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2010

SUSTAINABILITY SUMMARY


Table of Contents 04

MANAGEMENT AND STRATEGY

12

SUSTAINABLE CHEMISTRY

18

ECOEFFICIENCY

24

COMMITMENT TO STAKEHOLDERS

32

SAFETY

36

SOCIAL AND ENVIRONMENTAL MANAGEMENT, ENVIRONMENT AND COMMUNITY

42

GRI INDICATORS

EDITORIAL STAFF Editorial Committee Pedro E. Suarez (President of Dow for Latin America), Paul Oakley (Director of Institutional Relationships of Dow for Latin America), Lia Azevedo (Director of Human Resources of Dow for Latin America), Daniela Marques Grelin (Communication Manager of Dow for Brazil), Christiane Canavero (Sustainability Manager of Dow for Latin America), Rita Carvalho (Director of Safety, Health and Environment of Dow for Latin America). Collaborators Sumaia Miguel, Daniel Arruda, Yuri Alencar, Mauricio Castro, Douglas Araújo, Deborah Lacerda, Milena Matushita, Wilson Veloso, Marconi Oliveira, Marcela Schnug, Graziela Batista, Alex Ferreira, and Juliana Zellauy. Editorial Production - In Press Porter Novelli Amanda Rabelo (Proofreading), Daniela Barroso F. Dias (Editorial Coordination and Editing), Gustavo Gomes (Reporting and Text), Lúcia Calasso (Manager of Content and Digital Media), Maria Clara Viana Stoqui (Graphical Project, Art Editing and Layout Design), Rodrigo Padron (Director of Content and Digital Media). Images Collection of Dow Chemical Company and Thinkstockphotos. Contact Us For comments or suggestions about this report, please call us at (11) 5188 9000.


Working with chemistry means being a part of life in all respects. This activity is as noble as it is delicate, because, as our operations expand, our power to impact the daily lives of individuals and the planet greatly increases. And so does our responsibility. This is why Dow does not merely manufacture products. It creates solutions that make up a good part of what we drink, eat, wear, use to go places and have fun. Present in more than 160 countries, the Company’s goal is to apply chemistry for solving the planet’s most challenging problems by investing heavily in Technology and People. The fuel that drives Dow is innovation. It is by means of innovation that we generate solutions, devise goals, promote talents and implement actions to assure the health of the Earth and its inhabitants. This is why for Dow sustainability does not constitute a project or a donations program or a set of social and environmental actions. It is a management model and business as well as corporate culture strategy. In this summary, we will present some examples of this type of management. These are longstanding programs, which have been previously described in other publications. We believe that sustainability presupposes continuous actions whose development requires time, maturation and raising awareness. We are proud of the nature of our business as well as of promoting sustainability in a permanent, discreet and assertive manner.

Pedro E. Suarez President for Dow Latin America


MANAGEMENT AND STRATEGY 4


Everything results from chemical combinations, without which life would be unimaginable. This is why the responsibility and challenges of a company in the chemical industry are great. Managing Dow is therefore a mission that requires aligned strategies and a lot of effort. Dow is one of the largest chemical companies in the world with 114 years of history and more than 50 years of presence in Brazil. It offers solutions to key sectors such as water, energy, infrastructure, health and consumer goods. Innovation is the fuel and a major company pillar. Dow is therefore continuously investing in research and development. These commitments have made the company implement a project to contribute to the health of the planet and its inhabitants seeking “Innovative solutions for human progress” without putting aside “ethics and integrity in its businesses”. Mindful of the needs and challenges of the new business landscape, Dow is considering all this on a management model aligned with global values but also respects the autonomy and characteristics of each local environment where it operates. The head office for the strategic region of Latin America is located in Brazil, where the Company has been operating since 1956. Vision: To be the most profitable and the most respected sciencedriven chemical company in the world. Mission: To passionately innovate what is essential to human progress by providing our customers with sustainable solutions. Values: Integrity • Respect for People • Protecting Our Planet

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SUSTAINABILITY MANAGEMENT Sustainability is a mandatory and decisive principle at Dow that guides projects, research activities, products, processes and businesses. This is why it pervades all the areas and involves all Company employees who work to achieve sustainable management, success, profitability and a longlasting future for the business. In addition, sustainability is linked to the culture of the Company and guides corporate strategy and procedures. Dow believes the future depends on human progress, healthier and simpler living conditions and the preservation of ecosystems. It has therefore engaged its more than 52,000 professionals in raising awareness that the commitment to sustainability goes beyond giving donations and taking part in social and environmental projects. Sustainability at Dow is discussed with various internal and external audiences, to help devise long-lasting projects and bold goals, such as programs to reduce energy consumption and improve water reuse. Between 1995 and 2005, Dow Chemical has invested US$1 billionin this area. Two years ago, the company implemented an Alternative Feedstock project using renewable resources and raw materials to replace oil (see chapter 3). In the meanwhile, practical measures are being discussed to reduce disposal of perishable goods and increase the use of non-perishable goods. In 2005, the company reasserted its commitments and disclosed a sustainability action plan – the 2015 Sustainability Goals. These are the topics that guide the goals:

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» Local protection of human health and the environment; » Contribution to community success; » Sustainable chemistry; » Product safety leadership; » Breakthroughs to world challenges; » Energy efficiency and conservation; » Addressing climate change. Result in 2010*

Goal for 2015*

Sustainable Chemistry Sustentável Sales percentage of products with sustainable differentiator Indicator of Sustainable Chemistry

3.4% 21.2

10% 25

Breakthroughs to World Challenges At least 3 breakthroughs by 2015

0

3

Product Safety Leadership Goal Provide PSAs to all products

69%

100%

Energy Efficiency and Conservation Improve energy efficiency

2%

25%

Climate Change Reduce emissions of greenhouse gases

- 5%

25%

Community Success Goals Acceptance of 10 strategic regions

3 reassessed

10

Local Protection of Human Health and the Environment Rate of injuries and diseases Rate of severe injuries and diseases Rate of severe accidents with motor vehicles Loss of primary containment incidents Process safety incident

0,33 1,41 0,24 351 37

0,12 0,67 0,28 less than 130 less than 25

* Global Data

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The company is also renowned for its human resource management. For 15 years it has been among The Best 150 Companies to Work For (this ranking is published by two major Brazilian magazines, Exame and VocĂŞ S/A), for building good relationships with communities (organizing Community Consultation Panels with leaders and other local stakeholders) and developing social responsibility projects, based on three major pillars: education, environment and entrepreneurship. However, most company programs are multidisciplinary and pervade various fields of social and environmental development (see chapter 7).

HUMAN ELEMENT (HU) This is one of the largest and most strategic campaigns of the Company, aimed at investing in and recognizing the value of People – precisely one of the mainstays of the company. Although it is not present in the periodical table, Hu is the only agent that promotes innovation and sustainability. Therefore, Dow counts on their work, energy and behavior to ensure success and develop solutions in favor of a more sustainable future. This is why the Company invests in incentives and strategies that recognize the value of people and foster personal development collectively, inside the company and in society. Read on to discover how Dow manages people who work at the company: Leadership Dow leaders are a source of inspiration and are essential for committing employees to corporate strategies, culture and values. The Executive Leadership Committee and Corporate HR have identified those capabilities that are better aligned with the strategy, values, vision and mission of the company to leverage its success. Here are some examples:

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Human Resource Management is aligned with company management as a whole and rests on four pillars: 1. Organization aligned with businesses; 2. Organization aligned with functions; 3. Organization aligned with geographies; 4. Technology centers.


