Speech: William Clay Ford, Jr., The 5th Annual Greenpeace Business Conference, London, October 5, 2000
Following is the text of remarks as prepared for delivery by Bill Ford, chairman of the board, Ford Motor Company, at the 5th Annual Greenpeace Business Conference, London, October 5, 2000.I want to thank Greenpeace for giving me the opportunity to talk to you today. I am really proud to address this group, as you are at the frontlines of the battle to save the world. Time is not on our side, we need to keep moving forward, and we need to move fast. We're at a crucial point in the world's history. Our oceans and forests are suffering, species are disappearing; the climate is changing. Around the world, billions of our fellow human beings lack the most basic requirements of health and dignity.
Enlightened corporations are beginning to understand that these issues are business issues. They realize they can no longer separate themselves from what is going on around them. That, ultimately, they can only be as successful as the communities, and the world, that they exist in. That's our belief at Ford Motor Company. This morning I'd like to share what we're doing to address some of the critical issues facing our company, and our world.
I'll talk about what we are doing to take leadership as a corporate citizen, and to make the automobile industry sustainable. I'll describe the tremendous potential for positive change that could be unleashed by a combination of aggressive corporations, enlightened consumers, and properly aligned market forces.
Finally, as an example of all this, I'll talk specifically about climate change, a subject I know is of great interest to everyone here. As if all of that isn't challenge enough, I'll also try to keep my remarks short, to save lots of time for Q&A. That's the real value-added part of the program for me, where I get to learn from you.
When I became chairman of Ford Motor Company last year, my vision was to achieve new levels of success as a business, and clear leadership in resolving social and environmental issues. I believe the two are closely related. People around the world increasingly want to do business with companies they can trust. Trust means responsible corporate behavior - behavior that is principled and responds to societal demands. This is not just traditional philanthropy, it's the application of technological, intellectual, and capital resources in a way that makes the world a better place.
The Internet and the Information Age are educating and empowering people around the world. Sophisticated consumers are expanding their definition of self-interest, and their interests are merging with those of shareholders and society. Smart companies will get ahead of this trend and reward their shareholders by meeting the broader expectations of these consumers, giving them better products and services; and cleaner, safer, and more equitable communities. I believe very strongly that corporations could be and should be a major force for resolving social and environmental concerns in the 21st century.
That's what Ford Motor Company has been driving toward in the months since I became chairman. It's certainly been an interesting time for us, filled with many great steps forward, and a few humbling setbacks. I began by initiating a process of stakeholder engagement to bring a fresh perspective to our view of the world. I have met with the heads of many NGOs and asked them to help us address our issues.
We publicly endorsed the principles of the Coalition of Environmentally Responsible Economies. By including the CERES Principles as a key part of our new way of doing business, we have pledged to go beyond the requirements of the law to preserve and protect the environment.
We left the Global Climate Coalition. We felt that membership in that organization was an impediment to our ability to move forward credibly with our agenda on environmental responsibility. In May we published our first Corporate Citizenship report written under the Global Reporting Initiative's Sustainability Reporting Guidelines. The report began the process of measuring and documenting the full spectrum of the company's impact on the economy, the environment, and society.
The report created much more of a reaction than we anticipated. The vast majority of it was positive. A few people said that we were attacking our own vehicles, or confessing to a laundry list of failures. We weren't. All we were really trying to do was begin an honest dialog. The strong response we got - good and bad - convinced me that we are headed in the right direction with the report. Once the novelty wears off, and we have more measurable results to report, it will be less of a sound bite source for "gotcha" journalism, and more of the tool for improvement that we know it can be.
Unfortunately, all of the great progress we have been making in the last 20 months has been overshadowed in recent weeks by the tragic circumstances surrounding the Bridgestone/Firestone tire recall. I deeply regret the anguish this has caused the families who have had members injured or killed, and the anxiety it has caused our customers. There is nothing more important to me than our customers' safety and trust. We are moving as quickly as possible to replace bad tires with good tires, and to understand what went wrong, so that it never happens again.
This terrible situation - which goes against everything that I stand for - has made us more determined than ever to operate in an open, transparent, and accountable manner at all times. In the 20th century, the automobile provided tremendous benefits, and raised the standard of living in much of the world. But it also had a major negative impact on the environment. To be considered a leader in corporate citizenship, an automobile company must demonstrate leadership in addressing environmental concerns.
As some of you may know, I have been a life-long environmentalist. When I joined Ford Motor Company 20 years ago, I struggled to reconcile my environmental ethic with working for an industrial company. Early in my career I was even asked to stop associating with environmental groups. I continued to associate with environmental groups throughout my career. And now, as chairman of one of the world's largest corporations, I am in unique position to be a catalyst for change.
