Defining Social Sustainability: Through the Ford Motor Company's Model of Human Progress by Erb Institute

DEFINING SOCIAL SUSTAINABILITY T H R O U G H T H E F O R D M OTO R C O M PA N Y ’ S MODEL OF HUMAN PROGRESS AN ERB INSTITUTE WHITE PAPER

AN ERB INSTITUTE WHITE PAPER

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

EXECUTIVE SUMMARY............................... 3 INTRODUCTION.......................................... 4 APPROACH................................................. 6 Study Design.................................................................... 7 SDM Workshops............................................................. 8 Metric Development.................................................... 10

DR. MERRIAM HAFFAR, Erb Institute Postdoctoral Fellow (under the supervision of Dr. Joe Arvai)

RESULTS & DISCUSSION . . ........................ 12

MARY WROTEN, Director of Global Sustainability, Ford Motor Company

SDM Workshops.......................................................... 13

REBECCA SHELBY, Social Sustainability Manager, Ford Motor Company

Metric Development.................................................... 19

DEB HEED, Sustainability Specialist, Ford Motor Company

CONCLUSION............................................ 29 APPENDIX................................................. 31

FEBRUARY 2021

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EXECUTIVE SUMMARY IN SPITE OF THE WIDESPREAD PROLIFERATION OF SUSTAINABILITY METRICS AND REPORTING FRAMEWORKS, THESE SYSTEMS LACK CONSISTENT DEFINITIONS, PROCESSES AND STANDARDS FOR ASSESSING SOCIAL SUSTAINABILITY IMPACTS. This has made it difficult to benchmark progress on social sustainability issues, whether among companies or against global goals, such as the United Nations Sustainable Development Goals (UN SDGs). To resolve this challenge, the Ford Motor Company partnered with the University of Michigan’s Erb Institute on a collaborative research project. The aim was to develop a common framework that companies may use to define social impacts and a set of metrics to measure them to demonstrate progress. This framework can be applied not only at Ford but also across the spectrum of companies that contribute to human progress to drive positive change. Based on 166 interviews conducted with Ford employees, external subject-matter experts and community members in Southeast Michigan, we identified four core impacts created by Ford’s product use and operational and philanthropic activities. THE FOUR IMPACTS (OR “ENDS”) ARE:

Each of these four “ends” is achieved by multiple hierarchal levels of lower-order “means.” Together, these ends- and means-level impacts constitute the Model of Human Progress. This model, which we visualized as a wheel (Figure 1), provides a framework with which to define social impacts. To measure and quantify these social impacts, we developed a set of recommended metrics based on current social impact reporting practices within Ford (including Ford Fund and Ford Credit) as well as metrics from the social impact frameworks reviewed here. This set of metrics is available to implement immediately to measure the impacts identified in the model and to meet current stakeholder expectations regarding social impact reporting. We also developed a second set of metrics to support a more holistic view of the social impacts these activities create. These “aspirational” metrics are future-focused, and they more accurately capture the company’s effect on its stakeholders. However, these metrics are not currently included in existing reporting frameworks, so they represent an aspirational vision for the future of social impact measurement that heeds the call for more robust and comparable impact metrics. By developing this Model of Human Progress, Ford is meeting the challenge to measure the social impacts of its business. The model offers business the opportunity to align on the measurement of social impact, providing a common framework to embed human progress (particularly its social dimension) into the business decision-making process, both locally and globally.

Increase economic prosperity in the community Access to social good (mobility) Preserve human rights Protect human health, safety and well-being

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

1 INTRODUCTION A KEY CHALLENGE LIES IN DEFINING AND MEASURING THE “S” PILLAR OF ESG.

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1 INTRODUCTION

In December 2019, the World Economic Forum released its updated Davos Manifesto1, which stated that companies must do a better job of collaborating with other companies and stakeholders to “improve the state of the world.” This manifesto builds on the notion of a holistic approach to sustainability, where environmental, social and governance (ESG) objectives are considered equally—a notion that many companies publicly espouse in theory but struggle to fully realize in practice. A key challenge lies in defining and measuring the “S” pillar of ESG. This stems from a lack of consensus on a clear definition of corporate social sustainability, as well as a lack of a universal suite of comparable, robust and quantified metrics to track progress and guide improvements in this area. Without such social impact metrics (and an impact framework to guide their implementation), benchmarking progress on social sustainability issues, either between companies or against global goals such as the UN SDGs, is difficult. Research has demonstrated that sustainability metrics and reporting frameworks lack consistent definitions, processes and standards for assessing social sustainability impacts. One recent example is the study “Putting the ‘S’ in ESG: Measuring Human Rights Performance for Investors,” by New York University’s Stern Center for Business and Human Rights.2 This study compared the social components of 12 leading sustainability reporting frameworks and found that these systems lack a common definition for social impact. This inconsistency carries a high cost for companies that are reporting on their sustainability performance, in that they are faced with disclosing different types of performance data, across various formats, on a regular basis. The NYU Stern study also concluded that existing social metrics “evaluate what is most convenient, not what is most meaningful,”2 so they cannot be used to determine social sustainability leaders. These metrics fail to give investors the robust and comparable performance information they need “to respond to rising demand for socially responsible investing strategies and products.”2

The NYU Stern study and others3 highlight the two challenges of measuring social impacts: the lack of social sustainability reporting practices harmonized around a common definition of social impact, and the need for more robust social impact metrics that capture the actual effect that companies have on their communities, rather than the companies’ inputs or activities undertaken. To help resolve these challenges, the Ford Motor Company partnered with the Erb Institute on a research study that aims to systematically identify the various ways that Ford affects the social sustainability of its stakeholders, and to identify metrics with which to track progress on these impacts. Through this collaborative research study, we developed a model of corporate social sustainability that can be used not only by Ford but also across the mobility and other industry sectors. It can also encourage stronger harmonization within the social impact measurement field. Ford serves as an ideal case study for this work, given its legacy of technological and social initiatives that have moved the needle on environmental sustainability and social progress—described by Ford's belief: Freedom of movement drives human progress. In Ford’s early days, this includes the company’s design and mass production of the Ford Model T and its “$5 a day” living wage. More recently, Ford has introduced its vision for the City of Tomorrow, a plan for mobility solutions and community partnerships that aim to address systemic challenges such as road congestion and pollution. The mobility sector itself also serves as an ideal context for this study, because of transportation’s significant role in both enhancing and diminishing socioeconomic well-being. For example, research has shown that personal vehicle ownership allows physical access to job opportunities and critical services, thereby helping to alleviate poverty and raising the standard of living4, while at the same time contributing to road congestion, diminished air quality and climate change. Through this research project, by identifying a common definition for social sustainability and a universal suite of metrics, Ford may better tackle these social challenges and track progress.

1 World Economic Forum. (2020). Toward common metrics and consistent reporting of sustainable value creation – Consultation Draft, prepared in collaboration with Deloitte, EY, KPMG and PwC. Retrieved from: www3.weforum.org/docs/WEF_IBC_ESG_Metrics_Discussion_Paper.pdf 2 New York University Stern Center for Business and Human Rights (NYU Stern). (2017). Putting the ‘S’ in ESG: Measuring human rights performance for investors. Retrieved from: www.stern.nyu.edu/experience-stern/global/putting-s-esg-measuring-human-rights-performance-investors 3 e.g. HEC Paris Society & Organizations Center (HEC S&O). (2016). Social impact assessment strategy report. World Business Council on Sustainable Development (WBCSD). (2013). Measuring socio-economic impact: A guide for business. Retrieved from: www.wbcsd.org/Programs/Redefining-Value/External-Disclosure/Reporting-matters/Resources/MeasuringSocio-Economic-Impact-A-guide-for-business 4 E.g. Kneebone, E., & Holmes, N. (2015). The growing distance between people and jobs in metropolitan America. Brookings Institution. Retrieved from: www.brookings.edu/wp-content/ uploads/2016/07/Srvy_JobsProximity.pdf; Bouchard, M. (May 7, 2015). Transportation emerges as crucial to escaping poverty. New York Times. Retrieved from: www.nytimes.com/2015/05/07/upshot/transportation-emerges-as-crucial-to-escaping-poverty.html

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

2 APPROACH THE STUDY’S SCOPE INCLUDED THE COMPANY’S SOCIAL IMPACTS (POSITIVE OR NEGATIVE) THAT STEM FROM ITS OPERATIONS, PHILANTHROPIC ACTIVITY AND PRODUCT USE — AND THAT AFFECT ITS EMPLOYEES, DEALERS, CUSTOMERS AND COMMUNITY MEMBERS.

