Wednesday, June 29, 2011

57 issues and still counting: Ford's materiality

This is the third in the Reporting Materiality series. Number One was about Delhaize. Number Two was about Vodafone. This is Number Three and it's about FORD. You may have heard of Ford. It's a little automobile manufacturer making around 2 million vehicles per year worth around $130 billion in sales and employing over 164,000 people at 73 plants, 41 distribution centers and warehouses, 57 engineering research & development facilities and 106 sales offices worldwide. Small, right? But with BIG impacts.

The Ford Motor Company Sustainability Report 2010/2011 is long and detailed. It is presented online and offers a print-page download of 486 pages. I opted for the online version!

Ford's Materiality Matrix is clickingly spectacular. 

When you click on each box, you get a drop-down list of all the issues categorized in one of the nine sections. In total, 57 material issues were identified, of which 34 are of high-impact or high-concern or both.  Sounds like Ford's Director of Sustainable Business Initiatives is gonna need a LOT of ice cream!  But actually, he should feel relieved that there are only 57 issues as Ford started out with a list of more than 500. The description of how Ford developed their materiality analysis, both in terms of identifying the issues and prioritizing them is detailed and demonstrates good process and included feedback from a Ceres-convened stakeholder group review.

The 14 top issues in the very purple top-right box include:
  • Four issues relating to climate change
  • One issue relating to public policy
  • One issue relating to water
  • Two issues relating to Ford financial health
  • One issue relating Ford future competitiveness
  • One issue relating to vehicle safety
  • Four issues relating to supply chain sustainability
While this might seem like a very through deep dive into material issues, presented interactively, the downside is that you cannot discern the relative importance of issues within a given box in the matrix. Are these 14 high impact, high concern issues all of exactly equal importance to Ford and to Ford stakeholders?

As Ford didn't volunteer this information, I picked three issues of my own to focus on.  I skipped over supply chain issues which, though important, are don't strike me as materially groundbreaking (though addressing carbon and water issues in supply chain relationships is a new high-level issue this year which is a good thing) and while water is an ultrasonic issue of growing importance, I didn't feel it's where Ford is likely to gain materiality traction. The key take-out for Gina Marie Cheeseman in her post on Triple Pundit was Ford's focus on climate change and vehicle emissions reduction.

Anyway, I picked Ford Future Competitiveness : sustainable mobility, defined as "Ford’s approach to increasing challenges of urban mobility, congestion, urbanization and mega-cities, as well as rural mobility and economic opportunity"  which is connected to electrification strategy and developing more and better electric vehicles. Ford says this is simply an issue of adding up the numbers. Here are some of those numbers: 
  • There are now more than 6.9 billion people in the world. By 2050, there will be 9 billion, 75 percent of whom will live in urban areas.
  • By 2015, it is projected that at least 35 mega-cities will have a population of more than 10 million.
  • The number of automobiles globally is expected to grow from about 800 million today to between 2 and 4 billion by 2050.
  • During 2010 alone, the car market in China expanded by 30 percent, while the market in India grew by more than 35 percent
Guess that's a nice market any self-respecting car maker wouldn't want to miss out on. The competitive edge for Ford will be to compete in a way which satisfies global demand for more vehicles and more environmentally efficient options. I would think this has to be the top issue for Ford over the next 15-20 years and an opportunity to create Sustainable Shared Value. (But that's just my opinion)

I also think the Public Policy question of  "Regulation of vehicle emissions globally, state-by-state regulation in U.S.; increasing stringency and inconsistency of regulation; challenges left by lack of U.S. federal climate legislation" is crucial for Ford sustainability. Ford lays out the climate change policy landscape quite thoroughly and it is clear that this could have major effects on their operations  (and costs) and change the way Ford can serve consumers and appease regulators.

Finally, I select vehicle safety. Despite the fact that someone said "there are no safe vehicles, only safe drivers", I liked Ford's definition " Active and passive safety; pedestrian safety; customer interest in and demand for safe vehicles; increasing regulation generally with focus on active safety; challenge of evolving in-vehicle technology". This goes beyond making motor cars and looks at the whole scope of impacts of people driving cars in our communities. Road accidents are responsible for over 1.2 million deaths per year and up to 50 million injuries. The economic, business, social and environmental burden of road accidents is tremendous and the causes varied. It is in Ford's interest to do what they can to make driving a safer experience as this reflects positively on Ford in terms of reputation, protects communities and environmental damage and also make economic sense. Ford's driver-assisted technologies could be important in helping Ford gain competitive ground while managing the business, social and environmental risks associated with road safety. Again, Ford shares relevant contextual data and discuss in detail issues such as distracted driving with a very interesting case study. 

While Ford's materiality matrix does not quite meet the need in terms of understanding the relative importance of a high number of material issues (many companies identify less than 14 issues in total, while Ford have 14 issues in their top box alone), I don't think we can fault Ford in providing a comprehensive level of narrative which both educates and enlightens about the issues of the day. The only problem is that, to read all the narrative covering 57 issues would take far longer than it would to do anything about it.

This was post Number Three on Materiality. But watch this space. We're not done yet! Any guesses on who's up next?

PS: In writing this series I was reminded by Dave Meyer of a great series of posts the he wrote on his blog Valuestreaming about Materiality in the Supply Chain. This is a great series located here.

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices Contact me via  on Twitter or via my business website  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)

1 comment:

Bill Baue said...


Excellent take on Ford's materiality matrix, which is incredibly comprehensive! That said, I agree with your critique that the matrix doesn't give a sense of relative prioritization.

My other minor quibble with the matrix is that it doesn't display the issues on the top level matrix -- you have to click through to find out which issues are on it. This is understandable, given the number of issues (57!) However, SAP's interactive materiality matrix manages to squeeze all the issues into its top-line matrix, so I imagine Ford could have as well.

My point is that a quick scan of the material issues, gathered in one place, can be very useful. And its absence is frustrating.

Btw, FrameworkCR has an excellent series on materiality as well:


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