Chad Holliday
Chairman and CEO, DuPont
As prepared for delivery before the
Wharton China Business Forum, Philadelphia, PA,
March 29, 2003

I am pleased to participate in your forum and would like to share with you my ideas about sustainable growth and stakeholder involvement, and how these concerns fit into the overall understanding of a global company's social responsibility. In the process, I will discuss how we are making progress along these lines in our rapid growth in China.

Let me begin by telling you something about DuPont, which this July will be 201 years old. Among the most frequent requests I get from many of my friends in China and other countries is to explain how DuPont has continued to serve its customers for over two centuries. The answer can be found in our history and values.

DuPont began as a small family-run company and has grown to a global enterprise, operating in over 70 countries worldwide. Our first product was gunpowder. The company's founder, E. I. du Pont, relied on science and innovation to make his products better than the competition and more useful for his customers.

From the beginning he also set a tone, an expectation, and an insistence that his company would operate according to certain values. These were safety, health and what we came to call environmental protection; ethical behavior; and respect for people.

As DuPont grew larger, it became a company that knew when and how to change or transform itself for growth in new markets with new products and customers.

We became the world's foremost producer of black powder in our first century and later, of high explosives. In our second century we transformed our company into one of the world's leading producers of chemicals, energy, and materials.

Today, DuPont is a supplier of some of the world's most advanced materials, services and technologies. We are a science company intent on improving the lives of others through our innovation and discovery.

Underlying our successful transformations over two centuries was a clear understanding that DuPont creates value through science and technology, and we never lost sight of that. Science has been at the forefront of our success throughout our history. This year marks the 100th anniversary of our Experimental Station - our world class research center located in Wilmington, Delaware.. Our company employs over 5100 scientists and engineers worldwide - with nearly 2000 located at the Experimental Station.

DuPont remains a global leader in many of the polymer business we invented in the 20th century. But in recent years, we complemented our traditional strengths with investments in biology-based businesses that will be vital to our future. We are, for example, the largest seed company in the world.

Last year we further positioned our company to identify and capture opportunities by realigning our business under five growth platforms. Some of these platforms businesses you connect with DuPont - Coatings & Color Technologies and Performance Materials, for example. But the others indicate capabilities and markets not always associated with DuPont products, but which we have built into outstanding businesses: Agriculture & Nutrition, Electronics & Communications Technologies, Safety & Protection. Meanwhile, many historically important businesses in textiles have been grouped together as DuPont Textiles & Interiors, and we are in the process of separating these from the company.

The objective of the transformation we have underway is to pursue what we call sustainable growth. We define sustainable growth as creating value for society and our shareholders while consistently reducing the environmental footprint of our operations and products. Our main strategies to accomplish that include a thorough integration of all our scientific capabilities; increasing the knowledge content of products we make and services we provide; and a constant focus on productivity to stay competitive.

There is no better example of our pursuit of sustainable growth than the development of DuPont in China. China is an important part of DuPont's growth in our third century and it is exciting to be a part of the fantastic changes that are under way in that country. I've observed it first-hand. I've lived it first hand. And, I am truly encouraged about our future there.

In the past 19 years DuPont has grown from a single local office to three China-based companies. We also have 22 wholly owned sites and joint ventures, each consistently meeting our goal for double-digit growth each year. Among those 22 entities, we have manufacturing facilities for Nonwovens, Crop Protection Products, Films, Coatings, our subsidiary Protein Technologies International., Engineering Polymers, Teflon®, Electronics, and nylon, Lycra and generic spandex.

Our China-based businesses are serving continuously growing markets for products that support China's needs. For some time we have sold such well known products as DuPont Tyvek® protective material, Teflon® non-stick coatings and Sontara® spunlaced products. Now we are also selling Corian® solid surfaces, Tynex® nylon filament, crop protection products such as Londax®, Express® and Sindax®. Our first joint venture in seed braising was put into operation in China. DuPont Safety Resources also launched its presence there and was retained for the new airport project in Guangzhou. All together, we market over 70 products in China.

Our commitment to China is long term, and we have clear objectives. We plan to:

 
Overall, we want to help China develop its extraordinary economic potential in a sustainable way.
This objective fits with China's goals. Premier Zhu Rongji said on March 5 at the opening session of 10th National People's Congress that protecting the environment and natural resources is a basic national strategy of China. He said that economic development should not be achieved at the expense of environment and natural resources.China's leadership has recognized that sustainability, protecting natural resources while developing its economic and human resources is the key for the country to maintain its current speed of economic development. In the past 5 years, the government spent $70 billion in environmental protection and recovery.

Of course, sustainability is more than environmental protection, important as that is. True sustainable growth encompasses corporate social responsibility which requires that a company be responsive to the needs and expectations of all its stakeholders - employees, customers, shareholders and society.

Recently I co-authored with Jurgen Dormann, chairman of Aventis, a report of the World Business Council for Sustainable Development. This report found that new innovations and business developments become sustainable business assets only if they are acceptable to society at large. If sustainable growth is our goal, we must imagine ways for all stakeholders to participate in the process and for all stakeholder concerns to be considered.

Let me give you three brief DuPont examples that illustrate what I mean. Each involves an integrated decision process that considers financial, environmental and societal values.

