Gary M. Pfeiffer
Senior VP & Chief Financial Officer
The Year 2000 Conference on Environmental Innovation
The Plaza Hotel, New York
March 8-9, 2000

Good afternoon and thank you for giving me the opportunity to speak today. I would like to start with an apology to all. I was asked to speak about environmental sustainability, but instead, I have chosen to speak about creating shareholder value. So, if any of you would like to move on, I'll certainly understand. If you choose to stay, I hope I will leave you with two key thoughts:

Every corporation is under intense pressure to create ever-increasing shareholder value

And environmental sustainability is an enormous business opportunity to do just that.

Sustainability is not just a societal obligation, it is a real business opportunity. The objectives of those of us who seek increased environmental sustainability and better social responsibility are in many ways exactly the same as the objectives of those of us who seek increasing shareholder value.

In 2002, DuPont will be 200 years old. That makes us the oldest Fortune 500 company in the world. DuPont's chairman Chad Holliday has stated that "we are in the business of meeting human needs". That is what we have been doing for 200 years. Our products and services have changed as human wants and needs have changed, but our basic purpose has remained constant.

Our corporate mission is "sustainable growth". Defined, sustainable growth is creating shareholder and societal value while reducing our environmental footprint. Simply put, we believe it is essential to improve our performance across all three measures if we are to thrive into the next century. We must grow shareholder value. Growing the value we bring to society and reducing our environmental footprint are business strategies to grow shareholder value.

We have not always understood this. Twenty-five years ago, we viewed environmental demands as a legal obligation to be endured. Fifteen years ago, we began to shift our thinking from legal obligation to social obligation. We had to improve because we could. Our challenge was to balance the cost and investment to do what we could do with the cost and investment the marketplace would allow us to spend and stay competitive.

About ten years ago, our thinking began to shift again. This was no longer just a legal obligation or a social obligation. It was also an outstanding business opportunity to create shareholder value - while also increasing the value we bring to society.

So where is the opportunity? It is in profitable growth. That is what our owners, the shareholders of DuPont want. And, they want it with less capital intensity and greater productivity. Society wants exactly the same thing.

Wall Street wants profitable growth. Consumers want products, services and solutions that add value to their lives. Those companies who meet that need will find customers who want to buy. Sounds like profitable growth to me.

- That means a smaller environmental footprint for the value created. Sounds like less capital intensity to me.

- That also means less waste. Sounds like improved yields and manufacturing uptime and productivity to me.

- That also means that as a consumer, I can live safely, free from fear of catastrophic industrial damage. Sounds like being a good steward of the company our owners have invested in.

We believe that a business strategy of sustainable growth to create societal value and reduce our environmental footprint has created and will create shareholder value. Let's look at some real life examples.

1. A team of DuPont employees in Europe developed and marketed a peelable lidding system for packaging applications that eliminates solvent emissions from lacquer coatings, reducing packaging materials and improving taste. This effort rapidly gained DuPont 10 percent of the European lidding market share and reduced 1,000 tons of methyl acetate solvent per year. Profitable growth with more environmentally friendly products.

2. In 1989, we decided to exit the use of deepwell injection for waste at our nylon intermediates plant at Victoria, Texas. Deepwell injection remains legal, but we believed it was not a viable long-term solution for management of certain types of waste. Today, we sell many of those recovered materials that we used to waste. Those products produce $150MM in new revenue - growth - substantial profits for our shareholders and have replaced our competitors' products with a much more environmentally friendly solution.

3. By dramatically improving manufacturing yield and uptime at our 10 LYCRA® plants around the world, we have been able to meet society's growing demand for LYCRA® . Without this, we would have spent hundreds of millions of dollars on new LYCRA® plants. Sounds to me like profitable growth at lower capital intensity - something our shareholders want. It also sounds to me like a smaller environmental footprint and less waste - something society wants.

4. Carpet manufacturers deal with a significant waste issue related to dyeing carpets. DuPont now offers pre-dyed carpet fibers whereby the fiber is dyed in the production process significantly reducing the environmental impact. This has allowed DuPont to be ahead of the curve on market needs, protecting our position with premium branded products and growing market share. Commercial carpet fibers today are a major contributor to the shareholder value of DuPont.