Collaborate to Achieve Superior Results, Lead Courageously, Offer Innovative Solutions, and Generate Value for Customers. This is why leaders are constantly assessed and given incentives and receive training to manage their teams. In 2010, the 173 leaders in Brazil attended 1,476 courses, totaling 9,785 hours. In addition, the company has the H.H. Dow Academy program to train managers at different leadership stages: 1. Discover Leadership – prepares collaborators for leadership positions and has courses on management, interpersonal relationships and communication, introduction to finance, customer satisfaction and ethics, 2. Leadership Foundation – for new leaders and optional for other leaders, it offers courses and training on introduction to people management, diversity and inclusion, performance management, challenges and changes, self-knowledge and personal motivation, inspiration, commitment to and alignment with the team, development plan, management of change, introduction to finance and coaching, 3. Lead Strategically – designed for executive leaders, it analyzes key challenges and focuses on strategic thinking, methodology for decision-making, team building, etc. The company also developed a Leadership Workshop in partnership with the Dom Cabral Foundation. In 2010, various subjects were addressed, such as motivation, self-knowledge and self-development, team building, assertiveness, talent management, preparing successors, connectivity in the organization and with customers as well as coaching. See indicators of Economic Performance on page 44 See indicators of Labor Practices and Decent Work on page 46 See indicators of Human Rights on page 50 See indicators of Products Stewardship (customers) on page 51

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Other Programs » Ethics and compliance with the law: for all employees; » Respect and responsibility: a mandatory course for all employees; » Six Sigma: various training courses and resources on Six Sigma, the methodology used for project management; » Management of information and records: on information management and retention; mandatory for all leaders; » Diversity and Inclusion: providing a strategic context on these topics at Dow and encouraging leaders to develop a personal plan to engage in inclusive leadership; » Performance Management Workshops: providing tools and developing abilities in the areas of performance and counseling; » Remote teams: to enable leaders who have subordinates in other places to learn how to manage them remotely; » MBA Dow/Northwood: a post-graduate course in Business Administration, it includes online and face-to-face courses at Northwood University, in Michigan (USA).

Initiatives to Retain Talents » There are various policies for developing professionals, in addition to assessment tools and behavioral and functional training courses. Some of them are PGAE (the Brazilian initials for Global Employee Assistance Program) and the International Transfer Program 360 Degree Assessment. Applied according to activity and function, they are complemented by recognition programs, such as: » President’s Award: recognizes results that have financial impact; » Platinum Distinction: recognizes significant actions in functions/businesses/the company; » Recognition@Dow: recognizes globally those “who make a difference” and rewards results aligned with the strategies of the Company; » Genesis Award: recognizes leaders at all organization levels; » Pinnacle Award: for sales professionals, it recognizes outstanding performance; » SAC (Special Assignment Compensation): to reward employees who have transferred their specific knowledge to other sites (lateral position). 10


Communication channels Intranet - Bringing together information, strategies, procedures, processes, policies, strategic plans and reporting. » Dow Today: bringing together all communication channels in an electronic format. * Newsline: global and regional news channel; * In the Spotlight: broadcasting videos and images of the three main global or regional news stories of the week; * Featured Story: biweekly highlight for the most significant news story of the company; * Give Us Your Feedback: featuring survey questionnaires for employees on the initiatives of the company; * My HR Connection: : bringing together all the information relevant to employees, such as benefits, salaries, carrier plans, learning, and training; » Andrew’s Blog: Blog of Dow CEO and global president, Andrew Liveris; » Integrity & Respect: concentrating all the information, data and reports related to the ethics area and compliance reporting of Dow; » Drive to Zero: publicizing the main global results on safety; » Diamond TV: video website hosted on the intranet; » Be an Ambassador: bringing together information on the Company, templates and other strategic documents. Dow World News: global videoconference, broadcasted quarterly with the CEO of DOW; Broadcast: Videoconferencing with senior management; Communication Session: on a quarterly basis, it brings together the president of Dow for Latin America and the other regional leader executives; Bulletin Board: available in plants for specific and objective news; First Hand Newsletter: a weekly e-bulletin; Tower TV: present on every floor and collective space of Diamond Tower, in São Paulo, it broadcasts news, healthcare and safety tips and events. ECAP (the Employees Communication Advisory Panel) was implemented in 2010 at the unit of the state of Bahia. It is a multidisciplinary interaction tool formed by representatives of employees as well as site and HR leaders. Employees may also enter into a dialog with leaders. 11


SUSTAINABLE CHEMISTRY 12


Knowing that chemistry is present in all aspects of people’s daily lives, Dow uses innovation to generate products that have less impact on the environment throughout the entire production and consumption chain. By applying Sustainable Chemistry, the Company develops products with a more sustainable composition as well as solutions increasing the life cycle of materials, promoting recycling, water filtering, air filtering, etc. This is why Dow invests to develop and enhance products and solutions that not only generate economic return but also contribute to the better use of natural resources while providing answers to the most challenging global problems. For actions like these, the Company has won the “U.S. Presidential Green Chemistry Challenge Award� six times, the distinction granted to individuals and companies that have contributed to the development of sustainable chemistry. Dow has also been listed nine times in the Dow Jones Global Sustainability Index. See some products and solutions that support the position of Dow as an innovative industry committed to the future.

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LUBRICANT FOR SUGARCANE CRUSHERS Sugarcane, a major Brazilian agricultural product, is one of the country’s most important sources of energy biomass (bioethanol) and the basis of the sugar and ethanol agribusiness as a whole. However, sugar cane processing involves several phases, generating a high amount of waste. This is why Dow took on the challenge of producing a biodegradable and environmentally friendly lubricant for sugarcane crushing mills, called UCON™ SL-17000. The consumption of this high performance lubricant is up to 70% lower than that of synthetic oils. Launched in Brazil in 2010, the product is non-toxic and does not contaminate the extracted sugarcane juice. Therefore it is not a health hazard. The lubricant obtained the maximum classification of H1 from the National Sanitation Foundation (NSF), which classifies and certifies food products. Other features: » It is 3.6 times more efficient than regular lubricants; » It may be recovered and reused, reducing the amount of waste and costs to customers; » It has a high viscosity and lubricity index (400 versus 220 for the best synthetic oils); » It facilitates the cleaning of gears and is not toxic to the environment.

HEALTHY OIL Dow AgroSciences has introduced an innovative product to the food market: sunflower Oil that high in oleic content and, therefore, omega-9. It has excellent industrial performance

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According to UNICA (an association that represents sugarcane growers), 550 million tons of sugarcane were crushed in Brazil, in 2009. An estimated total of one billion tons are expected to be crushed in 2020.


and stability; therefore it does not alter flavors and meets the growing demand for healthier products. Obtained by processing sunflower seeds with high oleic content, this oil comes from producers that are exclusively certified by Dow AgroScience. It has the following characteristics: » Excellent nutritional composition; » Excellent cost-benefit ratio; » Zero Trans Fat; » Stability; » Increased yield in industrialized frying; » Neutral aromas and flavors; » Production follows a 100% traceable program, from seed supply to oil refining.

WHITE ROOF The challenge that Dow had in mind while developing its elastomeric coating technology for roofs and decks consisted in inventing a product that would reduce the heat island effect in urban centers and increase the energy efficiency index of buildings. Known as White Roof, this coating reflects solar rays and ultraviolet radiation, making it possible to reduce interior room temperatures by 6 degrees. On a cement slab roof, this reduction reaches 18 degrees. This is possible because the product prevents heat from accumulating between the roof and the ceiling tiles, thus also reducing the energy spent on air conditioning by up to 20%. The White Roof was awarded the One Degree Less Seal, which is an initiative of the Green Building Council to reduce the temperature of heat islands in major cities by 1 degree.

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» Contributes to the conservation of the entire building; » May be applied on any roof; » Is a water-based, fast-drying product with high solubility and little odor; » Has high reflectivity, thermal efficiency and biological resistance; » Has very low VOC content (volatile organic compounds that contribute to increasing the greenhouse effect); » Has excellent surface adhesion performance, thus greater resistance to natural wear and dirt.

JOINLLAST ™ 8000 The development of infrastructure is essential for economic growth, and many are the challenges facing this sector. One of the solutions that Dow has made available for this sector is Joinllast ™ 8000. This is a high-resistance, elastic and adhesive (two-component polymeric) expansion joint system that produces a sealant with excellent non-leak performance between concrete plates. It is 3 times more durable than systems normally used and has optimal adhesion properties for the conservation of concrete structures exposed to bad weather conditions. These joints require less frequent replacement and maintenance because of their durability. Unlike other products used in joint systems, the Joinllast™ 8000 formula does not contain solvents and is totally VOC-free. In addition, it is not harmful to people or the environment. This solution was developed in Brazil and may be applied both in buildings and traffic systems (streets, bridges and highways).

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SOLUTIONS FOR WATER Communities and industries around the world utilize reverse osmosis, ion exchange and ultra filtration technologies developed by Dow Water & Process Solutions. These technologies are used, among other things, to desalinize seawater as an alternative source of drinking water, and also to enhance efficiency in various industries. Dow solutions provide: » high filtration power to eliminate virus and bacteria; » high performance in salt retention; » reduced energy consumption; » space savings in municipal and industrial facilities; » capability to remove metal contaminants. See indicators of Products Stewardship (customers) on page 51 See indicators of Environmental Performance on page 52

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ECOEFFICIENCY 18


A strategic focus on sustainability requires all company decisions to bear in mind the present and the future. At Dow, the actions preserve the environment begin inside the company with environmentallyconscious attitudes that take into account major global challenges. Some of the most urgent ones include reducing energy consumption, saving water and the better use of energy sources. In this respect, the company invests in research and activities to help mitigate our impact on the planet.