I personally believe that sustainability is the most important issue facing the automotive industry and industry in general in the 21st century. For automobile manufacturers, sustainability is largely an environmental issue. I look at it not just as a requirement, but as an incredible opportunity. I want my company to be a leader in driving the transition, and to be in a position to benefit from it. I believe it will be a great way to please my customers and reward my shareholders.
Ford Motor Company once provided the world with mobility by making it affordable. In the 21st century, we want to continue to provide the world with mobility by making it sustainable. Given where we are today, that might seem like an impossible dream to some people, but we're already headed there. Frankly, we don't have a detailed map of how to get there yet, or even an exact picture of what sustainable mobility will look like. In addition to the automobile, it may include mass transit, or Internet access, or something we haven't even thought of yet. But we've taken some first steps.
At about the same time I became chairman, Ford Motor Company became the first and only automaker to certify all its plants around the world under ISO 14001, the international management standard that regulates and independently audits air, water, chemical handling, and recycling.
We have 140 factories in 26 countries all held to the same green standards, and now we are requiring our suppliers to meet them, too. Anyone who thinks there is a conflict between preserving the environment and rewarding shareholders should take a look at this program. It's saving us millions of dollars in energy, water, material, and waste-handling costs. It's confirmed my strong belief that - in addition to being the right thing to do - preserving the environment is a competitive advantage and a major business opportunity. Our next step in this area is an effort that I hope revolutionizes industry. We call it the "Heritage Project" - it's the environmental renovation of our Rouge manufacturing complex in Detroit. The Rouge Complex is one of the enduring symbols of the Industrial Age. Since it began operations 80 years ago, it has been studied and duplicated by companies and countries around the world as the paradigm of the modern, integrated manufacturing facility.
We think this is a terrific opportunity to transform the icon of 20th century manufacturing into a model of 21st century sustainable manufacturing. The new Ford Rouge Center will be a world-class center of lean and environmentally sensitive manufacturing. We are working with Bill McDonough and Michael Braungart on this massive undertaking. They are true visionaries.
Ford Motor Company also has been a leader in the development of clean-running alternative fuel vehicles. We are the world's leading producer and seller of electric vehicles. We've just launched an entire new brand - TH!NK - dedicated to the development and marketing of alternative fuel powertrains and vehicles. We're looking at innovative products and innovative power sources, including wind power for our production lines, but they have to be viable business projects.
We're also working on hybrid-electric and fuel cell powered vehicles. Hybrids, powered by a conventional engine as well as an electric motor, could represent 20 percent of the market in ten years. We'll have a hybrid-electric Ford SUV for sale in 2003. Longer term, I believe fuel cells will finally end the 100-year reign of the internal combustion engine. Fuel cells, which run on hydrogen, a renewable resource, have zero emissions. We'll have a test fleet of fuel cell vehicles on the road by the end of next year. Fuel cells could be the predominant automotive power source in 25 years. These alternative fuel vehicles are an important part of our overall efforts. But we know we must have breakthrough improvements in today's mainstream, high-volume products to have an immediate and major positive impact on the environment. So we've launched a "Cleaner, Safer, Sooner" campaign to make significant improvements to our products in the areas of environment and safety well ahead of regulations or regulatory timetables. As a result, this year we began a progressive rollout of more sophisticated low emission powertrains that meet the European Union's proposed Stage IV emissions standards five years before they are due to become law. These engines are 50 percent cleaner than the European Union's Stage III emissions standard, which came into force on January 1, 2000. In the United States, we've reduced the emissions of our Sport Utility Vehicles (SUVs) and light trucks years ahead of regulatory requirements, and recently committed to improving the fuel economy of our SUV fleet by 25 percent by the year 2005. We're often accused of putting too much emphasis on SUVs, so I should point out that we also make the world's best-selling car, the small, fuel-efficient Ford Focus.
What's next? As I said, the territory is largely uncharted. But we are beginning to draw a rough map to the future with the help of our outside stakeholders. We've begun a discussion with BP about technical issues we both face regarding sustainable mobility.
In August we held an Emerging Issues dialog with a number of NGOs. I'm pleased to report that Greenpeace was one of the key participants, as well as Friends of the Earth, Oxfam, and several other organizations and companies. Three specific issues emerged from this dialog as important for Ford to take a leadership position on: climate change, human rights, and educating the financial markets on the value of corporate citizenship. We've indicated to our stakeholders that we are absolutely committed to moving toward leadership in all three areas. For the purposes of today's discussion, I'd like conclude my remarks by focusing in on what was singled out as the most important issue for us to address: climate change.
