What’s next?Although he is now a Guardian employee, Vaupel often emphasizes a major focus area for Koch companies: innovation.“I’m always reminding employees that we need to improve continually, innovate and embrace change if we want to enjoy even more success,” Vaupel said.

“When we talk about innovation, it’s not just about the latest coating at the Guard-ian Science & Technology Center.“Innovation is about how you come to work every day, about doing your job bet-ter and doing it more efficiently.“We do a lot of things very well,” Vaupel concluded, “but we still need to strive to improve everything we do.“Guardian Industries is a company that really knows how to create value. And I’m going to do everything I can to help it continue to succeed even more.”

www.guardian.com

THE QUARTERLY NEWSLETTER OF KOCH COMPANIES

Discovery

When tourists gaze at New York City from the observation deck of the Empire State Building, they are looking through special-ized glass made by Guardian Industries.Guardian glass also adorns the Guggen-heim Museum in Bilbao, Spain, and the tallest building in the world – the 160- story Burj Khalifa in Dubai, UAE.Like Koch, Guardian is a privately held company. Last December, Koch Indus-tries acquired a minority stake of about 45 percent in Guardian Industries.

Embracing changeMany of the world’s most popular smart-phones, copiers and scanners rely on Guardian products. There’s also a good chance the chrome-plated plastic parts on your favorite car, truck or washing machine were made by Guardian. But when the company was founded as Guardian Glass Co. in 1932, its primary product was automotive glass, sold to corporate customers in nearby Detroit and Flint, Mich. Years later, the company acquired an automotive trim fabricator.In 1970, Guardian began manufacturing float glass, a product made by literally floating a layer of molten glass on a bath of liquid tin. (A modern float glass plant, such as the one Guardian opened last No-vember, can produce 900 tons of flawless product per day.)The 1980s and ‘90s brought further diversi-fication into fiberglass insulation and build-ing materials distribution, and the develop-ment of high-tech, value-added products,

such as specialized plastic coatings made at sites in the U.S. and Europe.Today, Guardian is the world’s leader in coated, value-added glass, including energy-efficient solar-control coatings. It is a truly global corporation with diver-sified products and nearly 1,000 patents.

If it ain’t broke...On Jan. 1, Ron Vaupel, the former leader of Koch Industries’ business development group, became the president and CEO of Guardian Industries. Guardian was on Ron Vaupel’s “radar screen” long before he came to the company.“I had been following Guardian Indus-tries for at least eight years,” Vaupel said. “I felt Guardian’s culture and businesses would be a tremendous investment op-portunity for Koch.”During his first two months on the job, Vaupel visited more than 16 Guardian plant sites in five countries, including Brazil, Luxembourg and Russia. Most of that time was spent listening and learning, and then sharing a vision for Guardian.“Wherever I go, I have the same question for our employees,” Vaupel said. “First and foremost, I want to know how well they understand Guardian’s vision and their role in helping the company achieve that vision. “I’ve learned that behaving ethically while competing to win is very much a part of the Guardian way,” Vaupel said, “as is entrusting people with responsibility for which they can then be held accountable.”

MAY 2013

A clear leader

2012 Koch jobs report pg 2 Carbon concerns pg 4 Original ideas pg 6 The President who could say “no” pg 7

this issue…

Guardian, which made the glass for this stairway, has about 19,000 employees working in 22 states and 25 countries.

2

Letters and other submissions become the property of Koch Industries, Inc., and may be reproduced in whole or in part, including your name, for any purpose and in any manner. Letters may be edited for length or clarity.

To “like” and follow Koch companies and leaders – including Georgia-Pacific, INVISTA, Flint Hills Resources, Matador Ranch, Koch Pipeline and Charles Koch – visit Koch Industries’ Facebook and Twitter pages.

