The Company’s culture of Sustainable Excellence takes into account the need for robust, formal governance mechanisms and management systems, as well as more subtle, cultural aspects, to ensure cohesion and innovation, based on the shared vision and common objectives described in ST’s Principles for Sustainable Excellence. Essentially, these systems are designed to help ST create value for all stakeholders: customers, shareholders, business partners, people and society as a whole.

Historically, Sustainable Excellence developed from the fusion of two separate initiatives: the Total Quality Management (TQM) philosophy by which all employees participate in the drive to maximize customer satisfaction, and ST’s pioneering work in environmental responsibility. ST was one of the first global industrial companies to recognize the importance of environmental responsibility and its initial efforts, started in the early 1990s, led to the publication of its first “Environmental Decalogue” in 1995. This document not only emphasized the importance of rigorous auditing of the environmental costs associated with semiconductor manufacturing but also set ambitious targets for reducing these burdens on global resources, targets that the Company has substantially achieved year after year. ST’s Decalogue has later been extended to include health and safety targets, underlining the Company’s commitment to continuously improve its environmental, health and safety performance.

As a direct result, ST played a pivotal role in demonstrating that ‘Green is Black’ i.e. that environmental responsibility delivers real financial benefits. The Company subsequently widened the scope of its definition of Corporate Responsibility to include areas such as Health & Safety, Human Rights, and Supply Chain, and increasingly formalized both the deployment of its principles within the Company and the reporting of the results to stakeholders to ensure that it remains at the forefront of Corporate Responsibility.

GOVERNANCE & COMPLIANCE
STMicroelectronics is committed to implementing high standards of corporate governance at all levels and its policies and procedures are upheld by internal controls that are regularly audited and reviewed to ensure their effectiveness. This commitment is supervised by the Corporate Vice President and Chief Compliance Officer, whose function includes ensuring the integrity of financial reporting, ensuring transparency and coordination between the Managing Board and the Supervisory Board, promoting an ethical culture with sustainable values, and investigating instances of possible non-compliance.

A Corporate Ethics Committee gives guidance to the Managing Board on issues regarding ethics, values and corporate behavior and makes recommendations on internal policies and procedures, and the training necessary to ensure that management and employees continue to live and promote the Principles for Sustainable Excellence.

ST has developed an e-Signature system in which managers from all sites and organizations annually sign the Company’s Business Conduct and Ethics Policy. By the end of 2008, 92% of eligible managers had signed this document. It has also established channels for non-compliance reporting.

SOCIAL
ST’s Principles for Sustainable Excellence detail precisely the Company’s commitment to its employees in terms of respect for the individual, freedom of association, employee welfare and development, human rights, fair treatment, health, safety and security, and privacy of personal information.

ST’s Principles for Sustainable Excellence are comprehensively deployed at corporate and local level through various programs, such as:

• Life-long learning and employability
• Employee empowerment and engagement (recognition, engagement survey…)
• Diversity and equal opportunities
• Integration of human rights issues in and beyond ST
• Engagement with local community and society.

As one of the first companies to sign the UN Global Compact, ST is committed to advancing the principles of human rights within its sphere of influence. The Company supports the United Nations’ Universal Declaration of Human Rights and all other major international human rights standards, including the core conventions of the International Labor Organization. In 2004, ST declared its official support for the draft ‘UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights’.

Since then the Company has continued to seek practical ways of implementing the Universal Declaration of Human Rights, in collaboration with stakeholders, through the working group ‘Entreprises pour les Droits de l’Homme’ (EDH), inspired by the Business Leaders Initiative for Human Rights (BLIHR). An internal working group on human rights, with members from different regions within ST, supports the Company in this initiative.

In 2001 STMicroelectronics founded a separate, non-profit organization, called the STMicroelectronics Foundation. This supports a worldwide computer literacy program, the Digital Unify, aiming to bridge the gap between those who have access to IT technologies and those who have not, by providing free computer training and access to the internet. By the end of 2008, the Digital Unify had trained over 55,000 people in 16 countries. The Company provides annual financial support to the Foundation (1,000,000 USD in 2007 and 500,000 USD in 2008) and allows its employees who wish to contribute to the Foundation’s activities to donate part of their working hours to this cause.

ECONOMIC
In 2008, STMicroelectronics was included in five main socially responsible investment (SRI) indices:

1. Advanced Sustainable Performance Indices Eurozone (France);
2. Dow Jones Sustainability Indices (US);
3. E Capital Partners Indices (Italy);
4. Ethibel Sustainability Index (Belgium);
5. FTSE4Good (UK).

The Company’s 2008 performance was also evaluated by the German rating agency Oekom. ST’s rating of Prime means that it is among the world’s best companies within the same industry. In 2008, ST was ranked the top sustainable company in the Paris CAC 40 for governance, social and environment issues.

HEALTH AND SAFETY
ST is among the top three semiconductor manufacturers worldwide in its safety record and is now extending its approach to also protect the health of employees outside the workplace.

In terms of Safety at Work, ST has improved its record from 0.93 Recordable Cases per 200,000 hours worked in 2002 to 0.39 in 2008. This is far better than the US industry average (5.6 in 2007) and even the US semiconductor industry (1.5 in 2007).

All ST sites have been OHSAS certified since 2003 but the Company recently evaluated over 20,000 workstations where chemicals were being used in order to eliminate all risks. This effort lasted for about 2 years, and is now completed.

A new Health Program for employees, launched in 2006, aims to provide the same level of health coverage for all ST employees, wherever they are, based on the best practices worldwide. This health program is based on three main areas:

- Individual medical check-ups (once/18 months)
- Bio-monitoring for employees exposed to chemical products
- Education: awareness on tobacco risks, healthy food, cancer prevention, cardiovascular risk, etc.

