Follow the Leader

Follow the Leader

As a Fortune 500 corporation, DuPont’s influence into a vast array of markets is indisputable. One DuPont initiative gaining attention is its journey toward sustainability, a directive now under the watchful care of chairman and CEO Charles Holliday, Jr.-- who acknowledges that DuPont’s leadership position is accompanied by a responsibility to set an example that others can follow. By Penny S. Bonda

Ranked as the 70th largest U.S. industrial/service corporation on the Fortune 500 list, DuPont’s tremendous influence into a vast array of markets -- food and nutrition, health care, apparel, home furnishings, construction, electronics and transportation -- is indisputable. Its size and outreach into both business and consumer markets places it firmly on the list of most-watched companies. One DuPont initiative gaining increasing attention from outside groups is its journey toward sustainability, a directive that began nearly a decade ago and is now under the watchful care of Charles Holliday, Jr. -- who acknowledges that DuPont’s leadership position is accompanied by an undeniable responsibility to set an example. What follows is the story of how a $25 billion multinational company has transformed itself into a highly-regarded global corporate citizen that others can follow.

How does a company, especially one as large as DuPont, get to be 200 years old? According to chairman and CEO Charles (Chad) Holliday, Jr., it’s because DuPont believes passionately in who it is and what it does.

What DuPont is is a science company. Founded in 1802 by E.I. du Pont de Nemours, a French immigrant, it began as an explosives manufacturer on the banks of the Brandywine River. The company today is headquartered in Wilmington, DE, and operates in 65 countries worldwide with over 90,000 employees. DuPont believed then, as it does now, that science is the foundation that it uses to tackle problems and make people’s lives better.

The company has transformed itself several times throughout its history. At its 100th anniversary in 1902, three young du Pont cousins modernized management and expanded into new products like paints, plastics and dyes. Throughout its second hundred years, it continued to research and develop the “miracles of science” that have become part of everyday living -- nylon, plastic wrap, Tyvek, Corian, and Kevlar, to name a few. However, as a chemical company it has also come under its share of criticism, and toward the end of the 20th century realized a need to readapt to changing circumstances, to begin to recognize and act on its responsibility for preserving and protecting the earth’s resources.

The company itself admits that change is very much a part of its current culture. In Holliday, it has, by all accounts, found a leader who clearly has the vision to create a suite of businesses that will be sustainable for the future. He’s fully aware of the legacy that leaders before him have left in making the company sustainable over two centuries, and he’s looking at the ways to carry that legacy forward in the future.

Sustainable growth is, in fact, his byword, and often dictates the direction he’s taking the company even while making some tough choices. His decision to allow the nylon and synthetic fibers businesses to ultimately operate independently is but one example of the realignment that is taking place. Adoption of the Six Sigma methodology for all operations of the company is another. Well grounded in DuPont’s history and culture -- he’s been employed there for more than 30 years -- Holliday has the knowledge, sensitivity and courage to carry forward its continually evolving mission. Holliday recently sat down with [email protected] to talk about DuPont at its 200th milestone year and its future.

As “a science company,” DuPont is continually challenged to adapt to a changing world. how has this contributed to your 200 years of success?

We officially adopted that logo [the miracles of science] about three or four years ago. Yet, when we opened the 50-year time capsule and looked at the headlines in the newspapers, it was clear that DuPont was a science company back then and people recognized it. So it has shaped us and it’s how we add value to the world: we understand a problem and we use our science to solve it. That’s what we’ve been doing for a long time.

DuPont has made substantial progress since 1988 when it was named one of the top corporate polluters in the country. can you elaborate on this?

Actually we were listed as the number one polluter. Greenpeace had scaled a plant we had in New Jersey and hung a big banner that said “DuPont Number One” and “Polluter” at the bottom. They faced it toward the Delaware Memorial Bridge to show everybody coming through, but the word “Polluter” was so low you couldn’t see it. So our phones were ringing with people saying, “You must have won another award -- what was it?” And, of course, the TV cameras came out. The bottom line is our plant manager handled it superbly; he was worried about the people on the tower. It was raining and we had to get them down safely. I remember sitting in the debriefing and we were proud that we handled it well. But then the realization hit us -- we are a large polluter; everything we do is legal, but is this where we want to be? And we said no.

