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For the “D,” 3M development teams within each of our business groups draw upon our core technologies to create products for targeted markets and geographies. |
We will continue to expand beyond our own operations and focus more on 3M Sustainability goals and the needs of our customers and communities. While we recognize the importance of what we do in our own businesses and will continue to innovate there, we see that far greater impact can be realized when we partner with others to understand and overcome the challenges we face together. |
Just as Sustainability is embedded throughout our Value Model, sustainable thinking is embedded into the core of 3M and in the strategic planning process we use for every region, every market, and every business. |
In each of our business groups and regions, we have dedicated Sustainability leaders who develop a relevant and well-informed strategy specific to their market demands and business goals. |
Annually, like many companies, we go through a strategic planning process during which our divisions develop their business strategies for the next few years. However, unlike other companies, we formally require that each plan addresses Sustainability factors relevant to the division’s market needs and business opportunities. |
How we work 84 85 3M 2020 Sustainability Report #improvinglives Introduction |
3M believes that good corporate governance practices serve the long-term interests of shareholders, strengthen the Board and management, and further enhance the public trust 3M has earned from more than a century of operating with uncompromising integrity and doing business the right way. Our commitment. |
Our corporate governance principles govern how we do business daily, enabling us to outperform and lead the way to sustainable growth. They provide a framework that defines the roles, rights, and responsibilities of different groups within the organization, the Board’s role in risk oversight, public policy engagement, and 3M’s commitment to Sustainability. |
3M’s Board of Directors oversees the CEO and senior management and assures that appropriate procedures and controls are in place covering management’s activities in operating the company on ethical grounds on a day-to-day basis. |
The Board of Directors believes that this leadership structure provides independent Board leadership and engagement while deriving the benefits of having our CEO also serve as Chairman of the Board. As the individual with primary responsibility for managing 3M’s day-to-day operations and with indepth knowledge and understanding of the company, our CEO is best positioned to chair regular Board meetings as the directors discuss key business and strategic issues. |
Coupled with an independent Lead Director, this combined structure provides independent oversight while avoiding unnecessary confusion regarding the Board’s oversight responsibilities and the day-to-day management of business operations. |
The Board plans the succession to the position of Chairman/CEO and other senior management positions. To assist the Board, the Chairman/ CEO and Senior Vice President of Human Resources annually assess senior managers and their succession potential for the position of Chairman/ CEO and other senior management positions. As a result of a thorough and thoughtful succession planning process, in February 2019, Inge G. Thulin, Executive Chairman of the Board, announced his intention not to stand for reelection at the 2019 Annual Shareholder Meeting. The Board nominated Michael F. Roman to serve as Chairman of the Board, effective May 14, 2019, following his election as a director by shareholders at the 2019 Annual Shareholder Meeting. |
Board’s role in the company’s long-term strategy. |
Each year management presents to the Board, and the Board discusses and approves, detailed long-term strategic plans for the company. In addition to the overall strategic plan for 3M and the business groups, the discussions also focused on breakout sessions with the directors on strategic corporatewide themes of portfolio management, innovation, commercial transformation, manufacturing and supply chain transformation, and people and culture. |
Our long-term strategy is outlined in the 3M Value Model. The 3M Value Model is what differentiates our company in the marketplace. It’s how we create extraordinary value for customers and premium returns for shareholders. The model is built around four elements: our Vision, our strengths, our priorities, and our Values. Additional details can be found in the 3M Value Model section. |
Corporate governance 3M’s Board of Directors has adopted Corporate Governance Guidelines which provide a framework for the effective governance of the company. The guidelines address matters such as the respective roles and responsibilities of the Board including leadership structure, responsibilities of the independent Lead Director, director independence, membership criteria, committees, and management evaluation. The Board’s Nominating and Governance Committee is responsible for overseeing and reviewing the guidelines, at least annually, and recommending proposed changes to the Board for approval. The Corporate Governance Guidelines, Certificate of Incorporation and Bylaws, charters of the Board committees, Director Independence Guidelines, and Board of Directors Code of Conduct provide the framework for the governance of the company and are available on our website at 3M.com, under Investor Relations — Governance. |
The Board’s current leadership structure is characterized by: • A combined Chairman of the Board and CEO • A strong, independent, and highly experienced Lead Director with welldefined responsibilities that support the Board’s oversight responsibilities • A robust committee structure consisting entirely of independent directors with oversight of various types of risks • An engaged and independent Board. |
How we work 86 87 3M 2020 Sustainability Report #improvinglives Corporate governance |
Lobbying and Political Activities Principle. |
