DOW US Equity☆

ITEM 1A. RISK FACTORS

The factors described below represent the Company's principal risks.

CLIMATE CHANGE - RELATED RISKS

Climate Change: Climate change-related risks and uncertainties, legal or regulatory responses to climate change and failure to meet the Company’s climate change commitments could negatively impact the Company’s results of operations, financial condition and/or reputation.

The Company is subject to increasing climate-related risks and uncertainties, many of which are outside of its control. Climate change may result in more frequent severe weather events, potential changes in precipitation patterns and extreme variability in weather patterns, which can disrupt the operations of the Company as well as those of its customers, partners and vendors.

The transition to lower greenhouse gas emissions technology, the effects of carbon pricing and changes in public sentiment, regulations, taxes, public mandates or requirements and increases in climate-related lawsuits, insurance premiums and implementation of more robust disaster recovery and business continuity plans could increase costs to maintain or resume the Company’s operations or achieve its sustainability commitments in the expected timeframes, which would negatively impact the Company’s results of operations.

In 2020, the Company announced commitments to reduce its net annual greenhouse gas emissions by an additional 5 million metric tons, or 15 percent compared with its 2020 baseline, by 2030 (the 2020 baseline represents a 15 percent reduction in greenhouse gas emissions since 2005) and its intention to be carbon neutral by 2050 (Scope 1+2+3, as defined by the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard, plus product benefits). Execution and achievement of these commitments within the currently projected costs and expected timeframes are also subject to risks and uncertainties which include, but are not limited to: advancement, availability, development and affordability of technology necessary to achieve these commitments; unforeseen design, operational and technological difficulties; availability of necessary materials and components; adapting products to customer preferences and customer acceptance of sustainable supply chain solutions; changes in public sentiment and political leadership; the Company’s ability to comply with changing regulations, taxes, mandates or requirements related to greenhouse gas emissions or other climate-related matters; and the pace of regional and global recovery from the pandemic caused by coronavirus disease 2019 ("COVID-19"). Given the focus on sustainable investing, if the Company fails to meet its climate change commitments within the committed timeframe and adopt policies and practices to enhance sustainability, the Company’s reputation and its customer and other stakeholder relationships could be negatively impacted and it may be more difficult for the Company to compete effectively or gain access to financing on acceptable terms when needed, which would have an adverse effect on the Company’s results of operations.

PANDEMIC - RELATED RISKS

Public Health Crisis: A public health crisis or global outbreak of disease could have a negative effect on the Company's manufacturing operations, supply chain and workforce, creating business disruptions that couldhave a substantial negative impact on the Company’s results of operations, financial condition and cash flows.

A public health crisis, including a pandemic similar in nature to COVID-19, could impact all geographic regions where Dow products are produced and sold. The global, regional and local spread of a public health crisis could result, and in the past has resulted in significant global mitigation measures, including government-directed quarantines, social distancing and shelter-in-place mandates, travel restrictions and/or bans, mask and vaccination mandates, restrictions on large gatherings and restricted access to certain corporate facilities and manufacturing sites. Business disruptions and market volatility resulting from a public health crisis could have a substantial negative impact on the Company’s results of operations, financial condition and cash flows. The adverse impact of a pandemic could include, and in the past has included without limitation, fluctuations in the Company’s stock price due to market volatility; a decrease in demand for certain Company products; price declines; reduced profitability; supply chain disruptions impeding the Company’s ability to ship and/or receive product; temporary idling or permanent closure of select manufacturing facilities and/or manufacturing assets; asset impairment charges; interruptions or limitations to manufacturing operations imposed by local, state or federal governments; reduced market liquidity and increased borrowing costs; workforce absenteeism and distraction; labor shortages; customer credit concerns; increased cyber security risk and data accessibility disruptions due to remote working arrangements; workforce reductions and fluctuations in foreign currency markets. Additional risks may include, but are not limited to: shortages of key raw materials; potential impairment in the carrying value of goodwill; additional asset impairment charges; increased obligations related to the Company’s pension and other postretirement benefit

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plans; and tax valuation allowance; and may also have the effect of heightening many of the other risks described in this "Risk Factors" section.

MACROECONOMIC RISKS

Financial Commitments and Credit Markets: Market conditions could reduce the Company's flexibility to respond to changing business conditions or fund capital needs.

Adverse economic conditions could reduce the Company’s flexibility to respond to changing business and economic conditions or to fund capital expenditures or working capital needs. The economic environment could result in a contraction in the availability of credit in the marketplace and reduce sources of liquidity for the Company. This could result in higher borrowing costs.

Global Economic Considerations: The Company operates in a global, competitive environment which gives rise to operating and market risk exposure.

The Company sells its broad range of products and services in a competitive, global environment, and competes worldwide for sales on the basis of product quality, price, technology and customer service. Increased levels of competition could result in lower prices or lower sales volume, which could have a negative impact on the Company’s results of operations. Sales of the Company's products are also subject to extensive federal, state, local and foreign laws and regulations; trade agreements; import and export controls; taxes; and duties and tariffs. The imposition of additional regulations, controls, taxes and duties and tariffs or changes to bilateral and regional trade agreements could result in lower sales volume, which could negatively impact the Company’s results of operations.

Economic conditions around the world, and in certain industries in which the Company does business, also impact sales price and volume. As a result, market uncertainty or an economic downturn driven by inflationary pressures; political tensions; war, including the ongoing conflict between Russia and Ukraine and the related sanctions and export restrictions; terrorism; epidemics; pandemics; or political instability in the geographic regions or industries in which the Company sells its products could reduce demand for these products and result in decreased sales volume, which could have a negative impact on the Company’s results of operations.

In February 2022, Russia invaded Ukraine resulting in the United States, Canada, the European Union and other countries imposing economic sanctions on Russia. Dow suspended all purchases of feedstocks and energy from Russia and has significantly reduced its operations and product offerings in the country. Dow has also stopped all investments in Russia and is only supplying limited essential goods to Russia. These actions have not had and are not expected to have a material impact on the Company's financial condition or results of operations. However, the fluidity and continuation of the conflict may result in additional economic sanctions and other impacts which could have a negative impact on the Company’s financial condition, results of operations and cash flows. These include decreased sales; supply chain and logistics disruptions; volatility in foreign exchange rates and interest rates; inflationary pressures on and availability of raw materials and energy, most notably in Europe; and heightened cybersecurity threats.

In addition, volatility and disruption of financial markets could limit customers’ ability to obtain adequate financing to maintain operations, which could result in a decrease in sales volume and have a negative impact on the Company’s results of operations. The Company’s global business operations also give rise to market risk exposure related to changes in inflation, foreign currency exchange rates (especially in highly inflationary economies such as Argentina), interest rates, commodity prices and other market factors such as equity prices. To manage such risks, the Company enters into hedging transactions, where deemed appropriate, pursuant to established guidelines and policies. If the Company fails to effectively manage such risks, it could have a negative impact on its results of operations.

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Pension and Other Postretirement Benefits: Increased obligations and expenses related to the Company's defined benefit pension plans and other postretirement benefit plans could negatively impact its financial condition and results of operations.

The Company has defined benefit pension plans and other postretirement benefit plans (the “plans”) in the United States and a number of other countries. The assets of the Company's funded plans are primarily invested in fixed income securities, equity securities of U.S. and foreign issuers and alternative investments, including investments in real estate, private equity and absolute return strategies. Changes in the market value of plan assets, investment returns, discount rates, mortality rates, regulations and the rate of increase in compensation levels may affect the funded status of the Company's plans and could cause volatility in the net periodic benefit cost, future funding requirements of the plans and the funded status of the plans. A significant increase in the Company's obligations or future funding requirements could have a negative impact on the Company's results of operations and cash flows for a particular period and on the Company's financial condition.

Supply/Demand Balance: Earnings generated by the Company's products vary based in part on the balance of supply relative to demand within the industry.

The balance of supply relative to demand within the industry may be significantly impacted by the addition of new capacity, especially for basic commodities where capacity is generally added in large increments as world-scale facilities are built. This may disrupt industry balances and result in downward pressure on prices due to the increase in supply, which could negatively impact the Company’s results of operations.

LEGAL AND REGULATORY RISKS

Environmental Compliance: The costs of complying with evolving regulatory requirements could negatively impact the Company's financial results. Actual or alleged violations of environmental laws or permit requirements could result in restrictions or prohibitions on plant operations, substantial civil or criminal sanctions, as well as the assessment of strict liability and/or joint and several liability.

The Company is subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to pollution, protection of the environment, climate change, greenhouse gas emissions, and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials. In addition, the Company may have costs related to environmental remediation and restoration obligations associated with past and current sites as well as related to its past or current waste disposal practices or other hazardous materials handling. Although management will estimate and accrue liabilities for these obligations, it is reasonably possible that the Company’s ultimate cost with respect to these matters could be significantly higher, which could negatively impact the Company’s financial condition and results of operations. Costs and capital expenditures relating to environmental, health or safety matters are subject to evolving regulatory requirements and depend on the timing of the promulgation and enforcement of specific standards which impose the requirements. Moreover, changes in environmental regulations could inhibit or interrupt the Company’s operations, or require modifications to its facilities. Accordingly, environmental, health or safety regulatory matters could result in significant unanticipated costs or liabilities. For additional information, see Part II, Item 7. Other Matters, Environmental Matters in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Health and Safety: Increased concerns regarding the safe use of chemicals and plastics in commerce and their potential impact on the environment has resulted in more restrictive regulations and could lead to new regulations.

Concerns regarding the safe use of chemicals and plastics in commerce and their potential impact on health and the environment reflect a growing trend in societal demands for increasing levels of product safety and environmental protection. These concerns could manifest themselves in stockholder proposals, preferred purchasing, delays or failures in obtaining or retaining regulatory approvals, delayed product launches, lack of market acceptance and continued pressure for more stringent regulatory intervention and litigation. These concerns could also influence public perceptions, the viability or continued sales of certain of the Company's products, its reputation and the cost to comply with regulations. In addition, terrorist attacks and natural disasters have increased concerns about the security and safety of chemical production and distribution. These concerns could have a negative impact on the Company's results of operations.

Local, state, federal and foreign governments continue to propose new regulations related to the security of chemical plant locations and the transportation of hazardous chemicals, which could result in higher operating costs.

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Litigation: The Company is party to a number of claims and lawsuits arising out of the normal course of business with respect to product liability, patent infringement, employment matters, governmental tax and regulation disputes, contract and commercial litigation, and other actions.

Certain of the claims and lawsuits facing the Company purport to be class actions and seek damages in very large amounts. All such claims are contested. With the exception of the possible effect of the asbestos-related liability of Union Carbide Corporation (“Union Carbide”) as described below, it is the opinion of the Company’s management that the possibility is remote that the aggregate of all such claims and lawsuits will have a material adverse impact on the Company’s consolidated financial statements.

Union Carbide is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past four decades. At December 31, 2022, Union Carbide's total asbestos-related liability, including future defense and processing costs, was $947 million ($1,016 million at December 31, 2021).

Plastic Waste: Increased concerns regarding plastic waste in the environment, consumers selectively reducing their consumption of plastic products, a lack of plastic waste collection and recycling infrastructure, or new or more restrictive regulations and rules related to plastic waste could reduce demand for the Company’s plastic products and could negatively impact the Company’s financial results.

Local, state, federal and foreign governments have been increasingly proposing regulations to address the global plastic waste challenge, including, but not limited to, extended producer responsibility fees, a Global Plastics Treaty and bans on non-essential items. These regulations on plastic waste drive demand toward plastic solutions that are recyclable, reusable, made with recycled content and/or renewable raw materials. In addition, without proper waste collection and recycling infrastructure at scale, plastics have faced increased public scrutiny due to negative coverage of plastic waste in the environment, including the world’s oceans and rivers. As Dow is one of the world’s largest producers of plastics, increased pressure on the use of plastics, despite positive carbon benefits and essential functions such as food preservation and medical uses, could cause reduced demand for the Company’s polyethylene products which could negatively impact the Company’s financial condition, results of operations and cash flows.

OPERATIONAL AND STRATEGIC RISKS

Company Strategy: Implementing certain elements of the Company's strategy could negatively impact its financial results.

The Company currently has manufacturing operations, sales and marketing activities, and joint ventures in emerging geographic regions. Activities in these geographic regions are accompanied by uncertainty and risks including: navigating different government regulatory environments; relationships with new, local partners; project funding commitments and guarantees; expropriation, military actions, war, terrorism and political instability; sabotage; uninsurable risks; suppliers not performing as expected resulting in increased risk of extended project timelines; and determining raw material supply and other details regarding product movement. In addition, disruptions to supply chains, distribution chains and/or public and private infrastructure, including those caused by industry capacity constraints, material availability, global logistics delays and constraints arising from, among other things, the transportation capacity of ocean shipping containers and labor availability constraints, could materially and adversely impact the Company's business operations. If the manufacturing operations, supply chains, sales and marketing activities, and/or implementation of these projects is not successful, it could adversely affect the Company’s financial condition, cash flows and results of operations.

Cyber Threat: The risk of loss of the Company’s trade secrets, know-how or other sensitive business information or disruption of operations could negatively impact the Company’s financial results.

Cyber-attacks or security breaches could compromise confidential, business critical information, cause a disruption in the Company’s operations or harm the Company's reputation. The Company has attractive information assets, including trade secrets, know-how and other sensitive, business critical information. While the Company has a comprehensive cyber-security program that is continuously reviewed, maintained and upgraded, a significant cyber-attack could result in the loss of critical business information and/or could negatively impact operations, which could have a negative impact on the Company’s financial results.

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Goodwill: An impairment of goodwill could negatively impact the Company’s financial results.

At least annually, the Company assesses goodwill for impairment. If testing indicates that goodwill is impaired, the carrying value is written down based on fair value with a charge against earnings. Where the Company utilizes a discounted cash flow methodology in determining fair value, continued weak demand for a specific product line or business could result in an impairment. Accordingly, any determination requiring the write-off of a significant portion of goodwill could negatively impact the Company's results of operations. See Note 12 to the Consolidated Financial Statements for additional information regarding the Company's goodwill impairment testing.

