Free Writing Prospectus - Filing Under Securities Act Rules 163/433 (fwp)
November 04 2021 - 8:38AM
Edgar (US Regulatory)
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All F-150 images are computer generated.
Ford and Ford Credit
Sustainable Financing Framework
November 2021
A Better World
For Generations
To Come
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Sustainability
at Ford
Sustainable Financing
Framework Introduction 2 Ford Sustainable Financing Framework 2021
Introduction
Ford Motor Company (“Ford”) is a global
company based in Dearborn, Michigan. Our core
business includes designing, manufacturing,
marketing and servicing a full line of Ford trucks,
utility vehicles and cars – increasingly through
electrified versions – as well as Lincoln luxury
vehicles, and providing financial services through
Ford Motor Credit Company L L C.
Ford is pursuing leadership positions in (i)
electrification, (ii) mo bility sol utions, in cluding
self-driving services and (iii) connected vehicle
services. Ford employs approximately 182,000
people worldwide.
Ford has three operating segments that represent its
primary businesses as reported in its consolidated
financial statements: Automotive, Mobility and
Ford Credit.
• The Automotive segment primarily includes the
sale of Ford and Lincoln vehicles, service parts and
accessories worldwide, together with the associated
costs to develop, manufacture, distribute and service
the vehicles, parts and accessories. This segment
includes revenues and costs related to electrified
vehicle programs.
• The Mobility segment primarily includes development
costs related to autonomous vehicles and related
businesses, including our electric scooter company Spin.
• The Ford Credit segment is comprised of the Ford Motor
Credit Company L L C business on a consolidated basis
(“Ford Credit”), which is primarily engaged in vehicle-
related financing and leasing activities. Ford Credit
offers a wide variety of automotive financing products
to and through automotive dealers throughout the
world. The predominant share of Ford Credit’s business
consists of financing vehicles and supporting dealers.
Contents
2 Introduction
3 Sustainability at Ford
3 Our Purpose
4 Our Sustainability Aspirations
5 Sustainability Governance
6 Sustainable
Financing Framework
6 Use of Proceeds
7 Ford Categories
9 Ford Credit
10 Process for Project Evaluation
and Selection
10 Management of Proceeds
11 Reporting
12 External Review
12 Disclaimer
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3 Ford Sustainable Financing Framework 2021 Sustainability
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Sustainable Financing
Framework Introduction
Sustainability at Ford
Over 20 years ago, we launched the industry’s
first Sustainability Report, demonstrating our
commitment to environmental progress. In 2021,
we combined our Annual and Sustainability
Reports into an Integrated Annual Report to share
a more holistic view of our performance – that
success in sustainability on behalf of customers
and other stakeholders requires a financially
healthy business, and financial health depends
on effectiveness in sustainability areas.
Throughout Ford’s nearly 118-year history, one thing that
has remained constant is our purpose to help build a better
world, where every person is free to move and pursue their
dreams. Guided by this purpose, we are doing our share to
meet the collective challenges the world faces. To address
the full range of material issues, we have defined aspirations
and plans to achieve them in six primary areas: People,
Human Rights, Climate Change, Sustainable Materials,
Circular Economy and Renewable Electricity Strategies.
Our purpose:
To help build a
better world, where
every person is free
to move and pursue
their dreams.
The aims of our sustainability strategic plan are to:
Earn Trust
To become the world’s most trusted company
by consistently serving others with integrity and
competence. Ford embodies these strongly held
values. Trust earned with global stakeholders will be
our most important asset.
Drive Progress
To provide vehicles and services that help create a
better world by preserving human rights, protecting
health and safety, increasing access to social good
(mobility) and enhancing societal economic prosperity.
Make Positive Impacts
To go beyond minimizing the negative impact of our
activities to making a net positive contribution to
society and the environment. Our long-term view is of a
connected transport network comprising increasingly
intelligent vehicles that communicate with each other
and the world around them – changing lives for the
better, and giving every person the freedom to move
and pursue their dream.
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4 Ford Sustainable Financing Framework 2021 Sustainability
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Sustainable Financing
Framework Introduction
Our Sustainability Aspirations
We are working to revolutionize mobility, fueled by new challenges and the desire
to help build a better world for everyone.
