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GROWING LONG-TERM VALUE: CORPORATE ENVIRONMENTAL RESPONSIBILITY AND INNOVATION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CHILDREN’S HEALTH 

AND ENVIRONMENTAL RESPONSIBILITY 

OF THE

COMMITTEE ON 

ENVIRONMENT AND PUBLIC WORKS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

MAY 16, 2012 

Printed for the use of the Committee on Environment and Public Works 

( 

Available via the World Wide Web: http://www.fdsys.gov 

(II) 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

BARBARA BOXER, California, Chairman 

MAX BAUCUS, Montana 

THOMAS R. CARPER, Delaware 

FRANK R. LAUTENBERG, New Jersey 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

SHELDON WHITEHOUSE, Rhode Island 

TOM UDALL, New Mexico 

JEFF MERKLEY, Oregon 

KIRSTEN GILLIBRAND, New York 

JAMES M. INHOFE, Oklahoma 

DAVID VITTER, Louisiana 

JOHN BARRASSO, Wyoming 

JEFF SESSIONS, Alabama 

MIKE CRAPO, Idaho 

LAMAR ALEXANDER, Tennessee 

MIKE JOHANNS, Nebraska 

JOHN BOOZMAN, Arkansas 

BETTINA POIRIER, Majority Staff Director 

RUTH VAN MARK, Minority Staff Director 

SUBCOMMITTEE ON CHILDREN’S HEALTH AND ENVIRONMENTAL RESPONSIBILITY

TOM UDALL, New Mexico, Chairman 

SHELDON WHITEHOUSE, Rhode Island 

KIRSTEN GILLIBRAND, New York 

BARBARA BOXER, California (ex officio) 

LAMAR ALEXANDER, Tennessee 

DAVID VITTER, Louisiana 

JAMES M. INHOFE, Oklahoma (ex officio) 

(III) 

C O N T E N T S 

Page 

MAY 16, 2012 

OPENING STATEMENTS 

Udall, Hon. Tom, U.S. Senator from the State of New Mexico ............................ 1 

Alexander, Hon. Lamar, U.S. Senator from the State of Tennessee ................... 2 

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma, prepared 

statement .............................................................................................................. 52 

WITNESSES 

Brady, Todd, Global Environmental Director, Intel Corporation ........................ 4 

Prepared statement .......................................................................................... 6 

Sauers, Len, Ph.D., Vice President, Global Sustainability, The Procter & 

Gamble Company ................................................................................................. 13 

Prepared statement .......................................................................................... 15 

Smith, Parker J., Vice President and General Manager, Worldwide Manufacturing Support and Quality, Eastman Chemical Company .............................. 21 

Prepared statement .......................................................................................... 24 

Response to an additional question from Senator Inhofe ............................. 30 

Jackson, D. Mitchell, Staff Vice President, Environmental Affairs and Sustainability, FedEx Corporation ........................................................................... 31 

Prepared statement .......................................................................................... 34 

Response to an additional question from Senator Inhofe ............................. 39 

(1) 

GROWING LONG-TERM VALUE: CORPORATE 

ENVIRONMENTAL RESPONSIBILITY AND INNOVATION 

WEDNESDAY, MAY 16, 2012 

U.S. SENATE, 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS, 

SUBCOMMITTEE ON CHILDREN’S HEALTH

AND ENVIRONMENTAL RESPONSIBILITY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10 a.m. in room 

406, Dirksen Senate Office Building, Hon. Tom Udall (Chairman of 

the Subcommittee) presiding. 

Present: Senators Udall and Alexander. 

OPENING STATEMENT OF HON. TOM UDALL, 

U.S. SENATOR FROM THE STATE OF NEW MEXICO 

Senator UDALL. The Subcommittee will come to order. 

Today’s hearing is titled Growing Long-Term Value: Corporate 

Environmental Responsibility and Innovation. 

First, I would like to welcome our witnesses, and I would like to 

give a special welcome to Mr. Brady, Global Environment Director 

from Intel, the largest private sector employer in the State of New 

Mexico. 

These companies represent a cross-section of blue chip American 

businesses that are taking significant actions toward corporate environmental responsibility. My primary goal in this hearing is to 

learn from them about these key trends. The next goal is to apply 

that knowledge in shaping voluntary Federal partnerships that 

help U.S. industries become more sustainable and profitable. I am 

also interested in how we can increase the transparency, publication, and information sharing of corporate environmental information. 

Businesses know that you cannot improve something unless you 

measure it. Recently, we have seen a stream of interesting reports 

from the business world on the topic of sustainability, innovation, 

and profitability. A recent MIT-Boston Consulting report found sustainability nears a tipping point. They found 70 percent of companies had sustainability on their permanent agenda. Two-thirds said 

it was important to competitiveness. 

A KPMG international report says expect the unexpected. Water 

scarcity, fuel scarcity, climate change, deforestation, and food security will impact businesses in new and complex ways in coming 

years. PricewaterhouseCoopers’ 14th annual CEO survey found 

2 

that two-thirds saw environmental responsibility as an innovation 

opportunity. Ernst & Young found that over 75 percent of 270 executives saw resource scarcity affecting their businesses in the next 

3 to 5 years. The Business Roundtable, an association of CEOs of 

large U.S. businesses, recently issued a report—Create, Grow, Sustain—with 126 CEOs describing their efforts to improve sustainability while creating jobs. 

The converging trend toward corporate environmental responsibility in the business world is in contrast with Congress’ seemingly 

growing divisions. My hope is that a greater understanding of sustainability business practices will benefit all in Congress, regardless of views on any particular bill or regulation. 

The Federal Government has great powers, and in America we 

rely on voters to ensure that power is used responsibly. But market 

forces can be even more powerful in many areas, so we are relying 

on business to exercise their market power responsibly. 

To some pessimists this may sound hopeless. But our testimony 

today gives me optimism that the interests of business and the environment can align. Businesses need water, energy, and raw materials, and they will need them on an ongoing basis, even after 

those of us in this room are gone. If businesses harness market 

forces to reduce energy use, raw materials, emission, and wastes, 

they will improve their own future and future generations. 

In decades past, economic growth could occur with little regard 

to resources like clean air, clean water, and raw materials since 

these were cheap and abundant. With 7 billion people on the planet 

and rapidly developing nations like China and India, this is no 

longer the case. Recently, more and more business like the ones 

here today are recognizing that competitive advantage, market 

share, and innovation lie in doing more with less. 

With that, I will now turn to our Ranking Member and the distinguished Senator from Tennessee, Senator Alexander, for any 

opening remarks that he might have. 

OPENING STATEMENT OF HON. LAMAR ALEXANDER, 

U.S. SENATOR FROM THE STATE OF TENNESSEE 

Senator ALEXANDER. Thanks, Mr. Chairman. 

I first want to thank Senator Udall who—for creating this hearing, and for scheduling it at a time when we both could be here, 

and for allowing me to invite witnesses from two Tennessee companies who have distinguished themselves in sustainability, both 

Eastman Chemical and FedEx. So thank you, Tom, for your leadership. 

I just left a meeting—well, let me put it this way. I do not want 

to be too personal about my daughter graduating, or is graduating, 

with an environmental management degree from Duke University, 

and she talks about the word sustainability a lot, and I often say 

to her, do not use that word with a lot of people because they do 

not know what you are talking about. 

[Laughter.] 

Senator ALEXANDER. They do in the university, and they do at 

the highest corporate levels, and they do in environmental groups. 

But it has a very broad meaning. And when dealing with business 

3 

people or potential clients, good words might be save resources and 

save money. I think that it what we are talking about. 

I just left a meeting with a group of business leaders who are 

deeply concerned about our reliance on Middle Eastern oil. They 

were even quoting Friedrich Hyek and Adam Smith and saying 

their ideology would allow some mandates for flex fuel vehicles in 

order to break up the OPEC cartel. And so, they were looking at 

sustainability as a national security issue. 