May 2013 | Volume 19 | Number 2

Editorial boardPhilip EllenderRich FinkJeff GentryDale GibbensGreg GuestCharles KochJim MahoneyDave Robertson

Questions? Comments? Contact: Rod Learned316.828.6136rod.learned@kochps.com

Publication design Amber VogtsKoch Creative Group

www.kochind.com©2013, Koch Industries, Inc. Koch is an EOE. M/F/D/V

Discovery

INDIRECT & INDUCEDCOMPENSATION

DIRECTCOMPENSATION

$4.2B $6.7B

KOCH COMPANIES 2012JOBS & ECONOMIC IMPACT STUDY

47,000+ DIRECT JOBS 143,000+ INDIRECT

JOBS

JOB SUPPORTSABOUT THREE ADDITIONAL JOBS IN THE U.S.

EACH KOCH COMPANY

200,000TOTAL JOBS ACROSS ALL 50 STATES

$IIBILLIONTOTAL COMPENSATION & BENEFITS

NEARLY

OF EARNINGS

BACK INTO ITS

BUSINESSES

90%

KOCH INDUSTRIES

HAS HISTORICALLY

RE-INVESTED

TOP 10 STATES

JOBS COMPENSATION & BENEFITS

Georgia

Texas

Kansas

Wisconsin

Arkansas

Alabama

Oregon

South Carolina

Oklahoma

Virginia

Georgia

Texas

Kansas

Alabama

Wisconsin

Arkansas

Oregon

Minnesota

Oklahoma

South Carolina

$746M$1.85B

$628M$2.08B

$371M

$211M

$191M

$187M

$597M

$518M

$461M

$543M

$154M$340M

$142M$354M

$132M$384M

$223M$661M

6,97228,320

6,55737,679

2,897

2,827

2,624

2,419

6,459

10,344

9,214

12,268

2,23210,265

2,0927,611

1,7906,023

1,6075,674

TOTAL DIRECT, INDIRECT & INDUCED

MILLION

BILLION

M

B

DIRECT

The following letter is from a history teacher whose students attend weekend classes organized by the Gilder Lehrman Institute and sponsored by the Fred and Mary Koch Foundation. (See story, page 7.)

Today, my students and I were discuss-ing aspects of the American Revolution. It was great how many of them recount-ed particular documents – including Common Sense, letters from a Penn-sylvania farmer and the Declaration of Independence – when addressing the founding of our nation.I know the 50 students I bring to Satur-day Academy have loved being able to attend this winter. They really enjoy the program.I want to express my appreciation for all that the Fred & Mary Koch Foundation has done for these unique opportunities.Thank you again for all the support!

Joel SchaeferAndover High School

Andover, Kan.

Data source: Harrah Analytics, data as of Dec. 31, 2012. Direct jobs include those at Koch companies in the 50 states and the District of Columbia. Total jobs were calculated using RIMS II multipliers produced by the U.S. Department of Commerce, Bureau of Economic Analysis. Shareholders and executives of Koch companies are not included in jobs totals.

KOCH COMPANIES 2012 JOBS AND ECONOMIC IMPACT STUDY

www.kochind.com/files/KochCompaniesJobStudy2012.pdf

This analysis, completed in January 2013 and based on data for the year ended December 31, 2012, was conducted by Harrah Analytics. It details the economic impact of Koch companies on the U.S. and individual state economies.

Through the years, Koch companies have experienced significant growth and today employ more than 47,000 people in all 50 United States and the District of Columbia.

Postal Pipeline

3

Agency. It involved testing industrial wastewater from various sources, includ-ing a brewery, dairy producer, snack food maker and pharmaceutical manufacturer.Using a KMS Laboratory Cell CF-1 mem-brane test unit, FDT was able to evaluate what type of process – microfiltration, ultrafiltration, nanofiltration or reverse osmosis – would produce the best results.In addition to constructing the test unit, KMS assisted FDT with the setup and provided recommendations for operat-ing and cleaning the membranes and interpreting the test data.The experiment was so successful that FDT entered it in the annual Green Apple Award competition. These awards were established in 1994 as a way of rec-ognizing and promoting environmental best practices worldwide.Out of more than 500 global entries, the FDT project was one of only four from Ireland to receive a Green Apple Award, presented in the House of Commons at the Palace of Westminster last November.Koch Membrane Systems and FDT have worked closely on similar projects before. One installation, at the second-largest brewery in Ireland, paid for itself in just 20 months.Almost 20,000 KMS systems have been installed worldwide, from Versailles to Sharm el-Sheikh. These installations are custom-designed to help customers reduce their water footprint, increase pro-ductivity, enhance safety and reduce costs.