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DIAMOND TOWER - DOW HEAD OFFICE IN SÃO PAULO Dow Latin America moved its head office to the Diamond Tower in July 2010. This tower is located in Condomínio Rochaverá/ São Paulo, and was built to meet the criteria of the Green Building Council (GBC), which defines standards and certifies “green buildings” all over the world. Condomínio Rochaverá is considered a benchmark in sustainable construction building in the country. Two of its towers have been Certified with LEED (Leadership Energy Environmental Design) in the ‘Gold’ category, which requires that four criteria be met: reduced energy consumption and reduced operational and maintenance costs; reduced use of non-renewable environmental resources; improved quality of air in the building interior; and improved quality of life and health of users. The Dow Tower is currently undergoing the GBC certification process. The building accommodates 800 employees and has an automated and intelligent lighting system that maximizes the use of sunlight. Desks have their own lamps whose light bulbs are activated by sensors detecting movement. All electrical devices have Energy Star or Procel efficiency seals, indicating reduced energy consumption; and the improved air conditioning system consistently maintains temperature at around 23 ºC. All these actions together reduce energy consumption by up to 15% as compared to conventional commercial buildings. To optimize water consumption, the faucets have movement sensors and flow restriction devices; and toilets are dual flush, resulting in water savings of up to 30%.

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» Disposal of recyclables: Diamond Tower has selective waste collection stations on each floor. Recyclables are used by the NGO Instituto Esperança that cares for socially vulnerable children in São Paulo; » Traffic and air: Diamond Tower is equipped with teleconferencing and telepresence rooms. Investment in state-of-the-art technology reduces circulation of employees in the case of transfers and travel, helping to improve traffic and reduce CO2 emissions; » Integration: the floors have broad structures and transparent conference rooms, forming an open space pattern; » Furniture: all items of furniture are made of certified wood, while carpets are made of 40% recycled materials; » Quality of life: the building has structures that favor employees’ quality of life: a restaurant, coffee shop, gym, massage room, and relaxation rooms.

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ENERGY MANAGEMENT IN GUARUJÁ During the first Ministerial Meeting on Clean Energy that took place in July 2010 in Washington D.C.,USA, representatives of 23 countries launched a public-private partnership initiative to accelerate energy efficiency improvements – the GSEP (Global Superior Energy Performance) partnership. One of the agreement guidelines requires an Energy Management Standard –ISO 50001– that includes a series of procedures and standards aimed at energy conservation. Dow, a major participant in this event, adopted and implemented this program in its Guarujá unit in the state of São Paulo. In this unit, fuel oil will be replaced with natural gas by December 2011. Seawater will also be replaced with rainwater in the treatment of effluents, cutting the energy consumed for pumping water by 50%. In addition, rainwater will not require treatment to eliminate waste, allowing the unit to save the fuel used to transport solids.

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Lighting and Recyclables: Dow’s Guarujá unit has replaced incandescent lamps with more economical technologies that consume less energy. In addition, the new plant facilities are already equipped with LEDs. And recyclables are sent to Cooperativa Novo Mundo, in Guarujá, to create income-generating activities for the local population.


EUCALYPTUS BIOMASS PROJECT – STATE OF BAHIA In 2010, Dow signed a contract with ERB (Energias Renováveis do Brasil) to purchase steam from renewable biomass, produced by means of energy cogeneration (combined generation), for the Aratu Complex in the state of Bahia, the largest production unit of the company in Latin America. The Company thereby intends to reduce CO2 emissions by 180,000 tons per year and meet 75% of the Aratu electric and thermal energy requirements as of the first half of 2013 once the project will have been fully implemented. Considered a source of clean energy, eucalyptus biomass will allow Dow to save 200,000 cubic meters of natural gas a day –currently used to produce chlorine soda and chlorohydrin– and possibly acquire carbon credits. ERB will be in charge of installing and operating the eucalyptus biomass cogeneration plant. Aratu will be the first petrochemical plant to use biomass as a source of energy in Brazil, creating 700 direct jobs until project conclusion.

See indicators of Labor Practices and Decent Work on page 46 See indicators of Human Rights on page 50 See indicators of Environmental Performance on page 52 23


COMMITMENT TO STAKEHOLDERS 24


Dow believes that engaging with stakeholders for obtaining their commitment to sustainability is essential to making the entire value chain sustainable. It therefore values the exchange of experiences between internal and external audiences. For continuous growth in Brazil, the company relies on the action of the Human Element (Hu), a critical agent in fostering more sustainable solutions and innovation. For this reason, Dow invests in various activities such as employee training and recognition, initiatives to include minorities in its team of collaborators, workshops and training for customers, as well as sponsorship of and incentives for research and innovation projects. In addition, the company follows strict anti-corruption policies for ensuring transparency and competence in relationships with partners, customers, suppliers and competitors. See other initiatives carried out for this purpose.

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DIVERSITY AND INCLUSION Dow recognizes that diversity in the workplace is the driving force of its development and success as this favors an environment rich in ideas, experiences and innovation. The company is therefore running initiatives to motivate women and the people with disabilities. It is no accident that in 2010, the presence of women in leadership positions at Dow Brazil reached a 20% share, a growth of 3% compared to 2009. On the other hand, the percentage of female employees in the total headcount of the company was 28%, which means 5% more women than in the previous year. This evolution took place in parallel with the strengthening of the WIN (Women’s Innovation Network) group created in 1989 to discuss professional issues related to the challenges faced by women. It highlights the importance of gender diversity and promotes the consolidation of women in leadership positions. In Brazil, this group is made up of 40 employees, both male and female. In 2010, the leaders of WIN Brazil took part in external events, such as an international convention entitled A Mulher no Plural (Woman in the Plural), and organized a workshop on diversity and inclusion. The initial event brought together 25 Dow employees. While the WIN group consolidates the policy of incentives to women, the DEN (Disability Employee Network) promotes the integration of the handicapped. This group is made up of 32 voluntary employees and carries out activities for raising internal awareness regarding the needs and requirements of the handicapped. In one of the actions implemented in 2010, company employees were asked to point out colleagues in Dow and/or the community who were actively engaged in working with the handicapped. Those selected became ambassadors of Diversity and Inclusion in the Company. Dow is part of the group of companies that selects handicapped professionals trained by SERASA. 26

Dow’s Diversity and Inclusion initiatives earned the Company the Diversity Seal of São Paulo – Full Category, awarded by the São Paulo State government to companies that have structured policies to address workforce diversity.


Awareness raising and space » In October 2010, the DEN group organized the Awareness Raising Month on the Handicapped during which copies of the tourism guide book entitled Guia Brasil para Todos (Brazil for Everybody Guide Book) were distributed. This guide provides information on adapted travel, rides, restaurants and hotels. The company also organized a lecture entitled Getting to Know the World of Silence; » “Guardian Angel”: this initiative gives guidance to employees on how to adequately help physically disabled individuals who have recently been hired or transferred. Employees also receive instructions on how to provide first aid in emergency situations; » The new head office of Dow Latin America is located in São Paulo has adapted, wide open spaces that facilitate room-to-room access: a special elevator takes wheelchair users to the auditorium on the ground floor while sound signals indicate the arrival of the elevator.

THE DOW-USP SUSTAINABILITY INNOVATION CHALLENGE Dow and USP (the University of São Paulo) decided to encourage and recognize innovative academic papers with a focus on sustainable solutions. The Dow-USP Sustainability Innovation Challenge is sponsored once a year by the Dow Foundation, which awards prizes to three post-graduate theses aiming to solve social, economic and environmental challenges. These projects are presented during the Dow Sustainability Week to promote a debate among researchers with different cultures, challenges and realities. These researchers receive grants to further develop their research and find practical applications for their projects. In addition, they have the opportunity to represent Brazil in the global awards ceremony of the Dow Sustainability and Innovation Challenge, at Tufts University, in Boston (USA).

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Prizewinners in 2010 » “Biotechnology Aspects of the Interaction between Bacteria and Sugarcane (Saccharum sp., L.)”; (Maria Carolina Quecine, PhD); » “An Index of Sustainable Urban Mobility”; (Marcela da Silva Costa, PhD); » “Payment for Environmental Services: Limits and Opportunities for Sustainable Development in Family Agriculture in the Brazilian Amazon Region”. (Rosangela C. da Costa, PhD).