The words that come to my mind are that to—on the front page 

of USA Today is a long story entitled U.S. Energy Independence Is 

No Longer a Pipe Dream, and citing all of the advantages to the 

United States from national security to more jobs to profitable corporations for having energy independence. And the words that 

come to my mind for that as a strategy are really to find more and 

use less. In the business world I think that means to save resources and save money. 

I am particularly glad that Parker Smith is here, who is the General Manager and Vice President for Eastman Chemical. He can 

tell me Eastman Chemical’s story, but I know how excited they are 

to have been nationally recognized this year for their work on sustainability, and I look forward to his remarks. 

I also welcome Mitch Jackson from FedEx. Fred Smith, who is 

the CEO of FedEx, has been a national leader in encouraging others to use electric vehicles and himself has helped his company 

lead the way. They have increased electric and hybrid truck fleets 

by 20 percent. They have improved their miles per gallon. They 

have saved over 53 million gallons of fuel, and in doing so they are 

thinking about saving resources and saving money over the long 

term. Their estimates are—I guess we will hear more about Eastman and FedEx’s savings. I will let them tell that story. 

There is one other Tennessee company that I ought to mention. 

Cummins Engine is not headquartered in Tennessee, but it has 

major operations there, and as a result of the decision by the Clinton and Bush administrations to get rid of high sulfur content in 

fuel for heavy trucks, new engines were required. And in that case 

the EPA allowed 10 years to get the job done, and over that time 

Cummins invented a new engine. The engine costs more, but the 

truckers supported it eventually because it saved them money because the engine was more fuel efficient. 

So in that case, a company, Cummins, is helping other companies 

with heavy trucks save resources and save money. 

I look forward, with Chairman Udall, to hearing from these witnesses about how we can help create an environment in which 

American corporations can save resources and save money. And I 

am glad to have these wonderful examples from Intel and Eastman 

and FedEx and other witnesses here today. 

Thank you, Mr. Chairman. 

Senator UDALL. Thank you, Senator Alexander. And let me just 

echo what you said. It was a real pleasure planning this with you 

and doing it on a bipartisan basis, and I think as a result of that 

we have some very, very good witnesses today. 

Senator ALEXANDER. I did not mention Procter & Gamble. That 

was a terrible error. 

Senator UDALL. Please, go ahead. 

4 

Senator ALEXANDER. They have a long and distinguished history 

in our State as well. This is a fine American company, and I look 

forward to what they have to say as well. 

Senator UDALL. It sure is. It sure is. And I am excited that your 

daughter is so involved with sustainability. I hope to get to meet 

her sometime, and I hope that she is maybe tuning in. You said 

that she would be working, but maybe she will consider that. 

Senator ALEXANDER. She is paying the rent. 

[Laughter.] 

Senator UDALL. Anyway, but with that, let us turn to our witnesses and start from the left with Mr. Brady. You will each have 

5 minutes for a statement, and then we will have a discussion. 

Your full testimony will be in the record, so you can proceed however you like. 

STATEMENT OF TODD BRADY, GLOBAL ENVIRONMENTAL 

DIRECTOR, INTEL CORPORATION 

Mr. BRADY. Thank you, Senator Udall, Senator Alexander. It is 

a pleasure to be here this morning. 

My name is Todd Brady. I am the Global Environmental Director 

for Intel Corporation. Today, I hope to briefly convey how sustainability is integrated into our business strategy. 

By way of introduction, Intel Corporation is the world’s largest 

semiconductor manufacturer with revenues of over $50 billion in 

2011. We employ approximately 100,000 around the globe, over 

half of whom are located here in the U.S. In fact, three-quarters 

of our manufacturing capacity is here in the United States in 

States such as New Mexico, Arizona, Oregon, and Massachusetts. 

As such, we have long been stewards of the environment and are 

proud to often be recognized as leaders in environmental matters 

by external rating agencies. 

Let me give you a little bit of background on Intel, and this is 

important as it relates to our approach to environmental sustainability. Over 40 years ago one of our co-founders, Gordon Moore, 

observed that the number of transistors in a semiconductor device 

doubles roughly every 2 years. This was later dubbed as Moore’s 

Law and has been the driving force behind the innovation in our 

industry. Devices and gadgets that we could not even imagine a 

decade ago are now reality because of Moore’s Law. 

In effect, to give that a little perspective, if one were to apply 

Moore’s Law to an automobile over the past 40 years, today’s automobiles would exceed speeds of 400,000 miles per hour, have a fuel 

economy of 100,000 miles per gallon, and cost less than a nickel. 

So, amazing innovation in our industry moving forward. 

How does that tie to the environment? Let me focus on three 

areas—first, our operations, second, our products, and then third, 

the application of our products to solve environmental challenges. 

First, our operations. As I mentioned, every 2 years due to 

Moore’s Law we have the opportunity to develop a new manufacturing technology. This means this is an opportunity also to insert 

environmental thinking into our technology development process. 

That process we call our design for environment process. It has 

worked very well for us. Over the past decade, we have invested 

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$100 million, for example, in water conservation initiatives that 

have resulted in over 40 billion gallons of water savings. 

We have reduced our greenhouse gas emissions 80 percent on a 

per product or per chip basis, and we recycle over 80 percent of our 

waste worldwide. We have recently installed 15 solar installations 

at facilities across the U.S., and we are also the largest purchaser 

of renewable energy in the United States, this past year purchasing almost $2.8 billion kilowatt hours of renewable energy. 

I now shift focus a little bit to our products. The biggest opportunity that we have in terms of growing our business and aligning 

that with sustainability is to create energy efficient products so 

that your cell phone lasts longer, your notebook lasts longer, your 

costs to operate our devices is less. 

In 2006 we made a strategic decision to focus on energy efficient 

performance. The results of that have been quite significant, such 

that from 2007 to 2014 the next billion PCs that will be sold, they 

will consume half the amount of energy and yet have 17 times the 

computing power of the first billion PCs which were sold worldwide. 

Last, let me touch on, then, the application of Intel technology, 

IT technology in general, on the world. And here is, perhaps, the 

most compelling story to align our business strategies to sustainability and that is the opportunity to integrate IT to make the 

world more efficient, whether that is efficient buildings, efficient 

transportation, efficient you name it. The applications are numerous. 

In fact, a recent report by the Climate Group and Global Sustainability Initiative concludes the better use of IT technologies has the 

potential to reduce greenhouse gas emissions by 7.8 gigatons. That 

is 15 percent of the worldwide greenhouse gas emissions. And that 

represents a potential savings of $950 billion. 

So in short, we do believe at Intel that a focus on sustainability 

in business goes hand in hand, whether that is our operations, our 

products or applications of our products. So, investing in sustainability, we believe, is an investment in our business. 

Thank you. 

[The prepared statement of Mr. Brady follows:] 

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Senator UDALL. Thank you very much. 

Mr. Sauers, I see you have a product there in front of you, Tide 

Coldwater, and I am sure you are going to tell us about that. 

Mr. SAUERS. Yes, sir. 

Senator UDALL. Please go ahead. 

STATEMENT OF LEN SAUERS, PH.D., VICE PRESIDENT, GLOBAL SUSTAINABILITY, THE PROCTER & GAMBLE COMPANY 

Mr. SAUERS. Well, Senator Udall, Senator Alexander, thank you 

for inviting me to testify today. My name is Len Sauers. I am the 

Vice President for Global Sustainability at Procter & Gamble, and 

I lead the overall program here in the U.S. and around the world. 

P&G manufactures and markets a broad range of consumer products that are used by over 4 billion consumers every day. In October of this year we will have been operating in the United States 

for 175 years. 

Today, I would like to talk to you about our efforts in sustainability, covering three areas—how we are improving the environmental footprint of our products, how we are improving the environmental footprint of our operations, and our program in social responsibility. 

Let me begin with our products. When we began the process of 

improving the environmental footprint of our products, we conducted extensive consumer research to understand what consumers 

thought about sustainability. 

