Environmental Commitment is a Long Term Business

With both public pressure and formal directives raising the profile of environmental responsibility, there is more need than ever for companies to take a serious look at their environmental policies. To meet and exceed both formal legislation and public expectation is no easy task - and there are certainly no quick solutions. Reduction in energy consumption - together with the other essential environmental targets such as emissions control, waste management and cutting water consumption - can only result from very long-term planning and company-wide commitment.

Progress is achieved in many small steps, year on year, not by dramatic leaps. There is no quick fix, little hope of making a decision this year and seeing a significant change next year. An organisation needs to live with environmental commitment as part of its culture - the most successful policies grow from within, rather than being imposed from outside.

In 2003, STMicroelectronics was judged Best Industrial Renewable Energy Partnership in the final year of the European Commissions five-year ‘Campaign for Take-Off competition. The prize was awarded in recognition of STs ambitious programme to obtain 15% of its energy from renewable sources by the year 2010, and for progress towards that target.

ST has set social and environmental goals high on the agenda, alongside its more conventional business ambitions. It has defined three main corporate objectives:

* for growth, to grow faster than its competitors, targeting 5% market share

* for shareholder value, with return on investment better than the average of the top ten semiconductor suppliers, and finally

* “to contribute to the wellbeing of our people and communities, emphasising sustainable development through environmental responsibility”

As long ago as 1995, ST defined and published its Environmental Decalogue, a ten-point roadmap of formal, timed and quantifiable targets leading towards the ultimate goal of becoming environmentally neutral. After a few years of working with the targets and monitoring real world performance, the Decalogue was revised in 1999 - more aggressive targets were set, including the ambitious goal to become CO2-neutral by 2010. Today this document remains the ultimate environmental guide for every operation in the company. It is part of STs basic operating principles, and helps breed a culture where everyone is encouraged to be environmentally aware - and is rewarded for being so.

A Corporate Environmental Support Group is responsible for developing and monitoring company-wide strategies for meeting the Decalogue goals. It reports to the Total Quality Environmental Management organisation, which itself is chaired by a corporate Vice-President. ST believes that only by the environmental policy being under the direct control of the most senior management can effective strategies be put in place that will have an actual effect on the environmental performance of the company as a whole.

The Environmental Decalogue defines specific objectives for reducing consumption of energy, water and chemicals, and for reducing and limiting greenhouse gas emissions and waste. On energy, it defines a reduction of at least 5% each year, measured as kWh per thousand dollars of added value, through process optimisation, conservation and building optimisation. The Decalogue demands a factor of 10 reduction in CO2 emissions by 2010 compared with 1990 levels - five times better than the average for industries meeting the Kyoto Protocol target - and further aims to be CO2-neutral by 2010. Neutrality is to be achieved through adopting a percentage of alternative energy sources, the target for which it was recognised in the EC competition. Design engineers must take into account the potential for pollution due to the use of their products and must design products which themselves have lower energy consumption, and which also help end users to make more efficient applications.

These are tough, self-imposed conditions. They are monitored with a system of measurement and periodic audit, and progress is publicly reported in an annual Corporate Environmental Report. In 2002, the accountancy firm PricewaterhouseCoopers externally verified the environmental performance data for the first time. In addition, the Decalogue requires that the most stringent environmental regulations of any country in which the company operates must be applied to every site, wherever it is located. And furthermore that the requirements of every relevant international protocol are met at least one year before the official deadline. Tougher still!

All of STs manufacturing sites are EMAS (Eco-Management and Audit Scheme) validated and ISO14001 certified. A detailed environmental statement was required from each site as part of the EMAS validation. Ecofootprints allow fast evaluation and comparison of sites both with each other and with the best-in-class - the ratio of actual performance versus standard is plotted on a ‘radar chart to create the footprint - the smaller it is, the better the performance. Annual environmental targets are set for each Division alongside the industrial and commercial targets. Suppliers and subcontractors are encouraged to become EMAS validated or ISO 14001 certified, and ST assists them in doing so. The great majority of its materials suppliers and equipment suppliers are already certified, or are in the process of certification.

Looking to the future

If we look towards the horizon, what do we see? For energy and (mainly) CO2 there will be the “greenhouse gas emissions” directives, which will give power to the Kyoto Protocol agreements through the 2008-2012 period. The regulations are not yet implemented at country level, but Directive 2003/87/EC of October last year established the carbon trade arrangement whereby manufacturing companies in ‘polluting countries will be allocated ‘emissions credits for the amount they are allowed to pollute - the level of their emissions less an agreed target. At the end of each specified time period, a manufacturer that has used all its credits and continues to pollute must buy credits from other manufacturers who have polluted less and have credits to sell.