To me that was the day -- the event -- when we started a concentrated effort with every process to clean up this end of the pipe. It was the right thing to do for the environment, but we also got a good return on every project except one -- all while increasing production 35 percent. We now maintain those same standards everywhere in the world, so if you go into a new DuPont plant that’s being built in China or one in Indonesia or here in the U.S., they all have the same environmental standards -- even though [local] regulations may not be as strict.

You are personally committed to sustainability. where does your inspiration come from? who are your mentors?

Ed Woolard, one of my predecessors, was clearly a leader -- he was the head of DuPont when we made the commitment. There’s a lot of people here that really care about the environment and I wouldn’t want to single anyone out; it’s in the way that they do business -- this is not an either/or.

Where it hits me is when I see the projects we’ve accomplished -- things we can do that make for good business and are right for the environment. There’s so much we can do, we ought to get on with it -- and that’s what encourages me.

But what has personally given you this passion and commitment?

Living in Asia for six years and going into the developing cities of Delhi, Beijing and Shanghai -- improving the environment was one of the best things you could do for the quality of people’s lives there. Experiencing that moves you. Then also seeing what’s happened in this country. We have a number of waterways that you couldn’t even think about fishing or swimming in.

Now, if you’re thinking, “Well, I’m only going to live another 20 years and so I don’t care,” well that’s different from my view. I can’t believe many people really think that way. Unfortunately, there are a lot of people who don’t understand or choose not to understand. It’s an education issue.

Much of the improvement in our water and in our air has resulted from the clean water and clean air acts of 1970. What do you think of government regulation in general in this area?

I think improvements will not happen without government regulation, but regulations should be focused on what the results should be, not how to get there. I think that’s very important because, generally, regulations that tell me how to do it will be much more costly and will not be achieve the results as fast.

So you want performance-based regulations, not prescriptive ones?

Right. Hold me accountable, audit me, see if I did it. Do take into account that industry needs some transition time to get to a certain point. As long as you allow enough time, people will find the technology to get there. If you say I’ve got to have it in the next six months, that’s a problem. But if I know for certain in five years that this is going to change, then I can deal with it.

I also think that in this arena countries need to be non-competitive. I believe we need to be taking steps across nations and be making changes at the same time.

The EPA now requires that you report dioxins and other pbts associated with your manufacturing processes and materials. Has this changed the way DuPont does business?

What I believe we’re going to find over time is that there will be some substances, not necessarily the ones you raised, but some that have undesirable characteristics. What we’ve got to have -- and our whole industry is working on this in cooperation with the government -- is a testing program to understand that. I think that’s exactly what we ought to be doing. When we find a substance that the data says is a problem, then we need to do something different. But it should be a very step-wise approach with the right kind of data, the right kind of testing, and not an emotional reaction to an article in the newspaper. I think if we do that, then any substance that we work with, that we buy, that we manufacture or that we sell that’s creating a problem, we must deal with it.

Do you believe that we can eliminate the toxins that are used in our industries and find viable alternatives for them that are safer?

I’m sure there’ll be some specific examples where we can’t, but I would start moving in that direction. But we will analyze the alternative product and determine what its problems are -- because I don’t want a solution that’s worse. We may hit one or two snags that are an issue and we’ll deal with those when we get there.

For example, we worked toward a major reduction of emissions. We looked at every project across the entire company and said we’re going to start with the ones that give us the biggest payback the quickest. We wanted to make a difference right away. If the country did that, we’d make a lot of progress in a hurry. So don’t tell me how, tell me the results you want. If you want X reduced from here to there, okay, I’ll go do that.

DuPont is such a diverse company. How do you empower your different divisions to establish environmental leadership in their respective fields?

We measure the environmental footprint of each business for each division -- we want to make steady progress to increase our shareholder value added per volume of product. We look at those measures periodically in our normal performance reports, and while we’ve got an overall goal for the company, we haven’t forced each unit to have a goal that adds up to the total because we don’t know how to do that just yet. But many are stepping up and setting goals themselves -- usually very aggressive goals. With that in place we have a formal review every year where we focus on specific programs. You must constantly keep the environment on the front burner; you can’t for example, decide to put these programs off during a recession. We’re going to stay on our steady path. Our people are proud of what we do around the environment.There are a lot of people in business who believe in environmental issues but who are reluctant -- I won’t say scared -- but reluctant to talk about the subject too much because they think, perhaps, that others will think they don’t care about making money. Well -- we care about making money, but we just don’t find the two mutually exclusive, which is the difference.