Climate Change
Achieve carbon
neutrality by 2050
Air
Attain zero emissions
from our vehicles
and facilities
Energy
Use 100 percent local,
renewable electricity
in all manufacturing
by 2035
Water
Make zero water
withdrawals
for manufacturing
processes
Use freshwater only for
human consumption
Waste
Reach true zero waste
to landfill across
our operations
Eliminate single-use
plastics from our
operations by 2030
Materials
Utilize only recycled or
renewable content in
vehicle plastics
Diversity, Equity
and Inclusion
Create a truly diverse
culture where everyone
feels like they belong
Safety
Work toward a future
that is free from
vehicle crashes and
workplace injuries
Human Rights
Source only raw
materials that are
responsibly produced
Access
Drive human progress
by providing mobility
and accessibility for all
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5 Ford Sustainable Financing Framework 2021 Sustainability
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Sustainable Financing
Framework Introduction
We plan to lead the electrification revolution for the same
reasons we continue to set and achieve other sustainability
goals: because it is good for customers, good for business
and good for the planet. Ford was the first full-line U.S.
automaker to commit to achieving carbon neutrality no
later than 2050, in line with the Paris Climate Agreement
and stand with California for stronger vehicle greenhouse
gas (G H G) emission standards. Our goal is backed by
science-based interim targets for C O 2 emissions
reductions. Ford has committed to reducing (i) Scope 1 and
2 G H G emissions in our operations by 76 percent by 2035
from a 2017 baseline and (ii) Scope 3 GHG emissions from
use of products we sell by 50 percent per vehicle kilometer
by 2035 from a 2019 baseline. At COP26, we joined a
global coalition of public and private sector leaders taking
bold action on zero-emission vehicles by signing the
RouteZero pledge to work towards 100% zero-emission
cars and vans globally by 2040, and in leading markets no
later than 2035.
We expect 40% to 50% of our global vehicle volume to be all-
electric by 2030, with planned electrification spending of $30+
billion by 2025, including our $7 billion investment in BlueOval
City and BlueOval SK Battery Park, the largest one-time U.S.
electrification investment by an auto manufacturer. Ford’s new
Tennessee assembly plant is designed to be carbon neutral
with zero waste to landfill once fully operational. Ford is the
first OEM to join the Better Climate initiative by committing to
reduce greenhouse gas emissions from our manufacturing
facilities in the U.S. by 50% over the next nine years, in line with
our global commitment to power our facilities with 100% local
renewable energy by 2035.
In addition, through the Ford Motor Company Fund (Ford Fund),
we have been strengthening communities and making people’s
lives better for more than 70 years. Since 1949, the Ford Fund
has invested more than $2.1 billion in programs that feed the
hungry, provide educational opportunities, support
multicultural initiatives, promote safe driving and more.
Our
Business
Activities
Design
We consider environmental impact
and sustainability in the design of
our vehicles
Responsible Sourcing
We require suppliers to enforce
environmental and social
standards aligned with ours
Logistics
We encourage our inbound
and outbound logistics
providers to transport
finished vehicles and
parts efficiently
Manufacturing
We invest in lean processes
and world-class factories to
create positive impact
Financing
We provide financing through Ford Credit to
individuals and dealers to finance vehicles and
battery electric vehicle infrastructure
Sales and Service
We are reimagining customer
experience by listening and
adapting to their needs
Our Vehicles in Use
We provide a safe and
enjoyable experience with
high-quality vehicles
Mobility
We are exploring new
solutions to support
urban mobility
End of Vehicle Life
Over 85 percent of our vehicle
parts and materials are
recycled and reused
Sustainability Governance
Ford has robust management processes, systems and
governance designed to help us improve our sustainability
performance, act responsibly and ethically and take
responsibility for the effects our activities have on society and
the world around us. Key committees and groups include:
Board
Committees
Sustainability and Innovation Committee
• Meets at least three times a year
• Primary responsibility for assessing the
company’s progress on strategic economic,
environmental and social issues, as well as the
degree to which sustainability principles have
been integrated into the various skill teams
• Evaluates and advises on innovations and
technologies that improve our economic,
environmental and social sustainability,
enrich our customers’ experiences, increase
shareholder value and improve people’s lives
• Reviews the summary Integrated
Sustainability and Financial Report as well as
any initiatives related to innovation
Read the Charter of the Sustainability and
Innovation Committee
Other Board committees: Audit, Compensation,
Nominating and Governance, and Finance
Executive
Management
Vice President, Chief Sustainability,
Environment and Safety Officer
• Primary responsibility for sustainability issues
• Oversees the Sustainability and Vehicle
Environmental Matters group, the
Environmental Quality Office, the Vehicle
Homologation and Compliance group and the
Automotive Safety Office
• Leads a multidisciplinary senior-level team to
oversee our actions in response to our climate
change and sustainable mobility strategies
Other executive and group vice presidents
across our functional areas also have
responsibility for sustainability-related
issues. These include our Chief People and
Employee Experiences Officer and our Chief
Diversity Officer.
