Name: Insights: Dow Chemical CEO - Profitability & Sustainability Must Co-Exist
Uploaded: 2020-01-13
Duration: 6 min 30 s
Description: Jim Fitterling believes petrochemicals are part of the global climate solution. (September 2019)

[MUSIC PLAYING] You run a petrochemical company. And I'm sure there's some people out in the audience who are saying, what the heck is he doing here? I thought petrochemicals were the problem, not part of the solution. How do you respond to that? Well, petrochemicals enable a lot of things that we do every day to be more energy efficient. So if you can imagine, the products that we make typically have two to three times the impact on greenhouse gas reduction then the materials we use to make them-- insulation materials, for example, light-weighting automobiles, making packaging lighter-weight and stronger-- eco-friendly products that you use every day. So there's a lot of what we do that really goes into a more sustainable economy. But you're seeing a reaction out there. We had an interesting story in the magazine about Ball Corporation, how well they've done in the last year. Because people are moving from plastic bottles to aluminum bottles. You're seeing a kind of anti-petrochemical mood in the public. Right. We see moves like this from time to time. The move that's been made over the last decades to plastics has been because it's the most sustainable and environmentally-friendly package that's out there. It's easy to say "shift back to aluminum" because you don't like the plastic waste issue. But aluminum requires 60% more energy and gives off 60% more greenhouse gas emissions to produce aluminum or recycle aluminum than plastics. If you go to steel or glass, it's even more. And so I think what you're dealing with is the emotional response to the plastic waste issue-- which we all agree is an issue that needs to be tackled-- versus the real response, which is if you want to get to circularity, let's get to circularity with these materials. And we can do it in a more efficient way. I want to get back to the plastic issue in a minute. But can you talk about some of the other things you're doing? You've taken this sustainability commitment very seriously. I read through your sustainability report. You have a lot of different projects going on that you think contribute. We have a tremendous number. If you look from a sustainability standpoint, the things that are very important to us-- obviously, climate change. We are a big user of energy. And so we do emit greenhouse gas. And so getting those emissions down and using new technology to do that is a big change for us. Putting circularity into the economy-- so, making sure that all the products that we do make have the potential to be recycled. And then working on the projects in the communities to help actually recycle them. Looking at eco-friendly products-- so, I'm not talking about everything being bio-based. But I'm talking about using chemistry that's cleaner to make some of the materials that you use everyday-- chemistry that's effective but maybe not as toxic as some of the historical chemistries that have been used. And then, obviously, dealing with the plastic waste issue and dealing with the infrastructure that's needed, really, to keep up with the consumption of this world plus the consumption that's going to come when we have another billion and a half people coming onto the planet. Do you ever get questions from your board of directors saying, hey, why are you spending 25% of your time on this recycling stuff? We don't make our money off of recycling. Actually, our board has spent more time this year on climate change and plastics recycling than just about anything else we've done. They believe that it's a purpose that we have to tackle. They have believed it for a long time. And so that sustainability report that you've got is not just the culmination of last year's work. This is our third decade of putting out these long-range sustainability goals. The first decade was really dealing with our operations footprint just inside the fenceline. The second decade started to deal with how our products perform. And the third decade is, how do we design a blueprint for a society that can be more sustainable and more circular? They're completely supportive of it. I would also say the financial market is changing as well. You start to see the importance of ESG financing, ESG reporting coming into play now. And that sustainability report you've got is not only aligned to the UN's sustainable development goals, it's GRI reporting methodology and it's third-party audited. So I think it's a best-in-class example of what ESG reporting can be. Do you ever see-- or does your board ever see-- any tension between pursuing that social purpose and pursuing profit? I don't think tension-- I think our view is you have to do both, right? You can't be a stock on the New York Stock Exchange and not pursue profit. But you have to challenge yourself to say, I have to do both. I have to pursue profit but I have to run a business that's long-term sustainable. And if that plastic waste issue is an existential threat, how do I tackle that and still maintain my business. Because that will get you in the long-run. And you have to change the business model. You have to change the types of materials. So for example, one of the first challenges I would give to my plastics business people is 100% of everything you make needs to be recyclable. That's a big goal. That doesn't necessarily mean it's going to get recycled. Now we've got to go work on what happens at the local level to make sure that it actually gets collected and gets recycled. And when you get into that mode, you're dealing with existing systems that are out there today-- sometimes that work against you. So sometimes when you're recycling gets collected curbside in the states or maybe in Europe, you think it's going to be recycled. But what you find out is the most expedient thing to do is to landfill it or to put it on a ship and ship it somewhere else. That isn't addressing the issue. So we have to step up and address the issue. And if we don't, who's going to help drive that? [THEME MUSIC] 

Insights: Dow Chemical CEO - Profitability & Sustainability Must Co-Exist

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Jim Fitterling believes petrochemicals are the solution.

