One Company s Sustainability Journey: Intel Procurement s Experience in Establishing a Comprehensive Sustainability Program Frank Sanders Director Corporate Strategic Procurement Intel Corporation October 30, 2012 1
2 Today s presentation contains forward-looking statements. All statements made that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. Please refer to our most recent earnings release and our most recent Form 10-Q or 10-K filing, available at www.intc.com, for more information on the risk factors that could cause actual results to differ. Additionally, all products, computer systems, dates, and figures specified are preliminary based on current expectations, and are subject to change without notice.
Agenda Corporate Overview Intel s Environmental, Social, and Governance Program Supply Chain Expectations Summary 3
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10 What do they all have in common?
11 Intel's Vision This Decade We Will Create and Extend Computing Technology to Connect and Enrich the Lives of Every Person On Earth
Intel Corporation: The World s Largest Semiconductor Manufacturer $43B 63 Countries Customers, 120 Countries >100,000 Employees ~$16B Supply Chain Top 10 Brand 10,000+ Suppliers 12
Intel Corporation: Corporate Responsibility Integrated into Our Business Continuing our commitment to the highest performance in all we do from product innovation to corporate responsibility is good business. >1M hrs Volunteering Per Year >$1B Education, Last Decade Paul Otellini President and Chief Executive Officer Intel Corporation >500 Awards, Last Decade 13
Intel Corporate Responsibility Evolution It s In Our DNA 10th CSR report Culture and values established First EHS report and public goals Stakeholder engagement and SRI road shows CSR business function First full CSR report Board-level responsibility established CSR Mgmt Review Committee CSR in global strategy on a page and link pay with CSR CSR blog and integration into AR/10K 1968 1994 1996 1998 2000 2002 2004 2006 2008 2010 14 Driving continuous improvement in performance and governance
What is ESG? Care for our people, the planet, and inspire the next generation Environmental Social Governance Innovation Resource Conservation Reuse and Recycling Green Products (DfE) Investment Supply Chain Responsibility Education and Awareness Workplace and Community Standards/Transparency Laws and Regulations Product Compliance Policy and Accountability 15 ESG Ensuring businesses comply with local and country laws, limiting their impact on the environment, and taking care of their employees and communities.
External ESG Evolution Driver Historical Recent History Current/Leading Co s NGO Government Companies Direct Recipient Companies Companies Indirect Recipient Focus Companies Environment Environment Social Governance Opportunistic Green is Green Environment Social Governance Including Supply Chain 1970s 1990s 2010+ 16 Leading companies have moved past compliance, making ESG a value
ESG in Action Inside Intel Portfolio Approach to Emissions Reduction and Energy Management Efficient Building Designs Conservation Energy Efficiency Solar Green Power Purchases 17 New facilities Silver LEED or better Israel Design Center, 1 st Gold in Israel First semiconductor company to certify an entire manufacturing campus to LEED Led world s first voluntary commitment to reduce greenhouse gas emissions 10 percent. 45 percent achieved $45M invested over decade in 1500 projects, saving ~790M kwh saved (~69,000 homes for 1 year) Top 10 percent of companies reporting emissions via the CDP since 2003 Largest purchaser of Renewable Energy Credits, 4 th year 9 solar installations Generating >3.8M kwh per year of solar energy
ESG in Action Inside Intel Social Water Waste Workplace $100M in vested in conservation programs since 1998 40B gallons saved (~370,000 U.S. homes per year) ~80 percent water used back to municipal treatment Founding member of Water Innovation Alliance ~80 percent solid waste recycled ~70 percent chemical waste recycled Composting cafeteria waste Innovative local efforts Reinvested savings, past 5 years into employee programs OHSAS 18001 certification received Forbes Top 100 Best Companies to Work For 9 th year, Working Mother Top 100 Employee bonus linked to sustainability 18
19...And Our Supply Chain
Our Approach to Supply Chain Sustainability Setting Clear Expectations Collaborating on Broad Initiatives Engaging Our Employees Driving Higher Levels of Transparency Requirements Industry Associations Purchasing Decisions Reporting Measure and Reinforce Recognition System Conflict-Free Supplier Management Processes Engagement Activities 20