During 2008 the first 18-month round of medical examinations was completed. In 2008, 47,000 tests were undertaken, following the 63,500 carried out in 2007.

ENVIRONMENT
ST is proud to be one of the first global industrial companies to have implemented a policy of environmental responsibility. In mid-1990s, the Company published its first Environmental Decalogue, which included measurable, time-defined goals for reducing ST’s impact on the environment, going far beyond legal requirements.

Since 1994, ST has consistently reduced its consumption of energy, water and chemicals per wafer. Energy consumption per unit, for example, was reduced by 50% between 1994 and 2008, while over the same period, water consumption per unit has been reduced by 73%. From 2000 to 2008, chemical consumption decreased by 44%. This focus on reducing consumption allowed ST to save $303M in 2008--i.e. if the Company had maintained the same levels as in 1994 in terms of energy, water and chemicals consumption per wafer, it would have spent $303M more.

ST considers global warming as a critical issue and works hard to decrease the level of greenhouse gases (GHG) released into the atmosphere through its manufacturing activities. Its ambitious Carbon Roadmap aims to achieve CO2 neutrality with respect to the Company’s direct emissions by the beginning of next decade. With impressive results – a reduction of 31% in total emissions over the five past years – ST is on target to reach this objective. For example, direct net emissions due to the use of Perfluorinated Compounds (PFCs) have decreased by 39% since 2004 as a result of investment in point-of-use abatement systems and using alternative substances where possible.

ST supports the evolution of legislation concerning the use of hazardous substances in products, although not all practical aspects are defined and not all consequences are identified yet. The current legal reference is the European directive RoHS (Restriction Of Hazardous Substances) covering Lead, Cadmium, Mercury, Hexavalent Cromium, and the flame retardants Polybrominated biphenyl (PBB) and Polybrominated diphenylethers (PBDE).
The RoHS limits for these substances are 1,000ppm, except for cadmium, which has a limit of 100ppm.

ST’s self-imposed limits are much stricter than the legal requirements. For example, where RoHS allows up to 1,000ppm of Mercury, ST allows no more than 5ppm in assembly materials and less than 100ppm in packing materials for the sum of Cadmium + Mercury + Lead + Hexavalent Chromium. Where RoHS allows up to 1,000ppm of PBB and PBDE, ST allows no more than 5ppm, which is the practical limit of detection. RoHS-like legislation is likely to spread geographically, starting with China, and ST is already far in advance of expected limits.

PRODUCT RESPONSIBILITY
The semiconductor industry can play a key role in reducing energy consumption, both in terms of the energy used by the component and the energy-saving characteristics that the ST component brings to the final electronic appliance. For example - as part of its determination to be the undisputed leader in the area of power solutions - many of ST’s products are dedicated to power management, from components in domestic electronic appliances such as refrigerators, televisions and washing machines to industrial power management, lighting and automotive applications.

ST technology often makes a substantial difference by enabling considerable reductions in overall energy consumption. For example, the increasing demand for new energy sources such as solar and wind power requires innovation in power electronics. In this field, ST has started to develop new solutions to manage solar cells or wind turbines.

In 2008, ST introduced a patented monolithic MPPT (Maximum Power Point Tracker) device that increases the average efficiency of photovoltaic panels by 3-6%, especially with partial shading. The Company also demonstrated new automotive power train solutions that significantly contribute to the reduction in fuel consumption (up to 15%) in Fuel Efficient Vehicles.

To further improve ST quality, the Quality Excellence in Mind program, completed in 2007, was launched to reinforce the engagement and commitment of ST people to excellence in product quality and customer satisfaction. In 2008, ST began a related campaign called Quality Excellence in Practice (QEP). This program is designed to ensure that ST people have the required skills and knowledge about ST quality tools, methods and procedures and that they apply them with discipline in their daily jobs.

STMicroelectronics’ position on the use of its products in military applications is clearly stated in its Principles for Sustainable Excellence: it will not sell products that it knows are to be included in weapons. In 2007, ST’s Corporate Ethics Committee created a position paper providing sales people with detailed guidance on what the Company regards as a weapon - which includes, for example, equipment used to guide an airborne weapon towards its target - and how to check the end uses of its products.

SUPPLY CHAIN
Although ST does not sell directly to consumers, it strongly supports the growing trend toward establishing “clean” supply chains in which all players share agreed standards in environment, human rights, and other socially responsible areas. This was the starting point for the creation of the EICC (Electronics Industry Code of Conduct), of which ST is a full member. The Company is committed to applying this code to itself and to ensuring its application to its upstream suppliers and in 2008 became one of the first companies to implement the EICC’s phase 3 validation process.

A very important part of the 2008 Quality and Sustainable Excellence programs activities was dedicated to the reinforcement of the control of hazardous materials in the Company’s global supply chain. A new release of its technical specification defining requirements related to the control of hazardous materials was published in June 2008 and has been successfully deployed to partners for full integration and compliancy verification. At the end of 2008, 92 % of key material suppliers and 84% of Back-end subcontractors had sent complete answers to the requests.

The field of Sustainable Development is a competitive paradox: ST aims to be the industry leader but also wants everyone else, including its competitors, to be as close to it as possible in protecting the planet! For example, ST develops a new way of reducing its own energy consumption it not only implements it in all appropriate ST sites around the world but is willing to share the knowledge and even encourage competitors to use it, even though this makes them inherently more competitive. This represents a new industrial dynamic which ST calls Responsible Competition and the Company aims to be the most responsibly competitive semiconductor manufacturer in the world.

November 2009

Note to Editors:
For more information please refer to ST’s Corporate Responsibility Report 2008, which is available for download at: http://www.st.com/stonline/company/sd/report08/cr08.pdf