The ozone lesson

By Nicholas Varchaver, Fortune senior writer

The latest shift was inevitable, in Holliday's view. "We had done just about all you could with polymer chemistry," he says. "And we did see the environment as something that was resonating with people." So a company that had long venerated chemistry Ph.D.s saw the rise of a new breed: the biology Ph.D.

DuPont's eco-consciousness can be traced back to one episode: the company's experience with CFCs. Chlorofluorocarbons were a cash cow for DuPont, which sold them as Freon, a refrigerant in air conditioners, and also as propellants in aerosol sprays. In the mid-1970s scientists began reporting that CFCs were eating away at the ozone layer. Depending on your point of view, DuPont spent more than a decade resisting regulation (the critics' opinion) or judiciously waiting for the science to conclusively establish the effect of CFCs (DuPont's take).

What is undisputed is that once the ozone science and public pressure reached critical mass, in the late 1980s, DuPont embraced a ban and developed non-ozone-eating successors. These not only left the ozone layer alone but eventually made more money than Freon. The whole episode, from the PR battering that DuPont took to the money it made from the planet-friendly substitute, opened the company's eyes to the possibilities of greening the business.

The ascension of Edgar Woolard as CEO in 1989 intensified the company's eco-awareness. The big drop in greenhouse-gas emissions began on his watch, earning surprise and then kudos from environmentalists. "This was not a crowded field when DuPont started making its reductions," says World Resources Institute president Jonathan Lash, who describes the company as a leader in addressing climate change.

It wasn't just greenhouse gases either: DuPont has cut its release of carcinogens by 92 percent since 1990, and hazardous-waste discharges of any sort have fallen from 2.2 billion pounds to 931 million pounds during the same period. (The latter is a reminder that DuPont remains a major polluter. It's a paradox of corporate environmentalism: The greatest improvements are available to those with the biggest problems.) The company even conceived a new metric, shareholder value added per pound, which connected profitability to the reduced use of energy and materials. In part because of such approaches, DuPont managed to save $3 billion in energy costs from 1990 to 2005, using 6 percent less energy even as it raised production by 40 percent.

DuPont discovered that it was easier to fund ambitious programs that made dramatic cuts in a few places than to try to skim a bit off the top everywhere. "Rather than trying to clean up at the end of the pipe," says Holliday, it's more a matter of "how do I fundamentally change the process?" For example, DuPont slashed releases of HFC-23, a greenhouse gas, by overhauling the way it made HCFC-22, the refrigerant that initially succeeded Freon.

There are any number of reasons to make such efforts, among them the fact that DuPont is a global operation that has to do business in places such as the European Union, which often has more stringent environmental rules than the U.S. A case in point: The EU passed a sweeping law in December, called REACH, that will regulate and possibly outlaw thousands of chemicals. As Linda Fisher, a longtime senior official at the EPA and now DuPont's chief sustainability officer, puts it, if the EU forces the company to phase out certain chemicals, "it's going to be hard to explain to our markets and our public in the U.S. or in Asia why the Europeans don't think it's safe for them, but we're going to continue to expose you."