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Reader Profile

Charles O. Holliday, Jr.
Chairman and Chief Executive Officer
DuPont

Editor's note: Each month, we ask a Directors & Boards reader to comment on critical issues facing directors today. If you'd like to participate in this section in the future, please email Scott Chase.

How do you identify your stakeholders and balance their interests in today’s rapidly changing environment? How can business leaders best engage stakeholders who may be critics of their firm or industry?

We have traditionally identified four stakeholder groups important to DuPont—shareholders, customers, employees and society. We fully understand the shareholders are the owners. Their best interest is served by the other three. At different times in our history, emphasis has shifted among those stakeholders. But that set provides us with an enduring template for identifying and engaging the people and groups who are vital to the continued success of our enterprise. We balance their various interests by listening and through dialog. We regularly poll our employees to find out how they see the company and how they feel about their ability to contribute to its growth. Our public affairs and issue scans enable us to maintain a good sense of the trends and developments important to stakeholder groups.

I personally participate in conferences and other events where I am able to state our company’s position relative to public issues and to talk with others who approach the same issues from different points of view. So while we rely to a great extent on information that we gather, there is really no substitute for some first-hand interaction with leaders in other sectors, whether friends or critics.

How else does the company embed the Company Stakeholder Responsibility mindset across the enterprise in its overall value proposition?

First, DuPont is a leader in terms of Company Stakeholder Responsibility through safety. For more than 200 years, DuPont has placed a concern for safety above all others. We have the most stringent and effective safety policies in our industry, which our trading partners, suppliers, and even competitors use as a benchmark. In 2000, we created a safety consulting business now worth over $100 million annually to provide training, certification and development around safety issues.

Second, the shift of DuPont’s products from a chemical basis to a biological basis has allowed our products to have a substantially smaller footprint on the environment. Having a diversity of disciplines as the foundation of our science allows us to invent and manufacture products that are both innovative and socially and environmentally responsible. Our regard for the environment is what will allow DuPont to thrive and survive in our third century.

DuPont has an over-200 year-old legacy supporting its core values of safety and health, environmental stewardship, ethics, and respect for people. In particular, DuPont is well-known for its “safety moments” that are deeply engrained in all DuPont employees. How would you advise corporate leaders whose companies don’t have such a long legacy and want to build similar lasting core values?

Because our core values have been part of our company’s culture for so long, it’s hard for us to imagine operating without being able to consistently refer back to the values that drive us. As we moved through a historic transformation of the company in the past eight years, we indicated that everything was open to change except our core values. We measure and gauge our progress opposite those values with a lively set of metrics that employees have access to. For example, any employee can see our statistics on year-to-date safety and environmental performance every day by clicking on a link accessible through our daily electronic newsletter. In every written letter or video message to employees I make some mention of core value performance – and in those rare few instances when I didn’t, I heard about it! Our core values work for us. They make us a more desirable company to do business with or have operating in your back yard. They give us a set of standards that make good and capable people want to work for DuPont. They give real backbone to interaction with our stakeholders.

For us, core values are central to our identity of who we are as DuPont, and they are the link through the generations of DuPont employees over our 205 year history. For companies that don’t have a set of values that can help them accomplish that, I would recommend that they take the time to understand and identify what values inform their behaviors and underlie their operating principles and the way they do business. Once those values have been identified you have to drive them everyday in what you say and what you do. You have to act in a way that proves beyond a doubt that they are true non-negotiables. You have to measure your performance against them, and where you don’t measure up, your stakeholders have to see you make the necessary adjustments to get on track and stay there.

You have been at DuPont for 37 years. During that career progression, what are some defining moments that have contributed to both your own and DuPont’s current approach to sustainability?

As a company, we have learned from scientific insights into the safety of our products and from changes in environmental laws. In the 1970s, DuPont was the world’s largest producer of CFCs. As CFCs became more closely linked to environmental change, we started the process of eliminating CFCs from our product offerings.

As a global leader in sustainable business practices, DuPont now works to direct the chemical industry toward developing more environmentally and socially friendly products. We influence the chemical industry most by constantly setting the bar higher on what is expected of a chemical company, by creating more biology-based products, and by considering the needs of the communities our business affects. For example, DuPont is the world’s leading producer of soy protein, which is now being used in various products that were traditionally chemically-based, such as printers ink.