Operational Event: A significant operational event could negatively impact the Company's results of operations.

As a diversified chemical manufacturing company, the Company's operations, the transportation of products, cyber-attacks, pandemics and other public health-related events or severe weather conditions and other natural phenomena (such as freezing, drought, hurricanes, earthquakes, tsunamis, floods, etc.) could result in an unplanned event that could be significant in scale and could negatively impact operations, neighbors or the public at large, which could have a negative impact on the Company's results of operations.

Major hurricanes and other weather-related events have caused significant disruption in the Company's operations on the U.S. Gulf Coast, logistics across the region, and the supply of certain raw materials, which had an adverse impact on volume and cost for some of its products. Due to the Company's substantial presence on the U.S. Gulf Coast, similar severe weather conditions or other natural phenomena in the future could negatively impact the Company's results of operations.

Raw Materials: Availability of purchased feedstock and energy, and the volatility of these costs, impact Dow’s operating costs and add variability to earnings.

Purchased feedstock and energy costs account for a substantial portion of the Company’s total production costs and operating expenses. The Company purchases hydrocarbon raw materials including ethane, propane, butane, naphtha and condensate as feedstocks and also purchases certain monomers, primarily ethylene and propylene, to supplement internal production, as well as other raw materials. The Company also purchases natural gas, primarily to generate electricity, and purchases electric power to supplement internal generation.

Feedstock and energy costs generally follow price trends in crude oil and natural gas, which are sometimes volatile. While the Company uses its feedstock flexibility and financial and physical hedging programs to help mitigate feedstock cost increases, the Company is not always able to immediately raise selling prices. Ultimately, the ability to pass on underlying cost increases is dependent on market conditions. Conversely, when feedstock and energy costs decline, selling prices generally decline as well. As a result, volatility in these costs could impact the Company’s results of operations.

While the Company expects abundant and cost-advantaged supplies of natural gas liquids ("NGLs") in the United States to persist for the foreseeable future, if NGLs become significantly less advantaged than crude oil-based feedstocks, it could have a negative impact on the Company’s results of operations and future investments. Also, if the Company’s key suppliers of feedstock and energy are unable to provide the raw materials required for production, it could have a negative impact on the Company’s results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

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ITEM 2. PROPERTIES

The Company's corporate headquarters are located in Midland, Michigan. The Company's manufacturing, processing, marketing and research and development facilities, as well as regional purchasing offices and distribution centers are located throughout the world. The Company has investments in property, plant and equipment related to global manufacturing operations. Collectively, the Company operates 104 manufacturing sites in 31 countries. The following table includes the major manufacturing sites by operating segment, including consolidated variable interest entities:

Location

Bahia Blanca, Argentina X

Candeias, Brazil X X

Canada:

Fort Saskatchewan, Alberta X

Prentiss, Alberta X

Zhangjiagang, China X X X

Germany:

Boehlen X X

Leuna X

Schkopau X X

Stade X

Terneuzen, The Netherlands X X

Tarragona, Spain X X

Map Ta Phut, Thailand X X

Barry, United Kingdom X

United States:

Carrollton, Kentucky X

Hahnville, Louisiana X X X

Plaquemine, Louisiana X X

Midland, Michigan X

Deer Park, Texas X X

Freeport, Texas X X X

Orange, Texas X

Seadrift, Texas X X

Texas City, Texas X X

Including the major manufacturing sites, the Company has manufacturing sites and holdings in all geographic regions as follows:

Manufacturing Sites by Region

Asia Pacific 18 manufacturing sites in 10 countries

EMEAI 1 37 manufacturing sites in 15 countries

Latin America 15 manufacturing sites in 4 countries

U.S. & Canada 34 manufacturing sites in 2 countries

1.Europe, Middle East, Africa and India.

Properties of the Company include facilities which, in the opinion of management, are suitable and adequate for their use and will have sufficient capacity for the Company’s current needs and expected near-term growth. All of the Company’s plants are owned or leased, subject to certain easements of other persons which, in the opinion of management, do not substantially interfere with the continued use of such properties or materially affect their value. No title examination of the properties has been made for the purpose of this report. Additional information with respect to the Company's property, plant and equipment and leases is contained in Notes 10, 14 and 16 to the Consolidated Financial Statements.

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ITEM 3. LEGAL PROCEEDINGS

Asbestos-Related Matters of Union Carbide Corporation

Union Carbide Corporation (“Union Carbide”), a wholly owned subsidiary of the Company, is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past four decades. These suits principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both actual and punitive damages. The alleged claims primarily relate to products that Union Carbide sold in the past, alleged exposure to asbestos-containing products located on Union Carbide’s premises, and Union Carbide’s responsibility for asbestos suits filed against a former Union Carbide subsidiary, Amchem Products, Inc.

For additional information, see Part II, Item 7. Other Matters, Asbestos-Related Matters of Union Carbide Corporation in Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Notes 1 and 15 to the Consolidated Financial Statements.

Environmental Proceedings

On May 17, 2021, the Company received a civil complaint from the State of Texas ("State") on behalf of the Texas Commission on Environmental Quality. The complaint, filed in the 250th District Court of Travis County, Texas, alleges environmental violations at the Company's Freeport, Texas, site involving 12 discrete air emissions events. The State is seeking monetary relief of no more than $1 million and injunctive relief to prevent recurrence. On August 31, 2021, the State informed the Company that it would be including additional air emissions events in the complaint, which may impact the monetary relief sought by the State. Discussions between the Company and the Texas Office of the Attorney General are ongoing.

On February 3, 2022, the U.S. Environmental Protection Agency (“EPA”) proposed a draft administrative order to resolve alleged violations at the Rohm and Haas Chemicals facility in Kankakee, Illinois, relating to a storage tank at the site that does not have certain control equipment specified by EPA Clean Air Act regulations. This issue was self-disclosed by the facility to the Illinois Environmental Protection Agency in 2015. Negotiations with the agencies are ongoing.

On December 16, 2022, the U.S. Department of Justice filed a complaint and proposed consent decree on behalf of the EPA relating to environmental contamination at the Lower Passaic River Study Area Superfund Site in New Jersey. The proposed consent decree includes a requirement that 85 settling defendants, including the Company’s Essex Chemical Corporation subsidiary ("Essex"), make a collective payment of $150 million for the EPA’s past and anticipated future response costs, with Essex’s share of the group settlement costs being $1.15 million. The proposed consent decree was submitted for notice and a public comment period on December 23, 2022, with public comments due by March 23, 2023.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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Dow Inc. and Subsidiaries

The Dow Chemical Company and Subsidiaries

PART II

Dow Inc. is the direct parent company of The Dow Chemical Company and its consolidated subsidiaries, ("TDCC" and together with Dow Inc., "Dow" or the "Company"), owning all of the outstanding common shares of TDCC. The principal market for Dow Inc.'s common stock is the New York Stock Exchange, traded under the symbol “DOW.”

Dow Inc. has paid dividends on a quarterly basis and expects to continue to do so, subject to approval by the Dow Inc. Board of Directors ("Board").Additional dividend information can be found in Note 17 to the Consolidated Financial Statements and Liquidity and Capital Resources in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

At December 31, 2022, there were 68,825 stockholders of record.

See Part III, Item 11. Executive Compensation for information relating to shares authorized for issuance under Dow Inc.'s equity compensation plans.

The Company grants stock-based compensation to employees and non-employee directors under stock incentive plans, in the form of stock options, stock appreciation rights, performance stock units and restricted stock units. See Note 20 to the Consolidated Financial Statements for additional information.

Issuer Purchases of Equity Securities

The following table provides information regarding purchases of Dow Inc. common stock by the Company during the three months ended December 31, 2022. The Company makes such purchases only during open windows subject to its insider trading policy.

Period Total number of shares purchased Average price paid per share

1.On April 1, 2019, the Dow Inc. Board ratified the share repurchase program originally approved on March 15, 2019, authorizing up to $3.0 billion for the repurchase of the Company's common stock, with no expiration date. The Company completed the April 1, 2019 share repurchase program in the second quarter of 2022. On April 13, 2022, the Dow Inc. Board approved a new share repurchase program authorizing up to $3.0 billion for the repurchase of the Company's common stock, with no expiration date.

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On April 1, 2019, DowDuPont Inc. (“DowDuPont” and effective June 3, 2019, n/k/a DuPont de Nemours, Inc. or "DuPont") completed the separation of its materials science business and Dow Inc. became the direct parent company of The Dow Chemical Company and its consolidated subsidiaries (“TDCC” and together with Dow Inc., “Dow” or the “Company”), owning all of the outstanding common shares of TDCC. As a result of the parent/subsidiary relationship between Dow Inc. and TDCC, and considering that the financial statements and disclosures of each company are substantially similar, the companies are filing a combined report for this Annual Report on Form 10-K. The information reflected in this report is equally applicable to both Dow Inc. and TDCC, except where otherwise noted.

In connection with the separation from DowDuPont, the Company entered into various manufacturing, supply and service related agreements with DuPont and Corteva, Inc. ("Corteva").

Except as otherwise indicated by the context, the term "Union Carbide" means Union Carbide Corporation and the term "Dow Silicones" means Dow Silicones Corporation, both wholly owned subsidiaries of the Company.

STATEMENT ON RUSSIA AND UKRAINE CONFLICT

In February 2022, Russia invaded Ukraine resulting in the United States, Canada, the European Union and other countries imposing economic sanctions on Russia. Dow continues to monitor and evaluate the broader economic impact, including sanctions imposed, the potential for additional sanctions and any responses from Russia that could directly affect the Company’s supply chain, business partners or customers. At the time of this filing, the conflict between Russia and Ukraine has not had and is not expected to have a material impact on the Company's financial condition or results of operations.

In the first quarter of 2022, the Company recorded pretax asset related charges of $186 million due to the Russia and Ukraine conflict and the expectation that certain assets will not be recoverable. The Company's remaining net asset exposure is not significant.

In the fourth quarter of 2022, the Company reversed certain asset related charges pertaining to the collectability of accounts receivables and inventory due to the Company's ability to recover a portion of the value of these assets. The pretax gain recorded by the Company in the fourth quarter of 2022 was $68 million.

STATEMENT ON CURRENCY EXCHANGE RATES

The Company's global business operations give rise to market risk exposure related to changes in foreign currency exchange rates and international capital flows that may be affected by extensive regulations and controls, especially in developing or highly inflationary countries such as Argentina. The Company continues to monitor these situations and take appropriate actions as necessary to manage the financial impact pursuant to established guidelines and policies. If the Company is unable to manage certain exposures in a cost-effective manner it could have a significant negative impact on its future results of operations and cash flows. A detailed discussion of these and other principal risks and uncertainties, which may negatively impact the future results of the Company, are included in Part I, Item 1A. Risk Factors.

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Table of Contents Page

About Dow 29

Overview 29

Results of Operations 32

Segment Results 35

Packaging & Specialty Plastics 35

Industrial Intermediates & Infrastructure 36

Performance Materials & Coatings 37

Corporate 37

Liquidity and Capital Resources 38

Other Matters 47

Critical Accounting Estimates 47

Environmental Matters 49

Asbestos-Related Matters of Union Carbide Corporation 56

ABOUT DOW

Dow combines global breadth; asset integration and scale; focused innovation and materials science expertise; leading business positions; and environmental, social and governance ("ESG") leadership to achieve profitable growth and deliver a sustainable future. The Company’s ambition is to become the most innovative, customer-centric, inclusive and sustainable materials science company in the world.Dow’s portfolio of plastics, industrial intermediates, coatings and silicones businesses delivers a broad range of differentiated, science-based products and solutions for its customers in high-growth market segments, such as packaging, infrastructure, mobility and consumer applications. Dow operates 104 manufacturing sites in 31 countries and employs approximately 37,800 people.

In 2022, the Company had annual sales of $57 billion, of which 37 percent of the Company’s sales were to customers in the U.S. & Canada; 35 percent were in Europe, Middle East, Africa and India ("EMEAI"); while the remaining 28 percent were to customers in Asia Pacific and Latin America.

In 2022, the Company and its consolidated subsidiaries did not operate in countries subject to U.S. economic sanctions and export controls as imposed by the U.S. State Department or in countries designated by the U.S. State Department as state sponsors of terrorism, including Cuba, Iran, the Democratic People's Republic of Korea (North Korea), Sudan and Syria. The Company has policies and procedures in place designed to ensure that it and its consolidated subsidiaries remain in compliance with applicable U.S. laws and regulations.

OVERVIEW

The following is a summary of the results for the Company for the year ended December 31, 2022:

The Company reported net sales in 2022 of $57 billion, up 4 percent from $55 billion in 2021, with increases across all geographic regions, except EMEAI, and operating segments, except Industrial Intermediates & Infrastructure, driven by an increase in local price of 11 percent, which was partially offset by a volume decrease of 3 percent and an unfavorable currency impact of 4 percent.

Local price increased 11 percent compared with 2021, with increases in all operating segments and geographic regions, primarily reflecting price gains due to tight supply and demand dynamics in the first half of the year. Local price increased in Packaging & Specialty Plastics (up 7 percent), Industrial Intermediates & Infrastructure (up 11 percent) and Performance Materials & Coatings (up 21 percent).

Volume decreased 3 percent compared with 2021, with decreases in Industrial Intermediates & Infrastructure (down 7 percent) and Performance Materials & Coatings (down 6 percent). Volume was flat in Packaging & Specialty Plastics. Volume decreased in EMEAI (down 10 percent), partially offset by increases in the U.S. & Canada (up 1 percent) and Latin America (up 1 percent). Volume was flat in Asia Pacific.

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Currency had an unfavorable impact of 4 percent on net sales compared with 2021, driven by EMEAI (down 9 percent) and Asia Pacific (down 3 percent).