Functional
Areas
Sustainability and Vehicle Environmental
Matters
• Coordinates our companywide sustainability
strategy and activities
• Leads our sustainability reporting and
stakeholder engagement
• Collaborates with other functional areas
and skill teams to integrate sustainability
throughout the company
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6 Ford Sustainable Financing Framework 2021 Sustainability
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Sustainable Financing
Framework Introduction
Sustainable Financing Framework
In accordance with our sustainability strategy, Ford has established a holistic Ford and Ford Credit
Sustainable Financing Framework (the “Framework”) under which it can obtain financing through Green,
Social and Sustainability transactions.
Transactions may include senior unsecured notes,
securitizations, loans, commercial paper, retail
deposits, convertible notes or other issuances (each a
Sustainable Financing).
Issuing entities will include both Ford Motor Company and
Ford Credit entities, which include but are not limited to
Ford Motor Credit Company L L C, F C E Bank p l c and Ford
Bank G m B H.
The Framework has been developed in alignment with the
International Capital Market Association (the I C M A) Green
Bond Principles, 20211, the I C M A Social Bond Principles,
20211 (together, the Principles), the I C M A Sustainability
Bond Guidelines, 20211 (the S B G) and the Loan Market
Association Green Loan Principles, 20212 (the G L P), all
of which recommend transparency and disclosure and
promote integrity with respect to “sustainable” financing.
In line with the Principles, the S B G and the G L P, Ford’s
Sustainable Financing Framework covers the following
key pillars:
• Use of Proceeds
• Process for Project Evaluation and Selection
• Management of Proceeds
• Reporting
The Framework also follows the recommendations of the
Principles, the S B G and the G L P on external review and
impact reporting.
1 https://www.icmagroup.org/sustainable-finance/the-principles-
guidelines-and-handbooks/
2 https://www.lma.eu.com/sustainable-lending
Use of Proceeds
An amount equal to the net proceeds from each Sustainable
Financing will be used to finance or refinance, in whole or in
part, new or existing green and/or social projects, assets or
activities made by Ford or Ford Credit that meet the eligibility
criteria described below. We intend to communicate our
expectations of the split between new and existing Eligible
Projects prior to each issuance.
Ford’s Eligible Projects will have occurred on or before
24 months prior to the issuance date of the related
financing. Ford’s and Ford Credit’s intention is to fully
allocate the net proceeds of each Sustainable Financing
within 24 months of its issuance.
Net proceeds raised will be allocated to the four categories
listed in the following table.
Eligible
Categories
Ford Ford Credit
Green Clean Transportation Clean Transportation
Green Clean Manufacturing n/a
Social Making Lives Better Making Lives Better
Social Community
Revitalization
n/a
A significant portion of the net proceeds of any Green and/
or Sustainable Financing is expected to be allocated to
Clean Transportation.
If any eligible social project becomes involved in a material
ESG controversy, we intend to reallocate funds to an eligible
project not involved in any material E S G controversies.
