ST recently concluded its flagship virtual event extending its ‘Sustainability Strategy’. Niloy from BISinfotech got an exclusive opportunity to interact with, Jean-Louis CHAMPSEIX, Group VP, Head of Corporate Sustainability, STMicroelectronics. Elaborating across many facets and vital prospects of its leading Sustainability goals, Jean-Louis emphasizes how crucial ‘Sustainability’ is in ST’s value proposition and also takes us across the strategies for creating technologies, product portfolio and R&D towards a greener and sustainable future. Also in the below-edited excerpts, the veteran shares the company’s ahead goals in becoming a complete carbon neutral organization.
How is ST extending towards a sustainable world?
At ST, we create technology for a sustainable world in a sustainable way. In fact, since ST’s establishment in 1987, we have been strongly focusing on this area. Hence, we proudly state that it has been embedded in our business model and culture for more than 30 years. Our innovative technology enables our customers to face environmental and social challenges. Today in a world with challenges from COVID 19, it has created the condition for us to even accelerate further different initiatives which I will share with you.
For us, basically, sustainability means three things:
- We create technology for a sustainable world,
- We do it in a sustainable way, prioritizing people and protecting the planet,
- And of course, we create long-term value for all stakeholders including our employees, customers, investors and partners.
Sustainability is an integral part of our company value proposition. You may have known that because it is public information for many years.
We have been publishing goals on sustainability publicly and in our yearly results for more than two (2) decades now empowering technology for a sustainable world.
ST’s value proposition on sustainability and how is the company attaining its shareholders with new growth and profit trajectories?
Sustainability is an integral part of the ST value proposition. First of all, for our shareholders, we aim to return value in line with our sustainable, profitable growth objective. This is very clear. We see that was happening last year and this year. For customers, we provide differentiating enablers. Since the semiconductor is very much driven by social change, it means a lot about responsible products and sustainable technologies. We will come back to that in a minute. And for all stakeholders, we are extremely committed to sustainability. Perhaps, we have been part of the first five companies to join the Electronic Industry Citizenship Coalition. It has been so successful that we changed its name which is now called Responsible Business Alliance. We signed the United Nations Global Compact in 2000. When I was based in Singapore from 2004-2008, the company also helped Singapore to promote United Nations’ Global Compact. We are the only private company invited to speak at this event. We have published external long-term commitments since 1994 and we just recently updated this commitment through the Sustainability Charter which is public information, and you can find much about it on the website. And we have 24 years of Sustainability Report.
What’s the key to keeping a sustainability-front strategy while creating technologies and product portfolios wooing a greener future? Also, how much effort and investment is needed on R&D?
When it comes to creating technologies for a sustainable world, first of all, it is about innovation and strong R&D investments. Also in terms of product portfolio, we have various leading product portfolios when it comes to sustainability. And we have a unique product life cycle approach from responsible sourcing to end of life.
We prioritize people. So it is about health and safety. It is about diversity. It is about engagement. I will not go into the details but they include promoting human rights for example. We protect the planet. First of all, we lead the way in terms of carbon neutrality, addressing water pollution risk and scarcity, and maximizing recycling. And we strive for zero waste in a circular economy. Last but not least, this is something you will see in the Sustainability Charter. We aim to generate long term value for everyone. We see risk management as an opportunity for growth and agility. We monitor and develop the full supply chain of ST, not only Tier 1. And we promote Science, Technology, Engineering and Mathematics in all our ecosystems in communities in order to develop these communities and attract not only new talents in these fields for us and for our customers but also more women in these paths.
Kindly underline the applications where ST’s sustainable products are empowering newer sectors?
We have the aim to become a leader in Smart Mobility, especially electric vehicles for a safer and greener application. We are also extremely active in Power and Energy, especially in all the renewable energy markets. Last but not least, we have plenty of ultra-low-power systems, especially microcontrollers and ASICs to make cities, homes and offices smarter.
Given your total revenue, can you elaborate, what percent(%) of your products represent sustainable technology?
10 years ago, we were the unique company in semiconductor to explain publicly how we drive the full product life cycle from responsible sourcing, eco-design of our products, very advanced responsible manufacturing production, targeting responsible usage, and addressing with our customers the end of life. Our objective was to have at least 50% of new products recognized by the Sustainable Technology Program which is audited externally. Last year, more than 63% of our new products were recognized by the program. Our objective is to triple responsible product revenues by 2025 Vs 2016. That will represent around a minimum of one-third of our revenue by 2027. We are very advanced in this program. Today if you look at the Sustainability Report of ST, the sustainable technology products represent 18.5% of our total revenue.
When the world lately was anguished because of the COVID situation, strategies of ST ensuring safety for its associates and employees?
We lead the way on safety for many years. The COVID situation helped us to accelerate our efforts here. So in 2020, we reached a very low (0.15%) recordable case of injuries and illness. By the way, the 2025 goal of ST is to achieve a 0.15% recordable case rate together with our contractors. We are still not there in terms of contractors, but somehow ST itself reached this target last year, which was 5 years in advance. I can already tell you that in 2021, our recordable case rate will be far below because we took the opportunity to take drastic steps in the behaviour of everyone including managers and employees. So we have reduced recordable cases by more than 85% since 2002.
As for employee experience, the ST workforce is not only diverse but also extremely engaged. We are engaged through the way we manage with true empowerment but also engaged in sustainability. And 81% of our employees recommend ST as a great place to work. This engagement score is yearly monitored and also publicly reported in our report.
You mentioned that ST is not just into the semiconductor business but also a pioneer in producing ultrapure water, kindly elaborate?
