Dow's plan to bank $1 billion on natural capital by 2025
Dow Chemical hasn’t shared the final results for its 2015 sustainability goals yet, but the company is already looking ahead with a new, ambitious 10-year agenda.
Perhaps the most notable of the company's 2025 goals is a mission to create $1 billion in value for the company — either through cost savings or new cash flow — by simply considering natural capital as part of major capital expenditures or investment decisions.
This idea was inspired by an existing collaboration with the Nature Conservancy, which shaped a groundbreaking project (PDF) at one of the company’s Texas plants. When the site was forced to consider a new wastewater treatment system, the planners determined that creating a coastal wetland would mitigate the plant’s impact.
So far, the positive financial impact of that decision has been around $200 million, Neil Hawkins, corporate vice president and chief sustainability officer for Dow Chemical, told GreenBiz in an interview.
“Imagine if we can find projects similar to that treatment plant example," Hawkins said. "We will go after this hard."
The move also underscores a much broader discussion occuring around the feasibility of decoupling corporate or economic growth from environmental impacts. For the world's 1,500 largest company's — which have a combined $3 trillion annual toll on the environment — a one-to-one relationship exists between corporate revenue and the environmental damage that results from business operations, according to data provided by TruCost for the annual GreenBiz State of Green Business report.
That tension has led groups such as TruCost to push for better ways to quantify the value of natural assets such as water and green infrastructure, which in turn introduces new financial incentives for companies to re-evaluate their environmental impacts.
When it comes to Dow, which has a market value of some $56.5 billion, plant managers will be asked over the next decade to first assess potential impacts, starting with its more than 200 manufacturing sites around the world.
The company developed a software application, as opposed to its current spreadsheet template, to collect data on biodiversity characteristics, water supplies, tree cover and other environmental metrics. By the end of the year, that tool should be available on tablet computers to make data collection far simpler.
“If you look at what is out there in the literature for valuing ecosystem services, it’s not actionable by companies," Hawkins said. "We’ve built into our site-screening process a set of questions about the impacts of projects on nature."
The information will be shared with Dow’s network of natural capital experts for consideration and discussion. To be clear, the chemical company’s tool doesn’t generate a standard numeric score for assessments, because each decision is inherently local.
However, the screen will help ensure “we don’t do dumb things,” Hawkins said.
Beyond natural capital
Dow’s stand on natural capital accounting is just one of the seven newly adopted goals, which all include a heavy emphasis on community and industry collaboration. It started discussing these ideas five years ago, midway through its second 10-year plan.
“Our conclusion was that public goal-setting and public reporting has served Dow very well in our transformation,” Hawkins said.
Here’s a summary of the other six commitments:
- Lead a “societal blueprint” toward a sustainable plant through 100 “significant dialogues” across the public and private sector. The goal is to establish 10 partnerships akin to the one with Nature Conservancy. Details should be released by the end of 2017.
- Accelerate sustainable chemicals innovation. This includes a specific goal to ensure that Dow products offset three times more carbon dioxide than they emit.
- Advance the circular economy through six major projects that design waste into new products and services. An example of a previous initiative is the “Energy Bag” pilot to turn plastic bags into synthetic crude oil.
- Get more transparent about chemicals technology. That will include working with NGOs, other businesses and researchers to create better product assessments.
- Encourage employees to “positively impact” at least 1 billion. Specific commitments include encouraging the Dow workforce to donate 600,000 hours to help students with science, technology, engineering and math education, as well as volunteer for 700 sustainability projects worldwide.
- Extend operational improvements. This includes a 400-megawatt renewable energy procurement goal and reductions in the company’s freshwater and waste intensity.