DOW GOL AWARD The Dow GOL (Guiding, Observing, and Leading) award is a pioneering initiative created in 2001 to give recognition to logistics suppliers (haulage companies, warehouses, terminals, and distributors) with the best safety performances. In 2010, new criteria were included in the contest, such as social responsibility, water savings, and waste generation. 24 suppliers were awarded prizes. And all those companies – 50 suppliers – that met these criteria received formal recognition. The program was devised in Brazil and served as a model for operations in Argentina, Chile, Mexico and Colombia. The annual awards ceremony helps raise awareness among suppliers regarding the need to continuously improve safety standards and promotes adjustments to reduce accidents.

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Workshops: Dow also organizes three annual workshops with drivers from partner transportation companies, highlighting the notions of safety, defensive driving and careful handling and transportation of hazardous liquids. In 2010, 150 drivers attended these courses.


SUSTAINABILITY WEEK SUSTAINABLE CATTLE RAISING Every other year, Dow organizes the Sustainability Week event in Argentina, Mexico and Brazil to discuss the challenges facing the planet. In October of last year, the company brought together representatives of academia, government agencies, private companies, and NGOs of these countries to discuss three topics: housing, solid waste management, and sustainable cattle raising. The latter topic was thoroughly discussed in Brazil with the purpose of boosting cattle productivity by increasing the average national density of cattle per hectare from 1 to 1.8 or even 2. Such density increase would allow setting aside more land for grain crops and reforestation. Improved technology and resource management will ensure increased production per cultured surface area, thus making the cattle farming industry more profitable. As a positive side effect, cattle farmer profits will be boosted since production will provide a balanced management of environmental, social and economic aspects. Convert™ is a technique for slow germination forage (Brachiaria hybrid) developed to achieve higher cattle productivity levels by increasing the yield of superior quality biomass per hectare. This forage plant was developed in the CIAT (the Spanish abbreviation for International Center for Tropical Agriculture) research center of Colombia. The Sustainable Cattle Raising project will be applied in six model farms in the Paragominas region (state of Pará) since it was the first municipal district to be removed from the list of the most heavily-deforesting Amazonia districts. The farms selected were those that achieved the highest scores and made most progress in adopting Embrapa’s BPA program (Portuguese initials for Good Agriculture and Livestock Practices). The farms will be managed according to three guidelines: environmental competence, pasture management and animal well-being. 29


Other benefits: Âť Economic benefits: a higher financial return for cattle raisers is expected because of increased productivity per hectare. The Sustainable Cattle Raising project intends to finance innovative solutions to meet the demand for animal protein. This is why the project intends to improve credit management practices by reducing the level of requirements in credit submission processes while promoting environmental and land ownership competence in rural properties; Âť Social benefits: public policies will be developed to enhance the business management skills of cattle farmers (management capacity building), as a result of the increased motivation, awareness and education of the rural population. Long-term financing for sustainable cattle raising and training financial agents on how to grant this special kind of credit are also a part of the social project component,. Some requirements: farms must not have outstanding labor-related payments; they must provide suitable accommodation for employees as well as educational programs for local communities. Âť Environmental benefits: cattle raising areas will be replaced by reforestation areas while 15 million hectares of grazing land will be recovered as part of a commitment made by the Brazilian government in the COP 15 climate negotiations in Copenhagen. This action will be initiated in model farms and yield lessons on sustainable management to owners of cattle raising farms in Brazil, based on the introduction, production and management of pasture lands. Besides increasing the economic benefits, the project intends to reduce the environmental and social impacts of the cattle raising activity by ensuring increased production per surface area unit and industry profitability.

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Brazil is the second largest beef producer in the world and has approximately 200 million heads of cattle grazing on 200 million hectares of land. Brazil’s challenge therefore consists in increasing beef production without cutting down native forests. According to UN (United Nations Organization) estimates, the world will have to increase food production by 25% by 2050 and Brazil has the potential to meet 40% of this demand.

See indicators of Human Rights on page 50 See indicators of Products Stewardship (customers) on page 51 See indicators of Environmental Performance on page 52 See indicators of Society on page 56 31


SAFETY 32 32


The commitment to safety has been a priority since the foundation of the company. Dow has always made heavy investments to ensure the safety of all internal and external audiences, as well as the safety of the population and the environment. In 2010, the company invested in programs aimed at reducing accidents with chemicals. These programs were applied in all the supply chain phases, from production to delivery and including handling and storing.

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PROGRAMA ATUAÇÃO RESPONSÁVEL Dow is one of the founders of Responsible Care®, a commitment launched by chemical industries across the world in 1987 to promote continuous improvements in the fields of health, safety and environmental performance. This initiative is currently present in 50 countries and was instituted in Brazil in 1991 under the name Atuação Responsável®. It promotes the sharing of information on processes and activities and the rigorous management of performance indicators and verification procedures. The commitments include analyzing risks posed by products, which in turn are indicated via safety cards and explanatory labels during every production phase. This ensures the sharing of required procedures at all phases of the production process. Dow manages safety across the entire product cycle: production, supply, distribution, usage and disposal. It also provides guidance to customers on how to handle and transport each product correctly while conducting facility visits on a regular basis. As Leader of the Product Management and Regulation Commission of Abiquim (the Portuguese acronym for Brazilian Chemical Industry Association), the company is in charge of disseminating, implementing and providing training on GPS (Global Product Strategy) among small and medium Brazilian companies. Created by ICCA (International Council of Chemical Associations), GPS is part of the Global Charter of Atuação Responsável and makes contributions to the SAICM (Strategic Approach to International Chemicals Management). The objective is to manage and minimize risk throughout the life cycle of its products. Presently, Dow is setting the standards in safety control and participates actively in all the Health, Safety, Environment, Distribution and Transportation commissions of ABIQUIM.

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Model: Dow conducts safety risk analysis for all the processes in its manufacturing plants as well as for product distribution. Its risk analysis models are compliant with international standards for process and distribution safety. Dow practices for controlling loss of primary containment are for example a world benchmark.


DRIVE TO ZERO The Drive to Zero campaign is an initiative to raise employee awareness of the importance of safety measures in industries and routine activities. Under the umbrella of a focused communication campaign, the company invests in lectures and workshops that stress major safety-related topics. In 2010, the campaign entitled O que toca seu coração? (What touches your heart?) was created to make employees assess the risks they are facing at work.

See indicators of Environmental Performance on page 52 See indicators of Society on page 56 See indicators of Products Stewardship (customers) on page 51 See indicators of Labor Practices and Decent Work on page 46 35


SOCIAL & ENVIRONMENTAL MANAGEMENT ENVIRONMENT AND COMMUNITY 36


We have seen that sustainability in the company is more than just an environmental program; it is a global activity and a part of the business. This positioning has made Dow a standard in various aspects, but it has also served to drive constant improvement and learning, especially when it comes to preserving the planet. The company currently has programs for correct energy management, reuse of wastes, and the rational use of water. In addition, it has rigorous safety programs that prevented fatal and severe accidents across operations in 2010 (LA7). In addition, Dow did not record any significant impact on biodiversity (EN12) or the communities in which it operates (SO1). These good indices result particularly from prophylactic actions applied in all manufacturing units (100%) and risk and safety analyses conducted for production, processes, transportation, and distribution of all chemicals. Safety analyses of processes and distribution follow international and local standards, such as those issued by CETESB. (PR1) The same principles also ensure the safety of the product throughout its entire life cycle as well as that of clients and consumers.

