Ford: Transition to Electric Vehicles

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Table of Contents

Introduction
Human Rights Risks and Ethics
Partnership Opportunities and Contribution to ESG
ESG Risks and Opportunities Conclusions
References

Introduction

ESG is an acronym that stands for environmental, social, and governance. It is a framework used to evaluate a company’s performance regarding its impact on the environment, its treatment of employees and other stakeholders, and the effectiveness of its leadership and governance practices. In the context of electric vehicles (EVs), the transition to EVs can significantly impact a company’s ESG rating because EVs are generally considered more environmentally friendly than traditional internal combustion engine vehicles. This can improve a company’s environmental rating and boost its overall ESG rating. A company’s leadership and governance practices can also be impacted by the transition to EVs, as it may require significant changes to the company’s operations and business model.

Human Rights Risks and Ethics

A few critical human rights issues are associated with sourcing materials for EVs. Human rights issues concerning sourcing materials for electric vehicles (EVs) include child labor and environmental degradation. One of the most significant issues is the potential for child labor and exploitation in mining materials like cobalt and lithium, which are vital components of EV batteries (Sovacool, 2019). In recent years, there have been numerous reports of children being forced to work in dangerous conditions in mines in countries like the Democratic Republic of Congo, where a significant portion of the world’s cobalt is mined. Nkulu et al, (2018) report that children as young as seven work in cobalt mines. The child labor issue is a primary ethical concern in the EV industry, and industry leaders are urged to ensure that their supply chains are free of exploitative practices.

Companies are beginning to take steps to address the issue, such as performing rigorous due diligence on their supply chains, providing training to suppliers, and establishing compliance and monitoring systems Zeuner, 2018). Companies are also working with local governments and international organizations to develop initiatives to improve labor conditions, provide access to education and healthcare, and support economic development in mining communities. In addition to the ethical concerns, the environmental impacts of EV battery production are also of concern. The production of EV batteries requires large amounts of energy, and mining materials like cobalt and lithium have been linked to air and water pollution in some regions. To reduce the environmental impacts of EV production, companies are looking for ways to increase energy efficiency and reduce the use of hazardous materials in their production processes. They are also exploring renewable energy sources, such as solar and wind, for powering EV battery factories. EVs also require large amounts of electricity to power them, which can lead to increased carbon emissions from the power plants used to generate the electricity.

Although EVs are often touted as a clean alternative to traditional vehicles, the sources of electricity used to power them still impact the environment (Paavola, 2001). It is essential to use renewable sources of electricity to power EVs to ensure that their environmental benefits outweigh the environmental costs. Therefore, it is vital to consider EVs’ social and economic impacts. The EV manufacturing process involves using large amounts of resources and labor, which can significantly affect local communities and economies. Furthermore, the cost of EVs can be prohibitive for many people, making them inaccessible to large portions of the population.

It is essential to consider how to make EVs more accessible and affordable to ensure that all realize their environmental benefits. Finally, there are concerns about the potential for human rights violations in the supply chain of materials used in EVs. In some cases, companies that source materials for EV production may need to adequately monitor their suppliers to ensure they are not using forced labor or engaging in other unethical practices.

This can make it difficult for consumers to know whether the materials used in their EVs were produced ethically.

EV manufacturers must ensure that their supply chain is free from human rights violations. This includes performing thorough due diligence on potential suppliers to ensure they meet the company’s ethical standards and regularly monitoring their suppliers to ensure that they maintain those standards. According to Paavola (2001), Companies should also ensure that their suppliers pay their workers a fair wage and provide safe working conditions. Moreover, companies must have a robust corporate social responsibility (CSR) program. CSR programs should include measures to address human rights issues in the supply chain, such as providing workers with education on their rights, establishing a grievance mechanism for workers to report violations, and monitoring potential breaches. By taking these steps, companies can ensure that their EV production is done responsibly and ethically.

The ethics of involvement in the EV industry depends on the ethical framework used. In the case of categorical reasoning, the critical question is whether the actions involved in sourcing materials for EVs can be considered universally good or bad (Ballet & Bazin, 2005). The categorical rationale is based on a set of rules in which decisions are made based on the underlying principles of right and wrong rather than on the individual circumstances of a situation. This reasoning is often seen in ethical decisions based on universal principles that cannot be broken without compromising the underlying moral code (Crane, 2019). For example, when it comes to sourcing materials for EVs, most agree that using environmentally friendly materials is the right thing to do, even if it is more expensive or difficult to obtain.

Using categorical reasoning, one might evaluate the situation and decide to only source materials from suppliers who adhere to specific environmental standards. In this case, the decision is based on the principle that it is wrong to contribute to ecological destruction. The same code would be applied in any situation involving sourcing materials for EVs, regardless of the specific circumstances. In addition, categorical reasoning is also used to evaluate the ethical implications of different production methods. For example, one might choose to only source materials from suppliers who use labor practices that are ethical and fair, even if it means paying more for the materials (Paavola, 2001). This decision would be based on the principle that it is wrong to exploit workers and that it is crucial to ensure fair compensation and working conditions. If it is shown that the actions involved in sourcing materials for EVs are inherently immoral, then it would be unethical to be involved in the EV industry.

Nevertheless, categorical reasoning can be a valuable tool for evaluating the ethical implications of sourcing materials for EVs. Using universal principles of right and wrong, this type of reasoning can help ensure that decisions are made in a way that is consistent with ethical values. Overall, the ethicality of being involved in the EV industry is complex and depends on various factors. While there are indeed human rights and environmental concerns associated with the sourcing of materials for EVs, there are also potentially positive consequences of EV production that need to be taken into account when making ethical decisions.

