Supply Chain Greenhouse Gas Management Strategy for Ford Motor Company

Abstract

The processing of raw materials and the manufacturing of components for the automotive supply chain results in significant life cycle energy consumption and greenhouse gas (GHG) emissions. As a result, automobile manufacturers face potential financial risks from their supply chain operations in the form of energy price volatility and regulatory actions to curb climate change. To understand and address this challenge, Ford Motor Company (Ford) and the University of Michigan School of Natural Resources and Environment student team (team) developed a strategy for managing greenhouse gas emissions in the vehicle supply chain. Since December 2008, the team has supported the engagement of suppliers through the development and administration of a survey to collect allocated greenhouse gas data and environmental management practices information. The student team also advanced industry-wide participation through collaboration with the Automotive Industry Action Group (AIAG) to standardize greenhouse gas reporting requests provided to suppliers. Additionally, the student team evaluated public reporting options, specifically by engaging Ford as tester of the new Corporate Value Chain (Scope 3) Accounting and Reporting Standard drafted by the World Resources Institute and the World Business Council for Sustainable Development. The project findings illustrate a wide range in the sophistication of the greenhouse gas management practices of suppliers and demonstrate the need for a collaborative approach between suppliers and original equipment manufacturers (OEMs) to further emissions reduction efforts. The different components of the master’s project have informed short-, mid-, and long-term recommendations for the measurement, management, and reporting of supply chain greenhouse gas emissions by Ford. Specifically, the student team recommends that Ford (1) expand their data collection program, (2) refine and use the proposed Maturity Matrix tool to measure supplier performance, (3) collaborate with suppliers on the improvement of management efforts, and (4) continue to support and pursue an industry-wide approach to greenhouse gas management through involvement with AIAG.