37


IMPACT AND REUSE (EN2) For a chemical industry, wastes have a great potential to become raw material; and to make best use of them, Dow works with integrated manufacturing, allowing the company and its customers to profit from these inputs. Therefore, basic raw materials undergo many phases until products (wastes) of various kinds and for various applications are extracted. In 2010, two units stood out regarding the use of recycled material. Jacareí: » 100% Recycled Metal Drums; » 90% Recycled Plastic Barrels; » 85% Recycled Plastic Containers; Franco da Rocha: » Label Liners: 100%; » Plastics: 50%; » Plastic drums: 100%; » Metal drums: 6%; » Cardboard packs: 84%. (EN27) In addition, Jundiaí and Franco da Rocha recycle 100% of their packs, while Dow AgroSciences uses or maintains 100% of its packs in a recycling process. (EN19 and EN26) The company intends to gradually ensure performance excellence in all its units. It is therefore investing in projects to reduce NOX and SO2 emissions and conducts tests to replace Forane 141b with other blowing agents such as water, cyclopentane and/or solkane (Jundiaí), which do not harm the ozone layer. The environmental management program of Dow in Brazil includes initiatives aimed at reducing or eliminating substances that may potentially degrade the ozone layer. These initiatives place Dow well ahead of the 2030 deadline set by the Montreal Protocol. Further research has been

38

Jacareí (Dow Coatings and Dow AgroSciences)— recycling: Metal drums 100%; Plastic barrels 90%; Plastic containers 85%; Cardboard containers 0% Franco da Rocha: Label Liner: 100%; Plastics: 50%; Plastic drums: 100%; Metal drums: 6%; Cardboard packaging: 84%.


conducted on alternative and economically feasible techniques for the polyurethane market, which has the goal of complying with the Brazilian Program for Elimination of HCFCs. The CFC12 in the Chlorine Soda and PO/PG Manufacturing units was replaced by Propane and HFC-134a/HCFC-123, respectively. These actions reduced company emissions by 64%, compared to 2009, and by 275% compared to 2007. Dow maintains partnerships with environmental institutions to develop initiatives such as the Recovery Plan for Degraded Areas in the Matarandiba Island (state of Bahia) and in JacareĂ­ and Franco da Rocha. (EN 14).

PROTECT AND PRESERVE Protecting the environment and fostering economic and social development in the communities in which the company is present constitutes also a part of the Social & Environmental strategy of Dow. The company has nearly 20 initiatives of social and corporate responsibility in Brazil, which are implemented according to its three Social Responsibility pillars: Education, Entrepreneurship and Environment. In 2010, R$ 669,000 were invested for projects in these fields. Read on to discover some of the most successful programs in the Company.

39


ECOSMAR The Ecosmar project (the Portuguese acronym for Sustainable and Supportive Economy in Matarandiba) implemented at Matarandiba Island (in Vera Cruz, state of Bahia) is mainly aimed at generating work and income through local enterprises and educational actions committed to environmental preservation. Dow invests R$ 88,000 annually in this program to continue to benefit the one thousand inhabitants of the island. Created in 2007, the project is run in partnership with UFBA (Federal University of Bahia State). This is considered one of the most accomplished company programs because it comprises educational and environmental activities, even though it is part of the Entrepreneurship strategy. Implementation Phases: 1. Establishing a communication channel to reach out to the community; 2. Diagnosis of the main local needs – priority was given to sectors such as transportation, education and income generation; 3. Creation of associations to strengthen and unite the community: Ascoma (the Portuguese acronym for Community Association of Matarandiba), Ascomat (the Portuguese acronym for Cultural Association of Matarandiba), Infomar, Infocentro (a community information center for digital inclusion), Community Development Forum, Group of Eco-agricultural Production of Food Products, and Group of Family Oyster Farming; 4. Creation of the Ilhamar and Concha Community Development Banks, a currency for the island; both banks granted credit for local projects.

See indicators of Products Stewardship (customers) on page 51 See indicators of Environmental Performance on page 52 See indicators of Society on page 56 40


ECO POLIS PROJECT For Dow, education is essential to preserving the environment. This is why the company implemented a project on education and biodiversity conservation in its Guaruj叩 unit (S達o Paulo state). Known as the Mangue Limpo project until 2010, Eco Polis allows students from public and private schools, researchers and visitors to gain knowledge and interact with the local natural habitat. The purpose consists in facilitating the understanding of the relationships between living beings and the environment. Nearly 40 students visit this place daily to see its Theme Areas and laboratories. The project adopts the junior company concept; all the areas have natural ventilation and some structures were built with recycled material. In addition, the area was built above ground level to minimize the environmental impact.

CACHOEIRA PROJECT The main objective of the Cachoeira Project is to safeguard the water supply of the largest Brazilian city and reforesting the areas surrounding springs and riverbeds. The initiative of the NGO The Nature Conservancy is run in partnership with Sabesp and with the support of the Dow Foundation. From 2008 to 2010, the Company invested R$ 875,000 to plant 600,000 seedlings of 80 different native species in Permanent Preservation Areas (APPs) surrounding the Cachoeira dam in the municipality of Piracaia, state of S達o Paulo. The project includes recovering 350 hectares of rainforest in the Mata Atlantica Biome because the loss of vegetation contributes to ground erosion and river pollution, impacting the water flows. The Sabesp Cantareira water-producer system currently accounts for 50% of the water supply to the S達o Paulo Metropolitan Region, corresponding to the consumption of nearly 9 million individuals. This project also contributes to the preservation of the local fauna. 41


GRI INDICATORS 42


We will now present the GRI indicators achieved by Dow in Brazil. The company reports information and figures on its performance in 2009 and 2010. Published since 2008, the Dow Brazil Sustainability Executive Summary may and should be assessed alongside the Global GRI, which achieved Application Level A+ (see at www.dow. com/sustainability). Data were gathered from the Dow units in Brazil.

43


ECONOMIC Performance ASPECTS

INDICATOR

INDICATOR DESCRIPTION

2009

2010

OBSERVATIONS

ECONOMIC PERFORMANCE

EC1

DIRECT ECONOMIC VALUE 4.543 GENERATED AND DISTRIBUTED, INCLUDING REVENUES, OPERATIING COSTS, EMPLOYEE COMPENSATION, DONATIONS AND OTHER COMMUNITY INVESTMENTS, RETAINED EARNINGS AND PAYMENTS TO CAPITAL PROVIDERS AND GOVERNMENTS (NET REVENUES)

4.310

Values in reals (millions)

Operating Costs

-4.471

-4.232

Wages and Benefits

-292

-331

Community Investments

-1

-1

Operating Profit/(Loss) (*)

-221

-254

Income Tax / Social Charges

125

79

Net Profit/(Loss) of the Exercise

-96

-175

Dividends

-93

-35

Economic Profit/(Loss)

-189

-210

ECONOMIC PERFORMANCE

44

EC3

COVERAGE OF THE ORGANIZATION’S DEFINED BENEFIT PLAN OBLIGATIONS

_

PREVDOW in figures: - Assets: approximately R$ 1 billion - Compliance level: 91% of the eligible employees - Retired: 390 - Defer (awaiting eligibility to the benefit): 300

The pension plan offered to employees is a DEFINED CONTRIBUTION plan. The objective of this plan is to complement the benefit paid by the National Institute of Social Security (INSS)


ASPECTS

INDICATOR

INDICATOR DESCRIPTION

ECONOMIC PERFORMANCE

EC4

SIGNIFICANT FINANCIAL ASSISTANCE RECEIVED FROM GOVERNMENT

PRESENCE IN THE MARKET

EC7

INDIRECT ECONOMIC IMPACTS

EC8

PROCEDURES FOR LOCAL HIRING AND PROPORTION OF SENIOR MANAGEMENT HIRED FROM THE LOCAL COMMUNITY AT LOCATIONS OF SIGNIFICANT UNITS DEVELOPMENT AND IMPACT OF INFRASTRUCTURE INVESTMENTS AND SERVICES PROVIDED PRIMARILY FOR PUBLIC BENEFIT THROUGH COMMERCIAL, IN-KIND OR PRO BONO ENGAGEMENT. (INVESTIMENTS IN THE COMMUNITY OR IN PUBLIC BENEFIT)

2009

_

2010

OBSERVATIONS

EGF = 21,1 R&D = 8,6

Values in reals (millions). EGF: Federal Government Loan to finance seed stocks R&D: Fiscal incentive obtained for technology innovation projects.

30%

30% of the hired employees for senior management positions were hired from the market. The other positions were occupied by employees assigned by the Internal Program of Carrier Succession.

R$ 1.230.120,00

Value of projects: Oral Health, Forรงa Jovem, Ecosmar, EducandDow, Pai Telecurso, Ambassadors of the Environment, EcoPolis, SolidariDow, More Opportunities, and Maintenance of school supplies in public schools.