Restructuring and asset related charges - net were $118 million in 2022, compared with $6 million in 2021, reflecting actions taken related to the Russia and Ukraine conflict in the current year.

Equity in earnings of nonconsolidated affiliates was $268 million in 2022, compared with $975 million in 2021, with lower equity earnings at all principal joint ventures, primarily driven by margin compression at Sadara Chemical Company ("Sadara") and the Kuwait joint ventures.

Sundry income (expense) - net for Dow Inc. and TDCC was income of $727 million and $714 million, respectively, in 2022, compared with expense of $35 million and $79 million, respectively, in 2021. Sundry income (expense) - net increased primarily due to the successful and final resolution and recognition of a long-running patent infringement award.

Net income available for Dow Inc. and TDCC common stockholder(s) was $4,582 million and $4,583 million, respectively, in 2022, compared with $6,311 million and $6,274 million, respectively, in 2021. Earnings per share for Dow Inc. was $6.28 per share in 2022, compared with $8.38 per share in 2021.

In 2022, the Company redeemed $750 million aggregate principal amount of 3.625 percent notes due May 2026.

In 2022, Dow Inc. declared and paid dividends to common stockholders of $2.80 per share ($2,006 million).

In 2022, Dow Inc. repurchased $2,325 million of the Company's common stock.

Other notable events and highlights from the year ended December 31, 2022 include:

•On January 31, 2022, the Company announced that Mary Draves, vice president of Environment, Health and Safety ("EH&S") and chief sustainability officer, announced her decision to retire in April 2022 after 32 years of service.

•On March 22, 2022, the Company announced that Jack Broodo, President of Dow Feedstocks and Energy, would retire at the end of July 2022 after 40 years of service with Dow.

•On March 30, 2022, Dow announced global capacity expansion in response to growing demand for mobility technologies.

•On April 7, 2022, the European Commission selected Dow ACCUTRACETM Plus Fuel Marker as the new common fiscal marker for tax rebated fuels in the European Union.

•On April 13, 2022, the Dow Inc. Board of Directors ("Board") approved a new share repurchase program authorizing up to $3 billion for the repurchase of the Company's common stock, with no expiration date.

•Effective April 14, 2022, following the Company's Annual Meeting of Stockholders, Jerri DeVard, former Executive Vice President and Chief Customer Officer of Office Depot, Inc., was elected to the Dow Inc. Board.

•On May 31, 2022, Moody's Investors Service announced a credit rating upgrade for TDCC from Baa2 to Baa1, affirmed its P-2 rating and maintained a stable outlook. On June 8, 2022, Standard & Poor’s affirmed TDCC’s BBB and A-2 rating, and revised its outlook to positive from stable. On June 16, 2022, Fitch Ratings affirmed TDCC’s BBB+ and F2 rating, and revised its outlook to positive from stable. These credit agencies' decisions were made as part of their annual review process and reflect the Company's supportive financial policies and strong operating performance.

•On September 7, 2022, Great Place to Work® and Fortune magazine honored Dow as one of the 2022 Best Workplaces in Manufacturing & ProductionTM. Dow ranked fourth in the large organization category, and this was the second consecutive year the Company was named to this prestigious list.

•On October 17, 2022 Dow Inc. announced it will accelerate the sustainability targets the Company set in 2020 by expanding its stop the waste target to a transform the waste target. By 2030, Dow will transform plastic waste and other forms of alternative feedstock to commercialize 3 million metric tons of circular and renewable plastics solutions annually.

•On October 26, 2022, Dow announced its launch of the world’s first recyclable silicone self-sealing tire solution.

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•On November 1, 2022, the Company announced that Diego Donoso, President of Packaging & Specialty Plastics, announced his decision to retire in the first quarter of 2023, after over 30 years of service.

•On November 1, 2022, the Company announced that Karen S. Carter, Chief Human Resources Officer and Chief Inclusion Officer for Dow, was named President of Packaging & Specialty Plastics.

•On November 8, 2022, the Company announced that Lisa Bryant was named Chief Human Resources Officer. Effective December 15, 2022, the Board elected Lisa Bryant as an Executive Officer of the Company.

•Dow was named to FORTUNE's World's Most Admired Companies list for 2022.

•Dow was named to the JUST 100 list for the third consecutive year. Dow earned the top spot in the Chemicals sector overall and received the number one position in the Workers and Stakeholders & Governance categories versus industry peers.

•Dow was named to Bloomberg’s 2022 Gender-Equality Index for the second consecutive year.

•Dow was named by the Human Rights Campaign ("HRC") Foundation to its 2022 list of “Best Places to Work for LGBTQ+ Equality.” This marks the Company’s seventeenth consecutive year receiving a perfect score on HRC’s Corporate Equality Index.

•Dow received the 2022 Artificial Intelligence Excellence Award for its Predictive Intelligence capability.

•Dow received eight 2022 Edison AwardsTM, (two gold, four silver and two bronze) once again earning more awards than any other organization.

•Dow was named the 2022 Organization of the Year by the Society of Asian Scientists and Engineers for its contributions to science and engineering and its commitment to ensuring that inclusion, diversity and equity are a business imperative.

•Dow advanced to 15th place on the 2022 DiversityInc Top 50 Companies for Diversity list making it the fifth consecutive year on the list. Dow was also included on six of DiversityInc's Specialty Lists including: Top Companies for Executive Diversity Councils, Top Companies for People with Disabilities, Top Companies for Black Executives, Top Companies for Latino Executives, Top Companies for Employee Resource Groups and Top Companies for Environmental, Social and Governance.

•Dow was named a 2022 honoree of The Civic 50 by Points of Light, the world's largest organization committed to inspiring, equipping, and engaging people to take action to change their communities and the world.

•For the sixth consecutive year, Dow received a top score on the Disability Equality Index®, placing the Company among the “Best Places to Work for Disability Inclusion” for 2022.

•Dow was honored with a Leading Disability Employer Seal by the National Organization on Disability, marking the sixth consecutive year Dow has received the recognition.

•Dow was honored with a 2022 CIO 100 award for the Company's Digital Manufacturing Acceleration program.

•Dow received six R&D 100 Awards from R&D Magazine for innovative technologies including: DOWSILTM ICL-1000 Data Center Immersion Cooling Fluid, DURATRACKTM R-100 and AEH-100 Resins for Green Bike Lanes, ELVALOYTM RET MF 1177 Polymeric PCR Asphalt Paving Compatibilizer, Sustainable Collation Shrink Film enabled by REVOLOOPTM, MaizeCareTM Clarity Polymer, and MAINCOTETM HG-300 Emulsion.

•Dow was named one of the "2022 PEOPLE Companies that Care®" for the third consecutive year.

•Dow received four 2022 BIGTM Innovation Awards from the Business Intelligence Group.

•Dow was awarded 5-Stars in the areas of Employment and Governance in the 2022 Hispanic Association on Corporate Responsibility Corporate Inclusion IndexTM.

•Dow’s MaizeCareTM Clarity Polymer, a bio-based and biodegradable polymer with film-forming properties for crystal clear formulations, was recognized with an R&D 100 Award and a BIGTM Sustainability Product of the Year in the 2022 Sustainability Awards program.

•Dow's DOWSILTM TC-6015 Thermally Conductive Encapsulant, an advanced, proven, silicone-based solution that provides exceptional thermal management for power electronics applications, won two prestigious 2022 innovation awards: one from the Business Intelligence Group (BIGTM) in the Manufacturing category; and a Silver Edison AwardsTM in the Industrial Technology category.

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•In 2022, CDP (formerly Carbon Disclosure Project, an international non-profit specialized in environmental reporting) confirmed Dow's climate change score of A-.

In addition to the highlights above, the following events occurred subsequent to December 31, 2022:

•Dow has been named to the JUST 100 list, placing 55th overall, an 11-point improvement from last year, and securing the top spot for Communities in the Chemicals sector.

•On January 25, 2023, the Dow Inc. Board approved restructuring actions ("2023 Restructuring Program") to achieve the Company's structural cost improvement initiatives in response to the continued economic impact from the global recessionary environment and to enhance its agility and long-term competitiveness across the economic cycle. This program includes a global workforce cost reduction, decreasing turnaround spending, actions to rationalize the Company’s manufacturing assets, which includes asset write-down and write-off charges and related contract termination fees.

RESULTS OF OPERATIONS

For comparison of results of operations for the fiscal years ended December 31, 2021 and 2020, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 4, 2022.

Net Sales

The following tables summarize net sales and sales variance by operating segment and geographic region from the prior year:

Summary of Sales Results

Sales Variances by Operating Segment and Geographic Region

Packaging & Specialty Plastics 7 % (3) % — % 4 % 50 % 2 % 2 % 54 %

Industrial Intermediates & Infrastructure 11 (5) (7) (1) 40 2 (2) 40

U.S. & Canada 6 % — % 1 % 7 % 42 % — % 2 % 44 %

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2022 Versus 2021

The Company reported net sales of $56.9 billion in 2022, up 4 percent from $55.0 billion in 2021, with local price up 11 percent, an unfavorable currency impact of 4 percent and volume down 3 percent. Net sales increased in all operating segments except Industrial Intermediates & Infrastructure and across all geographic regions except EMEAI. Local price increased in all operating segments and across all geographic regions, primarily driven by tight supply and demand dynamics and increasing raw material prices, partially offset by slower macroeconomic growth in the second half of the year. Local price increased in Packaging & Specialty Plastics (up 7 percent), Industrial Intermediates & Infrastructure (up 11 percent) and Performance Materials & Coatings (up 21 percent). Volume decreased 3 percent, driven by EMEAI (down 10 percent), which was partially offset by the U.S. & Canada and Latin America (both up 1 percent), while volume was flat in Asia Pacific. Volume was flat in Packaging & Specialty Plastics and decreased in Industrial Intermediates & Infrastructure (down 7 percent) and Performance Materials & Coatings (down 6 percent). Currency unfavorably impacted net sales by 4 percent driven by EMEAI (down 9 percent) and Asia Pacific (down 3 percent). Excluding the Hydrocarbons & Energy business, sales increased 1 percent.

Cost of Sales

Cost of sales ("COS") was $48.3 billion in 2022, compared with $44.2 billion in 2021. COS increased in 2022 primarily due to higher feedstocks, energy, other raw material costs, and logistics costs, partially offset by insurance recoveries related to certain weather-related events in the prior year. COS as a percentage of net sales was 84.9 percent in 2022 compared with 80.4 percent in 2021.

Research and Development Expenses

Research and development ("R&D") expenses were $851 million in 2022, compared with $857 million in 2021. R&D expenses in 2022 decreased compared with 2021 primarily due to lower performance-based compensation costs and a decrease in fringe benefit expenses which reflected stock market declines compared with 2021.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses were $1,675 million in 2022, compared with $1,645 million in 2021. SG&A expenses in 2022 increased primarily due to higher bad debt reserves which offset lower performance-based compensation costs and a decrease in fringe benefit expenses which reflected stock market declines compared with 2021.

Amortization of Intangibles

Amortization of intangibles was $336 million in 2022, compared with $388 million in 2021. Amortization of intangibles decreased primarily due to certain intangible assets becoming fully amortized. See Note 12 to the Consolidated Financial Statements for additional information on intangible assets.

Restructuring and Asset Related Charges - Net

2022 Asset Related Charges

In 2022, the Company recorded pretax asset related charges of $118 million due to the Russia and Ukraine conflict and the expectation that certain assets will not be recoverable. These charges included the write-down of inventory, the recording of bad debt reserves and the impairment of other assets. Asset related charges by segment in 2022 were as follows: $8 million in Packaging & Specialty Plastics, $73 million in Industrial Intermediates & Infrastructure, $6 million in Performance Materials & Coatings and $31 million in Corporate. See Note 5 to the Consolidated Financial Statements for additional information on restructuring and asset related charges.

Equity in Earnings (Losses) of Nonconsolidated Affiliates

The Company’s share of equity in earnings of nonconsolidated affiliates was $268 million in 2022, compared with $975 million in 2021, with lower equity earnings at all principal joint ventures, primarily driven by margin compression at Sadara and the Kuwait joint ventures.

Sundry Income (Expense) - Net

Sundry income (expense) – net includes a variety of income and expense items such as foreign currency exchange gains and losses, dividends from investments, gains and losses on sales of investments and assets, non-operating pension and other postretirement benefit plan credits or costs, losses on early extinguishment of debt and certain litigation matters.

TDCC

Sundry income (expense) - net for 2022 was income of $714 million, compared with expense of $79 million in 2021.

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In 2022, sundry income (expense) - net included a $321 million gain related to the successful and final resolution and recognition of a long-running patent infringement award (related to Packaging & Specialty Plastics), a $60 million gain related to an adjustment to the Dow Silicones breast implant liability (related to Corporate), non-operating pension and postretirement benefit plan credits and gains on the sales of assets and investments. These were partially offset by foreign currency exchange losses and an $8 million loss on the early extinguishment of debt (related to Corporate). See Notes 6, 14, 15, 19 and 25 to the Consolidated Financial Statements for additional information.

In 2021, sundry income (expense) - net included a $574 million loss on the early extinguishment of debt (related to Corporate and included in "Other net loss" in the consolidated statements of cash flows), and foreign currency exchange losses. These were partially offset by non-operating pension and postretirement benefit plan credits, gains on the sale of assets and investments, a $54 million gain related to an arbitration award (related to Industrial Intermediates & Infrastructure), and a $16 million gain related to post-closing adjustments on the previous divestiture of a bio-ethanol manufacturing facility in Brazil (related to Packaging & Specialty Plastics). See Notes 6, 14, 15, 19 and 25 to the Consolidated Financial Statements for additional information.

Dow Inc.

Sundry income (expense) - net for 2022 was income of $727 million, compared with expense of $35 million in 2021.

In 2022, in addition to the amounts previously discussed above for TDCC, sundry income (expense) - net included a $4 million net gain associated with agreements entered into with DuPont and Corteva as part of the separation and distribution (related to Corporate).

