Today, sustainable business success requires more than a
robust bottom line. Companies face unprecedented societal,
regulatory and market pressures.
This article provides an overview of DuPont's approach to
integrating Sustainability into the company's Business Strategy -
an approach that has made it one of the most innovative
organizations in the world.
GLOBE-Net - The last thirty years have seen big
changes in the attitude and approach of corporations to
sustainability.
From the conception of "siloed" environmental initiatives to the
appointment of Chief Sustainability Officers, many companies have
gone through a veritable revolution in moving from a compliance
mind-set to proactive commitments aimed at reducing their
environmental footprint.
This is in part due to rising pressure from consumers,
stakeholders, investors and regulators; indeed, in a global
economy, companies find it difficult to hide from the pressure of
increased transparency. Shareholders today want to ensure that
their money is invested in a company that will deliver results, and
minimize economic, environmental and social risk.
Nonetheless, the drive to maximize shareholder
return and continuously step up productivity has traditionally
overshadowed the need to conserve resources, manage waste, reduce
pollution and enhance social impacts.
As a result, some companies have found it difficult
to change the corporate mind-set and give sustainability the same
priority in business decisions as return on investment.
"Our expert consultants collaborate
with organizations to create custom solutions that improve human,
environmental and financial performance - for a better triple
bottom line. DuPont Sustainable Solutions' triple bottom line
approach has produced results for clients worldwide, in industries
from petroleum refining to mining." DuPont Sustainable
Solutions
However, at DuPont, we do not believe the two are
mutually exclusive. We would argue that the management strategies,
which have been so successful in developing and running a
profitable, forward-looking organization, should fully integrate
sustainability, thus driving business results and sustainable
development concurrently.
Driving Sustainability through
Pragmatism
The approach taken by DuPont is pragmatic. If
environmental improvement is side-lined by making it the
responsibility of an isolated sustainability manager, it will never
gain the priority required to truly make a company change. Why not
use proven, existing management structures to drive environmental
and social performance at the same time as business growth?
Sustainability, however, goes beyond internal
company processes. An effective sustainable business strategy must
also focus on product stewardship and societal needs to drive
innovation.
Production should be lean, green and clean. Though
daunting, it is certainly possible for companies to achieve such an
aim. DuPont, for example, has managed to increase its production
volumes by 41% since 1990, while concurrently reducing its energy
consumption by 6%, hazardous waste by 62%, water consumption by 9%
and greenhouse gas emissions by 55% (see Box 1).
At the same time, we have focused on developing
materials and services that allow customers to make cleaner and
greener products, such as polymers that reduce the weight - and
thus fossil fuel consumption - of cars and low-cost technologies
for commercial production of ethanol from agricultural residue and
bioenergy crops, including corncobs and switchgrass.
This was achieved through a consistent drive to
innovate to solve major societal challenges, a thorough knowledge
of our customers and their needs, as well as a strong focus on
product stewardship.
Our investment in footprint reduction goes back to the 1930s,
when the first statement of environmental responsibility was
adopted by the company. Today, our vision is to be the world's
most dynamic science company, creating sustainable solutions
essential to a better, safer, healthier life for people everywhere.
As often as we repeat these words, we remind ourselves that they
are more than an inspirational goal - they inform our everyday
reality and are part of the way we do business at DuPont.
The result is a business strategy designed to focus
on products that can deliver profitability in a more sustainable
way.
Challenges in improving sustainability
If a company wants to make a lasting improvement in footprint
reduction, one of the most critical success factors is the full
engagement of employees in the attainment of corporate goals.
In other words, individual employees need to think about and
take into account the consequences of their actions. The best means
of achieving this is by cultivating a strong company culture.
Voluntary or goal-driven waste reduction is several times less
costly than regulatory driven work, for example, but the change in
culture required is not easy to achieve.
Corporations can be large, unwieldy organizations, having
functioned with an established corporate culture for decades. They
may embrace a sustainability vision, but actually embedding it into
the culture and changing behaviour takes significant time and
energy. They struggle with conflicting aims within their
organization and struggle to find the right balance between
sustainability and business objectives. Often this is because
senior management delegates responsibility for sustainability to a
designated officer, often a specialist without power to incite
meaningful change.
"Without visible leadership
commitment and drive, sustainability and business objectives can
diverge. Companies fail to identify both internal and external
opportunities to improve their sustainability performance and miss
making the most of those they do identify, through the lack of a
cohesive, integrated approach." DuPont
Sustainable Solutions
In adapting to a sustainable business model,
companies face questions such as how to optimize decisions to
ensure it achieves sustainability improvements while keeping costs
down; how to align the organization and achieve operational
discipline with regard to social and environmental strategies; how
to speed up progress towards sustainability goals, reduce risk and
enhance impacts on society?
Without an effective corporate sustainability
business strategy, individual business units can pursue independent
strategies and duplicate work with the result that costs
rise.
The lack of transparency leads to slower overall
progress. Just as for a general business strategy, the corporation
must provide a general direction for individual business units to
pursue.
A clearly defined strategy accelerates
progress
DuPont works with a planning and resource management
system that integrates product stewardship and corporate footprint
reductions with business planning.
It is driven by corporate goals, and targeted at
accelerating environmental and social performance by prioritizing
and optimizing choices, determining and allocating corporate-wide
resources, identifying opportunities for synergies and leveraging,
as well as measuring and forecasting progress towards goals and
objectives.
