ESG Case Study – Micron Technology, Inc. | ETF Trends

By Sara Rodriguez, Sage ESG Research Analyst

About Micron Technology

Micron Technology, Inc. is an American semiconductor company that produces a variety of memory and storage products. Micron is the fifth largest semiconductor company in the world by revenue ($21.4 billion in 2020) and operates in 17 countries. The processors and microchips that Micron produces are used in computers, consumer electronics, automobiles, and telecommunications. Micron’s operations consist of both the research and design (R&D) and the manufacturing of semiconductors, which is notable as some companies in the industry have chosen to specialize in either R&D or manufacturing, due to the extremely high cost of each process. Micron builds its memory chips at fabrication plants, or “fabs” in Singapore, Taiwan, Japan, and the United States.

Semiconductors are fundamentally integrated into everyday life – they have been compared to both toilet paper and oil. Our reliance on these chips has been compounded by our experience with the Covid-19 pandemic, as demand for electronics has increased. Quarantine prompted a massive shift from offices to working from home, and semiconductors helped to power the laptops and webcams we used to work; however, temporary factory closures and disruptions in day-to-day operations have put pressure on supply. The rebound of the global economy has also caused disruption in supply chains, exacerbating the existing shortage. Reliance on chips is almost ubiquitous, and Goldman Sachs has calculated that 169 American industries are currently affected by the chip shortage, most notably the auto industry.

Semiconductors are at the heart of the intersection of tech and sustainability. Semiconductors will power the future of artificial intelligence, autonomous vehicles, the Internet of Things, and the continuing trend of remote work. Companies across industries will use these technologies to achieve a variety of environmental, economic, and social goals. The semiconductor industry relies on deep global supply chains and access to overseas markets, presenting a number of sustainability risks and opportunities. Currently, the industry faces regulatory uncertainty, making good ESG management paramount to its future.


Semiconductors will provide the foundation on which new sustainable technologies will run. To truly move the needle toward a more sustainable future, it is important that semiconductors be produced in a way that will not jeopardize the efficacy of the end-use product; however, the production of semiconductors is intensive and requires numerous inputs, including raw materials, chemicals, energy, and water. Each of these presents both risks and opportunities related to corporate social responsibility.

The manufacturing of semiconductors is an energy-intensive process that can create significant carbon emissions and involve high energy costs. Production of semiconductors causes emissions from direct operations, such as the greenhouse gases (GHG) used in the manufacturing process (Scope 1 emissions), and from purchased electricity used to power a semiconductor fab (Scope 2 emissions). Micron’s Scope 1 emissions involve fluorinated gases, which act as coolants during the manufacturing process but are considered the most potent and longest-lasting type of GHG emitted by human activities. Micron has formed specialized teams to focus on these gases with the goal to transition to gases that potentially contribute less to global warming, and the company also has a longer-term goal of achieving a net-zero manufacturing process.

Most of Micron’s emissions are Scope 2 emissions, which result from purchased electricity that Micron uses to power its fabs and office buildings. To address these emissions, Micron is working to follow LEED criteria in the construction of new buildings and has set a goal of transitioning to 100% renewable energy in the United States by 2025. While admirable, most of Micron’s operations take place overseas, and foreign markets do not always offer the same opportunities for renewable energy sourcing. Additionally, memory and storage affect the sustainability of a variety of end products, from computer energy to vehicle safety. While Micron does not report its Scope 3 emissions on its corporate sustainability report (CSR), it does site that 64% of the company’s revenue comes from low-carbon (energy efficient) products. Micron has committed to spending approximately $1 billion over the next five to seven years to develop technologies to further drive down the consumption of resources and generation of byproducts in production.

