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Green Electronics & Sustainability -

Key Business Imperatives for the 21st Century

T. R. Ramachandran Vice President, Corporate Quality & Programs VLSI Design Conference, Jan 7th 2013, Pune, India

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Outline

What is Sustainability?

Key Messages

Major Sustainability Imperatives

Climate Change

Energy

Materials

E-Waste

Sustainability Catalysts

LSI and Sustainability

Call to Action

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Outline

What is Sustainability?

Key Messages

Major Sustainability Imperatives

Climate Change

Energy

Materials

E-Waste

Sustainability Catalysts

LSI and Sustainability

Call to Action

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What is Sustainability?

The US Environmental Protection Agency (EPA) summarizes sustainability as follows:

Everything that we need for our survival and well-being depends, either directly or indirectly, on our natural environment.

Sustainability creates and maintains the conditions under which

humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of

present and future generations.

Businesses that maintain growth & profitability while preserving harmonious balance with the outside world are sustainable

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Sustainability & Capitalism

Source: M. E. Porter, M. R. Kramer, HBR (Jan 2011)

Influential strategic thinkers like Michael Porter emphasizing sustainability (“shared value”) as key to preserving capitalism

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Key Messages

Sustainability is a strategic imperative for long-term success

Electronics industry faces major challenges on sustainability front – Climate change, energy, materials, e-waste some of the key issues to address

– Water usage & labor practices other focus areas (not discussed today)

Key sustainability imperatives for industry: – Reduce greenhouse gas emissions & carbon intensity & manage climate risks

– Increase use of renewable energy & focus on energy efficiency

– Drive materials traceability & sustainable materials strategy for products

– Implement effective e-waste management & recycling

Holistic focus on sustainability can be good for the bottom line – Sustainability investments can be offset by significant operational savings

– Reduces risks of future catastrophic events that impact growth & profitability

Green electronics can & should enable long-term sustainability – Technology penetration in most industries presents unique opportunity

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Outline

What is Sustainability?

Key Messages

Major Sustainability Imperatives

Climate Change

Energy

Materials

E-Waste

Sustainability Catalysts

LSI and Sustainability

Call to Action

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Insurance Industry - Climate Change Canary?

Source: E. Mills, Science (Dec 2012)

What is driving these trends in the global insurance industry?

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Insurance Industry - Climate Change Canary?

Weather-related losses - growing challenge for insurance industry

Source: E. Mills, Science (Aug 2005)

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Insurance Industry - Climate Change Canary?

Source: Munich RE (Nov 2012)

To what extent is this trend influenced by climate change?

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Key Questions for Tech Industry

Are increases in natural disasters partly tied to climate change?

If so…

What can we do to reduce risks & maintain sustainable growth?

– Minimal operational disruption

– Minimal supply chain disruption

What can we do to support sustainable growth elsewhere?

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Source: @justinwolfers (Jan 2013)

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Climate Change – Is Global Warming Real? (1970s)

Source: Newsweek (Apr 1975) [ via 1, 2 ]

Source: Time (Jun 1974)

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Climate Change – Is Global Warming Real? (1970s)

Sources: Skeptical Science (Aug 2010);

T. C. Peterson et al., in Bulletin of the AMS (2008)

Most peer-reviewed papers in scientific journals from 1965-1979 predicted global warming, rather than cooling

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Climate Change – Is Global Warming Real? (Now)

Source: W. R. L. Anderegg et al., Proceedings of the National Academy of Sciences U. S. A. (Apr 2010)

Vast majority (97-98%) of world’s climate science experts concur on the reality of human-driven climate change

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Climate Change – Is Global Warming Real? (Now)

Source: UK Daily Mail (Oct 2012) Source: The Sunday Times – UK (Nov 2012)

Source: Forbes (Jul 2011)

However, some climate change skepticism persists, generally expressed through the popular media

Source: The Telegraph - UK (Dec 2012)

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Climate Change – Is Global Warming Real? Yes…. Source: Skeptical Science (2012)

Average of GISS, NCDC & HadCRUT4 monthly global surface T anomalies from Jan 1970 thru Aug 2012

Source: CNN (Aug 2012) Source: Berkeley Earth Surface Temp (BEST) Lab (2012)

