With chemistry present in 95 percent of products, developing a 21st century sustainable chemistry toolkit and working with others to scale breakthrough innovation are Dow’s top priorities.
When it comes to sustainability, Neil Hawkins is thinking big. Less than a year in the role as Dow’s Corporate Vice President and Chief Sustainability Officer, he is adamant that solutions are needed fast and have to be leveraged widely. “This is all about scale,” he underlines, “the more we do, the more opportunities we have to impact sustainable development.”
Hawkins is no newcomer to sustainability. At Dow since 1988, he has been responsible for some of the company’s key initiatives—such as its collaboration with The Nature Conservancy to value ecosystem services, and in 2012 he received the C.K. Prahalad Award for sustainability leadership by an individual. Charged with driving strategy and implementation for Dow’s sustainability and EH&S (environment, health and safety) programmes, including the company’s enterprise-wide 2015 Sustainability Goals, Hawkins works across Dow’s various businesses, geographies and functions, as well as spearheading collaboration with industry, NGOs, governments and academia.
Hawkins’s vision is for Dow to play a crucial role in addressing global sustainability challenges. A global integrated science and technology company with facilities in 100 countries and sales in 180, Dow’s business reach extends across the agricultural, automotive and construction sectors to energy, industrial, packaging and consumer markets. Like Intel, its flagship products are often invisible to the consumer eye, but with 2014 sales topping $58 billion, there’s a high chance your car, home and office furniture contain polymers, sealants, resins or polyurethane components created by Dow.
This presents both a huge opportunity and a challenge. On the one hand, having penetration into so many sectors and markets means there is incredible potential for leadership, catalysing breakthrough innovation across a truly broad range of industries. On the other, working on so many fronts simultaneously runs the risk that Dow’s efforts—and impact—get diluted.
“Some of the most difficult issues are those outside our direct control,” acknowledges Hawkins. “Few companies have the global and supply chain footprint of Dow and the ability to control every stage of the process. In a sustainable supply chain, this is both important and challenging to accomplish. But we’re committed to applying our expertise to solve these issues and create sustainable solutions for the supply chain and enact positive change.” With companies like Kering already well-advanced in tackling Tier 5 supply chain issues (ie. five steps removed), it seems Dow has work to do here.
A challenge of this scale calls for a bold response and Dow doesn’t lack ambition. An early adopter of Responsible Care in the 1990s, the company is now embarking on its third cycle of 10-year targets, the 2025 sustainability goals (see Box: 7 Key Goals).
The first step on its sustainability journey, the Footprint (1995-2005), focused on minimising the impact of Dow’s own operations; the second stage, the Handprint (2006-2015), set out to provide more sustainable solutions for customers. The third phase, Blueprint (2015-2025), centres on redefining the role of business in driving a global transition to a more sustainable planet and society.
Dow’s seven 2025 sustainability goals are grouped under three main themes:
1. Unlocking the potential of people and science
Delivering breakthrough innovation.
Engaging employees for impact.
World-leading operations performance.
2. Valuing nature
Incorporating the value of nature into business.
3. Building courageous collaborations
Leading the blueprint.
Advancing a circular economy.
Increasing confidence in chemical technology.
It’s a definite ratchet-up in terms of vision and impact—provided the company can deliver meaningful progress—but when it comes to how does Dow intends to measure performance, Hawkins is rather thin on detail. “We haven’t yet finalised all the KPIs (key performance indicators),” he confesses. Dow has already specified 40 KPIs and plans to engage with a wide variety of stakeholders to determine further ‘science-based’ metrics.
Inclusiveness is good but for the Blueprint to be credible, Dow needs to support its ambitious vision with really aggressive, science-based goals (see Setting science-based goals Box) that will deliver tangible progress in each of the seven areas. Launching its goals without this crucial foundation seems somewhat disingenuous for a science industry leader.
A 21st century toolkit
A hallmark of Dow’s new goals is the way they mobilise the company’s signature strengths—science, technology and breakthrough innovation—to find solutions to global challenges. “I don’t think that any of the new sustainable development goals (SDGs) of the UN can be met without the chemistry toolbox,” says Hawkins. “It’s extremely important for providing water, food, renewables, more sustainable energy, more sustainable urban infrastructure.”
