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#BusinessCase: Dow Continues to Show Positive Return on Pursuing Sustainability Goals
July 5, 2016
Last week, The Dow Chemical Company released its 2015 Sustainability Report, which examined the company’s journey toward reaching its 2015 goals and what it’s already achieved looking ahead to 2025. I caught up with corporate VP and Chief Sustainability Officer Neil Hawkins to learn more.
The new report details the completion of your 2015 goals, which yielded a range of great results for Dow. What were your biggest takeaways along the way?
Neil Hawkins: The 2015 goals end a 20-year run of public goals with metrics of success, with public reporting. You know, we first started with our first set of goals in the mid-‘90s. Then in the mid-2000s we set the 2015 goals - this report is an annual report but it also gives the final tallies and results on the 2015 goals. I think we learned a lot in the first set of goals that led into the second set of goals: We learned that public goal-setting with metrics and public reporting is a very effective way to align an organization, to help everybody in an organization know what hills they’re trying to take so that you can get maximum leverage - the best success for customers, the best success for stakeholders - because you have clarity. For aligning 50,000+ employees, I think the 2015 goals were quite remarkable.
When you look at the results that we achieved - for example: We got to over 400 MW of clean power – that was through a sub-goal in the 2015 goals; we eliminated 75 percent of injuries from an already low number through a focus on safety. We reduced our greenhouse gases from over that 10-year period by 27 percent, which is remarkable because we continued to grow the company during that period of time. We increased our sales of products highly advantaged by sustainable chemistry, up to 25 percent of our sales - and we had started below 5 percent. And again it’s because we were able to align everyone, align our processes [and] our investments.
Two other things I’d mention - One: Again we showed, just like we did with our first set of goals, that we still continued to make money. There is a positive return in pursing sustainability goals both for the bottom line and for the top line. I already mentioned 25 percent of our sales are now highly advantaged by sustainable chemistry, but we had the breakthroughs to world challenges goal – we announced 4 breakthroughs to world challenges over the 2015 goal period: One dealing with a breakthrough of water - reverse osmosis, reducing its energy and carbon footprint; one in omega-9 oils, which are heart healthy - we’ve replaced more than one and a half billion pounds of unhealthy oils in the American diet with those; we reduced 23 million metric tonnes of greenhouse gases because of our BETAMATE™ structural adhesives light-weighting cars; and last, we had a collaboration with LIFEBUOY™ soap, with Unilever– that soap reduces by 45 percent the pathogens that can cause disease, but it helped make it more cost-effective at the same time. So, those 4 breakthroughs - we’re just very pleased and thankful for these results. The people of Dow delivered them, and I think it’s a testimonial to the power of goal-setting with public reporting.
Will you continue to build on the progress made with the 2015 goals? Or are you shifting into broader, more SDGs-aligned goals for 2025?
NH: Our first set of 10 year goals are what we call footprint-reduction goals, and they worked very well for us. Our second set of goals really were handprint goals, where we worked on improving the good we are doing through our products and operations – and this second set of goals also included a continuation of footprint reduction. And now with the current set of goals, our 2025 sustainability goals, we’re carrying forward the concepts and objectives of some of the handprint goals and some of the footprint goals into a new set of goals, and then add further collaborative emphasis on blueprint: Dow taking its expertise, its globality, its technology, its public policy expertise, our value chain knowledge, our relationships with NGOs, and making that available and helping motivate dialogues that can lead to breakthrough solutions to major world challenges - be it in clean water, affordable housing, clean energy. And so, the 2025 goals really take the best out of footprint reduction for a forward 10-year look; the best out of what we learned through the 2015 goals and how to do more goods through our products, through our sustainable chemistry; but then it really says that we will, beyond that, make ourselves vulnerable to help solve some of these major world challenges.
When we spoke last year just after the goals were announced, you said you were particularly excited about the blueprint goal that you just mentioned. I know the initial blueprint is due at the end of 2017, but have you gained any insights from that process so far that you can share yet?
NH: I think the idea that there would be a single blueprint is not practical; it’s too big a chunk, so I think what you’ll end up seeing are a series of blueprints that we can convene and work on. And I’ve got a number of examples. We’re starting to work in the chemicals policy arena, you know, concern around chemicals and health – and I don’t know if you saw it the other day, but the new Toxic Substances Control Act just was signed by President Obama. I was there for that ceremony and that was an 8-year effort of convening and working together with stakeholders to get to a final solution that really will help ensure public health and consumer safety. So, that’s a good example of what we need to do in many areas, where we need to convene on: clean water, ocean waste, chemicals and their exposures, value chain, clean energy, the future of mobility. We have dialogues starting in virtually all those areas already. In some of these areas we have multiple dialogues going on. We’ve had dozens and dozens of customers and value chain partners reach out to us asking how they can get involved in some of these. So, I think if you give us until the end of this year, I think you’re going to see a lot of progress.