Our research showed that the vast majority of consumers, greater than 75 percent, are eco-aware and want to do the right thing, 

but they are not willing to accept any tradeoffs such as a higher 

price or a decrease in performance in order to purchase a product 

that claims to be environmentally sustainable. Now, we call these 

individuals the Sustainability Mainstream Consumer, and our goal 

is to develop products that fulfill the needs of these consumers, 

that is products that enable them to be environmentally sustainable but for which there are no tradeoffs in either value or performance. 

An example of such a product is Tide Coldwater, as you highlighted. We determined that in the laundry process there is a significant amount of energy used to heat water for machine laundering. So, we developed Tide Coldwater which uses proprietary 

technologies that enables consumers to wash in cold water but get 

the same cleaning performance that they expect in hot or warm. 

Such a product can enable consumers to be environmentally sustainable in a meaningful way by leading to a significant reduction 

in energy use. If every household in the United States that uses 

hot or warm water today were to switch to cold, the energy savings 

would be 33 billion kilowatt hours per year. That is equivalent to 

the consumption of 4.4 million households. 

Another example is Downy Single Rinse. This product is marketed in developing geographies such as the Philippines where 

laundry is largely done by hand. In these geographies, consumers 

wash their clothing in one basin and then go through a series a 

rinses to remove the detergent. 

Downy Single Rinse is formulated with technologies that sequester the detergent, allowing the consumers to rinse in only one step. 

14 

Such a product can enable consumers to be environmentally sustainable in a meaningful way by leading to a significant reduction 

in water use. Since its introduction in January 2008 Downy Single 

Rinse has led to over 35 billion liters of water being saved. 

In 2007 P&G set a 5-year goal to develop and market at least 

$50 billion in sales of products such as these, products that lead 

to meaningful environmental improvement with no tradeoffs. 

We improved the environmental footprint of our operations by focusing on driving conservation and eco-efficiency throughout our 

global manufacturing facilities. In 2007we set a 5-year goal to deliver at least a 20 percent reduction in carbon dioxide emissions, 

energy consumption, and water use from our plants. 

We are also reducing the amount of our manufacturing waste 

that is going to landfill. Today, about 1 percent of all raw materials 

that enter a P&G plant goes as disposed waste into landfills. To 

address this, we created a team whose job it is to find beneficial 

uses for that waste. Due to their efforts, 15 of P&G’s 140 facilities 

are now zero waste to landfill. 

For decades P&G has transported product in a multimodal fashion which uses multiple forms of transport. But today we are shifting toward intermodal transportation which uses containers that 

transfer smoothly between modes, optimizing the transportation 

process. Use of this approach in North America has reduced our 

transportation costs and improved sustainability by saving 11 million liters of diesel fuel. 

P&G’s corporate social responsibility program, known as Live, 

Learn & Thrive, focuses on helping children in need with the essentials to live, learn, and thrive. Our Children’s Safe Drinking 

Water Program is focused on delivering safe drinking water to children around the world. In collaboration with the U.S. Center for 

Disease Control and Prevention, we developed a low cost technology known as the PUR Water Packets which can treat heavily 

contaminated water. This single packet can transform 10 liters of 

the most contaminated water into water that is drinkable. 

We are also proud of the progress that we have made in order 

to optimally progress with our stakeholders. We have set up partnerships with the World Wildlife Fund. We work with the Department of Energy, along with others. We have our Supplier Scorecard, which allows us to work with suppliers around the world. 

In conclusion, I would like to thank you for this opportunity to 

testify today. Sustainability, done right, does change things in a 

meaningful way. Our efforts in environmental sustainability are 

right for the consumer as they provide products that do not ask 

them to accept tradeoffs, they are good for the environment because we are addressing areas of greatest impact, and they are 

right for our business because they improve the top line through 

new products and improve the bottom line by allowing us to decrease costs. 

Thank you. 

[The prepared statement of Mr. Sauers follows:] 

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Senator UDALL. Thank you very much. 

Let us proceed now with Mr. Parker Smith, please. 

STATEMENT OF PARKER J. SMITH, VICE PRESIDENT AND GENERAL MANAGER, WORLDWIDE MANUFACTURING SUPPORT 

AND QUALITY, EASTMAN CHEMICAL COMPANY 

Mr. SMITH. Chairman Udall and Senator Alexander, on behalf of 

Eastman Chemical Company we appreciate the opportunity to testify this morning. I am Parker Smith. I am Vice President and 

General Manager of Worldwide Manufacturing Support and Quality for Eastman Chemical Company. 

I can assure you that the topic of today’s hearing, corporation environmental responsibility and innovation, are concepts that Eastman pursues every day in order to remain competitive in an industry that is truly global. 

At Eastman Chemical Company we manufacture and market the 

chemicals, fibers, and plastics that give everyday products the 

strength, design, and functional characteristics desired by customers around the world. Even though our products are not household names, they are used in making everything from the packaging for your food, drinks, and personal care products to the fabric 

in your clothing and home furnishings, the paint on your house and 

automobile, and the plastics in your bicycle helmet and golf clubs. 

Our extensive product line is supported by strong technical services. Customers rely on Eastman’s expertise to help create innovative products that are competitive in today’s challenging marketplace. 

The world today is a dynamic place, and we see new entrants in 

our markets every year. Perhaps more than ever, people care about 

the legacy they leave for future generations and are ready to take 

action to address social and environmental concerns. Many companies see these challenges as threats. At Eastman, we see them as 

opportunities for which we continue to take an unconventional approach to succeeding in the marketplace. We have developed a 

number of transforming initiatives that do more than simply respond to the challenges. They allow us to embrace change and continue to find ways to innovate and improve. 

Technology, quality, operational excellence, and customer service 

are just some of our strengths. Eastman people actively work to 

protect people and the environment and to uplift the standards of 

the economic, physical, and social world in which we live and work. 

We have been involved in making life better, healthier, and safer 

for people around the world. We know it takes more than bricks 

and mortar to make a great company, and it takes collaboration 

and partnerships with all sectors of the economy, both public and 

private. 

One public partnership that Eastman has benefited from is with 

the U.S. Department of Energy. In 2010 Eastman signed a DOE 

Save Energy Now LEADER Pledge, which is now the Better Buildings, Better Plants Program, with a goal to reducing energy intensity over a 10-year period by 25 percent. The energy intensity baseline was established as 2008, the year that Eastman became an 

ENERGY STAR Partner. In 2008 Eastman established an 

22 

auditable measure consistent with DOE guidelines and has reduced 

its energy intensity by 5.3 percent. 

Eastman has benefited in other ways from this voluntary Government program as well. In particular we have received valuable 

training and external assessments by highly skilled engineers for 

steam, pumping systems, and compressed air. An assessment of 

our river water pumping system resulted in several actionable recommendations that resulted in a savings of more than $300,000. 

An assessment of our compressed air system resulted in recommendations for savings of $294,000. 

During the assessments, DOE involved our engineers. This 

hands-on experience enabled Eastman employees to conduct their 

own assessments, resulting in more savings. These internal assessments used specific knowledge from the DOE training as well as 

general guidelines for how to conduct assessments. In total, our internal energy team has identified more than $3 million in savings 

opportunities. In fact, DOE recognized Eastman in 2011 for having 

exceeded the 2.5 energy reduction target of the Better Buildings, 

Better Plans Program in a single year. 

Another public partnership that Eastman has greatly benefited 

from is with the Environmental Protection Agency. Earlier this 

year EPA named Eastman as an ENERGY STAR Partner of the 

Year for strategically managing and improving energy efficiency in 

2011. Eastman was one of the 36 organizations selected for this 

honor from a total of about 20,000 partners and is only the second 

chemical company ever selected. 

This voluntary EPA program is widely recognized at Eastman as 

a major contributor to the success of our energy program which is 

built on the ENERGY STAR Guidelines for Energy Management. 

An important part of the ENERGY STAR Program is the opportunity for interaction with other industrial partners. We participate 

in focus groups in the Peer Partner Network. These interactions 

with other partner companies have fostered sharing of best practices and implementation of novel approaches. 