With over 6000 in-house scientists with expertise ranging from atomic-level visualisation to elemental analysis, testing, materials, engineering and synthesis, Dow should be well-equipped to spearhead the shift to a greener, kinder chemistry. Boasting an annual research budget in new chemistry of more than $1.5bn—more than all US university chemistry budgets combined—the company has impressive R&D clout. The trick lies in directing this to more sustainable products and solving meaningful challenges by applying the right decision-making screens across resource allocation and R&D portfolios.
Hawkins is bullish about the potential of the 21st century chemical toolbox to harness green and sustainable chemistry principles to finesse both impact and performance. “Think of it as a toolbox more suited for a surgeon than a builder,” he explains. “By using computational chemistry, high-throughput laboratory methods and micro-scale systems, we can be much more selective and precise in our development of chemical products and processes that address specific needs.”
One example he cites of how Dow is sparking the transition towards a more sustainable alternative is a next-generation polymeric flame retardant for polystyrene foam insulation products which he says is stable and non-toxic, minimising risks to human health and the environment. To ensure scale, Dow is licensing the invention to make the technology available to the wider industry.
Counting on nature
Another cornerstone of Dow’s 2025 goals is valuing natural capital. The company aims to deliver $1bn in cost savings or new cash flow by valuing nature in its business decisions. Through a multi-year collaboration with The Nature Conservancy, Dow has developed an Ecosystem Services Identification and Inventory (ESII) Tool which allows business to calculate the value of ecosystem services at or adjacent to their operations.
The collaboration has established that large-scale reforestation offers a cost-effective way to reduce air pollution from Dow’s plants. It has also determined that using a constructed wetland instead of a sequencing batch reactor for industrial wastewater treatment at its Seedrift, Texas manufacturing site should save the company $282m over the project’s lifetime, as well as delivering a host of ecological benefits.
This is tangible, science-based progress and the decision to share results aligns well with the Blueprint’s aim of driving whole system change, but Dow will need to scale this kind of initiative hugely to make a real difference by 2025.
In it together
Finding new ways of collaborating is the third pillar of Dow’s new sustainability goals, and a crucial piece of the puzzle in developing prototypes to help meet the UN SDGs. “We believe chemistry is part of the solution toolbox to a sustainable planet,” Hawkins enthuses, “but people often don’t appreciate the benefits of chemistry performed in responsible ways. We will work with NGOs and others to help understand what sustainable chemistry is and how it should be applied, and get more understanding and support for the practice of chemistry. It’s our business, but we need the partnership of others to have the chemistry toolbox fully utilised.”
Dow’s ambitions for scale depend entirely on others taking up its innovative solutions. To make sure this is done right, the company has a product stewardship programme in place to give customers and others the necessary information to use its products in a sustainable manner, in appropriate applications. In some cases, Dow actually audits customers’ operations and conducts training prior to initial shipments.
Extended producer responsibility is crucially important in the chemical industry, which has a pretty poor track record of managing its products once they leave the factory gate—deliberately or accidentally.
A 20th century legacy
If there’s an elephant in the room, it’s where Dow stands on picking up its share of the industry’s polluting heritage. In an era when corporations and individuals are increasingly being held accountable for historic actions, Dow’s track record of facing up to liability has been chequered. From Agent Orange, Napalm and dioxin to Dow Corning’s defective breast implants, the company has strongly resisted claims for compensation and a string of out-of-court settlements and payments to compensate victims of noxious emissions from its Midland, Michigan plant and the infamous Bhopal disaster have left stakeholders feeling short-changed. With mounting global concern over the long-term health effects from bio-persistence and bio-accumulation of harmful chemicals like dioxins in the environment and food-chain, Dow needs to face up to its demons.
Hawkins skirts this, turning the conversation to how much the industry has learned from past incidents and reiterating the company’s goal of ‘eliminating unplanned events.’ “Most of the time,” he observes, “chemistry is a good servant, not an enemy.” While that may be true, sustainability leadership is also about how you deal with the good, the bad and the ugly—and here Dow falls somewhat short.
Show us the science
Breakthrough innovation is fundamental to the sustainability transition—and chemistry has a vital role to play. Ultimately, the success or failure of Dow’s sustainability ambitions ride on how seriously the company drives and embeds its 2025 goals across the value chain. At the end of the day, no amount of lofty aspirations, glitzy videos and soaring violins can make up for a lack of rigorous, science-based metrics and authentic corporate accountability.
Dow’s forward-looking and inclusive 2025 goals are about reinventing an industry. A key part of this will be reconciling the baggage of a 20th century product portfolio that still includes Chlorinated Organics with its sparkling new 21st century strategy.
