{"url_path":"/sec/cik-0000100790/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A RISK FACTORS","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-02-03","source_url":"https://www.sec.gov/Archives/edgar/data/100790/0000029915-26-000004-index.html","accession_number":"0000029915-26-000004","cik":"0000100790","ticker":null,"issuer_name":"UNION CARBIDE CORP /NEW/","edgar_url":"https://www.sec.gov/Archives/edgar/data/100790/0000029915-26-000004-index.html","primary_entity_key":"0000100790","primary_entity_name":"UNION CARBIDE CORP /NEW/"},"word_count":4534,"has_tables":true,"body_markdown":"ITEM 1A. RISK FACTORS\n\nThe factors described below represent the Corporation's principal risks.\n\nCLIMATE CHANGE - RELATED RISKS\n\nClimate Change: Climate change-related risks and uncertainties, legal or regulatory responses to climate change and a failure of TDCC's parent company, Dow Inc., to meet its climate change commitments could negatively impact the Corporation’s results of operations and/or financial condition.\n\nUCC sells substantially all of its products to TDCC in order to simplify the worldwide customer interface process and, as a result, the Corporation is subject to many of the same global risk factors facing TDCC and its parent company, Dow Inc. (collectively, \"Dow\"), including those presented by climate change. The Corporation is subject to increasing climate-related risks and uncertainties, many of which are outside of its control. Climate change may result in more frequent and damaging severe weather and weather-related events, potential changes in precipitation patterns and extreme variability in weather patterns. These short- and long-term weather and weather-related events can disrupt the operations of the Corporation as well as those of its customers, end-use customers, partners and vendors due to damage to local infrastructure and other property damage limiting site access, and causing water scarcity and lack of access to high-quality water, among other factors. These risks and uncertainties may also directly or indirectly impact decisions to invest in the construction and/or renovation of new or existing manufacturing sites and other Corporation facilities and locations.\n\nThe transition to lower greenhouse gas emissions technology, the effects of carbon pricing and changes in public sentiment, incentives, 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 Corporation’s operations, which would negatively impact the Corporation’s results of operations.\n\nIn 2020, Dow announced commitments to reduce its net annual Scope 1 and 2 carbon dioxide equivalent emissions by an additional 5 million metric tons, approximately a 15 percent reduction 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).\n\nThe commitments reflect Dow's current plans and targets and are not guarantees that Dow will be able to achieve them. The execution and achievement of these commitments within projected cost estimates and expected timeframes may impact the Corporation's operations and 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 and cost of necessary materials and components; adapting products to end-use customer preferences and end-use customer acceptance of sustainable supply chain solutions; changes in public sentiment and political leadership, including government incentives and tax credits to promote emission reductions; the ability of Dow and its consolidated subsidiaries to comply with changing regulations, taxes, mandates or requirements related to greenhouse gas emissions or other climate-related matters, including prescriptive reporting of climate-related matters; and Dow's ability to adequately fund capital expenditures necessary to complete its planned projects. In addition, standards for tracking and reporting on sustainability matters have not been harmonized, continue to evolve and may change over time, which\n\n7\n\n[Table of Contents](#i2aef629ae28d4ab08017402fb32766d6_7)\n\ncould result in significant revisions to Dow's performance metrics, commitments or reported progress in achieving such commitments. If Dow fails to meet its climate change commitments within the committed timeframe, coupled with its significant investments to meet those commitments, and adopt policies and practices to enhance sustainability, Dow's reputation and its customer and other stakeholder relationships could be negatively impacted, reducing demand for Dow and the Corporation's products, and it may be more difficult for Dow and its consolidated subsidiaries to compete effectively or gain access to financing on acceptable terms, which could negatively impact the Corporation’s financial condition, results of operations and cash flows.\n\nMACROECONOMIC RISKS\n\nGlobal Economic Considerations: The Corporation operates in a global, competitive environment which gives rise to operating and market risk exposure.\n\nThe Corporation sells substantially all of its products to TDCC, which operates in a competitive, global environment, and competes worldwide for sales. Increased levels of competition have resulted in lower prices and lower sales volume, which have had a negative impact on the Corporation's results of operations. These factors are expected to continue and may worsen in the near term, which could continue to challenge the Corporation's ongoing results of operations. To address these challenges amidst the ongoing macroeconomic uncertainty, the Corporation has taken targeted cost reduction initiatives and will continue to seek additional actions to mitigate the impact of macroeconomic uncertainty. Sales of TDCC'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, duties and tariffs or changes to bilateral and regional trade agreements could result in lower sales for the Corporation's products, which could negatively impact the Corporation's results of operations.