5. As landfill space was becoming an issue, finding recycle options for solid waste became a major challenge. Our Tyvek® business created a post-consumer recycle envelope. This envelope design enabled DuPont to capture significant new business from customers, such as the U.S. Post Office, who were looking for ways to reduce their environmental impact. Another example of profitable growth with a reduced environmental footprint.

6. An analysis of environmental projects submitted for corporate awards from 1994-1998 indicated that we were able to achieve annual cost reduction of $400 million, with an additional $400 million in capital avoidance. Sounds like productivity improvement and reduced capital intensity.

We have maintained our position as one of the safest companies in the industrial world. Additionally, since 1990, air toxics have been reduced by more than 60 percent, air carcinogens by more than 80 percent, and hazardous waste by 30 percent. Energy consumption has remained flat even though production has increased by 28 percent. We also are on track to reduce our greenhouse gas emissions by 45 percent by the end of this year, from a 1990 base.

During the decade of the 1990s, we improved our environmental footprint by about 60 percent and shareholder value increased by nearly 340 percent. I will not try to convince you of the mathematical causality of those two facts. I would suggest for your consideration that they are more than coincidental.

There are a lot of other examples from DuPont, but I hope these provide some evidence that improved environmental sustainability can and does increase shareholder value.

Doing what is right for our shareholders and doing what is right for the environment, for society at the same time, is just good business. Neither is a sacrifice - both are opportunities.

The pace of change is not slowing. Our shareholders and society may quickly say thank you for yesterday, but the dialog with both quickly and appropriately shifts to what will you do next. Yesterday is history. Tomorrow is the future.

We see three emerging trends that will provide new opportunities for companies who see sustainable growth and shareholder value as truly integrated.

They are:

Growing and changing expectations of the role of a responsible company in society

Rising growth of the service economy

Focusing  expansion in the developing world

In the last several decades, the role of a company in society has emerged to be something more than providing goods and services and paying taxes. During the 1960s, the civil rights movement ushered in an expectation about equal treatment of people of color. The 1970s saw the rise of women's rights. The 1980s and 1990s created new expectations about treatment of the environment.

In the future, we see increased public expectations regarding social responsibility and a company's role. We define social responsibility as the company's relationship with its stakeholders: customers/suppliers, employees, society and shareholders everywhere in the world. Socially responsible companies behave respectfully to all stakeholders and contribute to society not only through superior products and services, but also by helping to meet social needs.

These new expectations for improved social responsibility do not replace the expectations for increasing shareholder value. In the future as today, companies must create shareholder value if they themselves are to be sustainable. Being socially responsible without creating shareholder value says a company will cease to exist. At DuPont, our hypothesis is that trying to create shareholder value without being socially responsible will lead a company to exactly the same unfortunate end.

An important measure of the value we bring to society is how well our products, services and solutions meet the needs of the people of the world. Our products today enable space flight, feed the world, save energy, clothe and house people and save lives. Our products tomorrow will do all that and more.

Biotechnology (the addition of modern biology to chemistry, polymers science and engineering) will allow us to create traditional products, such as polyester, from renewable resources like corn. This will help us to reduce our footprint, while greatly improving our shareholder value. Additionally, biotechnology will allow us to make great strides in pharmaceutical and agricultural advances. DuPont is nearing commercialization on a watch that can help diabetics continuously monitor their glucose levels. Staying in a safe glucose range is important in preventing blindness and circulatory problems among diabetics.

In time we will create foods that help fight diseases like breast cancer, osteoporosis and heart disease. Children may be able to get an inoculation by eating a piece of fruit. Additionally, we may be able to use biotechnology to create traditional industrial materials such as polymers and fibers from nondepletable resources like corn instead of fossil fuels.

The combination of our relationship with our key stakeholders and the societal value of our products and services will be the ultimate determinant for our reputation as a responsible company and a major influence on the rate at which we can increase shareholder value. Today, many view social concerns the way they viewed environmental concerns 20 years ago. They have interest in the subject as a way to avoid the negative incident that could erode the corporate reputation. We believe 10 years from now, companies will look at social issues as a source of competitive advantage, just as they do now with environmental issues. E-commerce has taught us the importance of "first mover advantage". "First movers" here will have no less an advantage.