Eastman is recognized as a leader in the chemical industry as 

well. Eastman’s energy efficiency efforts have a rich history with 

consistent improvements over time. The American Chemical Council, the premier trade organization representing the chemical industry, recently recognized Eastman with several ACC Energy Efficiency Awards, and in fact this is the 19th consecutive year that 

we have received such awards. 

These programs have led Eastman to make significant investments in energy efficiencies. Even though most of our operating assets are located in the U.S., last year over 40 percent of our sales 

revenue came from outside the U.S. and Canada. Accordingly, we 

have to control costs here in the U.S. so we can compete globally, 

and one way we do this is through our Energy Efficiency Program. 

More than $35 million was invested in implementing more energy 

efficient manufacturing processes during 2010 and 2011. 

While many projects have been identified that will reduce energy 

use and greenhouse gas emissions, there are a number of barriers 

that prevent industry from full implementation. Most of these barriers can be attributed to competition for resources. Eastman, like 

many other industrial companies, establishes our capital expendiVerDate Aug 31 2005 12:43 Jun 19, 2017 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\25053.TXT SONYA
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ture budget based on our expected earnings, dividends we pay our 

investors, and investments that will result in growth. Our investors 

count on growth to improve the value of their investments. 

In closing, I would like to thank you for the opportunity to tell 

Eastman’s story here today. It is encouraging that the Congress is 

interested in what the private sector is doing on its own to promote 

innovation and improve efficiency, and hopefully this dialogue will 

help drive public policies that meet the shared and individual goals 

of both the Government and the business community. 

Thank you. 

[The prepared statement of Mr. Smith follows:] 

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Senator UDALL. Thank you very much, Mr. Smith. 

And our final witness, Mr. Mitch Jackson with FedEx. 

STATEMENT OF D. MITCHELL JACKSON, STAFF VICE PRESIDENT, ENVIRONMENTAL AFFAIRS AND SUSTAINABILITY, 

FEDEX CORPORATION 

Mr. JACKSON. Thank you, Mr. Chairman, Ranking Member Alexander. It is good to see you. I am Mitch Jackson, Vice President 

of Environmental Affairs and Sustainability at FedEx Corporation. 

At FedEx, our focus is simple when it comes to environmental 

sustainability. It is to connect the world in responsible and resourceful ways as we look to integrate sustainability into serving 

our customers. 

The underlying philosophy we use is called practical 

environmentalism. I define it as strategic and transformational environmental stewardship that adds tangible value in the effort to 

be more responsible. For a business, this entails that it should be 

economically viable, first and foremost. It should be aligned with 

the strategic business objectives. It should involve and motivate 

team members. And it should be responsible to its communities. 

The building blocks for practical environmentalism include performance, transparency, innovation, and leadership for us. As you 

can imagine, performance is very important in our customer service 

endeavors. We were the first company in the U.S. transportation 

logistics industry to set a goal to reduce carbon dioxide emissions 

in our global aviation operations by 20 percent. Currently, we have 

achieved 13.8 percent, so we are roughly 70 percent of the way toward that goal. 

We were the first in our industry to set a goal to improve the 

mileage of our FedEx Express vehicles. We have currently, through 

our last fiscal year, achieved 16.6 percent, so we are 80 percent of 

the way toward that goal. We are also seeking to have 30 percent 

of our aviation fuel come from alternative sources by 2030. And we 

have six solar energy facilities; five are in the U.S., and one is in 

Europe. 

FedEx was the first company in U.S. transportation logistics to 

establish a citizenship blog to inform stakeholders of our activities. 

We were the first to report global Scope 1, or direct, greenhouse 

gas emissions in our industry and to disclose climate risk to the Securities and Exchange Commission. 

FedEx worked closely with the Environmental Defense Fund to 

bring hybrid electric vehicles to the commercial vehicle sector some 

years ago. We have also gone further to advocate for—and work to 

bring to market—all electrical vehicles. And in fact, as Senator 

Alexander mentioned, Frederick W. Smith, our Chairman and 

CEO, participates in the Electrification Coalition in that regard. 

FedEx also strives to innovate with new services in the area of 

environmental stewardship, and we recently introduced the FedEx 

Carbon-Neutral Envelope Shipping Service wherein we neutralize 

all the carbon dioxide emissions created and emitted in the shipping of all FedEx envelopes around the world. And it is at no additional costs to our customers. And I might add, that is over 200 

million shipments a year. 

32 

In addition, some of the progress in lowering aviation emissions 

that we have had comes from the fuel efficiency and environmental 

advantages of our new Boeing 777 Freighters. They are beneficial 

for other reasons as well. For example, they have greater range, 

which allows FedEx to fly direct from Asia to the U.S., and it gives 

our Asian customers a 2-hour later package drop-off window. 

There are also major investments by FedEx in the U.S. economy, 

and there is an almost perfect correlation between investments in 

new productive assets and jobs in this country. At least partially 

in response to the expensing tax provisions that have been passed 

into law over the last decade with strong bipartisan support, FedEx 

has purchased a large number of these new, innovative aircraft and 

other capital assets that have created jobs. And in that regard, we 

would urge that Congress extend the expensing provisions through 

2012 as many have proposed. 

As mentioned, leadership is also a building block for practical 

environmentalism. As such, Frederick W. Smith and FedEx, the 

first company in our industry to do so, pushed for commercial vehicle fuel economy legislation which was enacted by the U.S. Congress in the Energy Independence and Security Act of 2007. 

At FedEx, we have encapsulated these building blocks of practical environmentalism into our EarthSmart Program. EarthSmart 

is our commitment to connect the world responsibly and resourcefully. It is made up of three pillars—our EarthSmart Innovations, 

our EarthSmart at Work, and our EarthSmart Outreach. 

EarthSmart Innovations seeks to inspire products and services, 

assets, and initiatives that deliver benefits for the environment, 

our customers, our team members, and business; an inclusive approach. EarthSmart at Work seeks to engage team members to understand and implement sustainable practices within the work 

place. And our EarthSmart Outreach program is our volunteer and 

philanthropic efforts in sustainable transportation, sustainable cities, and sustainable ecosystems, all things that FedEx has impact 

with and connects to. 

In summary, our efforts and experience at FedEx as it relates to 

growing environmental responsibility or sustainability and innovation distill down to the following considerations. One, at a national 

level, maximizing successful sustainability requires everyone working together. Two, at an organizational level, sustainability should 

be a team sport with every working to the same plan. Three, transformation requires persistence and a plan. Four, sustainability 

needs to make organizational sense and offer value to the organization. 

Five, performance is critical, but not sufficient on its own. Six, 

transparency is important for what is learned rather than what is 

simply reported. Seven, innovation is critical for long-term competitiveness for businesses and for the nation. Eight, innovation requires investment and public policies that support it. And the last 

one is that leadership is necessary on the relevant issues that we 

face. 

Chairman Udall, Ranking Member Alexander and this Subcommittee, thank you very much for the opportunity to testify 

today. That concludes my testimony, and I welcome any questions 

you might have. 

33 

Thank you. 

[The prepared statement of Mr. Jackson follows:] 

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Senator UDALL. Thank you very much, Mr. Jackson, and thanks 

to all of the witnesses. I think that what you have done here is 

really bring to life that term sustainability and showed us concrete 

ways that you are moving in your companies and in the industry. 

My first couple of questions are to the entire panel. Do you see 

corporate environmental responsibility or sustainability as an increasing trend that is here to stay in your company and in the industry? And how much profitability is your company deriving from 

sustainability efforts, and how much are you tracking that performance? And anybody can jump in on that that wants. 

Mr. Smith, go ahead. 

Mr. SMITH. Chairman Udall, yes, Eastman Chemical does believe 

that sustainability is here to stay. We have a very robust sustainability program. We have a sustainability officer. We believe that 

the way we approach sustainability definitely gives us a competitive advantage. 

Consumers have told us through our businesses that they are 

very much interested in products that come from renewable resources and all the things that support sustainability. So, we believe that it is strategic to our company to embrace that, and we 

have done that. 