In a speech you gave last year, you said that a huge number of the world’s population lives in dire poverty. Yet if everyone on this earth were to enjoy the standard of living that we do here in the United States, we would need at least three planet earths to support us. How do we raise those people out of poverty and yet let us all enjoy these things equally?

I think you have to have a reasonable timeframe to accomplish that. What I found out about Americans from living in an Asian society is that we have very short time frames. When you talk to a group of Chinese nationalists or Japanese, a hundred years is not that long. To us a hundred years is so long we can’t even think about it.

So if you say, “I really want to make a tremendous amount of progress in a hundred years,” well, all of a sudden that starts to be reasonable and then it’s amazing how many things we can do.

Can you elaborate?

There’s one program that the Carter Center did that moved me tremendously. They teach farming practices in developing countries. Here in this country it’s pretty obvious that you would cultivate or break the ground a little bit before you plant the seeds. Here, you wouldn’t plant the seeds under a tree, right? Well, they just plant the seeds under the trees. It’s cooler and it’s easier to plant. So with a little bit of education we can do so much. Look at the corn crop in China, the second biggest corn producer behind the U.S. We could grow this industry through teaching the right practices and developing the seeds that are right for their soil and climate conditions. We know we can make major progress in China’s corn industry, not by simply giving away a little bit of money, but if we can make it economically beneficial for us to go in we’ll do it. I think it’s a matter of finding our targets, but we need a reasonable time frame. This is not a five-year job.

Now you’re talking about biotechnology here to some extent. Is that a big area now for DuPont?

Biotech, when you back off from it, says in the last five years we’ve learned to understand the building blocks of life -- whether it’s a corn plant or an insect or a person. What we’re finding is that the similarities between all those are almost scary. The number of genes in a corn plant and the number of genes in one of us is, in order of magnitude, the same number.The task now is understanding how these corn genes can be put to work to yield crops that can be resistant to disease in a much more targeted, controlled way. If you spend a little time with our scientists and understand what they can do, it gives you tremendous hope that you could be part of the solution. I think this is very uncomfortable technology for a lot of people because now you’re experimenting with life. But we’ve been breeding crops forever in a very uncontrolled way. Somehow that didn’t bother us. Obviously the logic’s changed, but we have to face the reality that this is very uncomfortable for many people, so it’s not simply a matter of saying you just don’t understand. It’s a matter of how do we do the education? How do we take this one step at a time? If, for example, you’re going to make a drug that’s going to cure cancer, people who have had cancer will naturally be receptive to that drug. But if I’ve got plenty to eat its kind of hard for me to understand why making more food is very helpful, because I don’t see what’s going on in Africa and so forth. So I think it’s an education process there too.

Are there areas to which you will not go?

We work with bio-based materials and plants. We’re not working with animals or humans. I think there would be some clear areas with animals and humans we wouldn’t go. We obviously adhere to all government regulations, but we also have an external advisory board on biotech issues. There’s someone from China, India, Mexico, France and the U.S. and they have access to everything we do. They write an independent report every year where they’re free to say exactly what’s going on. These are world leaders -- they’re not going to rubber stamp everything DuPont’s doing.

So I think you will find over time a number of things we won’t do. You can look for us to be on the conservative side.

As a multinational corporation, do you see your role and responsibility more to the planet or to this country?

I don’t think they’re separable. We are headquartered here, we’re a U.S.-based company, but we operate globally and we adapt to the cultural needs where we are. What I’m seeing more and more is that in order to meet the needs of the U.S., we have to meet the needs of the world, especially for an issue like global warming. If we’re not setting the highest standards here, how can we be credible anywhere else in the world?

