This document summarizes engagement themes and company rankings from a CDP report on chemical companies' innovation for a low-carbon future. It identifies six overall engagement themes, including process efficiency, product innovation, supply chain optimization, carbon exposure, carbon regulation readiness, and water risk. For each of 10 chemical companies, it provides the company's ranking in these areas, key engagement actions identified in the CDP report, and strengths. The overall goal is to engage companies and investors on improving performance in transitioning to a low-carbon economy.

1. www.cdp.net | @CDP
CDP Investor Research
Back to the laboratory:
are global chemical companies innovating
for a low-carbon future?
August 2015
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2. www.cdp.net | @CDP
Overall engagement themes
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3. www.cdp.net | @CDP
Engagement
 Individual and collaborative engagement with companies prioritised by CDP
 CDP actively supporting institutional investors in individual and collaborative
engagement with companies
 Will provide additional information, support and coordination when needed.
 Work in progress, for investors – share your thoughts and ideas
 Traffic light coding:
Green = good performance
Amber = monitor performance, possible concern
Red = area of concern, engage with company
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Overall engagement themes (1): Process and energy efficiency
1) Set clear, strong, long-term emissions reduction
targets, both absolute and intensity, that are in line
with the methodology of Science Based Targets,
which helps companies establish meaningful and
ambitious carbon emissions reduction targets.
Page 5
Link to earnings: Improvement in process and energy efficiency can lead to cost savings and thus
enhanced earnings.

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Overall engagement themes (1): Process and energy efficiency
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2) Demonstrate emissions reduction
activities and their progress.

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Overall engagement themes (2): Product innovation
1) Provide a clearer definition of “green” products.
2) Have a better disclosure of sales and R&D spending related to “green” products.
3) Demonstrate a clear strategy to develop “green” products in order to capture the opportunity of “green”
products.
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Link to earnings: Potentially high market growth in areas where carbon emissions reduction
regulations are in place; first movers will benefit, laggards may miss out.

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Overall engagement themes (2): Product innovation
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Overall engagement themes (3): Supply chain optimization
1) Demonstrate a clear strategy to engage with supply chain on various environmental issues.
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Link to earnings: A sustainable supply chain may help companies manage reputational risk, reduce
costs, improve quality and ultimately lead to competitive advantage.

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Overall engagement themes (4): Carbon exposure
1) Provide more detailed emissions data at facility or country level so that investors can make an
accurate assessment of companies’ exposure to regulations in place in various jurisdictions.
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Link to earnings: Cost exposure to meeting regulatory requirements on carbon emissions.

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15. www.cdp.net | @CDP
Overall engagement themes (5): Carbon regulation readiness
1) Provide a clear stand on climate policy.
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Link to earnings: Companies that are truly supportive of low carbon regulations are more likely to
gain a competitive advantage should the regulatory regime change quickly in their favour.

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Overall engagement themes (5): Carbon regulation readiness
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Overall engagement themes (6): Water risk
1) Demonstrate company’s awareness of water risks and opportunities and how these could affect the
success of its growth strategy.
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Link to earnings: Potential physical risks may constrain the growth of the chemical business.

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Overall engagement themes (6): Water risk
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2) Set clear, strong, long-term water targets.

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Company level engagement topics
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22. www.cdp.net | @CDP
Ashland
Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
18 E E D B B N/A
Key engagement actions
 It is one of three companies that have increased their
normalised emissions on a per annum basis in the past decade.
 It is the only company that does not set any emissions
reduction targets.
 It is ranked bottom in product innovation:
 It did not provide any quantitative data on green sales
or R&D or related targets
 It did not provide any qualitative information on life
cycle assessment.
 It has the lowest R&D as a percentage of sales at 1.9%.
 It is ranked bottom two in supply chain optimization:
 It does not have a supply chain strategy, or effective
scope 3 reduction management.
Key strengths
 Its emissions intensity averaged over 2012-2014 is rather low.
 Its carbon exposure (carbon cost as % of EBIT) is among the
lowest.
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23. www.cdp.net | @CDP
Solvay
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Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
17 E C C E D C
Key engagement actions
 It has the highest normalised emissions intensity in the past
three years.
 It is one of three companies that have increased their
normalised emissions on a per annum basis in the past ten
years.
 It does not assess water risk at the river basin level.
 It reported that it is exposed to water risks in its supply chain
but do not request its suppliers to report on their water use,
risks and management.
Key strengths
 It provided data on green sales and relevant target, as well as
an indication of green R&D (though not a concrete figure).
 It is very active in engaging with its suppliers:
 The number of suppliers with which it engages
accounts for half of its spending.
 It has a holistic approach to address the physical risks facing its
supply chain.