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7 Ford Sustainable Financing Framework 2021 Sustainability
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Sustainable Financing
Framework Introduction
Ford Categories
Find out more about the U N Sustainable Development
Goals (S D Gs)
See our 2021 U N S D G Index
Eligible Green Categories Eligibility Criteria and Example Projects Targeted SDGs
Clean Transportation Investments and expenditures (including acquisition costs, research and development, and licensing costs) for the design, development and manufacturing
of zero-emission vehicles that are battery electric vehicles (BEV), fuel cell electric vehicles (FCEV) or other future carbon-neutral transportation.
• Research and development dedicated to zero-emission vehicles and technology, which includes testing, development of facilities, tooling and
manufacturing of zero-emission vehicles
• Manufacturing facilities, including new facilities and upgrading or modifying current manufacturing facilities, to produce zero-emission vehicles
• Projects related to the manufacturing and/or procurement of components for EVs such as batteries and powertrains, as well as remanufacturing
and/or recycling of batteries
• Projects related to electric scooters and e-bikes
• Projects related to the development and installation of vehicle charging infrastructure
SDG 9
SDG 11
SDG 13
Clean Manufacturing Investments and expenditures related to improving the environmental footprint of our operations, including but not limited to:
• Renewable energy
New or existing investments in, or expenditures related to, the construction, development, acquisition, maintenance and operation of renewable
energy projects, including wind, solar, geothermal, hydropower and biomass
• Sustainable Water and Wastewater Management
Investments and expenditures related to water conservation, water efficiency and improved water quality in production and office facilities
including recycling, reuse and sustainable water management in industrial processes
• Waste Management and Circular Economy
Expenditures related to projects that decrease waste generation, increase waste diversion from landfill and reduce consumption of natural
resources and energy, including:
– Increasing the use of renewable, recycled or reused materials
– Improving the separation and recovery of commodities from materials
– Reducing the hazards of the waste generated in our operations
SDG 6
SDG 7
SDG 11
SDG 12
SDG 13
Rendition of future BlueOval City, Stanton, Tennessee, part of a $7B planned investment by
Ford - the largest ever one-time investment in electrification by an auto company in the U.S.
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8 Ford Sustainable Financing Framework 2021 Sustainability
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Sustainable Financing
Framework Introduction
Ford Categories continued
Eligible Social Categories Eligibility Criteria and Example Projects Targeted SDGs
Making Lives Better Expenditures focused on advancing economic opportunity and equity for underrepresented and/or disadvantaged populations. Examples include:
• Expenditures related to widening the supplier diversity network – creating opportunities for diverse suppliers running minority-, women-, disability-
and veteran-owned businesses
• Expenditures related to expanding our minority-owned dealer network
• Social enterprises that benefit women (for example, the SHE-MOVES program)
SDG 4
SDG 5
SDG 8
SDG 10
Community Revitalization Expenditures and investment in internal and external projects that provide support or uplift to disadvantaged communities through creating and
renovating spaces to provide opportunities for economic employment and access to essential services. Examples include:
• Expenditures related to new development and community projects in Detroit’s Corktown
• Expenditures related to redeveloping Michigan Central Station to become the centerpiece of the new Corktown campus
SDG 8
SDG 10
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9 Ford Sustainable Financing Framework 2021 Sustainability
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Sustainable Financing
Framework Introduction
Ford Credit
Eligible Green Categories Eligibility Criteria and Example Projects or Receivables Targeted SDGs
Clean Transportation Offering automotive financing products and wholesale loans for vehicles that are purchased, in whole or in part, by Ford Credit and that meet the
below eligibility criteria:
• BEV, FCEV or other future carbon-neutral transportation vehicles
• Plug-in hybrid vehicles (PHEVs) with tailpipe CO2 emissions at or below 50 grams of C O 2 per passenger kilometer traveled (g C O 2/km)3
• Financings related to establishing or improving charging station infrastructure for individual customers or dealers
SDG 9
SDG 11
SDG 13
Eligible Social Categories Eligibility Criteria and Example Projects or Receivables Targeted SDGs
Making Lives Better Expanding access to essential services by providing automotive financing products and advancing economic opportunity and equity for all.