www.kochmembrane.com

Canada – Ontario is home to three important INVISTA facilities: an air bag fiber manufacturing site, a research and development center and a specialty chemical manufacturing operation.With more than 900 employees working at those three sites, INVISTA is the largest industrial employer in eastern Ontario. But for citizens in the Kingston area, the company’s best-known site is the INVISTA Centre, a popular recreation facility. In March, Steve Kimpton, INVISTA’s Kingston site manager, announced the company is renewing its naming rights sponsorship for the INVISTA Centre, which the company originally sponsored in 2008, the year the facility opened.“Given the long-term vision for our Kingston site,” Kimpton said, “and the hundreds of INVISTA employees who enjoy using this regional recreation facil-ity, we thought it was important to renew our corporate sponsorship.”The facility has four NHL-sized ice pads, a mini-rink, pro shop and an elevated gal-lery for viewing the skaters. The INVISTA Fitness and Wellness Centre, which adjoins the rink, is a popular workout site with more than 1,000 memberships.Just as INVISTA has a goal of reducing its overall energy intensity by 20 percent by 2020, the INVISTA Centre is also energy efficient. Its dressing rooms use radiant in-floor heating elements powered by energy captured from the rink refrigera-tion systems. Barcelona – Fashion designers thrive on creating something new. But at least one

famous designer, Andres Sarda, has relied on the same “secret ingredient” for 50 years. That special something is LYCRA® spandex, manufactured by INVISTA. Sarda was a forward-thinking textile engi-neer when he decided to use the elastic-ity of LYCRA® fiber to revolutionize the lingerie industry in Spain. He specified LYCRA® fiber when design-ing his first lingerie collection in 1962. It became immensely popular, and, ever since then, LYCRA® fiber has been a vital component in many of Sarda’s most famous swimwear and lingerie designs.“We are proud of having shared in a half-century of work by this very talented creator,” said Denise Sakuma, global mar-keting director for INVISTA Apparel.“We plan on saluting him throughout the year with a series of advertisements, promotions and exhibits.”INVISTA is also laying the groundwork for another celebration later this year: the 75th anniversary of nylon. Ireland – This island nation, nicknamed the Emerald Isle because of its lush green landscape, is even greener these days thanks to Koch Membrane Systems and one of its business partners.Last year, Dublin-based FDT Consulting Engineers & Project Managers suggested using KMS technology to see if water and carbon dioxide from various industrial waste streams could be cost-effectively recovered and reused.This experiment was partially funded by Ireland’s Environmental Protection

Westminster – Koch Membrane Systems has been honored for helping to keep Ireland “green.”

Barcelona – One of Spain’s most famous fashion designers and LYCRA® fiber celebrate 50 years together.

Kingston – INVISTA has renewed its sponsorship of this popular recreation complex in eastern Ontario.

International News

4

What’s the best energy policy?ing believe this change is directly attribut-able to the widespread use of fossil fuels. Because they believe further warming will have catastrophic effects, they have waged a war on carbon for many years.They have persuaded regulators to restrict carbon-based fuels in favor of subsidized alternative energy and encouraged policy-makers to make fossil fuels more expensive in hopes of discouraging their use.

A matter of policyIn 2009, some policymakers proposed new legislation called “cap-and-trade,” which would set a cap on carbon emissions and allow businesses to buy, sell or trade permits for emitting carbon.Due to its severe economic effects and the lack of proven benefits for the environ-ment, the legislation was widely unpopu-lar and failed to become law.

