Semiconductors: Strategize toward a sustainable fab for the future

Semiconductor demand is booming - but so are fabs' sustainability challenges.

Semiconductor manufacturers are in a challenging position - they need to fulfilsoaring chip demandwhile at the same timedecarbonizing their supply chain. The industry already has agiant carbon footprintand as it grows, so does its carbon footprint. This increasing capacity is setting the industry up for a potential conflict with international climate goals, such as the Paris Agreement, which aims to secure global net zero by mid-century and keep 1.5 degrees within reach as further underlined during COP26.

Greener fabs are more efficient and a greener supply chain is more profitable

The good news is that business growth and sustainability are not mutually exclusive. In fact, sustainability is good for business. Prioritizing sustainability helps fabs meet environmental targets (both external and internal), improveprofitability, support their customers' value chain (scope 3) and become more attractive to investors and talents.

Think about, for example, the way reducing energy use drives bottom line improvement. On average around15 to 30 percent of fabs' operating expensescome from electricity consumption. Energy prices are rising, so finding a way to cut energy use can save money. In addition, by factoring avoided emissions (i.e.emission reductionsthat occur outside of a product's life cycle or value chain but as a result of using that product)into their sustainability plan manufacturers can better quantify carbon reductioneffortsto share with customers.

Where should you start? By auditing fabs' energy and carbon footprint to establish your baseline

To make measurable improvements, fabs need to audit their energy and carbon footprints and understand how energy is used throughout the facility. The audit will measure the fabs' baseline emissions, develop an understanding of the volume and emission type by source, for example measuring the carbon footprint in the energy source mix (e.g., coal, oil, gas, solar, wind, hydroelectric, and nuclear) and analyze the facility's energy performance.

The audit is essential to understand the scope, scale, and structure of the fabs' energy footprint because better energy management is at the heart of any decarbonization plan. An energy and carbon footprint audit is especially important in energy-intensive industries like semiconductors because they're asignificant contributorofCO2 emissions so changes can make a large impact.

The next frontier for improvements is building the baseline for the supply chain's carbon footprint because upstream scope 3 accounts for around 20% of semiconductor manufacturers' emissions.

Then implement a strategy that supports semiconductor manufacturers on climate initiatives from idea to execution.

Once manufacturers have a complete picture, they can develop a decarbonization roadmap that identifies areas to decarbonize and a plan for how to do so. Here are some of the most important strategic steps:

• Define the climate strategy, set target goals, and prioritize actions: Create a strategy that meets manufacturers' goals, is alignedwithscience-based targets(i.e., how much and how quickly businesses need to reduce their GHG emissions to prevent the worst impacts of climate change),and determine the most impactful key performance indicators.

It's not enough to say the goal is to "lower GHG emissions." Semiconductor manufacturers need to set measurable, actionable targets and develop a concrete plan based on risk, opportunity assessments, and the most up-to-date science-based guidance for avoiding climate change impact. Sustainability is a long-term commitment, so any strategy must focus on both the short-term steps and the long-term goals.

• Track progress: Thanks to the carbon footprint audit, fabs already have a baseline report that identifies the volume and type of emissions.This can then be used as the basis for ongoing measurement of emissions data with a central record system, which makes reporting clearer and simpler.

• Structure programs and governance: Much like any other company initiative, sustainability programs need to bestructured with clear roles, responsibilities, and accountability. Sustainability must be embedded in the business strategy and be part of the decision-making process from the C-suite and across the company's departments and hierarchy.
• Communicate the commitment both internally and externally: Strategically communicate your initiatives and accomplishments to advance organizational reputation and awareness. All sustainability efforts must include a communications strategy. Semiconductor manufacturers should share their goals, deliverables, and achievements with employees, who will be involved in these initiatives, and also with shareholders, such as investors and consumers, whoprioritize investments in companies with green ambitions.

Semiconductor and circuit board with data flowing.

Let experts guide your decarbonization strategy

The most straightforward way to conduct an audit and create a strategy and action plan is to work with an experienced advisor who can guide you on a path to decarbonization. Having an expert advisor ensures you build an effective, data-driven strategy that accelerates your fab's sustainability initiatives while still prioritizing critical operations. Together you'll build a customized strategy that includes steps such as: creating a plan to meet climate commitments, identifying appropriate sustainability goals, and evaluating the financial strategies needed to meet these goals.

What sets us apart? We're thetop energy and sustainability consultancy in the world. We have helped thousands of organizations reach their green ambitions using our holistic and iterative 4-step approach, composed of four stages: define success, set targets, deploy programs, and sustain results.

We don't just build strategies, we've also implemented them on behalf of many leading companies. Our knowledge is rooted in first-hand knowledge to drive a more effective, results-oriented deployment. We're also established experts in traditional energy sourcing, as well as renewable energy, so we have the experience to ensure energy availability and resiliency, as well as formulate an approach to understanding the environmental impacts of supply chain

Learn how we can help design your fab's sustainability strategy

At Schneider Electric we can help you build a holistic climate change strategy with a road map of sustainable activities, including energy management as a way to sustainability. We have significant experience working closely with major global semiconductor companies,such as STMicroelectronics, on their sustainability consulting programs.