\n\nDuring 2025, the United States changed its long-standing trade policies and announced significant new tariffs, with certain exceptions, on virtually all imported goods. These actions triggered the negotiation of new trade agreements with certain U.S. trading partners. While these negotiations resulted in the reduction of certain recently imposed tariffs, the average U.S. tariff rate remains at its highest level since the 1930s. In response to the changes in U.S. trade policies, certain U.S. trading partners imposed retaliatory tariffs on U.S. imports. Shifts in tariffs, trade agreements, import/export restrictions, trade sanctions, sector specific trade barriers, and other governmental trade actions, whether enacted by the United States or other countries, especially those instituted in UCC's or TDCC's significant markets or markets where their significant customers or suppliers are located, and the associated uncertainty of long-term trade policies, could impact the Corporation's sales volume, sales price, and production and other costs. Changes in trade policies may also cause disruptions to material sourcing and availability, global supply chains and logistics and access to end markets. Additionally, changes in U.S. trade policy and associated responses from trading partners may create shifts in global market dynamics, disrupt the long-term planning process for governments and private enterprises and result in continued global financial market volatility. The impact of these changes in trade policies and the resulting trade and market uncertainty could have a negative impact on the Corporation’s results of operations. There can be no assurance that, in the future, the United States, other countries or international trade bodies will not institute new tariffs or more restrictive trade policies or remedies and, as a result, the Corporation may face additional uncertainty and adverse impact on its business, financial condition and results of operations.\n\nEconomic conditions around the world, and in certain industries and geographic regions in which the Corporation and TDCC do business, also impact sales price and volume and affect the efficacy of the Corporation's supply chain. For example, long-term market uncertainty, an economic downturn driven by trade policies and inflationary pressures, higher input costs and margin compression have reduced demand for the Corporation's products, resulting in decreased sales price and volume. Adverse economic conditions have also caused supply chain constraints. These factors have had and are continuing to have a negative impact on the Corporation's results of operations. Additionally, political conditions or tensions; war, invasion or conflict, including the ongoing conflicts in the Middle East and between Russia and Ukraine with the related sanctions and export restrictions; terrorism; epidemics; pandemics; or political instability in the geographic regions or industries in which the Corporation operates or its products are sold could further reduce demand for these products and result in decreased sales price and volume or supply chain disruptions, which could have a negative impact on the Corporation's results of operations.\n\nThe Russia-Ukraine conflict has been ongoing for more than three years since Russia’s February 2022 invasion of Ukraine, and although there have been recent efforts to seek a resolution, it remains unclear if these will be successful. In light of sanctions imposed by the United States, Canada, the European Union and other countries as\n\n8\n\n[Table of Contents](#i2aef629ae28d4ab08017402fb32766d6_7)\n\na result of this conflict, TDCC ceased in-bound investment to Russia and maintains reasonable, risk-based measures to ship into Russia only limited goods that comply with applicable legal restrictions. These actions have not had and are not expected to have a material impact on the Corporation's financial condition or results of operations. The situation remains fluid and the ongoing conflict may result in additional economic sanctions or other measures, which could have a negative impact on TDCC’s financial condition, results of operations and cash flows. These impacts could 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. Further, the intensity and duration of conflicts in the Middle East and potential expansion of hostilities in the region are difficult to predict and could disrupt the Corporation's supply chain operations, which could have a negative impact on the Corporation's results of operations.\n\nFinancial Flexibility: Market conditions, availability of credit and changes in TDCC's credit ratings could reduce TDCC's financial flexibility, which could impact the financial flexibility of the Corporation.\n\nAdverse economic conditions, a contraction in the availability of credit in the marketplace, or changes in TDCC's credit ratings, including failure to maintain an investment grade rating, could increase borrowing costs and reduce TDCC's sources of liquidity, restricting TDCC's flexibility to respond to changing business and economic conditions or to fund capital projects or working capital needs. Since TDCC is a major service provider, material debtor, and the major customer of the Corporation, reduced financial flexibility for TDCC could impact the financial flexibility of the Corporation, which could negatively impact the Corporation's results of operations.