It is a privilege to be here at the United Nations to participate in the presentation of the World Business Council for Sustainable Development's report on Sustainability Through the Market. I hope that in time, we will look back on this day as a starting point for inspiration and action that will benefit people, business and the environment globally.
When I started my career in industry 30 years ago, the world's population was under 4 billion; today it's over 6 billion. Of those 6 billion, 4 billion live in societies where the annual per capita income is less than $1500. What is special about that figure? It's the minimum considered necessary to sustain life.
In other words, the number of people currently living on about four U.S. dollars per day is greater than the entire world population the day I started working for DuPont. One quarter of those - fully a billion - live on one dollar per day or less. When we think of all the advances and progress of the last three decades, that should profoundly disturb us.
From the human perspective we should be concerned about this because it means that too many people are living with unmet human needs. They have poor shelter and nutrition. They have little access to proper health care and education.
From the business perspective, we should also be concerned, because it means that billions of potential customers cannot buy the products that industry sells. Deprived of economic power, they have no access to the economy we operate in. For these men, women and children, the global market might as well be on some other planet, because its benefits and opportunities are, for them, that far out of reach.
Let me take a moment to remind all of us that at the human level, those billions are individual persons with dreams and aspirations, with hopes for themselves and their children. They come from diverse and rich cultures. They draw meaning and purpose from a variety of traditions and religions. And they have much to offer the whole world in terms of their personal gifts, ideas and creativity. Their lives don't have to be changed completely. They are simply looking for what every person in this room already has- dignity, opportunity and economic empowerment.
The World Business Council has studied this issue and concluded that people in poor countries can be empowered economically. We believe in the ability of the market to meet their needs and generate opportunity if, together, we can come up with ways to make the market work for everyone. Our challenge is to devise approaches in which this can be done sustainably. For those four billion people, the option to develop along the model that the nations of Europe and North America took is not a viable option. That model operated on two assumptions that no longer hold.
One was that cheap, unlimited supplies of hydrocarbons and other non-renewable resources would always be available. The other was assuming an unlimited capacity for the earth's ecosystems to absorb the waste and emissions of our production and consumption.
Improved environmental performance is a necessary but not sufficient condition of sustainability. Even if we cleaned up all manufacturing companies everywhere, the world would not be on a sustainable path. Global consumption patterns are inherently unsustainable given existing technology, energy resources and products. For all six billion people living in the world to live like the average American, we'd need the equivalent of three planet Earths to source the material, create the energy and dispose of the waste.
The practical response to this ethical obligation is for industry to move toward sustainability. And the most efficient way to do that is to harness the power of the market. That's what we know how to do, and that was the idea behind the World Business Council for Sustainable Development project, begun four years ago, to develop an understanding of sustainable consumption.
We did not accept the idea that global consumption is a zero sum game in which the developed economies would have to give up some of their quality of life to help the people in the rest of the world. We viewed that approach as destroying a fundamental premise for business's existence - to create goods and services to improve quality of life. We set out to create a different vision - one in which market forces could be employed to build sustainability rather than degrade the ecology.
We believe the solution is to optimize markets so that they can help promote and sustain social equity, economic prosperity and environmental integrity. That is the new definition of corporate social responsibility.
The World Business Council has a vision and keys for action to achieve Sustainability Through the Market. John Pepper will describe them for you in a few minutes. Of those key steps, "making the market work for everyone" will stretch our powers creativity and innovation.
First, multi-national companies will have to evolve new business models. I emphasize that we will not be able to adapt existing business models; we will have to create new models in which products and a commercial infrastructure are tailored to the local needs of the populations we want to market to.
If we rely on our existing models, the very people we want to reach will be automatically eliminated from our consideration. Our existing models don't tell us how to develop markets where gross margins are slim, unit sales are high, and people are poor.
Our approach to R&D and innovation also tends to focus on product rather than functionality, and that will have to change. Sustainability will have to be built in to every product and infrastructure development. In certain ways, building businesses in these markets incorporates many of the techniques that we are using at the cutting edge of e-commerce: developing a market space, relying on volume rather than margins, using capital efficiently, and selling solutions rather than products.
The difference is that we must take the time to learn what the needs of the people in these markets are and then work with them and their representatives in government, NGOs and local groups to create offerings that present real value, are sustainable to produce and use, and are affordable to consume.
We have to discard certain assumptions we have about what are the "givens" of commerce and lifestyle. In the U.S., direct and indirect per capita water consumption is 4,000 liters per day. In India, per capita consumption is a tenth of that in New Dehli and much less in remote areas. How does that alter our assumptions about cooking, sanitation and apparel, let alone chemical process technology?
We have to look at ways to create buying power. One of the biggest misconceptions is that in poor countries, purchasing power is a zero sum situation - that every company that tries to deliver an offering is competing with every other company for the same limited pool of money.
We know that does not have to be the case. Deutsche Bank has established a fund to assist microcredit institutions around the world. Microcredit institutions are a revolutionary force enabling families to escape poverty. Small loans to emerging entrepreneurs create opportunities for self-employment and lives of dignity. But unless these institutions are profitable, they'll fail. The Deutsche Bank Microcredit Fund was created to foster their long-term sustainability.
