Corporate Environmental Report

Sustainability

Care for the environment is a core element in the business policy of STMicroelectronics and is embodied in the Company's Environmental Vision, Mission and Policy.

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 continuous 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 principles of Total Quality Management (TQM) and guided by the 16 principles of the International Chamber of Commerce (ICC) Business Charter for Sustainable Development.
See Appendix 1.

To be a world leader in our moral obligation towards the environment making investment in environmental programs a priority, attracting the best young people and motivating all employees in the challenge for a better quality of life.

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 objectives are :

	To ensure Management commitment to a culture of ecology throughout the Company.
	To design products and processes to minimize their environmental impact from "cradle to grave".
	To benchmark ST against leading companies the world over, so as to equal or exceed their environmental performance.
	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 Analysis to the environment parameters.
	To strive for continuous reduction in waste and pollution and in the consumption of water and energy, in a quest for sustainable development.
	To implement training and education for all employees to ensure that all personnel are empowered to perform the job correctly, and in line with the corporate environmental directives.
	To inform customers of the correct way to manage ST products throughout their life cycle, with minimum or no effect on the environment.
	To involve suppliers and contractors in adopting the Environmental Management System (EMS), thus providing goods and services that are environmentally sound.
	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.

See Appendix 2.

ORGANIZATION
At the highest level, environmental concern is the responsibility of our Total Quality Environmental Management (TQEM) organization, headed by a Corporate Vice-President. The Environment Strategies and International Quality Programs (ES-IQP) organization within this group spearheads the achievement of our vision, mission and policy.

Periodical audits are conducted by the ES-IQP and environmental Standard Operating Procedures and Corporate Specifications are set. Internal training on environmental issues is promoted and plans to meet corporate goals are implemented.

Through leadership and example, the ES-IQP group promotes a Company-wide culture of environmental protection. Appendix 1 shows how ST manages its environmental activities according to the principles of TQM and the ICC Business Charter for Sustainable Development.

The Corporate Environmental Steering Committee (ESC), chaired by our CEO supports all aspects of the Decalogue, including review and resource allocation. At the local level, an Environmental Steering Committee and a Site Environmental Champion (SEC) are active in every environmental initiative. In strengthening the Company image as an environment-conscious corporation, they interface 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. Regular contact with all regulatory agencies is maintained by these groups.

OWNERSHIP OF THE DECALOGUE OBJECTIVES
A comprehensive structure of Corporate Environmental Working Groups (CEWG) coordinates improvement actions at each site. Innovative solutions and 'best practices' are cascaded throughout the Company, building up expertise and knowledge.

ENVIRONMENTAL AWARENESS AND TRRAINING
To increase awareness of the environment, both with employees and outside contractors, training is given at each site. This includes:

	an in-depth commentary on the Company's Environmental Policy, the Decalogue and the site Environmental Statement;
	a general overview of the Corporate and Site Environment Manual;
	an explanation of the role and responsibility of each new employee within the site environmental management system;
	a tour of the site's main environmental facilities.

With the support of the Site Environment Champion, local training organizations offer specific courses both for internal and external contractor personnel. For example, design, manufacturing, facilities, maintenance, purchasing, clean room staff, etc. In addition, courses on emergency preparedness and response, including evacuation exercises are also offered. The training is geared towards the control of the specific and significant environmental effects listed in the relevant Site Register.

All personnel operating, supervising, monitoring or maintaining environmental equipment such as waste water treatment equipment, scrubbers, chemical and waste stores are trained to maximize performance. They prevent potential non-compliance with environmental legislation and corporate standards and control the items listed in the Site Register of Significant Environmental Effects.

This training is part of the Job Certification Program. ST personnel are given a refresher course every year and at each major change in environmental conditions.

In addition, a more advanced Environmental Awareness seminar was designed and developed at STMicroelectronics University.Now available on a CD-ROM, it is offered to ST's suppliers and customers. This seminar is mandatory for all contractors when the work performed at an ST site may have a significant effect on the environment.