Senator UDALL. Thank you. 

Mr. SAUERS. I would agree, especially from the fact that sustainability is now a path to improving and increasing a company’s business. You know, we integrate it into our business and to increasing 

top line sales; we integrate it into the business to help address the 

bottom line. The eco-efficiency, the conservation measures that we 

have put into place have saved P&G about $1 billion in costs over 

the past 10 years. 

So, I think when you can show that sustainability builds the 

business, companies want to do it, corporations want to do it, and 

that will continue the trend forward. 

Mr. BRADY. Yes, I would echo that, and perhaps provide another 

proof point. About 4 years ago we built sustainability metrics and 

targets into our employee bonus program. So, all of our employees, 

their compensation is tied to our sustainability performance in one 

way or the other. So clearly, sustainability is integrated, I think, 

more and more into the day-to-day business and operations because 

it does provide the benefits which the other panelists have talked 

about. 

Senator UDALL. Mr. Brady, one of the things you mentioned in 

your opening was about trying to make products last longer, and 

that is clearly a part of a sustainability effort. Could you talk a little bit more about that? 

Mr. BRADY. Sure. Certainly, consumers want products that, when 

we say last longer, that have longer battery life, more usability for 

the consumer. So anything we can do to make our products more 

energy efficient has a direct benefit to the consumer. 

If you take a data center, which all of our smart phones and 

notebooks as they are talking over the Internet are backed up by 

a data center, the chips which we have today use almost one-tenth 

of the power of chips just a few years ago. Buying the most recent 

products, implementing those products, has a direct savings not 

only to the consumer but to those who are powering the infrastrucVerDate Aug 31 2005 12:43 Jun 19, 2017 Jkt 000000 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\25053.TXT SONYA
41 

ture behind the Internet, behind technology, for the broader economy. 

Senator UDALL. Mr. Jackson, do you want to jump in? 

Mr. JACKSON. Yes, Mr. Chairman, thank you. I think that I agree 

with my fellow panelists here that I think sustainability is here to 

stay, I think much like quality was back in the 1980s, how it 

changed the way business was really approached, what they did 

each and every day. 

I think what is very encouraging in the trends that I am seeing 

now help to show that we are starting to integrate innovation into 

it as well, that we focused originally on efficiency improvements 

and the like, and that gets you so far, but now I think companies 

are starting to think how are you going to be able to innovate and 

find new ways to do what you have done in the past and still meet 

the mission of your companies. For us, emissions are equal to fuel. 

And so when we improve in that respect, we are actually saving 

on the bottom line as well. 

So, I think it has got a bright future ahead. 

Senator UDALL. Thank you very much. 

And I am going to go now to Senator Alexander. But just before 

I do, I wanted to recognize, we have our reporter here from the Albuquerque Journal. Michael Coleman is over at the press table, 

and I wanted to welcome him. 

We are seeing this trend, as Senator Alexander knows, where 

more and more newspapers are not putting reporters in Washington and are in fact pulling them out. But the Albuquerque Journal still has a very capable young man that is here, and I welcome 

him here today. 

And with that, let me turn to Senator Alexander. 

Senator ALEXANDER. Thank you, Senator Udall. And welcome to 

the Albuquerque Journal as well. 

Dr. Sauers, how long does that little package for clean water, 

how long does it take to make the water clean? 

Mr. SAUERS. Thirty minutes, sir. 

Senator ALEXANDER. And can you buy that at outdoor stores? 

Mr. SAUERS. You can buy it online. I believe Target has it, Target stores have it online. But this is largely for the developing 

world. It is part of P&G’s philanthropic program. 

Senator ALEXANDER. What about Boy Scouts in the United 

States? 

[Laughter.] 

Senator ALEXANDER. I mean, you cannot drink the water out of 

the creeks in the Smoky Mountains. You need something. 

Mr. SAUERS. We could make it available to them if they are interested. 

Senator ALEXANDER. But you do not now make it available to 

campers and hikers in the United States? 

Mr. SAUERS. When we first came out with it, we tried to develop 

a business model where we could make money in the way that you 

just described and found that we could not do that. That is why 

we turned it into a non-profit, philanthropic program. 

Senator ALEXANDER. So it is non-profit? 

Mr. SAUERS. It is non-profit. 

Senator ALEXANDER. Do you give it away in Africa? 

42 

Mr. SAUERS. Very much so. Yes, we partner with UNICEF and 

about 70 other partners to distribute these in the developing world. 

We have delivered over 3 billion liters of safe drinking water 

through this program. It is also useful for disaster relief. When disasters happen, the first thing that is lacking is safe drinking water. 

Senator ALEXANDER. Well, you are experts on the business 

model, but I know from experience that is handy in the outdoors 

in the United States. 

Mr. SAUERS. Well, if you have some Boy Scouts in Tennessee 

that would like some, I will give them to you. 

Senator ALEXANDER. Well, we might have an older Boy Scout 

who would like to have some. 

[Laughter.] 

Senator ALEXANDER. Mr. Jackson, FedEx has really led the way 

in an option of electric trucks. By 2020, or 2025, do you have any 

estimates of how rapidly you will incorporate electric vehicles into 

your fleet? 

Mr. JACKSON. Senator Alexander, it is hard to say at this time 

how many we will have at that time because of the work that we 

have underway currently. I can tell you that we are adding—we 

have got 47, or 43, that are currently operating on the roads, and 

over the next couple of months we are almost tripling that number. 

We are in the very early stages of electric vehicles. 

What is most encouraging for us, though, is that they are meeting the range requirements that we are looking for, around a 100- 

mile range on the battery pack—— 

Senator ALEXANDER. So, the problem is the cost of the battery? 

Mr. JACKSON. The cost of the battery pack. And that is where a 

lot of work is being put forward underway right now to try to bring 

that cost down. 

Senator ALEXANDER. So, would you agree that probably an appropriate role for the Federal Government in electric vehicles might be 

to emphasize research on how to make better, how to make cheaper 

batteries? 

Mr. JACKSON. Absolutely. It is the critical issue with respect to 

mainstreaming electric vehicles. 

Senator ALEXANDER. What is the cost of the—I mean, can you 

give us any cost? I know in a car, like a Leaf, you know, it adds 

$10,000. It takes it from a $20,000 car to a $30,000. What about 

a FedEx truck? 

Mr. JACKSON. For a FedEx truck, what we are seeing on electric 

vehicles is it between two and three times the cost of a conventionally powered vehicle. 

Senator ALEXANDER. And how much of that is the cost of the battery? 

Mr. JACKSON. Virtually all of it. 

Senator ALEXANDER. Yes. 

Mr. JACKSON. But we do get about 70 to 80 percent savings on 

the operational side of it, so it is a good opportunity. 

Senator ALEXANDER. Well, in a way it is similar to the Cummins 

story I was mentioning, the new Cummins engine that costs more 

for heavy duty trucks to get rid of the sulfur in the fuel, but truckers recouped the cost quick enough so that over time it saves them 

money. 

43 

Mr. JACKSON. Absolutely. 

Senator ALEXANDER. Mr. Smith, you mentioned Eastman saving, 

it sounded like several million dollars a year because of your environmental practices. Would you think that is right? Or does it cost 

you money, or does it make you money, those things you mentioned? 

Mr. SMITH. Well, it costs us money up front, but ultimately it 

saves us money. We, in particular at the Kingsport site, we are a 

very energy intensive facility. We generate our own power. So, we 

target things like steam leaks and insulation, ways to save electricity and things like that. 

As part of our energy management program, we have developed 

project lists and do extensive evaluations of those to determine, you 

know, which would have the best paybacks. Because we generate 

our own power, we are advantaged for that reason. And it is fairly 

cheap. 

So, it is a challenge at times for us to be able to, you know, we 

look at our internal rate of return, and we want to make sure that 

the projects that we take on, that they do have an appropriate payback for the company—— 

Senator ALEXANDER. Well, one of the purposes of the hearing is 

to try to understand Federal policies that might help or inhibit 

your environmental goals or your sustainability or your profitability so that you can afford to do the things that you want to do. 

