Corporate Environmental Report

Message from the President

Sustainable Development has been at the top of our agenda since the early 1990s. The concept embodies the shared values that we published at that time and which formalized the Company’s culture.

We set ambitious and measurable environmental targets in 1994. These aimed to produce specific achievements by 2000 in 10 key areas, such as energy efficiency and water consumption. We summarized our commitment in our Environmental Decalogue, which has become an integral part of the way we operate and assess the performance of our line managers.

The Decalogue has been communicated to all our employees and widely distributed to external stakeholders. It has helped strengthen our environmental awareness and culture of Total Quality and Environment Management, which is based on teamwork, empowerment and continuous improvement. In some limited areas our environmental performance in 2000 fell short of our expectations, but we are generally pleased with our achievements and progress. For example, compared with our baseline of 1994, electricity consumption (at equal production) is down by 29%, water use by 45% and greenhouse gases emissions by 29%.

Nevertheless, we are strongly motivated by a spirit of “constructive dissatisfaction”, and we cannot be complacent. There is much more to do and we are still far from meeting the needs of today without compromising the ability of future generations to meet their own needs.

Energy is probably the biggest environmental issue confronting the planet today; the present social and economic model based on fossil fuel (particularly in developed countries) is not sustainable; we need to develop new ways to reduce drastically the consumption of oil, gas and coal, thus reducing the emission of greenhouse gases that are now widely recognized as the cause of climate change.

This is the reason why we at ST are working very hard on the energy efficiency of our manufacturing sites, as well as on alternative energy sources such as cogeneration and wind turbines. Knowing that this will not be enough to stop the global warming process, we at ST are also investing in reforestation (carbon sinks) to compensate our remaining CO2 emissions. Our goal is to be in 2010 a completely neutral company as far as greenhouse gases are concerned. We believe this is the most challenging goal for a big manufacturing company, and we hope that many other world corporations will take the same direction.

Water consumption is the next item on the agenda, and we are implementing techniques to increase the amount of recycled water in our plants, aiming at a 90% ratio so that we will cut our raw water draw-down by 90%.

Far from eroding, our environmental commitment is growing year after year. In 2000, we were recognized by Innovest Strategic Value Advisors as the best semiconductor company out of fourteen analyzed, and we are one of the “Sustainable Companies” selected by the Dow Jones Sustainability Index since 1999. We are also supporting the Global Compact launched by Kofi Annan in 1999, promoting nine principles on Human Rights, Social Rights and Environment.

Deeply embedded in our Company's culture, this commitment is nurtured by two strong beliefs:

	Ecology is free:
-	prevention is cheaper than correction, because it is more effective to anticipate future legislation than to react once it is enforced;
-	eco-efficient corporations use less natural resources, and therefore they are intrinsically more profitable than the others;
-	shareholders’ value is not threatened by corporate social and environmental responsibility; on the contrary, we believe that by being good citizens we can amplify stakeholders’ value and return to investors.
	Ethical values, responsibility and ideals are an important base for motivating people to enhance their capacities as individuals and as members of our organization.