Unveiling the power of sustainability in ICT

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June 29, 2023 - The global expansion of semiconductor manufacturing has propelled the urgency surrounding sustainable practices and environmental, social, and governance (ESG) compliance planning, particularly in the wake of the information and communications technology (ICT) sector’s unprecedented growth. ICT refers to the infrastructure and physical components used to enable modern computing to include all network devices, applications, and systems used to interact in the digital world.

Today, nearly three years after an already stressed semiconductor market came to a screeching halt, the residual inventory shortages caused by pandemic-related shutdowns and supply chain disruptions remain. Yet despite the shortages, the demand for semiconductor chips and electronic devices continues to surge along with the need for readily available semiconductor chips.

To kick-start semiconductor manufacturing operations, multi-billion-dollar investments have been made worldwide. The European Union has allocated €15B as part of the European Chips Act for public and private semiconductor projects just as the US’s newly-approved CHIPS and Science Act will provide nearly $52 billion in government grants and incentives toward domestic semiconductor, solar panel, and electric vehicle manufacturing (read CHIPS and Science Act demands new attention on EHS). Other countries such as South Korea, Taiwan, Japan, and India have followed suit with their own domestic production incentives and tax breaks.

However, as these complex manufacturing facilities begin to ramp up operations, it becomes imperative to examine the critical link between sustainability in semiconductor manufacturing (or any technological product for that matter), the effects on the ICT sector, and broader implications on future generations (also read Implications of the semiconductor shortage on EHS).

The semiconductor manufacturing industry stands as a significant contributor to global greenhouse gas (GHG) emissions, reportedly exceeding 30 percent in some studies, and the escalating demand for electronics is driving this number upward.

Current semiconductor manufacturing production processes require a substantial amount of water and raw materials, including rare elements, minerals, and metals. These resources are usually extracted through mining efforts and have adverse effects on the environment. Initiatives like recycling, reusing materials, and adopting circular economy principles can reduce the reliance on natural resources, minimize waste, and ensure the long-term availability of critical materials.

Not only does the industry present a host of climate-related risks, but it also presents a large risk to corporate social responsibility (CSR) principles. Mining efforts often include unethical labor practices and modern slavery (read Fundamentals of ESG: Understanding human rights), creating both social and supply chain stability consequences.

The Business & Human Rights Resource Center, an independent, international, nonprofit organization working in a collaborative partnership with Amnesty International and leading academic institutions, reports that the ICT hardware sector, a $110B industry, failed to address forced labor risks and impacts within overall supply chain operations. The organization reports that while many leading global tech companies have established human rights commitments, “most failed to consider how their purchasing practices were exacerbating forced labor risks within their supply chains,” raising concerns about essential due diligence and tougher ESG investment demands.

Integrating sustainability efforts into operations extends beyond just the production process itself and involves ensuring the responsible sourcing of raw materials, promoting ethical labor practices, and addressing social and environmental risks within the supply chain. Doing so can allow semiconductor manufacturers to enhance their reputation, attract socially conscious partners, and maintain a competitive advantage in an increasingly sustainability-focused market (read Tackling decarbonization: ESG planning strategies).

Semiconductor manufacturers globally may want to shift toward becoming a purpose-driven organization to be better positioned as a global leader in both productions and all areas of ESG. Integrating sustainable practices into the entire semiconductor value chain, the ICT sector can contribute to a more sustainable future while maintaining growth and technological advancement.

Read more from Ryan Lynch in Future of work: The role of ESG regulations. Follow along with more sustainability-focused content and other digital trust, EHS, and supply chain topics that should be at the top of your list at BSI’s Experts Corner.