Anomalies wrt Jan 1950 - Dec 1979 mean

Average global temp has risen ~0.8C over last few decades

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Climate Change – Is Global Warming Real? (Now) Source: Times of India (Jan 2013)

Source: New York Times (Jan 2013)

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Climate Change – Is Global Warming Real? Yes…

Source: NOAA Climate Watch (Dec 2012)

Warming refers to average global temp - not local day-to-day

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Climate Change – Is Global Warming Real? Yes…

Source: A. Freedman, Climate Central (Jul 2012)

The notion of global warming does not preclude record lows…

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Small Shifts in Averages More Probable Extremes

Source: Hansen et al., NASA/GISS (2012)

Source: MIT News (Feb 2012)

“Climate dice” increasingly “loaded” towards high end of temp

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Warmer/Higher Ocean More Probable Extremes

Source: Skeptical Science (Nov 2012)

Satellite

Tide

gauge IPC

C

pro

jec

tio

ns

Source: Kinnard et al. (2011) via SS Source: Arctic Sea Ice Blog (Sep 2012)

Warmer ocean, sea level rise & increased water vapor partly implicated in some recent natural disasters

Source: IMBIE / NASA (Nov 2012)

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The New Normal?

Source: Associated Press (Washington, Nov 2012)

Source: CNN (New York, Nov 2012)

Source: Washington Post (Virginia, Sep 2011)

Source: Think Progress (Tennessee, May 2010)

Source: Think Progress (North Carolina, Sep 2010)

Are we adequately prepared for this? Are there steps we can take to mitigate our risks?

Source: NBC News (UK, Nov 2009)

Source: ABC News - AU (Australia, Feb 2011)

Source: Ria Novosti (Russia, Sep 2010)

Source: Climate Action / UNEP (Canada, Mar 2011)

Source: Accuweather (Pakistan, Sep 2012)

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Climate Change – The Role of CO2 Source: : Foster and Rahmstorf via Skeptical Science (2011)

12-month running average of T anomaly data – raw data & data with non-GHG factors removed

CO2 emissions a major driver of global temp – removing other contributing factors reveals the CO2 signal more clearly

Source: University of California, Berkeley Earth Surface Temperature (BEST) Lab (2012 - 1, 2)

Anomalies wrt Jan 1950 - Dec 1979 mean

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Climate Change – The Role of CO2

Source: Skeptical Science (Jun 2010)

Recent increase in atmospheric CO2 traceable to human activities…we currently emit ~2.4M pounds of CO2 /sec*

*Source - AP

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Climate Change – The Role of CO2

Source: David MacKay in “Sustainable Energy – Without The Hot Air” (2008)

…Specifically, CO2 emissions have risen sharply since the advent of the industrial revolution…

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Climate Change – The Role of CO2

Source: NOAA (Jan 2011)

…and, current CO2 levels are unprecedented in at least 800,000 years – not to mention, CO2 remains in the atmosphere for long

Current

CO2 level

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Industry Imperative - Mitigation Plans for Warming

The future could see anywhere from 1.6 to 6°C* of warming compared to pre-industrial times (we’re at ~0.8°C now)

*For example, see PWC, IEA & World Bank estimates

Source: PWC (Nov 2012)

De-carbonization

required to limit

CO2 levels to 450

ppm & T rise to 2°C

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Industry Imperative - Mitigation Plans for Warming

Work with suppliers, partners & customers to account for climate change risks in our strategic & operational plans

Source: Germanwatch (Nov 2012)

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Industry Imperative – Shrink Carbon Footprint

Source: Global e-Sustainability Initiative & Boston Consulting Group (Dec 2012)

Invest in innovation and actions that can shrink carbon footprint, not merely slow its growth

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Industry Imperative - Carbon Abatement Elsewhere

Source: Global e-Sustainability Initiative & Boston Consulting Group (Dec 2012)

“9.1 Gt CO2e amounts to $1.9 Trillion in

gross energy and fuel savings”

Collaborate with customers to help reduce their carbon intensity and drive sustainability with significant operational savings

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Outline

What is Sustainability?