\n\nPension and Other Postretirement Benefits: Increased obligations and expenses related to the Corporation's defined benefit pension plans and other postretirement benefit plan could negatively impact UCC's financial condition and results of operations.\n\nWhile the Corporation has frozen its defined benefit pension plans and its other postretirement benefit plan (the \"plans\"), the Corporation continues to sponsor the plans. The assets of the Corporation'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 health care cost trends may affect the funded status of the Corporation's plans and could cause volatility in the net periodic benefit cost and future funding requirements of the plans. A significant increase in the Corporation's obligations or future funding requirements could have a negative impact on the Corporation's results of operations and cash flows for a particular period and on the Corporation's financial condition.\n\nSupply/Demand Balance: Earnings generated by the Corporation vary based in part on the balance of supply relative to demand within the industry.\n\nThe Corporation's business operations are subject to the cyclical nature of the supply-demand balance in the chemical industry. The balance of supply relative to demand within the industry has been and continues to 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 has resulted in excess capacity which has disrupted and continues to disrupt regional industry supply and demand balances, resulting in downward pressure on prices and decreased operating rates, which has had and continues to have a negative impact on the Corporation's results of operations.\n\nLEGAL AND REGULATORY RISKS\n\nEnvironmental Compliance: The costs of complying with evolving regulatory requirements could negatively impact the Corporation'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.\n\nThe Corporation 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 Corporation 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 Corporation’s ultimate cost with respect to these matters could be significantly higher, which could negatively impact the Corporation’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\n\n9\n\n[Table of Contents](#i2aef629ae28d4ab08017402fb32766d6_7)\n\nthe requirements. Moreover, changes in environmental regulations could inhibit or interrupt the Corporation's operations or require modifications to its facilities. Further, additional environmental disclosure obligations require and may continue to require the Corporation to implement new practices and reporting processes and have created and will continue to create additional compliance risk. 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.\n\nLitigation: The Corporation is party to a number of claims and lawsuits arising out of the normal course of business with respect to commercial matters, including product liability, governmental tax and regulation disputes, and other actions.\n\nThe Corporation is involved in a number of legal proceedings and claims with both private and governmental parties. These cover a wide range of matters, including, but not limited to: product liability; trade regulation; governmental tax and regulatory proceedings; health, safety and environmental matters; employment matters; patent infringement; contracts; and commercial litigation. With the exception of the possible effect of the asbestos-related liability described below, it is the opinion of the Corporation's management that the possibility is remote that the aggregate of all such claims and lawsuits will have a material adverse impact on the Corporation's consolidated financial statements.\n\nThe Corporation is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past several decades. At December 31, 2025, the Corporation's total asbestos-related liability for pending and future claims, including future defense and processing costs, was $708 million ($791 million at December 31, 2024). See Notes 1 and 12 to the Consolidated Financial Statements for more information on asbestos-related matters.\n\nHealth and Safety: Increased concerns regarding the safe use of chemicals and plastics in commerce and their potential impact on the environment have resulted in more restrictive regulations and could lead to new regulations.\n\nConcerns 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 and continued pressure for more stringent regulatory intervention and litigation. These concerns could also influence public perceptions, the viability or continued sales of the Corporation's products, the Corporation's 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 Corporation's results of operations.\n\nLocal, 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.\n\nPlastic Waste: Increased concerns regarding plastic waste in the environment, resulting in the demand for substitute materials; brand owners selectively reducing their use of plastic products; a lack of plastic waste collection and recycling infrastructure and a failure to develop circular plastic materials or a circular economy for plastics; and/or the development of new or more restrictive regulations and rules related to plastic waste and related emissions could reduce demand for the Corporation’s plastic products and could negatively impact the Corporation’s financial results.