Innovation is key to driving sustainability in semiconductor manufacturing. Smaller chips offer greater efficiency and performance, lower production costs, and a lower price. This concept is called Moore’s law—named after Gordon Moore, the founder of Micron’s industry peer Intel—and states that the number of transistors in a semiconductor doubles every two years. Greater performance means that with each successive generation of product, the semiconductor industry produces microchips with fewer resources and fewer emissions per unit of production. This can make a big difference in only a short amount of time, and Micron has been able to reduce its combined Scope 1 and 2 GHG emissions per unit of production by 36% since 2018. Micron’s long-term GHG emissions goals include a 75% reduction in emissions per unit of production by 2030 and a 40% reduction in absolute emissions, both compared to a 2018 baseline. Micron has been increasing production in recent years, and therefore has not yet seen a decrease in absolute emissions; however, we believe the company is on the right track and even ahead of some industry peers in its goal toward more carbon-friendly operations.

Like all industries, the semiconductor industry faces risks associated with climate change. While flooding, heat waves, and drought have the potential to greatly affect operations, Micron has found that the most significant climate change transition risk is regulation related to carbon pricing. As the company has relatively large Scope 1 and 2 emissions, carbon pricing mechanisms have the potential to have a negative financial impact on the company by increasing direct costs in Micron’s operations. This is especially pertinent in Singapore where the National Environment Agency has adopted the Carbon Pricing Act to tax greenhouse gas emissions; while this has the potential to cost Micron $3.3 million USD annually over the next few years, we view it as a necessary incentive to reduce emissions.

Another important input in the manufacturing process is water, which is crucial to production. Semiconductor fabs rely on ‘ultrapure’ water to ensure quality and sterilize the factory floor, and as technologies grow more complex, water demand has grown. Increasing global water stress is likely to pose operational risks to the industry, and companies should incorporate water stress conditions in decisions about fab locations. Using the World Resources Institute’s Aqueduct tool, Micron has identified fabs that are located in areas of high water stress, and currently, only 1% of operations take place in these areas; however, many of Micron’s facilities still face potential water stress. In fact, the production of chips and display panels in Taiwan was affected by drought this past spring, causing chipmakers like Micron to have to truck in water to prevent fab shutdowns. Micron can manage water consumption by increasing water efficiency and reducing water demand. Currently, Micron uses a combination of recycled water from its own operations and local water, but having to compete with local communities for water presents risk. Micron is working toward a goal of reusing, recycling, or restoring 100% of water used in its operations with an interim goal of 75% by 2030.

After the manufacturing process is complete, semiconductor fabs are left with a variety of waste materials. To minimize this waste, Micron focuses on reducing hazardous chemical usage through process improvements and encourages the phase-out of these chemicals. Most of the waste Micron produces is hazardous, which presents even greater environmental risk. The company aspires to recycle or recover 100% of its hazardous waste with an interim goal of reaching 95% by 2030. As of 2020, Micron reuses, recycles, or recovers 84% of its total waste. In addition to waste created in manufacturing, end-product electronic waste is an important sustainability issue. When these products end up in landfills, they have the potential to harm the communities around them, and the raw materials, water, and energy that are put into making them are lost. While this is more pertinent to the companies that are using Micron’s products, we hope the company will consider this issue in their future sustainability reports.

Finally, while the company’s focus is on environmental management in Micron’s own operations, the company does have standards in place to monitor suppliers and work to improve energy efficiency, reduce GHGs, and minimize waste, wastewater, and air emissions using the Responsible Business Alliance (RBA) audit process. In 2020, Micron found that 7% of the suppliers it assessed were found to have environmental-related issues that required improvement, and relevant action was taken.


From a complex and extensive global supply chain to requiring a highly skilled workforce, operating in the semiconductor industry presents a multitude of social risks. These issues have the potential to affect a company’s financial performance, and strong management is necessary.

