Executive Summary

Charity And Challenges

Livio DeSimone
Chairman & CEO of 3M

June 1997

While leading companies around the world have contributed to communities through charitable giving, employee volunteer programs, and responsible environmental practices, a growing number of enterprises are embracing corporate responsibility as a positive business strategy as well as a way to contribute to society.

The potentials of such strategies are perhaps most evident in the environmental arena. 3M, for example, has saved hundreds of millions of dollars over 20 years through its Pollution Prevention Pays (3P) program. More importantly, the company's philosophy of sustainable development has led it to consider the environmental implications of products throughout their entire life cycle, from raw materials to manufacturing processes to ultimate recycling and disposal. We're convinced that in the years ahead companies with the most enlightened environmental policies will also be the most competitive, benefiting both the environment and the bottom line.

Constructive involvement in education also benefits both society and potential employers. 3M programs encouraging science, mathematics and engineering education, combined with support of organizations such as Junior Achievement, have contributed to a better educated, more competitive workforce. By encouraging individuals and helping institutions, 3M and other companies invest in their own futures by helping to shape the workforce of the future.

Experience teaches that corporate responsibility takes root and flourishes best when founded in a broadly accepted set of values. 3M's values, for example, address the company's appreciation of its four core constituencies:

• Satisfy customers with superior quality, value and service;

• Provide investors with an attractive return through sustained, quality growth;

• Respect our physical and social environment;

• Be a company of which employees are proud to be a part.

Besides serving as a primary basis for decision making, corporate values ideally both align with and reflect the individual values of an organization's employees, all around the world.

Applying an enterprise's core values globally in developing countries and diverse cultures presents a number of challenges. At 3M, the lessons of more than 50 years of international business lead us to conclude that the global aspects of corporate responsibility and constructive change are best addressed through long-term participation and learning, and consistent application of our values within local 3M organizations.

Several key factors comprise 3M's approach to expanding its operations, and therefore its values, around the world.

First, conscious and specific attention to the longer, as well as the shorter, term. Sustainability is a criterion central to our international expansion: are the commercial, political and societal characteristics conducive to our successful participation over time? Can 3M become a positive factor in the local community, a provider of meaningful employment, a merchant of useful products, and a contributor to local capabilities, both technological and entrepreneurial?

Second, the extent to which we become part of communities, and positively involved in those communities, is an important determinant of our commercial success and our acceptance into those communities. For this reason, 3M encourages employees at all levels to actively participate in everyday community life, the benefits of which accrue to the community and the company.

Third, as a company built on and driven by innovation, we recognize that innovation is sparked by a multitude of factors and founded in the diversity of ideas, the diversity of cultures, and the diversity of individuals.

The full value of diversity emerges only when it is appreciated, embraced and encouraged. An enterprise's success in adapting to and learning from cultural and individual differences shapes its ability to succeed around the world.

This approach has served 3M well and is validated by the growth and sustainability of our international businesses. Today, with operations in 60-plus countries, less than half our revenues are from sales in the US, and we expect the percentage of international sales to increase.

Global expansion and growth necessitates special attention to corporate responsibility. We believe that a business's ability to succeed and affect positive change draws strength from core values, both individual and institutional.

At the same time, the everyday manifestations of core values must stand the test of reality. If an organization professes ethical business practices, it must conduct its business accordingly or risk losing credibility with internal and external constituencies.

Corporations around the world are taking more seriously their responsibilities to the physical and social environment, both independently and through numerous associations.

The benefits are substantial. To employers -- the loyalty and pride of motivated employees, allegiance of customers, confidence of investors and acceptance by communities. To communities -- useful products, meaningful employment, technological advances, and the creation of economic value and worth.

Edited reprint from FIRST Magazine

Center for Ethical Business Cultures

1000 LaSalle Avenue, TMH 331 ▪ Minneapolis, MN 55403-2005 ▪ USA

Phone: 651 962 4120 or 800 328 6819 Ext. 2-4120 ▪ Facsimile: 651 962 4042

Email: mail@cebcglobal.org

© 1978-2008 Center for Ethical Business Cultures. All Rights Reserved.

Business Partnering with the University of St. Thomas - Minnesota