Supply chain

Sustainability in the value chain

Our supply chain extends to 60+ countries with a base of more than 30,000 vendors. Because of its global reach, we see supply chain sustainability as a key enabler of Dow’s overall corporate sustainability strategy.


Team Dow supports progress

At the heart of the supply chain are our people – the people who source the materials vital to our products and organize our supply chain networks, as well as the thousands of people who manufacture our raw materials and products. In addition, a network of more than 1,000 transportation operators links the materials and products we source to our facilities and, ultimately, to our customers. Each of these people holds the key to reaching Dow’s sustainability goals. Each can make a difference by noticing where efficiency can be improved, where lowercarbon options can be implemented, where waste can be reduced, or where circularity can be enhanced.


Metrics

Supply chain and climate

Purchased goods and services make up more than half of Dow’s supply chain (Scope 3) emissions. Working with our suppliers to advance end-to-end transparency will help us understand and reduce Dow’s climate impact.
 

In addition, we are working to reduce our carbon footprint in transportation. Our Green Transportation strategy consists of internal activities to measure and reduce our impact, as well as external engagement with customers and our logistics services providers (LSPs) to drive improvements and promote sustainable logistics.

 


Case studies: saving carbon across the supply chain

Modal switches and load consolidations have been common types of supply chain improvement projects for years, often because they also save costs. More recently, we are examining how these projects can have a positive impact on the environment as well. Below are project examples in which we estimated the environmental savings of the projects.


Transportation optimization: In North America, we are leveraging technology to reduce the number of trucks hauling material to customers by consolidating shipments to improve trailer utilization. A transportation optimization engine is helping identify shipment consolidations when products can be shipped together while respecting all relevant constraints, including but not limited to material compatibility, route, temperature requirements and delivery times. In 2020, more than 1,500 shipments were consolidated.

ESTIMATED EMISSIONS REDUCTIONS: MORE THAN 8,000 METRIC TONS OF CO2e


Implementing electric forklifts: LSP Sinotrans upgraded eight forklifts in their warehouses for Dow operations, allowing all of Dow’s goods to be moved using the electric forklifts. Using electric forklifts will eliminate more than 21,700 liters of diesel per year.

ESTIMATED EMISSIONS REDUCTIONS: MORE THAN 70 METRIC TONS OF CO2e

Collaborating through supply chain swaps:The Hydrocarbons business benefits from its widespread pipeline infrastructure in the Europe, Middle East and Africa region to arrange material swaps with industry partners. This practice avoids rush shipments during material shortages and contributes to CO2 emission and freight savings, which, in 2020, were $18 million alone.

ESTIMATED EMISSIONS REDUCTIONS: 9,100 METRIC TONS OF CO2e IN 2020

Supply chain and the circular economy

In Purchasing, we are increasing the amount of recycled content within our own packaging to help drive the circular economy forward. In Logistics, we are collaborating with suppliers, customers and logistics service providers (LSPs) to redesign new circular supply chains that reuse or recycle packaging, or incorporate post-consumer recycled (PCR) material.

 


Case studies: driving circular solutions across the supply chain


Piloting blockchain technology to aid recyclers: In 2021, we launched a blockchain pilot for our RENUVA™ Mattress Recycling Program to securely transfer verified product information. The advent of circular products is driving the need for efficient and reliable information sharing along the supply chain. Blockchain technology can speed up information exchange, providing quick access to verified data and enabling traceability. Using the ChemChain platform developed for the chemical industry, Dow will generate digital assets containing key encrypted information on the chemical composition of its solutions. These assets can be integrated into the final polyurethane-based products, ensuring contents can be identified at every stage in a product’s life cycle. Recyclers can then easily access this information and identify the most appropriate action for the disposal or recycling of end-of-life mattresses.


Directing waste from landfills: At the Dow Siloxanes Zhangjiagang facility in China, Dow’s Purchasing team worked with its waste disposal suppliers to identify new solutions to enable waste from the facility to be recycled. By identifying the waste disposal challenges, Dow Purchasing was able to leverage its current vendor base and locate new vendors who could execute the safe, reliable and cost-effective ways to direct waste away from landfills and to recycling facilities. This project reduced the waste sent to the landfill in 2020 by more than 90% compared to previous years.

Using PCR plastic in heavy-duty sacks: At Dow Tarragona, the plastics used in heavy-duty sacks were updated to include 30% PCR plastic, repurposing 250 metric tons of PCR from landfills.


