Why DuPont cares about sustainability
Thursday, June 28, 2012/
In 1802, American immigrant Eleuthère Irénée du Pont used French capital and gunpowder machinery to start a gunpowder mill near Wilmington, Delaware. This mill evolved into one of the world’s largest chemical and biotech company, but du Pont paid dearly for his success. The explosives the mill produced would go on to kill his grandson and injure his wife in accidental explosions.
Given this tragic start, safety has always been a large concern at DuPont, explains Fiona Murfitt.
She heads up the Australia and New Zealand arm of DuPont Sustainable Solutions, a global consultancy business within the chemical giant. It was born of the success of DuPont imroving safety and reducing accidents within its operations.
Sustainability became a part for DuPont’s corporate strategy in the 1980s. Given the company’s less than sterling sustainability reputation at that point, Murfitt says they had little choice. At one point, the company was the world’s largest producer of chlorofluorocarbons, coolants that destroy ozone. “There were changes in legislation in the United States that made us the country’s biggest polluter overnight,” she says. “We had Greenpeace slinging down our walls.”
DuPont wasn’t content with this situation, and responded by taking sustainability seriously. It took a broad view of the concept.
“We see our people, our assets and our community as part of our sustainability portfolio,” Murfitt says. “It’s about our license to operate, and about making sure we can keep doing what we’re doing into the future.”
Since the 1980s, the company has had phenomenal success. It managed to cut emissions by 65% below its 1990 levels by 2010. Overall energy usage has declined 5% since 1990, despite a 40% growth in production. The company says it has avoided $6 billion in energy costs over this time span, and continues to save $50 million a year.
This has been matched by more traditional metrics of success. DuPont is currently averaging returns of 141%, compared with 67% for the broader S&P500. To December 31, 2011, its revenues were $US38.7 billion, leading to net profits of $3.47 billion.
When sustainability is considered as part of the broader business strategy and set from the top, Murfitt says, it ends up saving companies money.
“You have to do it at a strategic level rather than have lots of little initiatives,” she says. DuPont vice president and chief sustainability officer Linda Fisher drives it from the top at DuPont. Even in 2001, when global warming prompted less urgency, DuPont’s then CEO Chad Holliday wrote in the Harvard Business Review about how his company was putting sustainability at the heart of its business strategy. “Sustainable growth should be viewed not as a program for stepped-up environmental performance but as a comprehensive way of doing business, one that delivers tremendous economic value and opens up a vast array of new opportunities,” he wrote. Indeed, he stressed that unless it delivered financial benefits, corporate attempts at sustainability were likely to flounder in the long-term.
Murfitt gives the example of energy usage, where she says up to 40% of savings can be achieved with very little capital spend. The key however is embedding it all up the production chain, and making it part of a company’s strategy and culture.
DuPont doesn’t pick its efficiency gains out of thin air. “We’re a science-based company,” Murfitt says. “We have a lot of scientists. And data is a key element of how we run our business.”
“As a principle, we believe data and metrics are really critical. It’s really important to look at sustainability as a return on investment. Because there are so many different investments that you might choose to make. Data is a part of that, a part of measuring how it’s all working.”
DuPont Sustainability Solutions was founded 30 years ago (originally as DuPont Safety Resources) by the company’s current CEO Ellen Kullman.
“We had a lot of clients coming to us and asking us why we were successful,” Murfitt says. “We were seen as a world-class leader in safety.”
Murfitt stresses that it’s something they continually work on (“we’re not there yet”), but says as people were coming to DuPont asking for help, the company decided to codify their processes and form the consulting business.
It’s an unusual consultancy as most of its 85 Australian staff members have an operational background and, remarkably, are drawn together by personal tragedy.
But Murfitt joined DuPont in 2010 as a consultant, and became the group’s Australia New Zealand head late last year. She has a background in marketing and corporate governance.
The death of her brother in law (who fell from height on a work site) prompted her to rethink her career. She completed a master’s degree in risk management, and worked for a time in the oil and gas sector before joining DuPont.
“It’s sad… something that connects all those people to the business is that at one stage or another they’ve gone through some sort of workplace tragedy,” Muffitt says.
“Some people say their father was injured, or they were a general manager who had to knock on the door of a house and say the husband wasn’t coming home. I’ve got 85 people, but they’re 85 pretty amazing, committed people.”
The consultancy has helped most of its clients halve their injury frequency within two years of engagement.
Murfitt laughs wryly when asked where she’s based, saying her job means she’s never in the one place for long.
As a leader at DuPont, she’s required to demonstrate what the company calls “felt leadership”, which means she’s never in the one city for more than a week, and often a lot less than that.
“It’s a big part of DuPont,” she says. “It’s about being visible, having conversations, including the courageous ones, knowing the people, stepping foot and seeing what’s happening, and talking to clients.”
“Felt leadership is about how I demonstrate that I care.”
It’s not the only structure she’s mentioned about working at DuPont. The company appears prescriptive about its preferred leadership style – hierarchical but involved.
She says that structure is a blessing.
“It makes decisions easy – the framework is all there. It means whenever we’re put in a compromising ethical position, the decision is easy, because we know what we have to do. It takes the ambiguity out of the question, and if it’s still there, we know we just have to pick up the phone and ask. There’s a very strong culture here, there is a very high standard that we work to.”
“When things go wrong, which they have, we’re quite devastated by that. We take a pause, the whole company stops.”
“It’s what I was looking for,” she says.
“The core values underpin everything we’re about.”