Corporate Environmental Report

Our Commitment to Sustainability



Our ultimate goal is to be in balance with the earth, to take no more than we can give back. We see the protection of our environment as a key corporate mission, because it is essential to the success of our business.

At ST we bring certain values to our workplace. We stake our reputation on the integrity of our people, our principles and the way we make things --- the starting points for all our strategies and the cornerstone of our continued success.

We value the earth on which we all depend for life. We value our society, the communities where our talented employees live and, of course, we value our shareholders - the people who own our Company.

Our environment is under grave threat, mainly from the way we have lived in the past and as a consequence of our lifestyles now. We are confronted today by dramatic environmental challenges that could threaten future economic development and the quality of our lives.

In 1995, with that in mind, our Company established an Environmental Decalogue summarizing our main environmental policies and objectives and detailing quantified, timed and measurable targets to help the Company move towards environmental neutrality.

OUR VISION
To be recognized by all our stakeholders as a leader in environmental care by following our Environmental Decalogue and by exceeding regulatory requirements in both degree and timing wherever possible.

OUR MISSION
To strive for sustainable development in minimizing the impact of our processes and products on the environment by maximizing the use
of recyclable or reusable materials and, where possible, adopting renewable sources of energy.

OUR POLICY
To aim for ambitious improvement of our environmental performance with a view to reducing our impact on the environment to levels which do not exceed those corresponding to the Economically Viable Application of the Best Available Technology (EVABAT).
To take a proactive approach in environmental activities, built on the principle of Total Quality Management (TQM) and guided by the 16 principles of the International Chamber of Commerce (ICC) Business Charter for Sustainable Development.

To be a world leader on the basis of three main commitments to society:
The first, and most important is ethical. We, as a corporation are responsible to society as a whole.

The second is economic. Companies that independently and voluntarily conform to increasingly tough environmental protection standards have a definite advantage over those that only comply with the law. What's more, environmentally-sound technologies and processes consume less energy and natural resources, which makes them more efficient and less expensive to use.

Third, as a leader in environmental issues, we are better placed to attract young talent and top human resources we need to maintain our performance in this fast-moving business. To know that a company is environmentally aware is likely to provide this young talent with extra personal satisfaction and motivation.

Profits remain one of the main sources of funds needed to achieve our economic and environmental goals. We firmly believe that social and environmental responsibility is a necessary part of creating good value and excellent returns for shareholders. This is because it encourages us to strive for efficiency - the essential ingredient in retaining our competitive edge.

Environmentally destructive activities have no place at ST. For us, profits and principles go hand in hand.


GENERAL PRINCIPLES

	The Total Quality Management (TQM) approach is a practical way of working and managing all aspects of a business to achieve the best results for all stakeholders. In the environmental context, this policy is termed Total Quality Environmental Management (TQEM). The ST Environmental Policy goes beyond the TQM principle of Customer Satisfaction and aims for Stakeholder Satisfaction through initiatives and programs based on the Company's Decalogue for the Environment (our vision for environmental responsibility and sustainable development). The second Decalogue was issued in August 1999 with objectives up until the year 2010. See Appendix 2.
	The objectives are:
	To ensure Management commitment to a culture of environmental protection throughout the Company.
	To design products and processes to minimize their environmental impact from "radle to grave". To strive for continuous reduction of waste and pollution and in the consumption of water and energy, in a quest for sustainable development, as proof that ecology saving methods are both responsible and profitable.
	To benchmark ST against leading companies the world over, so as to equal or exceed the best performing companies.
	To apply the most advanced statistical tools (Statistical Process Control, Design of Experiment, Failure Mode Effects Analysis) to processes and products. Apply environmental tools such as Environmental Impact Analysis, Life Cycle Assessment to the environment parameters so that environmentally responsible manufacturing processes are developed and implemented.
	To share results and best practises throughout all ST sites through a global exchange network allowing others benefit from lessons learned.
	To ensure that training in environmental awareness is an integral part of each individual's training and development plan.
	To inform customers on recycling and safe disposal of ST products at the end of their useful life and to promote partnership with suppliers in order to achieve ST's environmental goals, involving contractors working for ST.
	To promote an open dialogue with workers and the communities in which ST operates; cooperate in a positive spirit with industrial and scientific communities, governments and non-governmental organizations to develop laws, regulations and guidelines for the continuous improvement within these communities, promoting a global and healthy competitiveness.

ENVIRONMENTAL MANAGEMENT

Environmental protection is a key element of our corporate culture. In a fast-changing world our global success depends on our ability to react quickly. We do this through independent operational units that are bonded by a common culture. Our strong culture of Total Quality Management (TQM), teamwork, the empowerment of individuals and a focus on continuous improvement, helps us pursue our Decalogue goals across the Company.

ORGANIZATION
Environmental care is a high-level concern. The Corporate Environmental Steering Committee (ESC) is chaired by our CEO and supports all aspects of the Decalogue. A Corporate Vice-President heads our Total Quality Environmental Management (TQEM) organization.