Instead of accepting this reality, the Ad-ministration decided to bypass Congress entirely and restrict emissions through regulations, which are rules that don’t require the approval of elected officials.The U.S. Environmental Protection Agency began restricting emissions from mobile sources such as cars, working with other agencies to require manufacturers to make more fuel-efficient autos.Although this might sound like a good idea, such a policy is loaded with unin-tended consequences.

Vehicles with higher fuel efficiency are typically more expensive. They also tend to be smaller. For cash-strapped families with several children, this is a serious problem.Manufacturers have also tended to make cars lighter as a way of improving fuel ef-ficiency, which can reduce a car’s safety in the event of an accident.

Truth and consequencesRegulators have also changed the rules for stationary sources of emissions, including mills, manufacturing plants and refineries. The EPA now requires new and modified carbon-emitting sources to have permits from various agencies in addition to sepa-rate greenhouse gas requirements.These new requirements, coupled with lawsuits from non-governmental organi-zations, stop expansions that would cre-ate value for society and more good jobs.

The new rules also force manufacturers to use the most advanced (which usually means the most expensive) technologies.

Tale of two climatesIf the goal is really to reduce carbon emissions, it’s worth noting that the U.S. is doing a good job of achieving that goal without cap-and-trade programs.In Europe, where carbon cap-and-trade was imposed years ago, carbon emissions are actually up, not down. The same is true for European energy prices, which have become more expensive.

Even though much of the world is still suffering from economic stagnation, most of us would agree that we still have a very high standard of living. Compared to previous generations, we are wealthier, healthier, have better tech-nology, more mobility and many more opportunities for a better life.Several factors contribute to a higher standard of living, but one of the most important (and most often overlooked) is access to reliable and inexpensive energy.Affordable energy is essential for al-most every aspect of our modern lives. Without it, we wouldn’t have many of the things we often take for granted.Affordable energy is needed to run the hospitals and laboratories that improve our health. It’s required to deliver elec-tricity to our homes and put fuel in our vehicles. It also supports the millions of jobs associated with all of these things.

Carbon concernsIn general, the most affordable forms of energy come from fossil fuels, such as coal, oil and natural gas. Compared to these energy sources, alternative fuels such as solar and wind power are consid-erably more expensive (and less reliable).Burning fossil fuels to generate electricity or provide power necessarily releases car-bon dioxide, or CO2 , into the atmosphere.Carbon dioxide, a gas, is what we exhale ev-ery time we breathe. Erupting volcanoes, decaying trees, wildfires and the animals on which we rely for food all emit CO2.This by-product, which is essential for plant life and an unavoidable aspect of human life, is at the center of today’s climate change controversies.

Degree of changeThere is a vigorous debate about what effects carbon emissions may or may not have on our future climate.Many scientists have estimated that the earth’s atmosphere has warmed by about 1.3 degrees Fahrenheit since 1880.Those who believe that increased CO2 emissions inevitably lead to global warm-

Corpus Christi – Although uncertainty surrounding potential cap-and-trade legislation requires Flint Hills Resources to evaluate its future capital needs constantly, FHR has already reduced per-barrel criteria air emissions at its refineries by 76 percent since 1997. That’s 64 percent better than peer refineries.

5

For those who prefer higher taxation to spending cuts, having an entirely new source of revenue is an appealing way to reduce the deficit. Unfortunately, tax-ing carbon, as with all taxes, only takes more resources from the private sector to support a swelling federal government.

Does this sound fair?A recent study by NERA Economic Con-sulting analyzed the probable effects of a U.S. carbon tax that starts at $20 per ton and then rises 4 percent per year (which is in line with recent proposals). If such a tax were imposed, the study estimated that more than 1.3 million U.S. jobs would be lost this year alone and that workers’ incomes would eventually drop as much as 8.5 percent. Such a tax would also decrease house-hold consumption, due to the increased cost of goods. In Arkansas, for example, the average household would have to pay 40 percent more for natural gas, 13 percent more for electricity and more than 20 cents per gallon extra for gasoline. And that’s just in 2013. Costs would rise even more in subsequent years.For those living paycheck-to-paycheck, price hikes like these (coupled with high-er payroll taxes) can only mean lower standards of living and less opportunity.

