The Business Case for Sustainability

While corporate sustainability is not a new concept, companies often fail to apply sustainability principles at the core of business, instead choosing to use them as a peripheral strategy for better competitive advantage, market positioning or pure reputation-building.

To define sustainability as just “green” or “social responsibility” in the corporate context is to deprive it of its power to drive economic value and societal change. Sustainability must be connected to the conscience of an organization, but just as importantly, it needs to be seen as a platform for greater business growth and innovation. It must become so much a part of a company's fabric that it is perceived as an essential pillar of core business operations.

Weaving sustainability into the fabric of any company, especially a global one, requires change of perspective, renewed commitment and overarching dedication to the principles of sustainability. To effectively do this, companies must be committed to the three pillars of sustainability — economic, social and environmental conditions — which help define the parameters under which a company can contribute to sustainable progress. To meet these commitments, any company that is serious about sustainability must adopt a culture of continuous improvement.

In 1995, Dow set important public sustainability goals. Since then, Dow has met or exceeded most of these goals and continues to strive to improve upon all of them.

In 2005, Dow set the bar even higher with the introduction of a more ambitious, next-generation set of goals. These 2015 Sustainability Goals focus on efforts beyond Dow's own walls, committing Dow to creating stronger relationships within the communities in which it operates, improving product stewardship and accelerating innovation to solve some of the world's most pressing problems and reducing its global footprint. The goals focus on sustainable chemistry, energy efficiency, climate change, breakthroughs to world challenges, product safety leadership, local protection of human health and the environment and contributing to community success.

As a direct result of our effort to achieve these goals, Dow became the first chemical company to earn the Robert W. Campbell Award from the National Safety Council. The award recognizes companies that uphold environmental, health and safety as a key business value and clearly link measurable achievement in EHS performance to productivity and profitability.

Corporations aiming to advance their enterprise-level sustainability commitments must first understand and acknowledge what sustainability can accomplish from a business value perspective, how it can revolutionize innovation pipelines and the opportunities for unprecedented collaborations through corporate-driven sustainability initiatives.

SUSTAINABILITY: WHAT IT MEANS AND WHY IT MATTERS

To be able to make the case for sustainability, it is imperative for corporate executives to realize the power of sustainability for a company's growth and development. Moving beyond corporate social responsibility or environmental consciences, companies must understand that finding creative solutions that improve bottom line performance while enhancing value to society should, in fact, be the new business model. True incorporation of corporate sustainability means viewing it as an integral part of business, corporate practices and culture.

Sustainability must be an integral part of business strategy, product development, talent development and capital investment. And, as consumer demand for sustainable products continues to rise exponentially, companies increasingly are responding by funneling financing and investment in research and development for more sustainable products.

One of the most prominent mega trends, which is indicative of future market opportunity, is the accelerating investment and growth of renewable energy solutions and green technologies. Dow has leveraged this mega trend to advance R&D and fund projects that seek to meet the future energy needs and consumer demand for greener products and services.

COLLABORATION AS A CONDUIT FOR SUSTAINABILITY

While a corporate focus on sustainability can enhance product innovation and drive revenue, sustainability performance can benefit from the development of formal partnerships, joint ventures and dual-support initiatives. Dow has identified four key sectors for collaboration to advance sustainable solutions. The following are a few examples of partnerships fostered through a shared commitment to sustainability.

Industry partnerships — Dow is an active supporter and participant in chemical trade associations and professional organizations around the world aimed at promoting the importance of chemistry. Through the company's financial funding, executive leadership, technical expertise and sharing of best practices in sustainability and chemicals management, Dow is helping to advance chemistry as uniquely able to provide solutions to the world's greatest challenges.

In 2010, Dow and BASF announced a jointly developed hydrogen peroxide to propylene oxide (HPPO) production technology. The new HPPO process reduces wastewater by 70 to 80 percent and energy use by approximately 35 percent. There are no by-products produced besides water, and PO plants using the HPPO technology require up to 25 percent less capital to build than conventional technologies. The technology received industry recognition, including a Presidential Green Chemistry Challenge Award, for its potential to improve resource efficiency, lifetime value and process optimization.

Academia partnerships — Dow has established strategic partnerships and collaborations with academic institutions across the globe to advance scientific research and develop the world's next generation of scientists and leaders. Dow's contributions to advancing sustainable chemistry includes funding research at universities and independent laboratories, developing curriculum in sustainable chemistry, sharing technical expertise, offering specialized internships and granting endowments.

