Sustainable Packaging Innovation: Delivering Sustainable Solutions Across the Value Chain

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1 Sustainable Packaging Innovation: Delivering Sustainable Solutions Across the Value Chain Bob Maughon R&D Vice President, Packaging & Specialty Plastics and Hydrocarbons The Dow Chemical Company

2 Future Dow Operating Segments TECHNOLOGY PLATFORMS Polyolefins Elastomers Polyurethanes Silicones Acrylics Ethylene oxide derivatives Propylene oxide derivatives Cellulosics 2016 Net Sales: ~$40B >20% Op. EBITDA Margin* ~$20B Net Sales >25% Op. EBITDA MARGIN Packaging & Specialty Plastics ~$11B Net Sales >15% Op. EBITDA MARGIN Industrial Intermediates & Infrastructure ~$8B Net Sales ~15% Op. EBITDA MARGIN Performance Materials & Coatings WORLD-CLASS CAPABILITIES High-throughput R&D Catalyst discovery Polymer science Formulation expertise Process engineering High-performance computer modeling Application development *Includes silicones net sales and EBITDA for FY16. Operating EBITDA is defined as income from continuing operations, net of tax excluding depreciation and amortization, interest income, interest expense and amortization of debt discount, taxes, and significant items

3 Where Is Food Lost? The Role of Packaging in Addressing the Challenge Waste Breakdown by Stages of Value Chain 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 5% 13% 7% 37% 38% Consumption Distribution Processing Handling & Storage Production 50% of food loss can be Food Waste costs ~$750 Billion annually reduced 0 by better packaging

4 Packaging Delivers Significant Impact on Shelf Life and Reducing Food Waste Days Days 7 70 Days W H O L E C H I C K E N B R O C O L I F L O R E T G R A P E S

5 Recycling Many Plastics Is Challenging Technical Infrastructure Consumer Behavior Success will require focus on all three pillars

6 Plastics Are Under Attack Proposals for Plastic Bag Bans are Becoming More Wide Spread Pressure is Increasing Globally for Transparency & Disclosure

7 Delivering on the Positive Value of Flexible Plastic Packaging SOLUTIONS TO REDUCE FOOD WASTE REDEFINE THE FUTURE OF PACKAGING REDUCTIONS IN ENERGY CONSUMPTION DESIGN TOOLS FOR SUSTAINABLE PACKAGING COLLABORATIONS THAT REDEFINE THE FUTURE OF PACKAGING ADVANCEMENTS IN END OF LIFE OPTIONS DECREASE FOOD WASTE AND MATERIAL USE INCREASE RECYCLABILITY OF FLEXIBLE PACKAGING RECOVER THE VALUE FROM WASTE

8 The Innovation Challenge What Our Customers Want Innovation Must Bring: Enhanced product performance that meets Value Chain needs and with sustainable solutions Lower production cost and energy demands Increased plant capacity / capability What We Control Material Design

9 ess arch Market-Driven Innovation Model Material Science Process Research Collaborate Material Science Process Research Value Chain Driven Innovation alue Chain Driven Innovation Value Chain Driven Innovation Material Material Science Innovate Value Chain Driven Innovation Application Development Value Science Chain Driven Innovation Application Development Process Research Catalyst Research Material Science Material Science Catalyst Research Process Research Catalyst Research Catalyst Research Catalyst Research Application Development Application Development Application Development Application Development Market to Market Monomer to Monomer Converter Supplier / Equipment Manufacturer Commercializatio Commercializatio n n Brand Owner Market to Monomer Retailer Converter Accelerate Converter Supplier / Equipment Manufacturer Supplier / Equipment Manufacturer Value Chain Brand Owner Converters Brand Owner Equipment Retailer Manufacturers Retailer Brand Owners Retailers Converter Retaile Supplier / Equipment Manufacturer Commercializatio n Brand Owner Conver Supplie Equipm Manufa Brand Process Research Catalyst Capitalizing on innovation: Research A growth imperative Retailer