24. www.cdp.net | @CDP
Eastman
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Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
16 E D D C B E
Key engagement actions
 It is the only company that has insufficient historic emissions
data for us to calculate its emissions reduction since 2005.
 It has a weak emissions reduction target:
 Its target is 3% below the science-based targets.
 Its R&D as a % of sales is joint bottom three at 2.4%.
 It has not disclosed any supply chain strategy.
 It did not respond to CDP’s water questionnaire in 2014 and
2015.
Key strengths
 Its performance against its own emissions reduction target is
on track:
 It is 3.4% above its target.

25. www.cdp.net | @CDP
Nitto Denko
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Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
15 D E E A C D
Key engagement actions
 It has very poor data transparency:
 It does not have third party verification of its scope 1
and 2 emissions data
 It did not specify the assurance type.
 It did not provide any quantitative data on green sales or R&D
or related targets.
 It is ranked joint bottom in supply chain optimization:
 It did not engage with any stakeholders of its value
chain on emissions-related issues.
 It does not identify any water-related risks that could generate
a substantive change in its business.
 It does not assess water risk at the river basin level.
Key strengths
 Its emission reduction target is the most ambitious compared
to the science-based target:
 It is 19% above the science-based target.

26. www.cdp.net | @CDP
DuPont
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Key engagement actions
 It has the fifth strongest emissions reduction target and is
performing well against it.
 It provides transparent restated emissions data all the way
back to 2004 after any current corporate action, and also has
data going back to 1990.
 It is one of three companies in our study which discloses data
on green product sales and R&D, and have related targets.
 It appears to have advocated for policy makers to support
energy efficiency standards and GHG emissions standards.
 It has the highest manufacturing emissions normalized by
revenue.
 It does not assess water risk at the river basin level.
Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
1 A A D B A B
Key strengths

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DSM
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Key engagement actions
 It underperformed in several parts of the water risk area, e.g.
 It does not give any details on its water reduction
projects.
 It reported it is exposed to water risks in its supply
chain but does not request its suppliers to report on
their water use, risks and management.
 It is ranked in the bottom five for potential carbon exposure.
 It did not request its suppliers to report on their water use, risk
and management.
Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
2 A A B D A B
Key strengths
 It is a top two performer on historic emissions reduction and
the quality of its emissions reduction target (both absolute and
intensity).
 This strong performance could be related to its
management board having bonuses linked to
emissions reduction and energy efficiency.
 It is one of three companies which disclose data on green
product sales and R&D, and have related targets; it has the
highest percentage of green sales, and spent the most of
green R&D in absolute terms.
 It has a very clear position and is supportive of legislative
responses to climate change.

28. www.cdp.net | @CDP
AkzoNobel
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Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
3 C C A C A A
Key engagement actions
 Its R&D as a % of sales is among the lowest.
 It does not assess water risk at the river basin level.
Key strengths
 It is the only company that sets a target that includes the
emissions of its supply chain and products’ emission footprints
(Scope 3 emissions).
 It is one of two companies that have green sales targets for
both 2015 and 2020.
 It actively supports initiatives calling for a move towards a low
carbon economy.
 It is a clear leader in managing its water risk, e.g.
 it asked more than half of its suppliers (in terms of
spending) to report their water risks.

29. www.cdp.net | @CDP
Sumitomo Chemical
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Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
4 B C B C B E
Key engagement actions
 It did not provide any quantitative data on green sales or R&D
or related targets.
 It did not respond to CDP’s water questionnaire in 2014 and
2015.
Key strengths
 It has the highest R&D as a percentage of sales at 6%.
 Only 1 % of its carbon emissions are exposed to existing
emissions trading schemes.
 It is ranked slightly ahead of its Japanese peers due to the
transparency on its engagement with trade associations and
related climate change policy objectives.

30. www.cdp.net | @CDP
BASF
Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
5 B A C B E A
Key engagement actions
 It is ranked bottom two for carbon regulation readiness due to:
 It appears not support a number of policies relating to
climate change in the EU, including the potential
reforms to the EU ETS to make it more efficient.
Key strengths
 It has a comprehensive emissions reporting methodology.
 It is an early-mover in emission reductions:
 dating back to the mid-1990s when it started using
eco-efficiency analysis to help identify areas of
potential economic and environmental improvements
for products and processes.
 It is one of three companies which disclose data on green
product sales and R&D, and have related targets.
 It is one of two companies using life cycle assessment (LCA)
pre-2000, so could potentially be an early mover in this area.
 It has an outstanding approach to water risk assessment and
strategy, as well as to realise the opportunities it identified.
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31. www.cdp.net | @CDP
Bayer
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Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
6 C C A A E A
Key engagement actions
 It has a weaker than average emissions reduction targets, e.g.
 its strongest target covers only 18% of scope 1+2
emissions.
 It is ranked bottom two for carbon regulation readiness. Key
points are:
 It appears to exhibit misalignment on various strands
of climate policy.
 It lacks transparency with its official position towards
climate change policies.
 Although it does express a clear position on climate
change science
Key strengths
 It is a top four performer on emissions reduction and also on
data transparency.
 It is a leader in incorporating water-related issues into its
strategic business model and into its active supply chain
engagement.

