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green@work : Magazine : Back Issues : Jul/Aug 2002 : Cover Story

Cover Story

A "Value-Added" Metric


More Cover Story Articles

- The Challenge of Sustainable Growth
- DuPont's Pathways to Sustainability
- A "Value-Added" Metric
- Four Goals

 

By generating more value with less “stuff,” DuPont strives to make itself more
sustainable.


It has even devised a metric called “shareholder value added per pound of production” or “SVA/lb.” SVA is the shareholder value created above the cost of capital, which typically is 10 to 12 percent for corporations in the United States. On a simplistic basis, shareholder value can be created with material or knowledge or both, but SVA/lb. emphasizes only the addition of knowledge: the higher the SVA/lb., the greater is the use of “knowledge intensity” and the lower is the use of “material intensity” to create value. Coupled with the more traditional financial measures the SVA/lb. metric provides an indicator of the long-term sustainability of different growth strategies.

DuPont has evaluated the SVA/lb. for all of its business units. For example, DuPont Advanced Fiber Systems, which makes Kevlar® and Nomex®—have a goal to double SVA/lb. during the next five years. One way that the business unit will accomplish this is by bundling its products with services. For example, hazard assessments for people who buy protective clothing to create revenue streams that require no additional material resources (that is, increased SVA with no additional lbs.).

According to DuPont, efforts to improve productivity, especially in operations, invariably result in increased SVA/lb.; a decrease in raw material and energy use; or the elimination of waste. That’s how productivity connects to sustainable growth.

Four Goals -->>


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