Partnership Opportunities and Contribution to ESG

Ford has partnered with some organizations to support the development and production of electric vehicles (EVs) and address environmental, social, and governance (ESG) risks. One notable partnership is with the global non-profit organization WWF, with which Ford works to reduce EV supply chain emissions and promote sustainable practices in the automotive industry. Ford and WWF have collaborated on various initiatives to reduce the environmental impact of the automotive sector. The two organizations have worked to create a more sustainable vehicle supply chain by reducing emissions and increasing the use of renewable resources in producing and distributing electric vehicles. Ford has also committed to using sustainable materials in the production of its EVs, such as recycled aluminum and plastic. The two organizations have implemented a comprehensive strategy to reduce the automotive industry’s environmental impact by reducing emissions, using renewable resources, and eliminating hazardous materials.

Ford has committed to investing in developing new EV technologies and created a financing program to make EVs more affordable for consumers. This partnership is an example of how corporations can work with NGOs to promote sustainability and reduce the environmental impact of the automotive industry (Sovacool, 2019). The collaboration between the two organizations has resulted in a comprehensive sustainability strategy that will help to protect the environment and reduce the impact on the automotive industry. Ford has also partnered with several companies involved in the EV supply chain, including LG Chem and SK Innovation, to secure access to critical materials and technologies used in EV production. These partnerships help Ford to ensure a steady supply of components for its EVs while supporting the development of the EV industry as a whole.

Ford has also invested heavily in research and development related to EVs. This includes the development of new battery technologies that offer improved performance, range, and safety, as well as the result of advanced software and control systems for electric vehicles. The company has also invested in developing a new charging infrastructure that will make it easier for EV owners to recharge their cars. In addition to these investments, Ford has established a dedicated EV team to ensure that its EVs are designed and produced to the highest standards. This team includes design, engineering, software development, and manufacturing experts. The team is responsible for overseeing Ford’s EVs’ development, production, and launch, ensuring they meet the company’s high quality and performance standards. Ford is also working to reduce the environmental impact of its EVs. Paavola, (2001) stated that the company is investing in developing renewable energy sources, such as solar and wind, to power its EV production facilities and is reducing its carbon footprint.

Ford is also collaborating with companies and organizations to promote the use of EVs to reduce emissions and improve air quality. Finally, the company is investing in initiatives to reduce the cost of EV ownership, making them more accessible to consumers. In addition to partnerships focused on the EV supply chain, Ford has partnered with organizations working to advance circular economy principles. For example, Ford has partnered with the closed-loop recycling company closed loop partners to support the development of technologies and processes that enable the recycling of EV batteries. This partnership helps Ford to manage the environmental impact of EV battery production and disposal. Other partnerships that could help manage ESG risks include collaborations with organizations focused on responsible sourcing and supply chain management. Crane (2019) suggests that these partnerships could help Ford identify and address potential ESG risks in its supply chains, such as using conflict minerals or exploiting workers. Ford could also partner with organizations that promote sustainable transportation, such as bike-sharing programs or public transit agencies, to support the transition to low-carbon forms of transportation.

ESG Risks and Opportunities Conclusions

As a giant global automaker, Ford faces some risks and opportunities as it transitions to electric vehicles (EVs). One of the main risks for Ford is the potential for increased competition in the EV market. Many other automakers invest heavily in EVs, and some have already released highly-regarded electric models. This increased competition could make it difficult for Ford to gain a significant market share in the EV space (Nkulu et al, 2018). Another risk for Ford is the potential for regulatory challenges. Governments worldwide are beginning to implement stricter regulations on vehicle emissions, which could pressure automakers to transition to EVs more quickly. This could create challenges for Ford, mainly if the company can produce EVs at a different rate than its competitors.

However, Ford also has significant opportunities in the transition to EVs. One of the most extensive opportunities is the potential for growth in the EV market. As more and more consumers become interested in EVs, the market for these vehicles is likely to expand rapidly. This presents a significant growth opportunity for Ford, mainly if it can produce EVs that are well-regarded by consumers (Sovacool, 2019). Another opportunity for Ford is the potential for cost savings. As EV technology continues to improve, the cost of producing EVs will likely decrease. This could help Ford reduce its overall production costs, making its EVs more competitive in the marketplace. Overall, the transition to EVs presents both risks and opportunities for Ford. The company must carefully navigate these challenges to succeed in the rapidly-evolving EV market.

References

Ballet, J., & Bazin, D. (2005). Can homo economicus follow Kant’s categorical imperative?: A comment. The Journal of Socio-Economics, 34(4), 572-577.

Crane, A., Matten, D., Glozer, S., & Spence, L. J. (2019). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press, USA.

Hahn, R. (2009). The ethical rationale of business for the poor–integrating the concepts of the bottom of the pyramid, sustainable development, and corporate citizenship. Journal of Business Ethics, 84(3), 313-324.

Nkulu, C.B.L., Casas, L., Haufroid, V., De Putter, T., Saenen, N.D., Kayembe-Kitenge, T., Obadia, P.M., Mukoma, D.K.W., Ilunga, J.M.L., Nawrot, T.S. and Numbi, O.L., (2018). Sustainability of artisanal mining of cobalt in DR Congo. Nature Sustainability, 1(9), pp.495-504.

Paavola, J. (2001). Towards sustainable consumption: economics and ethical concerns for the environment in consumer choices. Review of Social Economy, 59(2), 227-248.

Sovacool, B.K. (2019). The precarious political economy of cobalt: Balancing prosperity, poverty, and brutality in artisanal and industrial mining in the Democratic Republic of the Congo. The Extractive Industries and Society, 6(3), pp.915-939.

Zeuner, B. (2018). An Obsolescing Bargain in a Rentier State: Multinationals, Artisanal Miners, and Cobalt in the Democratic Republic of Congo. Frontiers in Energy Research, 6, p.123.

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