Supply Chain ESG Position Vision: ESG is a leadership value in our Supply Chain SC ESG Procurement of goods (materials, products, equipment, services) and their impact on our society and the environment: Our products and operations Contributions from our suppliers and supply chain Incorporating ESG concerns Supplier Expectations Meet local laws, EICC, and Intel code of conduct Continuously reduce environmental footprint and social, governance risks associated with creation of components placed in our products Develop/deliver products that reduce environmental footprint and social, governance risks Transparency in ESG metrics and performance Looking ahead, we will continue to address challenges in reducing water use and chemical waste in our operations as we grow, and to drive leadership in supply chain responsibility. Paul Otellini, 2010 Corporate Responsibility Report 21
Collaborating on Broad Initiatives EICC Code of Conduct Elements Labor Freely Chosen Employment Child Labor Avoidance Working Hours Wages and Benefits Humane Treatment Non-Discrimination Freedom of Association Health and Safety Occupational Safety Emergency Preparedness Occupational Injury and Illness Industrial Hygiene Physically Demanding Work Machine Safeguarding Dormitory and Canteen Management Systems Approach Environmental Permits and Reporting Pollution Prevention Hazardous Substances Wastewater Solid Waste Air Emissions Product Content Ethics Business Integrity Anti-Corruption Disclosure of Information Intellectual Property Fair Competition Protection of Identity Community Engagement 22
Setting Clear Expectations Risk Assessment Overview Risk Assessments (RA) are tools used in the industry to evaluate how a company implements the EICC Code of Conduct at each facility. RA1: Internal Assessment; initial indicator of potential risk focused on a few risk areas. (Corruption index, type of industry, etc.) RA2: Supplier Self Assessment or Self Assessment Questionnaire (SAQ); RA2 is an indicator of potential risk in their management and policies. RA3: On-site Audit; RA3 is an evaluation of performance to the EICC code of conduct at the site http://www.eicc.info/tools_and_resources06.shtml Intel uses industry tools to measure conformance to the EICC Code of Conduct and expect our suppliers to implement sustainable solutions
Collaborating on Broad Initiatives Conflict Minerals Intel is concerned that metals (gold, tantalum, tin, and tungsten) mined in the Democratic Republic of the Congo (DRC) for the electronics supply chain may be fueling human rights atrocities in the eastern region of the DRC. By end of 2012, Intel will demonstrate that our microprocessors are validated as conflict-free for tantalum, and by the end of 2013, Intel will manufacture the world s first microprocessor fully validated as conflict-free across all four minerals. Source: 2011 Intel Corporate Responsibility Report, page 100. Photo courtesy of Enough Project photostream
Conflict-Free Minerals Play Video
Supply Chain Highlights >10thousand Number of Intel suppliers, in over 100 countries > 98 Number of smelter sites identified in our conflict minerals supply chain > 391 Tons of paper and plastic that we saved through packaging and shipment redesigns in 2011 Reviewed results of 49 third-party audits in 2011, a five-fold increase over 2010 Added ten new environmental screening considerations to our supplier award selection process Collected environmental data from our Top Tier 1 suppliers and shared results in our report Added ESG to supplier report cards based on risk assessments, their CSR programs Copyright @2012 Intel Corporation. All rights reserved. Intel and the Intel Logo are trademarks of Intel Corporation in the U.S. and other countries.
Common Ideas to Begin Sustainability Initiatives Greening ground transportation rental/lease fleets Green rental car alternatives Car leasing programs Pilot to rent hybrid/electric cars by the hour Hotels Highlighted environmentally friendly hotels in travel tool Office Supplies Eco-friendly stationery at same cost and choice of alternatives with higher cost Print fulfilment Moved collateral printing closer to end users and made digital where possible Paperless option for benefits and card statements 27
Intensifying Our Focus Carbon, Water, Waste Audits Supplier Report Card Travel Options Office Products Packaging 28
Evolving Procurement Value ESG Total Cost Quality Cost Technology Doing the right things right shouldn t have to cost more. - Brian Krzanich, Sr. VP and GM Manufacturing & Supply Chain Availability 29
Summary Journey Starts with Integrated Business Value Culture and Strategies. Leadership and Collaboration are Required for Timely, Lasting Change. Doing the Right Things Right Does Not Cost More. 30
Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has. Margaret Mead 31
Thank you for your time Download a copy of this presentation: https://supplier.intel.com/supplierdiversity Supplier Diversity e-mail address: supplierdiversity@intel.com 32