Examples include:
• Supporting underserved populations by providing affordable, equitable and non-discriminatory access to credit for credit-worthy borrowers with
lower FICO scores
• Payment extensions offered to provide relief to customers impacted by events such as public health emergencies, natural disasters or other
extenuating circumstances
SDG 8
SDG 10
3 Ford Credit’s Clean Transportation is expected to migrate over time to
include a greater majority of BEVs versus qualifying PHEV models. By 2025,
only BEV models are expected to be included as eligible models.
In the case of a securitization by Ford Credit, either
the proceeds will be allocated by the sponsor to
finance or refinance Eligible Projects that meet
the eligibility criteria outlined in this Framework or
the receivables underlying the securitization
(the “Eligible Receivables”) will meet the eligibility
criteria in this Framework.
All transit images are computer generated.
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10 Ford Sustainable Financing Framework 2021 Sustainability
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Sustainable Financing
Framework Introduction
Process for Project Evaluation
and Selection
Ford has established a Sustainable Finance Committee
(the “Committee”) to oversee the project evaluation and
selection process and ensure selected projects comply
with the eligibility criteria defined in the Use of Proceeds
section of the Framework and are aligned with Ford’s
corporate sustainability strategy.
The Committee will be made up of senior leadership
and other representatives from each of Ford’s Treasury,
Sustainability, Corporate Finance, Investor Relations,
Ford Credit and Office of the General Counsel teams, and
will meet at least twice per year. The Committee will be
responsible for:
• Approving the Sustainable Financing Framework and
any subsequent amendments thereto
• Evaluating and approving the selection of Eligible
Projects or Eligible Receivables based on the selection
criteria defined in the Use of Proceeds section of
the Framework
• Monitoring Eligible Projects throughout the life of the
Sustainable Financing(s)
• Replacing any projects that no longer meet the eligibility
criteria with new projects as soon as practicable
• Reviewing and validating the impact and allocation
reports for investors and ensuring the robustness of the
external review process
Management of Proceeds
Eligible Projects or Eligible Receivables will be tracked
internally in a register comprising Eligible Projects for each
Sustainable Financing (each an “Eligible Portfolio”). Ford or
Ford Credit may decide to aggregate Eligible Portfolios of
Sustainable Financings from the same issuer when issuing
instruments with the same classification (Green Financings,
Social Financings or Sustainable Financings).
Ford
An amount equal to the net proceeds of any financing will be
allocated to new projects or refinancing of Eligible Projects
under the review of the Sustainable Financing Committee.
In the event that funds cannot be immediately and fully
allocated – for example, in the case of divestment or if a
project no longer meets the eligibility criteria listed above –
Ford intends to reallocate the funds to other Eligible Projects.
If for any reason the aggregate amount in each Eligible
Portfolio is less than the total outstanding amount of Ford’s
Sustainable Financings issued, Ford will hold the net amount
in cash, cash equivalents and/or U.S. government or agency
securities (i.e. investments exclude any high-emitting
and controversial activities), or use it to repay short-term
borrowings until the amount can be allocated to the relevant
Eligible Portfolio.
Ford Credit
The Asset-Liability Committee (the “ALCO”) of each issuing
entity of Ford Credit is responsible for supervising each
Eligible Portfolio and the total aggregate amount issued in
each Sustainable Financing by the applicable Ford Credit
entity. The ALCO meets monthly and will be responsible for
ensuring that the aggregate amount in each Eligible Portfolio
is equal to or greater than the aggregate amount raised in
each Sustainable Financing.
Ford Credit’s Eligible Portfolios are dynamic, with new loans
continually added and loans exiting the portfolio when they
mature or if they cease to meet the eligibility criteria.
If for any reason the aggregate amount in each Eligible
Portfolio is less than the total outstanding amount of each
Sustainable Financing, the Ford Credit entity will hold the net
amount in cash, cash equivalents, and/or U.S. government or
agency securities (i.e. investments exclude any high-emitting
and controversial activities), or use it to repay short-term
borrowings until the amount can be allocated to the relevant
Eligible Portfolio.
