Calvert News & Commentary

Ford Motor Company (F) Meets Calvert Signature® Criteria and Added to Calvert Social Index®

Ford Motor Company now meets Calvert’s environmental, social and governance criteria as a result of clear progress in the environmental impacts of its vehicles

7/25/2011

Calvert Investment Management, Inc. ("Calvert") has determined that Ford Motor Company ("Ford") now meets all criteria for investment in the Calvert Funds that apply the Calvert Signature Strategies." While leading international automakers (including Honda, Nissan, Peugeot, Renault, Toyota and Volkswagen) currently meet Calvert's Signature criteria, Ford is the first US automaker to meet Calvert's criteria." Calvert Sustainability Research Department's recent auto industry review"focused on key industry impacts including environment, product safety, and human rights/workplace"has been the analytical basis for this decision." This decision was also informed by engagement with the company over the past four years across a range of corporate responsibility and sustainability topics.

Calvert has been encouraged by the company's significant recent progress in enhancing the fuel efficiency of its vehicle fleet and, indeed, Ford has emerged as the leader among the Big Three automakers on this critical issue. Calvert remains concerned about the overall impact of automobile companies " whose products account for nearly twenty percent of U.S. greenhouse (GHG) emissions¹ " but we believe that companies, including Ford, have taken meaningful steps to reduce the negative environmental impacts of their products. Calvert is committed to continuing its engagement with senior Ford management on key environment, social, and governance (ESG) issues, as well as with industry peers such as General Motors and Toyota."

Environment - Vehicles

Ford has significantly improved its environmental policies and practices since last reviewed in 2007 when it did not meet Signature criteria for Environment due to lagging policies and practices regarding vehicle fuel efficiency." In the past three years, however, Ford has successfully made sustainability -- above all improving fuel efficiency while enhancing the appeal of its specific models -- a strategic priority for the company. Ford now takes responsibility for its contribution to climate change and has a corporate commitment stating that "each new or significantly refreshed vehicle will be best in class, or among the best in class, for fuel economy." "The company has retooled its global manufacturing strategy to allow for greater flexibility and innovation (as well as cost savings and energy/materials reductions), and cleaner, more efficient vehicles are becoming an increasingly important component of converging global and U.S. fleets. Ford is committed to producing advanced vehicles that will focus on efficient engine technologies and electric vehicles in the near and mid term, and more advanced technologies, such as hydrogen fuel cells, in the long term."

Ford's current approach to meeting its vehicle-related environmental commitments relies on an array of advanced vehicle technologies that provide for greater efficiency and reduced use of petroleum. The company has invested in and is selling hybrid vehicles, plug-in hybrid vehicles, and electric vehicles, as well as vehicles equipped with advanced gasoline engine technology (through its EcoBoost system), biofuels-compatible engines, and cleaner diesel engine technology (through its ECOnetic system). Ford is aiming for a 20% electric fleet by 2020. It also has a goal to reduce vehicle CO2 emissions 30% from 2006 levels by 2020 in U.S. and European markets and reports that, compared with model year (MY) 2006, MY2010 fleet emissions have been reduced by 10.5% and 8.1% in the E.U. and U.S., respectively.

Product Safety

Ford demonstrates a strong commitment to product safety through the presence of a safety and quality management system that applies to all vehicles. Ford manufacturing facilities are ISO 9001 certified and the company meets Six Sigma standards across its operations. The company has programs to develop advanced safety technologies to enhance active and passive safety systems. "Overall, the company's vehicle safety performance has been adequate"recalls for safety-related defects have generally been made in a responsible and timely manner and the company has received high-safety ratings from the Insurance Institute for Highway Safety and the National Highway Traffic Safety Administration for many of its newer models.

Human Rights/Workplace

Ford is a leader in addressing human rights and supply chain impacts through the development of strong workplace policies and programs for both its own operations, but also those of its suppliers. In 2003, in response to work with key stakeholders, the company adopted a Code of Basic Working Conditions that applied to its global operations and extensive supply chain, and includes policies covering child labor, compensation, forced labor, freedom of association and collective bargaining, harassment and discrimination, health and safety, work hours, community engagement, bribery and corruption, and environment and sustainability. The Code has led to improved systems and processes at Ford facilities, plus increased supplier training, capacity building, and working condition assessments by the company. Ford requires suppliers to meet comparable standards.

In its domestic operations, workplace safety has been an area of concern over the past few years, but the company's strong policies and management systems have helped to reduce lost-time incident rate and other key performance indicators." Furthermore, the company has a solid labor relations record, as evidenced by a strong policy framework and a relatively positive relationship with labor unions.

Ford has also become an industry leader by addressing conflict minerals in its supply chain. The company has publicly supported conflict minerals provisions requiring sourcing disclosure and is working independently and collaboratively to develop risk assessment tools and supply chain management systems specific to this critical emerging issue.²

Calvert Investment Management, Inc., 4550 Montgomery Avenue, Bethesda, MD 20814.

As of 6/30/11, accounts managed by Calvert Investment Management, Inc. held securities issued by Ford Motor Company." Calvert may or may not still invest in, and is not recommending any action on, Ford Motor Company."

1. EPA. Climate Change: emissions, Accessed on July 17, 2011 at http://www.epa.gov/climatechange/fq/emissions.html.

2. For more information about Calvert's work on conflict minerals, see the recent article on our website: http://www.calvert.com/newsarticle.html"article=17664.