Families that spend a bigger portion of their household income on transporta-tion, utilities and household goods are hurt, not helped, by carbon taxes and cap-and-trade rules that make traditional forms of energy more expensive.

In April, the EU’s CO2 emissions-trading program was described as “on the brink of collapse,” as prices crashed by as much as 45 percent, dropping to record lows. In the U.S., which has no national cap-and-trade program, carbon emissions and en-ergy prices are both down in recent years. Thanks to increased U.S. production, nat-ural gas, which cost about $12 per million BTUs two years ago, now costs less than $4. U.S. crude oil prices are also down by more than $20 per barrel since 2011. Meanwhile, the U.S. economy is less slug-gish than the recessionary economies of much of Europe.An article in the U.K. acknowledged how the recent boom in U.S. shale oil and natural gas production has already had “profound” effects.London’s Daily Telegraph noted that increased production of these fossil fuels in the U.S. is “creating hundreds of thousands of jobs, significantly adding to GDP and contributing tens of billions of dollars in federal, state and local taxes.”Instead of celebrating these develop-ments, state and federal regulators in the U.S. keep trying to impose new and more restrictive carbon regulations.Considering the numerous and extensive environmental laws already in place, it’s easy to wonder why any additional carbon legislation – such as cap-and-trade – would be necessary.

Know your numbersAll too often state and federal proposals to tax carbon directly or launch new carbon cap-and-trade schemes have much more to do with raising revenue than helping our environment.Even with the so-called se-questration, total U.S. spend-ing has not gone down, but taxes have certainly gone up. As of Jan. 1, a U.S. household making $50,000 a year pays about $1,000 more in taxes. That isn’t nearly enough to erase the $1.3 trillion U.S. budget deficit, let alone the $16 trillion national debt.

Almost everyone is hurt by these higher costs – the exception being those few who benefit from subsidies.

A better approachAt a time when robust economic growth has been lacking, it makes no sense to burden essential industries and millions of households with even higher costs and bureaucratic hurdles. As several Koch companies have shown, there is a better way. By focusing on more efficient use of energy, it is possible to lower emissions without imposing even more environmental restrictions.INVISTA is an excellent example. That company is agressively pursuing a goal of reducing its energy intensity by 20 percent by the year 2020.Flint Hills Resources has already reduced its refinery emissions by 76 percent since 1997. Of the 50 largest refineries in the U.S., FHR refineries rank first, seventh and sixteenth for lowest criteria air emis-sions per barrel.For 2010 (the most recent year for which complete data are available), those emis-sions were 64 percent lower than the average among peer refiners.As Sheryl Corrigan notes in her Perspec-tive editorial on page 8, Georgia-Pacific has cut sulfur dioxide emissions by almost half since 2000.Koch companies are now among the best in the world at using fewer resources while producing more and better goods.That approach is not just good business, it’s good stewardship and a much better strat-egy for improving the quality of life for all.

April 2013 – Although the U.S. Senate recently voted down a carbon tax (again), several policymakers still want to impose one.

