Leveraging Sustainability for Competitive Advantage
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1 A three-page excerpt from our 15-page Best Practice Guidebook: Leveraging Sustainability for Competitive Advantage Trademark of The Dow Chemical Company
2 1 Best Practice Guidebook Leveraging Sustainability for Competitive Advantage guidebook summary Firm: The Dow Chemical Company Industry: Chemicals and Manufacturing Headquarters: Midland, Michigan, United States Geographic Footprint: Global Ownership: Public Revenue (2012): $56.79 billion USD Problem: Facing increasing environmental regulation, growing customer demand for green products, and fluctuating manufacturing input costs, Dow sees an opportunity to develop a competitive advantage through a comprehensive sustainability program. Solution: Dow develops a companywide initiative to address the triple bottom line (i.e., the economic, environmental, and social components of sustainability). The initiative: Increases internal savings through policies and production models that go beyond regulatory requirements Integrates external stakeholder perspectives into the strategic planning process Leverages core competencies through innovation to create sustainable products* Monitors, benchmarks, and publicizes sustainability progress quarterly and annually Business Results: More than $8.6 billion in savings and a growing portfolio of sustainable chemistry products Resources Required: Advisory Council of external experts A full-time sustainability staff of people Primary and secondary research to refine the sustainability initiative Capability to benchmark business units on their sustainability impact and progress Applicability of Best Practice to Executive Functions: Function Applicability CEO/Leadership Corporate Strategy R&D/Innovation Trademark of The Dow Chemical Company * In this guidebook, product is synonymous with the following terms: capability, process, technology, service, and manufactured products.
3 best practice guidebook 2 Dow establishes a companywide sustainability initiative to gain a strategic competitive advantage Components of Sustainability Initiative Initiative Development Purpose: Identify social and environmental trends and business opportunities that serve as the lynchpins for a sustainability initiative Management Structure Purpose: Develop the tools and infrastructure necessary to manage a companywide sustainability program Competitive Advantage Identification and Development Purpose: Assess and benchmark each business unit annually on its sustainability progress, and identify product opportunities and capabilities that can be translated into the sustainability value proposition Value Proposition Purpose: Develop a meaningful sustainability value proposition for customers, using quantitative validation of products sustainability Stakeholder Engagement Purpose: Communicate and embed a sustainability perspective with internal and external stakeholders Voluntary Reporting Purpose: Report sustainability initiative s performance to the public defining sustainability Sustainability: Using resources efficiently; providing value to customers and stakeholders; delivering solutions for customer needs; enhancing the quality of life of current and future generations. In the words of Dow s CEO Andrew Liveris: Sustainability requires making every decision with the future in mind. The contents of these pages are copyright Frost & Sullivan and The Dow Chemical Company. All rights reserved. Source: The Dow Chemical Company; Growth Team Membership research.
4 best practice guidebook 3 Initiative Development Internal and external experts assess Dow s impact and opportunities key takeaway: Develop meaningful sustainability goals via internal and external experts examination of the triple bottom line to identify sustainability goals, which are then filtered for strategic relevance Expert Engagement internal experts Goal Identification and Development Who: 300 experts within Dow Internal experts include individuals from an array of regions, seniority levels, and functions. This diversity ensures that goals reflect all pertinent perspectives and create buy-in companywide. Individuals with responsibility for developing or implementing sustainability projects are prioritized for inclusion. For example given the large amount of resources used in production, Plant Managers were included. Purpose: Identify Dow s impact on economic, environmental, and social arenas regionally and globally Start consulting with employees on their roles in implementing sustainability goals $ Step 1. Goal Identification Primary and secondary research inform Dow s development of goals for the three components of the triple bottom line: 1. Environment: assessing the company s footprint carbon, water, and community 2. Economic: creating an economic opportunity by developing sustainability solutions managing changes, services, or products that aid others sustainability efforts 3. Social: focusing on citizenship philanthropy, partnerships, and community engagement Environmental goals are prioritized, because Dow s credibility depends upon publicly addressing its own impact on the environment. external experts Sustainability External Advisory Council (SEAC) This group is responsible for identifying Dow s impact on economic, environment, and social arenas and pinpointing global and regional trends within these arenas for potential business opportunities. Customers The executive Sustainability Team selects business units based on their environmental and social impact, market size, and customer base, to gather feedback from their customers for sustainability goal creation. The feedback is collected by the BUs via surveys and interviews on a cross-section of customers. The feedback includes customer perceptions of Dow s environmental and social responsibilities, their sustainability or environmental concerns, and potential products and services they would find valuable Sustainability Goals Step 2. Goal Filtering Dow filters potential goals based on their: 1. Alignment to corporate strategy 2. Potential risk associated with not being addressed 3. Probability of achieving the goal by Relevance to Dow s capabilities and environmental and social impact Step Sustainability Goals Dow creates seven sustainability goals that: 1. Address the environmental impact of Dow and its clients 2. Increase community engagement 3. Leverage a sustainability value proposition Sustainability Goals Checklist Goals must: Be distinct from current programs or initiatives Have companywide support Be trackable and measurable Be aligned to the company s interests and core competencies The contents of these pages are copyright Frost & Sullivan and The Dow Chemical Company. All rights reserved. Source: The Dow Chemical Company; Growth Team Membership research.
5 Please contact us to learn how to access the full Best Practice Guidebook or for information on Growth Team Membership. us Visit us online
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