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APPROACH

2.1.

Study Design We relied on a structured decision-making (SDM) approach, which is based on the principles of cognitive psychology and group dynamics.5 This approach offers decision-makers a way of formulating complex organizational decisions that involve multiple objectives and a wide range of stakeholders. To do this, the SDM process helps decision-makers identify their stakeholders’ key priorities regarding a sustainability decision and identify an appropriate set of metrics to track progress in these areas. This method was initially developed in response to the need for decision-making tools to help guide more inclusive, and ultimately more meaningful, stakeholder involvement in organizational decisions. This method has since been successfully applied in a wide range of sustainability-related decision contexts.6 We applied the SDM method to identify stakeholders’ key priorities regarding Ford’s social impacts and to then translate these priorities into metrics to aid company decision-making. We collected data through a series of stakeholder workshops within and outside Ford, in the U.S. and internationally, to identify what these priority impacts are and how to measure them. This study was conducted in two phases: SDM workshops (Phase 1) and metric development (Phase 2). Both were informed by an ongoing and iterative review of the literature on mobility and sustainability. The study’s scope included the company’s social impacts (positive or negative) that stem from its operations, philanthropic activity and product use—and that affect its employees, dealers, customers and community members. Although we did not include supplier impacts in our analysis (due to the project’s limited time frame), the method we followed here may be readily applied at this level in the future and incorporated into the model.

5 Gregory, R., Failing, L., Harstone, M., Long, G., McDaniels, T., & Ohlson, D. (2012). Structured decision making: A practical guide to environmental management choices. John Wiley & Sons: Chichester. 6 e.g. Kenney, L., Árvai, J., Vardhan, M., & Catacutan, D. (2015). Bringing stakeholder values into climate risk management programs: Decision aiding for REDD in Vietnam. Society & Natural Resources, 28 (3): 261-279; Bessette, D., & Árvai, J. (2018). Engaging attribute tradeoffs in clean energy portfolio development. Energy Policy, 115: 221-229.

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

2.2

SDM Workshops This phase involved interviews with subject-matter experts internal and external to Ford. They included company employees and dealers, subject-matter experts from academia, research institutes, investor organizations and nonprofits, and members of the community within which the company operates. We interviewed 166 participants in total from June 2019 to February 2020. These interviews were conducted in a focus group format. All participants were asked to identify the fundamental ways Ford may impact social sustainability, currently or in the foreseeable future. This long-term value creation perspective was necessary because the automotive industry is undergoing a rapid period of disruption, due to the rise of automation and shared mobility, so a longer-term perspective is needed to ensure the social metrics’ relevance in the future. According to SDM principles, all decision priorities—in this case, the company’s social impacts—are hierarchal in nature. A small number of core social impacts (or ends) are achieved by a much larger number of lower-

order means. For example, a company may improve the health of its community (a core impact, or an end) by minimizing its facility emissions and preventing any industrial accidents (two separate means). To isolate the end from the means, participants were asked to describe why they believe each of the impacts they identified was important, from their perspective. We analyzed the interview data qualitatively, looking for common emerging themes related to how Ford affects social sustainability and drives human progress more broadly. We then used these themes to develop a hierarchal model of how Ford impacts social sustainability. In keeping with the SDM approach, we phrased these themes as actionable social sustainability objectives, making them easier to integrate into company decision-making in the future. We phrased Ford’s social impacts as verbs with a specific direction, such as “decrease the cost of transportation” instead of “transportation affordability,” which lacks a specific direction.

2.2.1 Ford Employees and Dealerships We spoke with representatives from 31 different departments within Ford (in the U.S. and internationally), as well as from its financial services arm (Ford Credit) and its philanthropic arm (Ford Fund), for a total of 55 interviewees. These departments were identified based on whether their work may impact social sustainability, and they included the company’s sustainability, marketing, human resources, automotive safety and corporate strategy departments, among others. Participants were asked to consider their department’s role within the company and to identify the fundamental ways their department may impact social sustainability, currently or in the foreseeable future, and why this impact was important. In addition to Ford employees, Ford (and Lincoln) dealers offered a unique perspective on social impacts. In their dual role as Ford’s customers and vendors, dealers are simultaneously enablers and beneficiaries of the company’s social impacts. To capture this unique perspective, we spoke to the general managers at six

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Ford dealerships (each located in a different U.S. state). As with the employee interviews, the participants were asked about the most important ways their dealership (and Ford more broadly) impacted social sustainability. The social impact themes from these interviews were analyzed using content analysis and were used to build a preliminary model of how Ford impacts social sustainability. This analysis involved multiple rounds of iteration between the interview data and the literature on sustainability and mobility to identify the company’s core social impacts (the ends), as well as the individual ways these impacts are achieved (the means). We analyzed the interview data to first identify the wide range of means by which Ford creates social impact, which we then distilled down to a smaller set of ends. This preliminary model represented the internal company perspective on social impacts. The areas covered under the model were designed to be individually mutually exclusive and collectively exhaustive.

APPROACH

2.2.2 External Subject-Matter Experts To supplement and validate our preliminary model, we interviewed members of external organizations with expertise in the fields of mobility and sustainability (15 interviewees in total). These organizations were identified based on the social impact areas that appeared in the preliminary model. These included three international research and public policy institutes that focus on issues related to sustainability and mobility, three investor relations organizations that advocate on issues related to human rights and social sustainability issues, and representatives from the sustainability

departments of two municipal government agencies. In these interviews, we asked the participants for their perspective on how mobility companies—broadly defined as including both original equipment manufacturers (OEMs) and shared mobility companies (of all modes)— impact people’s lives and well-being, currently and in the foreseeable future. The qualitative data (social impact themes mentioned) that emerged from these interviews were then used to help refine the preliminary model of social sustainability.

2.2.3 Members of the Community (General Public) To further supplement and validate our preliminary model, we surveyed members of the communities in which Ford operates. This sample population also included OEM consumers, transit users and shared mobility users, all of whom represent pertinent stakeholders whose perspective would be necessary in our model. We recruited 90 participants across three community types (rural, suburban and urban), using Southeast Michigan as a case study. We chose to recruit across different community types because transportation needs (and thus mobility-related social impacts) vary by community type. Mobility users living in rural or suburban locations, for example, tend to rely more heavily on personal vehicles than public transit, due to the relatively lower housing density and smaller transit systems in these areas. The interviews were conducted in a focus group format. Participants were asked for their perspective on how mobility companies affect their lives and well-

being, currently and in the foreseeable future. We interviewed 36 participants from rural communities, 29 from suburban communities and 25 from Detroit and other urban centers. They were compensated for their participation. The social impact themes that these interviews yielded were used to further refine the model of social sustainability (by refining the framing of the various means and ends). This data was also analyzed via a frequency count of the total number of mentions of each social impact theme. The analysis identified the relative frequency of mentions (a proxy measure of issue saliency) of each impact, from the general public’s perspective. This information was used (along with the review of the social impact measurement landscape conducted) to determine which social impacts are currently a measurement priority for Ford and its stakeholders.

WE INTERVIEWED 166 PARTICIPANTS IN TOTAL FROM JUNE 2019 TO FEBRUARY 2020. THESE INTERVIEWS WERE CONDUCTED IN A FOCUS GROUP FORMAT. ALL PARTICIPANTS WERE ASKED TO IDENTIFY THE FUNDAMENTAL WAYS FORD MAY IMPACT SOCIAL SUSTAINABILITY, CURRENTLY OR IN THE FORESEEABLE FUTURE.

