Chad Holliday, Chairman and CEO, DuPont
October 1, 2006
It’s a pleasure to be here today to discuss the imperative for an expanded commitment to sustainability and sustainable growth – for DuPont, for industry in general, and for all sectors of society.
Let me start with a perspective on DuPont. We are in our 204th year as an enterprise and have grown and moved in directions that our predecessors would find surprising. But what wouldn’t surprise them is the innovation and creativity – rooted in a foundation of values – that has taken us in those directions.
A Heritage of Innovation
We began as an explosives company. Our first patent in 1804 was signed by Thomas Jefferson and endorsed by James Madison. It was a machine for granulating gunpowder. Today we are on the leading edge of biotechnology and nanotechnology. When the U.S. government issued U.S. Patent 7,000,000 earlier this year, it was for a very different DuPont invention – a bio-based synthetic fiber derived from renewable resources.
In between, DuPont has been awarded patents for more than 34,000 inventions, many of which gave the modern age its look and feel and many of its most useful materials. The majority of those discoveries came in the second half of our history, with the pace rapidly accelerating the closer you get to the present. But you could say our patents represent, on average, a new innovation every other day for the past two centuries.
Today our innovation capability can best be described as dynamic science – science that is constantly anticipating and addressing market needs. For DuPont in the 21st century, dynamic science means using biology as well as chemistry and other scientific disciplines to develop sustainable products that address some of the world’s most pressing challenges.
To deliver those innovations to market, we have transformed our company several times in our history, constantly challenging ourselves with this question: Are we doing the right things to build a stronger company, help solve the world’s toughest challenges, and build a brighter future for people and our planet?
Examples of how we answered that question can be traced throughout our history as a company. In the DuPont archives there is a handwritten document from 1811 with our first safety rules. You also can read our first statement of environmental responsibility which was created in 1938. We answered the question again at the start of our most recent transformation to a science company when we said our mission is sustainable growth – putting our science to work to develop sustainable, global solutions, not only for our customers but for people everywhere.
There’s also something else that comes with 200 years of history – humility. As a company we have been through many experiences that remind us that we don’t have all the answers. When you have been making thousands of different products for more than two centuries, there are bound to be legacy issues. DuPont has them. We accept that society expects transparency and responsiveness on such issues, and we are committed to both in order to earn and keep the public’s trust.
Sustainability – An Evolving Idea
In order to do that, we have to keep pace with the evolving idea of sustainability. In the 1970s and 1980s our focus was on internal safety and meeting environmental regulations. In the late 1980s and 1990s we added voluntary footprint reductions, going beyond regulatory requirements. We looked to increase shareholder value with a goal of zero safety and environmental incidents as we decreased raw material and energy inputs into our products and reduced emissions at our manufacturing sites.
Now we see ourselves in a third phase of sustainable growth, characterized by a holistic approach that is fully integrated into our business models. In this phase, sustainability is broadened to include human safety as well as environmental protection, and it becomes our market-driven business priority throughout the value chain. The transition to products that meet the definition of “sustainable” will take place over time, for DuPont as well as for other companies such as General Electric and Wal-Mart. But the pace will quicken as the synergistic effects of market demand, societal expectations and product innovation create collaborations up and down the value chain. Sustainability will increasingly become central to the total value proposition. This will impact not only our business, but every customer and – through their products – every consumer we touch.
How to accomplish that is changing in this new century of sustainability. The view of scientists locked away in a laboratory inventing something new and wonderful to spring on the world has given way to a market-back approach. For innovation to be successfully introduced into the marketplace and accepted by society, it must be based on many forms of partnership and continuous dialogue with stakeholders, including governments, NGOs and academia. Science and innovation that does not address pressing human needs will not advance sustainability. Likewise a vision of sustainability detached from science and technology will not succeed. We need both the commitment to sustainability and the accomplishments of science.
But we never forget that we are a business, and our first job is to create value for our shareholders.
Sustainable growth means creating value for our shareholders and for society by developing products that the market demands – and which also are good for the environment and for the health, safety and well-being of people everywhere. Many companies say that what’s good for the environment can also be good for business. We have the view that what’s good for business must be good for the environment and for people worldwide or you are not moving toward sustainable growth.
Goals to Track Our Progress
To help keep us on that track, we have found it useful to create goals so everyone in the company knows what we’re aiming for and everyone outside the company can hold us to it.
We take such commitments very seriously.
For example, in 1994, we set a goal to reduce greenhouse gas emissions by 40 percent by the year 2000. We achieved that goal on schedule. Then we challenged ourselves to reduce our greenhouse emissions by 65 percent by 2010. We made that goal as well. In fact, we achieved a 72 percent reduction by 2004, six years ahead of schedule, and avoided costs of over $3 billion by holding our energy use six percent below 1990 levels.
