A Message from Dow's Chair and CEO
Originally published in Dow's 2022 Progress Report
At Dow, our ambition is clear – to be the most innovative, customer-centric, inclusive and sustainable materials science company in the world. Guided by that ambition, we are using our expertise, products, technologies and partnerships to meet the evolving demands of our customers while also leading the transition to a more sustainable and inclusive future.
ADVANCING OUR DECARBONIZE AND GROW STRATEGY
To help us achieve our target to be carbon neutral1 by 2050, we are making clear progress on our Decarbonize and Grow strategy.
- We achieved additional milestones in our plan to build the world’s first net-zero2 carbon emissions integrated ethylene cracker and derivatives site at our Fort Saskatchewan site in Alberta, Canada. We contracted Fluor to provide front-end engineering and design, procurement and construction management services and selected Linde as the industrial gas partner to supply clean hydrogen and nitrogen. When complete, the project will decarbonize 20% of our global ethylene capacity and grow our global polyethylene capacity by 15%.
- In Louisiana, we commissioned our UNIFINITYTM fluidized catalytic dehydrogenation (FCDh) pilot plant, which will produce propylene for our coatings, electronics and durables end markets while also lowering greenhouse gas emissions up to 20% compared to conventional propane dehydrogenation units.
- We announced a joint development agreement with X-energy to install the first grid-scale advanced nuclear reactor for an industrial site on the U.S. Gulf Coast. The project, to be located at our Seadrift, Texas, site, is expected to provide the site with safe, reliable low-carbon power and steam.
INVESTING IN CIRCULAR ECOSYSTEMS
This past year we made significant progress – and investments – to help develop a more circular economy.
- We expanded our “Stop the Waste” sustainability target to “Transform the Waste,” with a new commitment to commercialize 3 million metric tons of circular and renewable solutions annually by 2030. Through this target, we are collaborating to build materials ecosystems that increase recycling rates and enable us to scale our production of high-quality recycled and renewable materials to meet growing demand.
- We partnered with Mura Technology to construct multiple world-scale advanced recycling facilities in the United States and Europe – with the goal of collectively adding as much as 600 kilotons of annual recycling capacity by 2030. We also signed an agreement with Valoregen to build the largest combined advanced and mechanical recycling site in France.
- We announced a new collaboration with WM to address hard-to-recycle plastic films by enabling them to be placed directly into residential curbside recycling.
ELEVATING OUR FOCUS ON INCLUSION, DIVERSITY & EQUITY
Our commitment to inclusion, diversity and equity continues to play a critical role in enhancing our competitiveness and innovation.
- In 2022, 57.3% of employees participated in at least one of our 10 employee resource groups (ERGs). Our annual employee survey data showed that ERG participants have 13 percentage points higher overall satisfaction than non- ERG participants.
- Through Dow ACTs, our strategic framework designed to address systemic racism and inequality, we provided scholarships to 20 students at historically Black colleges and universities through the Future of STEM Scholars Initiative and hired 250 people and promoted 60 individuals into family-sustaining jobs through our partnership with OneTen.
- Dow ranked 15th on the 2022 DiversityInc Top 50 Companies for Diversity list.
CONTRIBUTING TO RESILIENT COMMUNITIES AND WORKPLACES
In 2022, we continued to leverage our talent, business models and resources to create positive impact for our communities and Team Dow.
- We contributed a total of $37.3 million in Corporate, Dow Foundation and in-kind investments aligned to our global citizenship strategic priorities.
- We introduced a Well-Being Portal to our employees in 2022. More than 25,000 employees used the portal in 2022, with more than two-thirds of users reporting exercising more and one-third reporting improved productivity.
CEO Statement on U.N. Global Compact
Our company reaffirms our commitment to the Ten Principles of the U.N. Global Compact on human rights, labor standards, protection of the environment and anti-corruption. The U.N. Global Compact and its principles are reflected in our strategy, culture and day-to-day operations, and we welcome opportunities to participate in collaborative projects that advance these broader development goals.
We also believe strong corporate governance creates long- term value by strengthening oversight and accountability. In 2022, we continued our focus on Board succession planning and refreshment – electing one new Director and continuing to outpace the S&P 500 for board diversity. We also added oversight of our environmental, social and governance goals within our Board Committee charters.
While investing in low-carbon and circular solutions, we continue to outpace our peers3 in key indicators of financial performance, due to our differentiated portfolio, leading feedstock and derivative flexibility, and low-cost positions. As of year-end 2022, Dow’s three-year average operating EBITDA4 margins and return on invested capital were above the peer median. In addition, our free cash flow yield4,5 averaged approximately 15% over the past three years, and was best- in-class at nearly two times our peer average and three times our sector and market average. We also continued to deliver attractive shareholder remuneration with a three-year average dividend yield of 5.2% that was well-covered by free cash flow.
I am proud of the progress Team Dow made in 2022 and the value we are creating for our stakeholders. We are advancing our ambition and becoming a stronger, more competitive and future-ready company.
Sincerely,
Jim Fitterling
Chair and Chief Executive Officer, Dow