Personally, I have learned more from interacting with our many talented employees – engineers, scientists, managers, front-line plant workers, and others – based in over seventy countries. Interaction with leaders of other companies and with U.S. and international government leaders has also taught me a great deal. There are various trade and development organizations DuPont is part of. Recently, I represented DuPont at meetings of the World Business Council for Sustainable Development and the World Economic Forum.

You are the Chairman of Business Roundtable’s Environment, Technology and the Economy Task Force, you have served on other leadership groups like President Bush’s National Infrastructure Advisory Council, and you have co-authored the book Walking the Talk, which outlines the business case for sustainability—what drives you to lead change in this broader arena outside of your own company?

DuPont’s long history has demonstrated to us that no company, however strong and competitive, can go it alone. Involvement in outside organizations and endeavors is a way of learning and leading. Working with other companies, we can learn from the rich variety of experiences that they share. I never walk away from a Business Roundtable meeting without a new insight that affirms something we’re doing or challenges me to think in a very different way. The S.E.E. Change initiative we kicked off some time ago was aimed at precisely that—dozens of companies visibly doing creative things to work more sustainably so their successes might trigger equally good but different ideas among their peers. The whole idea of sustainability as a realistic goal for industry came about because organizations like the World Business Council for Sustainable Development kept hammering away at it and offering up real life examples.

We can lead in those areas where our experience positions us to effect positive change. Ultimately, all this is good for our company and makes a lasting impression on our stakeholders.

You’ve argued that business leadership involves setting industry standards, not just following them. Why is it important for firms to manage stakeholder relationships themselves rather than leaving it to regulatory agencies? How can government and business work together most effectively to set standards that create value for multiple stakeholders?

The complexities and opportunities of modern business and industry are too great to assume that regulation alone can get us where we have to go. Regulation, as we have seen historically, is not a precision tool for change. But it can overcome inertia and get things going. The landmark environmental legislation of the 1970s and 1980s set in motion the kind of change that in the U.S. has led to cleaner air and water. No one doubts that. But how would you go about regulating sustainability? We can expect that government will identify some pressure points where regulatory instruments can advance the cause. But real progress in sustainability will come from what we build into products and services, in the way we design and operate our plants and distribution networks, in the way we think about the ultimate disposition of the things we make, even – and especially – in the way we direct our research and development. It’s hard to imagine regulatory protocols that can encompass all of that.

Industry has to be imaginative and proactive and show that we can accomplish the things our stakeholders expect of us, especially those things that go beyond the letter of the law. We reduced our greenhouse gas emissions by 72 percent since 1990 because our stakeholders expected us to be proactive and lead in this area. Right now one of the most exciting things we’re doing at DuPont in sustainability is the construction of a plant for a bio-based route to a key ingredient for our Sorona® polymer. It will be on stream this year. To be sure, work we did in bio-refinery development funded by the Department of Energy helped us understand the potential of such processes. But no one told us we had to do it. We worked with a business partner to make this happen because we think this is the way profitable businesses will operate in the future.

Our stakeholders understand this and they expect it of DuPont.

Chad Holliday, 59, is the chairman of the board and chief executive officer of DuPont. He is the 18th executive to lead the company in more than 200 years of DuPont history. He became CEO on February 1, 1998 and chairman on January 1, 1999.

Holliday has been with DuPont for more than 35 years. He started at DuPont in the summer of 1970 at DuPont's Old Hickory site after receiving a B.S. in Industrial Engineering from the University of Tennessee. He is a licensed Professional Engineer.

In 2004, he was elected a member of the National Academy of Engineering. He became chairman of the Business Roundtable's Task Force for Environment, Technology and Economy the same year. He is also past chairman of the World Business Council for Sustainable Development (WBCSD), The Business Council and the Society of Chemical Industry – American Section. While chairman of the WBCSD, Chad co-authored a book Walking the Talk which details the business case for sustainable development and corporate responsibility.

Holliday also serves on the board of Deere & Co. and is chair of the board of Catalyst. In addition, he is chairman of the U.S. Council on Competitiveness and is a founding member of the International Business Council.