INSIGHT by Planet Tracker
〉Dow is on a pathway aligned with +3°C although the company claims it is ‘aligned with a 1.5°C world’
〉72% of emissions come from Scope 3 yet there is no Scope 3 target for 2030
〉Planet Tracker’s analysis shows that Dow is on track to hit its target of a 15% reduction in Scope 1 & 2 emissions versus 2020, with the caveat that efficiency improvements may need to accelerate, particularly for Scope 1
〉Dow is relying on new technologies to provide the promised emission reductions, but as the management states these are ‘not yet economically available’
〉The executive team has little direct financial incentive to tackle this problem as only 5% of the short-term incentives are linked to sustainability
〉Presently, investors do not have the information to understand how Dow is heading to carbon neutrality in 2050.
Planet Tracker’s analysis shows that Dow is on track for a +3ºC climate scenario by 2030, although the company claims it is ‘aligned with a 1.5°C world’. With 72% of emissions coming from Scope 3 and Dow having no Scope 3 target, it is difficult to have confidence in the management’s statement.
Dow targets being carbon neutral for Scope 1, 2 & 3 by 2050. With a reliance on fossil fuels as a feedstock and energy source, the company faces considerable transition risk. About 35% of total emissions come from buying oil and natural gas for use as energy and feedstock. As with all chemical companies, it will be impossible to decarbonise the supply chain without addressing the oil and gas usage.
Dow’s total emissions in 2022 were 112,028 ktCO2e, of which 25% were Scope 1, 4% were Scope 2 and 72% were Scope 3. There is no detailed roadmap for eliminating Scope 3 emissions and no discussion of possible technologies or other action required. Although company states ‘tracking and reducing Scope 3 emissions are critical to Dow’s climate strategy’, they also acknowledge that significant future emission reduction will require “new technologies [that are] not yet economically available”.
Dow purchased 21.5 million tonnes of feedstock in 2021, i.e. base chemicals that are turned into plastics, all derived from oil and natural gas. This has an implied CO2e footprint of about 60 million tonnes. The carbon neutral Scope 3 target is simply not credible without a detailed plan to replace all this feedstock with recycled or renewable alternatives.
“As with many other chemical companies, Dow is relying on new technologies to provide the promised emission reductions but admits these are ‘not yet economically available’.
“There is expected to be a gap of 3-4 million tonnes by 2050 which will require ‘new technologies’ to close. This implies that all the other anticipated progress out to 2050 does NOT require new technologies, which lacks credibility in our view.
“Dow has also announced recycling initiatives totalling 880,000 tonnes and has a goal of 3 million tonnes by 2030. This is a long way short of the required capacity to achieve carbon neutrality for Scope 3. Our overall assessment is that Dow does not have a credible roadmap to become carbon neutral by 2050”.
-John Willis, Head of Research at Planet Tracker
The Climate Transition Analysis of Dow is part of a series examining the climate transition plans of sectors on the Climate Action 100+ list. Previous analyses have revealed similar deficiencies in companies like BASF and Bayer, further underscoring the urgency for effective Scope 3 emissions reduction. Planet Tracker also released a thematic analysis encompassing FMCG giants in the Food, Home Care and Personal Care sectors covered by CA100+.
Explore the report
Dow Climate Transition Analysis
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Planet Tracker is aiming for a significant, irreversible transformation of global financial activities by 2030.
To accomplish this, Planet Tracker seeks to change the practices of financial decision-makers to avoid ecological collapse and to show how environmental data can be used to drive ambitious positive financial outcomes.
Planet Tracker generates break-through analytics that reveal both the role of capital markets in the degradation of our ecosystem and the opportunities of transitioning to a zero-carbon, nature positive economy.
Through its reports and analyses and a programme of proactive engagement with financial institutions, Planet Tracker provides real world examples of how natural capital and ecological decline impact both the financial community and the companies in which they invest and seeks to internalise natural resources that have traditionally been seen as externalities and thus not valued in traditional economic models.
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