Speaker: George Biltz, Business Vice President, Custom & Fine Chemicals
Event: WEC Gold Medal Colloquium
Location: Washington, D.C.
Date: 05/14/2003

I appreciate the opportunity to address you today and to attend this symposium. Those of you that know Dow well were probably expecting to see Sam Smolik, our director of Environmental, Health & Safety, to address you today. I’ve been working with Sam on our Corporate Sustainable Development Steering Team for some time now, and in our discussions we believed this symposium would be a unique opportunity to provide a slightly different perspective. My job, as a vice president for our pharmaceutical based service business, is all about delivering results. It is about operationalizing a solid vision and turning it into a commitment to action. It is about something instilled in me a long time ago in my youth – how to leave the world a better place. Whether it was with my family, at church functions, or as part of the Boy Scouts – there was a continual emphasis on the stewardship of improving the world. So I really appreciate the opportunity to share Dow’s Sustainable Development journey with you, as it combines my love for this topic with the joy I feel from seeing solid visions turned into new realities. I’ll also share with you how PEOPLE – and their willingness to engage and innovate – make all the difference in your actual degree of success.

In this context, I will provide you with a business perspective on Sustainable Development and hope that I can leave you with some learnings, as much as I hope to gain some new insight from each of you throughout this conference.

In 1989, The Dow Chemical Company was awarded the World Environment Center Gold Medal. The world, the chemical industry and Dow has all changed a great deal since 1989. However, regardless of whether we are talking about 1989, 2003, or even 2013, there are three constants that will drive us to new levels of Triple Bottom Line performance. These are Enlightened Leadership, Personal Commitment, and Innovation. During my talk today, I will describe examples from Dow that supports this premise. At Dow we view Sustainable Development as a long-term journey during which we will have to invent and discover a sustainable future. Like most journeys, there is more than one way to get to a destination. Equally, we recognize we still have many more miles to travel. Nonetheless, the sooner you start the sooner you show progress! So lets begin with a look over our shoulder to the past.

The World In 1989:

• Students in Beijing began a series of demonstrations in Tianamen Square that led to Chinese military intervention.
• The Exxon/Valdez ran aground in Alaska and caused devastation in an environmentally sensitive area.
• The Soviet Union still existed.
• Few had heard of the Internet, and fewer still had any idea of its potential.
• The population of the planet was 5.2 billion.
• The first Earth Summit in Rio was still 2 years away!

The Chemical Industry In 1989:

• The Chemical Manufacturers Association (CMA) introduced the first codes of Responsible Care for the chemical industry. They dealt with emergency response and community awareness, in large part due to the terrible tragedy of Bhopal.

Dow In 1989:

• In 1989, Dow was a diversified, worldwide manufacturer of more than 2,000 products. Dow operated 179 facilities in 31 countries and employed about 62,000 people.
• Dow brought in $17.6 billion in sales.
• In 1989 Dow formalized its "waste reduction always pays", or WRAP program.

A great deal has changed in the past 13 years or so. Lets look at where we are today.

The World In 2003:

• The Soviet Union no longer exists; in fact there are former Soviet Bloc countries that belong to NATO. Who among you would have predicted this with certainty?
• The International Space Station is crewed by Russian cosmonauts as well as Americans. In fact, Americans are returning to Earth in Russian made spacecraft.
• The Internet provides information in great detail on any topic no matter how complicated or simple. One way to think of this capability is to look at this like it were a tool for doctors. A person with access to the Internet today has more diagnostic information available now than his/her doctor did in 1989. My children will never know the joy of doing research in the library stacks!
• The population of the world has increased to 6.3 billion people. That’s like adding the population of 3 countries the size of the United States to the planet since 1989.
• As you are all aware, the Johannesburg summit (sometimes known as Rio +10) was held late last year.

There are plenty of other changes but the point is that in just over 13 years, the world is a different, more technologically advanced, more socially aware, and a more crowded place. And the fundamental expectations of a broad range of stakeholders – employees, customers, shareholders, communities and society at large – are increasingly demanding and scrutinizing of performance.