Credits can also be earned from projects such as ‘carbon sink reforestation schemes and alternative energy systems. The price of credits will be set initially at a level of perhaps E2 or R3 per tonne of CO2 - which could have the effect of adding around 10% to a companys current energy costs - but will rise towards 2012 to penalise high energy users. In February the EC set out guidelines for the monitoring and reporting of greenhouse gas emissions. Leading semiconductor manufacturers such as ST, who have long-term carbon reduction programmes in place, can look forward to performing well under the new directives as a result of their hard work during the last ten years - in fact ST would hope and expect to become a net seller of credits.

The system is not without its critics. Some suggest that the winners will be those who manage the trading - the ‘credits stock market - rather than the environment, and that unscrupulous companies will be able to use loopholes to continue polluting and buy their way out of trouble. It is up to the responsible companies to ensure that it is indeed the environment that sees the benefit.

On the chemical landscape, the road ahead may not be so smooth. The European REACH system will indeed have far-reaching effects! REACH (Registration, Evaluation and Authorisation of Chemicals) will require that every use of any one of a large number of chemicals will have to be registered and approved. Chip-makers are at a disadvantage compared to many other industries in that they typically use small quantities of many different chemicals, rather than large quantities of a few. At the very least they are faced with a huge administrative burden.

But the bigger concern is that some chemicals may disappear altogether as chemical suppliers judge that the costs and work involved in communicating additional chemical information down the supply chain, and in dealing with the registration issues upstream, become too high. In some cases the quantities are very small indeed, yet the chemicals are very specific and their loss would raise serious technical issues as well as more obvious business concerns.

Semiconductor companies are working with their suppliers to agree and define appropriate procedures, and to achieve some chemical rationalisation. And they are working together through organisations such as the European Semiconductor Industry Association (ESIA) to try to modify the directive to be more realistic for the semiconductor environment. But its hard work, with the second draft of REACH running to 1200 pages, and even the definition of the word “use” not quite agreed!

What upsets many in the industry is that semiconductor manufacturers have been using a broad range of chemicals for many years and already have in place extremely effective environmental procedures and safeguards. And they feel that REACH is too broad, and will regulate chemicals that pose little if any environmental or worker safety risk.

Away from REACH the concern is with perfluorooctanesulphonic acid (PFOS), a critical constituent of leading edge photoresists, which is alleged to be a persistent bio-accumulative toxic (PBT). Again the quantities involved are relatively small, but the importance of the chemical is crucial, and again the ESIA is working to express concern at possible restrictions and to explain why the industry needs it. The UKs Department for Environment, Food and Rural Affairs (DEFRA) is currently evaluating a strategy on behalf of the European Commission. It is inevitable that some restrictions will be in place eventually.

The next big environmental deadline will be July 1, 2006, when Pb-free legislation takes full effect. The Restriction on Use of Hazardous Substances (RoHS) directive specifies that from that date most new electrical and electronic equipment may not contain lead and certain other materials (including mercury and cadmium), though certain market sectors remain exempt. EU member states are required to include the measures in national legislation by August this year. STMicroelectronics has had Pb-free devices in full production since early this year, but full conversion to the new packages depends at least as much on conversion of the manufacturing processes of end users.

The bottom line

It is often thought that being ‘green is more costly than being ‘normal, but ST has consistently demonstrated that the reverse is true. Taking energy alone, a recent calculation comparing current energy efficiency to a 1994 baseline shows that the company saved $80 million on energy costs in 2003, as a result of 10 years of initiatives. Following a programme to optimise chemical consumption, savings in back-end sites in 2003 were $2.6 million compared with 2001 figures. A water reclaim system for a cooling tower recovered its cost in eight months. However large or small, almost every initiative will have a financial as well as an environmental payback in the long term.

In addition, one important benefit not shown on the balance sheet is the reinforcement of the image of the company, for both employees and the public. A strong environmental policy contributes to making employees proud of their company, and makes the company attractive for young engineers who are typically more concerned about environment matters.

It is true that investment has to be made in order to see environmental benefits - its not just a case of going on an energy diet. Sometimes the numbers will be very significant and may affect other business decisions. For example, investing in a new wind farm might mean that less resources are available to increase capacity at a wafer fab. There are tough choices. But now EC and global legislation is forcing companies to make decisions that are biased towards the environment. It will be a lot easier for the companies that are doing that already.

Georges Auguste, ST corporate vice president and director of Total Quality and Environmental Management, receivies the Best Industrial Renewable Energy Partnership award as part of the European Commissions Campaign for Take-Off for Renewable Energy Awards 2003 from Mechthild Rothe MEP.

Fig.1: Energy consumption in terms of kWh/200mm wafer output with baseline of 100 in 1994 (1997 for PHX and 1996 for Crolles).

Fig.2: Chemical consumption based on index of 100.