Workforce health and safety is a major area of concern for the semiconductor industry, as chemical usage in manufacturing can have long-term impacts on employee health, and complex machinery presents the risk for injury. It is crucial for companies like Micron to take measures to protect employee health and safety and in turn, protect themselves from lawsuits and reputational damage related to hazardous substances and safety violations. Micron’s CSR lays out a clear vision—the company strives for an incident-free workplace at every manufacturing site, inclusive of both employees and contractors. Micron’s manufacturing locations are certified to International Standards of Organization (ISO) 45001 safety and management systems, a widely accepted certification for factories. The company views itself as an industry leader in its handling of hazardous chemicals and aims to eliminate as many high-hazard substances from the workplace as possible. In 2020, Micron faced no monetary losses from legal proceedings regarding employee health and safety violations and the company has had no related controversies in recent years.

Beyond physical safety, companies have a duty to ensure the protection of human rights for their workers. This is especially true for companies that operate in global contexts, as countries vary in their worker protection laws. Micron works to uphold a high level of labor ethics in its own operations guided by the company’s Code of Business Conduct and Ethics; however, more challenges arise when it comes to the operations of Micron’s suppliers, contractors, and other partners. Many of Micron’s suppliers are located in Asia, which is associated with a higher risk for human rights violations against foreign and migrant workers.

Micron mitigates these risks through its membership with the Responsible Business Alliance (RBA), an industry coalition formed to standardize corporate social responsibility in global supply chains and promote responsible working conditions, ethical business practices, and environmental stewardship. Supplier verification with the RBA requires an initial self-assessment questionnaire and an in-person audit conducted by a third party. Once the supplier is deemed to have appropriate safety and human rights standards in place, Micron will continue audits every two years. Suppliers found to have issues at any time are given a short window to resolve them before they are removed from the supply chain. Micron extends the oversight of human rights to anyone who works on a Micron site in any capacity, including any people hired temporarily by suppliers. The company assessed 1,400 suppliers in 2020, up from 900 in 2019, and none were found to meet the criteria for termination due to noncompliance with social issues. Micron is one of only a handful of companies in the RBA to have a blemish-free audit history, and that is reflected in a lack of past company scandals or lawsuits.

Another pertinent human rights-related supply chain issue Micron faces is the sourcing of conflict minerals. Like many technology companies, Micron relies on the use of tin, tungsten, tantalum, and gold (3TG) in the manufacturing of its products. These minerals are associated with human rights violations in the Democratic Republic of the Congo (DRC) and surrounding regions. Section 1502 of the Dodd-Frank Act requires publicly traded U.S. companies to track, monitor, and report on supply chain minerals that may originate in or near the DRC annually. Micron’s Responsible Minerals Policy requires suppliers to source conflict-free minerals from smelters or refiners that are validated by regulatory bodies, including the Responsible Minerals Initiative (RMI) and the Responsible Minerals Assurance Protocol (RMAP).

Micron is a founding member of the RMI, which has helped the company to develop a common approach for addressing conflict mineral supply chains and protocols. This process includes third-party auditing, due diligence tools, and a public database documenting smelters and refiners. The company publicly reports the results of its due diligence on conflict minerals annually. However, 3TG minerals are not the only components of Micron products that have the potential to be sourced from suppliers who contribute to human rights violations. Copper, cobalt, and lithium are all components that also carry supply chain risk yet are not regulated by Section 1502 of the Dodd-Frank Act. The RMI’s cobalt reporting program is expected to be implemented in 2022; however, Micron does not produce batteries and does not use significant amounts of cobalt. We hope to see Micron continue to expand its responsible minerals program.

In addition to human rights issues, Micron’s management of human capital is an important social issue that can affect the bottom line. Operating in the semiconductor industry requires a highly skilled workforce, and Micron faces fierce competition in recruiting not only from industry peers, but also from other industries. The research and development of semiconductors requires highly educated employees and is incredibly expensive, taking up 15% to 20% of the average industry player’s annual sales revenue — only pharmaceutical companies spend more. The inability to retain key knowledgeable employees could have a material adverse effect on Micron’s business. One notable industry story is that of Morris Chang, who worked at Texas Instruments (TI) in the 1960s and 1970s and went on to start the world’s largest semiconductor foundry, Taiwan Semiconductor Manufacturing Company (TSMC) after being snubbed for an executive position. TSMC is now a direct competitor of TI.