As a concerned member of our communities, 3M actively participates in public policy and legislative advocacy, or “lobbying.” As appropriate, 3M also participates in political activities to elect and work with elected representatives and government officials. 3M’s Government Affairs organization coordinates and oversees 3M’s lobbying and political activities. 3M Political Activities Board, which is made up of senior 3M executives, oversees 3M’s political contributions and the activities of 3M’s Political Action Committee (3M PAC). 3M PAC is a nonpartisan fund comprised of voluntary employee and stockholder contributions that is used to make contributions to U.S. federal, state, and local candidates as permitted by law. These activities must always comply both with applicable laws and 3M’s Lobbying and Political Activities Principle. Our actions. |
Board membership criteria 3M’s Corporate Governance Guidelines contain Board Membership Criteria which include a list of key skills and characteristics deemed critical to serve 3M’s long-term business strategy and expected to be represented on 3M’s Board. The Nominating and Governance Committee periodically reviews with the Board the appropriate skills and characteristics required of Board members given the current Board composition. |
It is the intent of the Board that the Board itself will be a high-performance organization creating competitive advantage for the company. To perform as such, the Board will be composed of individuals who have distinguished records of leadership and success in their arena of activity and who will make substantial contributions to Board operations and effectively represent the interests of all stockholders. The committee’s and the Board’s assessment of Board candidates includes, but is not limited to, consideration of: • Roles in and contributions valuable to the business community • Personal qualities of leadership, character, judgment, and whether the candidate possesses and maintains throughout service on the Board a reputation in the community at large of integrity, trust, respect, competence, and adherence to the highest ethical standards • Relevant knowledge and diversity of background and experience in business, manufacturing, technology, finance and accounting, marketing, international business, government, and other areas; and • Whether the candidate is free of conflicts and has the time required for preparation, participation, and attendance at all meetings. |
In addition to these minimum requirements, the committee will also evaluate whether the nominee’s skills are complementary to the existing Board members’ skills, the Board’s needs for particular expertise in certain areas, and will assess the nominee’s impact on Board dynamics, effectiveness, and diversity of experience and perspectives. |
Board refreshment. |
We regularly add directors to infuse new ideas and fresh perspectives into the boardroom. Five out of the 10 independent director nominees standing for this year’s election have joined our Board within the past four years. In recruiting directors, we focus on how the experience and skill set of each individual complement those of their fellow directors to create a balanced Board with diverse viewpoints and backgrounds, deep expertise, and strong leadership experience. |
Shareholder engagement. |
Shareholder engagement is fundamental to our commitment to good governance and essential to maintaining our strong corporate governance practices. We engage regularly with our global investors to gain valuable insights into the governance issues about which they care most. We aim to seek a collaborative and mutually beneficial approach to issues of importance to investors that affect our business, and to assure that our corporate governance practices remain industry-leading from their perspectives. |
During 2019, members of senior management met with a cross-section of shareholders owning approximately. |
The meetings included an overview of the company and a discussion of the company’s practices on corporate governance, including Board refreshment and diversity, director evaluation, directors’ skills matrix, Board leadership structure, as well as on strategic priorities, capital allocation and structure, environmental and social matters, Sustainability, and company culture. In general, investors viewed the company’s governance practices favorably, including the Board Chairman transition, the mix of tenure and overall diversity, and the disclosure regarding the Directors’ skill sets and qualifications. The feedback from these meetings was shared with the Board of Directors and helped inform the Board on corporate governance practices and trends. |
Director independence. |
The Corporate Governance Guidelines and Director Independence Guidelines provide that independent directors must comprise a substantial majority of the 3M Board. A director is “independent” if the Board affirmatively determines that the director has no material relationship with 3M directly or as a partner, shareholder, or officer of an organization that has a relationship with the company and otherwise meets the requirements for independence of the listing standards of the New York Stock Exchange. The independent directors will make the Board decisions on corporate governance matters. |
The Guidelines specify the criteria by which the independence of our directors will be determined, including strict guidelines for directors and their immediate family members with respect to past employment or affiliation with 3M or its independent registered public accounting firm. The Guidelines also prohibit Audit and Compensation Committee members from having any direct or indirect financial relationship with the company, and restrict both commercial and not-for-profit relationships of all directors with 3M. Directors may not be given personal loans or extensions of credit by the company, and all directors are required to deal at arm’s length with 3M and its subsidiaries and to disclose any circumstance that might be perceived as a conflict of interest. |
Diversity. |
For 3M, diversity, in its myriad manifestations, is fundamental to innovation, performance, and relevancy. |
