Last month, Ford Motor Co. CEO Bill Ford laid out a new vision to turn his company into a leader in technological innovation and, just perhaps, an environmental performance champion as well. His announcement, including the promise to produce 250,000 hybrids annually by 2010, comes during a time of trouble for the industry, and we watched it with keen interest.
First, our own "full disclosure": We work for SustainAbility, a think tank and consulting agency headquartered in London, and Ford Motor has been a client since the late 1990s. It's a relationship that endures in spite of periodic doubts on both sides.
Early on, for example, we advised Bill Ford (then the newly appointed chair of the board) to go public with his concerns about the sustainability of SUVs. He did -- and was pounced upon by, among others, The Wall Street Journal and The New York Times. Friedmanesque journalists sputtered that William Clay Ford Jr. was a "poor little rich kid" bleating about products crucial to his company's profitability. At one stage, Ford muttered that if we were his friends, God spare him from his enemies.
At other times, even after media coverage turned positive, our company teetered on the edge of resigning its relationship with Ford, feeling that, far from making progress on issues like climate change, it was going into reverse. Many environmentalists seemed to agree. The automaker has been the target of several aggressive and well-orchestrated campaigns accusing it of, among other things, being recalcitrant (to put it mildly) on climate change. Greenpeace compares the new Land Rover's fuel economy to that of the Model T, and suggests Ford's environmental performance is worse today than it was eight decades ago. Meanwhile, the Rainforest Action Network and partners are running an entire campaign dedicated to "jumpstarting" the company.
While environmentalists see the major U.S. automaker and its kin as dinosaurs flailing in a tar pit largely of their own making, financial pundits confirm that the company is reeling -- costs are high, market share is falling, critics love the new Mustang but not much else, and there is even talk of bankruptcy. Many business analysts paint all Detroit automakers with the same broad brush, citing high legacy costs related to pensions and health care as the primary reason these companies can't compete with the Asian automakers generally, and Toyota in particular.
So are American automakers headed for extinction? To give Grist readers a glimpse of the Ford view of the universe, we turned to Niel Golightly, the company's optimistically titled director of sustainable business strategies, who spoke to us from his office at Ford's headquarters in Dearborn, Mich.
Grist: Niel, since we got involved with Ford, we have been on a roller-coaster ride in terms of our sense that the company is making progress. Will this latest round last?
Golightly: Yes. There is no going back. The race is on to deliver sustainable mobility options with the features, performance, safety, styling, and lifestyle appeal consumers expect. You're right to say that there have been highs and lows since we publicly touched the third rail called global warming six years ago, but even when our progress wasn't as visible as some wanted, we were beavering away at new technologies (like hybrids and hydrogen) and new product segments (like cross-over vehicles that blend SUV and car attributes).
Those efforts put us in a better market position today than many appreciate. And this continues -- for example, we just announced an innovation partnership on nanotechnology with Boeing and Northwestern University that could provide new breakthroughs in fuel efficiency.
Grist: We were struck by your recent hybrids pledge, a tenfold increase over current hybrid production that could establish Ford as the American leader in bringing this technology to market. But even your 2010 hybrid production numbers will lag far behind Toyota's, and 250,000 vehicles is but a fraction of Ford's overall production. Is this deck chairs on the Titanic?
Golightly: Hey guys, give me a break! This is huge -- in impact, investment, and strategic commitment. A quarter million hybrids is our plan today, but as Bill hinted, we're not likely to sit on our thumbs as the segment continues to grow.
Grist: You also announced that Ford would take steps to offset the carbon emissions that occur in the production of these vehicles. Why not do this for every vehicle you produce?
Golightly: This is a pilot program. No other automaker is doing it at all. We want to explore how well this will be received, how much impact it will have on our greenhouse emissions footprint, and if (and how) we should leverage the idea further. Actually, it would be great to know what Grist readers think of this part of our plan.
Grist: Some campaigners have gone after Ford with searing ads and direct action. Did they influence your hybrid decision?
Golightly: No. And I have to vent a little here. I've spent considerable time talking with activist groups, and I actually share their concerns. Climate change worries me a lot -- it worries most people at Ford. We share a belief that societies need more energy-effective ways to live, work, and travel. So given that common ground, I'm baffled to see some campaigners stuck in a time warp.
Old-style sticks-and-stones attack ads and PR stunts worked when corporate leaders needed to be whacked upside the head to get them to pay attention to the issues. Then, the relatively simple challenge was to get environmental issues on the agenda -- but the issues are anything but simple, and finding solutions requires more nuance. We got the message a long time ago. Now we're spending time, energy, and billions of dollars on real solutions. More attacks won't get us to move faster.
The groups that are having an influence on us are the ones who get the fact that we're a business, and that we can help solve environmental problems only if the solutions also meet our obligations to customers, shareholders, employees, retirees, regulators, communities, dealers, and suppliers. I believe there is a growing convergence between environmental interests and business, but it will take sophisticated cooperation to realize the potential here.
Grist: If you were running a campaigning organization like Greenpeace or RAN, how would you pressure Ford?
Golightly: By buying more Ford products! I'm partly kidding, but the pressure that matters most to us is what consumers decide on the showroom floor. Campaigning organizations need to understand the importance of "demand pull," i.e., the importance of what customers buy, what they are willing to pay, and which attributes they value most. As one example, the Sierra Club gets it. As an organization that has beaten us up in the past and which will continue to insist that we make our products more fuel-efficient, they also take an active role in encouraging customer demand for fuel-efficient technologies like hybrids.
At Ford, we know that our future business depends on shifting from a fossil-fuel-intensive automotive business model to more sustainable mobility options, but we can't afford to arrive at that future before consumers are willing to make the leap with us.
Grist: In a speech to Ford engineers and scientists in September, Bill pledged to "focus every aspect of the business on innovation." Why should we believe that better environmental performance will result?
Golightly: As Bill put it in our newest sustainability report, out Oct. 18, we're a 100-year-old company that wants to reach 200. We're focusing on innovation because meeting 21st century needs in innovative ways is the surest way to business success. And I think it's pretty obvious that, over time, markets will demand innovation around fossil-fuel efficiency, lower greenhouse-gas emissions, a decreased ecological footprint, greater safety, lower congestion, less noise, more equitable access to mobility ... and that's just a partial list.
Grist: You are also working on a report dealing specifically with the degree of risk climate change poses to your business. Given our "Full Disclosure" calling card, how full will this year's disclosures be?
Golightly: Sometimes it feels like the debate about climate change and the auto industry is going on as if we -- the auto companies -- weren't even in the room. Part of the reason we write sustainability reports is to give investors, policy makers, and NGOs an industry view on why we consider sustainability generally and climate change in particular significant business issues -- and to explain how market and business forces might be leveraged to help solve it.
Anyone expecting our climate report to deliver a "eureka" solution or unilaterally to assume the burden for rolling back 100 years of accumulated infrastructure, policy, economic interest, and consumer habit will be disappointed. But anyone looking for a proactive contribution to the policy debate, an understanding of the dynamics at work in our industry, and near-term actions we can all take will, I hope, see that we're intent on skirting the tar pit. And to achieve that, our footprints are going to have to get a whole lot smaller.
London-based John Elkington is cofounder and chair of SustainAbility. He blogs at johnelkington.com. Canadian Mark Lee is a director of SustainAbility and makes his home in San Francisco.