Metric Development

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.

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 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.

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

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

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.

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.

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

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 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

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

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.

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. 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.