I was in Beijing a couple weeks ago on a panel with the Minister of the Environment and a group of students and journalists got on him about the Three Gorges Dam. It is considered the biggest dam project in the history of the world and they wanted to know what it was going to do to the environment. Then they attacked me about why the U.S. didn’t support Kyoto. I’m not sure which one of us had the most difficult time. Our view of Kyoto is that it has many serious flaws and should not be adopted as it is. But we think we should work on it to improve and fix the flaws rather than saying nothing, because some of the directives around Kyoto are very good.

But doesn’t the U.S. look like the biggest bully on the block?

I would hope we could sit down and have some good dialogue and understanding and find ways to find common ground. I assume that time will do that. To some extent, when other nations know that we’re going to take a stand, then they’ll go along with something they may not be clear about, knowing that nothing silly is going to be done. That way they can get the best of both worlds. I think there are so many positive things we can do with technology that can make a difference -- and there’s some very simple things, like emissions trading. But we need to get a workable system going because it’s holding up progress. [Some companies are] afraid that if they make reductions now, and then a trading system is put in place, their previous work doesn’t count. So they decide to hold off. But you don’t want people thinking about holding off. You want to get moving. I think emissions trading would actually move things -- some people think it’ll slow things down, but I think it’s just the opposite, it’ll speed things up.

What advice would you give to other corporations, both large and small, both local and international, that want to become more sustainable, but are afraid of shareholder reaction, are afraid of public opinion, are afraid of politicians?

I think today’s shareholders are concerned about big environmental problems. The Dow Jones Sustainability Index has outperformed the market. There is a clear value for shareholders in avoiding big problems. But how do you do that? You fix all the small problems every day. Then you’ve made progress and you don’t become a target. Also, remember the kids that are coming through school. It won’t take long before they’ll be in their 20s and early 30s and playing a big role in what stocks are being traded.

Second, remember that it takes a long time to get there. You can’t suddenly decide you’re going to be an environmental leader and be there, so you’d better start now and go after it. I think organizations need to be very careful that they’re not misunderstood. We think [economics and the environment] are compatible, they both work, but you need to be thoughtful.

When the big guys push initiatives forward, it gives the little guys some courage to do the same. Do you feel this is a responsibility?

I think whether the issue is safety or ethics or treatment of people, I think we do set an example for others. I think about all of our core values and hold those very high. You know, you can’t take a strong stand on the environment, yet be unethical dealing with your customers. It just doesn’t fit very well. I think, especially after Enron, that strong, ethical companies with integrity are going to rise to the top.

Tell us a little bit about DuPont’s sustainable growth excellence awards.

They started strictly around the environment. Now they’ve taken on a broader definition of sustainable growth, which includes safety. They’re about honoring individuals or teams who have made particular contributions toward sustainability.

A very unique thing we do each year is use a different set of outside judges who come in and evaluate our projects, see what we’re doing and get to know us. So each year we have eight new people who take their job very seriously. Now, 10-plus years later, we’ve got a lot of judges out there in the world; people who send us ideas that can have impact or who encourage a student or two to come to work for us. The monetary portion of the award is not for the individual. They get to give $5,000 dollars to the not-for-profit environmental agency of their choice. This gives them a lot of recognition and for the not-for-profit, the money really goes a long way.

As DuPont begins its third century, what are your biggest environmental challenges and goals?

I think the next challenges are really the same as our current challenges: we’ve got great science, we’ve got great needs, now how do we put those together? Many times that’s a simple economic equation, but when it comes to this topic it’s also an emotional one. We’ve got to learn to manage people’s emotions around new technologies and around what’s the right thing to do for the environment -- and then bring all that together to make progress. I think it’s going to be a difficult job, particularly in this country, especially in the area of transportation. We need some very visible examples of things that work. We’re involved in a project now that I’m very enthusiastic about. Have you been to Taipei? It looks like a sea of motor scooters, very polluting motor scooters. So we have developed, in cooperation with the government, a fuel cell powered motor scooter that we think can do a lot with pollution there. We’ve been dealing with the owners of the gas stations and now they’re carrying chargeable hydrogen cartridges. You plug one into the motor scooter and you’re off. I’m encouraged because that’s a really neat project and it’s economically sound with just a little bit of government help. In fact, the president of Taiwan tried out one of our motor scooters last week. That’s progress.