Founded in 1902, one of the world’s largest companies and a provider of nearly everything you may encounter in your everyday life has just announced a transformation.
3M, with operations in 29 U.S. states and 70 countries with 91,000 employees, has committed to “sustainability” in all of its new products starting in 2019.
So what does this mean, and why is it important?
Size Increasingly Matters
First let’s understand the footprint of 3M. In 2017 the company was responsible for emissions of 5.6 million metric tons CO2e from its Scope 1&2 operations, and 9.3 million metric tons CO2e as upstream Scope 3 emissions. This puts it in the top 1000 publicly traded global emitter category, so how it reports and manages its footprint is incredibly important as an example of leadership.
And there is significant, public evidence of leadership in line with the Paris Accord. The company has recorded a 68 percent absolute reduction in greenhouse gas emissions since 2002, while nearly doubling its revenue. If indexed to total sales, that reduction would be an 84% reduction in carbon intensity.
Use of Products
Keep in mind that 3M has tens of thousands of products currently in the marketplace, with more than one thousand new ones coming out of their innovation pipeline every year. These are things like high voltage power line insulating technologies which are able to dramatically reduce greenhouse gas impact, to cooling technology to reduce the massive amount of energy used by data servers, to lighter and more durable components in automobiles increasing fuel efficiency and safety. 3M is everywhere.
And because it is everywhere, this announcement means that integrating measurable aspects of sustainability into its products could really matter. If fully implemented, it will make 3M a better, more resilient company, but it will also make 3M’s customers better and more resilient.
Gayle Schueller, 3M’s Chief Sustainability Officer explains that “by taking responsibility for the footprint of our products and how they are used, we are doing the right thing from a transparency and reporting perspective as well as from an impact perspective.”
This is a bigger deal than it sounds. There are many companies with very large environmental footprints who choose not to take responsibility for the impact when their products are used by their customers. In fact, many of these firms report emissions, but not for this most important part of their footprint, often called “scope 3” or most commonly “use of product”. It’s arguably a material omission for investors and regulators trying to evaluate risk.
Schueller continues, “a firm is responsible for the entire life cycle impact of its products. We are taking that responsibility very seriously, measuring our performance, and creating opportunity for our firm and our clients. We see opportunity where others may see risk.”
Shareholders will look forward to this example of leadership as 3M continues to measure the impact of its products against its goals. These include at least a 50% reduction in GHGe (vs. 2002 baseline), a 10% reduction in water intensity, and achieving zero landfill status at more than 30% of global manufacturing sites, all by 2025. And 3M has mentioned that more aggressive goals are likely to be announced next year.
“It’s about networked, measurable impact, in a positive direction”, says Scheuller.
As CEOs of carbon intensive businesses worldwide realize what is needed to prosper in an increasingly carbon constrained world, we will see more firms like 3M who, as a core part of their business strategy, are fully transparent on their past emissions, and publish targets in line with the Paris Accords going forward.
Transparency and decarbonization are now a necessary part of competitive differentiation in an era of unprecedented risk and opportunity for business.