INVESTMENT IN THE ENVIRONMENT
We believe that companies investing in environmental protection have a significant advantage over those who wait. Indeed, we believe any investment will largely be repaid if we are capable of designing and implementing pollution-free processes which can reduce the use of natural resources and energy.

At ST, no investment made in energy conservation has taken longer than three years to recover &emdash; the average payback time has been less than two years. In 1998 alone, our investments in energy conservation and efficiency allowed the Company to save $12 million in electricity.

In the same timeframe, ST's savings in water consumption amounted to approximately $5 million.

We expect a significant savings increase in 1999.

PAYBACK FROM ENVIRONMENTAL INITIATIVES
We are all aware of the very serious dangers our planet is confronted with and we bear the collective duty to reduce those risks. Protection of the environment is thus a key mission at STMicroelectronics and the ultimate goal is to achieve environmental neutrality.

Three basic motives are behind this statement. The first, no doubt, is an ethical one that stems from our responsibility as a corporation towards society as a whole.

The second is of an economic nature. Companies that independently and voluntarily make their own activities conform to increasingly stringent environmental protection standards certainly have an advantage over those who do so only when forced by the law. New, environmental-friendly technologies and processes are also leading-edge ones, as well as more efficient and less costly.

Finally, if ST becomes a champion of the environment, it will have a greater appeal for young talent and the best human resources which will help us to grow in line with our goals.

Companies rated as eco-leaders obtain higher scores in vendor rankings, bringing a positive effect on sales. Also, important investment groups (especially banks), are today establishing special green investment portfolios.
A careful analysis of performance with regard to the environment will identify companies with a superior growth potential thanks to their efficiency in ecology. More and more, investments are now being made in companies where both financial and environmental performance go hand in hand.

A large investment corporation recently selected six companies in the microelectronics market sector from around the globe for green investment portfolios. STMicroelectronics was the only company selected in Europe, with three from the United States and two from Japan.

SUPPLY MANAGEMENT
More and more attention is now given to the purchase of environmentally sound materials and equipment at ST. In the assessment of key suppliers, a number of rating criteria are specifically related to the environment.
Vendors have reacted most positively and 87% of key suppliers have obtained, or are in the process of obtaining, ISO 14001 certification; 28% are in the process of obtaining EMAS validation. EMAS validation or ISO 14001 certification will become a necessary condition for all suppliers on the STMicroelectronics Qualified Supplier list.

PROBLEMS
In 1998 no additional issues over previous years were identified.
Problems identified from 1993 to 1998 are listed below.
The only open issue listed for 1998 was resolved, as planned, at the end of 1998. In all cases, if there was any doubt, the problem issue was addressed with the local authorities and corrective and/or remedial actions were implemented.

Location Discovery	Nature of problem	Action
Montgomeryville, Pa, USA
Acquired problem	Soil contamination from previous business.	Remediation with EPA completed.
Agrate, Italy
ST measurement	Ammonia concentration in discharged water - close to limits.	Ammonia in use in production has been decreased (prevention).
Agrate, Italy
Measurement by authorities	Aluminum in discharged water at 2ppm versus limit of 1ppm.	Non-repeatable in following measurements. Authorities archived the case.
Crolles, France
ST measurement	fluoride concentration in waste water slightly in excess of limits.	Major investment to reduce fluoride discharge completed Q4 1998.
Crolles, France
ST measurement	VOC emissions excessive.	Abatement investment completed Q2 1998.
Rousset, France
Permit review	Several measures at limit due to growth.	Renegotiate permit limits. Investment to reduce emission.
Shenzhen, China
Acquired problem	Hydrocarbon soil contamination.	Authorities informed, and asked to take remedial action. Frequent monitoring of ground water.
Phoenix, Arizona
Acquired new property	CFC present in the air conditioning system.	Replacement of the system planned for 1999.