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

2.3

Metric Development After finalizing the definition of social sustainability (what we termed the “Model of Human Progress”), we identified metrics that may best be used to measure the impacts identified in the model. We conducted an extensive review of the social impact measurement landscape as well as the existing social impact measurement practices at Ford, including the company’s latest social-sustainability-related public disclosures. These include Ford’s most recent sustainability and annual reports (2018/2019 and 2019/2020), as well as the company’s Human Rights Saliency Assessment (as disclosed in the 2020 sustainability report) and its corporate Code of Human Rights (Policy Letter No. 24: Code of Human Rights, Basic Working Conditions, and Corporate Responsibility). We also reviewed Ford Credit and Ford Fund’s annual reports. This review was necessary to identify priority impact areas in the model that were consistent with current expectations for social impact measurement and reporting, within and outside the company.

7 www.globalreporting.org 8 www.sasb.org/standards-overview/download-current-standards 9 www.msci.com/esg-ratings 10 sdgs.un.org/goals

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Following the method applied in the 2017 NYU Stern study (“Putting the ‘S’ in ESG”) described in the introduction, we also reviewed the external social impact landscape, choosing to focus on four sustainability-oriented reporting frameworks. Each of these frameworks represented a specific category for measuring social sustainability: the Global Reporting Initiative (GRI) standards7, a company-level, nonsector-specific reporting framework; the Sustainability Accounting Standards Board (SASB) reporting standards for the automotive sector8, a company-level, sectorspecific reporting framework; the MSCI Environmental Social and Governance (ESG) rating system9, an investor-focused reporting framework (an ESG rating system); and the UN SDGs10, a global sustainability goals framework. Although this list of frameworks is not exhaustive, it offers a valuable snapshot of the social impact reporting landscape through the lens of some the most commonly used impact frameworks. Impact areas that were addressed by more than two of the four frameworks were deemed high priority. Impact areas that were addressed by two or fewer frameworks were deemed medium and low priority, respectively.

APPROACH

WE DEVELOPED TWO SEPARATE SETS OF METRICS: A SET OF “RECOMMENDED” METRICS THAT MAY BE USED IMMEDIATELY AT FORD AND A SET OF “ASPIRATIONAL” METRICS.

Once we had identified the priority impact areas based on information from this review and from the study interviews, we developed metrics to measure these areas with the following criteria in mind. The metrics designed for this study ought to: Quantify the effect that the company is having on its stakeholders in the social impact areas identified in the model. Align with existing social impact reporting expectations. Minimize the company’s measurement and disclosure burden where possible, to lower barriers to entry for companies looking to adopt this framework, to encourage harmonization in the social impact measurement field.

To meet all the metric design criteria and balance these tensions, we developed two separate sets of metrics: a set of “recommended” metrics that may be used immediately at Ford and a set of “aspirational” metrics that are not available to use immediately but may be in the future. The aspirational metrics most accurately capture the effect that the company is having on its stakeholders, according to our analysis. However, these metrics are not currently included in the four frameworks that we analyzed. As such, these metrics represent an aspirational vision for the future of social impact measurement—one that heeds the call for more comparable and robust social impact metrics. In the meantime, we developed our recommended metrics that do meet current reporting expectations (based on our analysis of the reporting frameworks) and that align with Ford’s current social impact reporting practices, so they may be implemented immediately as needed.

Following the SDM method, we identified metrics that met the above criteria at the level of the means impacts listed in the model, as a way of measuring the endslevel impacts. Developing these metrics to meet these criteria required balancing two key design tensions: Having too many metrics (which is not realistic or costeffective to implement, and thus raises the barrier to entry) versus having too few (which do not capture all the different dimensions of the company’s impacts). Having metrics that accurately capture the company effect (rather than company action) but are too far removed from what investors and other stakeholders are currently asking for, versus metrics that align with current expectations but fail to accurately capture the company effect (and focus instead on company action).

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

3 RESULTS & DISCUSSION OUR MODEL PROVIDES A FRAMEWORK WITH WHICH TO DEFINE SOCIAL IMPACTS THAT IS APPLICABLE AT FORD AND MAY ALSO BE APPLICABLE AT OTHER COMPANIES AND SECTORS WITH SOME MODIFICATIONS.

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RESULTS & DISCUSSION

3.1

SDM Workshops Based on the data generated from the interviews with the subject-matter experts from within and outside Ford, we identified the four core ways (ends) that Ford’s operational and philanthropic activities and product use impact the social sustainability of its stakeholders. In keeping with the SDM approach, we phrased these ends impacts as actionable and decision-useful objectives. As shown in Figure 1, these objectives include: increase economic prosperity for the community, increase access to mobility (or, more broadly, to the “social good” provided by the company’s product or service), preserve human rights, and protect human health, safety and well-being. This model provides a framework with which to define social impacts that is applicable at Ford and may also be applicable at other companies and sectors with some modifications. In keeping with the mobility context, we envisioned this model as a wheel (Figure 1). Within this model, we envisioned the concept of trust at the center of the wheel (analogous to an axle), with the four core impact areas surrounding it, and with the concept of innovation (in product and process) running along the circumference. Based on our analysis of the interviews, we found that trust and innovation (in the company and its products, services and activities) are key enablers to the core social impacts in our model. Without trust, stakeholders will not choose to engage with Ford (for example, customers will not buy the company’s products and services), and so will fail to realize the social sustainability benefits that this would impart. Ford’s product and process innovations, which help maintain and improve quality and reliability and uncover new ways of driving human progress, help maintain this trust over time. Therefore, the concept of innovation helps ensure that stakeholders continue to engage with Ford and thus continue to realize the social sustainability benefits incurred from doing so. We located the concept of innovation at the circumference of the wheel, in motion (as indicated by the arrows), to more accurately reflect its nature as a dynamic and continual process. Since trust and innovation were identified as enablers of social impact and not impacts themselves, we did not identify metrics for them in the next phase of the study.

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

FIGURE 1:

Model of Human Progress at Ford

Each of the four ends social sustainability objectives shown in Figure 1 is in turn achieved by multiple, nested levels of lower-order means. Altogether, these ends- and meanslevel objectives make up a meansends spider chart (Figure 2) that illustrates how Ford affects the social sustainability of its stakeholders—and human progress more broadly. This model provides a framework to define social impacts that is applicable at Ford and in other companies and sectors. By analyzing the interview data, we identified many means objectives, or unique ways Ford can measure the four ends identified in Figure 2.

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To ensure that these objectives and their metrics were consistent with current stakeholder priorities—and in the interest of maintaining a smaller (and more readily implementable) suite of final metrics—we pared them down to seven priority means: 1. Preserve human rights11 (with an emphasis on issues salient to Ford). 2. Invest in the community through production. 3. Build capacity for economic prosperity through philanthropy. 4. Increase the movement of people. 5. Decrease the cost of transportation. 6. Target zero employee fatalities and serious injuries (including those stemming from mental health). 7. Enhance product safety.

We also identified some other priority areas that were not developed into core metrics. These were: “protect stakeholders’ emotional well-being” (which was incorporated into the “protect human health, safety and well-being” objective), “increase access to key opportunities” (which focuses on Ford’s future mobility solutions and thus cannot be measured at this time) and “decrease operational and product-level environmental impacts” (which currently cannot be measured directly using social metrics, and thus must be measured using environmental proxy metrics).