One particular goal in our 2025 goals is on circular economy - we’re the only material science company in The Ellen MacArthur Foundation’s Circular Economy 100. Virtually every other company involved is turning to us saying, ‘what can you do to help us design for a circular economy?’ because we have a materials solution for practically any problem. And so, even within that context, we’re already in quite a number of dialogues around how to have new prototypes for a circular economy, be it extensions of our energy bag concept in other cities, be it in designing pouches – we had a recent announcement on a new pouch with Seventh Generation that is recyclable, whereas other competing opportunities might have a layer of foil, , different types of plastics, and adhesives, etc. that make it hard to mechanically recycle. We also have our SafeChem chemical leasing and cleaning franchise out there, and the How2Recycle label that we’re promoting. I think the amount of energy on circular economy right now is huge. The amount of energy I see opportunities for greenhouse gas reduction are very large. So I’m very optimistic that the dialogue space is going to be rich, and how we summarize that – I’m guessing will be more threads of one tapestry versus a whole tapestry by the end of 2017.
I know it’s only been a year since you launched the new goals, but have you come up against any major challenges around any of them?
NH: I’d say, any time you set goals like these – these are not simple true-false questions, or simple fill-in-the-blank questions, or simple mathematical questions – I would characterize it as challenging essays. Every goal has a leader, and each of those leaders is working on how can they deliver big. We have the billion-person goal, which is about mobilizing our employees in their volunteerism to positively impact a billion people, or a hundred million per year. We have the billion-dollar goal, where the leader has a portfolio of 30 projects, and is trying to figure out to make a billion dollars of value for Dow in projects that improve nature at the same time. In fact, we have probably this year already delivered $20-30 million in positive for nature projects that are also positive for Dow.
But our teams are making great progress; they’re coming across the kind of roadblocks you’d expect, but that is not impeding progress. Our employees – and our prospective employees - are very motivated by these goals. We’re only five months into these goals, but I’m actually quite pleased at the progress – you know, we announced another major alternative energy deal since the beginning of the year, which puts us in the top five purchasers of clean power in the world. So we’re not losing any time, aggressively pursuing these goals.
The real answer is alignment. When you have the CEO, the Board of Directors, the senior management team, all backing clear goals and they have teams that are empowered to deliver, they’re going to go deliver. They’re not waiting around waiting for permission. So, I’m very proud of that.
Yeah, alignment around sustainability is key - I know a lot of companies are still struggling to find that. Speaking of alignment, one of your goals involves “ engaging in 100 significant dialogues and establishing 10 new collaborations.” How could the SB community help with that?
NH: I think there’s a real opportunity here as we all work together to learn from each other. We’re a very metrics-driven place. You can bank on us doing our best to get it done, but I do think we want stakeholders like Sustainable Brands and your companies to help us make course-corrections in mid-stream; we’re flexible in that if we’re off track or we need to redo our metrics or whatever, we’re very open to that kind of feedback.
What I think would be an interesting topic, is how do you have metrics around something like blueprints? How do you help organizations align around an abstract concept like a blueprint? Because I don’t know the answer - but it [might] help us to get feedback from your vast expert audience. [Developing] metrics around the blueprint in and of itself is a blueprint, because it’s us working together to try to hash out ideas with others, collaborating with a goal of making big change happen. Our billion-person goal might be another one that would be interesting. I mean, we have a lot of metrics around STEM education and things like that, but, you know, really scaling up another 10x from where we are, we need to think through - how do you count that next level of secondary impact? We’ll never make it to one billion by measuring one person from Dow teaching someone else how to read over a one-year period. But if we totally change a method of learning science, and it’s leveraged to all science teachers in the world, how do you count that? These are the kinds of concepts we’re thinking about. And I tell you, it’s a really good thought process because it’s causing us to think out loud and ahead of time about how to maximize Dow people impact.
I think that the way we’ve constructed these goals, focusing really strongly on collaboration - with our value chain, with academia, government, stakeholders, communities – I couldn’t be more optimistic about the potential impact we’re going to have as we execute them. There’s an elegance to how they’re created, to how they’re written; we’ve got all the different groups out practicing their pieces and their parts - it’s almost like a symphony. But I think if we have this conversation in 10 years, we’re really going to see fruits of collaboration that are measureable.
So think of us as evolving, and our ultimate goal is to redefine how business engages with society. I mean, big sustainability question – not that we have all the answers, but we’re going to be part of it and help convene whole value chains to make a go of it. So to the extent that we can all work together, we want to do that. We want to collaborate.