May 20, 2008 12:51 PM PDT

Dow Chemical's green-meets-green vision

Posted by Stefanie Olsen

SAN MATEO, Calif.--How does Dow Chemical, the world's second-largest chemical producer, turn itself into a sustainable business?

"It's where green meets green," Neil Hawkins, vice president of sustainability at the company, said here Tuesday at the opening of the two-day Dow Jones Environmental Ventures conference.

Hawkins, who was interviewed in a morning keynote address, was referring to the 110-year-old company's efforts to make money by being more energy-efficient, investing in new clean-tech technologies, and working with manufacturers on new green chemistry.

For example, from 1994 to 2005, Dow spent roughly $1 billion on refining its energy efficiency practices. That investment has paid off fivefold for Dow, Hawkins said. Since 1990, Dow has reduced its carbon dioxide emissions by 20 percent, surpassing guidelines set by the Kyoto Protocol. And going forward, Dow has set sustainability goals by 2015 for chemistry, climate change, and product safety.

The idea can seem discombobulating, considering that Dow is known for producing the chemical weapon napalm during the Vietnam War, as well as toxic pesticides that have caused sterility in men. Hawkins acknowledged that the company isn't green yet, but he said there are pockets of green throughout the 47,000-employee conglomerate.

"The Dow of today is focused on delivering solutions to the world's problems...in clean drinking (water), alternative energy, alternative feedstock, and public health," said Hawkins, who has been with Dow for 20 years.

The company, for example, has a unit called Dow Building Solutions, in which it is examining new technologies that can help business owners reduce their carbon dioxide emissions. The company produces a Styrofoam insulation that has received an Energy Star recommendation from the U.S. Environmental Protection Agency, for example.

He said the most exciting area Dow is looking at in building tech is photovoltaic technology for roofing and siding. The company is working on bringing costs down for the technology to those of comparable levels of the grid. "In the short term, the single most important thing we can do is improve CO2 (emissions) in buildings...where people are doing a lot more insulating."

Dow also has its own venture fund, with $500 million invested in public health, clean technology, and water products, according to Hawkins. He said the company is looking for the right partnerships.

For example, the company has invested in WaterHealth International, a San Francisco Bay Area for-profit that has developed a water system that has provided drinking water to 10 million people in India, according to Hawkins. He said that in addition to an investment, Dow has provided loan guarantees of $30 million to help the company's growth.

It has also teamed with the nongovernmental organization International Aid, which has developed a plastic filter for drinking water. With that technology, nearly 2 million people in the Sudan and Cambodia will get access to potable water, he said.

Dow is also involved in U.S. Climate Action Partnerships (USCAP), a collaboration of environmental groups and companies aimed at shifting U.S. policy on climate change.

"The existence of USCAP has really moved this administration and Congress to have us participate in a more friendly policy," he said.

The company is also trying to help customers with sustainability efforts. For example, he said, Dow is thinking of new battery technology for Toyota's future initiatives.

"This trend of sustainability is very real. It will impact our profit for the next 20 years," he said. "I'm hoping to lead a culture change."