_ R$ 1.159.910,98

45


LABOR PRACTICES And Decent Work

46

ASPECTS

INDICATOR

INDICATOR DESCRIPTION

EMPLOYMENT

LA 1

TOTAL WORKFORCE BY EMPLOYMENT TYPE, EMPLOYMENT CONTRACT AND REGION

EMPLOYMENT

LA2

TOTAL NUMBER AND RATE OF EMPLOYEE TURNOVER BY AGE GROUP, GENDER AND REGION

EMPLOYMENT

LA3

BENEFITS PROVIDED TO FULL-TIME EMPLOYEES THAT ARE NOT PROVIDED TO TEMPORARY OR PARTTIME EMPLOYEES

LABOR/ MANAGEMENT RELATIONS

LA4

PERCENTAGE OF EMPLOYEES COVERED BY COLLECTIVE BARGAINING AGREEMENTS

LABOR/ MANAGEMENT RELATIONS

LA5

MINIMUM NOTICE PERIODS REGARDING OPERATION CHANGES, INCLUDING WHETHER IT IS SPECIFIED IN COLLECTIVE BARGAINING AGREEMENTS

2009

_

2.8% turnover

_

_

_

2010

OBSERVATIONS

Registered workers in compliance with labor laws (CLT) hired for a specific period of time - 32 Registered workers in compliance with labor laws (CLT) hired for an unspecified period of time - 2117 Rural workers with CLT contract hired for an unspecified period of time - 22 Trainees - 95 Apprentice - 1* TOTAL – 2267

* We have 24 apprentices hired through partnering companies, such as SENAI and NURAP.

3.6% turnover Female = 39% Male = 61% Health and Dental Insurance Plan Life Insurance Social Security Pension Fund Transportation and Parking in workplace Restaurant in the workplace or food voucher, depending on the locality 100%

No period of time is specified for the communication plan; exceptions vary according to the collective bargaining agreement in force in each locality and reasons of notifications.

Our employees are affiliated to Unions and thus their employment contracts are regulated by Collective Bargaining Agreements


ASPECTS

INDICATOR

INDICATOR DESCRIPTION

OCCUPATIONAL HEALTH AND SAFETY

LA6

PERCENTAGE OF TOTAL WORKFORCE REPRESENTED IN FORMAL JOINT MANAGEMENT-WORKER HEALTH AND SAFETY COMMITEES THAT HELP MONITOR AND ADVISE ON OCCUPATIONAL HEALTH AND SAFETY

OCCUPATIONAL HEALTH AND SAFETY

LA 7

TRATES OF INJURY, OCCUPATIONAL DISEASES, LOST DAYS, ABSENTEEISM AND NUMBER OF WORKRELATED FATALITIES BY REGION

OCCUPATIONAL HEALTH AND SAFETY

LA8

EDUCATION, TRAINING, COUNSELING, PREVENTION AND RISK-CONTROL PROGRAMS IN PLACE TO ASSIST WORKFORCE MEMBERS, THEIR FAMILIES OR COMMUNITY MEMBERS REGARDING SERIOUS DISEASES

2009

2010

OBSERVATIONS

100%

Internal Safety, Health and Environment committees: Internal Committee for Accident Prevention (CIPA) – all our manufacturing units and offices have this commission with employees and employers representing 100% of DOW/ DAS employees. External Safety, Health and Environment committees: ABIQUIM – DOW has representatives in every commission. Various Dow representatives participate in other associations, which have Safety, Health and Environment commissions, such as: ABICLOR, FIESP, CIESP, PAM, ANDEF, AENDA, ABIFINA and SINDAG.

0,19

In 2010 there were no fatal accidents or accidents with permanent injury.

EAP – Employee Assistance Program for employees, relatives and dependents; VivaVida – Program for quality of life; Biological Monitoring Program – Analyzes on an individual basis the potential effects of occupational exposure risk on employees.

The Dow Health Program has always been focused on disease prevention and promotion of health.

_

0,15

_

47


48

ASPECTS

INDICATOR

INDICATOR DESCRIPTION

OCCUPATIONAL HEALTH AND SAFETY

LA9

HEALTH AND SAFETY TOPICS COVERED IN FORMAL AGREEMENTS WITH TRADE UNIONS

TRAINING AND EDUCATION

LA10

TRAINING AND EDUCATION

LA11

AVERAGE HOURS OF TRAINING PER YEAR PER EMPLOYEE BY EMPLOYEE CATEGORY

PROGRAMS OF SKILLS MANAGEMENT AND LIFELONG LEARNING THAT SUPPORT THE CONTINUED EMPLOYABILITY OF EMPLOYEES AND ASSIST THEM IN MANAGING CAREER ENDINGS

2009

2010

_

_

_

Union agreements are governed in compliance with Safety and Health laws by Employers and Employees. The agreement with the Union from Bahia state specifies some items related to managing safety, health and environment issues. Administrative positions: 18.44 hours Leadership positions: 38.45 hours Technical functions: 119.94 hours People Training and Management Program based on Competences for all the employees in the Company, without any distinction of function. Training is available for employees with the option of face-to-face or on-line models Drafting of the Individual Development Plan, revised periodically. Follow-up program for employees in leadership positions who are ending their corporate careers.

OBSERVATIONS


ASPECTS

INDICATOR

INDICATOR DESCRIPTION

TRAINING AND EDUCATION

LA12

PERCENTAGE OF EMPLOYEES RECEIVING REGULAR PERFORMANCE AND CARREER DEVELOPMENT REVIEWS

DIVERSITY AND EQUAL OPPORTUNITY

LA 13

COMPOSITION OF GOVERNANCE BODIES AND BREAKDOWN OF EMPLOYEES PER CATEGORY, ACCORDING TO GENDER, AGE GROUP, MINORITY GROUP MEMBERSHIP AND OTHER INDICATORS OF DIVERSITY

2009

2010

_ 23 women for each 100 men.

OBSERVATIONS

All employees are assessed once a year, while 70% carry out their career development planning under the guidance of their leaders. 28 women for each 100 men.

*Number of women among employees (per 100 persons) * Number of female specialists and leaders in relation to men (per 100 persons) DIVERSITY AND EQUAL OPPORTUNITY

LA 14

RATIO OF THE BASIC SALARY OF MEN TO WOMEN BY EMPLOYEE CATEGORY

_ 0,99

27 women for every 100 men 29 women in leadership positions for every 100 men 0,98

49


HUMAN Rights ASPECTS

INDICATOR

INDICATOR DESCRIPTION

INVESTMENT AND PROCUREMENT PRACTICES

HR1

PERCENTAGE AND TOTAL NUMBER OF SIGNIFICANT INVESTMENT AGREEMENTS THAT INCLUDE HUMAN RIGHTS CLAUSES OR THAT HAVE UNDERGONE HUMAN RIGHTS SCREENING

INVESTMENT AND PROCUREMENT PRACTICES

HR2

NONDISCRIMINATION

_

HR4

TOTAL NUMBER OF INCIDENTS OF DISCRIMINATION AND ACTIONS TAKEN

_

FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING

HR5

OPERATIONS IDENTIFIED IN WHICH THE RIGHT TO EXERCISE FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING MAY BE AT SIGNIFICANT RISK AND ACTIONS TAKEN TO SUPPORT THESE RIGHTS

CHILD LABOR

HR6

HR7

OPERATIONS IDENTIFIED AS HAVING SIGNIFICANT RISK FOR INCIDENTS OF CHILD LABOR AND MEASURES TAKEN TO CONTRIBUTE TO THE ELIMINATION OF CHILD LABOR OPERATIONS IDENTIFIED AS HAVING A SIGNIFICANT RISK FOR INCIDENTS OF FORCED OR COMPULSORY LABOR AND MEASURES TO CONTRIBUTE TO THE ELIMINATION OF FORCED OR COMPULSORY LABOR.

2010

OBSERVATIONS

70%

Dow contract templates contain human rights clauses. For some materials and services for which the contract template of the supplier is used, these clauses have not yet been included.

0%

Dow does not currently carry out human rights audits, but its 2011-2015 plan allows for these audits based on sampling.

zero

None. However, in the case of an incident, actions will be taken after the event has been examined and investigated, and the outcome may vary from a warning to dismissal.

zero

Currently no operations have been identified in which the right to excise freedom of association or collective bargaining may be at significant risk.

0%

Work with Maplecroft is being carried out to conduct a risk assessment and define areas to be audited. Goal: last quarter of 2011.

0%

Work with Maplecroft is being carried out to conduct a risk assessment and define areas to be audited. Goal: last quarter of 2011. Dow signed a pact to eradicate slave labor in June/2011 and encouraged its suppliers to do the same.