In 2021, in addition to the amounts previously discussed above for TDCC, sundry income (expense) - net included $30 million in gains associated with the agreements entered into with DuPont and Corteva as part of the separation and distribution (related to Corporate).

Interest Expense and Amortization of Debt Discount

Interest expense and amortization of debt discount was $662 million in 2022, compared with $731 million in 2021. Interest expense and amortization of debt discount decreased in 2022 primarily due to the liability management actions taken in 2021. See Liquidity and Capital Resources in Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 14 to the Consolidated Financial Statements for additional information related to debt financing activity.

Provision for Income Taxes

The Company's effective tax rate fluctuates based on, among other factors, where income is earned, the level of income relative to tax attributes and the level of equity earnings, since most earnings from the Company's equity method investments are taxed at the joint venture level. The underlying factors affecting the Company's overall tax rate are summarized in Note 7 to the Consolidated Financial Statements.

The provision for income taxes was $1,450 million in 2022, compared with $1,740 million in 2021, resulting in effective tax rates of 23.8 percent and 21.4 percent, respectively. The provision for income taxes in 2022 was lower than 2021 primarily due to a decrease in pretax income, changes to geographic mix of earnings and a reduction in uncertain tax positions recognized. The tax rate for 2022 in comparison to 2021 was impacted primarily by the level of equity earnings.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests was $58 million in 2022, compared with $94 million in 2021. See Notes 18 and 23 to the Consolidated Financial Statements for additional information.

Net Income Available for the Common Stockholder(s)

Dow Inc.

Net income available for Dow Inc. common stockholders was $4,582 million in 2022, compared with $6,311 million in 2021. Earnings per share of Dow Inc. was $6.28 per share in 2022, compared with $8.38 per share in 2021. See Note 8 to the Consolidated Financial Statements for details on Dow Inc.'s earnings per share calculations.

TDCC

Net income available for TDCC common stockholder was $4,583 million in 2022, compared with $6,274 million in 2021. TDCC's common shares are owned solely by Dow Inc.

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SEGMENT RESULTS

The Company conducts its worldwide operations through six global businesses which are organized into the following operating segments: Packaging & Specialty Plastics, Industrial Intermediates & Infrastructure and Performance Materials & Coatings. Corporate contains the reconciliation between the totals for the operating segments and the Company's totals. The Company did not aggregate any operating segments when determining its reportable segments. The Company reports geographic information for the following regions: U.S. & Canada, EMEAI, Asia Pacific and Latin America. The Company transfers ethylene to its downstream derivative businesses at market prices. See Part I, Item 1. Business for further discussion of the Company's segments.

The Company’s measure of profit/loss for segment reporting purposes is Operating EBIT as this is the manner in which the Company's chief operating decision maker ("CODM") assesses performance and allocates resources. The Company defines Operating EBIT as earnings (i.e., "Income before income taxes") before interest, excluding the impact of significant items. Operating EBIT by segment includes all operating items relating to the businesses; items that principally apply to Dow as a whole are assigned to Corporate. See Note 25 to the Consolidated Financial Statements for reconciliations of these measures.

For comparison of segment results for the fiscal years ended December 31, 2021 and 2020, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 4, 2022.

PACKAGING & SPECIALTY PLASTICS

Packaging & Specialty Plastics

Packaging & Specialty Plastics

Percentage change from prior year 2022 2021

Change in Net Sales from Prior Period due to:

Local price & product mix 7 % 50 %

Currency (3) 2

Volume — 2

2022 Versus 2021

Packaging & Specialty Plastics net sales were $29,260 million in 2022, up 4 percent from net sales of $28,128 million in 2021. Local price was up 7 percent, currency had an unfavorable impact of 3 percent, primarily in EMEAI and Asia Pacific, and volume was flat. Local price increased in both businesses, primarily in EMEAI, and driven by gains in functional polymers and olefins which more than offset lower polyethylene prices. Local price increased in Hydrocarbons & Energy as prices for co-products are generally correlated to Brent crude oil prices, which on average increased 40 percent compared with 2021. Local price increased in Packaging and Specialty Plastics in EMEAI and Asia Pacific, notably in infrastructure material and flexible packaging applications, more than offsetting decreases in the U.S. & Canada and Latin America. Volume increased in Hydrocarbons & Energy across all geographic regions. Volume decreased in Packaging and Specialty Plastics, primarily in EMEAI and the U.S. & Canada, as supply constraints and lower demand more than offset improved demand in Latin America and Asia Pacific.

Operating EBIT was $4,110 million in 2022, down $2,528 million from Operating EBIT of $6,638 million in 2021. Operating EBIT decreased primarily due to compression in integrated margins due to higher raw materials and energy costs and decreased equity earnings at the EQUATE and Sadara joint ventures.

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INDUSTRIAL INTERMEDIATES & INFRASTRUCTURE

Industrial Intermediates & Infrastructure

Equity earnings (losses) $ (91) $ 471

Industrial Intermediates & Infrastructure

Percentage change from prior year 2022 2021

Change in Net Sales from Prior Period due to:

Local price & product mix 11 % 40 %

Currency (5) 2

Volume (7) (2)

Total (1) % 40 %

2022 Versus 2021

Industrial Intermediates & Infrastructure net sales were $16,606 million in 2022, down 1 percent from $16,851 million in 2021, with local price up 11 percent, an unfavorable currency impact of 5 percent and volume down 7 percent. Local price increased in both businesses and across all geographic regions, except Asia Pacific, primarily driven by strong supply and demand dynamics in the first half of the year and rising energy prices. Currency unfavorably impacted sales in both businesses, primarily in EMEAI and Asia Pacific. Volume in Polyurethanes & Construction Chemicals decreased in all geographic regions. The volume decrease in Polyurethanes & Construction Chemicals was largely driven by inflationary pressure on demand for consumer durables, industrial and building and construction applications. Volume in Industrial Solutions increased in all geographic regions, except Latin America and was driven by strong demand for pharmaceutical, energy and agricultural applications, as well as improved supply availability, as the prior year was impacted by Winter Storm Uri.

Operating EBIT was $1,418 million in 2022, down $864 million from Operating EBIT of $2,282 million in 2021. Operating EBIT decreased primarily due to lower equity earnings from the Sadara, EQUATE and Map ta Phut joint ventures and inflationary pressure on demand.

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PERFORMANCE MATERIALS & COATINGS

Performance Materials & Coatings

Equity earnings $ 10 $ 7

Performance Materials & Coatings

Percentage change from prior year 2022 2021

Change in Net Sales from Prior Period due to:

Local price & product mix 21 % 19 %

Currency (4) 2

Volume (6) 1

2022 Versus 2021

Performance Materials & Coatings net sales were $10,764 million in 2022, up 11 percent from net sales of $9,672 million in 2021, with local price up 21 percent, an unfavorable currency impact of 4 percent, and volume down 6 percent. Local price increased in both businesses and across all geographic regions. Consumer Solutions local price increased in both upstream siloxanes and downstream silicones due to favorable supply and demand dynamics and higher raw material costs, partially offset by price declines in upstream siloxanes late in the year on increased industry supply. Local price increased in Coatings & Performance Monomers due to favorable supply and demand dynamics and higher raw material costs, partially offset by price declines late in the year as demand softened. Volume decreased in both businesses due to lower demand. Consumer Solutions volume decreased in all geographic regions except Asia Pacific, which was flat. Coatings & Performance Monomers volume decreased in all geographic regions except the U.S. & Canada, which was flat. The unfavorable currency impact was driven by EMEAI and Asia Pacific.

Operating EBIT was $1,328 million in 2022, up $462 million from Operating EBIT of $866 million in 2021. Operating EBIT increased primarily due to price gains in Consumer Solutions.

CORPORATE

Corporate

Equity earnings (losses) $ (10) $ 7

2022 Versus 2021

Net sales for Corporate, which primarily relate to the Company's insurance operations, were $272 million in 2022, down from net sales of $317 million in 2021.

Operating EBIT was a loss of $266 million in 2022, compared with a loss of $253 million in 2021. Operating EBIT decreased primarily due to the Company's insurance operations, increased environmental costs and equity losses.

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OUTLOOK

Operating Segments & End-Market Expectations

In 2023, Dow remains focused on managing near-term dynamics while continuing to position the company for long-term value creation. The Company recognizes initial positive signs from moderating inflation growth in the U.S., improving outlook for energy in Europe, and re-opening in China. However, Dow will continue to take prudent, proactive actions by implementing a playbook of interventions focused on optimizing labor and purchased service costs, reducing turnaround spending, and enhancing productivity, which is collectively expected to deliver $1 billion in cost savings in 2023. Going forward, Dow will continue to maintain its disciplined and balanced approach to capital allocation and focus on cash flow generation, while executing its strategic priorities for long-term sustainable and profitable growth.

In Packaging & Specialty Plastics, improved reliability and ongoing logistics improvements are expected to allow the Company to satisfy areas of resilient demand, notably in flexible food and specialty packaging, as well as higher-value functional polymers. Local prices are expected to continue to be impacted by high energy costs and inflation. The Company’s feedstock flexibility and advantaged regional footprint will put the segment in a position to navigate energy market dynamics throughout the year. In-region presence and superior derivative flexibility will allow the segment to continue to optimize price and volume mix.

In Industrial Intermediates & Infrastructure, demand growth is expected in consumer and energy end-markets. Market fundamentals will remain pressured for propylene oxide, polyols, isocyanates and derivatives systems, driven by lower-than-average growth in GDP, elevated raw material and energy costs and the impact of inflation on demand. Increased industry supply of propylene oxide and polyols is expected to impact margins. Recent and soon-to-be-completed investments in alkoxylation capacity are expected to service areas of resilient consumer demand in home care and pharmaceuticals.

In Performance Materials & Coatings, demand for performance silicones is expected to be in excess of GDP as the result of prioritization of key end-markets, most notably in mobility and electronics. Local prices are expected to be impacted by inflation, energy costs in Europe and increased industry supply of siloxanes. Coatings and acrylic monomers are expected to have improved supply availability from the prior year, especially for architectural coatings applications, while prices will be impacted by inflation and energy costs.

Other factors impacting operating segment profitability include an expected decrease in planned maintenance turnaround spending of approximately $300 million compared with 2022.

Projected Uses of Cash

Items that may impact the consolidated statements of cash flows in 2023 include:

•Cash contributions to pension plans are expected to be approximately $150 million.

•Capital expenditures are expected to be approximately $2.2 billion.

•Cash dividends from equity companies are expected to be approximately $350 million.

•Cash outflows related to the Company's 2023 Restructuring Program, including restructuring implementation costs, are expected to be approximately $400 million.

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash and cash equivalents of $3,886 million at December 31, 2022 and $2,988 million at December 31, 2021, of which $1,789 million at December 31, 2022 and $1,745 million at December 31, 2021, was held by subsidiaries in foreign countries, including U.S. territories. For each of its foreign subsidiaries, the Company makes an assertion regarding the amount of earnings intended for permanent reinvestment, with the balance available to be repatriated to the United States.

The cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries' operational activities and future foreign investments. Dow has the ability to repatriate additional funds to the U.S., which could result in an adjustment to the tax liability for foreign withholding taxes, foreign and/or U.S. state income taxes and the impact of foreign currency movements. At December 31, 2022, management believed that sufficient liquidity was available in the United States. The Company has and expects to continue repatriating certain funds from its non-U.S. subsidiaries that are not needed to finance local operations; however, these particular repatriation activities have not and are not expected to result in a significant incremental tax liability to the Company.

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For comparison of cash flows for the fiscal years ended December 31, 2021 and 2020, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 4, 2022.

The Company’s cash flows from operating, investing and financing activities, as reflected in the consolidated statements of cash flows, are summarized in the following table:

Cash Flow Summary Dow Inc. TDCC

Cash provided by (used for):

Operating activities - discontinued operations (11) (60) — —

Summary

Cash Flows from Operating Activities

Cash provided by operating activities from continuing operations in 2022 was primarily driven by the Company's cash earnings, dividends from equity method investments and cash provided by working capital, which were partially offset by performance-based compensation payments and pension contributions. Cash provided by operating activities from continuing operations in 2021 was primarily driven by the Company's cash earnings and dividends from equity method investments, which were partially offset by cash used for working capital requirements, pension contributions and performance-based compensation payments.

Net Working Capital and Current Ratio at Dec 31 Dow Inc. TDCC

Working Capital Metrics Twelve Months Ended

Days sales outstanding in trade receivables 40 40

Days sales in inventory 54 54

Days payables outstanding 60 57

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Cash used for operating activities from discontinued operations was related to cash payments and receipts the Company had with DuPont and Corteva that related to certain agreements and matters related to the separation from DowDuPont.

Cash Flows from Investing Activities

Cash used for investing activities in 2022 was primarily for capital expenditures and purchases of investments, which were partially offset by proceeds from sales and maturities of investments. Cash used for investing activities in 2021 was primarily for capital expenditures and purchases of investments and previously leased assets, which were partially offset by proceeds from sales and maturities of investments.

The Company's capital expenditures were $1,823 million in 2022 and $1,501 million in 2021. Capital spending was higher in 2022 as the Company continued the post-pandemic recovery and ramp up of investments in its higher return, lower risk and quick payback incremental growth projects. The Company expects capital spending in 2023 to be approximately $2.2 billion.

Capital spending in recent years has included the addition of a furnace to the Company's ethylene production facility in Alberta, Canada, which commenced operations in 2021; the retrofit of one of the Company's Louisiana steam crackers with Dow's proprietary fluidized catalytic dehydrogenation ("FCDh") technology to produce on-purpose propylene and the addition of a new specialty alkoxylation reactor in Plaquemine, Louisiana, which were both completed in 2022; the addition of an integrated methylene diphenyl diisocyanate ("MDI") distillation and prepolymers facility at its site in Freeport, Texas, which is expected to be completed in 2023; and construction of a world-scale polyethylene unit on the U.S. Gulf Coast.