Closing the loop with recycled IBCs:In Belgium, we worked with our supplier Mauser to use intermediate bulk containers (IBCs) made of PCR materials. Beginning in February 2021, the supplier began using rigid intermediate bulk containers (RIBCs) made of PCR resins instead of virgin HDPE at our Essers site. Mauser is collecting used IBCs, plastic drums and pallets, and sorting them to exclude material that was in contact with hazardous substances. Mauser then washes, palletizes and finally manufactures new RIBCs. With approximately 25,000 IBCs in production for Essers, we expect to save 152 tons of virgin plastics and 237 metric tons of CO2e annually.

Supply chain and waste reduction

Dow is committed to reducing waste throughout its operations and supply chain. Dow Purchasing and Supply Chain teams work to identify areas where waste can be eliminated, then collaborate with suppliers to find solutions. This can take the form of reducing the use of shrink wrap, eliminating printed paperwork, or finding suppliers who can take materials for recycling – avoiding the landfill. Furthermore, Dow is committed to pellet loss prevention, containment and cleanup in our own facilities, as well as for our external manufacturers and logistics service providers. We continue to advance progress by sharing solutions that have helped us contain pellets with our customers and others in the value chain.

 


Case studies: reducing waste in our supply chain


De-watering sludge to allow for recycling: Dow Purchasing worked with the production team at our Min Hsiung site in Taiwan to identify new solutions to recycle waste sludge. The wastewater from the Min Hsiung site was too watery to be used by recyclers and was being disposed of in a landfill. By implementing a filter press and heat-treating process, Dow was able to reduce the moisture content of the waste, enabling Dow Purchasing to identify a vendor who can recycle the waste. This saves on waste disposal costs as well as avoids unnecessary trips to the landfill.


Saving paper by going digital: Dow’s European International Trade Operations export documentation team switched from paper to digital to fulfill customer need for export documentation for Greece, resulting in up to 1,800 shipments per year moving to paperless.

Eliminating product waste on truck loading lines: The Dow Coatings business introduced a new system for flushing truck loading lines at their Gebze site in Turkey. Flushing loading lines is a requirement to eliminate the risk of cross-contamination. Historically, the team would utilize product to flush the lines, resulting in 300 kg of material wasted per shipment. To counter the problem, a waterbased cleaning system has now been introduced and operational procedures modified accordingly. Analysis showed that by changing cross-contamination measures at truck loading bays, we could deliver multiple benefits, including cutting waste and production unit costs and increasing product yield.


blue barrelsImproving returns process:The North America and Europe Purchasing teams are continuing work with plants to improve the returns process by reconditioning the drums and totes for reuse. This will reduce the number of packages that need to go to incineration.

The role of purchasing (GRI 308-103, 414-103)

Responsible procurement of goods is a key part of sustainable development. By assessing and improving our sustainability sourcing practice, we can help improve ecological and social outcomes and contribute to the transition to a more sustainable economy.
 

Our ambition: evolving from compliance to a culture that embeds sustainability as a strategic and financial advantage

We launched a new Sustainable Procurement Strategy, which defines a concrete roadmap for the years ahead around three key pillars.

 

Our Sustainable Procurement Strategy will enable Dow to make continuous improvements over time based on developments in our key supply chains by:
 

  • Evolving new and deeper ways of collaborating with our value chain. At the heart of the strategy is inspiring our team and our suppliers around Dow’s goals. We will provide opportunities for everyone to learn about sustainability, and to share ideas on how they can integrate sustainability into their practices.
  • Embedding sustainability into every purchase. We can leverage the collaborations between procurement staff and suppliers, looking for opportunities to integrate sustainability into contracts, the Code of Business Conduct for Suppliers and beyond. We want to enable Purchasing staff to access robust ESG data and make sustainability a meaningful metric in the decision-making matrix.
  • Advancing end-to-end transparency of our supply chains to identify hotspots in the supply chain where more sustainable alternatives can be sourced.


Supplier code conduct (GRI 308-1)

Through the Dow Code of Conduct, we continue to engage new suppliers globally and communicate our expectations that all suppliers are compliant with regulations and Dow’s values. We also continually review and refresh the Code of Business Conduct for Suppliers, completing a full analysis of our current standards and industry best practices to ensure that we’re holding our suppliers to the highest standards regarding sustainability, human rights, and environmental health and safety. The requirements of the Code of Business Conduct for Suppliers are built into all new and existing supplier contracts, to ensure they are contractually enforceable. Dow reserves the right to audit supplier compliance at any time. In the case where we identify less-than-adequate supplier practices, we reserve the right to discontinue business with the supplier. Annually, we’ve identified compliance issues in less than 0.1% of our supplier base, resulting in the immediate cessation of business.

 


The role of integrated supply chain

In 2020, Integrated Supply Chain (ISC) launched a new sustainability strategy, which builds from previous efforts, while taking into account Dow’s aggressive sustainability targets.
 

