How Dow Chemical is taking on the SDGs
This article originally appeared at Corporate Citizenship as part of its "Leader Insights Series: Business Action on the Sustainable Development Goals," written by leaders from across industries and sectors. The full series appears here.
The private sector has to take a leadership role if we are to achieve the SDGs. Dow’s chairman and CEO, Andrew N. Liveris, has been clear that we are prepared to take a leadership role. For us, this involves what we call "redefining the role of business in society."
The expectations that society has for business are shifting. Different people have different expectations of the business community. Society looks to the private sector for products, employment and philanthropy. Changing expectations means business has to shift towards a more purpose-driven perspective and create business models that fully integrate the triple bottom line. At times, this can be quantified in terms of today’s economics, but not always.
We developed Dow’s 2025 Sustainability Goals in a parallel path with the development of the SDGs. In fact, we were engaged in business consultations that started in 2012, helping to shape the SDGs. Hence our goals align, by design, to the U.N. SDGs. Having Unilever CEO Paul Polman on our board of directors also helped in this process as he championed the role of industry in the SDGs.
So, I’d summarise that the role of business is to develop new business models that line up with the SDGs and actively contribute to achieving them. It’s also to enter new and courageous collaborations with others — industry partners, governments, NGOs and academia — towards accomplishing the SDGs.
Impact of the SDGs on Dow Chemical
When we launched our 10-year Sustainability Goals in 2015, we gave our business units and geographical organizations the remainder of 2015 to ensure their business models and future plans were aligned. Because of the close alignment between our goals and the SDGs, we were able to begin the process of alignment with the SDGs quite quickly.
We already have seen progress. For example, our water and process solutions business is clearly aligned with the SDG on water. We have seen tremendous progress from making water technologies, such as our reverse osmosis filtration technology, less expensive, more efficient and less energy intensive.
Another particularly interesting example is on ecosystems. We have an explicit goal on valuing nature. We are bringing the value of ecosystem services directly into our business decision-making processes. We are doing this through the net-present value calculations that we use to do the economic valuations for all our projects — whether we’re developing a new product, a new business or deciding on capital allocation. Essentially, when we decide which projects get money and which don’t, we also consider the value of the ecosystem.
Over the past six months we already have added $20 million of value to the bottom line for the company through projects that are not only good for nature, but also good for business. We believe this trend is only going to accelerate.
How can companies prevent the SDGs from becoming just another 'tick-box' index buried in sustainability reports?
This is a legitimate concern. The U.N. did a really good job on engaging industry in the development of the SDGs, compared to the MDGs. This provided an opportunity for the industry to shape the metrics around the SDGs. The SDGs have to be incorporated into corporate goals, similar to the way that Dow has done with our 2025 Sustainability Goals.
Our 2025 Sustainability Goals are not a tick-box exercise, relegated to our sustainability report; they are rigorously incorporated into the normal business unit goals and therefore become functional goals, geographic goals, working group goals and personal goals. This is the kind of discipline that needs to happen within a company to make the SDGs real.
When our business presidents talk about our business strategy, they focus on Dow’s 2025 Sustainability Goals and the link to the SDGs.
When we talk to customers about how we are a leading and progressive company, one value proposition of doing business with Dow is that we are aligning ourselves with the sustainability trends of the future, which includes the SDGs.
The SDGs are a common part of our commercial discussions and conversations with the research community. It generates some really interesting questions: as we aspire to head towards a world of no hunger and zero poverty, what kind of business opportunities open up? As we bring people out of poverty and into the middle class, what kind of demands for products and services does that create?
The SDGs offer a tremendous business opportunity and that is where we are focusing our attention. It is certainly about sustainable development and doing good for people, but can translate into tremendous business opportunities as well.
The role of the private sector
What we have found helpful is to set goals. The first goal of our 2025 Sustainability Goals is about leading the blueprint towards sustainability. This requires open dialogue with a wide variety of stakeholders — including academia, NGOs, government, inter-governmental agencies and industry partners.
When you are trying to deal with problems in a watershed that will be affected by climate change, drought and severe weather, for example, you have to be talking not only to other industry people but also others who may be affected — such as local farmers — and those who represent the ecosystems themselves, such as NGOs or government agencies.
Back in 1992 we started the Corporate Environmental Advisory Council where we brought in NGO, academic and government leaders. Speaking frankly, some of those groups traditionally would have been more comfortable protesting against us rather than being in our boardroom advising our Senior Management.
Twenty-five years later, we have a whole different dialogue with a strong set of stakeholders who come in and advise our senior management and have been a part of developing our Sustainability Goals. They are very consistent in holding us to a much higher standard of behavior.
These are the kinds of dialogues and collaborations that the private sector can have: very explicit, with a long-term outreach and collaboration to more effectively address global challenges. Now, the key is to accelerate those kinds of collaborations through open dialogue. We are just beginning to get to the point where people can get past some of the stereotypes and tactics that have been used to reinforce positions in the past — and really look to the future.