Dow Chemical - Profitability & Sustainability Must Co-Exist

Jim Fitterling believes petrochemicals are part of the global climate solution. (September 2019)

you run a petrochemical company, and I'm sure there's some people out in the audience who are saying, What the heck is he doing here? I thought petro chemicals were the problem, not part of the solution. How do you respond to that? Well, petrochemicals enable a lot of things that we do every day to be more energy efficient. So if you can imagine the product that we make typically have 2 to 3 times the impact on greenhouse gas reduction, then the materials we used to make them insulation materials, for example, light waiting automobiles, making packaging, lighter weight and stronger eco friendly products that you use every day. So there's a lot of what we do that really goes into more sustainable economy. But you're seeing a reaction out there. We had a kn interesting story in the magazine about Ball corporation how well they've done in the last year, because people are moving from plastic bottles to aluminum bottles. You're seeing a kind of an anti petrochemical mood in the public, right? We've seen we see moves like this from time to time, so you know the move that's been made over the last decades to plastics has been because it's the most sustainable and environmentally friendly package that's out there. It's easy to say Shift back to aluminum because you don't like the plastic waste issue. But aluminum requires 60% more energy and six and gives off 60% more greenhouse gas emissions to produce aluminum or recycle aluminum, them plastics if you go to steal or glasses, even Maur. And so I think what you're dealing with is the emotional response to the plastic wishes to which we all agree is an issue that needs to be tackled versus the rial response, which is, if you want to get to circularity. Let's get the circularity with these materials and we can do it in a more efficient way. I want to get back to the plastic issue in a minute, But can you talk about some of the other things you're doing? You've taken this sustainability commitment very seriously. I read through your sustainability report. You have a lot of different projects going on that you think contribute. We have a tremendous number. Look, if you look from a sustainability standpoint, the things that were very important to us obviously climate change, we are a big user of energy, and so we do emit greenhouse gas. And so getting those emissions down and using new technology to do that is a big a big change for us, um, putting circularity into the economy. So making sure that all the products that we do make have the potential to be recycled in them, working on the projects in the community to help actually recycle them. Um, looking at eco friendly products. So I'm not talking about everything being bio based, but I'm talking about using chemistry That's cleaner, to make some of the materials that you use every day. Chemistry that's effective, but maybe not as toxic as some of the historical chemistries that have been used and then obviously dealing with the plastic waste issue and dealing with the infrastructure that needed really to keep up with the consumption of this world, plus the consumption that's going to come when we have another 1,000,000,000 1/2 people coming on the planet. You ever get questions from your board of directors saying, Hey, why are you spending 25% of your time on this recycling stuff? We don't make our money off of recycling. Actually, our board has spent more time this year on climate change and plastics recycling than just about anything else we've done. They believe that it's a purpose that we have to tackle. They have believed it for a long time. So that sustainability report that you've got is not just the culmination of last year's work. This is our third decade of putting out these long range sustainability goals. The first decade was really dealing with our operations footprint just inside the fence line. The second decade started to deal with how our products perform and the third decade is how do we design a blueprint for a society that could be more sustainable, more circular? They're completely supportive of it. I would also say the financial market is changing as well. You start to see the importance of E S G financing E SG reporting coming into play now, and that sustainability report you've got is not only a line to the U. N sustainable development goals, it's g r. I reporting methodology at third party audited. So I think it's the best in class example of what E. S d reporting can be. Do you ever see or does your board ever see any tension between pursuing social purpose and pursuing Prophet? I don't think tension. I think our view is they have to call. You have to do both, right? You can't be in. You can't be a stock on the New York Stock Exchange and not pursue profit. But you have to challenge yourself to say I have to do both. I have to pursue profit, but I have to run a business. It's long term, sustainable. And if that plastic waste issue is an existential threat, how doe I tackle that and still maintain my business because that will get you in the long run and you have to change the business model. You have to change the types of materials. So, for example, one of the first challenge is I would give to my plastics business. People is 100% of everything you make needs to be recyclable. That's that's a big goal. That doesn't necessarily mean it's going to get recycled. Now we've got to go work on what happens at the local level to make sure that it actually gets collected and gets recycled, and when you get into that mode. You're dealing with existing systems that are out there today. Sometimes that work against you. So sometimes when you're recycling gets collected curbside in states. Or maybe in Europe. Um, you think it's going to be recycled, But when you find out is the most expedient thing to do is the land, fill it or put it on a ship and ship it somewhere else. That isn't addressing the issue. So we have to step up and address the issue, and if we don't, who's gonna help drive that?