Sustainability is a mandate that STMicroelectronics had been adhering to for over 30 years.
The world has come a long way from when Milton Friedman wrote his “A Friedman Doctrine—The Social Responsibility of Business is to Increase Its Profits,” which was published by The New York Times in September 13, 1970.
Sure, the responsibility of the executives employed by a business is, first and foremost, to make profits for the business. Otherwise, the business will not survive, of course.
However, there are some statements there that, in this time and age, seem to no longer apply. Such as that the corporate executive should not make expenditures on reducing pollution beyond the amount that is in the best interests of the corporation or that is required by law in order to contribute to the social objective of improving the environment. Because such an act will reduce the returns to stockholders of the business, as he is spending their money.
Friedman may have written that in a different time. But in today’s context, such a belief, while it holds true from a nothing-personal-just-business perspective, no longer can stand. Because the world has reached a point wherein a collective effort toward environmental and social responsibility is critical to ensure the sustainability of life and everything else in our planet.
According to recent study, “Improving the Environment at Planetary Scale: A Survey of Business Drivers and Actions” by SAP, the greatest percentage of respondents (29%) said industry regulations were an underlying reason for investing in environmental issues. However, 27% cited strengthening society’s approval of their organization as a strong underlying reason, while 26% cited risks to company reputation.
Therefore, businesses now, of course in addition to maximizing shareholder value, should also act in a manner that promotes the well-being of society and the environment, while reducing their negative impacts to both spheres.
And such sustainability is a mandate that STMicroelectronics had been adhering to for over 30 years.
“At ST, we create technology for a sustainable world in a sustainable way,” explains Jean-Louis Champseix, Group VP and Head of Corporate Sustainability at STMicroelectronics. “Actually, it is not new. We have been doing that since our creation in 1987. It has been embedded in our business model and culture for more than 30 years. Our innovation technology enables our customers to face environmental and social challenges.”
This is especially so in this period, where the world is facing challenges from COVID-19.
For ST, sustainability means three things: creating technology for a sustainable world, in a sustainable way; prioritizing people and protecting the planet; and creating a long-term value for all stakeholders including employees, customers, investors, and partners.
“We have been part of the first five companies to join the Electronic Industry Citizenship Coalition,” says Champseix during a recent online media conference. “It has been so successful that we changed its name and is now called Responsible Business Alliance (RBA). We signed the United Nations Global Compact in 2000.”
Champseix says ST also helped Singapore to promote United Nation’s Global Compact. “We are the only private company invited to speak at this event. We have published external long-term commitment since 1994 and we just recently updated this commitment through the Sustainability Charter,” he adds.
Decade of Action
While progress is being made in many places, the action to meet the Sustainable Development Goals is not yet advancing at the speed or scale required, according to the United Nations. Which is why the next 10 years is being called the “Decade of Action”, wherein ambitious action needs to be taken to deliver the Goals by 2030.
According to a recent study by SAP and Oxford Economics, “The Sustainable Supply Chain Paradox”, sustainability is now often at the top of companies’ values, purpose, or mission. Around 65% of respondents said they have created a clear purpose statement around sustainability, with a further 23% saying they are in the process of doing so.
But lofty goals demand purposeful follow-through, and according to the survey, respondents are more likely to have set supply chain sustainability goals than to have taken concrete steps to realize them. For example, only 52% have reduced overall shipping miles.
Nevertheless, there are industry standouts in particular areas. For example, high-tech respondents appear to have made more progress in ensuring suppliers have sourced sustainable materials (72%) compared to companies in the telecom industry (53%). On the other hand, consumer products companies have made good progress in reducing overall shipping miles (58%) compared to high tech (48%).
The study notes that companies beginning to make good on their promises in concrete ways are starting to see a return on their efforts. A majority or 63% say they have reduced overall energy consumption—and, not surprisingly, more than three-quarters of those respondents say that has made a positive impact on sustainability.
For ST, the sustainability approach is extremely holistic. “We create technology for a sustainable world—through innovation, leading portfolios, responsible products, and unique product life cycle approach. In terms of innovation, we have more than 8,000 people working in R&D and product design. We have about 18,000 patents and are filling more than 500 new patents every year. We invested about 15% of our revenue in R&D last year. This year, it is potentially even more. We have a lot of centers to work with startups. We even have programs to host startups on ST premises. We have a lot of active R&D partnerships—more than 140—with the best universities in the world to continue to keep our leadership in terms of innovation,” explains Champseix.
The company prioritizes people—it is about health and safety, diversity, engagement, and promoting human rights. The company also ensures their processes and actions are environment friendly.
“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,” says Champseix. “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 the Tier 1s. And we promote science, technology, engineering, and mathematics [STEM] in all our ecosystems in communities to develop and attract not only new talents in these fields for us and for our customers, but also more women in these paths.”
Champseix notes that 10 years ago, ST was the only company in the semiconductor industry to explain publicly how they drive the full product lifecycle—from responsible sourcing, eco-design of products, very advanced responsible manufacturing production, targeting responsible usage, and addressing with their 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 compared with 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 our Sustainability Report, the sustainable technology products represent 18.5% of our total revenue,” explains Champseix.
ST also embraces diversity and inclusion. It has more than 100 nationalities across the company—none of which represent more than 25% of their total headcount. “Many external people call us metanational,” says Champseix. “We have 34% of women employees across the company.”
Champseix notes that in terms of gender equal pay ratio, it is 99.6% for ST. “We are still not satisfied with that,” he says. “We want 100% all across the company everywhere.”
What’s more important in terms of sustainability is that it is already a culture at the company. “We are not very much driven uniquely by the top management. Sustainability is embedded in our business. For sure, the top management is sponsoring it. But it is also driven by people because for the past 30 years, our people have been empowered to act on sustainability, and we have created the culture,” explains Champseix.
Finally, from an environment perspective, ST is one of the industry leaders 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 30 billion liters of ultrapure water annually in order to operate. So, we are also in the business of purifying water. We not only address the circular economy, but we also have huge initiatives worldwide with some of our leading customers toward zero waste.”
ST aims to be carbon neutral by 2027. “What is important is that we do more and better,” stresses Champseix. “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. Actually, we 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.”
Sustainability—A Collective Effort
ST aims to achieve 100% responsible products, which is basically the sum of products that provide added value from various environmental standpoints, mostly from climate (>90%).
“So, reducing the energy consumption of the product itself, or the usage and application,” says Champseix. “The societal added value is just a low part of it, but it is mostly on safety and medical. Some products may do both and so there is a split in the Sustainability Report. But this is our definition. And every year, we are improving in this aspect.”
But sustainability is a collective effort, and every link in the supply chain must have in place processes and policies that promotes sustainable goals. And to make ST’s whole supply chain more sustainable, the company does three things.
“First, we are very strict with our full supply chain. We innovate with customers on sustainability, making new progress everywhere,” explains Champseix. “Sometimes, we even convince our customers to move a little bit faster; we share with them our best practices elegantly as much as possible. Sometimes, we convince them to go RBA if they are not on RBA yet. Today, most of them are on RBA. So, this becomes virtuous. The second thing we do is we regularly and closely communicate with communities, authorities, and regulators, to better know the regulation and risks to improve the overall context. Finally, we go to the media, to call on the world to act together. We can do it, but we have to do it altogether.”
After all, we are all actors of sustainability.
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