The Environment Strategy group promotes a company-wide culture of environmental protection and the implementation of our vision, mission and policy. Locally, an Environmental Steering Committee and a Site Environmental Champion (SEC) are active in every environmental initiative. They provide a link between the Corporate Environment Strategies Group, Site Management (Purchasing, General Services, for instance), as well as with other functions such as R&D and Operations. Several strategic teams (Corporate Environmental Working Groups - CEWGs) ensure environmental consistency at ST sites around the world, providing guidance and support.

ENVIRONMENTAL MANAGEMENT SYSTEMS
By the end of 1997, 17 of ST's manufacturing sites were EMAS validated and ISO 14001 certified. Of the remaining two sites recently acquired by ST, one is ISO 14001 certified and the other will apply for certification by the end of 2001. As a prerequisite to obtaining EMAS validation, every site prepared and published a detailed Environmental Statement outlining its consumption of natural resources and release of substances to the environment. As required by EMAS, all sites update this Statement annually.

To maintain ISO 14001 certification, all sites receive a yearly surveillance visit by third parties. EMAS revalidation and ISO recertification (after the three-year cycle) of all ST manufacturing sites was completed successfully before November 2000.

Our product design plant in Grenoble, France, was the first of our non-manufacturing sites to achieve certification to EMAS at the beginning of 2001. The design teams at Grenoble have made a range of environmental improvements, such as promoting energy efficiency in product design and a transport initiative encouraging employees to use alternatives to the car.

Meet the most stringent environmental regulations of any country in which we operate, at all of our locations worldwide

REGULATIONS
The Corporate Environmental Working Groups, when necessary are assisted by external resources, to strictly monitor environmental regulations worldwide. This information is used to keep our environmental standards updated.

Measure progress/achievement using 1994 as the baseline where applicable, and publish results in our annual Corporate Environmental Report. Cooperate with international organizations to define and to implement eco-efficiency indicators.

MEASUREMENT
Measuring drives behavior. Without measurement, we cannot achieve excellence.

Environmental data from each site is measured against the relevant Decalogue target. This process is managed through the Environmental Database, which enables environmental indicators to be compared, site by site. Internal benchmarking and sharing of information is done through the dissemination of best practises.

Our Environmental Decalogue calls for cooperation with international organizations to define and implement eco-efficiency indicators. This activity has already started and ST has worked closely with the World Business Council for Sustainable Development (WBCSD) on the definition of these indicators and their implementation at ST.

We have begun to use the Environmental Burden approach in several categories of air and water emissions.
This is a measure of the potential of a group of substances to exert effects on a particular environmental impact category, such as acidification or aquatic eco-toxicity. The measure allows us to better assess our overall effects on the environment and focus our attention on those areas where the most improvement can be made quickly. We have tested the approach of our global warming potential (see page 19) and will report further on our environmental burdens next year.

Continuously monitor our progress, including periodic audits of all our sites worldwide.

AUDITS
Corporate Environmental Audits are conducted every 18 months at every site to ensure that environmental procedures are carried out and to monitor performance and progress against goals. Each audit ends with an action plan and revelant scoring of the audited site. Both site and corporate audits are verified by external, accredited verifiers during EMAS revalidation, ISO 14001 recertification and ISO 14001 yearly surveillance.

SUPPLY MANAGEMENT
Our supplier audits include questions on environmental performance, which account for 10% of the total score. We also strongly encourage our suppliers and subcontractors to become EMAS validated or ISO 14001 certified and assist them through training, support and auditing. Our goal is for 80% of our key suppliers to be certified to either of these standards by the end of 2001. By March 2001 over 80% of our key suppliers have obtained or are in the process of getting environmental certification (and 34% of them have all their sites certified).

ENVIRONMENTAL AWARENESS AND TRAINING
Training is provided at each site to increase the environmental awareness of employees and outside contractors. This includes:

	a detailed commentary on the Decalogue and the site's Environmental Statement
	an overview of the Corporate and Site Environment Manual
	an explanation of the role and responsibility of each new employee in the site's environmental management system
	a tour of the site's main environmental facilities
	an environmental session in the induction training for new employees.

Supported by the Site Environment Champion, local trainers offer specific instruction on the control of the potential environmental effects listed in the relevant Site Register. This applies to all personnel operating, supervising, monitoring or maintaining environmental infrastructure, such as wastewater treatment, scrubbers, chemical and waste stores. Employees working with or around chemicals receive specific training how to respond to incidents and the use of protective equipment.

The training is part of the job Certification Program. ST personnel are given a yearly refresher course or whenever there are major changes. In addition, an advanced Environmental Awareness seminar on a CD-ROM, designed and developed at STMicroelectronics University, is available to ST's suppliers and customers.

INVESTING IN THE ENVIRONMENT
In the long term, we believe that companies investing in environmental protection have a significant advantage over those who delay. This is because any investment will be largely repaid if production processes are pollution-free and the use of natural resources and energy are reduced. We have already proved that business can be both environmentally responsible and profitable.

None of our investments in energy conservation has taken longer than three years to recover - average payback time has been less than two years.
Environmental investments account for approximately 2% of our total Company investments.