You have got a boiler at Eastman, I know, and the EPA has been 

back and forth with the Congress on what is called the Boiler 

MACT Rule which, I, for one, think is too severe. It does not give 

enough time to companies like Eastman and many other companies 

in the country, and Congress is at fault for really not giving the 

EPA enough authority to devise a rule that would make sense. 

Do you have any estimate of how much, I mean, on the other 

side of the ledger while you might be saving money from some of 

your sustainability practices, on the other side of the ledger, how 

much would the Boiler MACT Rule, as it is currently constructed, 

cost your company? 

Mr. SMITH. Yes, sir. We are evaluating several alternatives there. 

But ultimately, we are looking at somewhere between $200 million 

and $300 million with respect to Boiler MACT. And there are some 

other regulations as well, the Haze regulations and the SO2 regulations. That is one of the challenges for us. These regulations and 

ultimately the technology that it is going to take to do this is potentially applicable to many of those regulations. But they are coming at us at different times, and they have different deadlines for 

implementation—it would be much more efficient and cost effective 

to be able to evaluate concurrently. 

Senator ALEXANDER. Would it help if you had a longer period of 

time to implement the regulations? 

Mr. SMITH. Yes, sir, absolutely. 

Senator ALEXANDER. And in terms of the boiler, what would be 

a reasonable period of time? 

Mr. SMITH. Well, as I recall, the Boiler MACT gives us I think 

5 or 6 years from time of implementation. That gives us time to 

do it—— 

44 

Senator ALEXANDER. I think it gives you 3. And what we are trying to do is get it up to 5. 

Mr. SMITH. Oh, well, we need the 5, then. 

[Laughter.] 

Senator ALEXANDER. Well, I want to make the point that there 

are companies who have these challenges who are trying to do the 

right thing, on the one hard, and we want to create an environment that makes it easier for you to be a company that can promote a better environment, sustainability, improve the quality of 

life here, and make money. 

So, I would appreciate it if you want to submit any extra comments to the Committee about that after the hearing, I would be 

glad to help you. 

Mr. SMITH. OK. Thank you very much. 

Senator ALEXANDER. Thank you, Mr. Chair. 

Senator UDALL. Thank you, Senator Alexander. 

A couple of questions for Mr. Brady on Intel and Intel practices 

in New Mexico. 

Intel does much of its production in Arizona and New Mexico and 

these are places where water is scarce. What are Intel’s strategies 

for water conservation in the West, and how successful have they 

been? 

Mr. BRADY. Yes, that is an area where we put quite a bit of emphasis, and as you mentioned, because of where those manufacturing facilities are located. So, in New Mexico, for example, and 

this is common at other facilities in arid regions, we will take— 

well, first let me explain. 

To make a semiconductor, a semiconductor is about the size of 

your fingernail when it is all said and done. And on that semiconductor are—can be upwards of a billion transistors. Those are the 

things that are turning off and on, you know, millions of times per 

second and make your computer or your cell phone, whatever your 

device is, work. 

To manufacture that semiconductor, you literally build it up like 

you would a skyscraper, and with each layer you have to clean off 

the surface of that silicon. And you do that with what we call ultrapure water. So, that is where the water use in semiconductor manufacturing comes from. 

And so what we do, one of our strategies is to make that ultrapure water but then reuse it over and over again in our facility. 

So, it may only be used once in cleaning off the wafer, but then it 

can be reused in facility systems which do not require the same 

kind of purity as that manufacturing operation does. 

The second thing we attempt to do is to work with our communities, to partner with our communities and see what their needs 

are. For example, in Arizona where I am located we actually take 

the water from our facility, clean it, and re-inject it into the 

groundwater to bank away that water for future use. And so that 

is another thing that we do. 

But the key is, the key is to look for opportunities to recycle and 

then also partner with the local communities for what makes sense 

there. 

Senator UDALL. I understand that Intel did a pilot project in New 

Mexico to share environmental data with the community. Can you 

45 

describe that effort and how it has been received and what Intel’s 

next steps are in that area? 

Mr. BRADY. Sure. This was a new—in fact, New Mexico was our 

trial location, if you will, our pilot location to be as transparent as 

possible in our environmental performance and operations. What 

we did was to create a Web site whereby we give the public real 

time feedback as to what is going on at our plant, how the pollution control equipment is operating, what our emissions are, et 

cetera, in an effort to engage the community. 

There is even—they are the most boring Web cams you have ever 

seen in your life, but they sit on the roof of our facility, and they 

look out over the stacks of our facility so you can literally, you 

know, visually monitor what is coming out of our stacks at any 

time, if you are so engaged or so inclined to do so. 

But it actually has been very well received by the community in 

being transparent and open as possible. And it has been such a 

success there in New Mexico that we are in the process of proliferating that now to other locations around the globe. 

Senator UDALL. There were people that were close to the plant 

that were very interested in this. I mean, you are talking about 

how it was boring, but the fact is that a variety of groups were saying, what are you emitting, and what are you doing? And so, you 

put this kind of transparency process into place that is, I think had 

a level of acceptance in New Mexico, and it sounds like you are 

now taking it to your other work stations in other places. 

Mr. BRADY. That is exactly right. We have a community environmental working group there in New Mexico, and they were the 

ones who helped us to design that Web site. And so, we added features that they were interested in based on feedback from the community. 

Senator UDALL. Great. Your testimony shows the incredible innovation cycle in the computer chip industry driven by Moore’s Law. 

And I think you talked about that in your opening. Could you 

spend a bit more time describing how that ties in with environmental benefits for other industries and society at large? And how 

that in turn drives Intel’s innovation? 

Mr. BRADY. Sure. The opportunity there is, as IT innovation 

moves forward very rapidly, there are numerous opportunities to 

use that IT equipment to make the world more efficient. Imagine 

buildings which are smart that know whether somebody is in the 

room or not and can adjust the air conditioning load, for example, 

the lighting on and off. We have seen some of these applications, 

predicting the transportation and opening roads so one way or the 

other, depending on the transportation load. 

These are opportunities for investment which can drive efficiency 

across society as a whole. And we think it is an opportunity also 

for the Government for investment in research in how one can better use IT to improve our efficiencies. 

Senator UDALL. Thank you for those answers. 

Senator Alexander. 

Senator ALEXANDER. Mr. Brady, do you know about how much of 

our, the United States’ electricity, is consumed by computer use? 

Mr. BRADY. It is about 2 percent. 

46 

Senator ALEXANDER. About 2 percent. Will computer use, will 

that percent go up or down? We will have more computers but 

more innovation. Do you have a guess? 

Mr. BRADY. Well, our argument would be that because it consumes 2 percent, you can now use that 2 percent to try to drive 

down the 98 percent. So, arguably, even if you were to increase to 

3 percent or 4 percent, if we can shrink that 98 percent of the pie, 

we can get an overall net benefit. That is the idea. 

Senator ALEXANDER. I see. 

Dr. Sauers, does Procter & Gamble use our national laboratories 

either for to make a profit or a product or to improve sustainability? And is there anything we can do to create an environment 

so that you can use them more easily? 

Mr. SAUERS. The Los Alamos National Laboratory has been very 

instrumental working with Procter & Gamble to help design and 

improve the efficiency of our manufacturing facilities. It has led to 

significant cost savings for the company. It has been a great partnership between us. 

Senator ALEXANDER. You use the computers? Is that what you 

use? 

Mr. SAUERS. It looks at—it makes reliability estimates for our 

plants and helps us improve the reliability of the manufacturing 

process so that the lines run more efficiently and run more often. 

Senator ALEXANDER. Someone mentioned earlier the similarity of 

the focus on sustainability today to quality in the 1980s. And in 

thinking about what an appropriate Federal Government response 

might be to create an environment where corporations would be 

more likely to consider sustainability, it made we think of the 

Baldrige Award for quality. 

