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Developing Organizational Readiness for Risk Reduction and Risk Mitigation:

Recent Lessons at Dow

Greg CochranRemediation and M&A Due Diligence EHS

AHC ConferenceSaratoga Springs, NY

June 2005

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About Dow …• A science and technology leader with

annual sales of $40 billion • Founded in 1897 by Herbert H. Dow in

Midland, Michigan• Supplies more than 3,300 products to

customers in 175 countries• From 165 manufacturing sites in 37

countries• Employs 43,000 people globally

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Building Construction

Food

Transportation

Furniture and Furnishings

Paper and Publishing

Home Care and Improvement

Personal and Household Care

Health and Medicine

WaterPurification

Electronics and Entertainment

About Dow …

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Remediation Organization

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Organizational Alignment

• Global Scope• Oversight by the Remediation Strategy

Board (EH&S, Finance, Legal)• Consistent Work Process & Implementation• Performance Metrics

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Global Remediation Scope

• 5 Continents• 45 (out of 165) Operating Sites • 200 Non-Operating Orphan (Legacy) Sites • 50 U.S. Superfund Sites• ~500 Projects • People

– 15 Remediation Leaders– 10 Project Leaders– 200-250 Partner (Contract) Employees

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Remediation Strategy Board

Remediation DirectorRemediation Director

Europe EH&SEurope EH&S

LegalLegal

Regulatory AffairsRegulatory Affairs

FinanceFinance

EH&S VPEH&S VP

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MeetResponsible Care Commitment At Least Long Term Cost of Ownership

Use Risk-Based Targets

Manage Projects Effectively

Negotiate Win-Win Solutions

Utilize Cost-SavingTechnology

Mission & Objectives

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Performance Measures

• EH&S – Compliance, Safety• Fiduciary – Environmental Liability Reserves,

Sarbanes Oxley• Strategic Focus – Site and Business alignment• Spending Forecasting & Control• Strategic Partners (Contractors) Performance• Continuous Improvement - Creativity, Value Added,

Breakthrough

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Drivers for Organizational Change

External:• Emerging Issues – Vapor Intrusion, NRD,

Brownfields Redevelopment• Alignment with Regulatory Agencies –

Relationship, Credibility, Consistency• Accountability – Community, Public, Shareholders

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Drivers for Organizational Change(cont’d)

Internal:• Corporate Restructuring – Re-aligned to EH&S

function, Layers eliminated• Mergers & Acquisitions Due Diligence –

Incorporate additional responsibilities• Organizational Renewal – Succession Planning,

Career Development

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Changes Implemented

Site by Site OrientationShorter Term FocusQuiet and InvisibleSystems - WeakConventional ContractsReacting to InfluencesStagnant Organization

Portfolio OrientationStrategic FocusFully Integrated on TeamsSystems OrientedStrategic PartnershipManaging Emerging IssuesHigh Powered Organization

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The Key Role: Remediation Leader

Accountable for All Aspects of Remediation within a geographic portfolio

– Technology– Negotiations– Compliance– Communications– Implementation– Spending

Done as a Team Leader with Other Functions

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Portfolio/Geographic Approach

• Enables Relationship Building – Trust & Credibility

• Consistency• Furthers Strategic Alignment• Issue Management

Greg CochranDirector of Remediation/EH&S Mergers & Acquisitions

M&A Due Diligence

Louisiana/ArkansasLouisiana/Arkansas

Colorado/CaliforniaColorado/California

MichiganMichigan

Europe/Africa/AsiaEurope/Africa/Asia

W.Virginia/North EastW.Virginia/North East

Orphan SitesOrphan SitesCanadaCanada

SuperfundSuperfund

TexasTexas

UNITED STATES

South AmericaSouth America

David GrahamVice President – EH&S

Organizational Design

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Early Team Successes• Site Strategic Leadership Teams• Regional Regulatory Affairs Teams• New Jersey NRD Team• Land Revitalization Team• Strategic “Peer Review” Process

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Continuous Improvement

• Six Sigma Mindset – 4 Black Belts, 6 Green Belt Project Leaders

• “Silo” Intolerant – Recognize those who “leverage” in or out

• Win-Win solutions are critical• Challenges & change are constant – get

over it!