The Solar Electric Light Fund, a non-profit organization, has a decade of experience enabling people in poor rural areas of developing countries to borrow money to purchase solar home electrification systems. This is sustainability in action. Clean, renewable electricity helps preserve the integrity of rural villages that are off the grid, improves education and leads to other amenities. The repayment rate of these loans typically is in the range of 99-100 percent and would be the envy of any bank in Frankfurt, New York or London.
Many of these issues come together in an example that I can give from my own company. DuPont is the largest seed company in the world. In the U.S. where farming takes place on an industrial scale and a farmer may farm thousands of acres, we deliver seed in large packages, containing enough seed to plant 3 acres or even much more.
But in many developing countries of Southeast Asia, farmers cultivate plots as small as one-tenth of a hectare. To sell into these markets, we tailor the package type to the individual customer with a small amount of land. For some packages, kernels of corn are actually counted out. This results in a lot of packages, which means more investment in infrastructure for different kinds of packaging and distribution. It's more labor intensive and less efficient. But it works.
We hire local people that understand the local economy and farm structure. To succeed in a business model with small margins, we realized that you have to be doing business in the local economy 100 percent. So that's where our production facilities are for those markets. Now we're doing research and testing locally. We're developing a product that we know is adaptable to the market because it's developed for the market. It's not easy to make money in these markets, but over time, we have become profitable Thailand, Pakistan, India, Indonesia and elsewhere.
I know that there are developing countries eager to work with us. Earlier this year, I met with President Wade of Senegal. Many of Senegal's brightest young people go abroad for their education. Unfortunately many then stay abroad because they find opportunity away from home. President Wade has made a concerted effort to get accomplished young professionals to return and provide them with opportunities for leadership and progress when they do.
To follow through on that, he is aggressively looking for ways to draw companies like DuPont into partnership, but not along the old paradigms of direct aid or as simply a source of raw material. He's looking for investment and for products that will help his nation develop.
A decade or two ago, we would have been unable to even consider his request because we had no business model to create value for our shareholders in an economy such as Senegal's. Today we try to think differently. Companies that succeed in doing that will have a first mover advantage and tap new growth opportunities.
For example, in 1998 we introduced a new herbicide for the cotton-growing countries of West Africa, Senegal among them. About 2 million hectares of cotton are under cultivation in West African nations. The number one enemy of West African cotton is a caterpillar that feeds on the flower buds of the plant.
DuPont developed a new family of chemicals called the oxadiazines. Our product is sold under the brand Avaunt® in sachet packages of 85 milliliters - enough to treat a typical farm of half a hectare. The 85ml pack was also specially developed for this market. It cannot be reused; it reduces packaging waste, and it can be easily disposed of. It's a sophisticated product, destroying the harmful caterpillars, but not hurting beneficial insects like predatory moths, ladybugs and other insects important to the ecosystem in those countries. It does not persist in the environment and is safer than the products it replaced.
We invited 20 African entomologists from the cotton companies of seven countries to our laboratory in France. They carried out practical experiments on cotton and the caterpillars to better understand the new insecticide. Our local distributor in Africa also conducted a series of seminars for farmers and supervisors.
Elements in our success with this product, in addition to the basic innovation, included a team of internal and external experts; a focus on what needed to be done to transfer cutting edge technology to poor nations; and hard work building capacity for a new product by committing time and resources to educate all the stakeholders. By my count, we used six of the 7 Steps to Sustainability Through the Market. The result has been a tangible difference in the lives of cotton growers in West Africa. The high performance of our product enables them to sustain their farming livelihood.
Currently, DuPont sales in Africa total about $100 million annually. We'd like to see that increase. But it must be accomplished sustainably and profitably. That is ultimately what making the market work for everyone is all about. It means solutions and opportunities for the consumer in poor economies, and it means profits and growth for the companies doing business there. One potential misunderstanding that we must avoid from the outset is that we are not talking about philanthropy and humanitarian aid when we speak of making the market work for all.
We're talking about commerce and profits. Those are the means we can use to bring the power of the modern global market to bear on improving human lives while safeguarding the global environmental commons. Real business growth - sustainable growth - represents the only effective way we can employ the wealth and resources of the world's largest companies to help sustainable development in the world's smallest economies.
At the same time, we can expect that a result of these ventures will be lessons in sustainability that developed countries also need to implement. By working with developing countries to leap-frog the environmental failures of the developed nations, multinational companies may succeed at making sustainability the model for business everywhere.
That's the overall goal of the World Business Council's Sustainability Through the Market. Much emphasis may be on developing countries, but we should not interpret that to mean that it is any less urgent for the developed economies to become sustainable as well. The environmental impact of a single consumer in the U.S. is still greater than a dozen or more people living in a developing country.
The challenge before us remains to grow our businesses sustainably. We are at the beginning of what we hope will be the "century of sustainability." We are grateful for all the work of the member companies of the World Business Council who together have brought us to the point where we can truly say, "Let us begin!"
Chad Holliday,