STMicro on corporate responsibility -- Part 2

Friends, here's the second and concluding part of my discussion with Vivek Sharma, Director, India Design Center, and Vice President, Emerging Market Regions, STMicroelectronics.
Here, we have discussed how the company's corporate social responsibility has helped ST reduce greenhouse gases/reducing carbon footprint/CO2 emissions, handling e-waste and chemicals, and the company's success in developing 'greener and cleaner' supply chains.

Reducing greenhouse gases, etc.
First, How has this initiative helped reduce greenhouse gases/reducing carbon footprint/CO2 emissions?

Sharma said: "This Initiative has helped us in reducing greenhouse gases/ reducing carbon foot print/CO2 emissions. Although the semiconductor industry makes a relatively small contribution to climate change compared to many other industries, ST integrated a formal, structured approach to reducing its environmental footprint in the early 1990s.

"Working with the World Business Council for Sustainable Development (WBCSD) at that time helped us to define the areas for action and improvement relating to CO2 emissions and other greenhouse gases (GHG); we called the resulting 10-part plan our ‘Environmental Decalogue’.

"Some of the key strategies are constant dedication to reducing our own environmental impact by reducing our consumption of resources such as energy and water and our net emissions of greenhouse gases, working with our suppliers and other stakeholders to share our vast experience and encourage best practices, developing advanced devices that minimize the power consumed in electronic equipment.

"Power-conscious design has two aspects: reduction of energy consumption in the chip itself and contribution to energy saving in the end application, such as home appliances or lighting."

Some key highlights:
* A reduction in energy consumption per unit by 5 percent compared to 2007. This consumption now represents around 49% of its 1994 level, meaning that the energy saved each year is equivalent to the consumption of a town of 400,000 people;
* Outstanding progress in the reduction of CO2 emissions, which are now represent only 68% of what they were in 2005 in absolute value, despite a 4 percent increase in production volume over the same period.

Handling e-waste and chemicals
Since 1993, ST has been working on programs to reduce its hazardous substances consumption and improve the resulting waste treatment. "The evolution of our Decalogue helped us to successfully challenge our performance in these areas. Thus we have been reducing our chemical consumption by more than 5 percent a year, on average, since 1998," added Sharma.

Through corporate and local chemical saving plans, many initiatives have been implemented and shared across ST to outperform this goal, such as substitution of the most hazardous substances, chemical recycling, process optimization or hardware modification to dilute chemicals and lower their flow rates. In 2008, a focus was given to tend to the elimination of PFOs compounds in Front-end and the conversion to halogen free materials in back-end applications.

Impact on greener, cleaner products
According to him, for a semicondcuctor company, there are three key areas for directly contributing towards greener and cleaner environment.

First, to reduce consumption and waste. This has been already highlighted in terms of reduction of energy usage, CO2 emissions, chemical usage, eco footprint, etc.

ST intends to become environmentally neutral by 2012 utilizing other mechanisms like plating trees, using non conventional energy sources etc. as well to neutralize even the reduced levels of environment impact.

Second, to design products which help in reducing the energy consumption of end products. ST has already identified 4 fields where semiconductor components can help: stand-by, lighting, electric enginers, airconditioning and heating.

For example, ST’s green products like ST's microcontroller-based lamp ballast reduces the energy consumption by as much as 80 percent by using high-performing switching components to minimize the power losses. ST’s patented sensorless motor controller with inverter driving allows a microcontroller to control the frequency and voltage of the power supplied to the motor.

In white goods appliances and air-conditioning systems, this approach delivers real world savings of 30 percent compared to existing solutions. ST’s dedicated solution for refrigerators integrates full digital temperature regulation that helps maintain the internal temperature more accurately for better food preservation while saving power. With the incorporation of “start&stop” systems in cars, 15 percent of fuel can be saved.

Third, to design products which inherently consume less power. As an example, chips designed on our latest 45nm Low Power platform can have significant less power consumption compared to the standard platforms depending upon the configuration of the chip.

Developing greener, cleaner supply chains
Finally, how successful has ST been in developing 'greener and cleaner' supply chains?

According to Sharma, ST, being a full member of the EICC (Electronics Industry Citizenship Coalition), has applied its Code of Conduct to the operations and extended the proposal to suppliers and subcontractors. It decided to get involved in the EICC, to participate to a standardized approach to Corporate Responsibility management within the electronic industry supply chain.