RESULTS & DISCUSSION

The process of deciding which means objectives were a priority for Ford was based on the relative importance of these objectives to members of the community (based on the data from the interviews with the general public) as well as their alignment with current impact reporting frameworks (based on our review of the impact reporting landscape using the four framework case studies). The data from the analysis of the general public interviews are summarized in Figure 3 and described in more detail in Table 1 (Appendix). The data from the analysis of the objectives’ alignment with existing frameworks are detailed in Table 2 (Appendix). This table describes how the means objectives identified in our model (and their recommended metrics) align with the social impact areas (and metrics) of the GRI, SASB and MSCI reporting frameworks. This table (Table 2, Appendix) also describes how the means objectives in our model align with the UN SDG target areas on a qualitative level (how Ford’s company-level actions on means objectives contribute to individual SDG target areas). It is important to note that our model’s recommended metrics are not quantitatively tied to the SDG targets, as more research is needed to connect company-level performance data to the global and regional-level SDG targets. In the following section, we discuss each of the model’s means- and ends-level objectives in turn, including the rationale for their prioritization. We also discuss the two sets of metrics that we have identified for each of the impacts in the model. The priority impact areas and their associated metrics are summarized in Table 3.

11 We define human rights in accordance with the United Nations Universal Declaration of Human Rights.

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

FIGURE 2: A means-ends spider chart illustrates how Ford impacts the social sustainability of its stakeholders (and human progress more broadly). *We did not design stand-alone metrics for these two objectives at this time. Examples of Ford's Social Impacts that emerged from the interviews

Provide access to mobility products and services, including those without access today (elderly, disabled, etc.)

Social Impact Themes (1st level of abstraction)

Core Social Impact Themes (2nd level of abstraction)

Increase movement of people

Provide a range of purchase, ﬁnancing and service promotions Provide vehicle or service features that decrease product-use costs

Decrease cost of transportation (Affordability)

INCREASE ACCESS TO MOBILITY (‘Social Good’)

Provide opportunity for shared mobility (e.g. Spin scooters)

Provide mobility services that decrease road congestion

Supporting direct, indirect, and induced jobs Paying income taxes

Support community prosperity via corporate or Ford Fund community programs (e.g. Ford Driving Skills for Life program)

Target zero employee fatalities and serious injuries (including from mental health issues) Decrease number of crashes involving Ford vehicles via safe driving / occupant safety / post-crash care features Decrease facility-level environmental impacts

Increase connectivity*

Invest $ into the community via job creation and the provision of goods and services ENHANCE SOCIETAL Build capacity for economic prosperity in community via philanthropy

ECONOMIC PROSPERITY

Protect stakeholders’ physical (incl. emotional) well-being related to: • Occupational Health & Safety (incl. mental health)

PROTECT HUMAN HEALTH, SAFETY AND WELL-BEING

• Product safety • Environmental community*

Ensure freedom of association and collective bargaining Protect against forced labor Ensure fair working hours

Preserve human rights, with emphasis on salient issues

PRESERVE HUMAN RIGHTS

Protect against child labor

Speciﬁc examples at Ford

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This is achieved by: ('Means' Objectives)

How Ford drives Human Progress ('Ends' Objectives)

RESULTS & DISCUSSION

FIGURE 3: Relative importance of the various means-level objectives to the community members interviewed (based on relative frequency of mentions), ranked in terms of high, medium and low priority

6% 4% 6%

10%

28%

Invest inHIGH community,Invest by production in community, by production Build capacity through Build philanthropy capacity through philanthropy

10%

13%

Protect emotional well-being Protect emotional well-being MEDIUM Decrease cost of transportation Decrease cost of transportation Preserve human rights Preserve human rights

13% 14%

Increase movement of Increase peoplemovement of people 28%

19% 14%

Protect physical well-being Protect physical well-being LOW Increase access to key Increase opportunitites access to key opportunitites

19%

TABLE 3: Summary of the classification of the six means-level objectives as high, medium and low priority, based on the data from the interviews with the general public and the review of the impact frameworks. *We did not design stand-alone metrics for these two objectives at this time.

Social Sustainability Objectives

'ENDS' INCREASE ECONOMIC PROSPERITY FOR THE COMMUNITY

INCREASE ACCESS TO MOBILITY ('social good')

'MEANS'

Importance of Objective to General Public

Alignment of Objective with Impact Frameworks IMPACT AREA ALIGNED WITH:

HIGH / MEDIUM / LOW

Invest in the community, through production

HIGH

MEDIUM

GRI UN SDGs

Build capacity for economic prosperity, through philanthropic activities

HIGH

MEDIUM

GRI UN SDGs

Increase the movement of people

HIGH

LOW

MEDIUM

LOW

UN SDGs

MEDIUM

HIGH

GRI MSCI

SASB UN SDGs

LOW

HIGH

GRI MSCI

SASB UN SDGs

HIGH

MEDIUM

Decrease cost of transportation Increase connectivity *

PRESERVE HUMAN RIGHTS

Preserve human rights, with an emphasis on salient human rights issues

PROTECT HUMAN HEALTH, SAFETY AND WELL-BEING

Protect physical well-being, related to: 1.

Employee safety (Occupational H&S)

Product safety (Vehicle safety)

Community & environmental safety (from operational and product-level environmental impacts)

Protect emotional well-being of stakeholders (including employees, dealers, customers, and community members)*

GRI UN SDGs

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

TABLE 4. Summary of the final list of recommended and aspirational metrics identified for the means-level objectives HOW FORD DRIVES HUMAN PROGRESS ('ENDS') INCREASE ECONOMIC PROSPERITY FOR THE COMMUNITY

HOW THIS IMPACT IS ACHIEVED ('MEANS')

Invest in the community, through production

RECOMMENDED METRIC

TOTAL CUMULATIVE $ INVESTED INTO THE COMMUNITY Future metric: GDP Impact

Build capacity for economic prosperity in the community, through philanthropy

INCREASE ACCESS TO THE SOCIAL GOOD PROVIDED BY COMPANY'S PRODUCT OR SERVICE

Increase the extent of social good provided (For Ford: Increase the movement of people)

Future metric: Total # people moved Decrease cost of products or services (For Ford: Decrease the cost of transportation)

TBD

Increase connectivity

N/A

PRESERVE HUMAN RIGHTS

Preserve human rights, with emphasis on salient issues (e.g. workers' rights)

CORPORATE HUMAN RIGHTS BENCHMARK

PROTECT HUMAN HEALTH, SAFETY AND WELL-BEING

PROTECT STAKEHOLDERS' PHYSICAL (INCLUDING EMOTIONAL) WELL-BEING, RELATED TO:

OCCUPATIONAL HEALTH & SAFETY: •

Total # employee fatalities (manufacturing)

Target zero employee fatalities & serious injuries, including those stemming from mental health (Occupational Health & Safety)

•

Global lost time case rate (including from mental health)

(for Ford, this is 'access to mobility')

Enhance product safety (For study company: Vehicle crashes)

Decrease operational and product-level environmental impacts

TOTAL MOBILITY VEHICLE SALES (including, if available, other mobility forms)

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VEHICLE SAFETY: •

% of vehicle lines with 5-star Global NCAP rating

COMMUNITY & ENVIRONMENTAL SAFETY: N/A (disclosed as part of environmental reporting)

RESULTS & DISCUSSION

3.2

Metric Development 3.2.1

INCREASE ECONOMIC PROSPERITY FOR THE COMMUNITY This core objective represents one of the four fundamental ways that Ford impacts social sustainability: the company’s economic footprint within its community. Ford achieves this impact through two means, namely by investing into the community (through the provision of goods and services, which includes providing employment—including indirect and induced jobs), and by building capacity for economic prosperity (through philanthropy). In doing so, the company creates wealth for its community and raises the overall standard of living. In terms of issue saliency (or the relative importance of the objectives to the general public), this core objective was the second most commonly mentioned in the interviews with the general public, second only to access to transportation. In terms of alignment with existing frameworks, this objective was one of the most widely addressed under the four frameworks considered here. Of the four frameworks, GRI had the highest extent of alignment (where it was considered under the umbrella of economic impacts and considered separate from social impacts). The objective was not considered under the SASB or MSCI frameworks. For the UN SDGs, this social impact aligns with the themes of SDG 1 (No Poverty), SDG 8 (Decent Work and Economic Growth) and SDG 9 (Industry, Innovation and Infrastructure). For example, as detailed in Table 2 (Appendix), the objective “increase economic prosperity for the community” through either production or capacity-building can contribute to the SDG 1 Target 1.2, related to reducing the proportion of men, women and children living in poverty. This core objective, its means and their associated metrics (total $ invested and GDP impact) are all transferable beyond the boundaries of Ford, to other companies and sectors, with no modifications needed.