The Board of Directors regards diversity as an important factor in selecting Board nominees to serve on the Board. Although the Board has no specific diversity policy, when selecting nominees, it actively considers diversity in recruitment and nomination of directors, such as gender, race, and national origin. The current composition of our Board reflects those ongoing efforts and continued importance of diversity to the Board. |
Corporate governance highlights. |
Director Tenure. |
Independent Lead Director Meeting attendance 96% |
Other public company Boards. |
Avg. 7 Avg. 64.3 33.3% 11/12 years 6 |
0-4 Years <59 Years 5-9 Years 60-65 Years 10-14 Years 66-70 Years Women Independent Not Independent 15-19 Years 71-74 Years Men 3 |
1 2 2 3 4 5 11 1 2 years Women Directors Directors are independent. |
Director Age Gender Diversity Board size and independence • Independent Lead Director with robust authority • Combined Chairman and CEO positions • Overall attendance at Board and committee meetings • There were eight Board meetings in 2019. |
Boards Board Boards Boards 3 |
0 1 2 3 5 |
1 3 |
8 1.3 average Board positions of our institutional shareholders. |
29% 42% of our outstanding shares or approximately. |
How we work 88 89 3M 2020 Sustainability Report #improvinglives Corporate governance |
An inclusive culture at 3M is built on our Be Respectful Principles — to respect the dignity and worth of individuals; encourage the initiative of each employee; challenge individual capabilities; and provide equal opportunity. 3M is continuously focusing on building and maintaining an inclusive culture. Additional information on our inclusive culture can be found in the Diversity and inclusion section. |
Governance actions. |
As we continually seek ways to improve corporate governance, our Board announced in November 2019 that it had established a new committee to strengthen oversight of the company’s strategies related to research and development, commercialization, Sustainability, environmental stewardship and other related activities. The new 3M Science, Technology & Sustainability Committee of the Board of Directors will help assure 3M is building on its strong innovation capabilities while maintaining 3M’s high product stewardship standards. |
As a science-based company that relies on investments and capabilities in R&D, commercialization and Sustainability for our success, this new committee aligns with 3M’s strategic priorities and enables the Board greater focus and engagement on a critical element of our strategy. |
In addition to forming the Science, Technology & Sustainability Committee, the Board has ended the Finance Committee. The responsibilities of the Finance Committee will be undertaken by the Audit Committee and the full Board. |
During 2019, the Board of Directors held eight meetings. Overall attendance at Board and committee meetings was 96%. |
Commitment to economic, environmental, and social topics. |
At 3M, we are inspired and motivated by our Vision of advancing every company, enhancing every home and improving every life. In collaboration with our employees, customers, partners, government, and communities, we apply our expertise and technology to help solve shared global challenges. Sustainability is at the heart of our company. It anchors our purpose-driven innovation in products, manufacturing processes and new technologies — and we’re always trying to do more. It is our ambition to meet the increasing expectations of our customers, employees, investors, and stakeholders — and grow our business — by continuing to make bold Sustainability commitments and taking stronger actions. |
3M has a long-standing commitment to Sustainability, from our groundbreaking Pollution Prevention Pays program that began in 1975 to our increasingly ambitious set of 2025 Sustainability Goals, which are designed to improve the footprint of our own operations, help our customers meet their own Sustainability goals and drive action on global environmental and social issues. |
As a global corporation, contributing to society through diverse markets, we believe that we have a significant responsibility to advance the United Nations Sustainable Development Goals across the world. |
We are also a participant of the United Nations Global Compact, a policy initiative for businesses to demonstrate their commitment to 10 principles in the areas of human rights, labor, environment, and anticorruption. We align this Report to the guidelines of the Sustainability Accounting Standards Board (SASB) and the Task Force for Climaterelated Financial Disclosures (TCFD) recommendations for helping businesses disclose climate-related financial information. Together with our ambition of improving every life and our strong set of 3M values, these commitments drive and inform our formalized approach to Sustainability — the 3M Strategic Sustainability Framework. |
Announced by CEO Mike Roman on Investor Day in November 2018, the Framework directs our efforts to areas where we can make the greatest impact: Science for Circular, Science for Climate, and Science for Community. At 3M, we are inspired and motivated by our Vision of advancing every company, enhancing every home and improving every life. |
How we work 90 91 3M 2020 Sustainability Report #improvinglives Corporate governance |
We regularly post governance news, events, and presentation information in the Investor Relations section of our website. See 3M Events and presentations. |
Looking forward. |
More than a century of operating with uncompromising integrity has earned 3M trust from our customers, credibility with our communities, and dedication from our employees. |
Our continued work across the Strategic Sustainability Framework helps advance 3M’s progress toward our 2025 Sustainability Goals, which is reported on in this Report. Sustainability at 3M is also guided by our Innovation Steering Committee which includes our CEO, CTO, and General Counsel. The committee provides leadership, oversight and strategy to encourage and assure Sustainability opportunities are recognized, and strong policies and procedures are in place. |
