STMicroelectronics, a market leader in silicon carbide (SiC) semiconductors with more than 40% of the global market share, has published sustainability reports for more than 25 years. Yet it has only been 20 years since the United Nations first mentioned that "social, environmental and governance issues should be integrated into investment analysis and decision making" in a 2004 report, which later become the beginning of the ESG principles formulated and followed by institutions.
DIGITIMES Asia talked to Giuseppe Izzo, ST's managing director of its Taiwan subsidiary and vice president of Asia Pacific Region Strategic Marketing, to understand why the company took actions to make sustainability a focus of its operation far ahead of the others and how ST is planning for its resilience going forward.
Q1: STMicroelectronics has been publishing sustainability reports for 25 years. What inspired ST's action to monitor environmental impacts and decide to make a long-term commitment to cut carbon emissions and use responsible materials 25 years ago?
Sustainability has been in our DNA for nearly 30 years and is an integral part of who we are. In the early 1990s, we were one of the first multinational companies to implement an environmental policy, complete with publicly disclosed targets that went beyond legal requirements. It set our vision to be recognized as a leader in environmental care. We have laid solid foundations in this area which enable us to fulfill new requirements and strive for even greater transparency, and greater ambition, such as our commitment to become carbon neutral by 2027.
Transparency is, and will remain, a priority. In addition to reporting our objectives and performance, we receive regular third-party evaluations.
In ST, we are convinced that technology plays a key role in solving environmental and societal challenges. Our vision is clear: we create technology in a sustainable way, for a sustainable world.
Q2: How does STMicroelectronics deal with net zero or carbon-neutral issues? How do you manage the carbon emissions in the supply chain?
ST is recognized as leading the PFC (perfluorocarbon) abatement task force at the World Semiconductors Council for more than 15 years. ST has also paved the way with renewable electricity in the semiconductors industry, increasing the percentage of certified green electricity we use year after year. ST works with all of you — employees, customers, subcontractors, communities, and governments — to tackle environmental tasks. I am happy to share that ST has set a strong strategy with realistic goals, achieving net-zero emissions across our operations by 2027.
I want to underline the importance of taking a holistic approach. You cannot just leave it to work within manufacturing. You have to deal with stakeholders – suppliers, subcontractors, and customers – and make sure they all have to be sustainable. And we make sure suppliers who provide products, materials, components, and so on (to ST) must pass our test on code of conduct and also sustainability standards. This is very important because if you are sustainable by yourself only, and all the people around you are not, nobody is sustainable.
And once again, I underline the concept of responsible technologies and products. In 2022, 77% of our new products were identified as responsible (vs 69% in 2021). And next year the percentage will increase and eventually will be 100%. They have to be making an advantage to the people who use them.
There are two major elements that we must control. One is electricity and one is water. So, for electricity, we try to move more and more to green electricity, this will not be moving 100% overnight, it will take some time. And then the water is a major issue because we have to constantly wash the wafers as they move from one step to another and must be done with pure water. We have activities in place in the two areas to achieve our targets of neutrality plus planting trees. When we plant trees, we take good care of the trees we plant.
Q3: In ST's latest sustainability report, it says that 90% of the waste was reused, recovered, or sent to be recycled. Could you give some examples? What kind of waste? How do they get reused, or recovered?
Actually, in 2022, we raised that percentage, with 95% of the waste generated by our operations being either reused, recovered, or sent for recycling. This achievement allowed us to reach our 2025 target early. We also reduced the quantity of waste sent to landfill from 6.8% in 2021 to 3.7% in 2022.
ST's waste management strategy is based on reduction, reuse, recycling, elimination, and treatment. In 2020, our Ang Mo Kio site (Singapore) developed a comprehensive strategy to reduce solid waste. It includes reviewing and analyzing waste flows, refurbishing, and relocating waste storage areas, labeling, communication and training on waste collection points and storage, and an innovative program called "Zero food waste". By implementing all these actions, the site did achieve 85% of waste recycled or reused by the end of 2021 vs 72% in 2020. Our Shenzhen site (China) started a project in 2019 to introduce a phosphorous-free compound in a manufacturing process, leading to a reduction of 40 tons of hazardous waste per year.
Another example is our manufacturing site in Calamba (the Philippines), which successfully passed the UL zero waste certification for landfill diversion in 2022. The UL zero waste validation program is a third-party certification that focuses on monitoring and measuring material flows through external audits and document validation, with the aim of eliminating landfill disposal. The overall goal was not only waste reduction but also waste recovery and proper segregation. To facilitate this, the site implemented several new initiatives, including 'no disposable Wednesdays', color-coded bins, WEEE recycling, and a solid material waste recovery shed (see quote).
Q4: What are the issues that you see must be addressed for the semiconductor industry in Taiwan in terms of sustainability?
Industrial, municipal, and agricultural pollution has caused huge damage to aquatic ecosystems. Rivers are very critical for the supply of clean water because the surrounding seas in Taiwan are salty. Both the agricultural and high-tech sectors are competing for scarce water resources. Water efficiency is of fundamental importance. Nevertheless, with the high human population and anthropogenic activities, the island faces environmental deterioration. It is our duty to protect Taiwan and maintain the great biodiversity to sustain the natural resource for generations to come.
Q5: What is ST's strategy moving forward in global procurement for better sustainability?
We procure materials, goods, and services from approximately 6,600 tier-one suppliers of diverse types and sizes. They range from manufacturing subcontractors, material suppliers, equipment, and spare parts suppliers, to onsite service providers and labor agencies.
We require our suppliers to declare they have read and understood ST's business ethics and corporate responsibility statement, and that they agree to comply with the latest version of the Responsible Business Alliance (RBA) code of conduct and apply it in their own supply chain. In addition, we have implemented specific requirements for our high-risk suppliers.
Regarding our global procurement, I would provide you with a few examples of what we achieved in 2022: 99% of our high-risk suppliers signed the RBA commitment letter, 394 suppliers' facilities completed a self-assessment questionnaire, 116 corporate social responsibility audits were conducted in one year – the most ever, 100% of new material suppliers were assessed on sustainability risks.
With increasing expectations around the sustainability of value chains, including human rights, climate change, ethics, quality, trade compliance, and business resilience, we faced two main challenges: consistency in cross-functional approaches and resources. To help address these issues, we created a new organization in 2022 under the procurement department called Third-Party Management (TPM). This has dedicated resources for enhancing our supplier onboarding, monitoring, and assessment capacities.
