Month: August 2023

Originally published in Dow’s 2022 Progress Report

At Dow, our ambition is clear – to be the most innovative, customer-centric, inclusive and sustainable materials science company in the world. Guided by that ambition, we are using our expertise, products, technologies and partnerships to meet the evolving demands of our customers while also leading the transition to a more sustainable and inclusive future.

ADVANCING OUR DECARBONIZE AND GROW STRATEGY

To help us achieve our target to be carbon neutral1 by 2050, we are making clear progress on our Decarbonize and Grow strategy.

We achieved additional milestones in our plan to build the world’s first net-zero2 carbon emissions integrated ethylene cracker and derivatives site at our Fort Saskatchewan site in Alberta, Canada. We contracted Fluor to provide front-end engineering and design, procurement and construction management services and selected Linde as the industrial gas partner to supply clean hydrogen and nitrogen. When complete, the project will decarbonize 20% of our global ethylene capacity and grow our global polyethylene capacity by 15%.In Louisiana, we commissioned our UNIFINITYTM fluidized catalytic dehydrogenation (FCDh) pilot plant, which will produce propylene for our coatings, electronics and durables end markets while also lowering greenhouse gas emissions up to 20% compared to conventional propane dehydrogenation units.We announced a joint development agreement with X-energy to install the first grid-scale advanced nuclear reactor for an industrial site on the U.S. Gulf Coast. The project, to be located at our Seadrift, Texas, site, is expected to provide the site with safe, reliable low-carbon power and steam.

INVESTING IN CIRCULAR ECOSYSTEMS

This past year we made significant progress – and investments – to help develop a more circular economy.

We expanded our “Stop the Waste” sustainability target to “Transform the Waste,” with a new commitment to commercialize 3 million metric tons of circular and renewable solutions annually by 2030. Through this target, we are collaborating to build materials ecosystems that increase recycling rates and enable us to scale our production of high-quality recycled and renewable materials to meet growing demand.We partnered with Mura Technology to construct multiple world-scale advanced recycling facilities in the United States and Europe – with the goal of collectively adding as much as 600 kilotons of annual recycling capacity by 2030. We also signed an agreement with Valoregen to build the largest combined advanced and mechanical recycling site in France.We announced a new collaboration with WM to address hard-to-recycle plastic films by enabling them to be placed directly into residential curbside recycling.

ELEVATING OUR FOCUS ON INCLUSION, DIVERSITY & EQUITY

Our commitment to inclusion, diversity and equity continues to play a critical role in enhancing our competitiveness and innovation.

In 2022, 57.3% of employees participated in at least one of our 10 employee resource groups (ERGs). Our annual employee survey data showed that ERG participants have 13 percentage points higher overall satisfaction than non- ERG participants.Through Dow ACTs, our strategic framework designed to address systemic racism and inequality, we provided scholarships to 20 students at historically Black colleges and universities through the Future of STEM Scholars Initiative and hired 250 people and promoted 60 individuals into family-sustaining jobs through our partnership with OneTen.Dow ranked 15th on the 2022 DiversityInc Top 50 Companies for Diversity list.

CONTRIBUTING TO RESILIENT COMMUNITIES AND WORKPLACES

In 2022, we continued to leverage our talent, business models and resources to create positive impact for our communities and Team Dow.

We contributed a total of $37.3 million in Corporate, Dow Foundation and in-kind investments aligned to our global citizenship strategic priorities.We introduced a Well-Being Portal to our employees in 2022. More than 25,000 employees used the portal in 2022, with more than two-thirds of users reporting exercising more and one-third reporting improved productivity.

CEO Statement on U.N. Global Compact

Our company reaffirms our commitment to the Ten Principles of the U.N. Global Compact on human rights, labor standards, protection of the environment and anti-corruption. The U.N. Global Compact and its principles are reflected in our strategy, culture and day-to-day operations, and we welcome opportunities to participate in collaborative projects that advance these broader development goals.