Immediately eliminating all CO2 emissions in the U.S. would only reduce

global temperatures a negligible 0.08° C by 2050. But the damage to our economy and the well-being of

American families would be enormous. Sources: Intergovernmental Panel on Climate Change; Science and Public Policy Institute

scienceandpublicpolicy.org/originals/state_by_state.html

6

Flamini said the ultimate goal is to struc-ture an investment that meets the needs of the counterparty and provides an appro-priate return for the risk Koch is assuming. “Our flexibility often sets us apart from other investors.“Once you’ve defined your acquisition or investment strategy,” Flamini added, “it’s really about getting the message to the marketplace, proactively meeting with po-tential investment candidates and listening willingly, so we can be problem-solvers.”Flamini contrasts Koch’s approach with those who try to line up several prospec-tive buyers for a business or asset in hopes of bidding up the purchase price. “That’s unlikely to produce any real value, especially in today’s environment of artifi-cially low interest rates,” Flamini said. “Far too many companies are willing to over- borrow and then overspend.”“To conduct our business successfully,” Feilmeier concluded, “we’ve got to apply MBM® to everything we’re doing.“We need to continually work at listening to and understanding our customers in order to anticipate and profitably satisfy their needs.”

company. “They’re looking for help solving a problem, like the need for extra liquidity to grow or the expertise to go global.“Because we’re entrepreneurial, privately held and well-capitalized,” Feilmeier said, “we can respond quickly to those requests.”

Building blocksAnyone who has read Charles Koch’s book, The Science of Success, knows about Koch’s foray into commercial real estate in the late 1970s and early ‘80s.What most people don’t know is that Koch is back in the commercial real estate market.Koch Asset Management Group, based in Scottsdale, Ariz., and Koch Equity Invest-ments have made more than a billion dollars’ worth of real estate investments from coast to coast in the U.S.According to Chris Robertson, managing director of real estate for KAMG, these projects range from newly built office space in Santa Clara, Calif., to renovated apartments in Orlando, Fla.“In Denver, our invesment fund bought a high-rise office building and completely refurbished it,” Robertson said. “It’s now fully leased and will soon be sold.”Another project involves building a series of apartments in Alabama, near the Birming-ham Country Club. Those will replace some very dated units built in the 1940s.Paying attention to the wants and needs of customers has been essential.“Apartment tenants in Orlando said they wanted to replace the tennis courts, which were largely unused, with a pool and work-out facility. So that’s what’s happening.”Enviable positionKoch’s investment capability relies on sev-eral important advantages, including access to capital and the ability to make decisions quickly with minimal bureaucracy.But those advantages are not enough. “We try to align with like-minded manage-ment teams and be problem solvers,” said Matt Flamini, president of Koch Equity Development. “This requires listening to the needs of counterparties and being flex-ible with investment structures.”

An April 1 announcement about Koch investing in a greeting card company was no April Fool’s joke. It was just the latest example of Koch Industries’ investment capability in action.

According to Steve Feilmeier, CFO for Koch Industries, a KII subsidiary, AG Invesment, LLC, has made a preferred equity investment of about $240 million in American Greetings Corporation. If, as expected, the $878 million buyout deal closes this summer, American Greet-ings will once again be privately held by its founders, the Weiss family, who estab-lished the business in 1906 and took it public in 1952.“We committed this equity capital be-cause we think the Weiss family are excel-lent managers and innovators,” Feilmeier said. “We also saw this transaction as a mutually beneficial opportunity. “That’s what true origination is all about – building relationships and finding new opportunities to help create value.”

All or nothing? There was a time, not so long ago, when it seemed Koch companies would never consider a transaction that resulted in less than a majority stake – or, at the very least, half-ownership.“In the old days,” Feilmeier admitted, “our approach was usually to own and control, but now we’re much more willing to make substantial minority investments.He says many of the counterparties ap-proaching Koch don’t want to sell their

Original ideas

American Greetings’ brands include Gibson and Carlton Cards, Papyrus stores and licensed characters such as Strawberry Shortcake, Hollie Hobby and Care Bears.

Koch Asset Management has invested in real estate transactions ranging from office space in Silicon Valley (above) to apartments in Orlando (below).

7

This photo of the White House was taken in 1862 by famed Civil War photographer Matthew Brady.

Handling historyThe Gilder Lehrman Institute of Ameri-can History was founded in 1994 to develop the study and love of American history, and a respect for the founding principles of the United States.Anthony Napoli, the Institute’s director of education (and a former inner-city school teacher), has a unique way of helping GLI achieve that goal.“We’re all about using primary source documents, rather than textbooks, to teach history.”

