Written by Katy Andrews, CNN
Ford’s 2017 annual report leaves me cold — the embarrassment of a corporate statement full of explicit reference to the environment may have passed on to the U.S. Department of Transportation.
The annual report indicates that America’s second largest automaker’s sustainability efforts in 2017 have been relatively strong — it’s taking an important aim at reducing its fuel consumption (under pressure from the EPA) and better tailpipe technology.
But while the company’s own initiatives on executive pensions are laudable, the real (and embarrassing) part of the report is at the bottom: the document’s acknowledgements of significant and binding liabilities over the coming decades.
As I predict
The report addresses liabilities with automotive warranty claims (many of which would be uncollectable), pensions (pressured by the data around retiree health benefits), and environmental liability (driven by vehicle contamination caused by run off from shale gas wells).
These liabilities are not as hard to get at as they once were. Ford and other automakers have been committing in numbers to dealing with them. The situation has progressed in tandem with the rise of the Millennials: they hold these issues in near-permanent high priority, and want the major integrated automakers (and their underlings from the supply chain) to pay up.
In a crucial moment this year, Ford announced it was setting aside $1.7 billion in a series of new car sales in Asia to pay off its legacy liabilities, driving the stock up on the belief that the future would be fairly bright.
And, in coming months, two more powerful moves appear highly probable: first, the anticipated final resolution of the multi-party buy-out settlement in the Volkswagen Diesel scandal — a deeply troubled affair that has cost the company upwards of $30 billion over the past two years, but continues to drag down it’s stock price.
Second, and much less clear, is the completion of the internal alliance and tie-up with Mazda that the two automakers have been exploring for well over a year. The deal is complex and necessary, but should absolutely happen sooner rather than later.
That is why, right now, I think Ford needs to be announcing the conclusion of its emission-reduction program. That would open the company up to claims, as is its right, for sharing equipment as well as cutting credits.
Even tougher will be the sooner that the reality of the sheer scale of global warming is brought to the top of the corporate agenda. The images of the Chesapeake Bay turning to coffee sludge like a fine polenta is a direct result of the enormous regional declines to the Chesapeake’s ecosystem.
In the coming year, the environmental battle lines are being drawn much more clearly and starkly — and urgently need to be moved.