10 Resins to Structures Deliver Functionality & Sustainability ML Structures Functionality Sustainability Down-gauge Enable Recyclability ML Structures 3-11 Layers Reduce Energy and Waste

11 Catalysis Can Significantly Improve Process Sustainability Polyethylene: Higher Efficiency and Plant Throughput Through Improved Catalyst Design Increasing Thermal Stability and Efficiency

12 Superior Packaging Abuse Resistance Collaborate Reduced Weight & Thickness Innovate Superior Stiffness & Toughness Accelerate Higher Performance Up to 25% Down-gauging 4X 1X 2X DOWLEX TM ELITE TM INNATE DOWLEX TM ELITE TM INNATE

13 Toughness Key Elements of the Innovation Catalyst & Process Innovation that delivers: High MW capability Optimized macromolecular architecture High co-monomer incorporation Can run at high Rx temperature (> 160 o C) High production rates and improved energy integration/efficiency Market Value Proposition INNATE Precision Packaging Resins Traditional mlldpe Excellent sustainability profiles due to light-weighting potential Stiffness Film toughness without compromising stiffness and other key properties

14 Dart Impact Strength (g) Dart Impact Strength (g) Enhancing Abuse and Drop Test Performance Laminated Heavy Duty Bags: Rice/wheat flour bags, fertilizer bags, seed bags, etc. Example: 5kg rice bag Structure: BOPA (15 µm)//pe (100 µm) Unmet need: unable to meet a stringent 5m drop test requirement from a brand-owner Example: 5kg seed bag Structure: PET (12 µm)//pe (140 µm) Unmet need: Downgauging to 100 µm to reduce cost & increase the yield Control 30% INNATE ST50 70% INNATE TH60 0 Incumbent (140 μm) INNATE ST50 (100 μm)

15 Impact Across Entire Value Chain Accelerates Implementation Polymer Design Processability Package Performance Resin Manufacturer Converter Processing Co-Packer Brand Owner Processing Retailer & Consumer Economic Impact Polymer Differentiation Processing Economics Downgauge Reduced Unsaleable Performance & Value Positioning Tougher Performance Bag Drop Brand Trust Example Dow Resin Bag vs. Asset Avg. Competitive Cost to Produce Reduced Costs Reduced Bag Breaks 10% Meets Targets Highly Satisfied The Entire Value Chain Must Be Considered

16 Recycle Solutions for Barrier and Non-Barrier Applications Recyclable PE (Monomaterial Laminate) Recyclable PE Based Barrier Film Reverse printed PE adhesively laminated to 3-layer PE sealant film 5/7-layer coex Barrier Film with EVOH/PA Lamination Layer Adhesive Layer Coex Layer Coex Layer Sealant Layer Surface Layer Tie Layer Barrier Layer Sealant Layer Seal Jaw Seal Jaw Laminate Coex

17 Package Design Enables Sustainable Innovation Collaborate Innovate Accelerate Reduced Weight Package Design Efficient Packaging

18 Sustainable Impact Is Needed Across the Value Chain to Succeed Industry and Consumer Engagement Recyclability Improved Performance Process Innovation Retailer & Consumer Brand Owner Converter Resin Manufacturer Package Design Downgauging / Lightweighting Recycle Compatilabizers Catalyst Breakthroughs

19 Path Forward: Working Together Increase Consumer Education & Collection Understand the value of plastics Segregation at source Improve Waste Management Infrastructure Enhance Recyclability All-PE technology Compatibilizer Develop End Use Markets Mechanical recycling Chemical recycling Energy recovery Be creative

20 We Believe in the Future of Plastics U.S. Gulf Coast 1535 kta Sadara 1300 kta USA / CANADA EUROPE CHINA INDIA REST of ASIA CENTRAL AMERICA MEAF SOUTH AMERICA Solution PE LDPE 750 KTA 350 KTA ELITE LDPE 400 KTA 350 KTA Elastomers 220 KTA NORDEL 200 KTA Elastomers 330 KTA

21 Thank you Trademark of The Dow Chemical Company (Dow) or an affiliated company of Dow