Key Messages

Major Sustainability Imperatives

Climate Change

Energy

Materials

E-Waste

Sustainability Catalysts

LSI and Sustainability

Call to Action

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Global Energy Consumption

~30% of total global energy consumption by industry today Fossil fuels currently dominate world energy sources

Source: K. Ward et al., HSBC, “Energy in 2050” (Mar 2011)

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Energy & GHG Emissions

Energy use dominates GHG emissions & C intensity Predominantly fossil-fuel driven; renewables GHG emissions ~ 1/10th

Source: D. Weisser, IAEA (2007)

Scales are different!

Source: David MacKay in “Sustainable

Energy – Without The Hot Air” (2008)

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Energy Demand Growth

Source: H. Gruenspecht , CSIS / US EIA (Sep 2011)

Without significant changes in energy use patterns, oil & energy demand and CO2 emissions will roughly double* by 2050

*For example, see HSBC estimates

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Energy Poverty and Growth

Source: IEA World Energy Outlook (2009)

Energy poverty worldwide already constrains growth Demand growth can’t be met without efficient energy use*

Electricity consumption in

sub-Saharan Africa, excluding South Africa, is roughly

equivalent to consumption in New York State.

In other words, the

20 million inhabitants of New

York consume roughly the same

quantity of electricity each year as the 849

million people of sub-Saharan Africa.

Source: IEA Exec Dir

M. V. der Hoeven

(Jun 2012)

*For example, see HSBC estimates

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Industry Imperative: Shift More to Renewables

Leading tech companies have started a shift towards more renewable energy sources

Intel Largest US tech purchaser of renewable energy (>85% of total energy) Reportedly ties part of employee variable compensation to sustainability goals

Google

Significant renewable investments & drive towards carbon neutrality Over 30% of energy is sourced from renewables

Microsoft

Carbon-neutrality by fiscal 2013 & increasing use of renewable energy Internal carbon-fee based model to drive operations

Apple

Main data center expected to use 100% renewable energy in 2013 Others have eliminated coal based sources

Greater renewables use reduces carbon intensity - will also help drive growth & lower costs for renewable energy technologies

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Industry Imperative: Energy Efficiency

Many tech companies (e.g., Google, Facebook) driving energy efficiency

Energy efficient products becoming more and more important

Energy efficiency can also be profitable business model for utilities

Energy efficiency is good for business & sustainability

Source: Pacific Gas & Electric (1, 2, 3) Source: San Jose Mercury News (2010)

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Outline

What is Sustainability?

Key Messages

Major Sustainability Imperatives

Climate Change

Energy

Materials

E-Waste

Sustainability Catalysts

LSI and Sustainability

Call to Action

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Materials & Disposal Challenges

Source: Electronics Takeback Coalition

Electronics manufacturing and use involves many materials & disposal challenges

Pb, Hg, Cd, Cr6+,

PBB, PBD, flame

retardants, other

toxic materials

Restricted Materials

Ta, Sn, W, Au mined

from the Dem

Republic of Congo &

nearby conflict zones

Conflict Minerals

Mounting e-waste,

low elemental

recycling efficiency,

limited e-recycling

E-Waste

Extracted elements

(e.g., rare earth

metals) that are not

easily available

Scarce Elements

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Elements Used in Electronic Products

Source: National Research Council of National Academies / Intel (2007) Source: UNEP / Umicore (2009)

Number of fundamental elements present in typical electronics / ICs has grown rapidly in the past 2 decades

Elemental presence

in computer ICs

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All Materials Carry Some Depletion Risks

Source: A. M. Diederen (Jun 2009)

If extraction cost & energy needs become prohibitive, this will impact product sustainability & increase carbon intensity

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Scarce Elements Pose Sustainability Challenge

Other Pt group Rare earths

Source: National Research Council of National Academies (2007)

Supply risk of some metals key to electronics & renewables is moderate to high

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Scarce Elements Pose Sustainability Challenge

Source: Dr. Duru, Seeking Alpha (Jul 2011)

Source: S. Bicheno, Hexus (Aug 2011)

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…Could Impact Move to Renewable Energy Sources

Source: A. M. Diederen (Sep 2010)

Double impact of scarce material depletion could be a big setback to meeting sustainability goals