We’ve been recognized for our efforts. An independent panel of experts assembled by BusinessWeek, for example, named DuPont the top green company of the past decade for our greenhouse gas reductions and our leadership in environmental management. But we don’t see recognition as a victory. We see it as confirmation that we’re moving in the right direction and as encouragement to continue.
2015 Sustainability Goals
Now we’ve created a new set of 2015 Sustainability Goals that renew and expand our commitment to sustainability. Our 2015 Sustainability Goals span every sector of our operations – from R&D to manufacturing to marketing.
They go beyond traditional footprint reductions to include goals that tie our business growth even more directly to the development of safer and environmentally improved products for the many global markets we serve – transportation, communications, construction and agriculture, to name a few. They also make sense from a business performance perspective because revenues from our current safety and environmental offerings are increasing at double our average revenue growth rate.
Market-Facing Goals
First and most important among this newest set of goals are what we call our market-facing goals. These build on markets and opportunities where we believe our integrated science capabilities in chemistry, biology and materials science can make a difference for our shareholders and society. F
or example, not only will we work to develop alternative fuels, but we also will create products that help make the use of those fuels more efficient. We have four market-facing goals:
By 2015, DuPont will double our investment in R&D programs with direct, quantifiable environmental benefits for our customers and consumers along our value chains.
By 2015, DuPont will grow our annual revenues by at least $2 billion from products that create energy efficiency and/or significant greenhouse gas emissions reductions for our customers. We estimate these products will contribute at least 40 million tonnes of additional CO2 equivalent reductions by our customers and consumers.
By 2015, DuPont will nearly double our revenues from non-depletable resources to at least $8 billion.
DuPont will enhance our focus on protecting people. We will increase the amount of R&D spent on developing and bringing to market new products that will protect people from harm or threats. Between now and 2015, we will introduce at least 1,000 new products or services that help make people safer globally.
Footprint Goals
To intensify our ongoing efforts to minimize the environmental impact of our operations around the world, we have updated and expanded what we call our footprint goals:
Since 1990, DuPont has reduced our global greenhouse gas emissions measured as CO2 equivalents by 72%. By 2015, we will further reduce our greenhouse gas emissions at least 15% from a base year of 2004.
DuPont commits to reducing water consumption by at least 30% over the next ten years at our global sites that are located where the renewable freshwater supply is either scarce or stressed as determined by the United Nations analysis of river basins globally. For all other sites, DuPont will hold water consumption flat on an absolute basis through the year 2015, offsetting any increased demand from production volume growth through conservation, reuse and recycle practices.
DuPont will introduce fleet vehicles that represent the leading technologies for fuel efficiency and fossil fuel alternatives. By 2015, we will ensure that 100% of our off-site fleet of cars and light trucks meet these criteria. We will continue to ensure these vehicles are safe as well as fuel efficient, and we will track and report on our fuel efficiency improvements.
Since 1990, DuPont has reduced our global air carcinogen emissions by 92%, well beyond legal requirements. By 2015, we will further reduce our air carcinogen emissions at least 50% from a base year of 2004. This will bring our total reductions since 1990 to 96%.
By 2015, DuPont will ensure that 100% of our global manufacturing sites have successfully completed an independent third-party verification of the effectiveness of their environmental management goals and systems. We will make this information publicly available and communicate it to our local communities.
To achieve these goals, we’re relying on the power of One DuPont – the creativity and commitment of our 60,000 employees around the world. But it’s also going to take partners who share our commitment and have the influence and ability to take actions that will make a difference in achieving a safe and sustainable world. Because of the nature of DuPont’s products and services, we sell into virtually every major industry in the world. As an ingredient supplier in countless value chains, we have a broad and deep impact on global industries and therefore on global society.
In some of those value chains, we already see opportunities for sustainable growth unfolding. Let me describe some of the exciting developments in three areas of current activity – biotechnology, bio-based materials and safety.
Biotechnology
Biotechnology holds great promise to enhance our lives and the planet. In the 20th century, DuPont used chemistry to transform natural processes and materials into manmade materials based largely on petroleum feedstocks. In the 21st century, we are using nature’s own processes to produce materials that are based on renewable feedstocks that can be produced and used in a sustainable manner. With a world population expected to reach nearly 9 billion by 2050, biotechnology offers the potential for sustainable living, healthy eating and battling diseases while reducing environmental impact on the planet.
We believe the broad field of biotechnology presents important opportunities that should be explored and developed to identify those safe and commercially viable applications that bring benefits to society. These opportunities span food, materials, energy generation, sensors and electronics. Benefits include lower cost, higher quality products and reduced reliance on fossil fuels, among other environmental benefits.
We are committed to improving our understanding of how to grow more nutritious food, particularly in areas that, because of soil composition or drought, pose an agricultural challenge. For example, our Pioneer Hi-Bred International subsidiary uses advanced plant genetics to develop field crops that are more productive, of higher quality, more nutritious and better suited for specific uses.
Pioneer® brand low linolenic soybeans are used to produce soybean oil that eliminates the need for hydrogenation, a process that creates trans fats, which have been linked to heart disease and other health concerns.