Now focusing on the Chemical Industry in 2003:

• There is no more CMA, instead the same organization is known as the ACC …and chemical industry organizations now exist in Europe, Latin America, and the Pacific!
• The spills, emissions and community contact described in the original Responsible Care program has added another class of emissions known as greenhouse gases.
• Shareholder reports are not the only annual message that stakeholders receive from chemical companies. Public reports of Environmental Health & Safety and the Triple Bottom Line are now an accepted and even routine part of the reporting landscape.
• Success has a new meaning. Making a profit is no longer the only measure of business accomplishment. Reporting on our socially responsible activities and operating in a more transparent way are the norm!

So where is Dow today?

Today, Dow has approximately 50,000 people that account for $27 billion in sales. This is twelve thousand fewer people even after the merger with Union Carbide and other additions to the Dow portfolio. Since 1989, Dow has moved from compliance and complaints about intrusive regulation to partnerships for win/ win propositions – with governments, with NGO’s, and with our local communities.

We have developed a 12 point Sustainable Development Operating Plan that guides our businesses, functions, and sites towards integration of Sustainable Development Principles into their strategies.

The Sustainable Development Operating Plan provides a unified, strategic context for all of our activities related to Sustainable Development. The plan is by no means limiting; it is quite the opposite. To gain the freedom to grow our businesses, we need a compass, an operating system, and a common language to guide us. Enlightened leadership provides the structure (i.e., the palette and the colors), allowing for interpretation by the individual businesses and employees. The 12-point plan is also a statement of commitment by leadership – it’s not OK to just talk about Sustainable Development – it provides a framework for all employees to interpret their own activities relative to the plan.

Leadership also involves some risk. In 1995, we introduced what was then considered a progressive and ambitious set of EH&S 2005 Goals. We really didn’t know how we were going to achieve these goals, but we knew that our current performance was unacceptable in a progressive environment. And though there is still a lot of work to do, Dow has made significant progress on these goals. For example:

• Dow reduced the injury and illness rate by 80% and leaks, breaks, and spills by over 40% since 1994. Putting this closer to home, since 1994, more than 8000 employees that could have been injured went home safely to their families as a result of our progress.
• Dow has reduced process safety incidents by 61% since 1994.
• Since 1994, Dow has reduced emissions of priority compounds by 79%.
• Our WRAP program, as described earlier, has accounted for the reduction of 177 million pounds of waste. According to the Race To Save The Planet web site, the average American generates 4 pounds of garbage per day.  This savings equals all the garbage that 442,500 people generate in a single day. Or a city the size of Tucson, Arizona generates in a day.

And by the way, we have been able to quantify real tangible business benefits as well. A rigorous cost / benefit analysis of the EH&S 2005 goals indicated a net value to the company of over $1.8 billion upon full realization of the goals.

Since 1989, Dow has received five green chemistry awards from the EPA, more green chemistry awards than any other company. What is important here is the power of motivated people. Dow did not set out to "win" five awards. Each of these was the result of individual efforts, motivated by enlightened leadership, to find a "better way" to explore and to innovate.

Let me talk about two of these awards as they truly represent the power of enlightened leadership, personal commitment, and innovation on the road to a sustainable future.

What is more essential to human progress than a plentiful food supply? And to deliver food, crops must be protected against insects. Dow AgroSciences, a wholly owned subsidiary of The Dow Chemical Company, developed a new crop protection technology derived through the fermentation of a naturally occurring organism. Spinosad is highly effective against targeted pests, and has little affect on most beneficial insects. So while Spinosad controls caterpillars and drywood termites, it will not harm friendly insects like lady beetles and lacewings. The fact that Spinosad does not harm the natural enemies of harmful insects only further enhances its role as a crop protector, because those good insects will go on eating the undesirable bugs.

Because Spinosad only affects pests, we don’t have to apply as much of it to be effective. Typically only 1.5 to 3 ounces of Spinosad is required per acre, compared to 1.5 to 5 pounds per acre of traditionally used products. That’s a 96% reduction in application rates, meaning that far less pest control agent is used and enters the environment.

Spinosad meets Dow’s Sustainable Development principles of product stewardship, eco-efficiency and eco-system integrity. Spinosad is low in toxicity to people and other mammals and birds. Plus it breaks down into simple, organic compounds. Spinosad is safe for people, animals and the environment.

