Ford Motor Co. in Dearborn and its financing subsidiary, Ford Motor Credit Co., today introduced the North American auto industry’s first sustainable financing framework, focusing on paying for ambitious plans in vehicle electrification and other environmental and social areas.
“Winning businesses are financially healthy and lead in sustainability — it’s not a choice, they rely on each other,” says John Lawler, Ford’s CFO. “We’re again putting our money where our mouth is, prioritizing and allocating capital to environmental and social initiatives that are good for people, good for the planet, and good for Ford.”
The company says the initiatives outlined in the sustainable financing framework are intended to help the automaker become carbon neutral no later than 2050, in line with its commitment to the Paris Agreement. The pledge is backed by interim targets the automaker intends to achieve by 2035.
A significant portion of related financing will go toward accelerating Ford’s development of electric vehicles. Objectives include expanding EV technology and charging infrastructure to remove obstacles to adoption and reducing emissions through EV and battery manufacturing.
“We’re going to build high-quality electric vehicles at scale and do so in a way that has a positive impact on people and the environment,” says Bob Holycross, Ford’s vice president of sustainability, environment, and safety engineering.
“In communities where air pollution and climate change are disproportionate burdens today, access to EVs can have the additional benefit of moving people to the front of the line for the health, economic, and mobility benefits these vehicles can provide.”
The framework will cover a variety of both unsecured and securitization funding transactions, including ESG bonds issued by Ford and Ford Credit to finance environmental and social projects, and how Ford’s electrification and mobility projects will be evaluated and selected.
It will also govern how the proceeds will be managed and how the companies will report results. Net proceeds from sustainable financing will be invested and expanded in four areas:
Clean transportation — Designing, developing, and manufacturing zero-emissions transportation, focusing on battery electric vehicles and the batteries that power them across the lifespan of the product. An example includes Ford’s recent announcement of the largest U.S. investment in electric vehicles at one time by an automotive manufacturer, together with SK Innovation, in new Tennessee and Kentucky production sites.
Clean manufacturing — Further reducing the environmental footprint of Ford’s operations through renewable energy, sustainable water and wastewater management, waste management, and energy-efficient buildings.
Making lives better — Advancing economic opportunity and equity for underrepresented and/or disadvantaged populations through projects to help widen Ford’s supplier and dealer diversity networks. The company states the goal is to create programs and opportunities for businesses owned by minorities, women, veterans and disabled people, and for women-focused community ventures and social enterprises that promote better health, develop critical skills, and support child and maternal health, education, and disability support services.
Community revitalization — Supporting and lifting disadvantaged communities by creating and renovating spaces to provide employment opportunities and access to essential services. Ford’s investment in Michigan Central Station west of downtown Detroit is one example of this.
Ford’s sustainable financing framework aligns with the environmental and social principles and best practices established by the International Capital Market Association and the Loan Market Association. Those groups counsel transparency, disclosure, measuring impact, and external reviews in sustainable financing.
In addition to external verification, a new sustainable financing committee established within Ford will assure that funded projects comply with Ford’s corporate social responsibility strategic plan and otherwise meet eligibility criteria. The committee comprises senior representatives from treasury, sustainability, corporate finance, investor relations, Ford Credit, and legal.
