Samsung Electronics manufactures a wide range of consumer and industrial electronic equipment and products, such as semiconductors, personal computers, peripherals, monitors, televisions, and home appliances.
Designing electronics with limited environmental impact will be essential to the future of the electronics industry in a resource-constrained world. The demand for Information Technology (IT) devices and services is expected to exponentially grow as a larger share of the population obtains material wealth. The main challenge to IT manufacturers is how they will meet this market demand in the face of increasing resource constraints, and how more products can be safely and efficiently manufactured and managed at end of life.
In 2013, 100% of Samsung’s products achieved its “Good Eco-Product” rating; this rating is defined as a product that includes two to three eco-friendly features, such as enhanced energy efficiency or the use of eco-friendly materials. One example of a product that has the “Good Eco-Product” rating is the Exhilarate Smartphone. This phone is built with 80% recycled materials and is free of brominated flame retardants, PVC (polyvinyl chloride), Beryllium, and phthalates.
According to StEP (Solving the E-Waste Problem) Initiative (a partnership of United Nations organizations, industry groups, and non-governmental organizations), in 2012 48.9 million tons of e-waste was produced. This figure is expected to increase by 33% by 20171. Electronic waste contains many valuable and precious materials. Using the personal computer as an example—a normal Cathode Ray Tube computer monitor contains the toxic substance cadmium, which can bio-accumulate in the environment and is extremely toxic to humans. In addition, it contains PVC, which when burned, can release carcinogenic dioxins into the atmosphere.
In 2013, Samsung collected and recycled almost 350,000 tons of electronic waste. In addition, the company has set a goal to increase the use of recycled plastic to 5% by 2015; in 2012 the current proportion of recycled plastic totaled 3.36%.
All companies, regardless of their industry classification, face increasing costs for key resources and services necessary for their operations, such as electricity, waste disposal, transportation, and raw material procurement. Companies are increasingly being pressured to report on the environmental impact of their operations and establish initiatives to mitigate impact. According to the 2014 PricewaterhouseCoopers annual CEO Survey, 80% of CEOs interviewed believe it is important to measure and try to reduce their company’s environmental impact, which is an increase from 48% in 2013.2
In 2012, Samsung undertook almost 700 projects to conserve energy and reduce greenhouse gas emissions worldwide. As a result, the company reduced absolute emissions by 980,000 tons when compared to business as usual. Additionally, Samsung’s waste decreased by 21% and its water consumption dropped by 45% for its global operations on a tons/sales basis.
Portfolio 21 has encouraged the company to increase the number of audits it conducts as well as increase its reporting on the findings of these supply chain audits.
Although Samsung has minimized its direct environmental impact across many of its KPIs, Portfolio 21 would like to see the company set long-term reduction goals across all of its KPI metrics (e.g., energy, waste, water, and carbon dioxide emissions).
To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 8/31/14 and may not reflect current opinions or subsequent events.