It was named for Malcolm Baldrige who was, I guess, President 

Reagan’s Secretary of Commerce. And it was not much of a Government program. It simply gave a prize, or an award, to the company 

that put in place systemic quality improvement based upon, I 

guess, many of the ideas of Mr. Deming and the Japanese during 

that period of time. 

But it captured the imagination of the corporate world in America. I worked for a while with David Kearns in the first Bush administration; he had been the CEO of Xerox, and Xerox had won 

the Baldrige Award beforehand, and during the 1980s Xerox, in a 

variety of ways, was able to recapture the copying market from the 

Japanese, and he attributed that focus to it. 

Do any of you have a comment on whether some sort of prize for 

innovation like the Baldrige Award for quality could be created for 

sustainability? And if it were created, would it be worth doing? 

Mr. SAUERS. Well, I would say any time a corporation can receive 

recognition for the good work that they are doing in an area, I 

think that would be appreciated very much. I also know that it 

would be appreciated and a good sign to the employees of a corporation. 

I know, for Procter & Gamble, we believe innovation is going to 

solve all of the issues of sustainability that we face today, and 

those ideas are going to come from our own people. So, we do a lot 

of effort to equip and educate them on sustainability, and the company receiving, you know, an award, awards like that would help, 

47 

I think, bring to them a certain satisfaction that their efforts are 

being appreciated. 

But at the end of the day I think you are going to find that most 

corporations are going to continue to work very, you know, urgently 

and diligently in this area for its ability to build the company’s 

business on the top line and the bottom line. 

Senator ALEXANDER. It seems to me, and I wonder if this is true 

with Mr. Smith, Mr. Jackson, and Mr. Brady, I mean your top line 

and bottom line is very instructive. That is to say that while all 

of these companies are striving to be good citizens, you are in business. And your job is to make money for your shareholders, or you 

would not be here for 175 years, you would not be here for 1.75 

years. 

And if you are able to create a new product, that goes to the top 

line. That helps pay for overhead. That, by itself, probably increases your net income. And if you go to the bottom line by reducing costs through innovation, that also increases your net income. 

So, would you say that the main driving force for sustainability is 

top line and bottom line? 

Mr. SAUERS. I would. For Procter & Gamble, certainly. And it is 

a trend that I see with my colleagues here at the table and as I 

work with sustainability leaders in other corporations, too. 

Senator ALEXANDER. Mr. Smith, Mr. Jackson, Mr. Brady, is your 

work with the sustainability primarily to be a good citizen, or is it 

an integral part of improving your top line and bottom line? 

Mr. SMITH. For Eastman Chemical, it is both. But it is an integral part of what we do. And I would agree with Dr. Sauers’ comment about voluntary—about programs, we have seen that with 

our Partner of the Year Program where our customers have embraced, you know, the work that we are doing around energy management, and it certainly drives innovation and new products and 

things like that. I would also mention that Eastman Chemical was 

a Baldrige Award winner in 1994. Thank you. 

Mr. JACKSON. Senator Alexander, you were spot on in that assessment. It is one of the reasons that we focused on performance 

and innovation with respect to that practical environmentalism 

concept that I mentioned. You know, efficiency gets you to a certain 

extent, but you need to be innovating as well to find new solutions 

and new ways of doing things and bringing new products to market. 

And I think you mentioned Malcolm Baldrige. I was talking 

about quality earlier in relation to that with respect to sustainability because I think one of the things that Malcolm Baldrige 

brought is it brought a process. So, you were measuring quality 

and the like, but it brought a process that they were measuring as 

well. 

So, it was not so much just solely about data but what you were 

actually, how you were doing it and what you were doing as well. 

It certainly made an impression upon us, and we won the Malcolm 

Baldrige Award in the 1990s as well. But think in that respect, in 

drawing that parallel, I think you are correct. 

Mr. BRADY. Yes, I would echo the comments of the panelists. The 

voluntary programs are embraced by a large number of industry 

participants. I know, historically, we have participated in the 

48 

project Excel Initiative as well as recently Performance Track 

which, although not an award program per se, was a voluntary program that enabled manufacturing flexibility here in the U.S. in exchange for transparency and other initiatives. 

So those, I would definitely support those types of initiatives to 

be brought forward by the Government. 

Senator ALEXANDER. Thanks, Mr. Chairman. 

Senator UDALL. Thank you, Senator Alexander. I think some fascinating questions there. 

And since you brought up the Baldrige Award, some of the award 

ceremonies I have been at and heard executives talk about building 

in a continuous improvement process into their practices, and I was 

wondering, has sustainability gotten that deep into the company 

that you try to encourage employees to come forward and give you 

information about how you could be more sustainable and make 

recommendations? Have you seen those kinds of practices been 

pushed down into the rank and file of the company? 

Mr. BRADY. I will start the comments. We have certainly seen 

that and have tried to implement programs to encourage that with 

our employees. So, we have an Environmental Excellence Awards 

Program where we recognize employees who have done activities 

each year and recognize them at a very high level within the company. 

We also issue what are called Sustainability in Action Grants 

where we ask employees to submit ideas that we then fund. Our 

energy conservation is largely a grassroots by our engineers bringing forward ideas which again then are evaluated and funded. So, 

it is critical to engage your employee base to reach your sustainability goals. 

Mr. SAUERS. And I would echo that, too. I think what has helped 

at Procter & Gamble is the executive sponsor for sustainability. At 

P&G it is our CEO, Bob McDonald. He sets a tone for the corporation that this is very important, which helps motivate our employees. 

We also have a specific training program for our employees on 

how they can bring sustainability to life in their individual jobs. 

And we have celebrations, such as Earth Day, held at all of our— 

we have 140 sites around the world, so each site has Earth Day 

events which then educate the employees and allow them bring forward at that time. 

Mr. JACKSON. We, at FedEx—the Employee Engagement Program is very, very important, and it comes out into two of the 

EarthSmart pillars that I mentioned, EarthSmart Innovations and 

EarthSmart at Work. 

So, with EarthSmart at Work, it is about finding sustainable 

practices within the workplace itself. The innovations program is 

about the assets and the services that we provide and use for our 

customer service, which is part and parcel, pardon the pun, of our 

business each and every day. We have an Enterprise Sustainability 

Council that is made up of 12 of our senior executives across the 

enterprise that helps steer the course on that. 

But that team member engagement is paramount. We have got 

to have the team members actually bringing solutions to the table 

49 

for us instead of the sustainability department trying to push initiatives down in a one-way manner. 

Mr. SMITH. I would echo those same comments for Eastman. We 

have a sustainability officer who is a member of our executive 

team, and we do a lot of things to better educate our employees 

about what our sustainability efforts are all about. We have Earth 

Fair Day, we had an energy fair, we do Earth Fair activities. 

We also have set a goal that by 2015 two-thirds of our revenues 

from new product launches would come from products that are advantaged by assessing against our sustainability criteria. So, a lot 

of effort goes on with that. Our technologies folks are very much 

engaged in developing new sustainable products. Thank you. 

Senator UDALL. Senator Alexander. 

Senator ALEXANDER. Well, first, thanks, Tom. I would like to 

thank the witnesses for coming today. This has been a very useful 

discussion. Your answers have been crisp and insightful, and you 

obviously know what you are talking about. So, your companies are 

great leaders in this country in a whole variety of ways. I know the 

Chairman joins me in thanking you for coming and for giving us 

this information. 

And I would, and I am sure that he will say this, but I would 

urge you if, when you go home, you think well, I wish I had said 

this, or I wish I had suggested that, I hope you will send it in to 

us because ideas like that sometimes have their way of getting into 

law or not getting into law, whichever you would prefer. So, I invite 

you to do that. 

I only have one more question, which is, is there a single thing 

you could, I mean, it seems to me our goal should be in the Federal 

Government not to order you to do a bunch of things but to create 

an environment in which you are more likely to succeed in your 

goals of improving sustainability and increasing your top line and 

lowering your bottom line to use, or increasing your top line and 

your bottom line to use Dr. Sauers’ point. 