Secret weapon Nearly 70,000 documents, photographs and other historic items are preserved in the Gilder Lehrman Collection. More than 60,000 of these are available to view online.The items range from a hand-colored engraving of the Boston Massacre by Paul Revere to a letter from a Titanic survivor, scribbled while still at sea.The oldest item in the collection is a letter, written in Latin, from Christopher Colum-bus to Queen Isabella of Spain.“Many of these items are on display at the New York Historical Society or on loan to museums across the U.S.,” Napoli said, “but their real value comes when we put them in the hands of students and teachers.“If you’re trying to understand what slavery was really like or what people were really saying during the Great Depression, we can provide the photos, letters and docu-ments that bring those issues to life. ”

Koch connectionSince 2006, the Fred and Mary Koch Foundation has sponsored workshops To

o Tr

ue

Noteworthy

“I am for economy. After that I am for more economy.” – Calvin Coolidge

for Kansas teachers and special classes for students featuring materials developed by GLI. (See letter on page 2.)According to Susan Addington, com-munity relations manager for the Fred and Mary Koch Foundation, GLI does an exceptional job.“When you see more than 200 high school students repeatedly show up for three hours of extra class time on a Saturday,” Addington said, “that’s a pretty strong indicator the program is worthwhile.”These Saturday Academies are often devoted to subjects that teachers don’t have time to cover in class. In many cases, GLI has been able to tailor resources in support of a topic chosen by a school district.In 2011, First Lady Michelle Obama presented the Gilder Lehrman Saturday Academy Program with the National Arts and Humanities Youth Program Award, the nation’s highest honor for out-of-school arts and humanities programs.“We’ve also seen a terrific response from teachers for our Foundation-sponsored GLI seminars,” Addington said. “Most teachers, whether from public, private or parochial schools, appreciate the opportu-nity to ‘dive deep’ on important subjects, such as the history of freedom of speech.”“Thanks to the Fred and Mary Koch Foundation and others, we have more than 2,800 schools affiliated with our pro-grams,” Napoli said, “including programs in Atlanta, Houston and the Twin Cities. “That creates a lot of opportunities to give our collection a real workout.” www.gilderlehrman.org

Coolidge by Amity Shlaes Among its notable accomplishments, this book is a reminder that many of the issues Americans wrestle with today have been around for decades.Banking issues, a volatile stock market, dangerous deficits, a push for new entitle-ments, double-digit unemployment, spe-cial treatment for special interests – Calvin Coolidge faced them all.Shlaes’ biography of the 30th U.S. President (1923-1929) is also a reminder that it is possible to address such issues successfully.Coolidge accomplished something that

seems impossible for today’s politicians. He cut the actual size of the federal budget while simultaneously establishing policies that allowed the U.S. economy to grow.When Calvin Coolidge was unex-

pectedly sworn in as President, there was a federal deficit. By the time he voluntarily left office, there was a surplus.Shlaes has called Coolidge “our great refrainer” and “the President who could say no.” He resisted higher taxes, bigger bud-gets and costly entitlements – even when they were popular with voters.Many historians have dismissed the 1920s as a frivolous or extravagant era that set up the Great Depression. In reality, the 1920s were largely a time of innovation, growth and opportunity. It was also a time when one man, leading by example, could accomplish a great deal. www.amityshlaes.com

Phot

os co

urtes

y GLI

Looking Back

8

Senior vice president – FHR renewables operations and EH&S

Instead of integrating vision, virtue and talents, knowledge processes, decision rights and incentives when addressing environmental issues, policymakers tend to focus on just one thing – their own agenda – without considering adverse secondary consequences.That agenda is usually whatever is popular or politically correct.Having good data and measurement systems to support any policy is criti-cally important. Unfortunately, very few knowledge systems are perfect, which is why policymakers tend to default to their own agenda instead. Climate change policy is a sobering ex-ample of this. Because the incentives for all those involved in developing climate change policy are not aligned, getting the best data to our decision-makers hasn’t been successful or sufficient. The consequences of this (not just for Koch, but society as a whole) are twofold. First, what used to be a robust discourse on how to further stewardship efforts for air, land and water quality has now been reduced to a single topic: climate.