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

INVEST IN THE COMMUNITY THROUGH PRODUCTION. The first way Ford enhances economic prosperity is through the provision of goods and services. This involves creating jobs—including direct, indirect (includes Tier 1 and 2 suppliers, indirect suppliers such as on-site caterers and office suppliers, and dealers), and induced (from employees spending money in the community on health care and restaurants, for example)—paying taxes, and leasing infrastructure and equipment. This objective is transferrable to all companies in all sectors and is commonly measured by many companies globally (including Ford), as well as the impact reporting frameworks analyzed in this study, using the metric of total cumulative dollar inputs into the community. This would involve calculating the sum of the total dollars invested in employee income, supplier spend, taxes paid and lease commitments. A more accurate measure of these investments’ effect that Ford may consider in the future (the aspirational metric) is GDP impact. This new metric represents the company’s contribution to the national GDP, measured in dollars. This metric relies on the number of times a single dollar invested into the community cycles through the economy to generate additional economic outputs. These economic multiplier effects may be

12 www.implan.com 13 https://autoalliance.org/in-your-state/

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calculated using an input-output model known as a social accounting matrix (SAM), at the level of either a specific company (known as ”economic footprinting”) or sector (contribution analysis). One example of a SAM is IMPLAN12, a private modelling application and dataset platform run by the IMPLAN Group (unaffiliated with this study). This platform was used in Ford’s 2018 Supplier Diversity Impact Report to measure the cumulative GDP impact of Ford’s supplier purchases (an example of economic footprinting). More recently, the Auto Alliance13 used IMPLAN to calculate the auto sector’s economic contribution, nationwide and by state (an example of economic contribution analysis). However, it is important to note that both of these metrics (total dollars invested and GDP impact) provide absolute measures of performance. Although they may be used to demonstrate improvements year over year, they lack a sense of context. For example, both metrics can be used to demonstrate total wages paid (and increases over time), but neither can demonstrate whether these were sufficient or “living wages.” One potential way to capture this equity dimension is to consider reporting on an additional metric, the company’s median wage.

RESULTS & DISCUSSION

BUILD CAPACITY FOR ECONOMIC PROSPERITY THROUGH PHILANTHROPY. The second means by which Ford enhances economic prosperity, based on our analysis, involves helping members of the community to help themselves (building capacity for economic prosperity in the community) through philanthropic programs that improve their standard of living. This includes philanthropic programs run by the Ford Fund. This objective is the area most closely associated with the classic notion of social impact, and it draws on the social enterprise literature, which sees businesses playing the role of development agents.14 Given this close association, it comes as no surprise that this objective was the third most salient issue mentioned in relation to social sustainability. The interview participants mentioned this objective in relation to Ford’s own philanthropic and local community revitalization programs, among others (Table 1, Appendix).

Of all the objectives covered in the model, this area has seen the most innovation in terms of developing impact metrics. As an illustrative example of this trend, in December 2019, at the 2019 Sustainable Brands New Metrics conference, Microsoft announced that it was working on developing a “Community Prosperity Score” to assess the performance of its community development initiatives.15 This metric measures the well-being of the community (within which Microsoft runs its development programs) across various dimensions, including employment rates, access to health care and access to recreation (not specific to economic prosperity). This impact may be measured by Ford and other companies within and outside the mobility sector using the same metric identified for “investing into the community through production” (either total $ invested or GDP impact).

THE SECOND MEANS BY WHICH FORD ENHANCES ECONOMIC PROSPERITY INVOLVES HELPING MEMBERS OF THE COMMUNITY TO HELP THEMSELVES THROUGH PHILANTHROPIC PROGRAMS THAT IMPROVE THEIR STANDARD OF LIVING. 14 Blowfield, M., & Dolan, C. (2014). Business as development agent: Evidence of possibility and improbability. Third World Quarterly, 35 (1): 22-42; Council on Foundations (COF). (2012). Increasing impact, enhancing value: A practitioner’s guide to leading corporate philanthropy. Retrieved from: www.cof.org/sites/default/files/documents/files/CorporateGuide.pdf 15 https://sustainablebrands.com/read/new-metrics/leading-edge-stakeholder-engagement-metrics-reshaping-companies-definitions-benchmarks-for-success

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

3.2.2

INCREASE ACCESS TO SOCIAL GOOD (MOBILITY ) This core objective represents one of the four main ways that Ford drives positive social impact for its stakeholders through its products and services (rather than through its philanthropic initiatives, for example). It encompasses the extent of travel and affordability (cost of travel). A third means-level objective was also identified in this study (yet not deemed a priority for metric development for now) that involved increasing access to key destinations. This ends objective is transferable to other mobility companies without any modifications needed. For other sectors, this impact area would need to be reframed. At a top level, this area represents the social good that the company provides to its stakeholders through its products and services. This social good is sector dependent: For mobility companies, this good represents access to mobility. For telecommunication companies, this good may represent access to information (or connectivity), and for food retail (grocery) companies, this good may represent access to nutrition. This ends objective was the number-one most commonly mentioned social sustainability objective, according to the interviews with the general public. In terms of alignment with existing impact frameworks, this impact area was one of the least widely covered. The GRI, SASB and MSCI frameworks did not include product-level positive social impacts. This is likely due to the challenges of collecting product use data and the limited company influence on product use and consumer behavior. However, there is a growing (yet nascent) impact measurement trend toward accounting for product-use impacts. For example, negative social product-use impacts are currently covered under GRI, SASB and MSCI, under the heading of product health and safety (or “product liability,” in the case of MSCI).

MSCI also covers positive environmental impacts under “environmental opportunities” (such as opportunities in clean technology). For the UN SDGs, this social impact most closely aligns with the theme of SDG 11 (Sustainable Cities and Communities), and specifically Target 11.2, which is focused on providing access to “safe, affordable, accessible, and sustainable transport systems for all, improving road safety, notably by expanding public transport, with special attention to the needs of those in vulnerable situations, women, children, persons with disabilities and older persons.”16 This contribution has a cascading positive social impact effect.17 By increasing access to mobility, Ford contributes to SDG 11 (and its Target 11.2) directly. By doing so, Ford gives its stakeholders physical access to key opportunities (including education, health and employment), which, in turn, indirectly contributes to other SDGs, such as SDG 4 (Quality Education), SDG 3 (Good Health and WellBeing) and SDG 8 (Decent Work and Economic Growth). This access also helps contribute to yet another set of SDGs, such as SDG 5 (Gender Equality) and SDG 10 (Reduced Inequalities). Under this objective, the two means identified in this study become: “increasing the extent of the social good provided” (for Ford, this is “increasing the movement of people”) and “increasing the affordability of the product or service” (for Ford, this is “decreasing the cost of transportation”). The former may be measured in terms of product or service sales (as a proxy for the extent of social good), while the latter will require a sectordependent product-affordability metric (for example, in the pharmaceutical sector, one common metric to measure this would be a medicine affordability index18).

16 GRI & UNGC (2017). Business reporting on the SDGs: An Analysis of the Goals and Targets. Retrieved from: www.unglobalcompact.org/library/5361 17 Bouchard, M. (May 7, 2015). Transportation emerges as crucial to escaping poverty. New York Times. Retrieved from: www.nytimes.com/2015/05/07/upshot/transportation-emergesas-crucial-to-escaping-poverty.html 18 Niens, L., Van de Poel, E., Cameron, A., Ewen, M., Laing, R., & Brouwer, W. (2012). Practical measurement of affordability: An application to medicines. Bulletin of the World Health Organization, 90: 219-227.

