{"id":9628,"date":"2016-11-03T22:11:12","date_gmt":"2016-11-04T02:11:12","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/dow-chemical-company-synthesizing-a-sustainability-strategy\/"},"modified":"2016-11-03T22:13:18","modified_gmt":"2016-11-04T02:13:18","slug":"dow-chemical-company-synthesizing-a-sustainability-strategy","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/dow-chemical-company-synthesizing-a-sustainability-strategy\/","title":{"rendered":"Dow Chemical Company: Synthesizing a Sustainability Strategy"},"content":{"rendered":"

In the United States, the chemical industry is the second largest industrial consumer of energy exceeded only by the petrochemical industry1<\/sup>.\u00a0 Accordingly, the continued threat of climate change and subsequent increasing regulatory pressures poses a threat to corporations in this industry, including Dow Chemical Company.\u00a0 Regulatory requirements are driven by the necessity to reduce greenhouse gas emissions produced from the use of fossil-fuels among other causes.\u00a0 As governments pledge to reduce their carbon footprint, companies such as Dow that rely upon fossil-carbon feedstocks will be required to adapt at the manufacturing and business operation levels2<\/sup>.<\/p>\n

Sustainability Strategies<\/strong>\u00a0<\/strong><\/p>\n

Clean Energy<\/em><\/p>\n

Dow recognizes that limits on greenhouse gas emissions will require investment in modifying greenhouse gas emitting equipment3<\/sup>.\u00a0 Additionally, regulations will affect taxes related to emissions3<\/sup>.\u00a0 As Dow\u2019s primary source of greenhouse gas emissions are a result of energy usage, they have commissioned projects aimed at reducing dependence on fossil-fuels in order to mitigate relevant costs such as carbon taxes and cap and trade systems3<\/sup>.\u00a0 For example, Dow has committed to using 400 MW of clean energy by 20254<\/sup>.\u00a0 In order to achieve this goal, Dow has launched a variety of programs, including efforts aimed at using energy generated from eucalyptus biomass and sugarcane as clean energy alternatives for their production processes3<\/sup>.<\/p>\n

Manufacturing<\/em><\/p>\n

In order to remain competitive in the face of increasing regulatory pressures to reduce greenhouse gas emissions and dependence on fossil fuels, Dow also relies upon innovative manufacturing processes.\u00a0 Advanced control and optimization models allow Dow to monitor plant conditions and adjust inputs to achieve greater efficiency5<\/sup>.\u00a0 This initiative resulted in decreased energy intensity by 4 to 6 percent in 20095<\/sup>.\u00a0 Dow also uses innovative catalysts which improve the yield of raw materials to finished goods during their production processes and results in a lower energy usage5<\/sup>.<\/p>\n

Financial Planning<\/em><\/p>\n

In order to fully mitigate risk and incentivize projects that carry a lower carbon footprint, Dow has changed its business planning processes as well3<\/sup>.\u00a0 When assessing potential capital investments, the price of carbon is included in Dow\u2019s calculations and therefore influences the attractiveness of a potential project3<\/sup>.<\/p>\n

Infrastructure<\/em><\/p>\n

In addition to adapting their financial valuation processes, Dow has also implemented changes in its infrastructure to mitigate the risks that physical manifestations of global warming present3<\/sup>.\u00a0 Several of Dow\u2019s manufacturing facilities key to their supply chain are located in the Gulf region, which may be susceptible to increasingly severe weather patterns caused by global warming3<\/sup>.\u00a0 Consequently, Dow has taken preventative measures and engineered facilities to better handle these types of situations3<\/sup>.<\/p>\n

Opportunities<\/strong><\/p>\n

Although Dow will likely be required to allocate capital towards adapting key components of their business model in order to survive in a world in which global warming represents a significant threat, the situation presents opportunities as well.\u00a0 Many of Dow\u2019s product offerings provide both at-home and industrial consumers methods to reduce energy usage and improve carbon footprints.\u00a0 For example, Dow\u2019s STYROFOAMTM<\/sup> insulation saves consumers $10 billion in energy costs each year3<\/sup>.\u00a0 In addition, Dow\u2019s BETAMATETM<\/sup> product, which is used in the steel industry, has resulted in a reduction of 23 million metric tons in carbon dioxide emissions3<\/sup>.<\/p>\n

Potential Future Strategies<\/strong><\/p>\n

In order to further mitigate the risks caused by global warming and its related regulations and promote adoption of clean energy sources, Dow should consider additional strategies.\u00a0 In particular, there is significant opportunity in expanding research on how non-carbon raw materials may be substituted for carbon materials in the synthesis of Dow\u2019s chemical products.\u00a0 Not only would such improved processes reduce Dow\u2019s carbon footprint, it may also have the added benefit of reducing manufacturing costs.\u00a0 Additionally, improving energy efficiency through reusing energy at key points in the production process would reduce the extent of Dow\u2019s dependency on fossil fuels.\u00a0 For example, recapturing energy units from heat sources could be applied to drive other processes.\u00a0 Finally, carbon capture and storage in mines or other subterranean locations may be a potential method to reduce carbon emissions6<\/sup>.<\/p>\n

Conclusion<\/strong><\/p>\n

Although Dow is heavily dependent on fossil fuels, its efforts to reduce its carbon footprint are noteworthy.\u00a0 They are managing this issue through a multifold strategy, and represent a good model for others in the chemicals industry hoping to abate their contribution to global warming.<\/p>\n

 <\/p>\n

Word Count:\u00a0 702<\/p>\n

 <\/p>\n

References<\/strong><\/p>\n

[1] U.S. Energy Information Administration<\/em>. December 2014. <http:\/\/www.eia.gov\/energyexplained\/index.cfm\/data\/index.cfm?page=us_energy_industry>.<\/p>\n

[2] Pye, E. Kendall. January 2016. The Laboratory for Research on the Structure of Matter. <http:\/\/www.lrsm.upenn.edu\/event\/how-will-climate-change-change-chemical-industry\/>.<\/p>\n

[3] The Dow Chemical Company. 2015 Sustainability Report<\/em>. <http:\/\/media-library.dow.com\/WebContent\/www-dow-com\/Documents\/Dow_2015_SustainabilityReport.pdf>.<\/p>\n

[4] The Dow Chemical Company. Our 2015 Sustainability Goals: Addressing Climate Change<\/em>. <http:\/\/www.dow.com\/en-us\/science-and-sustainability\/2025-sustainability-goals\/addressing-climate-change>.<\/p>\n

[5] Banholzer, JJ Patt and WF. Improving Energy Efficiency in the Chemical Industry<\/em>. 2009. National Academy of Engineering. <https:\/\/www.nae.edu\/Publications\/Bridge\/EnergyEfficiency14874\/ImprovingEnergyEfficiencyintheChemicalIndustry.aspx >.<\/p>\n

[6] McKinsey & Company. Pathways to a Low-Carbon Economy<\/em>. 2009. <http:\/\/www.mckinsey.com\/~\/media\/mckinsey\/dotcom\/client_service\/sustainability\/cost%20curve%20pdfs\/pathways_lowcarbon_economy_version2.ashx >.<\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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