Second, resources that could be applied to more pressing

local needs – such as rebuilding outdated wastewater treatment plants – have been hijacked to support the climate drumbeat.

Time for reflectionToday, when I look at my 19-year-old son, I still think about that day on the beach. I am just as committed to driving environ-mental excellence now as I was then. Great-grandma would probably be proud that I am working for a company that has demonstrated its commitment to the environment in so many ways over so many years. But I can’t help wondering what she would think about our nation’s blinkered focus on climate change.

http://www.kochind.com/Operations_Excellence/

In 1994, my husband and I took our new-born son and his great-grandma to the beach in Bayport, Minn., for a swim. At the end of our day, she told me how

happy and thank-ful she was to see her great-grandson playing in the wa-ter she had avoided for most of her life. Eighty years earli-er, she recalled, the water was “dirty and smelly,” pol-luted from waste-water and runoff, with trash floating downstream.

Today, that same beach is a popular gath-ering site and recreational resource for the entire region.

Tipping pointThat was a great day for our family, but especially for me, as it showed me that successful environmental stewardship can, and should, make people’s lives better.It was also a significant driver in my deci-sion to accept a leadership position at the Minnesota Pollution Control Agency.Working at the state’s environmental regulatory agency gave me a chance to observe and learn about the most success-ful approaches to stewardship. Perhaps the most important lesson I learned had to do with vision. Regardless of what policy, regulation or initiative the agency was working on, if there was a clear vision about the desired outcome and all parties involved agreed there was value in the vision, the approach was generally successful.But if the vision wasn’t shared or there was disagreement regarding its value, the stewardship effort usually failed.These outcomes shouldn’t surprise any-one who works at a Koch company, as vision and incentives are two of the five dimensions of our MBM® framework.During my time at the MPCA, Flint Hills Resources was actively and effectively ad-

vancing environmental stewardship efforts in Minnesota. Here was a company that “walked the talk” and let its environmental performance speak for itself. It was through those interactions with FHR that I learned about MBM and Koch’s Guiding Principles and how the ap-plication of both led to good stewardship.I now know that Koch has a long history of environmental stewardship (dating all the way back to Fred Koch in the 1920s) that has changed people’s lives for the bet-ter. That’s why Koch was at the top of my list when it came time to seek a role in the private sector.

Walking the talkSince 1997, Flint Hills Resources’ refiner-ies have reduced average per-barrel criteria air emissions by 76 percent. In 2004, FHR earned a Clean Air Award from the U.S. Environmental Protection Agency for reduced flaring and emissions. In 2000, FHR refineries averaged almost two hours of flaring per day. In 2012, flaring at Pine Bend Refinery totaled just six-and-a-half hours for the entire year.As for other Koch companies, at Georgia-Pacific, sulfur dioxide emissions have been reduced by almost half since 2000. Total suspended solids in wastewater have been cut by 38 percent since 2005.GP Harmon Recycling helps recover and reuse millions of tons of wastepaper used by GP and other companies.Last year, six INVISTA sites received awards for perfect EH&S performance. In addition, Koch’s Matador Ranch won a 2012 EH&S Excellence award for its water conservation efforts in Texas.

Shifting policiesIf we use an MBM perspective to look at our country’s environmental decision-making, it’s not hard to see why so many policies and programs have failed to achieve the desired results.

By Sheryl Corrigan

From 2003 through the summer of 2006, Corrigan was commissioner of the Minnesota Pollution Control Agency.

“Koch has a long history of environmental stewardship that has changed people’s lives for the better.”

Perspective