When we first proposed a set of environmental goals in 1989, a reduction in greenhouse gas emissions was not among them. However in 1991, based on the atmospheric science capability we had developed to better understand ozone depletion, we concluded that there was a credible link between greenhouse gas emissions and global climate change. Our decision to take action at that time was based solely on our commitment to environmental stewardship and our belief that this was the socially responsible course of action.

As a result of this decision, and the installation of several abatement projects, we reported greenhouse gas reductions from our global operations, on a CO2-equivalent basis, of 68% in 2002 versus the base year of 1990.

However, we have not stopped here. To address the need to encourage further reductions, and to build financial incentives for taking action, we have been active in several countries in developing an emissions trading system. To date, we have completed trades valued at more than $40 million.

A second example involves the best technology for the treatment of large volume hazardous wastes. For over 50 years, we have used underground injection wells, a technology that involves injecting hazardous wastes into geologically stable formations thousands of feet underground where the wastes cannot migrate. However, in 1989, acting under a belief that this practice might become unacceptable to the public over time, we set a goal that, by the end of the 1990s, we would eliminate all toxic discharges to the ground or verify that they have been rendered non-hazardous.

 
Again, we took action and spent over $500 million in research, capital and operating costs to develop and install alternatives to deepwell injection over the past decade. In 2002, our reported discharges are down by 87%, and all our existing hazardous injection wells meet the U.S. EPA certification standard that requires the waste will be contained - and thus pose no hazard - for 10,000 years.

However, we have not exited deepwells completely. This is for two reasons. The first is that the alternatives we have explored and, in some cases installed, involve putting these wastes in landfills, which though safe and secure, represent to us and to plant communities a much less desirable option. The second reason is that the added costs of the alternatives, again in some cases, threatens the viability of the manufacturing unit. This second case is another illustration that our thinking has broadened to include both societal and financial values to what began in 1989 as a purely environmental goal. In fact, today, we have additional data and experience that indicate that deepwell injection is the best environmental solution for certain types of waste, a conclusion also reached by the U.S. EPA. However, we will continue to seek better solutions.

A third and last case involves the protection of natural resource biodiversity, an issue high on the list of most environmental groups. As a company since 1994, we have protected through conservation easements and donations nearly 18,000 acres of company land valued at nearly $50 million. In addition, we have played a vital role in improving the agricultural productivity of land around the world while significantly reducing the impact of insecticides, herbicides and pesticides on land, water and wildlife through the development and sale of low use rate agrichemicals.

However, when meeting with our external Biotechnology Advisory Panel, they challenged us to develop an official position stating our intent to "protect and conserve natural resource biodiversity." With their help we now have an official position which has been placed on our corporate biotechnology website as a public statement of our intent and commitment to action.

These three examples show our evolution from environmental stewardship as the primary driver in the 1990s to an integrated approach that considers environmental, societal and financial values with increasingly more input from a broad and diverse group of external stakeholders.

It is this type of integrated approach to stakeholder concerns, social responsibility and sustainability that informs the decisions we are making as we grow our businesses globally and sustainably - in China and elsewhere.

That is why we invited Professor Chen Chuming, founding president of the Chinese Academy of Preventive Medicine, to be a member of the DuPont Biotechnology Advisory Panel. We also invited Professor Duan Ning, Vice President of the China Academy of Environmental Sciences, to be an external judge of the DuPont Sustainable Growth Excellence Awards. They represent key stakeholders in a country of primary importance to our growth. We want to hear what they have to say. We want to benefit from their perspectives. And at the same time, we believe that they and their constituents benefit from observing and participating first hand in how we operate and do business.

In cooperation with the Ministry of Science and Technology, we established the DuPont Innovation Awards which in each of the past three years have recognized 10 outstanding Chinese scientists for their achievements in material science and biotechnology. We have helped promote safety progress with local education bureaus in Shanghai, Beijing, and Shenzhen.

Consider one more example, from another part of the world entirely. DuPont and three other large agricultural companies announced earlier this month that we have agreed to share technology for free with African scientists in a broad new attempt to increase food production on that continent, where mass starvation is a recurring threat. We will donate patent rights, seed varieties, laboratory know-how and other aid to help African agricultural scientists who are working with small farmers to battle plant disease, insects and drought.

The point to underscore that gone are the days where a company expanded and innovated in a vacuum. With socially responsible global companies, very little happens without thorough discussion up front with the key stakeholders involved. This is as it should be. Because of this approach, we make better, more informed decisions. We can anticipate problems before they arise. And when we grow in new parts of the world it can be as a dynamic part of the society in which we expect to participate economically.

The DuPont approach to sustainable growth is one where the emphasis is on achieving business results while meeting important environmental and societal needs. We see achieving environmental improvements as a source of lower costs and increased capacity, and we see meeting societal needs as a source of market development and stakeholder input.

We believe the integration of sustainability thinking into a business' innovation process is not a negative or limiting factor, but rather is a creative opportunity in the business's best interests.

We at DuPont have a long way to go to reach true sustainable growth, and right now, progress toward sustainability is more about the journey than the destination. Even those farthest along in the journey can expect changes to their itinerary, detours, and sometimes the need to travel off the map and blaze a new trail. But if we take the trip seriously, the amount of business value to be generated and the common good to be created will amply reward our efforts.