ISC sustainability stategy

Transportation stewardship

Dow’s Transportation Stewardship Program is an extensive, holistic program focused on driving the industry toward a new standard of transportation safety and security. Dow achieved a number of milestones in 2020 by implementing several initiatives that support our commitment to strengthen transportation safety to reduce risk to people and the planet.

 

Case study

Improving temperature monitoring: We made significant investment in temperature telematics and temperature monitoring equipment to our transportation equipment. These investments enable nearly real-time monitoring of temperature-sensitive products, so we can react before a deviation causes a safety concern. In Europe, the smart container implementation was completed in 2020, and there were no emergency events caused by either high- or low-temperature events.

Case study

Reducing potentially serious incidents: We invested considerable time in 2020 to reduce transportation incidents that had the potential to be more serious than they were (potential transportation incidents). The 2020 program created several joint teams between Dow and logistics service providers to address issues before they escalate in severity.

The role of packaging

Dow is following the “4R” principles (Reduce, Reuse, Recycle and Replace) in packaging design and packaging supplier selection, to reduce the carbon footprint in packaging material production and packaging product transportation.

Reducing packaging material is one of the key levers to drive sustainable packaging. Providing minimum but sufficient packaging is the goal. This can include simplifying packaging or replacing heavier containers with those made of lighter materials. Dow is also adopting package reuse as a material-savings strategy. Dow is establishing closed-loop systems between production sites or between production sites and key customers to return empty packages to be cleaned or refurbished for reuse.

Saving resources through packaging

Case study

Thinner stretch wrap for securing pallets: Dow Asia Pacific has been implementing super-thin stretch wrap film at Dow sites and at 3PL outplants in 2020. Common polyethylene (PE) stretch wrap film is 20-25 microns thick. Enabled by Dow technology (DOWLEX® and ELITE®), the leading film producer is now able to offer 8- to 10-micron films with even better pallet-load securement performance. With the new stretch wrap film, plastic consumption can be reduced by 50% for each pallet load, resulting in emissions savings of 2.35 metric tons of CO2e for 1 metric ton of stretch film material.

Case study

Using drum liners: Dow continues to find opportunities to reuse drums when a PE liner is inserted into the drum before product filling. After the liners are disposed by the consumer site, clean drums are ready for return and reuse. A PE liner is 1-2 kg in weight in comparison with disposing a whole drum. Thus, the material savings by reuse is significant.

Case study

Reconditioning IBCs: Dow Europe has also supported the purchasing of reconditioned IBCs. With a reconditioned package such as an IBC, all components (such as the inner container, screw cap and the outlet valve) that came in contact with the previous product that filled it are either replaced with new original components or thoroughly cleaned. Dow Europe purchased more than 17,000 reconditioned IBCs, which are expected to save ~1,300 metric tons of CO2e when compared to purchasing new IBCs.

External collaborations

External manufacturing

External manufacturing (EM) refers to manufacturing services that are performed by an outside party on Dow’s behalf using Dow’s intellectual property. In 2020, Dow collaborated with more than 200 external manufacturers globally, spending over $0.5 billion on a diverse portfolio of technologies. All EMs are managed through a robust, risk-based work process that includes a screening of process risks, an initial on-site Environment, Health & Safety (EH&S) audit, and regular subsequent EH&S audits. EM contract agreements also specify that the manufacturer comply with Dow’s Code of Business Conduct.

GLEC partnership

Dow is an active member of the Global Logistics Emissions Council, a group convened by Smart Freight Centre to drive supply chain emissions reductions through global, harmonized guidelines for reporting and reducing logistics emissions.

Operation Clean Sweep®

In 2020, Dow amended existing contracts with more than 150 LSPs and 25 EMs who actively handle plastics on Dow’s behalf to require participation in the Operation Clean Sweep® (OCS) program. Additionally, Dow revised tracking and reporting capabilities for transportation incidents to specifically reflect the severity of pellet release to water and to track details such as quantity of pellets released, recovered, recycled and released to water. We are confident that formal adoption of OCS by our LSPs will provide recognition for the good work already being done to prevent the release of resins into the environment and close any gaps that may exist in resin-handling work processes.

Logistics service providers

Leveraging our approach to our suppliers and EM suppliers, we also set high standards for our logistics service providers (LSPs) by having in place an extensive risk-based program in order to qualify providers and established periodic follow-up assessments. These assessments include reviewing health and safety practices, labor practices, environmental compliance and security.

Dow signs the sea cargo charter

Dow’s bulk marine team became an inaugural signatory to the Sea Cargo Charter (SCC) in late 2020. SCC is a framework for measuring, aligning and reporting bulk vessel chartering activities in the interests of achieving established decarbonization targets.

CEFIC partnership

Dow is partnering with the European Chemical Industry Council, also known as CEFIC, to develop a methodology for the European chemical industry to calculate logistics emissions.