Dow puts innovation to work for society

Ret Boney

When a social entrepreneur in India needed capital to expand his efforts to bring clean water to poor, rural villages in his home country of India and beyond, Dow Chemical Company agreed to invest $1 million.

Based on its experience producing membranes for large-scale desalinization operations, Dow also provided technical advice for Waterhealth International’s product, a small kiosk that uses ultraviolet technology to purify water.

And it provided business-strategy consulting, as well as help in finding financing for the venture from other sources.

Already, Waterhealth is bringing safe, affordable drinking water to more than 500,000 people in India, Ghana, Sri Lanka and the Philippines.

If its growth plans succeed, the effort could provide clean water to millions of people across the globe — and it could serve as an entry point for Dow into a completely new market.

“It got Dow employees a closer seat at the table, closer to that market space so they can understand if there’s a market opportunity for us,” says Bo Miller, global director of corporate citizenship for Dow and president and executive director of the company’s foundation. “Normally we wouldn’t have a chance to see that.”

That nexus between moving the needle on major social issues and bolstering the company’s bottom line is just where Dow wants to be.

“That’s how we’ve tried to evolve our philanthropy,” says Miller.

In fact, the company, which posted $45 billion in revenues last year, has tasked itself with developing at least three “breakthroughs” that will dramatically improve the world’s ability to solve problems in the areas of affordable and adequate food supply, decent housing, energy and climate change, sustainable water supplies or improved personal health and safety.

By pointing its research and development arsenal at major problems plaguing the globe, Dow has the opportunity to benefit society as it boosts it corporate coffers.

The Breakthroughs to World Challenges initiative was launched in 2005 as part of Dow’s 10-year sustainability goals, its second round of such goals since 1996.

The first set, centered primarily on internal operations, yielded what Miller considers to be “real breakthroughs” in energy efficiency and emissions reductions for Dow.

And over that 10-year period, the company’s conversation around sustainability evolved.

“We now use the term sustainability in its broadest sense,” says Miller. “The sustainability of our enterprise, our customers, our communities and all that we interact with – in an economic, social and environmental sense.”

The current set of sustainability goals contains seven items, including Breakthroughs to World Challenges which, if successful, will address critical social needs while providing new market opportunities and new revenue streams for Dow.

Currently, Dow says, 30 projects throughout the company could someday qualify as breakthroughs, including the Waterhealth investment.

The company also points to roof shingles it’s developing that contain internal solar panels, and plant-breeding techniques that yield oils free of trans fat, with lower levels of saturated fat and higher quantities of beneficial monounsaturated fats.

And its new diesel particulate filter removes higher levels of pollutants from diesel exhaust while maintaining high fuel efficiency, a benefit for places like Africa and India, where diesel is the primary fuel.

“We spent a lot of time on it,” Miller says of developing the latest sustainability goals. “It wasn’t a check-the-box exercise. It naturally evolved to where we realized we needed to have an external, forward-looking component to the goals.”

The total investment in the Breakthroughs effort is hard to calculate, says Miller, given that the effort is intentionally imbedded in the company’s operational groups.

But he estimates the company has put at least $100 million in research-and-development into the effort since 2005, and as much as $10 million in charitable contributions to support the organizations working on world challenges.

“Part of our thinking is that in order for it not to be ‘program of the month,’ it’s got to be integral to the business, our operational strategies and the way we run the company,” he says. “We want the organization to see these opportunities and think about how they can build it into their work.”

In an attempt to come at global challenges from another angle, Dow in 2007 pledged $5 million over five years to create the Sustainable Products and Solutions program within the Center for Responsible Business at Berkeley’s Haas Business School.

The goal of the effort is to facilitate multi-disciplinary approaches to increasing sustainability by bringing together scholars, researchers, students and business people, and the company has earmarked up to $5 million more for other possible investments through the center, says Miller.

“The whole premise is that to solve these problems, you have to look at them from all angles, including technology, public policy, health and business models,” he says. “The program funds projects that address world problems, but only if there are multiple disciplines involved.”

In addition to the financial investment, the company has loaned the program one of its executives who works with the center and teaches classes.

Dow retains no ownership rights to innovations that come out of the program, but Miller believes the company’s catalytic role has value both to society and to the company.

“The program gives us a pulse on these big problems and how they’re being solved,” he says. “That’s business insight we couldn’t get if we were just doing checkbook philanthropy.”

Support for Dow’s current approach to philanthropy is built into the highest levels of the corporate structure.

The company has a chief sustainability officer, who heads an internal sustainability council populated by representatives from multiple business units.

And its external advisory council on sustainability includes individuals from around the world who are thought leaders in areas like the environment, economics and social issues.

The form of strategic or imbedded philanthropy Dow is practicing makes business sense to the company’s stakeholders, including its board and shareholders, says Miller.

“It demonstrates value not only to society but to the company,” he says. “There’s a clearer line of sight to the value that’s derived from those investments,” he says. “Business-aligned philanthropy becomes viewed as another of Dow’s resources to be deployed in pursuit of the company’s business strategy.”

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