An important avenue of collaboration includes aiding the development of and fostering the next generation of industry and sustainability leaders who will continue to build on the advancements of today to find even more solutions for tomorrow. In support of this strategy, Dow hosts the annual Dow Sustainability Innovation Student Challenge. This award program recognizes and rewards students and universities for their innovation and research of sustainable solutions that address some of the world's most pressing social, economic and environmental problems. Students from across the globe develop thesis-like projects that aim to solve a world challenge, such as access to clean water, global hunger and renewable energy sources.

NGO partnerships — Non-governmental organizations play an important role in advocating for sustainable solutions to the world's greatest challenges, as well as impacting public perceptions regarding the safety of chemicals in commerce. Dow has ongoing and active partnerships with influential NGOs to share information, develop research initiatives, collaborate on innovative solutions and best practices and find common ground on key science and sustainability issues.

In January 2011, Dow and the Nature Conservancy announced an unprecedented $10 million collaboration to help define the value of nature for industry. Dow and the Nature Conservancy will work together to apply scientific knowledge and experience to examine how Dow's operations rely on and affect nature. The aim of the collaboration is to advance the incorporation of the value of nature into business, and to take action to protect the earth's natural systems and the services they provide people, for the benefit of both business and society. One of the major objectives of this collaboration is to share all tools, lessons learned and results publicly and through peer-review so that other companies, scientists and interested parties can test and apply them to their own initiatives and business decision-making.

Government/regulatory partnerships — Dow works with governmental institutions and agencies worldwide to advance the role of chemistry in solving the world's greatest challenges. Collaborations and research partnerships enable Dow to share information and insight into key scientific applications and combine strengths in pursuit of breakthrough solutions. The company supports the development of responsible, science-based laws, regulations, standards, practices and procedures that safeguard the community, workplace and environment. Appropriate review by governments helps Dow maintain and enhance public acceptance of its operations and products.

While chemical products provide benefits to society, they also must be managed in a responsible way to minimize any adverse effects on humans and the environment. Dow employees take this responsibility very seriously and work hard to ensure that Dow's products are manufactured, stored, transported, used, disposed and recycled in a manner that shows high regard for human health, safety and environmental stewardship.

As a company committed to the American Chemistry Council's Responsible Care initiative and the Global Chemicals Management Policy, Dow measures its progress against two product-related metrics, demonstrating:

1. A documented process for characterizing and managing product risk, and a summary of the process that is available to the public;

2. A process to communicate the results of the risk characterization and management process in an effort to facilitate public knowledge.

These measures are designed to demonstrate the chemical industry's commitment to the safe management of chemicals throughout their life cycle and going above and beyond government requirements.

THE RESULTS AND POTENTIAL FOR SUSTAINABILITY

The results and potential financial return rapidly can exceed expectations. For Dow, these sustainability commitments have resulted in an overhaul in the company's energy use, water conservation practices and the way in which the company views research and development, product innovation and technology advancements. In fact, since 1994:

• Energy efficiency investments of over $2 billion have resulted in over $9 billion of savings.

• Dow's energy efficiency program has saved 1,800 trillion BTUs, which is the electrical energy equivalent of powering all the residential homes in California for 20 months.

• Beyond the cost saving garnered through energy efficiency, Dow has developed and introduced next-generation products, driven by the R&D investment in sustainable solutions and technologies.

Dow's sustainability commitments come with an expectation of economic return on investment and any organization that makes similar commitments should have the same expectation. Today, senior management is more confident than ever that Dow will be among the most prominent and influential global companies of the 21st century. That is because the company is fully committed to — and uniquely built for — addressing the global sustainable innovation and development challenges that live at the intersection of greatest need and the most significant business opportunity.

Dow strives to be sustainable and to contribute to solving some of the world's major challenges. As a result of this commitment and enterprise-wide focus on sustainability, Dow's workplaces are safer, its facilities are cleaner, its energy use is more efficient and its corporate governance is even stronger and more vigilant. With the right approach and commitment, other organizations have the opportunity to achieve similar results.

Ultimately, a company exists to bring economic value to its shareholders and employees, but it must do more than just make profit. A company must be responsible to the environment, but it must be more than just green. A company must be socially responsible, but it needs money to do so. To be sustainable, a company must invent new products and services that meet economic, environmental and social needs in an integrated way.

D. E. (Dave) Kepler is executive vice president, business services, chief sustainability officer and chief information officer for the Dow Chemical Co. He is a member of Dow's Executive Leadership Committee, which is responsible for its corporate strategy and financial performance. He also has oversight responsibilities for Dow's Canadian region. In his business services leadership capacity, Kepler has global responsibility for functions including customer service; information systems; purchasing; supply chain; work process improvement; and environment, health and safety. Kepler began his Dow career in 1975 in Pittsburg, Calif., after receiving a bachelor's degree in chemical engineering from the University of California at Berkeley. He has had numerous career assignments in IT and business, with geographic assignments in the United States, Canada and the Pacific.