If we move to the planet protection and how we operate, again we lead the way in terms of carbon neutrality. ST is a producer of ultrapure water. Maybe you think ST is a semiconductor business company. In reality, we produce every year 30 billion liters of ultrapure water in order to operate. So we are also in the business of purifying water. We not only address the circular economy but with some of our leading customers. Indeed, we have huge initiatives worldwide for zero waste.
ST’s carbon-neutral goals and how is the company moving towards this green vision?
Well, we announced about our carbon neutral strategies last year itself that we will be carbon neutral by 2027. What is important is that we do more and better. First of all, we will be compatible with the COP 21 1.5°C most aggressive scenario by 2025. On top of that, we will be one of the semiconductor companies using renewable energy by 2027. Also, not forgetting to mention that ST also participated in the Apple Clean Energy Program. We have a plan on carbon neutrality to significantly reduce energy consumption, which is a strong business model for ST. We have reduced our PFCs emission by 78% since 1994, so carbon neutrality is not new for us.
That is why exceptionally, ST has been recognized by the CDP belonging to the A list. I am sure you know about this carbon disclosure project. It is the most demanding criteria and they selected only 277 companies around the world for all industries last year. So a lot of people (companies) lost their rating and ST was rated A in the 2020 edition.
ST’s strategies and programs empowering new-generation in creating more sustainable innovation and technologies?
The last example is about STEM your way, which is also a unique program of ST in order to help the new generation to understand how we can make the world more sustainable through technology. This is important for business growth because we need to attract a lot of talents every year. It is also important for diversity because very few women/around 15% of women have diplomas in this field, at least in the universities in which we source. We are committed to recruiting 30% women every year in exempt positions, but actually, only 15% are available. So, the STEM your Way program is also important for that. We do more at communities because we also have the ST Foundation that is working on the digital divide. For example, we have plenty of initiatives in Singapore, India and China and everywhere in Asia.
How are you measuring the progress of the sustainability programs? What business value have you seen?
We monitored and published yearly reports of all our progress publicly since 1994 through holistic measures like eco-footprint, which is a concept we use for all of our sites, or through specific KPIs addressing different aspects of sustainability like health and safety, recordable case, severity rate, the level of people engagement, the training hours (more than 44 training hours per employee, close to 3 million training hours a year), the diversity indicators by the workforce and by place, remuneration standards including the fair wages, all the site certifications, the direct and indirect emissions including transportation emission, the water usage and recycling, the recycling of waste, the percentage and revenue of responsible products, the number of patents, the supplier risk management, and the community involvement. They are all holistic KPIs reported because we believe that transparency is virtuous.
I would like to add that we follow almost all the most advanced reported initiatives such as United Nations Principle, United Nations Sustainable Development Goals, Global compact Initiative, SASB standard, TCFD (Taskforce for climate financial disclosure). We aim to present data from different angles to different readers. What is the most important in ST (I don’t know whether it is unique or not) is that we use the same definition both internally and externally. Everywhere, all the sites, all the organizations use the same definition, so again it becomes very virtuous. We know what we are tackling, and sustainability is embedded in ST management systems, business review, IT system and all risk management like the enterprise risk management process that I was talking about. We review internally all these indicators in business reviews.
Sourcing 100pc renewable energy by 2027, so will it be primarily solar or also combining other forms of clean energy?
The strategy that we started to execute more than 10 years ago is to source from renewable energy, so non-fossil. This excludes nuclear for example which is low carbon but considered as a fossil. It includes solar, wind, biomass, solar thermal, photovoltaic, geothermal, fuel cells using renewable fuels, low-impact hydroelectric generation, digester gas, landfill gas, ocean wave, ocean thermal, or tidal current.
We encourage all sites to install onsite solar generation whenever possible and to sign a Power Purchase Agreement (PPA) with a renewable energy source close to them. The latest example we announce this year is our plant of Bouskoura which has the biggest private solar installation in Morocco and will get its electricity from a wind farm close to the plant.
When talking about sustainability, water becomes a key utility, strategies of ST to increase wafer efficiency while consuming less value per unit of water?
Water is the first resource used in semiconductor manufacturing and this is also the most critical for life on earth. We address water management since our creation, publish aggressive long-term goals and report transparently for 25 years. We are a pure water manufacturer. ST produces every year 30b litres of ultrapure water. The difference of water management vs carbon emissions, for example, is the differentiated approach by region. Some regions suffer water scarcity risks, some water flooding, some are encouraged by authorities to extract groundwater which puts at risk the region etc. In any case, ST addresses all these challenges. We feel responsible and accountable for all water-related challenges wherever we operate, by assessing and evaluating the water stress level of all our manufacturing sites considering local constraints by ensuring all used water is appropriately treated before discharging it back into the natural environment by continuously improving water efficiency across our operations.
We recycle water whenever it is possible. In 2020 our water recycling rate was 41%.
Revamping complete R&D centers into carbon-neutral facilities shall mentor and indulge a lot of investment. Hence how will it impact the direct ROI strategy of the company when the world is already facing a chip shortage?
Our approach has always been to continuously maintain or revamp our buildings to avoid major business disruption or major on-time financial impact. For example, all our sites are certified OHSAS (Health & Safety), ISO 140001 (environment), EMAS (environment disclosure), ISO 50001 (energy), 22301 (business continuity) or IATF (most stringent standards from the automotive industry). We anticipate constantly new standards or long-term goals by re-engineering the layout of our offices or plants. It can include the environmental performance of course, but also health & safety, quality of the working environment for our people, innovation places or labs, opening to the external partners etc. Since we have started the carbon neutrality approach more than 25 years ago, the remaining efforts will not impact our ROI strategy and absolutely not our production ramp-up.