Innovation is fostered through diverse perspectives, and an inclusive company culture drives the retention of highly skilled employees. Micron publishes an annual Diversity and Inclusion (D&I) report, and the 2020 report offers an in-depth look at the company’s policies and demographic data. In response to the social unrest in the U.S. in 2020, Micron has laid out six DEI commitments for 2021, including increasing representation, driving equitable pay, strengthening inclusion, advocating for the underrepresented, committing a percentage of cash investments to be managed by minority-owned firms, and increasing diversity among its suppliers.

It’s no secret that the technology industry has historically been a place of underrepresentation for women and remains predominately male. Globally, women still make up only about one-third of Micron’s workforce, but the company has policies in place to enable progress in gender diversity and is seeing progress in female leadership. The board of directors is now 37.5% female, up from only 14% in 2018. Additionally, senior leadership was 14.2% female in 2020. Micron regularly reviews for inequities in pay on a global level, including base pay and stock awards. While historically this review has focused on gender, Micron has expanded it to focus on all underrepresented groups, including minorities, people with disabilities, and veterans.

There are challenges that arise when attempting to foster diversity and inclusion as a global company. Many of the diversity and inclusion policies throughout the tech industry and beyond are very U.S.-centric; however, as mentioned, 71% of Micron’s workforce is located in Asia. Micron mentions this deficiency in its diversity report. As the U.S. is not the only part of the world that deals with the issues of diversity and inclusion, it is important that Micron and other companies work to make their policies transcend the challenges of geopolitics. We spoke to Micron on this subject and were assured that the issue would be relayed to the DEI team. The company has made some recent progress in this area, including expanding its DEI team in Asia, opening new employee resource group chapters around the world, and establishing a Supplier Diversity program.

Despite its progress, Micron directors recently faced a lawsuit brought forth by one of its shareholders alleging that they breached their duties by publicly touting a commitment to diversity while failing to meaningfully increase it. The lawsuit claimed that the compensation of directors, such as Micron’s CEO, was excessive in part because it was tied to their commitment to diversity programs and initiatives, but that no meaningful change has occurred in Micron’s workforce diversity. The filing of this case signals that shareholders are putting companies under greater scrutiny when it comes to ESG policies, and board and workforce diversity issues may continue to be a source of potential litigation.


Effective management of a company’s intellectual assets is a crucial component of good governance in the semiconductor industry. The competitive edge of both semiconductor design and manufacturing depends on the effective management of intellectual assets. According to the company’s 2020 10-K, Micron is the owner of 14,200 active U.S. patents and 6,500 active foreign patents. Micron has proactive IT measures in place to monitor and identify suspicious activity, and these efforts proved to be instrumental in a case regarding the suspected theft and misuse of Micron’s intellectual property. In 2018, the U.S. Justice Department indicted two companies based in China and Taiwan for conspiring to steal trade secrets from Micron. These attempts to steal Micron’s confidential information demonstrate the increasing importance of the company’s intellectual property to the technology industry.

While intellectual property protection is an important driver of innovation, it has the potential to restrict competition and promote anti-competitive behavior. These risks could engender regulatory scrutiny and legal action. Micron is the only U.S.-based producer of dynamic random-access memory (DRAM) chips, and Korean companies Samsung and SK Hynix are its only competitors in that space. In 2018, a lawsuit was filed against the trio in U.S. District Court in California, accusing the companies of artificially limiting the supply of DRAM memory chips to create a shortage and raise prices. Similar lawsuits have subsequently been filed in the same court as well as in Canadian courts, and an investigation has been opened in China. These lawsuits have the potential to cause financial loss for Micron through settlements, fines, and potential regulation. While these events are only a piece of the complex puzzle that makes up governance, we find them to be the most financially material and relevant topics for Micron’s industry for the purposes of this report.