\n\nPlastics have faced increasing public scrutiny due to low recycling rates and the presence of plastic waste in the environment, including the world’s oceans and rivers, and pollution associated with the manufacture of plastics. Accordingly, regulators, manufacturers, brand owners and consumers are driving demand for materials made with recycled content, bio-based materials and materials made with low or zero carbon emission options, and local, state, federal and foreign governments are proposing and implementing regulations to address the global plastic waste challenge, including, but not limited to, extended producer responsibility fees, recycled content mandates, taxes on plastics at the national level and bans on non-essential items. Further, an intergovernmental negotiation committee is in the process of negotiating an international legally binding instrument to end plastic pollution.\n\n10\n\n[Table of Contents](#i2aef629ae28d4ab08017402fb32766d6_7)\n\nSubstantially all of the Corporation's sales are to TDCC, one of the world’s largest plastics producers. TDCC sells plastic products that continue to enable increasing quality and standards of living and offer significant greenhouse gas reductions compared with alternative solutions. In order to both maintain the benefits of plastics, meet growing demand for circular and renewable plastics and advance efforts to end plastic pollution in the environment, Dow is partnering with other organizations to bring the waste back into the circular economy. Dow's circularity targets aim to transform plastic waste and other forms of waste to commercialize 3 million metric tons of circular and renewable solutions by 2030. Further, Dow has committed to reducing its net annual greenhouse gas emissions and intends 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).\n\nWithout the expansion of proper waste collection and recycling infrastructure and the development of a circular economy for plastics at scale, along with increased pressure to reduce the use of plastics, the Corporation could experience reduced demand for its polyethylene products, which could negatively impact the Corporation's financial condition, results of operations and cash flows.\n\nOPERATIONAL RISKS\n\nRaw Materials and Energy: Availability of purchased feedstocks and energy, and the volatility of these costs, impact the Corporation's operating costs and add variability to earnings.\n\nPurchased feedstock and energy costs account for a substantial portion of the Corporation's total production costs and operating expenses. The Corporation purchases hydrocarbon-based raw materials including ethane, propane, and butane as feedstocks. The Corporation also purchases certain monomers, primarily ethylene and propylene, to supplement internal production, as well as other raw materials. The Corporation also purchases natural gas, primarily to generate electricity, electric power to supplement internal generation, and steam.\n\nFeedstock and energy costs generally follow price trends in crude oil and natural gas, which are sometimes volatile. Power prices often follow general energy trends, and are additionally subject to short-term surfeits and shortages related to, for example, intermittent wind and solar generation, and power generation and transmission outages. 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 Corporation's results of operations.\n\nWhile the Corporation 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 Corporation's results of operations and future investments. Also, if the Corporation's key suppliers of feedstocks and energy, which may include limited or single source suppliers, are unable to provide the raw materials or energy required for production, it could have a negative impact on the Corporation's results of operations.\n\nOperational Event: A significant operational event could negatively impact the Corporation's results of operations.\n\nAs a diversified chemical manufacturing company, the Corporation's operations at each site, including maintenance of its facilities, the transportation of supplies and products, cyberattacks, the Corporation's expanding utilization of artificial intelligence (\"AI\") in the Corporation's operations, including but not limited to its manufacturing process controls, supply chain optimization, and human resources analysis, and by its suppliers and customers, and the complex and evolving regulatory environment surrounding AI; 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 or unintended 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 Corporation's results of operations.\n\nMajor hurricanes and other weather-related events have caused significant disruption in UCC'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 UCC's products. Due to the Corporation's substantial presence on the U.S. Gulf Coast, similar severe weather conditions or other natural phenomena in the future could negatively impact UCC's results of operations. Other non-weather-related unplanned events have also caused disruptions in UCC’s operations at various sites. While the Corporation has processes in place to minimize the risks and impacts of such events, such unplanned future events could negatively impact the Corporation’s results of operations.\n\n11\n\n[Table of Contents](#i2aef629ae28d4ab08017402fb32766d6_7)\n\nCybersecurity Threat: Disruption of the Corporation's information technology, data security, and other operating or third-party systems, including disruption of the ability to safely and reliably operate the Corporation's facilities; the risk of loss of the Corporation's proprietary information including trade secrets, know-how or other sensitive business information; and the risk of loss or security of the private data of the Corporation, its customers and its employees could negatively impact the Corporation's results of operations, financial condition and reputation.