"ST’s Corporate Responsibility department is responsible for deploying the Electronics Industry Citizenship Coalition (EICC) program. To manage the suppliers and subcontractors involvement in this initiative, it works in collaboration with the Purchasing and Sourcing department which has created a new central role in 2008 to manage the Quality and Sustainable Excellence programs.

"As we are among the first companies to launch this phase at the supply chain level, we decided to adopt a temperate approach. For the moment, our objective is to promote the EICC initiative rather than imposing it. Purchasing and Sourcing department managers have spent several months negotiating with each company to agree on subscribing to E-TASC and filling in the questionnaire for their main sites, and then to share their Corporate Responsibility performance.

"The spirit of the approach is to explain that as it is an industry initiative, if they complete the SAQ once, they will be able to share their results with other customers that might be EICC members too.

"In 2009, we will keep on inviting new companies to complete their SAQ and integrate these specific criteria in our suppliers /subcontractors performance evaluation tools (SPE)," he concluded.

STMicroelectronics on corporate responsibility -- part 1

STMicroelectronics recently launched its Corporate Social Responsibility Report -- said to be the first of its kind. I was fortunate enough to catch up with Vivek Sharma, Director, India Design Center, and Vice President, Emerging Market Regions, and find out more about this report. Here's what he had to say:

ST's concept of sustainable excellence
Corporate Social Responsibility has been the core belief for STMicroelectronics since its inception. In fact, STMicroelectronics is one of the first global industrial companies to recognize the importance of environmental responsibility and has won many awards for its pioneering work in this field.

The Company played a leading role in demonstrating that ‘Green is Black’ i.e. that environmental responsibility delivers real financial benefits and these goals are not in contradiction to each other. For building a culture on this core belief, all levels in an organization have not only to be involved, but also to ensure their commitment as well.

This was given a communicatble & practical shape when corporation adopted TQM principles in early nineties and its concepts, processes and practices were cascaded to all levels of whole enterprise. Soon after, company published its first ‘Environmental Decalogue’ in 1994 followed by another wave of TQEM.

In this journey, the company has continually widened the scope of its definition of corporate responsibility and increasingly formalized both the deployment of its principles within the company and the reporting of the results to stakeholders to ensure that it remains at the forefront of Corporate Responsibility.

ST’s Sustainable Excellence program was launched in 2007 to revamp the same core belief and to embed Corporate Responsibility into every level of the Company’s activities. The term reflects ST’s firm belief in its ability to balance stakeholders’ expectations to make the Company ‘sustainable’ – successful now and in the future – in the short and long term and enable it to contribute to sustainable development at a global level. This progam is based on three key principals i.e. Integrity, People and Excellence which captures the essence of it.

Why such a report now?
What's the need for such a report at this point of time? That's the obvious question!

Sharma said: "It is an annual report through which we intend to give an overview of our Corporate Responsibility strategy, our achievements at company and local levels and a description of the challenges we face in all areas of corporate responsibility such as environment, employee well-being, community involvement, and product responsibility while also demonstrating strong performance in aspects that are becoming increasingly important to stakeholders. This is a testimony to our commitment to CSR and it reports the progress track record on various fronts, hence demonstrating our accountability.

Progress in all areas
I asked Sharma to elaborate how ST was able to record continued progress in all areas of Corporate Responsibility.

As can be noticed in the report, we are able to make continued progress in all the areas. The key reason lies in the fact these CSR goals have been successfully deployed throughout the organization and we are able to generate high commitment to this cause.

As an example, the energy used per production unit has been more than halved since our pulishing of decaloque where in there was a target of 5 percent reduction every year. For us, Corporate Responsibility is a process of continuous improvement while adapting to a changing business environment.

On a regular basis, our company is evaluated by rating agencies and extra-financial analysts working with ethical indices or asset management companies, thereby ensuring that our practices are benchmarked with other leaders and this external evaluation has also direct impact on potential investors in the company.

"As outlined above, on annual basis we intend to give an overview of our Corporate Responsibility strategy, our achievements at company and local levels and a description of the challenges we face in all areas of corporate responsibility such as environment, employee well-being, community involvement, and product responsibility while also demonstrating strong performance in aspects that are becoming increasingly important to stakeholders.