Cash Flows from Financing Activities

Cash used for financing activities in 2022 included payments on long-term debt, which was more than offset by proceeds from issuance of long-term debt. In addition, Dow Inc. included cash outflows for dividends paid to stockholders and purchases of treasury stock. TDCC included cash outflows for dividends paid to Dow Inc. Cash used for financing activities in 2021 included payments on long-term debt and transaction financing, debt issuance and other costs, which were partially offset by proceeds from issuance of common stock. In addition, Dow Inc. included cash outflows for dividends paid to stockholders and purchases of treasury stock. TDCC included cash outflows for dividends paid to Dow Inc. See Notes 14 and 17 to the Consolidated Financial Statements for additional information related to the issuance and retirement of debt and the Company's share repurchases and dividends.

Non-GAAP Cash Flow Measures

Free Cash Flow

Dow defines Free Cash Flow as "Cash provided by operating activities - continuing operations," less capital expenditures. Under this definition, Free Cash Flow represents the cash generated by Dow from operations after investing in its asset base. Free Cash Flow, combined with cash balances and other sources of liquidity, represents the cash available to fund obligations and provide returns to shareholders. Free Cash Flow is an integral financial measure used in the Company's financial planning process.

Operating EBITDA

Dow defines Operating EBITDA as earnings (i.e., "Income before income taxes") before interest, depreciation and amortization, excluding the impact of significant items.

Cash Flow Conversion (Operating EBITDA to Cash Flow From Operations)

Dow defines Cash Flow Conversion (Operating EBITDA to cash flow from operations) as "Cash provided by operating activities - continuing operations," divided by Operating EBITDA. Management believes Cash Flow Conversion is an important financial metric as it helps the Company determine how efficiently it is converting its earnings into cash flow.

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These financial measures are not recognized in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and should not be viewed as alternatives to U.S. GAAP financial measures of performance. All companies do not calculate non-GAAP financial measures in the same manner and, accordingly, Dow's definitions may not be consistent with the methodologies used by other companies.

Reconciliation of Non-GAAP Cash Flow Measures Dow Inc.

1.Free Cash Flow for the year ended December 31, 2021 reflects a $1 billion elective pension contribution.

Income before income taxes $ 6,090 $ 8,145

+ Interest expense and amortization of debt discount 662 731

- Significant items 1 (11) (712)

Operating EBIT (non-GAAP) $ 6,590 $ 9,533

+ Depreciation and amortization 2,758 2,842

1.The year ended December 31, 2022 includes costs associated with implementing the Company's Digital Acceleration program and 2020 Restructuring Program, asset related charges due to the Russia and Ukraine conflict, a gain related to a legal matter with Nova, a gain related to an adjustment of the Dow Silicones breast implant liability, a loss on the early extinguishment of debt and activity related to the separation from DowDuPont. The year ended December 31, 2021 includes costs associated with implementing the Company's Digital Acceleration program and 2020 Restructuring Program, implementation costs and asset related charges - net, a loss on early extinguishment of debt, a gain on a previous divestiture, litigation related charges, awards and adjustments and activity related to the separation from DowDuPont. See Note 25 to the Consolidated Financial Statements for additional information.

2.Cash flow conversion for the year ended December 31, 2021 reflects a $1 billion elective pension contribution.

Liquidity & Financial Flexibility

The Company’s primary source of incremental liquidity is cash flows from operating activities. The generation of cash from operations and the Company's ability to access capital markets is expected to meet the Company’s cash requirements for working capital, capital expenditures, debt maturities, contributions to pension plans, dividend distributions to stockholders, share repurchases and other needs. In addition to cash from operating activities, the Company’s current liquidity sources also include TDCC's U.S. and Euromarket commercial paper programs, committed and uncommitted credit facilities, committed accounts receivable facilities, a medium-term notes program, a U.S. retail note program (“InterNotes®”) and other debt markets.

The Company continues to maintain a strong financial position with all of its committed credit facilities undrawn and fully available at December 31, 2022. Cash and committed and available forms of liquidity were $13.7 billion at December 31, 2022, an increase of $1.1 billion from December 31, 2021. The Company also has no substantive long-term debt maturities due until 2027. Additional details on sources of liquidity are as follows:

Commercial Paper

TDCC issues promissory notes under its U.S. and Euromarket commercial paper programs. TDCC had $299 million of commercial paper outstanding at December 31, 2022 (zero in 2021). TDCC maintains access to the commercial paper market at competitive rates. Amounts outstanding under TDCC's commercial paper programs during the period may be greater or less than the amount reported at the end of the period. Subsequent to December 31, 2022, TDCC issued approximately $311 million of commercial paper.

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Committed Credit Facilities

The Company also has the ability to access liquidity through TDCC's committed and available credit facilities. At December 31, 2022, TDCC had total committed and available credit facilities of $8.4 billion. See Note 14 to the Consolidated Financial Statements for additional information on committed and available credit facilities.

Committed Accounts Receivable Facilities

In addition to the above committed credit facilities, the Company maintains an accounts receivable facility in the U.S. where eligible trade accounts receivable, up to $900 million, may be sold at any point in time. The Company also maintains a committed accounts receivable facility in Europe where eligible trade accounts receivable, up to €500 million, may be sold at any point in time. In 2022, the Company sold $391 million of receivables under the U.S. and Europe committed accounts receivable facilities. See Note 13 to the Consolidated Financial Statements for additional information.

Uncommitted Credit Facilities

The Company has entered into various uncommitted bilateral credit arrangements as a potential source of excess liquidity. These lines can be used to support short-term liquidity needs and for general purposes, including letters of credit. The Company had no drawdowns outstanding at December 31, 2022.

Letters of Credit

TDCC utilizes letters of credit to support commitments made in the ordinary course of business. While the terms and amounts of letters of credit change, TDCC generally has approximately $600 million of outstanding letters of credit at any given time.

Company-Owned Life Insurance

The Company has investments in company-owned life insurance ("COLI") policies, which are recorded at their cash surrender value as of each balance sheet date. The Company has the ability to monetize its investment in its COLI policies as an additional source of liquidity. The Company had no outstanding monetization of its existing COLI policies' surrender value at December 31, 2022.

Early Settlement of Letters of Credit

The Company utilizes, from time-to-time, letters of credit discounting programs to manage and expedite the settlement of letters of credit in certain regions. These letters of credit are associated with accounts receivable and the Company retains no interest in the transferred letters of credit or receivables once sold.

Shelf Registration - U.S.

On June 13, 2022, Dow Inc. and TDCC filed a shelf registration statement with the U.S. Securities and Exchange Commission. The shelf indicates that Dow Inc. may offer common stock; preferred stock; depositary shares; debt securities; guarantees; warrants to purchase common stock, preferred stock and debt securities; and stock purchase contracts and stock purchase units, with pricing and availability of any such offerings depending on market conditions. The shelf also indicates that TDCC may offer debt securities, guarantees and warrants to purchase debt securities, with pricing and availability of any such offerings depending on market conditions. In 2022, TDCC filed a prospectus supplement under this shelf registration to register an undetermined amount of securities for issuance under InterNotes®. Also, in 2022, TDCC filed a prospectus supplement under this shelf registration to register an undetermined amount of securities for issuance under a medium-term notes program.

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Debt

As the Company continues to maintain its strong balance sheet and financial flexibility, management is focused on net debt (a non-GAAP financial measure), as the Company believes this is the best representation of its financial leverage at this point in time. As shown in the following table, net debt is equal to total gross debt minus "Cash and cash equivalents" and "Marketable securities."

Total Debt at Dec 31 Dow Inc. TDCC

Gross debt as a percentage of total capitalization 42.1 % 43.9 % 41.8 % 43.5 %

Net debt as a percentage of total capitalization 33.3 % 37.9 % 33.0 % 37.5 %

1.Included in "Other current assets" in the consolidated balance sheets.

In the second quarter of 2022, the Company redeemed $750 million aggregate principal amount of 3.625 percent notes due May 2026.

In the fourth quarter of 2022, the Company issued $1.5 billion of senior unsecured notes. The offering included $600 million aggregate principal amount of 6.30 percent notes due 2033 and $900 million aggregate principal amount of 6.90 percent notes due 2053.

In 2022, the Company issued an aggregate principal amount of $167 million of InterNotes®. Additionally, the Company repaid $121 million of long-term debt at maturity and approximately $3 million of long-term debt was repaid by consolidated variable interest entities.

The Company may at any time repurchase certain debt securities in the open market or in privately negotiated transactions subject to: the applicable terms under which any such debt securities were issued, certain internal approvals of the Company, and applicable laws and regulations of the relevant jurisdiction in which any such potential transactions might take place. This in no way obligates the Company to make any such repurchases nor should it be considered an offer to do so.

TDCC’s public debt instruments and primary, private credit agreements contain, among other provisions, certain customary restrictive covenant and default provisions. TDCC’s most significant debt covenant with regard to its financial position is the obligation to maintain the ratio of its consolidated indebtedness to consolidated capitalization at no greater than 0.70 to 1.00 at any time the aggregate outstanding amount of loans under the Five Year Competitive Advance and Revolving Credit Facility Agreement ("Revolving Credit Agreement") equals or exceeds $500 million. The ratio of TDCC’s consolidated indebtedness as defined in the Revolving Credit Agreement was 0.40 to 1.00 at December 31, 2022. Management believes TDCC was in compliance with all of its covenants and default provisions at December 31, 2022. The Revolving Credit Agreement was extended in November 2022 and matures in November 2027.

Dow Inc. is obligated, substantially concurrently with the issuance of any guarantee in respect of outstanding or committed indebtedness under the Revolving Credit Agreement, to enter into a supplemental indenture with TDCC and the trustee under TDCC’s existing 2008 base indenture governing certain notes issued by TDCC. Under such supplemental indenture, Dow Inc. will guarantee all outstanding debt securities and all amounts due under such existing base indenture and will become subject to certain covenants and events of default under the existing base indenture.

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In addition, the Revolving Credit Agreement includes an event of default which would be triggered in the event Dow Inc. incurs or guarantees third party indebtedness for borrowed money in excess of $250 million or engages in any material activity or directly owns any material assets, in each case, subject to certain conditions and exceptions. Dow Inc. may, at its option, cure the event of default by delivering an unconditional and irrevocable guarantee to the administrative agent within thirty days of the event or events giving rise to such event of default.

No such events have occurred or have been triggered at the time of the filing of this Annual Report on Form 10-K. See Note 14 to the Consolidated Financial Statements for information related to TDCC’s notes payable and long-term debt activity and information on TDCC’s debt covenants and default provisions.

While taking into consideration the current economic environment, management expects that the Company will continue to have sufficient liquidity and financial flexibility to meet all of its business obligations.

Credit Ratings

TDCC's credit ratings at January 31, 2023 were as follows:

Credit Ratings Long-Term Rating Short-Term Rating Outlook

Fitch Ratings BBB+ F2 Positive

Moody’s Investors Service Baa1 P-2 Stable

Standard & Poor’s BBB A-2 Positive

On May 31, 2022, Moody's Investors Service announced a credit rating upgrade for TDCC from Baa2 to Baa1, affirmed its P-2 rating and maintained a stable outlook. On June 8, 2022, Standard & Poor’s affirmed TDCC’s BBB and A-2 rating, and revised its outlook to positive from stable. On June 16, 2022, Fitch Ratings affirmed TDCC’s BBB+ and F2 rating, and revised its outlook to positive from stable. These credit agencies' decisions were made as part of their annual review process and reflect the Company's supportive financial policies and strong operating performance.

Dividends

Dow Inc.

Dow Inc. has paid dividends on a quarterly basis and expects to continue to do so, subject to approval by the Dow Inc. Board. The dividends declared by the Dow Inc. Board align to the Company's strategy announced in 2018 of returning approximately 45 percent of operating net income1 to the shareholders through the dividend and total shareholder remuneration of approximately 65 percent, when including share repurchases, over the economic cycle. The following tables provide information on dividends declared and paid to common stockholders:

Dividends Paid for the Years Ended Dec 31 2022 2021

In millions, except per share amounts

Dividends paid, per common share $ 2.80 $ 2.80

Dividends paid to common stockholders $ 2,006 $ 2,073

Dow Inc. Cash Dividends Declared and Paid

Declaration Date Record Date Payment Date Amount (per share)

1.Operating net income is a non-GAAP measure that Dow defines as "Net income (loss) available for Dow Inc. common stockholders," excluding the impact of significant items.

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TDCC

TDCC has committed to fund Dow Inc.'s dividends paid to common stockholders and share repurchases, as approved by the Dow Inc. Board from time to time, as well as certain governance expenses. Funding is accomplished through intercompany loans. TDCC's Board reviews and determines a dividend distribution to Dow Inc. to settle the intercompany loans. For the year ended December 31, 2022, TDCC declared and paid dividends to Dow Inc. of $4,375 million ($3,264 million for the year ended December 31, 2021). At December 31, 2022, TDCC's intercompany loan balance with Dow Inc. was insignificant. See Note 24 to the Consolidated Financial Statements for additional information.

Share Repurchase Program

On April 1, 2019, the Dow Inc. Board ratified the share repurchase program originally approved on March 15, 2019, authorizing up to $3 billion for the repurchase of the Company's common stock, with no expiration date. The Company completed the April 1, 2019 share repurchase program in the second quarter of 2022. On April 13, 2022, the Dow Inc. Board approved a new share repurchase program authorizing up to $3 billion for the repurchase of the Company's common stock, with no expiration date. In 2022, the Company repurchased $2,325 million of its common stock. At December 31, 2022, $2 billion of the new share repurchase program authorization remained available for repurchases. As previously announced, the Company intends to repurchase shares to cover dilution over the cycle. The Company may from time to time expand its share repurchases beyond dilution, based on a number of factors including macroeconomic conditions, free cash flow generation, and the Dow share price. Any share repurchases, when coupled with the Company's dividends, are intended to implement the long-term strategy of targeting shareholder remuneration of approximately 65 percent over the economic cycle.

