Koch Industries creating value in society*

Good morning. You heard my introduction. Just some background, as some of you may know, Koch Industries has transformed from a small engineering business in 1961 into a diverse group of companies employing nearly 120,000 people in over 50 countries around the world, including about 65,000 here in the U.S., headquartered in Wichita, Kansas. Koch is one of the largest privately owned companies in the world, and our products, services, and brands are a very diverse offering — from essentials like shelter, clothing, and hygiene supplies to innovations like leading-edge medical devices, software, energy-efficient glass, and robotics. On behalf of all Koch employees, I'd like to express Koch's pride in being a sponsor of today's summit. After all, the theme, 'Power of Purpose,' is very connected to our fundamental belief about the role of business in society.

At Koch, our view is unique in some ways. Many companies are focused on short-term profits and shareholder value. Well, we take a longer-term view. Generally, we're thinking about long-term value creation based on mutual benefit. We believe that by creating value for our customers, our vendors, our employees — in a word, for society — is the only way we are successful. We think about the role of business as helping people improve their lives by providing products and services they value more highly than their alternatives, and by doing so responsibly while consuming fewer resources. To the extent that we accomplish this, and only to the extent we accomplish this, then we think about our profitability over the long term as a measure of our success in creating value for society. So providing long-term benefit to society is the goal, and we believe that it's critical to do so responsibly.

In addition to using fewer resources, responsibly also means we believe in profiting by economic means — where the market, really all of us as individuals making our decisions, decides who wins and loses. So we're opposed to subsidies, mandates, and other measures that might rig the system as it relates to creating winners and losers, even if those policies benefit our bottom line. And I think that's one thing that sets us apart from many companies.

In addition, we have a set of guiding principles that define our culture. Those include things like integrity, transformation, stewardship, compliance, respect — and we work hard in every aspect of our business to develop that culture. That culture is part of our management philosophy, which we call Market-Based Management. That philosophy also differentiates us, as it positions us to innovate, to change, and to grow the value we create for customers and ultimately for the company holistically. MBM is our effort to take the tenets that have made free societies and market economies the most successful structure in history and to apply those inside the firm to create value.

So it's natural that the extension of that is we're focused on creating a free and open society when we think about what we're doing externally as well. That's why we work to break barriers that stand in the way of people realizing their full potential. We believe doing so moves our society away from the two-tiered system we have today and toward one of mutual benefit, where people only benefit by helping others improve their lives. We believe this requires strategic and integrated efforts across four pillars of our society: government, education, community, and business.

Specifically, we're focused on a number of key initiatives across those four pillars, some of which you're discussing here today. I'll mention a few examples. First, free speech and toleration. Enabling good ideas and speech means enabling all ideas and speech, and that's true so long as they do not violate the person, the property, or the liberty of others. We believe this is particularly important in institutions of higher learning, where young minds benefit from the free-flowing, civil debate and exchange of ideas from people with all backgrounds, experiences, and perspectives. In everything we do, we believe it's important to find common ground rather than focus on where we disagree. Internally, we talk about partnering with anyone to do good and no one to do harm.

In education, we support K-12 initiatives that help students discover, develop, and apply their unique abilities, establishing a foundation for a life of contribution and fulfillment. We support policies and programs that provide all students, regardless of their income or zip code, the freedom to receive high-quality education that best meets their unique needs. To prepare students for the future, we've got to embrace all kinds of educational delivery — whether that be public, charter, private, homeschool, virtual, micro, some combination of these, or things we've yet to imagine. We also support policies and programs that empower educators to apply their talents and knowledge to offer innovative approaches to educational delivery.

We're working to end corporate welfare. We support reforms that lead to more innovation, economic growth, and individual opportunity — when people in the marketplace decide the winners and losers, rather than government picking the winners and losers through subsidies, favors, and other policies. As I suggested, another example: we are the fifth largest producer of ethanol in the U.S., and we vehemently oppose subsidies and mandates that actually benefit our bottom line. In fact, we've been successful in getting many of those subsidies eliminated.

And finally, I'll talk about criminal justice reform. I know some of the folks here are very interested in this topic. We support criminal justice reforms that respect human dignity while building stronger and safer communities across the U.S. — policies that are smart on crime and soft on taxpayers. We see tremendous opportunity here. We also believe that prisoners' re-entry to society begins on day one of their incarceration, not the day they're released.

For those of you who don't know these statistics: we have 5 percent of the population and 25 percent of the world's prisoners. So it's a pretty serious problem — something's obviously not working. To that end, we support 'ban the box' — removing the space on applications that requires applicants to check yes or no as to whether they've been convicted of a crime, which eliminates them from any consideration. One in three adults in this country has a criminal record, so it's a pretty significant factor. We owe it to ourselves and our communities to provide second chances to people who are genuinely interested in turning their lives around. And if you think about that statistic, one in three — it's pretty important to us having a workforce in the future.

Connecting efforts to improve society while driving business goals go hand-in-hand for us at Koch. We apply the same philosophies to our efforts externally to those that we have internally. So what I'd like to do in closing is just show you a little bit of video about those efforts. I'd encourage you — after you see the video, if you're interested, there's a kiosk outside with a little more on what we're doing, and you can get to know us better. So thanks for the time and enjoy the summit.