Market Facing Goals [1]
- Double investment to US$640 million in R&D programs with
direct, quantifiable environmental benefits for our customers and
consumers
- Introduce at least 1,000 new products or services that help
make people safer globally
- Increase annual revenue by at least US$2 billion from products
that create energy efficiency and/or significantly reduce
greenhouse gas emissions
Footprint Goals
- Since 1900, DuPont has reduced global greenhouse gas emissions
measured as CO₂ equivalents by 72%. Further reduce at least 15%
from base year of 2004
- Reduce water consumption by at least 30% at global sites that
are located where the renewable freshwater supply is either scarce
or stressed. For all other sites, we will hold water consumption
flat on an absolute basis through the year 2015
- 100% of the off-site fleet of cars and light trucks will
represent the leading technologies for fuel efficiency and fossil
fuel alternatives
- Since 1990, DuPont has reduced global air carcinogen emissions
by 92%. Further reduce by at least 50% from a base year of
2004
- 100% of our global manufacturing sites will complete an
independent third-party verification of the effectiveness of their
environmental management goals and systems
Fundamentally, the process focuses on the
identification of choices that will allow the company to accelerate
progress towards its environmental objectives, and the optimization
of those choices to ensure maximum business and environmental
benefit (see Box below).
Internally, this means identification of
opportunities for environmental improvement. DuPont found that by
decreasing water consumption and improving operational efficiency
for a cooling tower at the DuPont Dordrecht facility in the
Netherlands, it could reduce the annual intake of freshwater by
100,000m2 - the equivalent to the amount consumed by an average of
700 Dutch households per year. This also led to a reduction of
additive deliveries of water from 130 to 15 per year, thereby
decreasing operational costs and emissions generated through the
delivery process.
As it pertains to implementation, DuPont sees five
steps in the development of an effective corporate sustainability
management plan.
- Build a business case for sustainability
- Understand the impact of key drivers
- Integrate sustainability into the business strategy and
objectives.
- Manage risk, reduce cost and increase stakeholder value
- Develop competencies and support a cultural shift towards
sustainability
By setting up a sustainability management system
that focuses on accelerating value creation and performance, then
integrating it into business strategy; and implementing it in a way
that addresses the cultural changes necessary within the
organization, the process will end up being embraced and
lasting. DuPont also looks at its value chain to minimize
harmful inputs and outputs, while maximizing the "good" across
networks of companies and geographies. The good and bad can be
defined correctly by five elements that have traditionally been
used to encapsulate corporate sustainability:
- Environmental impact of waste;
- Air emissions (with a major focus on greenhouse gases);
- Energy use;
- Fundamental human rights;
- and, increasingly, water,
- all under the goal of decreasing or avoiding the depletion of
resources not only through the value chain, but also through a
lifetime of end use.
Externally, companies should also look at ways of
improving sustainability throughout the value chain by augmenting
product stewardship efforts.
At DuPont, for example, the polymers business was
able to greatly reduce operating costs and improve sustainability
outcomes by initiating a product line simplification project to
incorporate cost product stewardship on raw material inputs that
posed environmental concerns. One modification on a specific
raw material with sustainability and supply concerns reduced the
cost by 10 times and solved the supply issues - this win-win
approach with supplies is currently being expanded to other product
lines.
Realizing Improvement through a
Sustainability Management System
Shareholders have traditionally sought investments
which deliver dividend and share growth. There is a small but
growing recognition that business growth may be linked to
reputation; therefore, companies must allocate importance to
environmental leadership to satiate demands placed by not only
shareholders, but also stakeholders and consumers.
Further, if products are manufactured sustainably,
that means processes improve and become safer, the environmental
footprint is reduced, risk exposure lowered, costs cut - and
revenue is therefore increased. This may sound simple, but is often
difficult for companies to put into practice. However, if companies
manage their environmental commitment like financial and
productivity commitments, they will find efficiencies of scale.
By establishing a management system that integrates
sustainability planning into the core business process and at the
same time focuses on optimizing resource allocation and maximizing
returns, business and sustainability goals can be achieved more
quickly. This has not only worked for DuPont, but also for a
variety of companies and industries we partner with.
"Working with companies that are
motivated to meet the growing expectation of stakeholders and
shareholders, we have conducted initial assessments of their status
quo and aims, formulated visions, designed a solution, then helped
them implement and integrate their sustainability strategy into
common business management practices." DuPont
Sustainable Solutions
This encompassed devising strategy goals, setting up
development guidelines from budgeting to training, putting in place
individual business unit plans which clearly delineate
accountability roles, establishing analysis and reconciliation
metrics through to assisting with implementation and communication
of progress.
By analyzing all opportunities and focusing efforts
on the ones that generate the most value, it is possible to align
business unit strategies with corporate goals. As a result, overall
costs can be lowered, opportunities can be clearly identified,
synergies become transparent, strategies coordinated and, in turn,
much progress can be made.
Such a clear plan helps to avoid the pitfalls which
prevent many businesses from selecting the most effective projects.
Site managers may be tempted to implement their pet projects rather
than those most suited to the needs of the organization.
It is also often difficult to select the "best"
project purely on the basis of raw data. By using a clear
sustainability planning process, the "right" projects, which are
most likely to succeed, can be selected and integrated in the
business planning process. These actions can then be shared across
the company - geographically or functionally - to maximize
results.
Conclusion
The challenges our world faces have not changed. If
anything, they have become more urgent and, in a global economy,
more complex than ever. Companies face a conflict between social,
environmental and economic interests. They need to take a pragmatic
approach which takes into account the business value of
sustainability.
A clearly aligned sustainability management system that
allocates resources intelligently, leverages efforts across
business units, identifies the best sustainability projects for the
company, improves operational discipline and takes into account
specific and measurable sustainability cost benefits when making
business decisions, is the only way to ensure accelerated progress
is made towards business and sustainability goals.
The resulting financial, environmental and societal benefits are
substantial.
Editor's Note: This article
has been adapted from a DuPont Sustainable Solutions publication
entitled "Lean, green and clean: Integrating Sustainability into
Business Strategy."