Corporate_Environment_Responsibility_Program

Flextronics’ Corporate Environmental

Responsibility Program

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Index

S.No. 1. Introduction 2. Major Environmental Industry Drivers 3. The Price of Non-Compliance to Our Industry 4. Flextronics’ Corporate Response 5. Employee Response 6. Benefits 7. Summary

Unit Title

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Unit 1: Introduction

Welcome to Flextronics’ Corporate Environmental Responsibility Program.

Before we begin, let us take a look at how the course is organized and how to navigate within the course.

At the bottom left of the screen you can view the following:

• A slide progress bar displaying the percentage of completion of the current slide.

At the bottom right of the screen you can view the following:

• The Course Map button, which displays the complete list of units and corresponding sub

topics. You will see tick marks against those topics you have completed.

• Audio on/off buttons: You can play or mute audio with this feature.

• Play/Pause buttons: You can play or pause the screen with this feature.

• Page Controls: Help you navigate back and forth within the course.

At the top right of the screen you can view the following buttons:

• Notepad: You can use the notepad to enter and save notes.

• Print: Allows you to take a print-out of the entire course.

• Help: Takes you to the help page.

• Exit: Takes you out of the course.

At the right side of the screen you can view the following buttons:

• Menu: The menu displays all the units in this course. The highlighted item is the current

slide you are viewing.

• Script: Displays the transcript of the audio narration.

Let’s get started. Happy learning!

Course Goal

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Environment Enabling Sustainability Across Our Value Chain

Our planet’s rapidly growing population and the pressures of economic development have caused areas of our environment to suffer continuous degradation, sometimes resulting in permanent damage. This has been recognized, and Flextronics is continuously building

sustainable foundation capabilities that enable us to design, manufacture, ship and service products in an environmentally friendly manner to preserve the sanctity of our environment. We also ensure that all our global operations meet or exceed both international and local environmental laws and guidelines.

The Agricultural Revolution

From the 18th century to the end of the 19th century, the Agricultural Revolution

transformed the earth’s surface when one-tenth of the land surface of grass and trees was cleared to plow and plant crops. This period of rapid growth and improvements in farm technology restructured the world’s food economy.

The Industrial Revolution dramatically expanded economic activity in its shift from wood to fossil fuels, harnessing vast amounts of energy stored beneath the earth’s surface. While the effects of the Agricultural Revolution transformed the earth’s surface, the effects of the Industrial Revolution continue to transform the earth’s atmosphere.

The Environmental Revolution resembles the Industrial Revolution in that the sustainability of each is dependent on shifting to a new energy source. And like both earlier revolutions, the Environmental Revolution will affect the entire world.

This new revolution is creating chaos in our Information and Communications Technology (ICT) industry, as well. With the fast pace and complexity of confusing compliance requirements, we are facing new challenges while we will hopefully enjoy new business opportunities.

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Course Objectives

At the completion of this course, you will be able to:

• Identify the major environmental industry drivers that are influencing changes in our

corporate and social behavior. • • • • •

Explain the price of non-compliance to our industry.

Describe the difference between the traditional product lifecycle and the environmental product lifecycle and its associated requirements.

Describe key points of Flextronics’ environmental policy and corporate response to this new world.

Describe the benefits of Flextronics’ 5 x 5 Environmental Strategy and have a clear understanding of the handful of messages that accompany it.

Identify one or two personal behaviors that you will change in support of environmental stewardship.

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Unit 2: Major Environmental Industry Drivers

There are five significant prime movers affecting our industry.

Global Regulatory Agencies

Global environmental regulatory activity has escalated in the last ten years and is predicted to continue at very high level.

Not only are we seeing a spike in the number of new global regulations, the complexity of these new laws is increasing and there seems to be little harmonization among them.

These new environmental requirements cover a multitude of categories spanning hazardous substance control, energy and water consumption, e-waste, packaging and labeling,

batteries, pollution control, Green House Gas Emissions (GHGE) and a much higher level of public transparency into our environmental performance.

Major regulations and directives include:

• RoHS – Restriction of Hazardous Substance Directive. This European directive restricts

the use of six hazardous materials in the manufacture of various types of electronic and electrical equipment, but a new version of RoHS (RoHS2 Recast) is adding at least 11 new substances and is planned for release in 2011. This chemical substance directive has now been globalized and versions in other regions of the world are now applicable. •

WEEE – Waste Electrical and Electronic Equipment directive. This European Community directive aims at the collection, recycling and recovery of all types of electrical goods to solve the problem of toxic e-waste. The prime responsibility for WEEE belongs to the brand company putting the product on the market

REACH – Registration, Evaluation, Authorization and Restriction of Chemicals regulation. An EU regulation that addresses the production and use of chemical substances and their impact on human health and the environment. REACH requires significant

identification, tracking and reporting of chemical content that is shipped into the EU. Over 350 new chemical substances have been identified to be substituted over the next 15-20 years.

