HomeMore
Your Membership
Home
Your Membership
Reviews   About

Expert Reviews

Search   Tags   Author   Everything

The Dow Chemical Company: A chemistry-set report

By Elaine Cohen (beyond Business) on August 31, 2010 at 11:50am.

Content:

The Dow Chemical Company is a diversified chemicals manufacturer with specialist expertise in the electronics, coatings, plastics, health and agricultural sciences fields and more. The company operates at 214 sites in 37 countries around the globe, employing over 52,000 people and netting nearly US$45 billion in sales turnover. A veteran reporter, Dow published a first Environmental Report back in 1997 at a time when reporters were true pioneers. The uniqueness of Dow's reporting is that not only is it written in accordance with the GRI guidelines, it's actually named after the GRI framework and called a "Global Reporting Initiative Report", following the flow of GRI disclosures and indicators point by point and question by question (with the addition of a "GRI Read me first" section which provides highlights of Dow's sustainability activities during past years).

Aside from the GRI's own reports, I don’t recall seeing many others structured in this way. There are upsides and downsides to this approach. The upside is the absolute clarity and discipline with which the report is written, which adds much to its credibility. The downside is that Dow's overall predominant value contribution to global sustainability gets lost. Dow has apparently considered what issues are most material for the company and has translated these into Sustainability Goals to the year 2015, which, due to the structure of this report, are best reviewed as a group of goals on the Dow website. Exactly how these goals were developed, and whether they are the result of a structured materiality analysis, is unclear. In fairness however, Dow presents the most comprehensive set of quantified goals, described in plain language, that I have ever seen. They are grouped in three focus areas: Collaborate, Innovate and Elevate. The goals include: Local Protection of Human Health and the Environment, Contributing to Community Success, Product Safety Leadership, Sustainable Chemistry, Breakthroughs to World Challenges, Energy Efficiency and Conservation and Addressing Climate Change. I am just missing a goal related to the Dow workplace, but this is impressive nonetheless. However, in my view, what this report gains in credibility as a result of rigid tick-box style application of the GRI framework, it loses in terms of focus, resulting in a kind of fragmentation of the real Dow story. With an organization of this size, scope and diversity, the highlighting of some key material themes, with case studies and more in-depth exploration of impacts, would have brought a little life to this report.
 
Communication:

Structured as a GRI Index, finding information in this report is a piece of cake.  Full, complete responses to all the GRI disclosures and indicators are neatly recorded in GRI sequence. The contents table is preceded with an explanation: "Unlike a typical table of contents, ours is designed to help you search for topics of special interest."  It is indeed an extended contents list, and it's hyperlinked too, making navigation of this 96 page report very easy. The Chairman's opening statement also serves as a reconfirmation of Dow's commitment to the UN Global Compact, turning this report into a Communication on Progress as well, and there is also an Appendix with a cross index to Dow's reporting to the CEO Water Mandate.  The GRI Index is reproduced in full and relevant annotations provided. Stakeholder engagement is adequately described and appears to be an example of best practice.

Despite its technical nature, this report is not (very) boring. The language is readable and flows well, and includes occasional insights of a culture which seems to be embedded, for example: "Right. Now. These two words describe the spirit of urgency that guided our actions in 2009."  I miss the personal touch, though. Aside from a thumbnail of the Chairman and CEO, we don't see the faces of any employees in this report, no quotes from members of the (all-male) Sustainability Team, nothing from the SEAC – the Sustainability External Advisory Committee – whose membership is not disclosed, and nothing from any other external stakeholders. This all tends to give the impression that sustainability at Dow is managed rather like a chemical process – sterile laboratory conditions, detailed lab notes, exact measures of all materials, a process conducted in perfect sequence and an output which delivers a predictable result. However, human beings are also necessary for Dow's CSR chemistry to succeed and it would have been nice to see some of the faces behind this impressive performance. An example where this might have been of quite some relevance relates to Dow's acquisition of Rohm and Haas in April 2009. In a report on the internet, I read that this acquisition was planned to result in 10,000 job losses and some 10-15 plant closures. The Dow report barely mentions the way in which this merger was conducted and the effect on people and communities through the restructuring process with the only reference, as far as I can tell, being the involuntary attrition rate which was "unusually high (11.6 percent) due to significant restructuring and acquisition-related integration activities during the year."   Surely this significant social impact merits more than half a line in a 96 page report.

Credibility:

This is a highly credible effort by Dow Chemicals, intended, it seems, for the educated investor and the professional community. The report covers all bases and in quite some detail. Nice graphs and charts show performance data in a transparent way. There is some spectacular photography of scenes and nature shots, but aside from a certain appreciation of art and aesthetics, it is not clear how these photos project the Dow message. The assurance statement is passable, though recommendations made to Dow by the assuring organization were kept private. Dow publishes a quarterly updates of performance against the 2015 Sustainability Goals – a good practice.

Dow appears to have integrated a sustainability mindset into its core business, with product development driven with sustainability aspects at the fore, such as solar solutions and photovoltaics, water solutions for sustainable drinking water, a system to reduce usage of solvents and much more. The company seems to be doing great at sustainability. Now it's time to put the chemistry set back in the box and take a broader view of how the company's reporting can serve a wider range of stakeholders and truly assist Dow in leveraging its core sustainability strengths and key material issues.

Recommendations:

1. Add a human touch to the report – case studies, real photos of real people, personal stories
2. Include a detailed materiality matrix showing how the 2015 goals align with material issues
3. Consider focusing more on materiality and less on a list of indicators. 
 
elaine cohen is the Joint CEO of BeyondBusiness Ltd, www.b-yond.biz/en , a leading CSR reporting and consulting firm in Israel,  specializing in a wide range of consulting services for the development of social and environmental responsibility of businesses.