Dow open to collaborative approaches to meet global sustainability challenges

Chemical Weekly

May 2016

The chemical industry is facing several challenges in the volatile and globalised world in which it presently operates, and arguably nothing is as vital as ensuring a sustainable future for itself.

According to Mr. Neil Hawkins, Chief Sustainability Officer, the Dow Chemical Company, while the need for global sustainability has never been greater and the challenge is having a direct impact on the chemical industry, it also represents an immense opportunity for the industry.

But no single company can make this transformation to a more sustainable future happen, and the chemical industry has a responsibility to collaborate and show the world new way of doing things.

In this exclusive interview with Chemical Weekly, Mr. Hawkins talks about how the chemical industry must continue to deliver science-based products through innovation for advancing the well-being of people; and serve society as solution providers. Above all, he stresses the need for the industry — and all of society — to value nature and the natural eco-system in which we all thrive.

Excerpts from the interview:

What are the top sustainability challenges that the chemical industry faces today?

Virtually every challenge throws up an opportunity. One can think of sustainability as a challenge, but it can also be viewed as an opportunity. Chemistry is a tool box with which you can solve any challenge with another chemistry product.

Sustainability trends that impact us today include climate change, energy, food production, sustainable infrastructure and water. All these challenges are a result of rising global population and Dow has solutions for all these challenges.

However, if you don't have the right public policy environment and a value chain that understands the benefits, off-the-shelf solutions to address these challenges may not materialise and then your country and the planet does not realise the benefits of it. It is important that we approach the challenges with openness and transparency. In the past, the chemical industry was just involved in manufacturing and selling. A sustainability oriented approach for a company comes from being aware of the challenges, looking at ways to help solve them and exploring collaborative approaches to address the challenges.

Chemistry — the industry as well as the science — is not understood by most people. Virtually every challenging aspect of chemistry will be solved by chemistry itself and not by something else. So we need to get people and policy makers to understand that there is no good or bad chemistry, it is just chemistry. We need to demonstrate product safety and do that in a more transparent way so that public have confidence in us.

How do you go about influencing policy makers?

One way to do this — and we have done it very successfully — is by bringing the policy makers to our plants and laboratories. Get them to come and meet real people — engineers and chemists working there — make them see the facilities; how clean and safe these are. The image of the chemical industry is not linked to the reality; it is the image of the past. When more people, NGOs and policy makers see our facilities, it will lead to many conversations, building trust and certainly more respect can be earned when you engage in sincere dialogues.

Is this something that you do in other developing nations as well?

We do this wherever we have our facilities. In China, for example, we had many government officials, NGOs and clients visiting our facilities. We also did that in Thailand. The first step is to engage them by having them to visit our facilities.

Are these challenges and the responses different in emerging markets?

No, the challenges and the opportunities are the same. Opportunities in the developing countries are bigger because more progress is needed quickly. Like for example in communications, countries like India leapfrogged over the need for extensive landline infrastructure to mobile phones. When you are investing in infrastructure or adopting new practices in food production or food packaging, if you don’t have to replace anything already existing, it can actually be done quicker without going through different stages. That can be a real advantage.

India has an extremely fragmented chemical industry; would it not be a big challenge for it to address the sustainability issue?

It mirrors the country. I probably can’t intelligently comment on it. All I would like to say is that it is not necessary to have the same business model or adopt the US or Europe approach. We need to be very clear about the objectives and find ways to get there and move along with whatever works.

For example, in the area of energy, India will need a much distributive model than the US because you don’t have hundreds of utilities or power lines, but there are people that need power. So you are going to end up with much more distributed energy solutions. Likewise, with water, you don’t have systems of plants for treatment of water, but people do need clean water.

There is the need to look at localised in-house systems like putting solar panel on roof-tops to distribute energy. So different models are needed and according to me that’s opportunity. Companies can think creatively and flexibly to match the situation.

Can you speak about the different stages of sustainability initiatives that Dow has taken over the years?