Pension Plans

The Company has both funded and unfunded defined benefit pension plans that cover employees in the United States and a number of other countries. In 2022 and 2021, the Company contributed $235 million and $1,219 million to its pension plans, respectively, including contributions to fund benefit payments for its unfunded pension plans. In the first quarter of 2021, the Company elected to contribute $1 billion to its U.S. tax-qualified pension plans, which is included in the 2021 contribution amount above. This contribution was based on the Company's funding policy, which is to contribute to defined benefit pension plans when pension laws and/or economics either require or encourage funding. The Company expects to contribute approximately $150 million to its pension plans in 2023.

On March 4, 2021, the Company announced changes to the design of its U.S. tax-qualified and non-qualified pension plans (collectively, the "U.S. Plans") and, effective December 31, 2023, the Company will freeze the pensionable compensation and credited service amounts used to calculate pension benefits for employees who participate in the U.S. Plans. See Note 19 to the Consolidated Financial Statements for additional information concerning the Company’s pension plans.

Restructuring

The 2020 Restructuring Program was substantially complete at December 31, 2021, with the exception of certain cash expenditures expected into 2023, consisting of severance and related benefit costs and costs associated with exit and disposal activities, including contract cancellation penalties and environmental remediation. Restructuring implementation costs totaled $40 million in 2022.

The Company expects to incur additional costs in the future related to its restructuring activities, which will be recognized as incurred. The Company also expects to incur additional employee-related costs, including involuntary termination benefits related to its other optimization activities. These costs cannot be reasonably estimated at this time. See Note 5 to the Consolidated Financial Statements for additional information on the Company's restructuring activities.

Digital Acceleration

In 2021, Dow announced plans to further advance and expand its digitalization efforts to deliver long-term value creation, by accelerating investment in three key areas: expanding digital tools to accelerate materials science innovation; further enhancing the e-commerce buying and fulfillment experience for Dow's customers; and adopting real-time digital manufacturing insights, operational data intelligence and demand sensing to enhance the productivity and reliability of Dow’s operations. The Company expects more than $300 million in incremental annual run rate Operating EBITDA generation by the end of 2023 related to digital acceleration, with an additional one-time $100 million in structural working capital efficiency gains, driven in part by enhanced planning from digital tools.

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Digital acceleration pre-tax expenses totaled $230 million in 2022. The Digital Acceleration program was completed at the end of 2022.

Contractual Obligations

The following table summarizes the Company’s contractual obligations, commercial commitments and expected cash requirements for interest at December 31, 2022. Additional information related to these obligations can be found in Notes 14, 15, 16 and 19 to the Consolidated Financial Statements.

Contractual Obligations at Dec 31, 2022 Payments Due In

Dow Inc.

TDCC

1.Excludes unamortized debt discount and issuance costs of $282 million. Includes finance lease obligations of $790 million.

2.Cash requirements for interest on long-term debt was calculated using current interest rates at December 31, 2022, and includes $6 million of various floating rate notes.

3.Includes imputed interest of $260 million.

4.Includes outstanding purchase orders and other commitments greater than $1 million obtained through a survey conducted within the Company.

5.Includes liabilities related to asbestos litigation, environmental remediation, legal matters and other noncurrent liabilities. In addition to these items, Dow Inc. includes liabilities related to noncurrent obligations with DuPont and Corteva. The table excludes uncertain tax positions due to uncertainties in the timing of the effective settlement of tax positions with the respective taxing authorities and deferred tax liabilities as it is impractical to determine whether there will be a cash impact related to these liabilities. The table also excludes deferred revenue as it does not represent future cash requirements arising from contractual payment obligations.

The Company expects to meet its contractual obligations through its normal sources of liquidity and believes it has the financial resources to satisfy these contractual obligations.

Off-Balance Sheet Arrangements

Off-balance sheet arrangements are obligations the Company has with nonconsolidated entities related to transactions, agreements or other contractual arrangements. The Company holds variable interests in joint ventures accounted for under the equity method of accounting. The Company is not the primary beneficiary of these joint ventures and therefore is not required to consolidate these entities (see Note 23 to the Consolidated Financial Statements). In addition, see Note 13 to the Consolidated Financial Statements for information regarding the transfer of financial assets.

Guarantees arise during the ordinary course of business from relationships with customers, committed accounts receivable facilities and nonconsolidated affiliates when the Company undertakes an obligation to guarantee the performance of others if specific triggering events occur. Additional information related to guarantees can be found in the “Guarantees” section of Note 15 to the Consolidated Financial Statements.

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Fair Value Measurements

See Note 19 to the Consolidated Financial Statements for information related to fair value measurements of pension and other postretirement benefit plan assets; see Note 21 for information related to other-than-temporary impairments; and, see Note 22 for additional information concerning fair value measurements.

OTHER MATTERS

Recent Accounting Guidance

See Note 2 to the Consolidated Financial Statements for a summary of recent accounting guidance.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in accordance with U.S. GAAP requires management to make judgments, assumptions and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. Note 1 to the Consolidated Financial Statements describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. Following are the Company’s accounting policies impacted by judgments, assumptions and estimates:

Asbestos-Related Matters of Union Carbide Corporation

Union Carbide is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past four decades. These suits principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both actual and punitive damages. The alleged claims primarily relate to products that Union Carbide sold in the past, alleged exposure to asbestos-containing products located on Union Carbide’s premises, and Union Carbide’s responsibility for asbestos suits filed against a former Union Carbide subsidiary, Amchem Products, Inc. ("Amchem"). Each year, Ankura Consulting Group, LLC ("Ankura") performs a review for Union Carbide based upon historical asbestos claims, resolution and asbestos-related defense and processing costs, through the terminal year of 2049. Union Carbide compares current asbestos claim and resolution activity, including asbestos-related defense and processing costs, to the results of the most recent Ankura study at each balance sheet date to determine whether the asbestos-related liability continues to be appropriate.

For additional information, see Part I, Item 3. Legal Proceedings; Asbestos-Related Matters of Union Carbide Corporation in Management’s Discussion and Analysis of Financial Condition and Results of Operations; and Notes 1 and 15 to the Consolidated Financial Statements.

Environmental Matters

The Company determines the costs of environmental remediation of its facilities and formerly owned facilities based on evaluations of current law and existing technologies. Inherent uncertainties exist in such evaluations primarily due to unknown environmental conditions, changing governmental regulations and legal standards regarding liability, and emerging remediation technologies. The recorded liabilities are adjusted periodically as remediation efforts progress, or as additional technical or legal information becomes available. At December 31, 2022, the Company had accrued obligations of $1,192 million for probable environmental remediation and restoration costs, including $244 million for the remediation of Superfund sites. This is management’s best estimate of the costs for remediation and restoration with respect to environmental matters for which the Company has accrued liabilities, although it is reasonably possible that the ultimate cost with respect to these particular matters could range up to approximately two times that amount. For further discussion, see Environmental Matters in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Notes 1 and 15 to the Consolidated Financial Statements.

Pension and Other Postretirement Benefits

The amounts recognized in the consolidated financial statements related to pension and other postretirement benefits are determined from actuarial valuations. Inherent in these valuations are assumptions including expected return on plan assets, discount rates at which the liabilities could have been settled at December 31, 2022, rate of increase in future compensation levels, mortality rates and health care cost trend rates. These assumptions are updated annually and are disclosed in Note 19 to the Consolidated Financial Statements. In accordance with U.S. GAAP, actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, affect expense recognized and obligations recorded in future periods. The U.S. pension plans represent 73 percent of the Company’s pension plan assets and 72 percent of the pension obligations.

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The Company uses the spot rate approach to determine the discount rate utilized to measure the service cost and interest cost components of net periodic pension and other postretirement benefit costs for the U.S. and other selected countries. Under the spot rate approach, the Company calculates service cost and interest cost by applying individual spot rates from the Willis Towers Watson RATE:Link yield curve (based on high-quality corporate bond yields) for each selected country to the separate expected cash flow components of service cost and interest cost; service cost and interest cost for all other plans (including all plans prior to adoption) are determined on the basis of the single equivalent discount rates derived in determining those plan obligations.

The following information relates to the U.S. plans only; a similar approach is used for the Company’s non-U.S. plans.

The Company determines the expected long-term rate of return on assets by performing a detailed analysis of historical and expected returns based on the strategic asset allocation approved by the Company's Investment Committee and the underlying return fundamentals of each asset class. The Company’s historical experience with the pension fund asset performance is also considered. The expected return of each asset class is derived from a forecasted future return confirmed by historical experience. The expected long-term rate of return is an assumption and not what is expected to be earned in any one particular year. The weighted-average long-term rate of return assumption used for determining net periodic pension expense for 2022 was 7.95 percent. The weighted-average assumption to be used for determining 2023 net periodic pension expense is 7.46 percent. Future actual pension expense will depend on future investment performance, changes in future discount rates and various other factors related to the population of participants in the Company’s pension plans.

The discount rates utilized to measure the pension and other postretirement obligations of the U.S. plans are based on the yield on high-quality corporate fixed income investments at the measurement date. Future expected actuarially determined cash flows for the Company’s U.S. plans are individually discounted at the spot rates under the Willis Towers Watson U.S. RATE:Link 60-90 corporate yield curve (based on 60th to 90th percentile high-quality corporate bond yields) to arrive at the plan’s obligations as of the measurement date. The weighted average discount rate utilized to measure pension obligations increased to 5.64 percent at December 31, 2022, from 3.04 percent at December 31, 2021.

At December 31, 2022, the U.S. tax-qualified plans were underfunded on a projected benefit obligation basis by $545 million. The underfunded amount decreased $2,040 million compared with December 31, 2021. The decrease in the underfunded amount in 2022 was primarily due to the market-related impact of higher discount rates partially offset by unfavorable returns on plan assets.

The assumption for the long-term rate for compensation levels for the U.S. tax-qualified plans was unchanged. The Company uses a generational mortality table to determine the duration of its pension and other postretirement obligations.

The following discussion relates to the Company’s significant pension plans.

The Company bases the determination of pension expense on a market-related valuation of plan assets that reduces year-to-year volatility. This market-related valuation recognizes investment gains or losses over a five-year period from the year in which they occur. Investment gains or losses for this purpose represent the difference between the expected return calculated using the market-related value of plan assets and the actual return based on the market value of plan assets. Since the market-related value of plan assets recognizes gains or losses over a five-year period, the future value will be impacted when previously deferred gains or losses are recorded. Over the life of the plans, both gains and losses have been recognized and amortized. At December 31, 2022, net losses of $3,123 million remain to be recognized in the calculation of the market-related value of plan assets. These net losses will result in increases in future pension expense as they are recognized in the market-related value of assets.

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The net decrease in the market-related value of assets due to the recognition of prior losses is presented in the following table:

Net Decrease in Market-Related Asset Value Due to Recognition of Prior Losses

In millions

The Company expects pension net periodic benefit cost ("NPBC") to decrease in 2023 by approximately $115 million, resulting in an NPBC credit. The decrease is driven primarily by discount rate increases, resulting in a reduction in the amortization of actuarial losses, partially offset by higher interest cost.

A 25 basis point increase or decrease in the long-term return on assets assumption would change the Company’s NPBC credit for 2023 by $58 million. A 25 basis point increase in the discount rate assumption would decrease the Company's NPBC credit for 2023 by $4 million. A 25 basis point decrease in the discount rate assumption would decrease the Company's NPBC credit for 2023 by $23 million.

Income Taxes

Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities, applying enacted tax rates expected to be in effect for the year in which the differences are expected to reverse. Based on the evaluation of available evidence, both positive and negative, the Company recognizes future tax benefits, such as net operating loss carryforwards and tax credit carryforwards, to the extent that realizing these benefits is considered to be more likely than not.

At December 31, 2022, the Company had a net deferred tax liability balance of $150 million, after valuation allowances of $1,269 million.

In evaluating the ability to realize the deferred tax assets, the Company relies on, in order of increasing subjectivity, taxable income in prior carryback years, the future reversals of existing taxable temporary differences, tax planning strategies and forecasted taxable income using historical and projected future operating results.

The Company files tax returns in multiple jurisdictions and is subject to examination by taxing authorities throughout the world. Tax authorities have the ability to review and challenge matters that could be subject to differing interpretation of applicable tax laws and regulations as they relate to the amount, character, timing or inclusion of revenue and expenses or the sustainability of tax attributes. The ultimate resolution of such uncertainties could last several years. When an uncertain tax position is identified, the Company considers and interprets complex tax laws and regulations in order to determine the need for recognizing a provision in its financial statements. Significant judgment is required in determining the timing and measurement of uncertain tax positions. The Company utilizes internal and external expertise in interpreting tax laws to support the Company's tax positions. The Company recognizes the financial statement effects of an uncertain income tax position when it is more likely than not, based on technical merits, that the position will be sustained upon examination. At December 31, 2022, the Company had uncertain tax positions for both domestic and foreign issues of $520 million and $498 million for interest and penalties.

Environmental Matters

Environmental Policies

Dow is committed to world-class environmental, health and safety (“EH&S”) performance, as demonstrated by industry-leading results, a long-standing commitment to Responsible Care®, a strong commitment to achieve the Company's 2025 Sustainability Goals and Dow's drive to deliver against new targets on climate protection and a circular economy. These goals and targets set the standard for sustainability in the chemical industry, focusing on improvements in the Company’s local corporate citizenship and product stewardship, and by actively pursuing methods to reduce the Company's environmental impact.

To meet the Company’s public commitments, as well as the stringent laws and government regulations related to environmental protection and remediation to which its global operations are subject, the Company has well-defined

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policies, requirements and management systems. The Company's EH&S Management System (“EMS”) defines the “who, what, when and how” needed for the businesses to implement the Company’s policies and requirements and meet performance objectives, leadership expectations and public commitments. The EMS is integrated into a company-wide management system for EH&S, Operations, Quality and Human Resources.

