Disclosure on management approach for Environment

Environmental policy

We have had a Corporate Environment Policy since 1993, which reflects a proactive attitude towards environmental protection, going beyond mere compliance with international and local regulations. The purpose of the policy is to establish the major principles for improving environmental performance, allowing ST to become one of the best industrial companies in the area and to obtain recognition from stakeholders and society in general for environmentally-friendly operations. The policy is guided by the 16 principles of the International Chamber of Commerce Business Charter for Sustainable Development and designed to support compliance with the Eco-Management and Audit Scheme (EMAS) and the ISO 14001 international standard.

Our Environmental policy translates the high level commitments reflected in our code of conduct, The Principles for Sustainable Excellence, into principles that can be concretely implemented through our internal procedures and activities.

Environmental certifications

All 16 of our manufacturing sites are certified to the international environmental standard, ISO 14001 and have EMAS validation.

Environmental steering committees and top management responsibility

The company's environmental strategy and its implementation are overseen by ST's Corporate Environment, Health and Safety Steering Committee. The Corporate Vice President for Total Quality and Corporate Responsibility chairs this committee and reports on performance to the CEO on a quarterly basis.

Each manufacturing site also has an environmental steering committee, chaired by the site manager and a chemicals committee to ensure and oversee the correct use of hazardous substances. An environmental team is present at each site to manager all aspects of environmental performance, implementing the Environmental Policy and providing quarterly performance reports to top management.

Environmental objectives and the Environment and Health and Safety Decalogue

In 1995, ST issued the first Environmental Decalogue, a set of 10 targets created to help the company reduce its impact on the environment. We were one of the first companies to set measurable, time-defined goals for environmental performance and to commit to them in public – publishing our Decalogue as a booklet and distributing it widely to our employees, suppliers, customers and partners. The Decalogue was first revised in 1999, and in 2005, to mark the 10 th anniversary of the first Decalogue, we published a new edition, which includes specific health and safety targets. It expresses our high-level objectives to guide the company in continuously improving our environmental and health and safety performance.

www.st.com/stonline/company/cr/2006/environmental/decalogue.htm

The EHS Decalogue is used as a guide when setting specific Corporate Annual Targets (CATs), which are met using the nine criteria of the Business Excellence model of the EFQM (European Foundation for Quality Management). One of the ‘results' categories is ‘Society results', which is used to ensure that environmental objectives across the company are set within a common structured framework. Our results are reported and evaluated versus these objectives on a quarterly basis under the direct supervision of the top management.

Environmental accounting and reporting

At ST we use numerous indicators and reporting methods to ensure that we are meet our environmental targets. These cover all key aspects of environmental performance relevant to our sector, including energy management, water, chemicals, waste and greenhouse gas emissions.

Our environmental accounting method monitors environmental costs versus savings due to the use of energy, water and chemicals. We use the Environmental Burden Method (developed with the World Business Council for Sustainable Development) to measure the impact of emissions to air and water. And our eco-footprint method is used by all of our manufacturing sites to measure ten key parameters on a quarterly basis: electricity, waste, fluorides, eutrophication, atmospheric acid, water, chemicals, material intensity, global warming and VOCs.

In our goal to reach carbon neutrality, we closely follow our performance in three key areas: energy efficiency (including the reduction of CO2 emissions from Perfluorinated Compounds (PFCs), the use of alternative and renewable energy and carbon sequestration.

We report externally on numerous environmental indicators in our annual CR Report, which are verified by a third party. All environmental indicators cover about 85% of the company in terms of headcount (manufacturing and other major sites where R&D take place), but 100% in terms of manufacturing activity.