In November 2019, the 3M Board of Directors established a new Board-level committee to provide general oversight of the significant scientific and technological aspects of 3M’s businesses and the company’s Sustainability and stewardship activities: the 3M Science, Technology & Sustainability Committee of the Board of Directors. The committee will review the company’s Sustainability policies and programs, identifying and analyzing significant Sustainability, materials vulnerability, and geopolitical issues that may impact our overall business strategy, global business continuity, and financial results. |
Additional information can be found in our 2020 Proxy, Commitment to Sustainability. |
3M’s Code of Conduct. |
More than a century of operating with uncompromising integrity has earned 3M trust from our customers, credibility with our communities, and dedication from our employees. And for the seventh year in a row, 3M has been recognized by Ethisphere® as one of the World’s Most Ethical Companies®. |
The Code of Business Conduct and Ethics for Directors of the company incorporates long-standing principles of conduct 3M and the Board follow to assure the company’s business and the activities of the Board are conducted with integrity and adherence to the highest ethical standards, and in compliance with the law. |
Our Code of Conduct applies to all employees, including our CEO, Chief Financial Officer, and Chief Accounting Officer. See the Corporate Code of Conduct section for additional details. |
Lobbying and Political Activities Principle. |
All 3M Political Action Committee (PAC) receipts, disbursements, and contributions are publicly disclosed as required by law. 3M’s reports are available on the Federal Election Commission website. Corporate contributions directly to candidates, political committees, ballot measures, Section 527 organizations, and issue advocacy or “lobbying” are outlined in our Political Activities and Issue Advocacy report. |
Governance links. |
For more information on corporate governance at 3M, see: • Corporate Officers • Board of Directors • Committee Composition • Governance Documents • Annual Reports and Proxy Statements. |
How we work 92 93 3M 2020 Sustainability Report #improvinglives Corporate governance |
Our commitment. |
The concept of risk appetite and tolerance is an essential component of our strategic planning, and it’s the responsibility of our senior business leaders to plan accordingly. |
We firmly believe that good corporate governance practices serve the longterm interests of our stockholders, strengthen 3M’s Board of Directors and management, and further enhance the public trust 3M has earned from more than a century of operating with uncompromising integrity and doing business the right way. Governance includes broad risk oversight by the Board and its committees. Risk analysis is reported to the full Board, the General Auditor, and the Chief Ethics & Compliance Officer. Both the General Auditor and Chief Ethics & Compliance Officer are appointed by, and report to, the Audit Committee of the Board. |
Risk oversight. |
The Board has delegated primary responsibility for the oversight of risks facing the company to the Audit Committee of the Board of Directors. The Audit Committee Charter states that the committee will “discuss policies and procedures with respect to risk assessment and risk management, the company’s major risk exposures, and the steps management has taken to monitor and mitigate such exposures.” |
Enterprise risk Assessing and planning for risk at all levels. |
The Vice President and General Auditor, Corporate Auditing, whose appointment and performance is reviewed and evaluated by the Audit Committee, is responsible for leading the formal risk assessment and management process within the company. The General Auditor, consulting with the company’s senior management, annually assesses the major risks facing the company and works with those executives responsible for managing each specific risk. The General Auditor periodically reviews with the Audit Committee the major risks facing the company and the steps management has taken to monitor and mitigate those risks. |
While the Board’s oversight of risk is primarily performed by the Audit Committee, the Board has also delegated to other committees the oversight of risks within their areas of responsibility and expertise. We believe this governance of risks by Board committees, who share information with the full Board, is appropriate for a diversified technology and manufacturing company like 3M. 3M’s 10-K, Item 1A outlines risk factors applicable to the company. |
Our actions. |
Corporate-level 3M’s Enterprise Risk Management (ERM) initiative, launched in 2001, has helped assure adequate recognition and ownership of the most significant potential risks to the company’s shareholder value, using a process that proactively identifies and communicates enterprise risks within the company. This includes confirming that appropriate plans and oversight exist for all major risks, providing for ongoing review and assessment of risk, and aiding in generating awareness and engagement of general risk matters throughout the company. The approach provides a customized capability that leverages 3M’s comprehensive, experience-based global knowledge and capabilities while also considering tools often used in financial or insurance-oriented businesses. |
To assure longterm success, we are committed to discovering and preparing for all potential threats to our Vision. |
Risk owners familiar with the environmental, economic, and business aspects within the company are interviewed and requested to complete a thorough assessment for their respective risk(s). |
Together with subject-matter experts and senior management, the outcomes are mapped to demonstrate the relative level of risk and likelihood of risk. This “heat map” identifies the highest- risk areas and shows where to focus our internal efforts. In addition, external resources and data are continually reviewed to assist in the risk identification process. The results of our various risk assessment exercises are shared with the Corporate Operations Committee and the company’s full Board of Directors. |