EuP – Energy-Using Products. Manufacturers will be required to track the amount of energy used to manufacture a product; how much energy a product uses during its life; and how much energy is used in the product take-back process to comply with this directive.

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Governments

There are more than 50 countries that have governmental institutions or regional entities that monitor and direct environmental compliance for their countries.

Non-Governmental Organizations (NGOs)

Green Peace issues a quarterly “green” scorecard for all major-brand high-tech companies. Good Electronics, a coalition of 27 global NGOs, is an international network on Human Rights and Sustainability in Electronics. Participating companies in the Good Electronics network refer to a jointly elaborated set of demands, known as the Good Electronics

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Common Demands. These demands cover the overall production cycle of electronic equipment, from extractives to production, to e-waste and recycling.

Customers

Our customers have their own internal requirements that we must adhere to, in addition to regulations and laws associated with different countries and regions where they do business.

Consumers

Consumers and their purchasing dollar will assert an increasingly larger role in influencing environmental regulation.

According to a 2008 report published by OTX research a global consumer research and consulting firm, seven out of ten consumers have visited social media websites; and of those nearly half made a purchasing decision based on the information they gathered. Sixty-percent reported that they are likely to use social media websites to pass on information they receive online.

It is imperative that companies that operate in our industry become aware of current and future requirements and trends, and build appropriate foundations for commensurate scaling.

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Unit 3: The Price of Non-Compliance to Our Industry

We must respond with a paradigm shift in our thinking with new strategies, tools, processes, systems and a renewed commitment to understanding and to meeting or exceeding these new global requirements if we are to stay competitive.

Without a meaningful commitment, we run the risk of reputational, legal and financial damage which could ultimately lead to adverse customer relationships, penalties or fines and level or declining revenue and impacts to profits and earnings-per-share.

The traditional product lifecycle has been supplanted by the environmental product lifecycle. Today’s environmental product lifecycle is a Cradle2Cradle, closed-loop process where a product is evaluated at the end of its life for assembly recovery value and recycling. The new closed-loop process brings incremental compliance challenges as well as some very significant potential new business opportunities. Not taking advantage of these new market opportunities could be a form of non-compliance consequences (i.e. revenue, revenue/

profit). As a company we should understand where these opportunities are and be ready to harness them.

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Unit 4: Flextronics’ Corporate Response

Environmental, Health and Safety Policy

Flextronics recognizes its responsibility as a corporate citizen.

Through our Environmental, Health and Safety (EHS) Management systems:

• We will take the necessary measure to provide a safe and healthy workplace, protect the

environment, conserve energy and natural resources and prevent pollution and labor risks by applying appropriate management practices and technology.

• We will monitor and measure our performance and comply with all applicable EHS legal

and other requirements we subscribe to maintain our status as a responsible corporate citizen in all locations in which we operate.

• We will periodically review our practices and procedures to address changing

circumstances, and to continually improve our performance.

• We will openly make this policy available to all persons working for or on behalf of

Flextronics, Vendors, customers and the public.

• We will promote and foster a culture where it is responsibility of its management,

persons working for or on behalf of Flextronics, and business associates to work in partnership for the benefit of the environment and the health and safety of all. •

While not officially part of our environmental policy yet (coming), the global requirement to accurately track, report and reduce consumption of our natural resources is and will continue to be, a significant industry priority. Flextronics is committed to proactively participate in this global effort to preserve our earth’s natural resources.

Vision

Helen Keller said, “The only thing worse than being blind is having sight but no vision.”To be successful in this new environmental space, a paradigm shift in behavior must occur, both in our business and personally. We can no longer think in traditional ways. We are in

uncharted territory and the companies that determine how to get to a stewardship level first will reap the benefits.

We need to abandon the tactical risk- avoidance - only approach and adopt a strategically-thinking proactive mentality.

Our vision is to build environmental sustainability platforms that mitigate risk and generate value that enables creating value that increases customer competitiveness. Roadmap to Achieving Environmental Stewardship

Flextronics’ proactive response includes a multiple-step roadmap that leads to

environmental stewardship. This roadmap clearly depicts shifting away from a defensive, regulation-driven posture to a stronger offensive, value-generating position.

Compliance-Driven – Traditional compliance strategies will not be sufficient to

differentiate Flextronics from our competitors in the future. Successful companies in the new environmental marketplace must build on a compliance-driven foundation that aims toward environmental stewardship.

