Environmental responsibility and sustainable development

12/01/1997

Environmental responsibility and sustainable development Cell teams show results

This is an edited version of Mr. Pistorio`s presentation to the 4th International Safety & Health conference of the Semiconductor Industry on June 24, 1997.

Some years ago, in a message to all SGS-THOMSON employees, I emphasized top management`s commitment to adopt with enthusiasm the 16 principles for environmental management of the ICC Business Charter for Sustainable Development. I knew that I was not choosing for our company - at least in the short term - the easiest of all possible routes.

When we decided to set for ourselves much more rigorous standards than those required for full compliance with all national and international regulations, I knew I was making the right choice because a leading corporation must be a responsible citizen in respecting the rights of everyone to a safe environment. But, again, I knew that the path to excellence was indeed a steep climb.

It is quite natural for a sector that is at the forefront of technological innovation to take a leading role in what I define as a new social awareness.

If we look at the history of business, we can see five distinct phases in the concept of corporate responsibility. In the early days, it was believed that companies had only one responsibility - toward their owners (or to use a more up-to-date term, their shareholders). Then came the realization that there was also a responsibility toward the customers. In the next phase, it was realized that firms have a responsibility toward their own employees - their key resource. A few years later, the firm`s responsibility was extended toward its own partners. We are now beginning a fifth phase, in which firms are also aware that they have a solemn responsibility toward society, in the broadest sense of the term, and (above all) toward the environment.

We are all aware of the serious environmental dangers confronting our planet, and we bear the collective duty to reduce those risks. This is why environmental protection must become one of the key missions of our companies.

Three basic motives are behind this statement. The first and most important is an ethical responsibility as a corporation toward society as a whole. The second reason is economic, and can be summed up with a slogan that is rapidly gaining in awareness and acceptance: "Ecology is Free." Why? Environmentally friendly technologies and processes are also leading-edge ones that are more efficient and less costly in the long run.

Finally, those companies that make the effort to become environmental champions will have greater appeal for the best human resources. I believe that whoever comes to work for SGS-THOMSON wants to know that they are working for a "clean" company. I would like to be very clear that economic and ethical goals are not contradictory.

The sole mission for any business is to create wealth, that is, it must operate as a resource amplifier. It`s simple: you input a certain amount of resources and the output must be greater than the input. If this is not true, then it is not a business enterprise - it`s a parasite.

I am deeply convinced that the attitude of caring for the environment is not only compatible with our business mission but gives us a competitive advantage.

Those who deny this are fighting a war of the past. It just reminds me of what was said 15 years ago about quality. Mediocre companies would say, "Quality is very nice, but unfortunately we cannot afford it; it`s too expensive." At the same time, good companies realized that quality was free and that, on the contrary, nonquality was too expensive for a company to bear in the long run.

Of course I don`t mean that there are no costs involved in environmental protection. Simply, I am sure that the benefits largely offset the undeniable costs. The true final objective we must aim for is "environmental neutrality." Let me go into this a little more deeply.

One hundred years ago, when a farmer ran his own holding, he did no damage to the environment. He recycled everything, using manure from his animals to fertilize his fields and eating the produce from the land. If, after 20 years of farming, he closed down the holding, he left the environment exactly as he had found it two decades earlier. That is an "environmentally neutral" business, just as I would like SGS-THOMSON to be. Is this merely a dream? Perhaps. But this, I believe, is the direction we should all take.

In the first phase, we simply made sure that SGS-THOMSON was in strict compliance with all the laws and regulations that were in effect at our sites throughout the world.

Too obvious, one could say. People might even think this was a trivial task, but it was not. Especially for a company like ours, with 17 main factories in eight countries on four continents, the body of rules that must be followed is extraordinarily complex. Nevertheless we achieve this goal every day.

We then decided to move ahead and set the target of adopting at all our locations worldwide the most stringent of all regulations originating from any country where we operate. This means that if, for example, Germany has the most stringent regulations on packing of goods and requires the adoption of fully recyclable boxes, we will adopt the same recyclable boxes throughout the company, even in those countries where nonrecyclable boxes are still acceptable.

In the next phase, we want to anticipate national or local regulations, moving as far and as fast as we can in the direction of becoming a company that is environmentally neutral.

For a competitive advantage, we are adopting a set of internal regulations that are tougher than those imposed by external authorities. Once again, in choosing this strategy we are fully convinced that it is the right thing to do, not just for ethical and social reasons. In anticipating the inevitable evolution of environmental legislation, we gain competitive advantage.

In October 1995, Malta was the first SGS-THOMSON site to be validated in accordance with the eco-management and audit scheme (EMAS). Since then, 14 of our sites have been EMAS validated. At the end of 1996, no other semiconductor company in the European Union (EU) had as many sites that were both EMAS-validated and registered with the EU.

Nine SGS-THOMSON sites have also obtained ISO 14001 certification. Our sites in California and Malaysia are the first to be certified in their respective countries, while the Singapore back-end plant is among the first three in that country.

We are very proud of these achievements, and these external assessments provide positive feedback as we rapidly make the step function change from mandatory compliance to stricter, self-imposed standards.

We are trying to change culture in a rather short time. This could be painful in a more traditional industrial environment, but continuous innovation and sudden change are the rules of the game in microelectronics.

I am sure that we will continue seeing successes as a result of our actions. Some of our environmental investments are paying off in just two years, for example. Positive momentum is building up in our organization. Improvement will spark enthusiasm for further improvement.

Almost in parallel, we want to extend our message to the reality that surrounds our sites worldwide. We will act as one of the knowledge centers for companies like ours that have similar environmental projects. We will first talk to our best customers and suppliers, and then, with their help, reach out to spread this message to a larger audience. Informal associations or clubs would diffuse a shared culture of environmental responsibility and sustainable development.

We want to extend this message as widely as possible and invite everyone to assist SGS-THOMSON people and their families worldwide in moving toward a cleaner and safer environment.

Pasquale Pistorio is president and CEO of SGS-THOMSON Microelectronics. He can be reached at ph 781/259-0300, fax 781/259-4420.