Legend has it that a Dow chemist discovered Spinosad on vacation while scraping a drum that had been used to ferment rum. Once again, the power of the individual and how change comes about one person at a time.

The second example comes from the Cargill Dow joint venture and their ability to make plastic from corn.

NatureWorks PLA is a technology that harnesses the carbon naturally stored in plants through the process of photosynthesis to create a polymer that can be used for things like clothing, cups, food containers, candy wrappers and even furnishings. The person who invented this material, Dr. Pat Gruber, was looking for a renewable resource based product that offered competitive value and substantial market size. Ironically, Dr. Gruber told one of his elementary school teachers when asked the age-old question, "what do you want to be when you grow up", Gruber answered that he would invent something useful and succeed in business. He did both. NatureWorks PLA creates numerous advantages for the environment including the reduction of dependence on oil to create polymers by using 20% to 50% less fossil resources. It took Dr. Gruber twelve years to bring this research to the point where it was commercially viable, and he did. NatureWorks PLA was the basis for the creation of the Cargill Dow joint venture that is quickly becoming a premier player in the polymer market.

In 2002, President Bush awarded Dow the National Medal of Technology. This is the highest honor an U.S. company can receive from the U.S. Department of Commerce. According to the citation, Dow was awarded the National Medal of Technology "for the vision to create great science and innovative technology in the chemical industry and the positive impact that commercialization of this technology has had on society".

What is critical about each of these stories is that companies do not make them happen. Enlightened leadership creates the environment, but motivated and innovative employees deliver the results. It is not enough to set goals or edict success. The progress along the Sustainable Development journey is far more complicated than this.

Some additional examples of our employees delivering sustainable success through innovation in science and technology include:

• BioBalance carpet backing, a product made from renewable soy, not petroleum derivatives.
• FilmTec reverse osmosis membranes, which convert seawater into drinking water.
• WOODSTALK^TM building and construction materials, products that are made from waste wheatstraw, which was previously burned, and a small amount of engineered polyurethane.
• Sentricon Termite Colony Elimination System, a systems-based approach for controlling termites that results in one ten thousandth the amount of chemicals versus more traditional applications methods.

These are a few examples of the first, though significant steps on our sustainable journey. Sustainable Development is meant to drive innovation and value growth. And it does. It has the additional positive benefits of increasing employee satisfaction, which leads to customer satisfaction and community acceptance, and ultimately leads to business success.

Dow recognized the need for more sustainable products a long time ago. We believe the WEC Gold Medal in 1989 was an early indicator of this awareness. Subsequent green chemistry awards and the National Medal of Technology in 2002 are evidence that we continue to make progress but the needs of our stakeholders are changing as well. This is, and will continue to be, a challenging environment for Dow and other companies.

Sustainable Development is fundamental to our strategy for the future. Sustainable practices fuel innovation and growth. We simply do not accept the fact that compromise is a necessary condition of Sustainable Development. Some talk of balance to the Triple Bottom Line, suggesting tradeoffs, will be necessary. Perhaps, but overall, we are guided by what Jim Collins and Jerry Porras call the "genius of the word ‘and’", as opposed to the "tyranny of the word ‘or’". In other words, the simultaneous pursuit of economic prosperity - for Dow, its employees, and its communities - environmental stewardship and corporate social responsibility are not contradictory or mutually exclusive at Dow.

What will future award recipients be discussing when they are invited to speak here in another ten years? I hope they present lofty goals and incredibly demanding targets. I hope they will stir our imagination and open our minds to new thoughts and new directions. But more importantly, I hope they will show how it’s all possible, because of successful projects that people in their firms have delivered to the world. I hope they can show how their vision instilled motivation and created a commitment by individuals to deliver innovative successes.

I believe the key aspects of any successful business proposition focuses around Enlightened Leadership, Personal Commitment, and Innovation. Sustainable Development requires an even higher level of such focus due to the constantly changing landscape of the discussions in this area. And my fondest hope is that many of you will leave today with a renewed sense of engagement and a desire to motivate and drive your company in such a way that you can bring about new realities in the future that we can only imagine.