Bio-Based Materials
A direct product of our biotechnology is our work in bio-based materials. A few months ago, we announced a partnership with BP to create a new generation of biofuels that can be produced from locally grown crops containing sugar – like corn in North America, sugar beets in Europe, and sugar cane in Brazil.
These biofuels will help reduce the world’s dependence on oil while also providing economic opportunity to local farmers. We expect to commercialize products in the U.K. next year. Separately, we are developing seeds to increase the production of alternative fuels.
Our intent is for DuPont to become a major player in bringing biofuels to market in a way that promotes sustainable agriculture. Sustainable agriculture is a goal that demands partnerships across multiple sectors, and we currently are in discussions in the United States and Brazil to identify NGOs with whom we can partner in pursuit of this objective. We want to make sure that the development of biofuels is accomplished in a way that does not take food out of some peoples’ mouths to put gasoline into other peoples’ cars.
We also are tapping into a multi-year research and development partnership with MIT focusing on bio-based materials and technologies, including fine chemicals, monomers, biopolymers and biomodified polymers.
Our joint venture with Tate & Lyle of the U.K. is developing a bio-based process for creating a major ingredient for our Sorona® polymers, our newest polymer platform. The bio-route to this polymer uses 40 percent less energy and will save the equivalent of 10 million gallons of gas annually – enough to power 22,000 cars a year. The first manufacturing facility for what we call Bio-PDOTM will start up later this year in Loudon, Tennessee, with commercial product available early next year.
Our plan is to brand our product line of high-performance materials made with renewable resources, so that our customers can easily identify and select DuPont Renewable Materials. This will include Sorona® as well as engineering polymers, coatings and elastomers based on renewable materials.
Progress Throughout DuPont
We also are aiming to make further progress in improving the environmental profile of our traditional product lines. For example, our R&D pipeline is delivering next-generation refrigerants with lower greenhouse warming potential; new automotive finishes with lower VOC content; and enhanced solutions to improve solar module lifecycle and efficiency, building on our experience with eight DuPont prod
ucts currently used in photovoltaic solar panels.
Safety
Because of our unique tradition of safety at DuPont, the third area where I believe DuPont will make a sustainable growth difference is in safety. At DuPont, sustainability is not just about being an environmentally smarter company. It’s also about protecting people and keeping them safe.
We have many current product offerings that protect people, with many more in development. We are confident that the power of DuPont science will put us on a path to meet our 2015 goal of 1,000 new products or services that help make people safer.
You know Kevlar® as a 40-year-old product that is used in protective vests where it has saved the lives of 3,000 police and security officers. What you may not know is that Kevlar® – a lightweight aramid fiber that is five times as strong as steel – also is used to reinforce high-performance automobile tires sold by Goodyear. And it is being used to protect people from tornadoes and hurricanes through the DuPont TM StormRoomTM with Kevlar® that can stop a 2×4 traveling at over 200 miles per hour.
We recently announced a $100 million global investment in our Nomex® business. You probably know Nomex® as a flame-resistant aramid fiber that protects firefighters and emergency workers around the world. It’s also widely used in aircraft interiors, train upholstery, as electrical insulation, and is now seeing growing use in providing safe and reliable wind power in countries like China.
Because of products like Kevlar® and Nomex®, we’ve seen the market for personal protection products continue to grow around the world. We’re building on that strong base with innovations that address the increasing threats facing people and property from weather, attack and accidents.
The threat of avian flu poses a significant and serious challenge to countries around the world. As part of our safety offering, we will be marketing personal BioSecurity kits that include DuPont disinfectants and wipes. Our Virkon® S disinfectant has been independently tested by the Harbin Veterinary Research Institute in China, and was proven to be effective against the H5N1 avian flu virus.
In fact, the United Nations Food and Agricultural Organization has asked us to provide initial supplies of Virkon® S to meet the short-term needs in 69 nations, where it is needed most to help governments and farmers prevent avian flu from spreading.
Safety is paramount in the early development of products and technologies. We will not be sustainable if the technologies we are developing and their applications throughout the value chain are not introduced to the market in a safe manner.
Partnerships are critical to achieving this objective. An example of this is the work we are doing with Environmental Defense to understand potential risks of the emerging field of nanotechnology as it gains broader application. We are developing a framework for responsible development, production, use and disposal of nano-scale materials critical to “next-generation” communications devices and other products.
Also, our longstanding partnership with Public Citizen on automotive safety has been instrumental in the development of products and processes that help keep people safe while on the road.
These are just a few examples that show how sustainable growth is not a distant goal, but an immediate reality. For DuPont, 2015 begins today. Sustainable growth is about products and services we are working on right now. Our 2015 Sustainability Goals are our investment in the future of our business, the future of our customers, and the future of families around the world. They are also about the future of our planet – the one we live on today and the better, safer and healthier planet we aspire to leave for tomorrow.
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