We also believe strong corporate governance creates long- term value by strengthening oversight and accountability. In 2022, we continued our focus on Board succession planning and refreshment – electing one new Director and continuing to outpace the S&P 500 for board diversity. We also added oversight of our environmental, social and governance goals within our Board Committee charters.

While investing in low-carbon and circular solutions, we continue to outpace our peers3 in key indicators of financial performance, due to our differentiated portfolio, leading feedstock and derivative flexibility, and low-cost positions. As of year-end 2022, Dow’s three-year average operating EBITDA4 margins and return on invested capital were above the peer median. In addition, our free cash flow yield4,5 averaged approximately 15% over the past three years, and was best- in-class at nearly two times our peer average and three times our sector and market average. We also continued to deliver attractive shareholder remuneration with a three-year average dividend yield of 5.2% that was well-covered by free cash flow.

I am proud of the progress Team Dow made in 2022 and the value we are creating for our stakeholders. We are advancing our ambition and becoming a stronger, more competitive and future-ready company.

Sincerely,

Jim Fitterling

Chair and Chief Executive Officer, Dow

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Our commitment to addressing climate change is reflected in our environmental responsibility efforts and our Goals that Inspire. While we have been monitoring and collecting our Scope 1 and Scope 2 greenhouse gas (GHG) emissions data at our mining and processing facilities for several years, in 2022, we took steps to enhance our data collection processes to measure our emissions reduction progress more accurately.

Goals that Inspire Environmental Stewardship 

Reduce Greenhouse Gas Emissions 
We continue to further our commitments to address climate change in alignment with UN SDG 13: Climate Action.

TARGET: Reduce Scope 1 and Scope 2 GHG emissions by 20% on a per-ton basis by 2030 (compared with a 2021 baseline). 

2022 Progress: During the year, we had our GHG emissions calculation methodology third-party verified in compliance with the GHG Protocol, which provides globally accepted GHG accounting standards. Through this process, we improved the accuracy of our measurements, promoting enhanced reliability and transparency in our GHG reporting. As such, we identified slight discrepancies in our 2021 metrics, which led to an approximate 10% increase to our baseline, and are reflected in the data below. To ensure continued focus on this important goal, in 2022 we created a dedicated, cross-functional Steering Team to oversee our emissions reduction efforts in pursuit of our 2030 goal. To see our energy consumption by type, please see page 75 of the report.

Executing Our Climate Strategy

In addition to improving our data collection methods, we closely monitor our year-over-year emissions to guide resource allocation, take corrective action as needed, and ensure we are making progress against our 2030 goal. Our 2022 performance, which represented an overall increase in emissions, was impacted by several factors, including planned higher production, increased energy usage due to colder than expected temperatures at some of our U.S. sites, and increased material handling at one of our largest mines.

However, reducing our emissions and increasing our energy efficiency remain central to our climate strategy, and we continue to monitor our performance and assess our biggest climate-related opportunities and risks to identify areas for improvement. This includes investing in solutions that we believe will enable us to achieve our GHG emissions reduction goal by 2030, such as:

Increasing our reliance on renewable energy and lower carbon-footprint fuel sources, such as propane and natural gas;Improving transportation efficiencies for raw materials and finished goods;Installing more efficient, lower-emissions technologies to offset our energy-intensive operations; andParticipating in power purchase agreements, which support the overall development of solar power infrastructure, and the purchase of carbon offsets to further our positive impacts.

In 2022, we completed several site-specific projects to support energy efficiency improvements, including:

Moving an air compressor to a heated area at our Black Lab Serena, Illinois, facility to limit fuel usage;Upgrading exterior lighting at our Black Lab Chardon, Ohio, facility to high-efficiency LED bulbs that can now run on a timer;Replacing aging and inefficient air compressors at our Hephzibah, Georgia, and Lampazos, Nuevo León, plants with new, energy-efficient compressors; andInsulating the maintenance building at our Troy Grove, Illinois, facility to reduce the amount of energy required for heating and cooling.

Additionally, we continue to look for validated ways to automate data collection, reducing the risk of human error in our reporting and promoting data-driven decisions with the highest degree of reliability possible.

View the full Covia 2022 ESG Report here.