So, can you think of a single thing that we could do that would 

help you do that, a policy that we might implement? Or can you 

think of one we are implementing that interferes with your ability 

to do that? 

Mr. JACKSON. Well, Senator Alexander, I think for us, as I mentioned in my testimony, one of the things that helps with respect 

to innovation and the public policies that support it has been the 

accelerated depreciation for capital expenditures because it has allowed us to bring some of these new, innovative technologies to 

market very soon, or in a very rapid manner. 

So, that, along with, if I could have the liberty to also mention 

what you have mentioned which is the battery technology studying 

as well, those would be critical, I think, in doing so. 

Senator ALEXANDER. So, your first point, really, was you bought 

a lot of big airplanes that use less fuel. Right? 

Mr. JACKSON. Absolutely. And actually, it is a win-win because 

what it allows us to do is it allows us to fly direct to and from Asia 

which gives better customer service options for our Asian customers in moving goods back to the U.S. which we know is a critical economic issue for us at well. 

50 

Mr. SAUERS. I would add to that the comment I made that innovation, in our mind, will solve all of the issues of sustainability 

going forward. So, in general, anything that better enables a corporation like Procter & Gamble to innovate in a responsible way 

will be very helpful. So, your R&D Tax Credit, you know, good 

TSCA reform that leads to innovation that can occur in a responsible way, predictable regulations, all of those kinds of things 

would be very helpful. 

Mr. BRADY. As a large U.S. manufacturer, as I mentioned before 

we have about three-quarters of our manufacturing here in the 

U.S. even though less than a quarter of our products are sold here, 

so manufacturing flexibility is key for us. So, as new regulations 

are put into place, focusing on flexibility for manufacturers, 

streamlining processes is critical. 

Mr. SMITH. I would like to add to Mr. Brady’s comments. That 

is a great comment. For us in manufacturing, a balanced approach. 

We believe we need a comprehensive energy policy and as we consider environmental regulations and things like that, those all go 

hand in hand, and we just need to make sure that we have a balanced approach as we deal with those issues. Thank you. 

Senator ALEXANDER. Thank you, Mr. Chairman. 

Senator UDALL. Thank you, Senator Alexander. I just have a couple of questions about reporting and indexes and those kinds of 

things, and it is to the whole panel. 

What are the benefits to companies in participating in the Dow 

Jones Sustainability Index process and being included in the index? 

And what are the benefits to these indexes, and what are some of 

the problems with them? 

Mr. SAUERS. Well, P&G is part of the Dow Jones Sustainability 

Index, the FTSE4Good Global 100. Those kinds of indexes have a 

lot of credibility. There is transparency on the ratings and 

rankings, and we find great value being part of those and being 

ranked highly on those. It certainly helps with shareholders, investors, and our employees and consumers because it shows, in an 

independent fashion, that P&G is trying to be responsible in this 

area. 

There are other ratings and ranking systems that are less transparent in, you know, how they rate and rank companies. Those, at 

times, can lead to confusion for others because you can be rated 

very low in one ranking and very high in another. So, anything 

that could drive standardization across those ratings and rankings 

would be helpful. 

Senator UDALL. What would you recommend to drive the standardization? 

Mr. SAUERS. Well, there are some efforts that are just beginning 

right now on global reporting standards and such. And I would continue those programs. P&G is part of those right now. But those 

kinds of things would be helpful on which metrics are measured, 

how they are measured, the degree of importance that are put on 

each metric, those kinds of things. 

Senator UDALL. Yes. 

Mr. Brady. 

Mr. BRADY. Yes, I would agree. We are also regularly ranked and 

rated in these different metrics. I think the benefit is that one can 

51 

benchmark your performance relative to other companies. So, that 

is useful to see what other companies are doing, how you can improve, how you are doing relative to your peers. 

I would also agree with Mr. Sauers that the—when you are 

ranked No. 5, the question from the CEO is, why are we not No. 

1? And so, my advice would be could we come up with a relative 

ranking system because in reality there is very little difference between No. 5 and No. 12 or No. 3. But that does tend to get our executives’ attention, and perhaps that is one of the benefits of a 

ranking system. 

Senator UDALL. Mr. Jackson. 

Mr. JACKSON. Thank you, Mr. Chairman. It is interesting. I 

think that some of the challenges with some of the rating systems 

that we have out there is that they primarily focus on only one of 

the four pillars that I mentioned earlier, and that is transparency. 

Maybe, to a lesser degree, around performance, but often never 

around innovation and leadership with a few exceptions. 

One of the ones that we have recently seen that we were intrigued by and were pleased to have been included in was the 

Maplecroft Climate Innovation Leaders Index because, again, a lot 

of that focus was around performance and innovation. 

But as I had mentioned earlier with respect to transparency, 

transparency in reporting information for information’s sake can or 

cannot be helpful. It depends on what the issue is. But if the information is actually leading to improvements and innovations in the 

operations that are occurring, that are applicable not only within 

the four walls of an enterprise but outside the four walls as well 

to, in some cases, society at large, then you have real benefit from 

some of these systems. But they need to expand beyond their limited scope and evaluation procedures now. 

Mr. SMITH. My comment would be that I would just emphasize 

that a standard approach would certainly be, in our eyes, very 

helpful and beneficial. 

Senator UDALL. So, you would like to see what Dr. Sauers talked 

about, move to more standardization on these sustainability indexes? 

Mr. SMITH. Yes. 

Senator UDALL. And that could be very helpful for all of you. 

Mr. SMITH. Yes. 

Senator UDALL. Thank you very much. 

Let me just, in closing here, thank all of you today for your excellent testimony, and I think we had a very, very interesting discussion. And it was great having Senator Alexander here for the entire 

hearing. 

Here are my takeaways, very brief, from the hearing today. No. 

1, I think we learned a lot about how businesses are making decisions that are good for the bottom line and also good for the environment. No. 2, we should consider this information as we further 

look at voluntary Federal partnership programs for businesses to 

improve their environmental responsibility. And No. 3, the discussion about corporate reporting of environmental and sustainability 

information, I think, was very valuable, and I think you made some 

very good points in terms of standardization. 

52 

Committee members will have 2 weeks to submit any additional 

written questions to our witnesses, and responses will be included 

in the record. 

And Senator Alexander, I do not know if you have any closing 

comments, but if you do not, the Committee is adjourned. Thank 

you. 

[Whereupon, at 11:12 a.m., the Subcommittee was adjourned.] 

[An additional statement submitted for the record follows:] 

STATEMENT OF HON. JAMES M. INHOFE, 

U.S. SENATOR FROM THE STATE OF OKLAHOMA

I would like to thank Senator Udall and Senator Alexander for holding this hearing examining private sector innovation and sustainability. I would also like to 

thank the witnesses for being here—your companies and others like you are important employers of many hardworking Americans and key in maintaining and improving our way of life. 

Today the Subcommittee on Children’s Health and Environmental Responsibility 

is looking into the nexus between sustainability and profitability in the private sector as the best place to make cost effective environmental improvements. However, 

what efforts are successful for one company may not work for another company. For 

example, FedEx has on its own been converting part of their delivery fleet to run 

on natural gas fuels such as CNG and LNG because of its price advantage. One recent article quoted CEO Fred Smith as stating it could result in a 40 percent reduction in fuel costs. This is, of course, without the Government stepping in and dictating to them what to do. 

Improving efficiency and the wiser use of our resources is instinctive for businesses. For example, not so long ago, Tide ‘‘released a new cold-water detergent with 

advertisements touting the substantial energy savings from not having to use hot 

water.’’ This company responded to demands for energy efficient products that save 

consumers money and probably claimed market share as a result. 

As some of these companies present here today demonstrate, mandates and command-and-control style regulations that kill jobs and hamper economic growth 

aren’t necessary and cause more harm than good. Private sector innovation without 

the heavy hand of the Government can simultaneously protect the environment and 

create jobs. 

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