Automaker commits to ethical standards for supply chain

Article By : Ariella Brown

Can a company do well by committing to do good? Ford affirms it can.

Ford Motor Company is committing to do good in order to do well.

On Feburary 24, Ford announced that it has joined the Electronic Industry Citizenship Coalition (EICC)—a nonprofit group of electronics companies working to improve the social, environmental and ethical conditions of their global supply chains. The organisation has over a 110 electronics companies. But Ford is the first automaker to achieve full membership.

As a member of the EICC, Ford will have to open not only its own facilities but those of its suppliers to audits. The minimum set is 25 per cent. The automaker will also work with the coalition on improving working conditions, as well as the environmental impact of its operations according to its guidelines and benchmarks.

Rob Lederer, EICC’s executive director is quoted in the announcement as pointing out the significance of including an auto manufacturer for which many of its existing members serve as suppliers, making up 15 per cent of them, in fact: “We are looking forward to collaborating and building on its unique global experiences and supplier relationships, as well as the growing convergence between the automotive and electronics industries.”

Hau Thai-Tang, Ford group vice president, global purchasing said, “Working with the Electronic Industry Citizenship Coalition and other industry leaders enables us to further improve the way we work together with our suppliers to address sustainability-related issues such as human rights, working conditions and environmental responsibility.”

Ford has set a pattern of committing to environmental issues. In 2010, Ford achieved the distinction of being the first automaker to join the CDP Water Disclosure program. As its press release that step followed on a decade of implementing its own voluntary Global Water Management Initiative that resulted in a reduction of global water use of 56 per cent or 9.5 billion gallons.

This kind of commitment to doing better for the planet and for humanity is what has earned Ford another distinction. It’s the only automaker to be named a 2016 World’s Most Ethical Company by Ethisphere Institute. Every year Ethisphere lists the companies that serve as models of ethical practices, corporate citizenship, and leadership. Ford has made its list for seven consecutive years now, which is pretty impressive.

Though virtue is said to be its own reward, that doesn’t hold true for business. Ford is very much aware of its image and the effect that can have on customer behaviour. In fact, in its press release about making the World’s Most Ethical Company list, it states very clearly: “Consumers placing increasing importance on ethics in business; recent report shows majority of U.S. learned more about a company before doing business; more than one-third opted not to do business with companies with negative reputations.”

What Ford says its customers want corresponds to what Nielsen published in a report this past fall, “The Sustainability Imperative: New Insights On Consumer Expectations.” It notes that “brands with a demonstrated commitment to sustainability have grown more than 4 per cent globally,” in contrast to those that cannot make the same claims whose growth rate was under 1 per cent.

Carol Gstalder, SVP, Reputation & Public Relations Solutions, Nielsen, explains, “Social responsibility is a critical part of proactive reputation management. And companies with strong reputations outperform others when it comes to attracting top talent, investors, community partners, and most of all consumers.”

To twist around another saying that was attached to an automaker in the past, what’s good for the planet is good for Ford’s business, as well. That’s something all businesses should bear in mind in managing their supply chains with an eye to social responsibility and sustainability.

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