"These include Health & Safety of our employees, diffusion of Corporate Responsibility in the supply chain, implementation of human rights,responsible restructuring etc. apart from economic results," he said.

Benefits of the concept
Next, I asked him to elaborate on the short-term and long-term benefits of this concept.

Although CSR focus is well understood to yield sustained results over long-term, it very well offers numerous short term advantages. Simply, short term results achieved without compromising CSR principals would yield sustained long term results. Let us take a relatively obvious example, keeping employees healthy and safe, providing them good work life balance etc. can deliver high quality results in short term whereby ensuring their long term sustainability.

Although, all examples may not be so obvious and rather sometimes can even be very challenging to arrive at the balance, nevertheless these principals provide guiding direction This helps building aligned expectations from stakeholders.

"Let us take another example in the area of environment and product responsibility. The short-term and long-term benefits from this concept would be seen in various areas such as power applications in our homes, from lighting, heating,air-conditioning, white goods appliances and entertainment electronics.

"Replacing traditional incandescent bulb lamps with compact fluorescent lamps (CFL) cut energy use by a factor of five, using advanced motor control technologies for energy efficiency, silent operation etc. can brings down energy consumption by as high as 40% and noise levels as well. In short term, electricity bills come down and in long-term this helps in conserving the environment as energy needs go down.

Involvement of ST India
It would be interesting to find out a bit about the involvement of ST's Indian arm in all of this.

Sharma said: "ST’s India operations are seamlessly integrated into ST corporate culture hence embody the CSR initiatives with equal vigor through structure, systems, processes & practices, while also taking into consideration local realities.

"As a matter of structure, locally we have Sustainable Excellence Committees, Ethics Committee and employees’ voluntary committee known as Community & Environment Support (CES). As an example of processes, Sustainable Excellence Operations Review is carried out every quarter with SE committee.

"Being a major Intellectual Property design center, quality and timeliness of the products developed has an impact on the economic results of the company. To strengthen these, various training programs, both corporate and local are deployed along-with strong practices e.g. project management.

"The sites are ISO/TS certified to ensure these. Further, a design center is a key place to ensure high energy efficiency of semiconductor products. As an example. our local teams are developing Low Power design platforms in latest technologies e.g. 45nm, 32nm, on which semiconductors chips are designed and which can help in bringing down the power consumption as high as 30 percent.

"Chips and embedded software are also designed to consume less power e.g. Set-Top-Box System-On-Chip solutions. The sites are certified to latest information security standard of ISO 27001.

"On the social front, the company’s health program is fully deployed locally as well. In the last one and a half year, more than 85 percent of our employees have undergone health check. There is continuous series of health talks on the local sites from medical specialists.

"Even though, Greater Noida is a design center, hence less changes of employee safety issues as compared to manufacturing plants, it is OHSAS 18001 certified to keep the high standards. Also, regular employee engagement surveys are done to ensure high level of employee motivation."

Another corporate program, under the aegis of ST Foundation namely Digital Unify, intended to bridge the Digital Divide is being pursued strongly locally. Already 9 labs have been opened in Indian schools where students don’t have access to computers and internet. The basic infrastructure comprising of computers and associated hardware along-with training is provided here. So far, more than 2,000 students have been trained with the goal of doubling this number this year.

"In order to extend good practices in the supply chain, we invite our suppliers to agree on the Business Ethics principals. As a local initiative, we systematically inform our suppliers not to offer any gifts to any of our employees/decision makers in order to ensure no conflict of interest and high business integrity.

"Under the environment focus, first and foremost need is to spread the awareness about the environment challenges world is facing. Time to time, events are organized e.g. Environment Week in June this year, wherein environment related movies are screened, stalls are put-up like CFL/LED bulbs, painting competition and quizzes on environment are organized, NGOs are invited to interact with our employees, plant saplings are distributed etc.

"Being non manufacturing units in India, although, there is no direct pollution, however, reduction of waste in various forms remain under focus e.g., energy/water/paper consumption, food wastage etc. In order to optimize transport related pollution, we have deployed 38 buses running on CNG, which carry more than 80 percent of our employees at Greater Noida," noted Sharma.

I will continue my conversation with Vivek Sharma in the next post.

There, we will be discussing how the CSR strategy has helped ST reduce greenhouse gases/reducing carbon footprint/CO2 emissions, handling e-waste and chemicals, and the company's success in developing 'greener and cleaner' supply chains.