32. www.cdp.net | @CDP
Mitsubishi Chemical
Page 32
Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
7 B C D D C B
Key engagement actions
 It is ranked joint bottom on supply chain engagement:
 It does not engage with any stakeholders whatsoever
on emissions-related issues.
 It did not provide any quantitative data on green sales or R&D
or related targets.
 It does not assess water risk at the river basin level.
 It reported that it is exposed to water risks in its supply chain
but did not request its suppliers to report on their water use,
risks and management.
Key strengths
 It has the fourth strongest emissions reduction target and is
performing well against it.
 It has a comprehensive, company-wide water risk assessment
procedure.

33. www.cdp.net | @CDP
Asahi Kasei
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Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
8 C B B B D E
Key engagement actions
 It did not provide any quantitative data on green sales or R&D
or related targets.
 It did not respond to CDP’s water questionnaire in 2014 and
2015.
Key strengths
 It has the third strongest emissions reduction target and is
performing well against it.
 It set clear targets related to the use of life cycle assessment
(LCA).

34. www.cdp.net | @CDP
Dow Chemical
Page 34
Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
9 A B D E D C
Key engagement actions
 It does not disclose any supply chain strategy nor scope 3
emissions reduction management.
 It has exhibited no support of low-carbon regulations in the
US, and opposition to climate policy in EU.
 It did not respond to the supply chain management questions
within CDP’s water questionnaire.
 It does not assess water risk at the river basin level.
Key strengths
 It is ranked top on the performance against its emissions
reduction target:
 Its performance is almost 20% above its own target.

35. www.cdp.net | @CDP
PPG
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Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
10 C D E A C D
Key engagement actions
 It has the joint weakest emissions reduction target, e.g.
 Its target is 6% below the science-based targets.
 It is one of three companies that do not have third party
verification of its scope 1 and 2 emissions data and no
response to the assurance type.
 It has not disclosed any use of life cycle assessment (LCA).
 It is ranked joint bottom in supply chain optimization:
 It did not respond if it engaged with any stakeholders
of its value chain on emissions-related issues.
 It is the only responder that does not see water-related
opportunities which could benefit its business.
Key strengths
 It is reducing emissions by the most over 2005-2014, despite
already being the lowest emitter.

36. www.cdp.net | @CDP
LG Chem
Page 36
Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
11 D D C E C B
Key engagement actions
 It does not set or has set but not disclosed data on green sales
and related targets.
 Its R&D as a percentage of sales is ranked joint bottom two at
2.1%.
 It is ranked in the bottom two for potential carbon exposure.
 It did not request its suppliers to report on their water use, risk
and management.
 It does not assess water risk at the river basin level.
Key strengths
 It is one of the two companies using life cycle assessment
(LCA) pre-2000, so could potentially be an early mover in this
area.

37. www.cdp.net | @CDP
Shin-Etsu
Page 37
Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
12 E E A C C B
Key engagement actions
 It is one of three companies that increased their normalised
emissions (on a per annum basis) over past ten years:
 It has the highest increase among all.
 It sets an emissions reduction intensity target but did not
provide sufficient data for us to fully assess it.
 It did not provide details on its use of life cycle assessment
(LCA).
Key strengths
 It has the most transparent emissions data:
 It is the only company to receive a high level of
assurance from a third party on 100% of its scope 1
and scope 2 emissions.
 It is very active in engaging with its suppliers:
 The number of suppliers accounts for 70% of its
spending.

38. www.cdp.net | @CDP
Toray
Page 38
Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
13 D B A D E E
Key engagement actions
 Its emissions reduction target is weak compared to the
science-based target, and it merely meets its own target.
 Its emissions data transparency is poor:
 It only has limited assurance and the proportion of
verified emissions is low.
 It did not respond to CDP’s water questionnaire in 2014 and
2015.
Key strengths
 It is one of three companies that provided quantitative
information on both green sales and R&D and related targets.
 It is one of two companies that have green sales targets for
both 2015 and 2020.

39. www.cdp.net | @CDP
Evonik
Page 39
Rank Process and energy
efficiency
Product
innovation
Supply chain
optimization
Carbon
exposure
Carbon regulation
readiness
Water risk
14 C E C D D N/A
Key engagement actions
 It has the joint weakest emissions reduction target, e.g.
 Its target is 6% below the science-based targets.
 It did not provide any quantitative data on green sales or R&D
or related targets.
Key strengths
 It has a comprehensive emissions reporting methodology, e.g.
 It adopts operational control as its reporting
boundary.
 It receives verification for 100% of their Scope 1 and
Scope 2 emissions.

40. www.cdp.net | @CDP
Next steps
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41. www.cdp.net | @CDP
Next Steps
 Individual engagement with companies
 Collaborative engagement with companies
 Updates to league tables when appropriate
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