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RESULTS & DISCUSSION

INCREASE THE MOVEMENT OF PEOPLE. This objective represents the company’s ability to move people from point A to point B. It involves providing mobility products (for now, vehicles) to customers, employees and members of the community, through sales or philanthropic programs, for example. This impact measures the extent of mobility provided by the company’s products and services. The extent of mobility, rather than access (or accessibility) is typically measured by the number of people moved.19 Measuring this means objective using this metric would require the collection of product use data. As a result, this metric is more suited for use with emerging mobility solutions, such as autonomous vehicles (AVs) and connected vehicles. This metric is also suitable for use at ride-sharing companies, such as Uber, to publicly report on their performance on this means objective. In absence of product use data, companies may use the alternative proxy metric of product sales (such as vehicles or mobility sales at Ford). DECREASE THE COST OF TRANSPORTATION. This objective includes up-front purchase cost savings, through various levels of promotions (or up-front cost savings), as well as multiple downstream (or life-cycle) savings. These include (but are not limited to) vehicle software applications that help customers save money on fuel or parking costs, vehicle safety features that decrease insurance costs, and vehicle design, manufacturing, and service features that ensure vehicles’ reliability and longevity and minimize repair costs over time. More work is needed to identify a method to model both upstream and downstream savings. As such, currently, no recommended metrics are available that adequately capture the affordability of the company’s vehicle and mobility solutions. INCREASE CONNECTIVITY. At Ford, this means objective represents the twin concepts of accessibility and connectivity—two key components for measuring the effectiveness of transportation systems. Together, these two concepts represent the overall quality of the travel itself, rather than its affordability or capacity (such as distance or number of people traveled). This objective also represents the extent of access that this travel affords—that is, the extent of key opportunities (such as health, education, employment) that travelers are able to reach as a result. By achieving this means objective, Ford helps stakeholders connect to key opportunities as well as to each other, which confers even more cascading prosperity benefits, such as improved health and well-being. It is important to note that this objective is specific to mobility companies. In the context of Ford specifically, and based on the data from the study interviews, Ford achieves this objective in two ways (which are illustrative and not exhaustive). These are by increasing access to public transit and by decreasing urban traffic congestion. More work is needed to develop methods to track the extent to which Ford’s future mobility solutions can help achieve these and other accessibility improvements.

19 Smith, T., Axon, C., & Darton, R. (2013). A methodology for measuring the sustainability of car transport systems. Transport Policy, 30: 308-317.

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

3.2.3

PRESERVE HUMAN RIGHTS This objective encompasses, but is not restricted to, preserving human rights that apply across all industry sectors (such as workers’ rights and customer safety rights), as well as company- and sector-specific human rights. Ford conducts a regular saliency assessment to identify its most salient human rights issues. Ford’s latest assessment (Human Rights Saliency Assessment, described in its 2020 Sustainability Report) identifies the following issues, in alphabetical order: access to water and sanitation; air quality; child labor; climate change; data protection, privacy and security; forced labor and ethical recruitment; harassment and discrimination; health, safety and security; human trafficking; and product safety and quality. Among the four core impacts identified, preserving human rights was the least commonly mentioned issue with respect to human progress. Members of the general public mentioned this impact exclusively in terms of workers’ rights, which likely speaks to the “availability bias” inherent in their responses (discussed further in the conclusion). This impact area was one of the most widely covered by all three impact frameworks reviewed in this study.

Of the three frameworks, GRI and MSCI had the most coverage (including all areas under Ford’s Policy Letter 24), while SASB focused only on collective bargaining and work stoppages (supplier rights were not included in this review). None of these frameworks considered human rights issues other than workers’, suppliers’ and (to a limited extent) customers’ rights. Coverage of customers’ rights (specifically with respect to digital rights) is a small but growing trend that currently is included only in GRI. None of the three frameworks included the remaining salient human rights issues identified by Ford’s Saliency Assessment. In terms of the UN SDGs, preserving human rights is aligned with all the 17 SDGs, depending on the nature of the salient human rights issues considered. For example, at Ford, preserving human rights aligns with SDG 5 (Gender Equality), SDG 6 (Clean Water and Sanitation) and SDG 8 (Decent Work and Economic Growth). Also, as detailed in Table 2 (Appendix), preserving workers’ rights contributes to SDG 8 (Decent Work and Economic Growth), Target 8.8, which focuses on “protect[ing] labor rights and promot[ing] safe and secure working environments for all workers.”20

20 GRI & UNGC (2017). Business reporting on the SDGs: An Analysis of the Goals and Targets. Retrieved from: www.unglobalcompact.org/library/5361

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This reflects one of the two key challenges in measuring the preservation of human rights21: 1. Corporate human rights lack a clear definition of which issues are salient to each industry and company, leading to a very wide and heterogenous range of disaggregated and largely qualitative human rights metrics within the reporting landscape. 2. Quantifying human rights preservation (regardless of which issues are considered) will always necessarily rely on measurement proxies, due to its fundamentally qualitative nature. These challenges make it difficult to compare companies on their human rights performance and to benchmark progress. In response to these challenges, the Corporate Human Rights Benchmark organization (CHRB, now World Benchmarking Alliance) has developed a quantitative rating system with which it scores companies on their human rights performance, based mostly on common, cross-sector factors, as well as numerous sector-specific indicators. As of late 2020, CHRB was benchmarking five sectors (extractives and mining, apparel, agriculture, technology and automotive), with plans to expand

RESULTS & DISCUSSION

to others in future. In its 2020 methodology for the automotive sector22, CHRB provides a holistic, multidimensional measure of an auto company’s human rights performance across six measurement themes: governance and policies, embedding respect and human rights due diligence, remedies and grievance mechanisms, performance on human rights practices, performance on responses to serious allegations, and transparency. For this study, we recommend the use of the CHRB Auto Score as an external measure of Ford’s (and peers’) human rights performance, because this tool aims to harmonize human rights reporting across these and other sectors in the future. Preserving human rights and its associated metrics are transferable to other mobility companies without any modifications needed. For other sectors, this objective would need to be modified at the level of the lower-order means to include the specific salient human rights issues that are unique to the sector. The ideal metric to report on this impact would also vary by sector, depending on the availability of the CHRB benchmark for that particular sector. For sectors that are not currently being benchmarked by CHRB, more work is needed to identify a suitable alternative metric for companies to measure their human rights performance.

21 As described by: Shift Project (2017). Human rights reporting: Are companies telling investors what they need to know? Retrieved from: www.shiftproject.org/resources/publications/ corporate-human-rights-reporting-maturity; de Felice, D. (2015). Business and human rights indicators to measure the corporate responsibility to protect: Challenges and opportunities. Human Rights Quarterly, 37 (2): 511-555; Hess, D. (2019). The transparency trap: Non-financial disclosure and the responsibility of business to respect human rights. American Business Law Journal, 56 (1): 5-53 22 www.corporatebenchmark.org/chrb-methodology

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

3.2.4

PROTECT HUMAN HEALTH, SAFETY AND WELL-BEING Companies achieve this objective by protecting both the physical (health and safety) and emotional (mental) wellbeing of their stakeholders. At Ford, stakeholders include consumers, employees and dealers, and the scope of well-being includes employee occupational health, vehicle safety (from crashes) and community safety (from environmental impacts). This objective is transferable to other mobility companies with no modifications needed. For other sectors, the definition of protecting human health, safety and well-being should be modified at the level of the lower-order means—specifically for product safety. The means and the metric to measure it would depend on the nature of the product itself. Although the interviewees described the categories of physical health and safety and emotional wellbeing as distinct, the two objectives may be viewed as interrelated. This is because emotional wellbeing depends first and foremost on physical safety. Alternatively, emotional well-being may also be measured independently of physical well-being using an employee “pulse” score (or employee satisfaction index). In the interest of paring down the final list of recommended metrics, we have combined these two objectives into one core objective.