\n\nUCC relies on various information systems, including information systems operated by Dow and by third-parties and which may also include embedded AI, to support safe, efficient and reliable business and operating processes and activities and to safeguard its proprietary information assets, including trade secrets, know-how and other sensitive, business critical information. These systems are critical to the Corporation's process to accurately report financial results for management and external reporting purposes and to ensure compliance with financial reporting, legal and tax requirements in the United States and around the world. These systems may also be used to collect and process sensitive customer and personal employee data the Corporation may be legally required to store, process and protect in accordance with complex country- and territory-specific laws that continue to evolve, violations of which could result in significant criminal or civil sanctions, investigations or enforcement actions.\n\nIncreased global cybersecurity vulnerabilities, threats and targeted cyberattacks, which are becoming more sophisticated as attackers increase their utilization of developing techniques and tools, including AI, continue to pose risks to UCC’s products, systems and networks, and the confidentiality, availability and integrity of the Corporation’s data, and may surpass the Corporation's and Dow's current safeguards. These vulnerabilities also expose the Corporation’s customers, suppliers and third-party service providers to loss. In addition, the Corporation is exposed to similar risks resulting from cyberattacks that are experienced by its suppliers and other vendors. As a result, cyberattacks, internal and external security breaches, and attacks and security breaches of third-party systems could disrupt UCC's operations, compromise UCC’s proprietary and confidential, business critical information, jeopardize UCC's ability to safeguard and maintain accurate data, including personal data, and harm UCC's reputation which could result in litigation, enforcement actions, including fines, penalties and disruption of UCC's right to operate in certain jurisdictions, and significant remediation costs. Additionally, UCC’s and/or Dow's use of AI software may create additional risks related to the unintentional disclosure of proprietary, confidential, personal or otherwise sensitive information.\n\nWhile Dow and its subsidiaries, including the Corporation, have been targets of cyberattacks, including phishing, social engineering, industrial espionage and other malicious attacks, and have determined that certain of these attacks have resulted in and could continue to result in unauthorized third parties gaining access to Dow's and the Corporation's information systems and certain confidential business information, the Corporation is part of Dow's comprehensive cybersecurity program that is continuously reviewed, maintained and upgraded and, to date, these attacks have not materially impacted the Corporation. However, cyberattacks by nation-state organizations, crime organizations and other hackers continue to occur and are increasingly sophisticated, and these attacks may occur and remain undetected for an extended period of time. These attacks could have a material negative impact on the Corporation’s results of operations, financial position and reputation. More information on the Corporation’s processes for assessing, identifying and managing material risks from cybersecurity threats, including management’s role and the Board's oversight of such processes, can be found in Item 1C. Cybersecurity.\n\nPublic Health Crisis: A public health crisis or global outbreak of disease could have a negative effect on the Corporation's manufacturing operations, supply chain and workforce, creating disruptions that could have a substantial negative impact on the Corporation’s results of operations, financial condition and cash flows.\n\nUCC sells substantially all of its products to TDCC in order to simplify the worldwide customer interface process and, as a result, the Corporation is subject to many of the same global risk factors facing TDCC, including those that may be presented by a public health crisis. A public health crisis, including a pandemic similar in nature to COVID-19, could impact all geographic regions where UCC's products are produced and sold. The global, regional and local spread of a public health crisis could result in, 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 Corporation'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, a decrease in demand for certain of the Corporation's products; price declines; reduced profitability; supply chain disruptions impeding the Corporation'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\n\n12\n\n[Table of Contents](#i2aef629ae28d4ab08017402fb32766d6_7)\n\nto manufacturing operations imposed by local, state or federal governments; reduced market liquidity and increased borrowing costs; workforce absenteeism and distraction; labor shortages; increased cybersecurity risk and data accessibility disruptions due to remote working arrangements; and workforce reductions. Additional risks may include, but are not limited to: shortages of key raw materials; additional asset impairment charges; increased obligations related to the Corporation’s pension and other postretirement benefit plans; and tax valuation allowances and may also have the effect of heightening many of the other risks described in this \"Risk Factors\" section."}