Resolved clauseResolved: Proponents request that Ford issue a report on its aluminum, steel, mineral, rubber, and leather supply chains, disclosing how it can enhance supply chain traceability and transparency regarding deforestation risk and GHG emissions and increase procurement targets for sustainable materials.
Whereas clauseWhereas: Vehicle manufacturing relies on extraction, processing, and manufacturing of aluminum, steel, minerals, rubber and leather — activities associated with intensive environmental degradation1, 2 and substantial greenhouse gas (GHG) emissions:
The aluminum and steel sectors account for approximately 9% of global GHG emissions.3, 4 In 2019, vehicle manufacturers consumed 18% of aluminum5 and 12% of steel6 globally.
Clearing forests for cattle raising is a leading cause of deforestation in Brazil, a country considered a major source of leather for U.S. auto manufacturers.7
Unsustainable practices used to expand rubber tree cultivation in Southeast Asia and in Africa threaten the destruction of biodiverse ecosystems.8
Strip mining minerals and ores for automotive parts is associated with the destruction of high carbon stock forests, valuable for their ability to store carbon and provide richly diverse habitats.9, 10
Ford is working on important sustainability initiatives. However Ford’s current goals and disclosures are not comprehensive.
Although Ford was a founding member of the Global Platform for Sustainable Natural Rubber (GPSNR), the Company subsequently dropped its membership. Ford also doesn’t disclose information on deforestation risk or biodiversity loss associated with rubber used in its vehicles, nor does it provide insight into environmental risks associated with strip mining for minerals and ores or raising cattle for leather.
Ford has committed that 10% of its total primary steel and aluminum will be low carbon by 2030. But competitors have done more. Volvo and Mercedes-Benz have taken steps to improve steel supply chain sustainability by participating in the ResponsibleSteel™ initiative. Volvo has signed on to SteelZero, pledging to procure 50% net-zero steel by 2030 and 100% by 2050. Similarly, Audi, BMW, and Mercedes-Benz, participate in the Aluminum Stewardship Initiative, which promotes sustainable aluminum mining and production. Mercedes-Benz11 and Porsche12 have committed to reach near-zero carbon aluminum by the end of 2030.
Ford could address investor concerns and take meaningful action by providing more in-depth disclosures and ambitious target setting.
Supporting statementSupporting Statement:
Shareholders recommend that the report be prepared at reasonable cost and omitting proprietary information, and, at board and management discretion, consider:
Disaggregating sourcing information for Ford’s full supply chains, e.g., mines, processors, smelters, refineries, manufacturers, farms and tanneries.
Enhancing disclosure on mineral/ore, rubber, and leather suppliers, deforestation risk associated with these materials, and risk mitigation measures.
Addressing the pros and cons of rejoining GPSNR and participating in global value chain emissions reduction initiatives such as ResponsibleSteel, SteelZero, and the Aluminum Stewardship Initiative.
[1] https://www.nytimes.com/2021/11/17/climate/leather-seats-cars-rainforest.html.
[2] https://www.nature.com/articles/s41586-023-06642-z
[3] https://www.iea.org/reports/iron-and-steel-technology-roadmap
[4] https://www.csis.org/analysis/decarbonizing-aluminum-rolling-out-more-sustainable-
sector#:~:text=Globally%2C%20the%20aluminum%20sector%20contributes,carbon%20dioxide%20(CO2)..
[5] https://www.inclusivedevelopment.net/wp-content/uploads/2021/07/global_bauxite0721_web.pdf, 11.
[6] https://www.iea.org/data-and-statistics/charts/global-end-use-steel-demand-and-in-use-steel-stock-by-scenario-2000-2050.
[7] https://www.nytimes.com/2021/11/17/climate/leather-seats-cars-rainforest.html.
[8] https://www.sciencedirect.com/scisnce/article/pii/S096098222031006X
[9] https://www.mightyearth.org/electric-vehicles-evs-are-vital-to-the-transition-away-from-fossil-
fuels-toward-clean-transportation-they-reduce-air-pollution-and-are-more-efficient-than-cars-that-run-on-gasoline-even-better-th//
[10]
https://www.washingtonpost.com/world/interactive/2023/ev-battery-bauxite-guinea/
[11] https://europe.autonews.com/suppliers/mercedes-get-low-carbon-aluminum
[12] https://www.greencarcongress.com/2023/04/20230428-porsche.html