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Growth-Driven – Flextronics is positioned for growth with the establishment of our robust 5-Pillar Environmental Framework that we will continually mature and monitor. We aim to create a Way-of-Life making conscious environmental behaviors a part of our corporate and personal DNA. Our 5-Pillar Environmental Framework and our CLEAN value proposition are springboards to developing sustainable corporate and personal behaviors.

Stewardship-Driven – Our ultimate achievement is to lead in the new environmental space. This stewardship role demonstrates that we clearly understand the global needs of our industry and can leverage our environmental foundation to anticipate our customers’ needs. Additionally, it implies that we have an effective environmental management system in place designed to encourage performance monitoring and continuous improvement through regular assessments, audits, KPIs (Key Performance Indicators) and transparent reporting.

Environmental Strategy

Flextronics has developed a robust comprehensive environmental strategy that is designed to accommodate both existing and future environmental requirements.

The “5 x 5 Strategy” consists of a five-pillar Environmental Framework and a five-part CLEAN Value Proposition.

5-Pillar Environmental Framework

The environmental framework describes five categories of environmental concern: • • • • •

Chemical Substance Management Take Back and Recycling Pollution Control Resource Conservation Climate Change

Chemical Substance Management

This pillar focuses on effective management and control of all identified hazardous or chemical substances in the product and manufacturing process.

Our objective is to design, source, manufacture and repair and recycle with

environmentally-responsible materials and environmentally-responsible suppliers. We are pragmatic in ensuring effective management and control of all chemical substances in products and manufacturing processes. We help our customers and their suppliers

understand direct material compliance levels and substance content. In our ODM business, all of our designs are required to have a full material content declaration. Take Back and Recycling

This pillar focuses on electronic product take back, reuse, recycling and ethical disposition of scrap materials (asset recovery with zero waste to landfills).

We practice take-back, reuse, recycling and ethical disposal of scrap material. This applies to the design, manufacturing and after life elements of the entire product life cycle. We

design for disassembly, recyclability, and zero e-waste to landfills. We make partnering with

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ethical recycling and scrap vendors a high priority. Flextronics also provides asset recovery services.

Pollution Control

We ensure that proper management systems and controls are in place to restrict or ban contaminants from escaping into the air, ground and water. Our objective is to control site pollution levels to meet or exceed all international and local laws/ guidelines. All our global manufacturing sites are either ISO14001 certified or have plans to achieve certification. Resource Conservation

Our resource conservation program focuses on the reduction of energy and water

consumption. Flextronics designs and builds energy efficient products which are compatible to renewable sources of recharging. We are also focusing on water recycling & treatment efforts across our sites globally. Climate Change

This pillar focuses on reducing and reporting on Greenhouse Gas (GHG) Emissions and applies to the design, sourcing and manufacturing elements in the product lifecycle.

Flextronics’ commitment is to provide a global footprint of our carbon emissions and commit to reducing them in support of the global warming challenge. We submit our global footprint to the Carbon Disclosure Project (CDP).

As a company, Flextronics has committed to a 15% carbon emissions reduction per revenue dollar by 2015. In the longer term, we will explore carbon trading as an alternative to meet carbon dioxide emission targets established in specific global regions.

All global sites will proactively participate in the development and application of best practices targeted at continuous CO2 reduction.

Customers are asking for guidance on CO2 emissions in regards to the sourcing and

manufacturing of their products. We are able to accommodate this requirement today, but only manually. An automated system will be available in late 2010 that will allow customers to retrieve their CO2 emissions. Five CLEAN value propositions

Complementing our Five Pillar environmental framework is our Five CLEAN value propositions, which include:

Compliance with all legal and customer requirements

Flextronics is dedicated to understand and effectively translate all global legal and customer requirements into actions that will mitigate risks and maximize compliance.

Liability and cost protection for Flextronics and our business partners

We are dedicated to create win-win agreements with all our business partners. We ensure that roles and responsibilities are clearly defined to minimize risk and exposure.

Environmental stewardship

We aspire to be stewards of the environment and our communities and to fulfill our business needs in an environmentally responsible manner.

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Asset recovery

Flextronics has established a B2B asset recovery business and will further expand this business to accommodate the expected growth of returned electronic products. This will ensure that electronic waste do not end up in landfills.

New business opportunity

The current emphasis of environmental preservation has now opened the doors to new business opportunities. These span the entire “Cradle2Cradle\" life cycle. Flextronics is preparing capabilities and services that will enable new businesses to come to fruition.

All five pillars of our environmental framework are examined against all five elements of the value proposition to ensure that we are maximizing compliance, minimizing cost and exploring any new market requirements.