Protecting human health, safety and well-being was the third (out of four) most commonly mentioned issue with respect to social sustainability. This objective was one of the most widely covered by all the impact frameworks reviewed. There was an emphasis on physical health and safety, particularly with respect to employee (or occupational health and safety) and product safety. Emotional well-being received more limited attention and was considered only with respect to employee engagement on the job. Of the three frameworks, GRI and MSCI offered the strongest coverage of both physical and emotional health, while SASB focused on product use (product safety) impacts. For the UN SDGs, this social impact most closely aligns with the theme of SDG 3 (Good Health and Well-Being) and SDG 12 (Responsible Consumption and Production). For example, by protecting physical health and safety, Ford helps contribute to SDG 3 Target 3.6, which focuses on decreasing the “global deaths from road traffic accidents.”23

23 GRI & UNGC (2017). Business reporting on the SDGs: An Analysis of the Goals and Targets. Retrieved from: www.unglobalcompact.org/library/5361

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RESULTS & DISCUSSION

PROTECT PHYSICAL HEALTH AND SAFETY. This objective covers the health and safety of employees (Occupational Health & Safety or OHS), consumers (product safety) and community members (from environmental impacts, including both resource use and product use emissions). Regarding its employees, Ford reported metrics in 2020 using the standard OHS metric known as lost-time case rate (otherwise referred to as lost-time injury or lost-time incident rate). This lagging metric tracks the number of employee injuries that have resulted in lost time within a specific time period, as compared to the total number of hours worked. Although the metric itself is industryagnostic, benchmarking safety performance is done on an industry-by-industry basis. For example, mobility safety performance benchmarks will differ from retail benchmarks. At Ford, this measure is tracked globally and is thus referred to as the global lost-time case rate. Because we have combined this objective (”protect physical health and safety”) with “protect emotional well-being,” Ford may consider including lost-time cases that stem from mental health issues. Ford also reports on OHS performance using another critical safety metric, the total number of employee fatalities, which tracks fatalities that occurred in any of Ford’s workplaces. Regarding customer safety, Ford currently tracks its performance using the New Car Assessment Program (NCAP) developed by the U.S. National Highway Traffic Safety Administration. Specifically, Ford reports on the percent of Ford and Lincoln vehicle nameplates that have been awarded a 5-star (the highest) safety rating under the NCAP testing protocols. While this is a standard metric used by the mobility sector, other sectors can align on their own industry-specific product safety assessments. All three of these health and safety metrics (global losttime case rate, number of fatalities and percentage of nameplates with 5-star NCAP safety rating) are aligned with the GRI and SASB reporting frameworks, which encompass these metrics, and are thus our recommended metrics for measuring Ford’s impact on physical health and safety, based on our Model of Human Progress. Regarding community (or environmental) safety, more research is needed to develop a method to directly calculate the community health impacts resulting from facility and product-use emissions and resource use.

In the meantime, one way this impact may be measured currently is by using the proxy metrics that companies (such as Ford) use to track environmental performance. These include the metrics that track a company’s performance on water, waste, air, materials, climate change and energy (such as facility energy consumption and volatile organic compounds released by facilities), and the metrics that Ford uses in its environmental sustainability reporting. However, for this model, we have chosen not to include these proxies in the list of recommended metrics (Table 4), to avoid double-counting them under both social and environmental performance. PROTECT EMOTIONAL WELL-BEING. This objective involves protecting customers, employees and other stakeholders (for Ford, this includes dealers) across various dimensions of emotional well-being. At Ford specifically, some of the dimensions that were identified from the interviews included autonomy (or personal freedom), stress reduction, a sense of contentment or joy, and social connection. These well-being dimensions are common to all stakeholder categories (although they may manifest differently for each stakeholder group) and may be applicable across sectors. Ford currently tracks this objective for its employees using an annual pulse score, based on a survey of self-reported measures of employee engagement. This type of index is a common metric in use at other companies (including other sectors) as well. Ford does not currently use pulse scores for other stakeholder groups, such as customers and dealers.

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

4 CONCLUSION

This study’s objective was to develop a universal definition of corporate social sustainability and an associated suite of metrics that may be applied across the mobility sector and other sectors, to encourage more harmonization and consistency in the social sustainability reporting field. In doing so, we sought to identify metrics that were quantitative in nature, generalizable among sectors where possible, and aligned with existing reporting expectations. Quantitative measures of social impact are necessary to integrate social risks and opportunities alongside environmental and governance considerations in company decision-making and to enable comparisons among companies. For some objectives, such as those related to human rights and emotional well-being, this quantification proves to be a challenge, due to the intangible nature of company initiatives’ social impacts. To resolve this challenge, we identified more holistic quantitative measures that captured multiple dimensions of performance, such as the CHRB, as a proxy for preserving human rights. To add more nuance to the measurement, we recommend incorporating an equity dimension into the entire model. Companies may report on their social impact performance in the areas identified in our model using the metrics identified here within specific communities of concern, where possible, and in the absence of any confidentiality or privacy restrictions. More research is needed to determine how this approach may shape the metrics described in this paper and how it may be applied in practice.

24 See Gregory et al. 2012

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Quantifying performance in this way allows corporations to more readily integrate social sustainability considerations into their operational, strategic and product-level decisions. This may be achieved by following the subsequent stages of the SDM process. The objectives identified in this study and their associated metrics may be used in the future to develop different decision alternatives (such as different product designs), and then to assess how they perform. Another advantage of the SDM approach, other than the ability to quantify performance, is that it allows decision-makers to adapt their objectives and metrics over time, effectively futureproofing their social sustainability model, in the face of shifting stakeholder expectations. This may be achieved by repeating the SDM process followed here, including reassessing which stakeholders to engage and conducting the interviews to elicit a new set of stakeholder priorities, along with subsequent decision objectives and performance metrics. This type of adaptive management would also require establishing a monitoring system. Ideally, this should include a predetermined set of performance triggers (such as failing to meet long-term social impact targets) that would alert decision-makers to any declining performance.24 This type of monitoring and review program would help ensure the validity of the social sustainability model over time.

CONCLUSION

Finally, to conduct this analysis, we relied on certain assumptions regarding the generalizability of the results from the interviews conducted in the SDM workshops: First, the types of impacts the participants identified depended on how they defined social sustainability. None of the participants was given a definition of human progress in the interviews. Instead, participants were told that human progress was considered synonymous with social impacts. This was intentional; we purposefully framed human progress in this abstract way to avoid limiting the range of possible responses (such as by highlighting certain impact themes over others), which would introduce researcher bias. However, this depended on the participants’ ability to think creatively about a wide range of possible human progress impacts that might not be immediately available to them cognitively (otherwise known as the “availability bias” in decision-making). This bias was most apparent in the participants’ discussions of human rights impacts. Mentions of workers’ rights tended to dominate in this space (as they are most commonly associated with human rights in an organizational or occupational setting, and are thus most readily available or “‘top of mind”), while the human rights associated with other issues, such as climate change and air quality, were not mentioned. Both of these are considered salient rights at Ford.

Second, the use of case studies in research limits the results’ generalizability to a wider population. With the community interviews, this meant that the results regarding the relative saliency of the impact areas identified in the model were specific to the region of Southeast Michigan, with a sample population that skewed more rural, given the higher number of rural participants than urban and suburban participants interviewed. This meant that the community data carried a stronger focus on the use of privately owned vehicles (rather than shared or transit modes), as well as a lower reliance on OEM dealerships (due to the challenges of proximity and cost in an urban setting), that may not necessarily reflect the priorities of community members outside of the case study. Given these biases, more work is needed to further validate this model and its associated metrics, both within Ford and outside the company and the automotive sector.

QUANTITATIVE MEASURES OF SOCIAL IMPACT ARE NECESSARY TO INTEGRATE SOCIAL RISKS AND OPPORTUNITIES ALONGSIDE ENVIRONMENTAL AND GOVERNANCE CONSIDERATIONS IN COMPANY DECISION-MAKING AND TO ENABLE COMPARISONS AMONG COMPANIES.