The Company believes third-party verification and transparent public reporting are cornerstones of world-class EH&S performance and building public trust. Numerous Dow sites in Europe, Latin America, Asia Pacific and the U.S. & Canada have received third-party verification of the Company’s compliance with Responsible Care® and with outside specifications such as ISO-14001. The Company continues to be a global champion of Responsible Care® and has worked to broaden the application and impact of Responsible Care® around the world through engagement with suppliers, customers and joint venture partners.

Dow manages environmental data for reporting with a waste, water and emissions inventory system. All manufacturing sites globally record their emissions and water use in the system. The data is reviewed at the facility level and then by global coordinators before being aggregated for ESG reporting.

Dow's EH&S policies help to ensure the Company achieves its annual health and safety performance targets and the Company seeks to continuously improve on these targets through process and personal safety project implementations. Improvement in these areas, as well as environmental compliance, remains a top management priority, as the Company continues to implement its 2025 Sustainability Goals and progressive, multi-decade sustainability targets that include advancing a circular economy and climate protection. Progress is reviewed regularly by management and with the Environment, Health, Safety & Technology Committee of the Board.

Detailed information on Dow’s performance regarding environmental matters and goals is accessible through the Company's Science & Sustainability webpage at www.dow.com/sustainability. Dow's website and its content are not deemed incorporated by reference into this report.

Chemical Security

Public and political attention continues to be placed on the protection of critical infrastructure, including the chemical industry, from security threats. Sabotage, terrorism, war, natural disasters and cyber incidents have increased global concerns about the security and safety of chemical production and distribution. Many, including the Company and the American Chemistry Council, have called for uniform risk-based and performance-based national standards for securing the U.S. chemical industry. The Company is subject to U.S. regulations with established risk-based and performance-based standards that must be met at U.S. Coast Guard-regulated and Chemical Facility Anti-Terrorism Standards-regulated facilities promulgated by the U.S. Department of Homeland Security. The Company is also subject to the requirements of the Rail Transportation Security Rule issued by the U.S. Transportation Security Administration. The Company continues to support uniform risk-based national standards for securing the chemical industry.

Since 1988, the Company has maintained a comprehensive, multi-level security plan that focuses on security, emergency planning, preparedness and response. This plan, which has been activated in response to significant world and national events, is reviewed on an annual basis. The Company continues to improve its security plans, placing emphasis on the safety of Dow communities and people by being prepared to meet risks at any level and to address both internal and external identifiable risks. The security plan includes regular vulnerability assessments, security audits, mitigation efforts and physical security upgrades designed to reduce vulnerability. The Company’s security plans are also designed to avert interruptions of normal business operations that could materially and adversely affect the Company’s results of operations, financial condition and cash flows.

The Company played a key role in the development and implementation of the American Chemistry Council’s Responsible Care® Security Code ("Security Code"), which requires that all aspects of security – including facility, transportation and cyberspace – be assessed and gaps addressed. Through the global implementation of the Security Code, the Company has permanently heightened the level of security – not just in the United States, but worldwide. The Company employs several hundred employees and contractors in its Emergency Services and Security department worldwide. In 2019, the Company established its Global Security Operations Center ("GSOC") to provide 24-hour/day, 365-day/year real-time monitoring of global risks to Dow assets and people. The GSOC employs state-of-the-art social media monitoring, threat reporting and geo-fencing capabilities to analyze global risks and report those risks, facilitating decision-making and actions to prevent Dow crises.

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Through the implementation of the Security Code, including voluntary security enhancements and upgrades, the Company is well-positioned to comply with U.S. chemical facility regulations and other regulatory security frameworks. The Company participates with the American Chemistry Council to periodically review and update the Security Code.

The Company continues to work collaboratively across the supply chain on Responsible Care®, supply chain design, emergency preparedness, shipment visibility and transportation of hazardous materials. The Company cooperated with public and private entities to lead the implementation of advanced tank car design, and track and trace technologies. Further, the Company’s Distribution Risk Review process addresses potential threats in all modes of transportation across the Company’s supply chain. To reduce vulnerabilities, the Company maintains security measures that meet or exceed regulatory and industry security standards in all areas in which they operate.

The Company's initiatives relative to chemical security, emergency preparedness and response, Community Awareness and Emergency Response and crisis management are implemented consistently at all Dow sites on a global basis. Each Dow site has established outreach programs designed to engage community stakeholders with objectives centered around awareness of Dow operations, products, and efforts to protect worker and community health and the environment. These programs also educate community members on emergency planning and response, emissions and waste, future site plans to reduce waste and emissions, and process safety systems. Finally, these outreach efforts establish an opportunity for Dow site leaders to hear about community stakeholder expectations and address questions and concerns about safety, health, environmental or other issues. The Company participates with chemical associations globally and participates as an active member of the Global Congress on Chemical Security and Emerging Threats and in positions of leadership in the U.S. Chemical Sector Coordinating Council.

Climate Protection

Addressing climate-related risks and opportunities is part of Dow’s overall climate strategy. This science-based strategy includes a phased approach to decarbonize while meeting growing demand for Dow's products and contributing to a low-carbon future through continued investment in new products, technologies and processes. In 2020, Dow announced commitments to reduce its net annual Scope 1 and 2 carbon emissions by an additional 5 million metric tons by 2030 versus its 2020 baseline, a 15 percent reduction and a 30 percent reduction since 2005 as Dow had reduced its carbon emissions 15 percent between 2005 and 2020. Additionally, Dow announced its intention to be carbon neutral by 2050 (Scope 1+2+3, as defined by the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard, plus product benefits). Reflecting Dow's focus to make meaningful progress in the near term, Dow intends to reduce its carbon emissions by approximately 2 million metric tons from 2022 to 2025 while growing underlying earnings. Dow is also committed to advancing water stewardship within the Company's operations and to working collaboratively to enhance water management at the watershed level. As part of this commitment, Dow has set a global target to reduce freshwater intake intensity by 20 percent at its key water-stressed sites by 2025.

Despite these commitments, climate change-related risks and uncertainties, legal or regulatory responses to climate change, and failure to meet climate change commitments could negatively impact Dow’s operations, financial condition and/or reputation. Climate-related risks include both physical and transition risks.

Physical Risks

Climate-related physical risks include more frequent severe weather events, potential changes in precipitation patterns, water scarcity and extreme variability in weather patterns, which can disrupt the operations of the Company as well as those of its customers, partners and vendors. In 2021, Dow partnered with S&P Global Trucost (Trucost) to assess the Company’s exposure to climate-related physical risks based on the geographic location of manufacturing operations. The risks assessed included water stress, heat waves, cold waves, droughts, hurricanes, wildfires and flooding. The analysis included an assessment of the physical risks using a baseline year of 2020 with time periods ranging to 2050, and scenarios of low, moderate and high climate change. Based on the Trucost methodology, which scores the exposure of sites to physical risks relative to global conditions, Dow was assessed at moderate exposure in 2050 under all scenarios, with a weighted average that is slightly lower than the average of the materials industry (as defined by Trucost). Dow will use this information to inform decision-making at sites with respect to managing climate-related physical risks.

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Transition Risks

Climate-related transition risks include the availability, development and affordability of lower greenhouse gas emissions technology, the effects of carbon pricing and changes in public sentiment, regulations, taxes, public mandates or requirements.

Climate Opportunities and Actions

There are also significant climate opportunities for Dow, including the ability to be a leader in the development of lower emissions technology, such as Dow’s 2021 announcement to build a net-zero (Scope 1 & 2 emissions) ethylene and derivatives complex in Alberta, Canada. Additional opportunity actions to achieve carbon neutrality include expanding access to clean power, developing lower carbon emissions manufacturing technology, such as Dow's proprietary FCDh technology, and collaborating with Shell to develop electrified cracking technology powered by clean energy. Dow’s technology and materials science leadership also provide a significant opportunity to deploy materials to help reduce emissions for customers and industries that will allow Dow to capture value from increasing demand for low-carbon and sustainable products. These are just some examples of critical steps on Dow’s path to carbon neutrality by 2050 while enabling business growth.

The potential impacts of climate-related risks and opportunities are part of Dow’s climate strategy and factored into the Company’s business and financial planning. When assessing the magnitude of impact, Dow evaluates elements such as changes to the cost of raw materials, impact on operating cost (e.g., energy costs, costs of complying with regulation), cost of investment in new technology to reduce emissions, impact to the price at which products can be sold, impact of potential lost sales or, in the case of opportunities, improvements in production, increased revenues, cost efficiencies and market share gained. In addition, there could be impacts that need to be considered that cannot be financially quantified (e.g., reputational impact of certain risks and opportunities).

Dow is taking specific actions to mitigate identified climate-related physical and transition risks, while also advancing opportunities in several key areas. These include:

•Optimizing Manufacturing Facilities and Processes for Sustainability: Dow is investing approximately $1 billion in annual capital spending allocation to decarbonize assets, in a phased approach, while growing capacity. This investment plan includes large, industry-leading projects, such as the announced net-zero carbon emissions (Scope 1 & 2 emissions) site in Alberta, Canada, as well as emissions-reduction investments in existing facilities and replacement of end-of-life carbon intensive assets with state-of-the-art, carbon-efficient and sustainable technologies. In 2021, Dow implemented energy efficiency and emissions reduction projects, reducing energy consumption by 1.232 million kilojoules per year and amounting to 611,500 metric tons of carbon dioxide ("CO2") reduction. In 2021, Dow’s Terneuzen site outlined a roadmap to support the Dutch Climate Agreement and enable a reduction of 1.7 million metric tons of CO2 annually by 2030 versus a 2020 baseline. These projects are part of Dow’s roadmap that will enable the Company to decarbonize its manufacturing while meeting growing demand for its products and includes replacing end-of-life assets with high-efficiency, low-carbon assets. Dow is also working to reduce water use and the potential impact of water stress. One example is the Company’s commitment to 100 percent water circularity by 2025 at Dow’s site in Terneuzen, The Netherlands.

•Increasing Clean Energy in Purchased Power Mix: Dow continues to invest in cost-efficient clean energy, including wind, solar and hydropower, across operations. In 2021, Dow expanded access to renewable power to more than 900 megawatts, so that more than 25 percent of purchased electricity comes from renewable sources. Dow is a leading user of renewable energy in the chemical industry and in the top 20 among global corporations according to BloombergNEF. Dow is also collaborating with X-energy with the intent to deploy carbon-free small modular nuclear technology options at one of the Company's U.S. sites by approximately 2030.

•Developing Next Generation, Low-Carbon Manufacturing Technologies: Dow is investing in longer-term, future-focused manufacturing technologies that will be critical in the decarbonization of the Company's manufacturing. For example, Dow is collaborating with Shell on technology to electrically heat steam cracker furnaces. Combining electrical cracking with clean electricity sources would reduce the CO2 footprint of the production process to near zero emissions. Dow also developed its proprietary FCDh technology, which can be used to make cracking a less carbon intensive process, and has installed the technology in a mixed-feed cracker in Louisiana to produce on-purpose propylene, reducing energy use and emissions by up to 20 percent. Dow is leveraging the learnings from the FCDh development to also advance ethane dehydrogenation technology for ethylene and propylene production, which has the potential to reduce emissions by 40 to 50 percent.

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•Collaborating With the Supply Chain to Tackle ‘Upstream’ Carbon Emissions: Dow is working closely with its suppliers to set emissions reduction targets and to embed ESG performance as a metric in supplier selection, contracting, and relationship management. Approximately 70 percent of Dow’s emissions footprint fall into the Scope 3 categories and more than half of those come from the raw materials, transportation, and other services purchased as a company. Reducing Scope 3 emissions is a tremendous challenge for all companies. Dow recognizes the significant opportunity it has to work with suppliers to reduce those emissions, just as Dow's customers are looking to the Company to reduce emissions for the Dow products they buy. Dow was recently recognized as a Global Supplier Engagement Leader by CDP, placing among the top 8 percent of companies that disclose their data to CDP. CDP's Supplier Engagement Rating system independently evaluates supplier engagement practices with the aim of accelerating action to reduce emissions in global supply chains.

•Developing Low-Carbon Products, Technologies and Services: Dow products are essential to a low carbon future, and the Company wants the world’s best brands to look to Dow to help them achieve their goals and make their products more sustainable. Dow is helping its customers achieve their climate goals by providing products that facilitate energy efficiency, light weighting, fuel transition, circularity, increased operational efficiency, resource reductions and reduced emissions. Examples include Dow’s MobilityScienceTM platform, which is focused on developing cutting-edge material innovations that will enable the next generation of electric and autonomous vehicles to achieve longer range, greater comfort, enhanced safety, and a lower carbon footprint. Dow’s ENDURANCETM compounds for cable systems support next-generation, longer-life, and lower-carbon emissions infrastructure, including on- and off-shore windfarms. Dow’s Novel ENDURANCETM HFDD 4201 enables significantly lower-carbon emissions (approximately 80 percent), and material and energy savings during cable production. Additionally, in September 2022, Dow introduced DOWSILTM Immersion Cooling Technology, a next-generation solution for cooling hyperscale cloud enterprise data centers with optimized efficiency and sustainability. DOWSILTM ICL-1000 Fluid, the first product in this new technology family, is estimated to absorb heat about one thousand times more efficiently than air-cooled systems, resulting in up to a 95 percent reduction in energy use for server cooling and up to a 50 percent reduction in overall data center power consumption. This product can also be recycled to increase its circularity.

