Transition to Sustainability

While there are many factors supporting the business case for sustainability at 3M, the main drivers for sustainability are operational excellence, organic growth, and risk management. Each of them is linked to corporate business initiatives.

Improving operations has an immediate impact on the bottom line through cost reductions and supports sustainability. Our Pollution Prevention Pays (3P) program has reduced waste and resulted in operating cost savings. Linked with our corporate Six Sigma initiative, improving process yields results in eliminating pollution at the source and lowering operating costs.

Organic growth at 3M means growth through the sales of more and new, innovative products. In recent years, an emphasis has been on products that help customers achieve their goals for sustainability. Through our Design for Six Sigma (DFSS) process and linking with our 3M Acceleration initiative, these sustainability efforts are aimed at creating a competitive advantage.

Risk management benefits present a convincing business case for sustainability alone. Companies need to anticipate and address potential problems before they become liabilities. Companies that do not manage their risks have seen their value drop significantly.

While operational excellence, growth, and risk management are all drivers for sustainability, the discipline required by a pursuit of sustainability frequently spills over into other aspects of a company's operations. Indeed, recent studies suggest that companies that manage their EHS systems well tend to have higher long-term returns than other companies. Innovest (www.innovestgroup.com) cites studies by researchers at Duke University and ICF Kaiser that show environmentally superior companies financially outperform environmentally inferior companies. WestLB AG recently revisited their study "More gain than pain - Sustainability pays off' in October 2003. According to the updated results of the study, "sustain-ability is an independent return-driving factor that can have a positive impact on shareholder value." In studying the performance of sustainability investments, the Dow Jones Sustainability Index achieved a risk-adjusted outperformance of 3.1 percent positive alpha. They conclude, "it pays off to be good."

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