The second major trend we see is the growth of the service economy. In 1973, goods and services accounted for an equal percentage of the economy at $6 billion and $7 billion respectively. By 1998, goods accounted for $8 billion and services $14 billion. Projections for 2023 indicate that goods will account for $13 billion and services $44 billion. What does that mean for a material business such as DuPont. We view it as a ripe, mostly untapped opportunity.

Traditionally at DuPont, growth has been measured by the increase in the number of pounds we made. Growth meant building more facilities and selling more pounds of product. We recognize that this had an increased strain on the environment. If we are to become a sustainable growth company - one that focuses on increased shareholder, environmental and societal value - we need a new model for growth.

This new model does not abandon manufacturing. The people of the world will always need "things". The new model does say that those things must each more effectively meet society's needs and do so in a way that is increasingly sustainable - they will create profitable growth with less capital intensity and less waste. They will create increasing shareholder value because they are increasingly sustainable.

As part of that model, we view environmental footprint much more broadly than injuries, illnesses, waste and emissions. We also include the use of depletable raw materials and energy consumption throughout the value chain.

Recently we set two goals relative to this area. By the year 2010, DuPont will source 10 percent of our global energy needs from renewable energy, such as wind or biomass. When Chad Holliday first made this commitment, some questioned the wisdom. Perhaps if he had waited until today with oil hovering at $30 a barrel, the economic wisdom would have been just as apparent as the environmental wisdom. We further will reduce our global greenhouse gas emissions by 65 percent, using 1990 as a base and we will maintain flat energy consumption.

Additionally, we will derive 25 percent of our revenues from non-depletable resources. These new goals address energy consumption and renewable feedstocks -two areas we believe warrant significant attention for the foreseeable future.

To address our sustainable growth goal, we created the metric shareholder value per pound of product. Through this goal, we are encouraging our businesses to create more shareholder value without creating more pounds of product. This is our new model for DuPont as an industrial materials company.

The third major emerging trend we have identified is growth in the developing economies. In 1998, emerging economies represented $4 trillion of the total $22 trillion global market. By 2023, we expect to see a five-fold increase in the developing economies. Again, this translates into tremendous potential growth for DuPont.

As we move into new markets, one thing we are learning is that reputation is critical. Let me share a story that illustrates this.

Beginning in the mid 1980s, we saw a large growth opportunity in Asia for a product called titanium dioxide. A TiO2 plant is a hazardous manufacturing process. Communities in Taiwan found it hard to accept that a company could operate such a plant safely and without damage to their environment. It took us several years to convince them we could. That was several years of lost growth, lost shareholder value creation.

Well the plant was eventually built and started up in 1994. We have done what we promised. We have operated it safely and we have not damaged the environment.

So what? TiO2 is one of DuPont's best businesses and it creates enormous shareholder value. Our Taiwan plant is a major contributor to that. More importantly, is the future. Recently, DuPont was recognized by the leader of Taiwan as the best company in the country. Future growth investments in Taiwan are expected to be accepted much more quickly because of the reputation we have built. This translates into reduced cycle time, which goes right to our bottom line as profitable growth to create shareholder value.

We also are learning that growth in the developing world cannot mirror the methods used in the developed world, where environmental depletion was an unwanted and/or many decades of unavoidable side effect. The developing world has learned from the history of the developed world. Companies who can figure out how to facilitate growth in the developing world in a sustainable manner will find better acceptance by those countries and will find the opportunity to create enormous value for shareholders.

Perhaps our greatest potential for growth will be the percentage of the global population we serve. Today we in DuPont serve about one billion of the six billion people in the world - primarily in the developed economies. If we are to be a sustainable growth company, we must serve the entire population in a way that is good for society, our shareholders and the environment. That is our challenge for the next 100 years. And when we unlock this potential, the value to our shareholders from profitable - and sustainable - growth will be huge.

As DuPont starts our third century of business, we view sustainable growth as our key defining strategy. By integrating sustainable strategies and practices into our business plans, we will be best positioned to capitalize on emerging trends in a way that builds tremendous value for our shareholders while also improving the environment and society as a whole.

Let me leave you with a couple of thoughts I shared earlier.

Every corporation is under intense pressure to create ever-increasing shareholder value, and
Environmental sustainability and social responsibility tomorrow are enormous business opportunities to do just that.

The companies that understand that will meet the expectations of society and of their shareholders.

Those companies will increase shareholder value and societal value while reducing their environmental footprint.

Thank you.