Throughout our history we have had a strong commitment to environmental sustainability even when it was not called for. Way back in 1990 we had a visionary CEO and visionary leaders who put into place our current sustainability approach. One of the important things they did was that in 1992 they set up an external advisory panel for sustainability. This group exists even today – only members keep rotating through. It is a very distinguished group. They are not asked to endorse a company. Their job is to tell us what we are doing well and what we are not doing well and that’s been very valuable to the company. That led us to our first set of goals. No company had ever done anything like that before. We gave the goals, we did public reporting.

What we found was that we had changed the culture of the company. We became totally different. We became matrix driven around a common objective and we made lot of money. We made $5-bn from a $1-bn investment. That was low hanging fruit, but if we had not set those goals we would not have captured that.

In the first five years from 1995 to 2000 we were still trying to figure out what we were doing. We did not have the matrix to begin with and no system to measure success. In the second half we really pulled back. We then set the next set of goals. It took several years and that became our 2005 goals. The goals for 2015 were set around 2005. The first set of goals were kind of footprints and the second set continued built on that and added hand prints, which included looking into benefits of the products and maximising benefits of the products.

In the middle of the last year we announced a new set of goals for 2025. It took us nearly four years to set those goals. It was a lengthy process that involved a lot of stakeholder engagement and interviewing around 1,000 people, including young leaders in the company. We sought inputs from NGOs, Government, customers like Unilever, Coca-Cola, etc. as to what they wanted from a chemicals company. Their inputs helped us prepare the set of new goals.

The main difference in these goals is the idea of blueprint. We had footprint, but blueprint is different. It is the commitment to put Dow into the solutions space in areas that we don’t know if challenges can be solved. Clean drinking water is a good example for this. Technology exists for this, but tackling the problem will take time. We are willing to put ourselves into the discussions for finding long term solutions. It is also the same with issues like plastic waste or ocean waste; it is not that Dow will come up with the requisite technologies, but we need to convene with the right people and develop a common understanding of the problem and the causes behind it. That is a big difference in our third set of goals in which we have expanded our risk taking capacity and also in terms of openness and finding new solutions.

Partnerships would be vital for these initiatives?

That’s the whole point – it is about the circular economy. Dow will be a part of the solution in the critical value chain. We are going to provide the technology solutions, but if those are never adopted it does not help anybody. We have a matrix in these goals around impacting people positively and keeping track. We have a matrix around nature goals, which is all about doing more for nature while making money for the company.

Many companies frame rules, but do not follow them. If you can create situations where you are making more money by doing the right thing, then people would do that and it is worth trying. For the first 10 years it may turn out to be like low hanging fruits, but you can make hundreds of millions of dollars and help nature. So as long as it appears low hanging fruit why not do it. Most companies haven’t even thought about it.

So sustainability has to be the essence of the way companies operates?

Yes, sustainability has to be a part of business strategy. If you look at Dow Performance Plastics, their R&D, manufacturing and other departments are focused on sustainability all the time as a part of their business. They have recognised that they can help their customers more if they have focused effort as a part of their strategy. Our water business, which is a leading business for us globally as well as in India, has its own sustainability efforts. Dow Automotive is focused on sustainable mobility, which promotes auto companies addressing climate change and fuel efficiency issues. So sustainability is integrated in the company’s strategy.

Is it important to weave it into the innovation cycle also?

It is very important. We manage all our R&D with a portfolio approach and within that portfolio assessment process sustainability is an important part. We are mainly concerned about not spending money on projects that are less sustainable than the products that are being replaced.

What kind of future does Dow see for the bio-based chemical industry? Do you see this as intrinsically sustainable?

I do not believe that if something is bio-based it would be better. You have to look at the specifics and do life-cycle analysis. We have some experience with this. We created a venture in Brazil for converting sugarcane to ethanol to polyethylene. But in the US, it was a poor experience with corn to ethanol. Corn to ethanol is bad for climate change than fossil fuel or gasoline. There are other problems as well, like requirements for huge quantity of water.

Before we plunge into bio-based products we need to decide what areas we are trying to optimise. It should not be climate alone; water should also be a consideration.