Advancing a Circular Economy

Dow’s vision for turning the tide on plastic waste is centered on solving challenges: from designing for recyclability at the beginning of a product’s life to increasing Dow's capacity to use plastic waste as feedstock and other alternative feedstock, enabling plastic waste to be blended with virgin plastic as recycled resins, and building and partnering in industrial ecosystems to close the loop. The issue is complex, and through partnerships, Dow is working across the value chain to improve access to collection, recycling, and processing infrastructure and to create new circular business models. Improving circularity of plastics through recycling and reuse is critical to a world that is also targeting carbon emissions reduction. The lower-carbon benefits of polyethylene-based packaging serve as a key driver and source of value, as well as the lifecycle perspective of plastic versus other available materials. Moving to circular products includes increasing the share of plastics production from circular feedstocks. In 2020, Dow announced "stop the waste" and "close the loop" targets to address plastic waste and, in 2022, Dow committed to accelerating the circular ecosystem by turning waste and alternative feedstock into raw materials that help deliver 3 million metric tons per year of circular and renewable solutions by 2030 with a new "transform the waste" sustainability target.

Meeting this expanded “transform the waste” target will require investments in technologies and infrastructure and strategic partnerships. To do this, Dow will expand its efforts to “stop the waste” by building industrial ecosystems to collect, reuse or recycle waste and expand its portfolio to meet rapidly growing demand. Dow expects the waste required to produce this expanded target to surpass and replace the original 1 million metric ton stop the waste goal. Dow is also catalyzing a circular economy for plastics through global partnerships with non-governmental

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organizations and investors, such as the Alliance to End Plastic Waste, The Recycling Partnership, Circulate Capital and Closed Loop Partners. Additionally, Dow is accelerating its progress through several recently announced circular and mechanical offtake agreements and projects that will help contribute to achieving the new target, including:

•Agreements with Mura Technology to construct multiple world-scale advanced recycling facilities in the U.S. and Europe, collectively adding as much as 600 kilotons of annual capacity.

•An investment to build the largest single hybrid recycling site in France, managed by Valoregen, which will secure a source of post-consumer resins (“PCR”) for Dow.

•Mechanical recycling collaboration with Boomera LAR in Brazil.

•An investment in Mr. Green Africa and an agreement to co-develop more traceable, fair, and high-quality PCR that can be used in the production of new flexible plastic packaging.

•A memorandum of understanding with Lucro Plastecycle to develop and launch polyethylene film solutions using PCR plastics in India.

•The launch of a bold new collaboration with WM to improve consumer recycling for hard-to-recycle plastic films throughout the U.S. by allowing consumers to recycle these materials directly in their curbside recycling. Once operating at full capacity, this collaboration is expected to divert more than 120,000 metric tons of plastic film from landfills annually.

Dow is also working directly with its customers, brand owners and the value chain to help customers redesign and create packaging solutions that are both high-performance and recyclable or made with circular polymers. Dow continuously invests in application development, packaging redesign and infrastructure improvements to deliver on the Company's circularity goals.

As one of the world’s largest producers of plastic, Dow wants to put an end to plastic waste. Eliminating plastic waste is about more than just recycling and reusing. It is about creating innovative solutions that are sustainable and continuing to invest in an industrial ecosystem for the circular economy.

Environmental Remediation

For comparison of environmental remediation-related matters for the fiscal years ended December 31, 2021 and 2020, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 4, 2022.

The Company accrues the costs of remediation of its facilities and formerly owned facilities based on current law and regulatory requirements. The nature of such remediation can include management of soil and groundwater contamination. The accounting policies adopted to properly reflect the monetary impacts of environmental matters are discussed in Note 1 to the Consolidated Financial Statements. To assess the impact on the financial statements, environmental experts review currently available facts to evaluate the probability and scope of potential liabilities. Inherent uncertainties exist in such evaluations primarily due to unknown environmental conditions, changing governmental regulations and legal standards regarding liability, and the ability to apply remediation technologies. These liabilities are adjusted periodically as remediation efforts progress or as additional technical or legal information becomes available. The Company had an accrued liability of $948 million at December 31, 2022, related to the remediation of current or former Dow-owned sites. At December 31, 2021, the liability related to remediation was $983 million.

In addition to current and former Dow-owned sites, under the federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") and equivalent state laws (hereafter referred to collectively as "Superfund Law"), the Company is liable for remediation of other hazardous waste sites where the Company allegedly disposed of, or arranged for the treatment or disposal of, hazardous substances. Because Superfund Law imposes joint and several liability upon each party at a site, the Company has evaluated its potential liability in light of the number of other companies that have also been named potentially responsible parties (“PRPs”) at each site, the estimated apportionment of costs among all PRPs, and the financial ability and commitment of each to pay its expected share. The Company’s remaining liability for the remediation of Superfund sites was $244 million at December 31, 2022 ($237 million at December 31, 2021). The Company has not recorded any third-party recovery related to these sites as a receivable.

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Information regarding environmental sites is provided below:

Environmental Sites Dow-owned Sites 1 Superfund Sites 2

Sites added during year — 2 2 5

Sites closed during year — (16) (6) (3)

1.Dow-owned sites are sites currently or formerly owned by the Company. In the United States, remediation obligations are imposed by the Resource Conservation and Recovery Act or analogous state law. At December 31, 2022, 24 of these sites (24 sites at December 31, 2021) were formerly owned by Dowell Schlumberger, Inc., a group of companies in which the Company previously owned a 50 percent interest. The Company sold its interest in Dowell Schlumberger in 1992.

2.Superfund sites are sites, including sites not owned by the Company, where remediation obligations are imposed by Superfund Law.

Additional information is provided below for the Company’s Midland, Michigan, manufacturing site and Midland off-site locations (collectively, the "Midland sites"), as well as a Superfund site in Wood-Ridge, New Jersey, the locations for which the Company has the largest potential environmental liabilities.

In the early days of operations at the Midland manufacturing site, wastes were usually disposed of on-site, resulting in soil and groundwater contamination, which has been contained and managed on-site under a series of Resource Conservation and Recovery Act permits and regulatory agreements. The Hazardous Waste Operating License for the Midland manufacturing site, issued in 2003, and renewed and replaced in September 2015, also included provisions for the Company to conduct an investigation to determine the nature and extent of off-site contamination from historic Midland manufacturing site operations. In January 2010, the Company, the U.S. Environmental Protection Agency ("EPA") and the State of Michigan ("State") entered into an Administrative Order on Consent that requires the Company to conduct a remedial investigation, a feasibility study and a remedial design for the Tittabawassee River, the Saginaw River and the Saginaw Bay, and pay the oversight costs of the EPA and the State under the authority of CERCLA. See Note 15 to the Consolidated Financial Statements for further information relating to Midland off-site environmental matters.

Rohm and Haas, a wholly owned subsidiary of the Company, is a PRP at the Wood-Ridge, New Jersey Ventron/Velsicol Superfund Site, and the adjacent Berry’s Creek Study Area ("BCSA") (collectively, the "Wood-Ridge sites"). Rohm and Haas is a successor in interest to a company that owned and operated a mercury processing facility, where wastewater and waste handling resulted in contamination of soils and adjacent creek sediments. In 2018, the Berry’s Creek Study Area Potentially Responsible Party Group (“PRP Group”), consisting of over 100 PRPs, completed a Remedial Investigation/Feasibility Study for the BCSA. During that time, the EPA concluded that an “iterative or adaptive approach” was appropriate for cleaning up the BCSA. Thus, each phase of remediation will be followed by a period of monitoring to assess its effectiveness and determine if there is a need for more work. In September 2018, the EPA signed a Record of Decision ("ROD 1") which describes the initial phase of the EPA’s plan to clean-up the BCSA. ROD 1 will remediate waterways and major tributaries in the most contaminated part of the BCSA. The PRP Group has signed agreements with the EPA to design the selected remedy. Although there is currently much uncertainty as to what will ultimately be required to remediate the BCSA and Rohm and Haas's share of these costs has yet to be determined, the range of activities that are required in the interim Record of Decision is known in general terms.

At December 31, 2022, the Company had accrued liabilities totaling $339 million ($358 million at December 31, 2021) for environmental remediation at the Midland and Wood-Ridge sites. In 2022, the Company spent $37 million ($38 million in 2021) for environmental remediation at the Midland and Wood-Ridge sites.

In total, the Company’s accrued liability for probable environmental remediation and restoration costs was $1,192 million at December 31, 2022, compared with $1,220 million at December 31, 2021. This is management’s best estimate of the costs for remediation and restoration with respect to environmental matters for which the Company has accrued liabilities, although it is reasonably possible that the ultimate cost with respect to these particular matters could range up to approximately two times that amount. Consequently, it is reasonably possible that environmental remediation and restoration costs in excess of amounts accrued could have a material impact on the Company’s results of operations, financial condition and cash flows. It is the opinion of the Company’s management, however, that the possibility is remote that costs in excess of the range disclosed will have a material impact on the Company’s results of operations, financial condition and cash flows.

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The amounts charged to income on a pretax basis related to environmental remediation totaled $176 million in 2022 and $158 million in 2021. The amounts charged to income on a pretax basis related to operating the Company's current pollution abatement facilities, excluding internal recharges, totaled $773 million in 2022 and $761 million in 2021. Capital expenditures for environmental protection were $137 million in 2022 and $65 million in 2021.

Asbestos-Related Matters of Union Carbide Corporation

Union Carbide is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past four decades. These suits principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both actual and punitive damages. The alleged claims primarily relate to products that Union Carbide sold in the past, alleged exposure to asbestos-containing products located on Union Carbide’s premises, and Union Carbide’s responsibility for asbestos suits filed against a former Union Carbide subsidiary, Amchem. In many cases, plaintiffs are unable to demonstrate that they have suffered any compensable loss as a result of such exposure, or that injuries incurred in fact resulted from exposure to Union Carbide’s products.

For comparison of asbestos-related matters of Union Carbide Corporation for the fiscal years ended December 31, 2021 and 2020, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 4, 2022.

The table below provides information regarding asbestos-related claims pending against Union Carbide and Amchem based on criteria developed by Union Carbide and its external consultants:

Asbestos-Related Claim Activity 2022 2021

Claims settled, dismissed or otherwise resolved (6,538) (4,612)

Claimants with claims against both Union Carbide and Amchem (1,530) (2,139)

Plaintiffs’ lawyers often sue numerous defendants in individual lawsuits or on behalf of numerous claimants. As a result, the damages alleged are not expressly identified as to Union Carbide, Amchem or any other particular defendant, even when specific damages are alleged with respect to a specific disease or injury. In fact, there are no asbestos personal injury cases in which only Union Carbide and/or Amchem are the sole named defendants. For these reasons and based upon Union Carbide’s litigation and settlement experience, Union Carbide does not consider the damages alleged against Union Carbide and Amchem to be a meaningful factor in its determination of any potential asbestos-related liability.

For additional information see Part I, Item 3. Legal Proceedings and Asbestos-Related Matters of Union Carbide Corporation in Note 15 to the Consolidated Financial Statements.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s business operations give rise to market risk exposure due to changes in foreign exchange rates, interest rates, commodity prices and other market factors such as equity prices. To manage such risks effectively, the Company enters into hedging transactions, pursuant to established guidelines and policies that enable it to mitigate the adverse effects of financial market risk. Derivatives used for this purpose are designated as hedges per the accounting guidance related to derivatives and hedging activities, where appropriate. A secondary objective is to add value by creating additional non-specific exposure within established limits and policies; derivatives used for this purpose are not designated as hedges. The potential impact of creating such additional exposures is not material to the Company’s results.

The global nature of the Company’s business requires active participation in the foreign exchange markets. The Company has assets, liabilities and cash flows in currencies other than the U.S. dollar. The primary objective of the Company’s foreign currency risk management is to optimize the U.S. dollar value of net assets and cash flows. To achieve this objective, the Company hedges on a net exposure basis using foreign currency forward contracts, over-the-counter option contracts, cross-currency swaps and nonderivative instruments in foreign currencies. Exposures primarily relate to assets, liabilities and bonds denominated in foreign currencies, as well as economic exposure, which is derived from the risk that currency fluctuations could affect the dollar value of future cash flows related to operating activities. The largest exposures are denominated in European currencies, the Chinese yuan, the Japanese yen, the Thai baht and the Argentinian peso, although exposures also exist in other currencies in Asia Pacific, Canada, Latin America, the Middle East, Africa and India.

The main objective of interest rate risk management is to reduce the total funding cost to the Company and to alter the interest rate exposure to the desired risk profile. To achieve this objective, the Company hedges using interest rate swaps, “swaptions,” and exchange-traded instruments. The Company’s primary exposure is to the U.S. dollar yield curve.

The Company has a portfolio of equity securities derived primarily from the investment activities of its insurance subsidiaries. This exposure is managed in a manner consistent with the Company’s market risk policies and procedures.

Inherent in the Company’s business is exposure to price changes for several commodities. Some exposures can be hedged effectively through liquid tradable financial instruments. Natural gas and crude oil, along with feedstocks for ethylene and propylene production, constitute the main commodity exposures. Over-the-counter and exchange traded instruments are used to hedge these risks, when feasible.

The Company uses value-at-risk (“VAR”), stress testing and scenario analysis for risk measurement and control purposes. VAR estimates the maximum potential loss in fair market values, given a certain move in prices over a certain period of time, using specified confidence levels. The VAR methodology used by the Company is a variance/covariance model. This model uses a 97.5 percent confidence level and includes at least one year of historical data.

The 2022 and 2021 year-end and average daily VAR for the aggregate of all positions are shown below. These amounts are immaterial relative to the total equity of the Company.

Total Daily VAR by Exposure Type at Dec 31 2022 2021

In millions Year-end Average Year-end Average

The Company’s daily VAR for the aggregate of all positions increased from a composite VAR of $200 million at December 31, 2021 to a composite VAR of $341 million at December 31, 2022. The interest rate VAR increased due to an increase in interest rate volatility. The equity securities VAR increased due to an increase in equity volatility and an increase in equity exposure. The foreign exchange VAR decreased due to a decrease in managed exposures. The commodities VAR increased due to an increase in managed exposures and an increase in commodity volatility. See Note 21 to the Consolidated Financial Statements for further disclosure regarding market risk.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Dow Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Dow Inc. and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes and the schedule listed in the Index at Item 15(a)(2) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.