Ford Pledges to Reduce CO2 Emissions By 30% Between Now and 2020
By Chris Haak
Today, Ford Motor Company pledged that it will reduce CO2 (greenhouse gas) emissions by 30% between now and 2020. Shareholder environmental activists who have been pressing many corporations to release a blueprint for how they intend reduce their CO2 footprint in the coming years immediately lauded the move. The Interfaith Center on Corporate Responsibility, which manages over $100 billion in assets and represents over 300 religious groups, responded to Ford’s move by dropping a shareholder resolution that had called for Ford to take action on global warming. The organization still plans to apply pressure to GM during its annual meeting in June to make a similar move, but so far GM has not commented.
One change that Alan Mulally implemented when he arrived at Ford was to create the position of group vice president for sustainability, because he saw that the continued sale and marketing of large, fuel-thirsty, carbon-spewing vehicles was, in fact, not a sustainable business model. The incumbent in that job is Sue Cischke (pictured at left). Ms. Cischke admits that Ford had fallen short of fulfilling some of its most dramatic environmentally-oriented pledges in the past, but said that this one came as a result of detailed modeling.
Of course, the two most famous examples of Ford making bold claims about environmental initiatves only to renege on them later were when Bill Ford said in 2000 that the company would improve the fuel efficiency of its SUVs by 25%, and when the company promised in 2005 to build 250,000 hybrid vehicles per year by the end of the decade. The SUV fuel efficiency pledge was officially annulled in 2003, and the hybrid production pledge was in 2006, just a year after it was first announced.
In reality, similar to feeling the necessity of having a top executive focus exclusively on sustainability – because the company doesn’t have much choice but to worry about its future sustainability in an environmentally-sensitive world – the company also has little choice but to make its current pledge. Not only would the company have egg on its face for being environmentally irresponsible, but more importantly, since CO2 output is closely correlated to fuel consumption, and new CAFE standards will require a 40% fuel economy improvement by 2020, it actually seems reasonable to expect that Ford can meet its pledge of a 30% CO2 reduction. If it meets the fuel efficiency target, it should hit the CO2 number without any problems. If Ford misses the CAFE number by 2020, it will again look foolish for making such a bold pledge, but Alan Mulally will be long-retired by then and it will be the problem of another generation of executives and another generation of shareholders to deal with.
The next question is, will Ford’s competitors follow suit? After all, they all have to meet the same 35 mpg CAFE number by 2020, so should all have the same opportunity to look good to concerned shareholders and customers. I’m betting that Ford won’t be allowed to bask in the green glow by itself for very long.
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