_

PERCENTAGE OF SIGNIFICANT SUPPLIERS AND CONTRACTORS THAT HAVE UNDERGONE SCREENING ON HUMAN RIGHTS AND ACTIONS TAKEN

FORCED AND COMPULSORY LABOR

50

2009

_

_

_


PRODUCTS Stewardship (Customers) ASPECTS

INDICATOR

INDICATOR DESCRIPTION

CUSTOMER HEALTH AND SAFETY

PR1

LIFE CYCLE STAGES IN WHICH HEALTH AND SAFETY IMPACTS OF PRODUCTS AND SERVICES ARE ASSESSED FOR IMPROVEMENT AND PERCENTAGE OF SIGNIFICANT PRODUCTS AND SERVICES CATEGORIES SUBJECT TO SUCH PROCEDURES

PRODUCT AND SERVICE LABELING

PR3

PRODUCT AND SERVICE LABELING

PR5

MARKETING COMMUNICATIONS

PR7

TOTAL NUMBER OF INCIDENTS OF NON-COMPLIANCE WITH REGULATIONS AND CODES CONCERNING MARKETING COMMUNICATIONS, INCLUDING ADVERTISING, PROMOTION AND SPONSORSHIPS BY TYPE OF OUTCOME.

COMPLIANCE

PR9

MONETARY VALUE OF SIGNIFICANT FINES FOR NON-COMPLIANCE WITH LAWS AND REGULATIONS RELATED TO PROVIDING PRODUCTS AND SERVICES.

TYPE OF PRODUCT AND SERVICE INFORMATION REQUIRED BY PROCEDURES AND PERCENTAGE OF SIGNIFICANT PRODUCTS AND SERVICES SUBJECT TO SUCH INFORMATION REQUIREMENTS

PRACTICES RELATED TO CUSTOMER SATISFACTION, INCLUDING RESULTS OF SURVEY MEASURING CUSTOMER SATISFACTION

2009

_

_

_

zero

2010

OBSERVATIONS

Risk analysis to assess the impacts on health and safety are conducted for every new product and application. This risk analysis, depending on how hazardous the product is or its potential application, may lead to the discontinuation of product development. The evaluations cover topics such as: intrinsic hazards, product use and risk management

Independent assessments and audits in risk analysis for top priority products were concluded in 2010, and Dow intends to conduct independent assessments and audits for all products by 2015. See the product risk analyses on the Web (a total of 360): http:// www.dow.com/productsafety/ finder/index.htm. The Product Risk Analysis Methodology may be found at the link: http://www.dow.com/ productsafety/assess/index.htm

Every chemical product manufactured in Brazil or imported from any other Dow unit is labeled according to legal requirements in force.

Labels of wastes also contain information on materials safety and environmental agency registration. In addition, during 2010, Dow worked to implement the new GHS labeling requirements for products defined as hazardous substances, in compliance with the Brazilian standard NBR 14725:2009. Labeling is required for all chemicals. Labels are made for all of them.

Customer complaints are recorded and investigated to implement improvement actions. As a result of improvements in global labeling process, Brazil shows benchmarking levels. An opinion survey is being developed for this area. zero

zero

_

51


ENVIRONMENTAL Performance ASPECTS

INDICATOR

INDICATOR DESCRIPTION

MATERIALS

EN1

MATERIALS USED BY WEIGHT AND VOLUME

2009

2010

_

MATERIALS

ENERGY

EN4

PERCENTAGE OF MATERIALS USED THAT ARE RECYCLED INPUT MATERIALS

INDIRECT ENERGY USE BY PRIMARY SOURCE

WATER

EN8

TOTAL WATER WITHDRAWAL BY SOURCE

BIODIVERSITY

EN11

LOCATION AND SIZE OF LAND OWNED, LEASED, MANAGED IN OR ADJECENT TO PROTECTED AREAS, AND AREAS OF A HIGH BIODIVERSITY VALUE OUTSIDE PROTECTED AREAS

BIODIVERSITY

52

EN2

EN12

DESCRIPTION OF SIGNIFICANT IMPACTS OF ACTIVITIES, PRODUCTS AND SERVICES ON BIODIVERSITY IN PROTECTED AREAS AND AREAS OF HIGH BIODIVERSITY VALUE OUTSIDE PROTECTED AREAS

_

OBSERVATIONS

_

2 of our 11 sites use recycled inputs. These are: Jacareí (Dow Coatings and DAS) – Metal drums: 100% recycled; Plastic barrels: 90% recycled; Plastic containers: 85% recycled; and Franco da Rocha – Labeling Liner: 100%; Plastics: 50%; Plastic drums: 100%; Metal drums: 6%; Cardboard packs: 84%.

Remaining sites are also developing plans to use recycled inputs.

1.09 billion kWh

Specific projects are being developed for each site. In addition, Dow has set the goal of achieving by 2015 a 25% reduction in energy use intensity in relation to 2005.

17.8 million m3 /year

There are various programs that have been developed to reduce water consumption.

4 of the 11 sites have environmental protection areas: Jacareí (Permanent Protection Area –APP– near and adjacent to rivers: 343700 m2); Franco da Rocha (APP – within and adjacent to the area: 1.34 km2); Guarujá (Environmental Preservation Area: 440000 m2); Matarandiba Island (Environmental Preservation Area: 970 hectares).

The following sites are located in industrial districts: Pinda (Pindamonhangaba), Jundiaí, Seeds, São Paulo, TDI, Aratu, and DOPEC.

_ _

_

_

Manufacturing area works in an integrated manner, and hazardous raw materials are subject to a specific risk analysis in the distribution area. Some raw materials we can point out include: Propylene (160,000 Mt/ yr), Natural Gas (236.8 MM m3 / year), Nitric Acid (55,000 tons/ year).

There are no significant impacts – every operation has licenses issued by local environmental agencies and improvement plans when applicable.


ASPECTS

INDICATOR

INDICATOR DESCRIPTION

2009

2010

OBSERVATIONS

BIODIVERSITY

EN13

HABITATS PROTECTED AND RESTORED

R$ 1.22 Millions (3 projects in Brazil)

Restoration of 350 hectares in the surroundings of the natural reserve of Cachoeira, one of the six main reserves of the Cantareira System (R$ 875 thousand).

Other investments were made in areas such as Matarandiba Island, Guarujá and Franco da Rocha.

BIODIVERSITY

EN14

STRATEGIES, CURRENT ACTIONS AND FUTURE PLANS FOR MANAGING IMPACTS ON BIODIVERSITY

All sites are compliant with national regulations and plans put in place to regulate and monitor actions taken.

Agreements with local environmental agencies were made in the areas of Jacareí, Franco da Rocha, Guarujá and Matarandiba Island, which are documented in the operation license. Matarandiba Island: Plan for recovery of degraded areas totaling 13.8 hectares; Jacareí: relocation of the water pool for firefighting; Franco da Rocha: has compensation areas negotiated with the environmental agencies.

EMISSIONS, EFFLUENTS AND WASTE

EN16

TOTAL DIRECT AND INDIRECT GREEN HOUSE GAS EMISSIONS BY WEIGHT

EMISSIONS, EFFLUENTS AND WASTE

EN17

OTHER IMPORTANT INDIRECT GREEN HOUSE GAS EMISSIONS BY WEIGHT AND REDUCTIONS ACHIEVED

EMISSIONS, EFFLUENTS AND WASTE

EN19

EMISSIONS OF OZONEDEPLETING SUBSTANCES BY WEIGHT

_

_

_

Measuring methodology is being perfected.

_

_

Measuring methodology is being perfected.

_

There was a 64% reduction, equivalent to an absolute amount of 275% of emissions reduction in relation to 2007.

The environmental management program of Dow in Brazil is focused on reducing and eliminating operations that entail handling of substances with potential to deplete the ozone layer and is totally aligned with the guidelines of the Montreal Protocol and regulatory requirements in force. Replacement of CFC R12 and R22 by R134A in refrigeration systems, and work processes created to ensure restricted use of substances that are in annexes A and B of the Montreal Protocol are evidence of this.

53


54

ASPECTS

INDICATOR

INDICATOR DESCRIPTION

EMISSIONS, EFFLUENTS AND WASTE

EN20

NOX, SOX AND OTHER SIGNIFICANT AIR EMISSIONS BY TYPE AND WEIGHT

EMISSIONS, EFFLUENTS AND WASTE

EN21

TOTAL WATER DISCHARGE BY QUALITY AND DESTINATION

EMISSIONS, EFFLUENTS AND WASTE

EN22

TOTAL WEIGHT OF WASTE BY TYPE AND DISPOSAL METHOD

EMISSIONS, EFFLUENTS AND WASTE

EN23

TOTAL NUMBER AND VOLUME OF SIGNIFICANT SPILLS

2009

_

_

48.9 tons

_

2010

OBSERVATIONS

NOX: 399 tons / SO2 178 tons

Dow has a reduction program of SOX and NOX emissions. 90% of sites have eliminated SOX emissions in boilers by using more sustainable fuels. There is also a reduction project of NOX emissions for the TDI plant scheduled for December, 2012.

