Ford Motor – Climate Change Report (2004 – 2005)

Outcome: Successfully Withdrawn

WHEREAS: In the U.S., passenger cars and light trucks account for one-fifth of all annual U.S. carbon dioxide emissions linked to climate change.
Ford Motor Company bears the auto industry’s second-highest “carbon burden” – or total carbon dioxide emissions associated with its fleet, due in part to the poor fuel efficiency of its products, not the size of its fleet.
Worldwide consensus that greenhouse gas (GHG) emissions need to be reduced continues to grow, with ratification of the Kyoto Protocol causing many countries to enact limits on these emissions. Already, the European Union and some U.S. states have enacted similar limits, and Canada’s reduction target of 25% is due by the end of the decade.
In September 2004, the California Air Resources Board adopted regulations requiring vehicle emissions reduction in California; other states will follow. Roughly one-quarter of the US vehicle market is currently required to meet California’s standards, to which the greenhouse gas regulations will eventually be added.
Fuel-efficiency standards more stringent than U.S. standards have recently been approved in China, the fastest-growing passenger car market in the world. Most of Ford’s SUVs sold today in the U.S. would be illegal for sale in China by 2008.
These standards are creating markets favorable to automakers with lower carbon burdens and agility in introducing clean technology vehicles.Competitors Honda and Toyota, already offering vehicles with better than average fuel economy, have been moving quickly to introduce lower-emission advanced technology vehicles to consumers. Toyota successfully introduced hybrid vehicles to the U.S. market three model years ago, and has already moved to the second generation of hybrid technology. Toyota has outsold Ford worldwide for the first time in history (USA Today 11/11/03).
In January, 2004, Ford announced that it would be forced to purchase patent rights from Toyota in order to launch its first hybrid-technology vehicle, a hybrid version of the Escape SUV.
While Ford is investing in advanced technologies such as hybrids and hydrogen fuel cells and plans to bring some advanced technologies and some improved conventional technologies to market in select products, our Company has not reported to investors its expectations for reductions in Ford’s overall carbon burden or its ability to meet near-and long-term emerging global competitive and regulatory scenarios.

RESOLVED:
The shareholders request that a committee of independent directors of the Board assess (a) how the Company will ensure competitive positioning based on emerging near and long-term GHG regulatory scenarios at the state, regional, national and international levels, (b) how the Company plans to comply with California’s greenhouse gas standards, and (c) how the Company can significantly reduce greenhouse gas emissions from its national fleet of vehicle product (using a 2004 baseline) by 2014 and 2024, and report to shareholders (at reasonable cost and omitting proprietary information) by September 1, 2005.
SUPPORTING STATEMENT
We believe management has a fiduciary duty to carefully assess and disclose to shareholders all pertinent information on its response associated with climate change, particularly as it relates to an emerging business reality.

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