Dow Chemical'S Use Of E-Commerce In

Executive Summary

No organization could be further from the image of the "tree hugger" than the world's largest chemical producer, Dow Chemical Company. Yet for all of industry's superficial acknowledgement of the need for environmental responsibility, no other organization has so completely focused on balancing financial, social and environmental results. Dow has incorporated a highly successful e-commerce strategy, not only for the benefits it can yield in business results, but also as part of its ongoing implementation and management of its Triple Bottom Line business model.

Introduction

"The ocean will be dead in seven years!" So prophesied actor Ted Danson nearly 20 years ago in the environmental Chicken Little alarm that encouraged everyone to "save the earth." Clearly, the ocean is still alive, and even Ralph Nader has given up his campaign to rid Los Angeles of cars. Well-meaning but misinformed and misdirected groups and individuals so trivialized environmental issues that those with the means and ability to make real differences in essence tuned them out.

Eventually, formerly left-leaning members of academia began to realize that no, society was not going to regress to horse-and-buggy days; and businesses must operate profitably if they are to remain in business and so benefit the local, regional and national economy. A conference held in North Carolina in 1982 was the first to address both extremes in an effort to arrive at workable solutions. By the early 1990s, the concept of the triple bottom line (TBL) had emerged. The TBL model recognizes that businesses must be profitable, but it measures their success in terms of social and environmental issues as well. Long-term goals of the TBL include bringing value to all stakeholders and achieving truly sustainable practices.

The view of the TBL model at most organizations is that it is a "nice" gesture but not truly workable in the real world. Dow Chemical Company takes the opposite view, formally adopting the TBL business model in the mid-1990s. The purpose here is to assess Dow's management of its TBL strategy and to evaluate how it uses e-commerce as a strategy implementation tool.

Strategic Issues

The Triple Bottom Line

Dow's first TBL business report in 1999 was the first to reflect that formal adoption of the model (Dow Releases First 'Triple Bottom Line' Report, 1999). The primary focus of business - and its investors - is that of the "bottom line," but the TBL also looks at other quantities and qualities that also are important for the long term. "At its narrowest, the term 'triple bottom line' is used as a framework for measuring and reporting corporate performance against economic, social and environmental parameters" (What is the Triple Bottom Line?). Dow Chemical uses a broader definition, however, one which is "used to capture the whole set of values, issues and processes that companies must address in order to minimize any harm resulting from their activities and to create economic, social and environmental value" (What is the Triple Bottom Line?). This broader definition expands to include all of the company's stakeholders - "shareholders, customers, employees, business partners, governments, local communities and the public" (What is the Triple Bottom Line?) - in all locations in which it operates.

In this age of globalization and the rapid economic development of Third World countries, this concerted attention to sustainability and corporate social responsibility is doubly important. Many developing nations lack the strict environmental laws that exist in the United States and other developed nations, and the more unethical types have used many of these developing nations to practice sloppy manufacturing in favor of more profitable operations. Likely the most dramatic of the results of this type of approach to chemical manufacturing in developing nations remains the disaster that occurred at the Union Carbide plant in Bhopal, India in which thousands were sickened or died as a result of a chlorine gas leak at the site.

Clearly, the costs of repair and cleanup negated all of the profits that Union Carbide had enjoyed from the operation of the Bhopal plant prior to the disaster, and without even considering the cost of the loss of human lives. The TBL model addresses not only the financial bottom line resulting from operations, but also that including corporate responsibility and sustainability over the long term. The Bhopal operation included neither. Corporate responsibility requires that the organization acknowledge its role in the community, the local economy and the national economy of the host country. Sustainability refers to whether the operation is sustainable over time.

"Over time" can be nebulous and can be used by less scrupulous companies to refer to months or one or two years, but sustainability in the TBL definition refers to whether there is the possibility that workers' children and grandchildren will be able to carry on the same types of operations. The definition of sustainability in this sense assumes no technological advances or economic changes in the specific area being evaluated. The manufacturing of laundry starch can be used as an example. Once a product found in every household and used with regularity, starch is a rarity in today's households. The market for it disappeared in response to cultural shifts and technological change, not because there was any great problem in sustaining the manufacture of it. The telling factor in assessing sustainability is whether something can be continued for generations based on current practice.

An Environmental Example

Given that ozone (O3) is a naturally-occurring substance in the Earth's atmosphere, the debate surrounding whether it is increasing or decreasing superficially seems to be little more than an academic exercise, or alternatively something for militant environmentalists to champion. There is confusion over ozone, likely because when it is at ground level, it is a pollutant and carries a negative connotation. It is the ozone layer of the outer atmosphere that constitutes the beneficial ozone, and it is that layer that needs to be protected.

The ozone layer is referred to as something that is always present and that is correct, but such reference implies that the ozone layer is static and is just "there." This is not the case, for the very action of the sun's rays on the O2 molecules present in the stratosphere both produces and destroys O3 molecules literally millions