Sustainability leaders from widely-varying sectors who champion good corporate social responsibility (CSR) policy have one thing in common – a strong personal interest in doing the right thing. Jenny Marusiak reports.
Sustainability, these days, is an obvious strategy for business managers, but pushing CSR to the next level has always required something a bit more - business leaders willing to go out on a limb for projects that might not provide direct benefits to the company’s bottom line.
Take former ST Microelectronics chief executive Pasquale Pistorio, who started a comprehensive programme to ramp up environmental sustainability and energy efficiency in the firm well before the business benefits were established within the industry.
By most standards, the engineer-turned-businessman Pasquale Pistorio was a success. After moving up through the ranks of Motorola, he led semiconductor manufacturer ST Microelectronics, previously SGS Microelettronica of Italy and Thomson Semiconducteurs, to a leading position within the industry. Last year the company was rated as one the world’s most admired companies by Fortune magazine. He retired as chief executive and managing director in 2005, but left a strong legacy and remains as Honorary Chairman. ST Microelectronics now has 53,000 employees worldwide and in 2010 had net revenues of US$10.35 billion.
Given his accomplishments, it’s comical to hear him describe the arguments he used to have with his son years ago during which he was told in no uncertain terms he was failing as company leader. His three young children were ahead of the curve when it came to environmental issues. Those children had a much greater sense of social responsibility, said Mr Pistorio at a recent speech to energy efficiency experts in Singapore. “You guys are not doing well. You are complying with the law, but it’s not enough,” his children told him. Mr Pistorio humbly admitted, “I was losing the argument.”
ST Microelectronics was no stranger to CSR. Even when it was not so popular, said Mr Pistorio, the company was always capable of reconciling shareholders’ values. But for environmental issues there was not much sensitivity. “You complied with the law. This was the normal position across the board,” he added.
Having admitted defeat to his children, Mr Pistorio personally took charge of ST Microelectronics’ sustainability measures. He adapted the company’s award-winning total quality management system, which was implemented to consistently maintain and improve the quality of products and services, to monitor his company’s environmental performance. In early 1993, he launched a strong corporate-wide programme for CSR based on the following question: ‘what could we do to be neutral to the environment’?
Mr Pistorio implemented sustainability measures throughout the company’s global operations, with managers reporting directly to him on their performance. Regular audits were instituted, and a brief video message on ST Microelectronics’ environmental goals was distributed internationally to every employee. In 1995, the company released its first Decalogue - a set of 10 environmental performance targets, and according to Mr Pistorio, the first public announcement of measurable, numerical targets by a multi-national company.
Since that time ST Microelectronics has achieved its goal of reducing carbon dioxide (CO2) emissions by five per cent per year and met other targets on waste minimisation, chemical reduction, energy consumption, water efficiency and treatment. Its established facilities have all obtained environmental certification from the International Standards Organization (ISO) and the European Union’s Eco Management and Audit Scheme (EMAS).
When asked how the company dealt with regional variations in environmental standards, Mr Pistorio told Eco-Business that the company took the strictest standards of all its facilities’ locations and applied them to every ST Microelectronics site in the world. This includes two factories in China that collectively employ more than 7,000 people, its 1,800 person strong facility in the Philippines, a Malaysian facility employing over 4,000 workers and its Singapore site with more than 6,300 employees.
The Singapore site is used by Mr Pistorio to demonstrate how the company turns tough challenges into opportunities to take a leadership role in the industry. The site manufactures wafers, which are extremely energy intensive and essential to everything from computers, digital electronics, mobile phones and smart cards to cars.
For energy efficiency, said Mr Pistorio, Singapore is the benchmark. The company has been cutting energy consumption year after year and Singapore is always the best – 25 per cent better than the corporate average, he added.
Mr Pistorio, and his successor Carlo Bizotti, who is sitting president of the European Semiconductor Industry Association (ESIA), currently share their expertise in sustainable management at numerous international forums including the International Business Council of the World Economic Forum and the United Nations’ ICT Task Force. Locally, Mr Pistorio serves on the Singapore Government’s Internal Advisory Council.
While the company continues to refine its targets beyond industry standards for its own operations, it is also turning its attention to the broader impacts of its business. It performs life-cycle assessments on its products to address sustainability issues both within the supply chain and for consumer usage. One goal highlighted in ST Microelectronics’ latest sustainability report is to have every new product ‘eco-designed’ by 2015, meaning the products are designed for reduced environmental impact from source materials to recycling and disposal.
The reasons for these continuous improvements to the company’s sustainability policies, as Mr Pistorio always told his management teams, are threefold:
The company had a responsibility to minimise its impacts on the environment; such improvements were essential to attracting the younger, more environmentally-savvy consumers and employees; and the company stood to benefit economically, although they didn’t know this at the time because it hadn’t yet been measured.
As it turned out, he was right - it has been good for the bottom line. In its 2010 sustainability report, ST Microelectronics reported its spending and returns on environmental improvements from 2006 through 2010. Costs included water, waste water and air treatment, recycling of water and chemicals, waste transportation and disposal, as well as costs related to environmental management systems, audits, permits and remediation.
Over the five year period, the company spent US$205 million in the areas of energy, water and chemicals and saved US$1,349 million, a net savings of US$1,144, as a result of those improvements.
So the financial incentive is there, but as Mr Pistorio stressed, it’s not enough.
“If the chief executive is not totally committed, it won’t succeed,” he said.
