Can Microchips Turbocharge Sustainability Improvement?

Many companies today approach sustainability on a macro level, peering past the four walls of their own operations to address the issue across their entire value chain. NXP Semiconductors, based in Eindhoven, the Netherlands, goes further. As NXP President and CEO Kurt Sievers notes, “We believe our technology innovations will have an even greater positive cumulative impact on the world’s sustainability targets than what we achieve in our own operations.” He points to the critical role that semiconductors play in electrified transportation and in the creation of smart homes and smart cities as just two examples. “In fact,” he notes, “Goldman Sachs recently reported that one ton of CO2 emissions from a semiconductor factory reduces five tons of CO2 worldwide.” We sat down with him to discuss NXP’s sustainability goals and its broader vision for global improvement.

Bain & Company: Let’s start with your own organization. What are your current sustainability goals and areas of focus?

Kurt Sievers: We have established clear goals, such as achieving carbon neutrality by 2035, minimizing our impact on global water supplies, and developing collaborative circular economy solutions. Our long-term ambition is to collaborate with our supply chain to develop better, more sustainable products. We know we can add value by looking at our entire supply chain and asking at each point if any or all waste can be repurposed as an input to the system.

Bain: What do you perceive as the most significant challenges and opportunities for sustainability in the semiconductor industry?

Kurt: Our world—and industry—is on an exciting journey of transformation. As semiconductor technology evolves, manufacturing processes are becoming more complex. Smaller, faster semiconductors require more process steps to produce, which means production consumes more and requires more processing chemicals. That, in turn, translates to a big challenge—an increased need for energy and water.

That said, our efforts to conserve electricity, optimize processes, increase renewable electricity use, upgrade tools, and install abatement equipment resulted in a decrease in absolute and normalized Scope 1 and 2 emissions in 2022. We are also increasing our water recycling rates, with plans to achieve a water recycling rate of 60% by 2027.

Bain: We mentioned the role of innovation earlier. Can you provide some examples?

Kurt: Last year, we introduced Ultra-Wideband radar technology for presence detection. In smart homes, presence detection enables light, sound, and other functions to adjust as you move from room to room, so you only use energy where and when it’s needed.

We also deploy machine learning and artificial intelligence in our i.MX 8M Plus microprocessors to help save energy in other unexpected ways. Our smart refrigerator system can track the freshness of fruits, vegetables, and other perishables to help reduce food waste and make it easier for households to save on groceries and prevent food waste. Extend that benefit across entire communities, and the result is more food availability with higher energy efficiency.

Our automobile EV components are used throughout the electric powertrain to help improve energy management; extend range; add efficiency; and, by enabling seamless connectivity and safety-critical software updates delivered directly to the vehicle, help keep both the car and the driver safe.

Bain: How do you engage and educate employees on the significance of sustainability, including your top leadership team?

Kurt: We communicate through numerous platforms and channels, including town halls, meetings, our intranet and Internet sites, internal messages, social media, blog posts, and newsletters that report on our sustainability efforts. Last year, we incorporated sustainability goals into our annual incentive plan for all employees. We also have an employee resource group dedicated to these issues, called “No eXtra Planet,” which brings together environmental-protection enthusiasts concerned about the ongoing climate and biodiversity crisis. This global group creates opportunities for team members to actively engage in and support our journey to climate neutrality through ongoing dialogue and grassroots actions, including a number of Earth Day activities around the world.

And 2023 marked our first year participating in Earth Hour, an initiative started in 2007 as a symbolic moment of commitment against climate change and biodiversity loss.

Bain: How has working with Bain helped you advance your mission?

Kurt: It’s important for us to engage with partners who share the same level of commitment to environmental sustainability. Bain has been an excellent resource for expertise, ideation, and insights as we continue on our journey. Driving positive change and sustainable growth at a global level is only possible if there is a network of support, and Bain has been a great partner and resource.

Bain: Given the scope of your sustainability efforts, what have you learned? What advice do you have for other corporate leaders?

Kurt: We say that sustainability is a journey, not a destination. It’s a multifaceted challenge that requires ongoing dedication as well as collaboration with partners outside your company. Last year, for example, we became one of the founding members of SEMI’s Semiconductor Climate Consortium, the first global, industry-wide collaborative focused on addressing the semiconductor industry’s response to climate change. This is an excellent example of an opportunity to participate in collaborative industry partnerships to address a global challenge that requires wide support and commitment.

Bain: What’s next on your sustainability agenda?

Kurt: Our next step is to continue to diligently make progress and hold ourselves accountable to our environmental, social, and governance goals, including reducing carbon footprint 35% by 2027, becoming a carbon-neutral company by 2035, and achieving a water recycling rate of 60% by 2027.

In addition, listening to and collaborating with our customers is always top of mind. We want to ensure there is alignment with their priorities as they march toward their own sustainability goals, while also helping them achieve any regulatory requirements. And we continue to work closely with suppliers to ensure working conditions in our supply chain are safe and our products and processes are environmentally responsible.