Executive Speeches

Chad Holliday,

Chairman and CEO, DuPont
As prepared for delivery before the TERI Delhi Sustainable Development Summit New Delhi,
February 6, 2003

DuPont is one of the few industrial companies in the world that defines its long term business objective in terms of sustainability.

Our goal as a company is sustainable growth. We define sustainable growth as "creating shareholder and societal value while we reduce our environmental footprint... along the value chains in which we operate."

We have three primary strategies for achieving sustainable growth: integrated science, knowledge intensity and productivity. What I would like to do is explain how each of those strategies helps us make concrete progress toward sustainability

Sustainable growth has been our stated goal since the late 1990s. But it was already a factor in how we envisioned the future of our business as early as 1989. We are no newcomers to environmental and sustainability performance issues. Last month, in the Financial Times annual CEO poll of list of "Companies that best manage and effect environmental resources", we placed 11th. One respondent to their survey said of DuPont, "for the last 30 years or so, I have heard them talk about the environment."

But the process of coming to identify our overriding corporate objective as sustainable growth was evolutionary. And it is the natural outcome of melding two separate strains of corporate social responsibility.

DuPont's first step, like most companies' was to address environmental waste and emissions. In 1989 set our first reduction targets with the aim of meeting public expectations not just what regulations required. Many companies took a similar business approach to environmental stewardship and demonstrated that "pollution prevention pays," the tag line made famous by 3M. Dow Chemical adopted "Waste Reduction Always Pays (WRAP)" and DuPont flatly declared that "The Goal Is '0'" for all injuries, illnesses, incidents, waste and emissions.

Meanwhile other companies, like Shell, Novo Nordisk and Nike, became leaders in areas of stakeholder engagement and human rights policies. In time, we saw both these trends – environmental performance and stakeholder engagement – emerge as a new way of understanding corporate social responsibility overall.

Today, many companies are beginning to report in the area of corporate social responsibility. However, our view is that openness and transparency are necessary but not sufficient. We believe the transformation of our businesses to ones that create significantly more value while using substantially less depletable resources will be critical to achieving a future world that is sustainable.

We call this process of creating more shareholder value while using less depletable resources "knowledge intensity," because it a primary factor in achieving that is increasing the knowledge content of our products and services or using our band estate more effectively and so on. Knowledge intensity is one of DuPont's three core strategies that I've already mentioned.

Another is productivity. Many people, including most of the investment community, still view environmental stewardship as a necessary cost of doing business, and not as an integral part of overall productivity efforts.

Over the past decade we have reduced our environmental footprint through a strategic focus on productivity, and by addressing very specific environmental and energy targets. Our productivity efforts have resulted in substantial improvements in first pass yields, and very aggressive implementation of six sigma training and projects. The results have been major increases in capacity and very large reductions in costs measured in the billions of dollars.

Our focus on targeted environmental and energy goals has resulted in:

• A 91% reduction in global air carcinogens
• A 47% reduction in global hazardous waste
• Flat energy use for the past decade while production increased over 30%
• A 68% reduction from 1990 in CO2-equivalent greenhouse gas emissions from our global manufacturing operations

While we have clearly made substantial investments to achieve these results, we have also reduced our remediation and end-of-the-pipe waste treatment costs by over $250 million per year versus a decade ago. We have saved over $1.5 billion in energy costs compared to where we would be today if energy use increased linearly with production. And we have generated over $40 million in fairly near-term revenues from the sale of greenhouse gas emission reduction credits.

If approached as a business-driven strategy anchored in better total system productivity, the environmental leg of sustainable development eliminates waste, creates more capacity, and strengthens the financial bottom line. Because we view sustainability this way operationally, we have strengthened our commitment to "sustainable growth" even during the past few years when the global economy has been relatively weak and uneven. In other words, properly integrated into a businesses total plan and day to day operations, there should be no reason to weaken this "leg" of sustainability during tough economic times.

Our experience creating strong financial and societal value through sustainable development is based on 200 years of using science to create products and services necessary to improve the quality of life in developed economies. What we call integrated science is the third sustainable growth strategy. This involves bringing together our scientific expertise in chemistry with our world class capability in biology.

Let me give you an example. DuPont™ Sorona® is the newest polymer platform in the DuPont polymer portfolio. Sorona® 3GT polymer is the first commercially available polymer from this new platform. Fabrics containing Sorona® 3GT polymer are very attractive to apparel designers and consumers, because of their softness, comfort stretch and recovery, vibrant colors, stain resistance, and easy care.

Currently the company's fiber-grade or apparel-grade Sorona® is made in a petroleum-based process. However, we have successfully manufactured it using a fermentation process based on corn sugar, a renewable resource. By 2004 we will replace petrochemicals in the production of these polymers for many end-use applications, including fibers. That is integrated science at work, helping us grow sustainably.

Much of the focus on sustainable growth is in the wealthy countries of Europe and North America. But we believe there is a huge opportunity ahead to do the same in areas of the world where growth is high but individual income is very low. This will require re-inventing our business models and establishing much broader business relationships with business and public organizations in these economies. This is a large challenge but also offers great growth opportunity to those who are successful.

In Taiwan, we recently announced a partnership with a company called Asia Pacific Fuel Cell Technologies to develop fuel cells for motor scooters. You don’t see many motor scooters in the U.S. But in many of the countries of Asia they are a primary and essential means of transportation. Fuels cells will reduce petroleum consumption and air pollution.

Our role as a global leader is to move in a direction that achieves a more sustainable future everywhere – where important societal needs are increasingly met, one where environmental impacts are continuously reduced towards zero, and one where the early movers achieve superior financial results from lower costs and higher growth.

For long term success, a business has to view sustainability as "fundamental and lasting change" and not "protecting the status quo." There must be a recognition that sustainable growth is a journey, not a destination. We clearly believe that a strategy of sustainable growth will contribute to competitive advantage. But for a company to succeed in this regard, its vision of sustainability requires the following:

A very strong focus on achieving business results, not just meeting important environmental and societal needs, as important as they may be.

Integrating sustainable development practices into the business units, and not making it simply a corporate initiative.

Viewing, and achieving environmental improvements as a source of lower costs and increased capacity; and of meeting societal needs as a source of market creation and growth.

Moving ahead of competition – the tried and true experience of business is that the early mover achieves most of the benefits.