Total Value -12.3 Millions of m3 for 9 sites

All effluents are treated and analyzed before being discharged to the “receptor body”. Analysis parameters are in agreement with those of the environmental legislation and operation licenses.

47.62 tons

Dow is a signatory of Atuação Responsável, and for years all the sites have worked intensely to eliminate, reduce and recycle waste. The company has been working since 2009 to improve its methodologies for calculating waste. In addition, it is identifying better applications for its wastes, such as using them as raw material or by-products. The company is also seeking more environmentally efficient disposal methods, such as recycling and reprocessing. The goals for 2015 are being explained in detail in our facilities. It is important to bear in mind that each report prepared for any agency or institution applies different methodologies.

There were no significant spills.


ASPECTS

INDICATOR

INDICATOR DESCRIPTION

PRODUCTS AND SERVICES

EN26

INITIATIVES TO MITIGATE ENVIRONMENTAL IMPACTS OF PRODUCTS AND SEVICES AND EXTENT OF IMPACT MITIGATION

2009

2010

PRODUCTS AND SERVICES

EN27

PERCENTAGE OF PRODUCTS SOLD AND THEIR PACKING MATERIALS THAT ARE RECLAIMED BY CATEGORY

COMPLIANCE

EN28

MONETARY VALUE OF SIGNIFICANT FINES AND TOTAL NUMBER OF NONMONETARY SANCTIONS FOR NON-COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS

zero

zero

TRANSPORTATION

EN29

SIGNIFICANT ENVIRONMENTAL IMPACTS OF TRANSPORTING PRODUCTS AND OTHER GOODS AND MATERIALS USED FOR THE ORGANIZATION’S OPERATIONS AND TRANSPORTING MEMBERS OF THE WORKFORCE

1

1

_

_

OBSERVATIONS

The Fountain Project, reported in the 2nd half of 2010 and validated as Synergy, presented US$ 288 million from the Pindamonhangaba unit (2009) and US$ 35 million from the Jacareí site (classification and application of off-grade product as non-prime product). Other highlights include: the NOX emissions reduction project; the Eco Polis environmental education program in Guarujá; and the reforestation of the surrounding area of the DOPEC site. In addition, the company carries out tests to use environmentally innovative blowing agents in Jundaí. All the DowAgrosciences sites use or maintain 100% of their packaging materials in a recycling process. In addition, 2 of the 9 sites that handle chemicals also recycle 100% of their packaging materials (Jundiaí and Franco da Rocha). The other units recycle to a lower degree, but all of them have improvement projects.

Dow is also a founding member of IMPEV (the Portuguese acronym for National Institute of Empty Pack Processing), which has a post-consumption solid waste management program.

A tanker overturned. Firemen controlled this accident, and no-one was injured.

55


SOCIETY

56

ASPECTS

INDICATOR

INDICATOR DESCRIPTION

COMMUNITY

SO1

NATURE, SCOPE AND EFFECTIVENESS OF PROGRAMS AND PRACTICES OF ASSESSING AND MANAGING IMPACT ON COMMUNITIES OF OPERATIONS, INCLUDING ENTRY, OPERATIONS AND EXIT

CORRUPTION

SO2

PERCENTAGE AND TOTAL NUMBER OF BUSINESS UNITS ANALYZED FOR RISKS RELATED TO CORRUPTION

CORRUPTION

SO3

PERCENTAGE OF EMPLOYEES TRAINED IN THE ORGANIZATION’S ANTI-CORRUPTION POLICIES AND PROCEDURES

2009

_

2010

OBSERVATIONS

zero

DOW conducts risk analysis for process safety in all its manufacturing units and also distribution risk analysis for all its hazardous chemical products. 100% of its sites undergo this evaluation. The risk analysis models used by DOW comply with international safety standards for processes and distribution and local legislations (example: CETESB). Established mitigations maintain the probability of a significant event low.

_

100%

_

100%

Risk assessments of businesses are an integral part of the Dow Corporate Code of Conduct. Local representation through the Regional Committee of Ethics is in charge of addressing and regulating the application of the Codes of Conduct in the units. The Global Department of Ethics and Compliance maintains a constant and regular dialog with the Regional Committee of Ethics, exploring and covering the potential risks in the region, including the ones related to corruption. The efforts of the Global Department of Ethics and Compliance and Regional Committee of Ethics contribute to the global process of risk assessment (ERM – Enterprise Risk Management) together with the Legal Department in guiding and counseling the business units as to potential risks. All employees receive training.


ASPECTS

INDICATOR

INDICATOR DESCRIPTION

CORRUPTION

SO4

ACTIONS TAKEN IN RESPONSE TO INCIDENTS OF CORRUPTION

PUBLIC POLICY

SO5

PUBLIC POLICY POSITIONS AND PARTICIPATION IN PUBLIC POLICY DEVELOPMENT AND LOBBYING

PUBLIC POLICY

SO6

TOTAL VALUE OF FINANCIAL AND IN-KIND CONTRIBUTIONS TO POLITICAL PARTIES, POLITICIANS AND RELATED INSTITUTIONS BY COUNTRY

ANTICOMPETITIVE BEHAVIOR

SO7

TOTAL NUMBER OF LEGAL ACTIONS FOR ANTICOMPETITIVE BEHAVIOR, ANTI-TRUST AND MONOPOLY PRACTICES AND THEIR OUTCOMES

COMPLIANCE

SO8

MONETARY VALUE OF SIGNIFICANT FINES AND TOTAL NUMBER OF NONMONETARY SANCTIONS RESULTING FROM NON-COMPLIANCE WITH LAWS AND REGULATIONS

2009

2010

_

_ _

_ zero

_

_

OBSERVATIONS

Actions are taken after the event has been examined and investigated, and the outcome may vary from a warning to dismissal

Not compatible with the internal policies of the company.

_ zero

Dow believes that taking part in discussions previous to the development of public policies is an essential role in building a positive agenda in the sustainability field. Discussions, however, were initiated more actively in 2011.

TOTAL ACTIONS AND OUTCOMES (SENTENCES)

MONETARY VALUE

57


APPENDIX Sustainability Report (2010 Dow Brazil Sustainability Summary and Global Report): The Dow Brazil Sustainability Executive Summary, which has been published since 2008, is intended to highlight the actions and strategies of the Company in the country. Many of them are the result of global and/or Latin American alignments. The material is not meant to replace the Global GRI, but rather to present the performance of the Company in Brazil; this is why it only features the indicators achieved in this country. The main ones include indicators for business, people management, ecoefficiency, safety, community and environmental actions.

GLOBAL SUSTAINABILITY REPORT OF DOW CHEMICAL COMPANY: Âť The Dow 2010 GRI follows the insurance Environmental Resources Management (ERM) methodology. The company reached Application Level A+, i.e. complete in the approach of indicators and critical topics and revised by an independent third party. ERM interviewed the collaborators at Dow headquarters in Midland (USA) and other facilities in the USA, Spain and Germany. This analysis took into account the following points:

58


» Collaborator understanding of the Dow business and sustainability strategies; » Revision of the GRI report and other proof documents; » Understanding of the logistics of data collection, processes and systems; » Inventory of global emissions and Global Asset use report; » Data check of visited facilities; » Analysis of control mechanisms; » Verification at facilities; » Process analysis of data change management.

ERM ASSESSED THE 2010 GRI REPORT BASED ON THE FOLLOWING PERSPECTIVES: » Does the report reflect the sustainability issues and challenges of Dow? » Does it adhere to the Accountability AA1000 Assurance Standard (2009) principles of inclusivity, materiality and responsiveness? » Does it provide precise data for data compilation and report presentation? This is the eighth GRI issued by Dow Chemical Company. THE 2010 Report refers to the period from 1st of January to 31st of December, 2009. It may be accessed at the website www.dow. com/sustainability as well as in the previous editions and the 2009 and 2010 versions of the Brazilian Executive Summary.

59


Science for a Sustainable World We only have one planet and resources are limited. Therefore, everything we do and how we do it is important. Dow is committed to minimizing its own environmental footprint and offering solutions that may help customers and society to do the same. The world needs solutions for major challenges, such as energy, climate change, water, feeding habits, housing, and health. This is why we employ some of the best scientists and engineers dedicated to solving such challenges with innovation. It allows us to not only invest in the planet, but also in the business. www.dow.com


Dow Brazil - Sustainability Summary 2010