Risk & Outlook

Semiconductors are the basic building blocks of modern technology and are truly a product of globalization. From the raw material inputs to the manufacturing process to the end product, semiconductors cross borders, oceans, and hands in every country in the world. While some semiconductor companies have a more concentrated supply chain due to focusing on either the R&D or the manufacturing of microchips, Micron does both. Consequently, ESG risks affect Micron from start to finish. The company’s manufacturing process involves a laundry list of environmental risk. Micron faces social issues ranging from protecting human rights in the supply chain to diversity and inclusion and the good management of human capital. And finally, the company must protect its intellectual assets without involving itself in anti-competitive behavior — a challenge for good governance. Overall, we believe Micron is intentional with its handling of ESG risks and often goes a step beyond its industry peers in its forward-thinking sustainability goals; however, many are still just that—goals. We will continue to monitor Micron’s progress and thus give the company a Sage Leaf Score of 3/5.

Sage ESG Leaf Score Methodology

No two companies are alike. This is exceptionally apparent from an ESG perspective, where the challenge lies not only in as­sessing the differences between companies, but also in the differences across industries. Although a company may be a leader among its peer group, the industry in which it operates may expose it to risks that cannot be mitigated through company management. By combining an ESG macro industry risk analysis with a company-level sustainability evaluation, the Sage Leaf Score bridges this gap, enabling investors to quickly assess companies across industries. Our Sage Leaf Score, which is based on a 1 to 5 scale (with 5 leaves representing ESG leaders), makes it easy for investors to compare a company in, for example, the energy industry to a company in the technology industry, and to understand that all 5-leaf companies are leaders based on their individual company management and the level of industry risk that they face.

For more information on Sage’s Leaf Score, click here.


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  2. Institutional Shareholder Services (ISS) ESG Corporate Rating Report for Micron Technology, Inc.
  3. For All: 2020 Annual Report. Micron Diversity, Equality, and Inclusion. 2020.
  4. Micron Technology, Inc. Form 10-K. September 2020.
  5. Shilov, Anton. Micron: Tawian Drought is Over, but More Problems Incoming. Tom’s Hardware. July 2021.
  6. Yoo-chul, Kim. Lawsuit filed against Samsung, SK, in US. The Korea Times. May 2021.
  7. Wince-Smith, Deborah. America’s Lack Of Chips Is More Than A Blip. June 2021.
  8. Blum, Andrew. From Cars to Toasters, America’s Semiconductor Shortage Is Wreaking Havoc on Our Lives. Can We Fix It? June 2021.
  9. Ovide, Shira. Computer Chips Are the New Toilet Paper. The New York Times. May 2021.
  10. Bloom, Sahil. The Amazing Story of Morris Chang. The Curiosity Chronicle. January 2021.
  11. Godoy, Jody. Micron shareholder sues directors over “phantom” diversity commitment. February 2021.


Sage Advisory Services, Ltd. Co. is a registered investment adviser that provides investment management services for a variety of institutions and high net worth individuals. The infor­mation included in this report constitute Sage’s opinions as of the date of this report and are subject to change without notice due to various factors, such as market conditions. This report is for informational purposes only and is not intended as investment advice or an offer or solicitation with respect to the purchase or sale of any security, strategy or investment product. Investors should make their own decisions on investment strategies based on their specific investment objectives and financial circumstances. All investments contain risk and may lose value. Past performance is not a guarantee of future results. Sustainable investing limits the types and number of investment opportunities available, this may result in the Fund investing in securities or industry sectors that underperform the market as a whole or underperform other strategies screened for sustainable investing standards. No part of this Material may be produced in any form, or referred to in any other publication, without our express written permission. For additional information on Sage and its investment management services, please view our web site at, or refer to our Form ADV, which is available upon request by calling 512.327.5530.