Stakeholder Capitalism

How to embed ESG values into the computer chip value chain

Companies committed to ESG principles must source products and materials following ethical and sustainable practices.

Companies committed to ESG principles must source products and materials following ethical and sustainable practices. Image: Pexels.

Keyvan Esfarjani
Chief Global Operations Officer and General Manager, Manufacturing, Supply Chain and Operations, Intel
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  • The technologies needed to address climate change rely on computer chips.
  • Ensuring the value chain for chips is sustainable is critical to ESG principles.
  • Cross-sector collaboration is key to ensure decarbonization goals are met.

Businesses around the world are recognizing it is more critical than ever to incorporate environmental, social and governance (ESG) principles into everyday practices. The semiconductor (or chip) industry plays a vital role in enabling technology that will help address climate change, facilitate the sharing of information, connect the world, bring cultures together and build global knowledge.

At the same time, the chip industry must also take ESG into account when making business decisions. During the World Economic Forum’s annual meeting earlier this year, it was encouraging to see that members agreed on the need for a more geographically balanced, resilient and sustainable semiconductor supply chain. ESG is foundational to this goal.

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Transparency changes the game

With more attention on ESG, we are observing fundamental changes to ESG globally, driven by the European Union, the US and others. The public policy goal is to increase transparency and incentivize responsible business conduct. This shift focuses on requiring companies to conduct mandatory human rights and environmental due diligence, then report publicly on those findings. Public disclosure should provide stakeholders – including investors – with the ability to make better-informed assessments of climate and human rights risks associated with public company products and services.

Increased ESG transparency across the industry is a game-changer for committed companies that are investing significantly in innovative sustainability solutions, including abatement of emissions, water reclamation and powering manufacturing facilities with renewable electricity.

Studies reveal that buyers increasingly consider ESG issues when making purchasing decisions. These investments are not only good for the planet, but they are also good for business. For example, more than a third of global consumers are willing to pay more for sustainable options. Younger generations are particularly prioritizing sustainability in their decision-making with a survey from Deloitte noting that climate change and the environment are top concerns for Generation Z.


How is the World Economic Forum helping companies track their positive contributions towards achieving the Sustainable Development Goals?

Collaboration is key

Yet the world’s greatest challenges cannot be tackled by one country, one region or one company. Together with our industry peers, regulators and other stakeholders, we are on the cusp of a more inclusive and sustainable world, enabled through our collective actions.

Semiconductor designers and manufacturers should be driving sustainable computing across the full product life cycle. This involves reducing the use of hazardous materials, maximizing energy efficiency during the product's lifetime and promoting the recyclability of electronic products.

Working across industries to set decarbonization goals and create harmonized standards is also critical for businesses to make significant progress in the same direction. Intel is a founding member of the Semiconductor Climate Consortium, the first global collaboration of semiconductor ecosystem companies focused on reducing greenhouse gas (GHG) emissions across the value chain.

Members are committed to working proactively on harmonized standards and publicly reporting progress on Scope 1, 2 and 3 emissions annually. These initiatives will result in a new level of accountability and facilitate transparency for investors as well as customers.

At the same time, ESG-oriented companies must take a proactive, focused approach to diversity, equity and inclusion (DEI). The Alliance for Global Inclusion was launched in 2021 with the aim to improve diversity and inclusion practices and promote transparent reporting in four critical areas: leadership representation, inclusive language, inclusive product development and STEM readiness in underserved communities. A growing cadre of members from across the technology sector agrees that DEI cannot be solved by one company alone.

Toward global impact

With leadership comes responsibility. As supply chains grow, companies committed to ESG principles must source products and materials following ethical and sustainable practices. Equally, manufacturing footprints should be committed to integrating ESG into long-term strategies and decision-making.

Across our extended value chain, we must all reduce our GHG footprint while working toward climate solutions. Because semiconductors play such a critical role by forming the basis for carbon-reduction technologies, investments made today create a ripple effect that extends across geographic borders and into the global marketplace. The best collaborations are those with common goals and have metrics to measure progress. Working together across the semiconductor value chain will benefit not just the technology industry, but industries around the globe.

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