There is perhaps no more challenging an issue, and certainly none that is raised with as much frequency or passion in my discussions with environmentalists, than climate change. I am a businessman, not a scientist. We work with uncertainty every day. The essence of business success is to reduce uncertainty to an acceptable level, and then to act. Competitive advantage comes from acting with good judgment in a situation where there is uncertainty and risk. So as a businessman I ask, what do we know and what is the risk? Is there sufficient evidence to make a decision, to take action? The answer is absolutely yes.
Society's assessment may change in the future as the science develops, but the present risk is clear. The climate appears to be changing, the changes appear to be outside natural variation, and the likely consequences will be serious. From a business planning point of view, that issue is settled. Anyone who disagrees is, in my view, still in denial. We at Ford Motor Company have moved on. What role should the business community play in addressing this issue? There's no doubt we were overly cautious - I'm sure you would say obstructionist - in our initial reaction. Whatever reasons there were, and however genuinely they were felt, I believe there is now more than enough evidence to warrant an immediate and comprehensive - but considered - response. I also believe that the market and competition-driven change is the best hope for moving quickly and effectively to address this issue. After almost 10 years of negotiation and debate, governments are still arguing about how to get started. We have the Kyoto Protocol, not yet in a shape agreeable to several significant nations, which argues for a 5.2 percent emissions reduction, and then only in developed countries.
I'm not here to deny or defend the role of the business community in prolonging this debate. But even if the objections ended today, that process is unlikely to move fast or far enough. To address climate change we will need to stabilize CO2 concentrations in the atmosphere. The scientists at the Intergovernmental Panel for Climate Change tell us that will be difficult, with, for example, the stabilization of CO2 concentrations at 1990 levels requiring aggressive reductions in emissions - 60% cuts by 2050 As I said, I'm not a scientist. I don't know if that is the right number or not, so I can't endorse it. But let's assume for a moment that's the magnitude and speed of change we may need to make. I would ask how many of you believe that we will achieve a 60 percent reduction in CO2 emissions in 50 years through a consensus-based global regulatory process? I don't. The NGO community asked us to end our denial response to climate change, and we have. In return, I would ask that the NGO community keep an open mind and engage in a constructive discussion about how positive change can be achieved most effectively. I'm not dismissing government regulation or coordination. Governments will have a role to play in the change process. Here in Europe, we're part of a voluntary agreement with the European Union that will reduce CO2 levels in our new vehicle fleet by 25 percent from 1995 levels by the year 2008.
I'm not dismissing global treaties and their potential to generate action. Kyoto has certainly got people's attention. But I believe there is a better way. As a proponent of market-driven solutions, I place more emphasis on corporate governance than government countenance. I believe that transparency, stakeholder engagement, and accountability - performance standards and measures - will be the real regulatory tools of the 21st century. And that consumers will be the real regulators. The market for environmental solutions is already here, and it's growing stronger. We see it every day in our dialogs with consumers, in our market research, and on the evening news. This new dynamic is going to drive rapid change. Does anyone doubt the demand for more fuel-efficient vehicles after the recent fuel protests here? The marketplace is not perfect, but it is powerful. Shortly after we announced our 25 percent fuel economy improvement for SUVs, one of our competitors held a press conference to announce that anything we would do, they would do better. I thought that was terrific.
The best way to get the auto industry to stop dragging its feet is to have us race against each other. We love to do that, and we're good at it. But we'll need your help to make sure we're racing in the right direction. We at Ford Motor Company intend to act in the interests of both our shareholders and society to contribute to the solution to this urgent concern. I've already described some of the things we are doing with alternative and mainstream vehicles, and with the promising technology of fuel cells. We know we have to do more, we will do more, and we will keep you informed of our progress. Let me share a key shift in our thinking that has already occurred.
At Ford Motor Company, this is no longer just a public policy issue. We are not simply reviewing our policy position, we are now reviewing our competitive business strategy. We are working to ensure that we have a clear long-term strategy to respond to this challenge. Our review will consider a progressive shift to renewable energy in our production processes; opportunities to offset future CO2 emissions; the role of emissions trading; and ways to encourage our suppliers to aggressively pursue our sustainability agenda.
You can be sure that our response will meet at least three criteria: it will generate shareholder value; it will be the most aggressive market-focused response in the auto industry; and it will offer real gains for our customers and the planet. In this race, we intend to get out front and stay.
I want to thank my Greenpeace hosts again for this opportunity to speak to you. I'll consider it a complete success if my competitors hold press conferences to tell the world how they're going to win the race.
Thank you for your interest, I'd be happy to answer any questions you have now.