Chris Librie, senior director of environmental, social and governance (ESG) at semiconductor equipment company Applied Materials speaks with Environmental Finance about the challenges of curbing emissions in a rapidly growing sector.
Environmental Finance: You're in an industry where greenhouse gas (GHG) emissions are predicted to quadruple by 2030, as revenue doubles. Why is that and what can be done about it?
Chris Librie: Semiconductors are processing increasingly complex operations given the rise of artificial intelligence (AI), electric and autonomous vehicles, the Internet of Things and cryptocurrency. All of these are data-hungry applications that require more complex processing, which consumes more energy.
The simplest option we have as an industry to prevent this great rise in emissions is to increase our purchases of clean energy. An issue with renewable energy is its intermittency. So, in order to make sure that our industry has the power it needs, one option is to offset that intermittency with storage capabilities – batteries, in other words. Another is to find more continuous sources of carbon-free energy like geothermal or even nuclear.
Applied Materials is a member of the Semiconductor Climate Consortium. It's a group of about 80 companies in our industry representing the entire value chain – from suppliers, to companies like Applied who make the chipmaking equipment, to companies that make chips, and those that use them in devices and data centres.
We've determined that 80% of the semiconductor industry's carbon footprint could be eliminated with clean energy. That's the silver bullet and one thing this industry can really push on, but it's not the easiest silver bullet to implement.
Another is efficiency, Applied Materials has a team in our research and development department who is working to make the chipmaking machines 30% more energy efficient. That will reduce the demand for energy considerably. We have a number of other solutions in our arsenal of eco-friendly solutions that we can offer our customers to help their chip-making manufacturing facilities.
So clean energy and increased energy efficiency are the primary means that we have to significantly reduce the carbon footprint of this industry. Supporting the need for more energy-efficient computing to combat the projection that the industry's emissions might quadruple is a very important rallying point for us as a company.
EF: You released your 2040 Net Zero Playbook™. How confident are you that this industry can achieve net zero by 2040?
CL: I feel like there's a genuine effort to be as proactively responsible for our environmental footprint given what we know about our industry's growth trajectory. As an industry, I could see longer timeframes being needed. But the reason we built our playbook to 2040 is because we want to get there faster. We also think aiming to get there faster gives us some room to manoeuvre – after all, the Paris Agreement calls for net zero by 2050. Driving to net zero faster helps create the positive momentum for industry collaboration.
We also see a huge advantage in being able to provide eco-friendly solutions to our customers, many of whom have net zero goals. If you look at companies like Apple, Microsoft and Google, they are targeting net zero by 2030. So they're putting pressure on their suppliers, and we want to make sure we're able to help our customers, who are those companies' suppliers. It's a virtuous circle if you think about this value chain pressure that's making us all move in lockstep. But whether we all get there on the same time scale or not is another question.
EF: What role do you feel reporting has to play in this transition by either 2030 or 2040?
CL: The old adage of you can't manage what you don't measure applies here. Reporting plays an enormous role in being transparent and driving performance, which is incredibly important to stakeholders like employees, customers and investors. So we've set goals, whether they're for 2030 or the 2040 Playbook, and as we make progress, we need to tell people how we're tracking and demonstrate that are we making the progress over the necessary time. Reporting plays an important role there.
Reporting also galvanizes the organisation as a team to accomplish these goals. It gives people a great opportunity to show what they're doing and how they're succeeding. Environmental, social and governance (ESG) is a team sport; for instance, the folks going after the 30% reduction in energy consumption by our equipment is a very important group for us. We must keep everybody organised and focused on the goals, and the reporting helps to do that.
EF: Do you see yourselves looking to lead this industry by setting more ambitious targets than perhaps some of your competitors are?
CL: We've tried to raise the bar in terms of the goals and the structure of what we're trying to do, but also in tying this back to our business and business strategy.
We have an ESG framework that we call 1x / 100x / 10,000x, and in that framework 1x refers to our business and what happens within our four walls, so to speak. The 100x is our value chain and reflects our suppliers and our customers – it is actually about 100x the size of our own footprint. And finally, the 10,000x is the impact of electronics, globally; it's about the chips that are being used at the data centre that's processing all that data, the AI and autonomous vehicles and Internet of Things. So that framework is comprehensive, and I think that's raised the bar for Applied and our industry.
We want other companies in our industry to emulate us and to come with us and collaborate with us. We're not going to implement the Net Zero 2040 Playbook on our own, it really requires collaboration. A lot of what we've tried to do is not only set ambitious goals for ourselves, but also activate and engage our suppliers and customers in that important pursuit.
For more information, visit Applied Materials