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Conflict Minerals Tied to Huge Human Toll in Africa

Source: IHS (Jan 2011)

Key minerals mined in the Democratic Republic of Congo (DRC) or vicinity - tied to years of conflict and war over

resource wealth - are referred to as Conflict Minerals

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Usage of Conflict Minerals in Electronics

Metal DRC % of Global Supply Key Use in Electronics

Tantalum (Coltan) ~20% [CRS], ~ 10-20% [IHS] Capacitors

Tin (Cassiterite) ~ 2-5% [CRS], ~ 6-8% [IHS] Solders, alloys

Tungsten (Wolframite) ~ 0.5-1.0% [CRS], ~ 2-4% [IHS] ICs

Gold ~ 2% [CRS], < 1% [IHS] IC packaging

Source: Congressional Research Service (Jul 2012), IHS (Nov 2010)

Source: Apple (2012)

Avoiding use of minerals that support armed groups committing human rights violations in DRC is a key imperative

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Restricted Materials (examples)

Key Materials Example Usage in Electronics

Included under EU RoHS requirements (6 now, might expand)

Lead – Pb Cables, solders, PCBs, lamps, batteries, etc.

Cadmium – Cd Cables, platings, contacts, CdX detectors

Mercury – Hg Switches, lighting, displays, scanners

Hexavalent Chromium – Cr6+ Anti-corrosion coatings

Polybrominated Biphenyl - PBB Flame retardants used in plastics, cables,

PCBs, connectors, etc. Polybrominated Diphenylether - PBDE

Included under EU REACH requirements (138 now, growing every year)

Cobalt Dichloride - CoCl2 Humidity indicator cards, desiccants

Dibutyl Phthalate - DBP Plasticizer, dye, pigment, paint, ink, adhesive

Bis(2-methoxyethyl) ether Electrolyte in batteries

Typically toxic, have restrictions tied to use in electronics – common global requirements growing, esp. in Asia

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Materials Traceability

Source: IHS (Jan 2011)

Materials traceability within supply chains can be a significant challenge for electronics companies

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Outline

What is Sustainability?

Key Messages

Major Sustainability Imperatives

Climate Change

Energy

Materials

E-Waste

Sustainability Catalysts

LSI and Sustainability

Call to Action

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E-Waste & Recycling

Source: Server Monkey (2010)

~40 million tons of e-waste / year* Only a small fraction is recycled

*For example, see UNEP (2009)

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E-Waste & Recycling

Asian countries a major disposal point

for toxic e-waste

Source: P. Rekacewicz, UNEP/GRID-Arendal (2005)

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Industry Imperatives: Materials & E-Waste

Use scarce elements judiciously in products

Minimize use of restricted materials in products

Avoid using minerals that support armed groups in the DRC zone

Implement materials traceability capabilities through supply chains

Collaborate to ensure safe e-waste disposal & effective reuse

Sustainable materials strategy and effective e-waste disposal & reuse key to long-term business, resource

& community sustainability

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Outline

What is Sustainability?

Key Messages

Major Sustainability Imperatives

Climate Change

Energy

Materials

E-Waste

Sustainability Catalysts

LSI and Sustainability

Call to Action

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Sustainability Catalysts for Tech Industry (Examples)

Category Key

Aspect

Laws & Government Regulations Industry

Specs/

Stds

Customer

Req /

Specs

NGOs &

Voluntary

Programs US EU Other

Climate

Change

GHG

emissions

• EPA

• SEC

• CA -AB32

• ETS

• Carbon tax

• Kyoto,

• Carbon tax

• Cap &

Trade

• ISO

14064

• IBM, Dell,

Intel, etc.