Dow at a glance
Dow is an integrated science and technology company with a diversified, market-driven portfolio of specialty chemical, advanced materials, agrosciences and plastics businesses.
Sales: $14.4 billion in Q4 2014
Profit: Adjusted profit was 72 cents per share
Employees: Approx 53,000 people as of December 31, 2014
Countries of operation: Approx. 180
Timeline—Sustainability at Dow
1897—Dow founded in Midland, Michigan, USA.
1906—H.H. Dow partners with Westinghouse to develop industrial co-generation.
1933—Toxicology lab established.
1991—Sustainable External Advisory Council (SEAC) announced to gain insights from external thought leaders on sustainability topics and issues.
1995—Dow announces first set of decade-long sustainability goals, 2005 EH&S Goals, which saved $5 billion with a $1 billion investment.
2000—CEO Frank Popoff pens Eco-Efficiency: The Business Link to Sustainable Development.
2003—Dow publishes first Global Reporting Initiative (GRI) sustainability report.
2006—Dow announces second set of sustainability goals, 2015 Sustainability Goals, which expand focus to positive “handprint” of Dow’s products and solutions.
2007—Dow signs UN Global Compact.
2011—Dow announces landmark, six-year collaboration with The Nature Conservancy to incorporate the value of nature into business decision-making.
2013—Dow wins its 9th US EPA Presidential Green Chemistry Award, more than any other company.
2014—Dow names fourth “Breakthrough to World Challenges”.
2015—Dow announces third set of sustainability goals, 2025 Sustainability Goals, which seek to redefine the role of business in society.
Dow’s 2025 Sustainability Goals
7 Key Goals Description
Leading the blueprint Lead development of a societal blueprint that integrates public policy solutions, science and technology, and value chain innovation to facilitate the transition to a sustainable planet and society.
Delivering breakthrough innovation Deliver breakthrough sustainable chemistry innovations that advance the wellbeing of humanity.
Advancing a circular economy Advance a circular economy by delivering solutions to close the resource loops in key markets.
Valuing nature Apply a business decision process that values nature. Dow will deliver business value and natural capital value through projects that are good for business and good for ecosystems.
Increasing confidence in chemical technology Increase confidence in the safe use of chemical technology through transparency, dialogue, unprecedented collaboration, research and our own actions.
Engaging employees for impact By 2025, Dow employees worldwide will apply their talents to positively impact the lives of 1 billion people.
World-leading operations performance Maintain world-leading operations performance in natural resource efficiency, environment, health and safety.
What are science-based goals?
According to a CDP (Carbon Disclosure Project) study, more than 75 percent of large company respondents have carbon reduction targets. Yet most are not aggressive enough to limit global warming to 2°C—the threshold outlined by the Intergovernmental Panel on Climate Change (IPCC) to keep climate risk within ‘acceptable’ levels. To ensure corporate carbon reduction efforts deliver, targets must be science-based.
The Science Based Targets initiative—a partnership between CDP, UN Global Compact, World Resources Institute and WWF—is a global campaign to recruit 100 companies by the end of 2015 to set greenhouse gas (GHG) emission reduction targets in line with climate science.
With Ecofys as a technical consultant, the partners have developed the Sectoral Decarbonisation Approach (SDA) methodology for setting climate science-based emissions reduction targets. It divides the annual global GHG emissions budget at both sector- and company-specific level by calculating each company’s share of total sector activity and determining individual emissions budgets.
The approach is gaining momentum, with more than 40 companies—from AstraZeneca and Mars to Unilever and Xerox—committing to it. Companies who adopt science-based emission reduction targets are expected to:
1. Set targets within 24 months of signing up, with a commitment period of a minimum of 5 years from the date they announce the target.
2. Comply with a boundary covering company-wide Scope 1 and Scope 2 emissions and all GHGs.
3. Set a target level of decarbonisation required to keep global temperature increase below 2°C compared to pre-industrial temperatures.
4. Commit to an ambitious Scope 3 target if Scope 3 emissions cover a significant portion of a company’s overall emissions.
5. Disclose the GHG emissions inventory on an annual basis.
Andrea Spencer-Cooke and Fran van Dijk are Founding Partners of One Stone Advisors, a global sustainable business consultancy and certified B-Corp.Dow Chemicals chemistry corporate strategy company profile