 requirements, and extending these requirements to their own suppliers. If a
supplier fails to comply with Ford's Global Terms and Conditions, after discussions with its purchasing teams, Ford
has the right to end its relationship with that supplier. Ford strives to develop mutually beneficial relationships
with suppliers that make progress towards internal sustainability goals that are consistent with global best
Simplify Supplier Reporting to Engage Suppliers: The automobile industry has established extensively complex
supply chains, with up to 10 tiers of suppliers, comprised of production and indirect (non-production) suppliers.
While production suppliers can engage in Ford's PACE program more easily, given business similarities, Ford often
faces challenges with engaging indirect suppliers in meaningful environmental and social initiatives and in
reporting on these efforts. Ford seeks to increase indirect supplier participation by engaging with its indirect
suppliers' leadership and by communicating the importance of measuring, monitoring, and reporting
environmental data to stakeholders. To address survey fatigue from reporting on environmental and social issues,
which presents another challenge, Ford requests that suppliers report through CDP's Supply Chain program. Doing
so helped Ford set a uniform reporting framework that suppliers could use to provide environmental performance
information and allows Ford to determine more accurately how each supplier contributes to its environmental
Provide Support Through Dialogue and Shared Learning: To create an environment for shared learning, Ford
encourages suppliers to communicate openly with Ford and to identify vulnerabilities so that both parties can
work to mitigate risks. Ford's Supply Chain Sustainability team regularly monitors suppliers that fail to voluntarily
respond to CDP or adopt PACE or RBA guidelines, and discusses their status with directors that manage
procurement contracts. These directors then take these issues up with identified suppliers to stress the
importance of environmental and social sustainability and to work toward acceptable solutions. Ford strives to
help suppliers realize the mutual value added from sustainable initiatives, including competitive advantages,
reduced costs, and decreased disruption risks.
Recognizes Suppliers: Though supplier participation in Ford's initiatives remains voluntary, Ford strongly
encourages and culturally fosters participation, and acknowledges the efforts of suppliers pursuing excellence in
environmental stewardship. At Ford's 18th World Excellence Awards, 57 suppliers from across the globe received
recognition as leaders among their peers. The World Excellence Awards addressed the following issues: highest-
quality, greenest, and safest products; supply chain diversity; and leadership within the ABF network. The awards
ceremony offers Ford a tool to build enthusiasm for continued environmental commitment and collaboration.

Resources: Center for Corporate Climate Leadership's Supply Chain Guidance:
"We are committed to reducing the environmental footprint of our supply chain. Through the PACE
program, we share leading practices and lessons learned from our operations to help our suppliers minimize
their environmental impacts and improve their sustainability."
- Jacklyn Watt, Director of Supply Chain Sustainability, Ford Motor Company