Climate risks and opportunities (GRI 201-2)

Climate change poses both opportunities and risks for Dow. We see an opportunity for our industry to generate the solutions needed to transition to a low-carbon economy. Our products often can reduce GHG emissions more than the carbon footprint used to manufacture them, and we continue to align investments in our product R&D with a low-carbon future. We also see continued opportunities to improve the carbon footprint of our operations – by sourcing cost-competitive renewable power, improving raw material efficiency and implementing low-carbon technologies.

At the same time, we are an energy-intensive company and, as such, transitional risks such as regulatory changes focused on energy and emissions are of importance to us. Reducing our overall energy usage and GHG emissions by optimizing our facilities and implementing new technologies will decrease the potential impact of energy- and emissions-focused regulations. We also are collaborating with industry associations to support regulatory measures to address climate change. For example, we support carbon emissions pricing, but with a realistic approach to allowances allocation, carbon leakage, technological limits and cross-industry projects. In addition, Dow proactively incorporates a carbon emissions price into business planning and risk management strategies for all jurisdictions where Dow operates, including those without existing carbon emissions pricing legislation.

Climate change may also result in physical risks, such as more frequent incidents of severe weather, or contribute to chronic impacts such as long-term change in precipitation patterns. Engineering our facilities to better withstand acute impacts of severe weather and addressing water availability, especially at our water-stressed sites, are of particular importance to enabling continued, safe operation of our facilities. We continue to study the long-term implications of changing climate parameters on water availability, plant siting issues, and impacts and opportunities for products.

This table outlines our potential risks and opportunities related to climate change, and which elements of our decarbonization strategy help mitigate the risk or capitalize on an opportunity

Taking into account the carbon benefits of products

We are joining Columbia University’s Center on Global Energy Policy and The Nature Conservancy in launching a new project to calculate the environmental benefits of products and technologies that reduce or eliminate harmful greenhouse gases that contribute to climate change.

The Center on Global Energy Policy will investigate the potential for new methods that quantify and measure carbon emissions reductions across full product life cycles. The project will engage key stakeholders representing environmental groups, industry, academia, and data and accounting firms to develop new tools for decision-makers to accelerate global progress toward 2030 and 2050 emissions targets.

The Greenhouse Gas Protocol Standards developed by the World Resources Institute and the World Business Council for Sustainable Development are the most comprehensive and widely used global standards for companies to measure and report their greenhouse gas emissions. The Corporate Value Chain Scope 3 Accounting and Reporting Standards measure indirect emissions that result from activities and assets not controlled or owned by the reporting organization across its value chain. This project will study and build on existing methodologies to account for value chain emissions reduced or eliminated by innovative products and services, including the role that materials and sustainable applications can play in achieving emissions reductions.

Scenario analysis: evaluating risks and opportunities

In 2020, Dow initiated a climate-related scenario analysis focused on evaluating transitional and physical risks, as well as opportunities. The analysis uses two boundary scenarios – one where global ambition aligns to the International Energy Agency (IEA) Sustainable Development scenario of decarbonizing the economy, and another that aligns to the Regional Rivalry Shared Socioeconomic Pathway (SSP) 3.0, which explores a more uneven path to decarbonization. Scenarios are selected in an effort to test the boundaries of possible futures and help us understand how Dow’s current portfolio may perform under different possible future states, which in turn informs strategic decisions for the company. For example, in the Sustainable Development scenario, Dow’s cost of regulatory compliance is higher than in Regional Rivalry, but our opportunities for the development of low-emissions goods and services and low-carbon technologies are much greater. We utilize these results to build the resiliency of our company as it relates to a variety of outcomes.

Summary parameters of externally developed scenarios selected to evaluate climate risk/opportunity

Scenario Descriptions, 2050 Snapshot Sustainable Development1 Regional Rivalry2
Description Coordinated path to decarbonization Uneven path to decarbonization
Market Trends Increased demand for solutions
that mitigate climate change
Slower, regionally driven demand for solutions that mitigate climate change; greater market for climate adaptation products
Temperature Rise <1.5°C 2.1°C
Carbon Price (USD/metric ton) 135 30
Renewable Energy
(% of total primary energy)
47 17
1 IEA Sustainable Development Scenario  2 Regional Rivalry, Shared Socioeconomic Pathway 3.0, RCP6.0

Process to evaluate climate-related risks and opportunities

Climate risks and opportunities

We intend to build upon this evaluation to enable continued risk and opportunity assessments in 2021. We are working with S&P Global Trucost to conduct a more detailed analysis of our operations and to identify with more granularity the areas of exposure to physical hazards resulting from climate change. This analysis will focus on evaluating our manufacturing sites across the world using climate-modeling data to understand the potential impact of floods, water stress, heatwave, coldwave, hurricanes, sea level rise and wildfires.

U.S. Gulf Coast Facilities Exposed to
Physical Climate Risk
Gulf Coast Facility Address
Plaquemine, LA 21255 Louisiana Highway 1
Plaquemine, LA 70764
Freeport, TX 2301 N. Brazosport Blvd.
Freeport, TX 77541
St. Charles Operations 355 Highway 3142, Bldg 632,
Hahnville, LA 70057
Seadrift, TX 7501 Highway 185 N.
Seadrift, TX 77983
Deer Park, TX 909 Rohm & Haas Rd.
Deer Park, TX 77536
Texas City, TX 3301 5th Ave S.
Texas City, TX 77590
Sabine, TX 2739 Farm to Market Rd. 1006
Orange, TX 77630