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3M CEO on the company's plans to invest $1B to accelerate new environmental goals

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Mike Roman, 3M Chairman and CEO, joined Yahoo Finance Live to discusss the company's plan to invest $1 Billion to achieve carbon neutrality, reduce water use, and improve water quality.

Video Transcript

SEANA SMITH: 3M announcing that it plans to spend a billion dollars to achieve its environmental goals. We want to get to Brian Sozzi, who's joined by the CEO of 3M, Mike Roman. Sozz.

BRIAN SOZZI: All right, thanks so much, Seana. And good to see you again, Mike. So big news out from 3M this morning here. $1 billion investment over 20 years, and you hope to achieve carbon neutrality by 2050 and reduce water use by 25% at your facilities. Why did you make this announcement now?

MIKE ROMAN: Yeah, Brian, thank you again for having me on today. It was an exciting day for us to step out with these goals, goals that build on a legacy of leadership for us in sustainability. ESG is critical to 3M and 3M-ers. It's high expectations from our customers, our shareholders, the communities that we're part of with our operations around the world.

Today's announcement, invest a billion dollars over the next 20 years to really step forward in our carbon goals, go carbon neutral by 2050, reduce the water usage in our manufacturing facilities by 25%, improve the quality of water that comes out of our factories. And it's really important to us that we do this, leverage the 3M capabilities and step into it, bend these curves early. And that was an important part of our announcement. It was an important part of why now.

We could do that. We could leverage our technology, state of the art technology, partnerships with other companies, to really bend the curves and make a difference not only to those goals that we have over the next 10 and 20 years, but in the next several years, and invest and to make the steps and take that on now. It was a chance to really step into something that was critically needed and be a manufacturer that can provide some leadership here.

BRIAN SOZZI: Mike, have you heard from investors saying, Mike, listen, you need to get more out in front of this? And this is, in part, why-- or one part why you're announcing this today.

MIKE ROMAN: Well, I think investors have always looked to us to be a leader in sustainability. That's something we hear from investors. What we do-- and we have a long history of delivering on that. We started more than 30 years ago with pollution prevention pays, reducing waste as a manufacturer at the source. We've reduced our greenhouse gas emissions over the last two decades by over 60%. So we've been making tremendous progress. We have goals for 2025, environmental goals that include water usage.

Our investors have noted that. And they've said that's important to them. This is an opportunity to step forward and take a bigger leadership role. And every time we've done that in sustainability and in environmental stewardship and product stewardship with our innovation, we have seen it be a strong response from our customers, our shareholders, certainly our employees. So it is something they look for from us. This is an opportunity to take that next big step with them and look and meet their expectations, which are certainly increasing over time for 3M.

BRIAN SOZZI: I've heard you talk at length, Mike, really, the past year or so brought proactively managing the PFAS situation. Or if people are not familiar with PFAS, that is these forever chemicals. Does an announcement like this help proactively manage that situation? Does it reduce the risk of a negative outcome here?

MIKE ROMAN: Well, this is broader than PFAS, what we're announcing today, carbon and stepping into the climate challenge. Even water is broader than PFAS, though it is an example of what I talk about as we go out and work on PFAS. We are proactively managing PFAS, taking steps before we're forced to do so. And the goals we have around water here, these are going beyond the regulations that we face operating our facilities, and go forward, step further forward, proactively manage environmental stewardship.

So it will help us address PFAS. The purification technologies we put in our factories will help address PFAS. They'll address other chemistries as well. Agricultural runoff-- we will be able to filter that as well. So we will do more than PFAS, but it is certainly about proactively managing environmental stewardship.

BRIAN SOZZI: Let's switch gears a little bit to the pandemic, Mike. Have you been able to catch up with the demand for N95 masks? And how many masks do you plan to make this year?

MIKE ROMAN: Well, we are producing more masks than ever before. We have increased our production capacity in 2020 by more than fourfold. And so, we, at the end of 2020, we were producing an annual rate of 2.5 billion N95 respirators. And we produced over 1.2 billion in the United States and delivered to our customers over a billion in the year. And so, we're producing more than ever before. We're getting N95s out to where the needs are greatest and focused on those frontline healthcare workers and first responders.

That said, it's still a challenge. There's a need out there in the healthcare workers. It's-- a part of it's production. And we've been certainly focused on increasing our production. Part of it is logistics and working in public and private partnership with healthcare distributors and government partners as well to get the product to where it's needed and, at the same time, start to leverage that production capacity to be ready for the next surge in the pandemic.

And I think we're seeing progress. We're seeing progress in those partnerships. And we'll continue to focus on producing more and more N95s. We'll also continue to be a partner in the marketplace to make sure that we don't see price gouging. We don't see fraud. That we're helping on that side of it as well. So it's-- I'm really proud of what we accomplished as we went through 2020. We're well positioned as we come into 2021 to keep moving forward, keep advancing on that plan.

BRIAN SOZZI: What is it like, Mike, to have a change in tone in the White House? You know, you go back-- you rewind a bit into April. I mean, 3M is getting attacked by now former President Trump on how you were producing masks. And you stepped up. You said that is not right. What is it like now to have a more-- just a more, just, respectful tone out of the White House?

MIKE ROMAN: Well, I would say we have a long history in 3M of working in public-private partnerships with governments at all levels-- federal governments, local governments. And the pandemic was another lesson for us about the importance of public-private partnerships, and they take work. They take us stepping up in our leadership. We saw that early in the pandemic globally. We saw it in the United States.

And we stepped into it. Through the partnership with-- in the US, we were able to deliver those 2 billion respirators. I really like-- and I talked about it in our Q4 earnings call-- the foundation we have as we begin to work with President Biden's administration and his team. We have common goals.

We have a common goal to do everything we can to fight this pandemic, deliver as many PPE solutions as we can into the marketplace, deliver our N95 respirators. We've got a great foundation with them. It's a science based approach to solving the challenges with the pandemic. So it's a very strong place to start the partnership, and we're working well.

BRIAN SOZZI: Before I let you go, Mike, your business touches so many areas of the global economy. What does the US recovery look like to you? So many different letters put to it-- K-shaped, V-shaped. Does it feel like a-- or does it look like a V-shaped recovery to you?

MIKE ROMAN: Well, we reported our Q4 earnings just a few weeks ago. And we talked about a strong finish to 2020. The US had a strong contribution to that. We saw growth in the fourth quarter in the US. And we had suspended guidance, like many companies, as we went through 2020. We were providing monthly sales updates, which was a little unusual for us.

As we came into 2021 at our earnings call, in fact, we threw better visibility in the end markets. We saw better projections and visibility on what the end markets are expected to do as we go through 2021. We reinstated guidance. So we're looking at 3% to 6% organic local currency growth for the year in 2021. And there's still a lot of uncertainty, I would say, relative to the pandemic.

But still, one of the things that we're watching closely. It continues to be very fluid and how we look at each of our markets. Even as we came through the first quarter, you see a lot of focus on chip shortages impacting automotive industry. And we supply into the automotive industry elective procedures in both medical and oral care kinds of offices, not back yet to the levels that they were before the COVID pandemic.

So we're watching some of those trends and maybe the uncertainty of how the vaccines help address the pandemic, how fast we see the economy open back up. As we started the year, we were looking at healthy growth for the total year.

BRIAN SOZZI: OK, well, don't take away my monthly sales reports, Mike. I actually enjoyed reading those when they did come out. I know it was a change of pace, but I appreciated them. We'll leave it there for now. 3M chairman and CEO, Mike Roman, good to see you. Stay safe. Seana, back to you.