Environmental Performance Review: Ford Motor Company

environmental-performance-reviewIt has been noted that sustainable development involves “making balanced and equitable decisions so that financial, environmental and social outcomes are achieved in both short and longer terms”[1] and importance of sustainable development is greater then ever before.

This article sets context for environmental performance review of Ford Motor Company, a global automobile manufacturer headquartered in Michigan, US. Ford Motor Company has sold more than 5.6 million cars generating more than USD 134.2 billion revenues during 2012 employing around 171,000 people.[2]

In global marketplace Ford competes with General Motors Company, Chrysler Group LLC, Toyota Motor Corporation and other companies and corporate social responsibility (CSR) is acknowledged by each of these companies as an important source of competitive advantage.

Key Environmental Impacts of Ford’s Global Operations and Related Debates

Automobile industry has a greater level of environmental impact compared to many other industries partially due to rapidly increasing numbers of cars of various sizes and use of massive amounts of petrol and diesel.

Environmental impacts of operations of Ford and other global automobile manufacturers are immense and they can be divided into the following six categories presented in order to importance:

Firstly, environmental impact through greenhouse gases. CO2 emissions can be specified as the most significant environmental impacts of cars.[3] The issue of automobile CO2 emissions is increasingly being addressed by relevant regional and governmental rules and regulations. For example, in EU limits have been imposed to automobile manufacturers on the levels of CO2 emissions by European Commission to achieve a general target of 120g CO2/km emissions.[4]

Secondly, impact on quality of air. Apart from CO2 emissions discussed above, automobiles cause detrimental impact to the quality of air through emissions of carbon monoxide, nitrogen dioxide and other toxic gases.[5]

Thirdly, environmental impact through use of resources. Ford has sold more than 5.6 million cars and trucks during 2012[6] and the process of their manufacturing has involved utilisation of massive amounts of metals, plastics and other materials and vast amount of natural resources have been used to produce these materials.

Fourthly, impact on quality of water. Major negative impact of automobiles on the quality of water is caused via oil and particles getting washed into creeks and rivers, and consequently reaching the sea. Moreover, significant amount of water is used daily to wash cars, although implications of this fact are often underestimated.[7]

Fifthly, impact on ozone depletion. Chlorofluorocarbons (CFCs) used in automobile air conditioners can be specified as one of the major causes of ozone depletion environmental issue. According to certain scientific publications neglecting the issue of ozone depletion can result in severe negative consequences on humans, animals and the nature in multiple levels.[8]

Sixthly, environmental impact through creation of noise. With increasing numbers of cars on the road noise created by them might have psychological and medical implications for millions of people, especially aged individuals.

Ford’s Program’s and Initiatives to address its Environmental Impacts

Importantly, environmental impacts of Ford’s business practice discussed above creates pressures and opportunities at the same time. Pressure is caused by a wide range of non-government, government and intergovernmental environmental organisations such as United Nations Environment Programme, World Nature Organisation, Wildlife Conservation Society, World Business Council for Sustainable Development and many others.

Opportunities related to environmental impact, on the other hand, relate to addressing relevant environmental impacts in a proactive manner via investments in effective programs and initiatives and integrating these measures with Ford’s marketing strategy.

Range of programs and measures initiated by Ford in order to address environmental impacts of company’s operations are presented within its annual Sustainability Report. The following table illustrates range of measures initiated by Ford management in order to  each type of environmental impact:

Type of Environmental Impact Ford’s Initiatives to Address the Impact
Impact on quality of air USD 125 million investments to be made to address issues of air and water pollution until 2017
Impact through use of resources Environmental Operating System (EOS) is integrated globally in 2010 increasing the levels of efficiency of using resources
Impact through creation of noise Use of recycled cotton in 2013 Ford Fusion Model to provide noise dampening
Impact on quality of water Global water usage reduced by 62% between 2000 and 2012

Further reduction of 30% compared to the level of 2009 is planned by 2015

Impact through greenhouse gases Levels of CO2 emissions reduced by 31% during the period between 2000 and 2010. Further reduction of 30% is planned until 2025
Impact on ozone depletion Conducting researches on replacing chlorofluorocarbons (CFCs) that have negative effects on ozone layer of atmosphere

Types of environmental impact and Ford’s relevant measures to address the impact

Source: Sustainability Report 2012/13, Ford Motor Company

 Additional CSR programs and measures initiated by Ford during 2012 include about 25,000 company employees and retirees volunteering more than 115,000 hours on 1,350 projects and a set of other similar initiatives.[9]

Conclusions

This article has briefly set a context for environmental performance review of Ford Motor Company. Environmental impacts of Ford’s business have been found to relate to greenhouse gases, the quality of air, use of resources, creation of noise and others.

Analyses conducted so far indicate to high levels of relevance and effectiveness of measures employed by Ford to address environmental impacts of its operations. According to its Sustainability Report 2012/13, Ford Motor Company the company employs a set of effective programs such as Environmental Operating System progressing towards sustainable development with positive implications on company’s brand image.

[1] Samson, D. & Daft, R.L. (2012) “Management” Cengage Learning p.4

[2] Annual Report (2012) Ford Motor Company

[3] Mikler, J. (2009) “Greening the Car Industry: Varieties of Capitalism and Climate Change” Edward Elgar Publishing

[4] The Transformation of the Automotive Industry: The Environmental Regulation Effect (2010) KMPG

[5] Fitzpatrick, T. (2011) “Understanding the Environment and Social Policy” The Policy Press

[6] Annual Report (2012) Ford Motor Company

[7] Pollution Prevention Fact Sheet: Car Washing (2014) Available at: http://www.stormwatercenter.net/Pollution_Prevention_Factsheets/CarWashing.htm

[8] Tabin, S. (2008) “Global Warming: The Effect of Ozone Depletion” A.P.H. Publishing Corporation

[9] Annual Report (2012) Ford Motor Company