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

The Erb Institute is the University of Michigan’s businesssustainability partnership between the Ross School of Business and the School for Environment and Sustainability. We work with business leaders to help them improve company competitiveness through enhanced social, environmental and economic performance. Our degree programs prepare students to be future business leaders for sustainability, while our research and executive education prepare current business leaders for what’s next in sustainability. Ross School of Business 701 Tappan Street Ann Arbor, Michigan 48109-1234 School for Environment and Sustainability 440 Church Street Ann Arbor, Michigan 48109-1041

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APPENDIX

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

TABLE 1: Frequency (% and total number) of mentions of the different social sustainability objectives as elicited in the interviews with members of the general public across rural, suburban and urban communities in SE Michigan

SOCIAL SUSTAINABILITY OBJECTIVES (Means: Blue, Ends: Yellow)

# TOTAL MENTIONS

% TOTAL MENTIONS

INCREASE ECONOMIC PROSPERITY

113

33%

INVEST IN COMMUNITY BY PRODUCTION

19%

Create (and maintain) direct jobs

10%

Increase economic viability of community (e.g. create induced jobs)

Pay taxes

BUILD CAPACITY THROUGH PHILANTHROPY

14%

… by community programs

… by community revitalization

… by community education

… by investing in social entrepreneurs

<1%

INCREASE ACCESS TO TRANSPORTATION

140

41%

INCREASE MOVEMENT OF PEOPLE

27%

Provide customers with mobility products and services

25%

... due to a lack of public transit in my area

... to get to essential services

... when travelling

... (shared) when my personal vehicle breaks down

... (shared) when I am unable to drive

... in inclement weather

… via personal mobility substitutes - food delivery services

… (shared) for disabled users

… (shared) for seniors

… for families with small children (car seats)

… (shared) when sharing personal vehicles within family

Provide customers with mobility products and services via financing products

Increase access to specialized transport lines (non-emerg. medical, police)

<1%

DECREASE COST OF TRANSPORTATION

10%

Of private vehicles

… purchase - consumer vehicle discounts

… purchase - dealership services

… purchase - insurance

… employee discounts

<1%

Of shared mobility

INCREASE ACCESS TO KEY OPPORTUNITIES

Increase access & connections to public transit

Decrease delays due to traffic congestion

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APPENDIX

SOCIAL SUSTAINABILITY OBJECTIVES (Means: Blue, Ends: Yellow)

# TOTAL MENTIONS

% TOTAL MENTIONS

PRESERVE HUMAN RIGHTS

… workers' rights (access to health, disability, retirement benefits)

PROTECT HUMAN HEALTH, SAFETY, AND WELL-BEING

19%

PROTECT PHYSICAL WELL-BEING

Decrease public exposure to environmental contaminants (facilities)

… from vehicles - air quality

… from facilities - air quality

… from facilities - water quality (have seen improv. over years)

… from vehicles - need for vehicle electrification

… manufacturing - sustainable resource use

<1%

Decrease number of vehicle crashes

PROTECT EMOTIONAL WELL-BEING

13%

Enhance sense of personal control & freedom

Joy of driving

Increase social connection

Reduce stress

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

TABLE 2: Alignment of the social sustainability objectives with the four case study impact frameworks, and their classification as objectives of high, medium and low priority SOCIAL SUSTAINABILITY OBJECTIVES 'ENDS' INCREASE ECONOMIC PROSPERITY FOR THE COMMUNITY

ACCESS TO TRANSPORTATION ('SOCIAL GOOD')

'MEANS'

ALIGNMENT OF OBJECTIVE WITH EXISTING FRAMEWORKS GRI

SASB

MSCI

SDG

Invest in the community, through production

201-1: Direct economic value generated and distributed 203-2: Significant indirect economic impacts 207-4: Country-bycountry [tax] reporting

SDG 1: No Poverty: - Target 1.2 SDG 8: Decent Work and Economic Growth: - Target 8.2 - Target 8.5 SDG 9: Industry, Innovation, and Infrastructure: - Target 9.2

MEDIUM

Capacity building (for economic prosperity), through philanthropic activities

201-1: Direct economic value generated and distributed 203-1: Infrastructure investments and services supported 413-1: Operations with local community engagement, impact assessment, development programs

All SDGs depending on nature of philanthropic initiative, e.g.:

MEDIUM

SDG 1: No Poverty: Target 1.2 Target 1.4 SDG 17: Partnerships for the Goals: - Target 17.18

Increase the movement of people (mobility)

LOW

Decrease cost of transportation (affordability)

LOW

Increase access to key opportunities

PRESERVE HUMAN RIGHTS

PRIORITY LEVEL

Preserve all human rights, with an emphasis on salient human rights issues (e.g. ensure workers' rights)

UNIVERSITY OF MICHIGAN | ERB INSTITUTE

202-1 & -2: Ratios of standard entrylevel wage by gender compared to local minimum wage 407-1: Operations and suppliers in which the right to freedom of association may be at risk (qual risk assessment) 409-1: Operations and suppliers at risk for incidents of forced or compulsory labor 408-1: Operations and suppliers at risk for incidents of child labor 406-1: Incidents of discrimination and corrective actions taken 405-1 & -2: Diversity of boards and employees 412-1 & -2: Operations subject to human rights reviews

TR-AU-310a.1 TR-AU-310a.2

- Corporate governance key issue score (e.g. board diversity) - Labor management key issue score (e.g. % workforce covered by collect. agreements)

SDG 11: Sustainable Cities and Communities: - Target 11.2

LOW

All SDGs depending on the salient human rights issues considered, e.g.:

HIGH

SDG 5: Gender Equality: - Target 5.1 SDG 6: Clean Water and Sanitation: - Target 6.4 SDG 8: Decent Work and Economic Growth: - Target 8.8

APPENDIX

SOCIAL SUSTAINABILITY OBJECTIVES 'ENDS' PROTECT HUMAN HEALTH, SAFETY, AND WELL-BEING

ALIGNMENT OF OBJECTIVE WITH EXISTING FRAMEWORKS

'MEANS'

GRI

Protect physical wellbeing, including:

PRODUCT (vehicle safety): 416-1 & -2: Assessment of H&S impacts of product and service categories OCCUPATIONAL: 403-1: OHS management system 403-2: Hazard ID, risk assessment, incident investigation 403-3: Occupational health services 403-4: Worker participation, consultation, and communication on OHS 403-5: Worker training on OHS 403-6: Promotion of worker health 403-7: Prevention and mitigation of OHS impacts 403-8: Workers covered by OHS management system 403-9: Work related injuries 403-10: Work-related health impacts

(i) Employee fatalities and serious injuries (Occupational H&S (ii) Product safety (vehicle safety) (iii) From environmental impacts

Protect emotional well-being, including: (i) Employee wellbeing (ii) Customer / community wellbeing

EMPLOYEE: 403-6: Promotion of worker health (including mental health)"

SASB

MSCI

PRODUCT (vehicle safety):

TR-AU-250a.1 TR-AU-250a.2 TR-AU-250a.3

- Product safety and quality key issue score (e.g. scope of product testing; product recalls) - Product carbon footprint key issue score (e.g. extent of energy / carbon reduction programs in manufacturing operations)

PRIORITY LEVEL

SDG OCCUPATIONAL:

HIGH

SDG 3: Good Health and Well-being: - Target 3.6 - Target 3.9 SDG 12: Responsible Consumption and Production: - Target 12.4 - Target 12.5

OCCUPATIONAL: - Product safety and quality key issue score (e.g. scope of employee training, in product manufacturing and handling)

EMPLOYEE: SDG 3: Good Health and Well-being: - Target 3.4

MEDIUM

(iii) Dealer well-being

DEFINING SOCIAL SUSTAINABILITY THROUGH THE FORD MOTOR COMPANY’S MODEL OF HUMAN PROGRESS

AUTHORS: DR. MERRIAM HAFFAR, Erb Institute Postdoctoral Fellow (under the supervision of Dr. Joe Arvai) MARY WROTEN, Director of Global Sustainability, Ford Motor Company REBECCA SHELBY, Social Sustainability Manager, Ford Motor Company DEB HEED, Sustainability Specialist, Ford Motor Company R 2020

FEBRUARY 2021

Defining Social Sustainability: Through the Ford Motor Company's Model of Human Progress

Articles inside

Metric Development

SDM Workshops

Study Design