Flextronics’ Environmental Management System

Flextronics’ environmental management system consists of a Business Model and a Governance Model. Business Model

Our environmental management system is a closed-loop system that consists of four major phases. This closed-loop process allows for feedback that can enter anywhere in the model and be fed back into the process, assuring continuous improvement. • • • •

Discover – Monitoring of environmental influencers - regulatory activity, customer requirements, and consumer habits.

Design – Determining the strategic and tactical implementations to make in response to our monitoring activities.

Deliver – Moving implementations into global operations, design centers, and through the Flextronics supply chain.

Sustain – Maintaining and improving implementations through assessments and audits and the feedback mechanisms.

Flextronics’ Environmental Management System Our governance structure starts with an Executive Advisory Committee (EAC) that is made up of senior-level executives that provide guidance, support and approval of environmental strategies and investments. The next level - the Corporate Environmental Leadership Committee (CELC) - is made up of a senior leader and cross-functional senior managers who are tasked to monitor global environmental activities before translating them into meaningful strategies, processes, systems, tools, metrics and implementation plans.

The main body of CELC is comprised of six Functional Work Groups (FWGs) that are focused on effective competency building and certification throughout each of their functional disciplines internally across all segments and business units, as well as externally throughout our supply chain transition to Segment BU.

Mission

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Flextronics’ environmental mission is to ensure that we have robust business processes in place all aimed at environmental sustainability.

We will accomplish this mission through environmentally-compliant

• Product designs

• Manufacturing processes and suppliers • After-market processes • Employee behaviors

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Unit 5: Employee Response

As a critical priority of our roadmap, Flextronics is asking for a cooperative response from our employees to identify and change personal behaviors that will sustain a shift towards becoming environmental co-stewards.

Some ideas for personal behavior change include:

E-cycle electronics

Toxic computer

Conserve resources in and around your home

• Purchase energy efficient appliances and home electronics. •

Replace incandescent light bulbs with energy-efficient lighting. Artificial lighting

consumes almost 15% of a household's electricity use. Use of new lighting technologies can reduce lighting energy use in homes by 50%–75%.

Landscape for water conservation – A well-designed landscape that considers the climates of your home can reduce heating and cooling costs and conserve water. On average, landscaping for energy efficiency provides enough energy savings to return an initial investment in less than 8 years.

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Reduce greenhouse gas emissions

• Gases that trap heat in the atmosphere are called greenhouse gases.

• Fossil fuels are made up of hydrogen and carbon. When fossil fuels are burned, the

carbon combines with oxygen to produce carbon dioxide (CO2).

• World CO2 emissions are expected to increase by 1.8 percent annually between 2004

and 2030. Much of the increase is expected to occur in the developing world where emerging economies, such as China and India, fuel economic development with fossil energy.

• Emissions from the countries outside the Organization for Economic Cooperation and

Development are expected to grow above the world average at 2.6 percent annually between 2004 and 2030.

Reduce trash

• Landfills are expanding every day. Between 1960 and 1990, trash production has

doubled, and since then remains at about 4.5 pounds per person per day.

• Buy minimally packaged goods.

• Less packaging could reduce your garbage significantly, saving 1,200 pounds of carbon

dioxide and $1,000 per year.

• If you consider a certain products' packaging to be excessive, mail it to the company

with your challenge to the company to reduce its packaging; include suggestions on how if you have ideas.

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Unit 6: Benefits

Flextronics believes that everyone benefits when our 5 x 5 Environmental Strategy is implemented effectively. This is what we believe will happen.

The customer is seen as: • As a brand of choice

• Recognized in its industry • As a responsible partner

• With a competitive advantage

Flextronics is seen as:

• As the employer of choice • As the partner of choice • As an investment of choice • With a competitive advantage

The world sees:

• Improvements to the earth • Improvements to its people • Green products

• Customer satisfaction

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Unit 7: Summary

Flextronics is well positioned to lead the ICT industry in the environmental revolution. We are committed to realizing our vision of environmental sustainability through the supportive structures that we have assembled through our Environmental, Health and Safety Policy, Vision, Roadmap, Environmental Strategy, Governance Structure and our Mission.

Major Corporate Messages

• Environmental requirements are dynamic and complex, and impact Flextronics, our

customers, and the entire supply chain, in all markets.

• Flextronics has a robust environmental compliance management system.

• Flextronics teams worldwide are actively delivering full product life cycle environmental

solutions.

• Compliance is not free! Responsibilities and deliverables vary by business

model and contract.

• The environmental capabilities and services we create increase customer

competitiveness while enabling industry-wide global stewardship. Our “Green” legacy will be measured on the value we provide to our customers.