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Dow Chemical Moving on Green Projects

By    |   Thursday, 23 Jun 2011 12:08 PM

Say what you must about “greenwashing” — the idea that by implementing a project here and there will give a company an “environmentally friendly” look — it’s something that consumers want and an area where Dow Chemical Co. (DOW) is expecting to outpace its competitors.

Dow is the largest chemical producer in North America, with more than $55 billion in revenues in the year ending in March and one of the global chemical giants. It’s hard to avoid bad press, by the nature of its industry.

Dow also is a major energy consumer and user of petroleum as a feedstock for many of its chemicals. And that is something that is starting to worry U.S. consumers again after environmental issues took a back seat to the economy during the recession.

According to the annual ImagePower Global Green Brands Study, which surveyed 9,000 adults in eight countries, 73 percent of U.S. consumers say they believe it is important to buy from “green” companies.

In an attempt to reduce its negative impact both on the environment and on its books, Dow is undertaking a series of measures to green up the place, starting at home.

It signed a power purchase agreement in late May with power provider Consumers Energy to buy electricity produced from a landfill gas-to-energy project. What that means is a quarter of Dow’s corporate center energy needs will be supplied by local clean energy, reducing the company’s carbon footprint by the equivalent of removing 20,000 cars off the road.

That figure is set to double later in the year when a second landfill gas-to-energy project comes online.

But the greening doesn’t stop there. The company also recently bought more than 100 hybrid electric (PHEV) Ford F-150 pickup trucks. The move isn’t entirely altruistic; the engines are operated by lithium ion battery technology developed by Dow via a joint venture known as Dow Kokum. The purchase is a reinvestment that greens 5 percent of its U.S. truck fleet at the same time.

Saving the world

This greening exercise isn’t an accident but part of Dow’s 2015 Sustainability Goals. It is trying to reduce greenhouse gas emissions by 2.5 percent by 2015 compared to 2005 levels, as well as reduce its overall energy intensity by 25 percent, among a host of other goals.

What does that mean for the bottom line? According to Fitch Ratings, as long as these green investments — and others — don’t end in negative free cash flow after capex and dividend payouts, and assuming the chemical industry as a whole doesn’t nosedive, then its rating should remain in place.

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Say what you must about greenwashing the idea that by implementing a project here and there will give a company an environmentally friendly look it s something that consumers want and an area where Dow Chemical Co. (DOW) is expecting to outpace its competitors. Dow...
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2011-08-23
Thursday, 23 Jun 2011 12:08 PM
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