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11 Ford Sustainable Financing Framework 2021 Sustainability
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Sustainable Financing
Framework Introduction
Reporting
Annually, until full allocation of the net proceeds in the
case of Ford or until maturity in the case of Ford Credit, the
issuing entity will publish a Sustainable Financing Report
on its website that will include:
i. The amount of any Sustainable Financing that has been
allocated to the relevant Eligible Portfolio by category,
subject to confidentiality considerations
ii. The outstanding amount of net proceeds from the sale of
any Sustainable Financing yet to be allocated to Eligible
Projects at the end of the reporting period
iii. Expected impact metrics, where feasible
Sample Impact Metrics
Ford Categories Example Expected Impact Metrics
Green
Category
Clean
Transportation
• Reduction in Scope 3 G H G emissions per vehicle kilometer from use of sold products
• Expected/achieved new production capacity of EVs
• Number of EVs manufactured
• Number of electric scooters and e-bikes produced
• Number of EV charging ports/stations installed
Green
Category
Clean
Manufacturing
Renewable Energy
• Reduction in Scope 1 and 2 G H G emissions
Sustainable Water and Wastewater Management
• Volume of water saved, reduced or treated (m
3)
• Improved water-use efficiency expected/achieved compared to pre-investment (in percent)
Waste Management and Circular Economy
• Waste recycled or diverted from landfill (metric tons)
• Percentage recycled or renewable plastic content
Social
Category
Making Lives
Better
• Qualitative description of the projects
• Number of beneficiaries
• Number of diversity suppliers
Community
Revitalization
• Qualitative description of the projects
• Number of jobs expected to be created
Ford Credit Categories Example Expected Impact Metrics
Green
Category
Clean
Transportation
• Number of EVs and PHEVs financed
• Estimate of the lifetime reduction in C O 2 emissions achieved by the EVs and PHEVs financed
by the Green Bond proceeds
Social
Category
Making Lives
Better
• Increase in financing to underserved credit-worthy borrowers with lower FICO scores
• Number of contract extensions granted
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12 Ford Sustainable Financing Framework 2021 Sustainability
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Sustainable Financing
Framework Introduction
External Review
Second Party Opinion
We will obtain and make publicly available a Second
Party Opinion (S P O) from a consultant with recognized
environmental and social expertise on the environmental
and social benefits of this Framework as well as the
alignment to the Principles, S B G and G L P. The S P O will
be available on the S P O provider’s website.
Verification
We expect that the Sustainable Financing Report will be
accompanied by (i) assertions by Ford’s management that
an amount equal to the net proceeds of any Sustainable
Financing has been allocated to Eligible Projects and (ii) a
report from an independent third party who will examine
and verify the management of the net proceeds and
provide assurance as to the compatibility of the selected
Eligible Projects with the Framework.
Disclaimer
The information and opinions contained in this
Framework are provided as of the date of this
Framework and are subject to change without notice.
Statements included or incorporated by reference
in this Framework may constitute “forward-looking
statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-
looking statements are based on expectations,
forecasts and assumptions by our management
and involve a number of risks, uncertainties and
other factors that could cause actual results to differ
materially from those stated. Ford cannot be certain
that any expectation, forecast or assumption made
in preparing forward-looking statements will prove
accurate, or that any projection will be realized. It is to
be expected that there may be differences between
projected and actual results. The forward-looking
statements speak only as of the date of their initial
issuance, and Ford does not undertake any obligation
to update or revise publicly any forward-looking
statement, whether as a result of new information,
future events or otherwise. For additional discussion,
see “Item 1A. Risk Factors” in Ford’s most recent annual
report on Form 10-K, as updated by Ford’s subsequent
filings with the Securities and Exchange Commission.
This Framework is provided for information purposes
only and does not constitute a recommendation
regarding the purchase, sale, subscription or other
acquisition or disposal of any debt or other securities
of Ford or any subsidiary of Ford. This Framework is
not and is not intended to be, and does not form part
of or contain, an offer to sell or an invitation to buy, or a
solicitation of any offer or invitation to buy, any securities
issued by Ford or any subsidiary of Ford. If any such offer
or invitation is made, it will be done pursuant to separate
documentation in the form of a prospectus supplement,
an accompanying prospectus or other equivalent
document and a related pricing term sheet (the “Offering
Documents”). Any decision to purchase or subscribe for
any securities pursuant to such offer or invitation should
be made solely on the basis of such Offering Documents.
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