Sustainability and Risk Management

By focusing on sustainability, a company can anticipate and deal with potential problems before they become serious liabilities. The ability to anticipate and manage such risks is invariably rewarded by investors, customers, and employees. Conversely, companies that do not manage risks have seen their value (stock price) plummet. Indeed, the risk reduction and risk management benefits alone constitute a convincing business case for pursuing sustainable development.

Two examples help illustrate this benefit.

• Global sourcing. Multinational companies (and many local ones) source raw materials and manufactured goods from suppliers located around the world. For economic or cultural reasons, not all of these suppliers use products or processes that are sustainable - a situation that can compromise the ethics of purchasers and can reduce the vendor's ability to provide a consistent supply of high-quality products. Because it considers a supplier's sustainabil-ity when it begins developing business partnerships, 3M is more likely to build relationships with responsible and reliable vendors.

• Global climate change. Because of its attention to sustainability, 3M began to assess and respond to global climate change over six years ago. It created a cross-functional task force that inventoried the company's greenhouse gas (GHG) emissions and proposed strategies for significantly reducing them. These strategies include major investments in new abatement technologies, the inclusion of global climate change impacts in LCM reviews, and process changes to reduce GHGs. Because these strategies were developed in advance of regulation or sudden shifts in marketplace demands, 3M has been able to implement them in a deliberate, well-planned fashion that has minimized the disruption to employees, customers, and shareholders. 3M has received third-party verification of its GHG inventory, which was developed using the World Resource Institute's/World Business Council for Sustainable Development's GHG Protocol. The company plans to include additional greenhouse gas emissions data, including expected reductions, in its sustainability reporting.

Such benefits are usually the result of a systematic approach for facilities and business units to identify and manage their risks. The 3M EHS Management System, described above, provides an example of how such an approach can be applied. This system imposes a formal process for identifying risks, prioritizing them, and then addressing them through action plans. An EHS Scorecard tracks progress toward targets; senior management regularly reviews this progress and charts the course for further EHS improvements. External Communications: Reporting and Marketing Claims. Reporting offers additional opportunities to reinforce 3M's commitment to sustainability and enhance its reputation. In the mid-1970s, 3M's reports on its environmental progress (issued as part of the 3P program) were among the first by any major corporation. Since then, the company's reporting has been explicit about its goals and its success in meeting those goals.

In 2002, the company also published its first Sustainability Report (available online at, which documents ethical and employment policies, community involvement, and contributions to economic health, in addition to environmental programs and results. This report was prepared using the Global Reporting Initiative's (GRI) June 2000 Sustainability Reporting Guidelines. In addition, it follows the overarching principles detailed in the GRI Working Paper, April 16, 2001, "Overarching Principles for Providing Independent Assurance on Sustainability Reports."

Although 3M recognizes the competitive advantage of sustainable products and processes, the company is very careful about marketing claims that refer to such qualities or benefits. Before such claims are allowed, they must be approved by the 3M Environmental Marketing Claims Review Committee, which consists of legal, marketing, technical, and other experts. Approval is based on technical accuracy and clarity. Broad environmental claims, such as "environmentally friendly," are prohibited because they are ambiguous and impossible to document. Rigorous attention to these claims helps assure 3M customers that they can rely on their accuracy.

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