Further growth, more sustainable future

Earlier today, as part of our Investor Day webcast, we shared how we will continue to grow our business while also delivering strong performance and a more sustainable future – which together adds value for all our stakeholders.

Leaders from across our company participated, highlighting our sustainable and circular product offerings, and outlining our disciplined plan to continue delivering long-term value growth while achieving a zero-carbon emissions future. It’s a future we will deliver with a clear focus on our financial priorities.

The progress we’ve made on our commitments since our spin in 2019 speaks to Team Dow’s focus and strong execution. I’m very proud of our team and all they’ve accomplished, especially in this dynamic and unrelenting environment.

We’ve achieved incredible continued earnings growth and provided top-quartile cash conversion to support our financial priorities. We were disciplined in our investments. We also demonstrated a best-owner mindset, which has unlocked value by aligning our manufacturing, production and supply chain capabilities more closely with our priorities. And Team Dow delivered all of this while continuing to make progress towards our ambition and purpose.

What we make here at Dow will help create the better future we all desire. Our products and the markets we serve are well-positioned to grow, meeting both increasing customer demand as well as the drive towards a more circular and sustainable world.

Our product portfolio was built with one purpose in mind: to generate value growth through creating a more sustainable future as we solve many of the world’s toughest challenges. And, today, we announced multiple investments to make further progress towards that purpose.

• We announced plans to further accelerate a circular economy, including the launch of a line of fully circular plastic solutions in 2022, and new collaborations with New Hope and Fuenix to expand our global capabilities to make new plastics from plastic waste.
  
• We also announced investments to increase our production capacity to serve several high-growth, key markets — enabling us to grow while also helping our customers achieve their sustainability and growth targets.

It is not only within our control to show the world how to take our industry to a zero-carbon emissions future — we believe it’s our responsibility. And that’s what we’re going to do.

Sustainability has been a business imperative for us for more than 30 years. Our path toward zero-carbon emissions began in the early 2000s; and, last year, we announced our intent to be carbon neutral by 2050. Since 2005, we have already reduced our CO2 emissions by 15%, and the announcements we made today will take us to ~30% total by 2030.

To further our progress, we will begin replacing end-of-life production facilities with capacity that has lower-carbon emissions using both existing and new carbon-efficient technologies. A major project we just completed in the U.S. Gulf Coast, TX-9, has provided us necessary learnings. By incorporating technologies such as hydrogen and carbon capture and storage, we have a clear path to reduce carbon emissions by 5 million metric tons by 2030, including:

• Taking our entire Alberta site to net-zero carbon emissions while tripling its downstream production capacity in core markets. This work will include creating the world’s first net-zero carbon emissions ethylene cracker and derivatives complex; this is the type of production plant used to make flexible and safe packaging to protect goods.
  
• A multi-generational plan to achieve net-zero carbon emissions at our site in Terneuzen, The Netherlands, through a clean hydrogen plant, carbon capture and storage, and electrifying key processes.
  
• Broader carbon reduction actions, including procuring additional renewable energy agreements across Europe, Canada, and Brazil. We are already the top purchaser of clean energy in the chemical industry and top-20 among global corporations and this will further reduce our annual carbon emissions by more than 600,000 tons.

We know the next steps in our journey to a zero-carbon future that we announced today will be impactful, but we also know that to have the most robust impact, we’ll need public policy to help accelerate progress.

We’re actively engaged and collaborating with governments and community partners to help our industry achieve carbon neutrality faster — because we know that public policy will be a key consideration in our investment decisions. There are technologies available right now that would lower carbon emissions, but they need supportive policy and incentives to scale up, ensure affordability, and improve access. That’s why we support:

• Establishing frameworks that place a price on carbon — a market-based voluntary emissions trading system we believe would be an attractive alternative and bridge to a mandatory system in the future. This is, quite simply, what makes Canada so attractive for our first investment. Internationally, there are several mandatory emissions trading systems that have proven to reduce industrial carbon emissions at a low abatement cost and raise funds to invest in emission reduction projects and infrastructure while still allowing economic growth.
  
• Government investment and incentives to accelerate development and adoption of low- to zero-emissions technologies.
  
• A simple, credible framework for accounting for the benefits of innovative products and technologies, and ultimately accurately measuring Scope 3 carbon emissions, which is a project we’re currently working on with Columbia University, The Nature Conservancy, and Honeywell.
  

Every past success, every announcement we made today, and every policy we support is based on our ambition. And that’s fitting because our path ahead is an ambitious one. In fact, it will be challenging.

But most rewarding things in life are — pursuing our ambition is core to creating value for all our stakeholders and delivering a more sustainable future.

Jim Fitterling, Dow Chairman and CEO