• GHG Protocol

• AA1000

• CDP

• US EPA

Energy Energy

efficiency • Energy

Policy Act • EUP • ECA

• CEA:

Sleep &

Active

• E-PEAT

• Lower

power

products

• Energy Star

Key Concerns

• Upfront investment required to drive carbon intensity & energy efficiency

• Fossil fuels cheaper than renewables where externalities are not priced right

• Lack of global coordination leading to patchwork of laws & requirements

Likely Benefits

• Reduction in extreme climate events & lower long-term business risks

• Significant energy cost savings & ability to lift regions out of energy poverty

• Energy efficient products more competitive

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Sustainability Catalysts for Tech Industry (Examples)

Category Key

Aspect

Laws & Government

Regulations Industry

Specs/Stds

Cust

Req /

Specs

NGOs &

Voluntary

Programs US EU Other

Materials

Scarce

elements • RESTART

Act* • ERECN*

• Urban Mining

(Japan)

Conflict

minerals

• SEC Rules

• CA-SB861

• MD

• Prop*

• GeSI- EICC

• Conflict Free

Smelter

• PPA

• Cisco

• Intel,

Apple,

etc.

• OECD Guidance

• RSN

• Enough Project

Restricted

materials

• TSCA

• EPA CAPs

• CA

• RoHS

• REACH

• SAICM

• China

• India

• CEA

• IEC

• JEDEC

• Apple

• Sony • Greenpeace Guide

E-waste E-waste

disposal • 25+ States

• WEEE

• Basel

Conv

• Japan

Recycl

Law

• India

• EPEAT

• R2

• E-Stewards

• Call2Rec

• WEEE forum

• Dell

• BAN

• Electronics

TakeBack Coalition

• Goodwill

*Legislation pending, not yet passed

Key Concerns

• Materials traceability challenges • Finding alternative materials • Required supplier oversight

Likely Benefits

• Reduction in supply & business risks • Potential materials cost savings • Community & health improvements

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Sustainability Catalysts for Tech Industry (Examples)

Investor groups increasingly active in driving sustainability requirements

Carbon Disclosure Project (CDP) Collaborative initiative between investors with ~US $78 Trillion in assets

Focus is GHG emissions and carbon footprint

Principles of Responsible Investment (PRI) UN-backed institutional investor network with ~ US $30 Trillion in assets

Focus is environmental, social, and corporate governance (ESG) issues

Global Investor Coalition on Climate Change (GIC) Worldwide investor consortium with ~US $ Trillions in assets

Focus is climate change

FTSE4Good Index, Dow Jones Sustainability Indices

Investors will likely get more active in driving business transparency & accountability on sustainability practices

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…And Companies Are Paying More Attention

Increasing Sustainability Reporting a Good First Step Need to Drive Key Imperatives for Sustainability

Source: GA Institute, Dec 2012

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Outline

What is Sustainability?

Key Messages

Major Sustainability Imperatives

Climate Change

Energy

Materials

E-Waste

Sustainability Catalysts

LSI and Sustainability

Call to Action

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LSI and Sustainability

Category Goal Accomplishments-to-date Work Ahead

Climate Change

Reducing GHG emissions

• CDP reporting • 26% reduction from 2007 baseline

• New companywide GHG goal • Manufacturing partner emissions

Energy Increasing energy

efficiency

• Low pwr, energy-efficient products • Solid progress on energy efficient data centers

• Next level of improvements in operational energy efficiency

Materials

Reducing use of scarce elements

• Tracing rare earths in products • Significant progress on full material declarations (FMD)

• Deeper collaboration with suppliers to enable FMDs

Eliminating conflict mineral use

• LSI Conflict Minerals Policy • Collecting supplier data

• DRC “conflict-free” products

Minimizing use of restricted materials

• RoHS & REACH compliant • Green IC (no Pb/Sb/Cl/Br) • Halogen-free PCBAs

• Eliminate RoHS exemptions • Formal Design for Envir. program

E-waste Maximize recycling & reducing e-waste

• WEEE Compliant • 76% waste recycling rate • Earth Day e-recycling programs

• Zero waste to landfill

LSI actively driving internal progress & supplier requirements

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Outline

What is Sustainability?

Key Messages

Major Sustainability Imperatives

Climate Change

Energy

Materials

E-Waste

Sustainability Catalysts

LSI and Sustainability

Call to Action

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Call to Action

Climate Change

• Drive significant reductions in GHG emissions • Manage climate change risks in operations

Energy • Shift more towards renewables for energy sourcing • Focus on energy efficient products & operations

Materials & E-Waste

• Drive materials traceability through supply chains • Implement sustainable materials strategy • Drive safe e-waste disposal & effective reuse

Thank you!

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