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Business and
governance

We build business
resilience, customer
trust, and long-term value
through our ESG program.

Goals and highlights

Governance

Goal* Status Progress to date
Goal*:Continue to expand our disclosure and alignment with industry-recognized frameworks and standards Status: Progress to date:
  • Increased disclosure against Task Force on Climate-related Financial Disclosures (TCFD)

2021 highlights

  • Named on the Dow Jones Sustainability Index for North America (DJSI North America) for the first time
  • Launched $1.5 billion sustainability-linked revolving credit facility to reinforce ESG goals
  • Established Ethics and Compliance Steering Committee

*We aim to achieve goal by 2025, unless otherwise stated.

We are a company where potential is realized, and where the future of technology is defined. Our impact is exponential, going beyond what we do to what we enable—the continuous progress of society. That makes it our responsibility to ensure that everything we undertake—from sourcing and production to how we manage our business, to how we deliver for our customers—is executed with excellence.

To that end, we aspire to make ESG criteria part of everything we do. And when we consider the environmental and social impacts of our actions, we build business resilience and help raise the bar for our entire industry. We strive to exceed our customers’ expectations and launch cutting-edge products and technologies without compromising on our values or our responsibility. Amid ongoing change and continued, heightened demand for semiconductors in 2021, we are proud to have delivered with agility, compassion, and an unwavering commitment to ESG.

Contributing to the UN SDGs

We recognize the importance of the United Nations 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs). These goals play an important role in building a more equitable, inclusive, sustainable world. We have identified five SDGs as most relevant to Lam’s top material topics: #3 Good Health and Well-Being, #4 Quality Education, #8 Decent Work and Economic Growth, #10 Reduced Inequalities, and #13 Climate Action. In this report, we are proud to share how we’re contributing to these SDGs.

ESG At LAM

ESG at Lam: Delivering a positive impact

We put our business to work for a better world. Our ESG strategy, which provides a framework for our ESG investments and efforts, is composed of six key pillars reflective of the issues that matter most to our business and stakeholders.

From goal setting and regular progress assessments on material ESG topics, to investments in environmental and social responsibility initiatives, we actively involve our leadership in the efforts we put forward. Doing so ensures that we adopt ESG best practices to create a program that delivers value to all Lam stakeholders.

Stacey MacNeil
chief communications
officer and ESG
executive sponsor

“Our holistic approach to ESG is key to providing a positive impact to the company and our world. Further integrating ESG into our operations — while managing ESG-related risks and opportunities — demonstrates our leadership
and values.”

Being transparent about our ESG strategy and performance is a critical component in taking accountability and achieving our ESG goals. We continue to expand our disclosure and alignment with industry-recognized frameworks and standards and make measurable progress toward our ESG priorities in the short and long term.

Act with purpose for a better world

Our ESG Mission:
We elevate human prosperity and protect the environment in our operations, supply chain, and the products we create.

Doug Bettinger
executive vice president
and chief financial officer

“Lam’s new sustainability-linked credit facility is part of our overall management focus on financial performance while integrating ESG principles into day-to-day operations. We believe this will also add long-term value for Lam’s stakeholders.”

Innovation Spotlight

Giving ESG its credit: New financing structure links sustainability to our bottom line

Financial considerations shouldn’t hinder the pursuit of bold ESG goals—they should inspire them. That’s the vision behind our new financing structure consisting of a $1.5 billion, five-year sustainability-linked line of credit, launched in May 2021. Over the credit facility term, Lam will receive a pricing adjustment if the company is above or below performance targets around annual energy savings and maintains our high standard of employee safety. This connection further promotes and engrains our ESG initiatives while providing access to potentially lower-cost financing.

Materiality

Making an impact where it matters most

We center our ESG strategy, investments, engagements, and reporting on the topics that reflect the most significant environmental, social, and economic impacts of our business and to our stakeholders. In this report, we refer to these as “material” topics1. To identify those topics, we conduct an ESG materiality assessment every three to five years, or when notable shifts happen in our business.

In our most recent assessment, conducted in 2018, we identified 13 material topics across six strategic pillars.

These pillars provide the basis of our ESG strategy and priorities.

Business and
governance
Products and
customers
Sustainable
operations
Our
workplace
Responsible
supply chain
Our
communities
Strategic pillars Material topics

Strategic pillars: Business and governance Integrate ESG into our business operations; foster ownership and accountability; set strategy and goals

Material topics:
  • Leadership participation in ESG

Strategic pillars: Products and customers Innovate with ESG in mind; be a partner of choice for supporting our customers’ ESG goals; design for environment principles

Material topics:
  • New product pipeline
  • Product safety
  • Product compliance
  • Regulatory compliance and emerging regulations

Strategic pillars: Sustainable operationsMinimize our environmental impact through investments in energy, water, waste, and greenhouse gas emissions reductions

Material topics:
  • Energy efficiency
  • Greenhouse gas emissions
  • Waste and recycling

Strategic pillars: Our workplaceBuild an inclusive, diverse, and engaged workplace while achieving top performance in health and safety

Material topics:
  • Employee wellness and professional growth
  • Health and safety
  • Inclusion and diversity

Strategic pillars: Responsible supply chain Ensure an ethical and responsible business ecosystem focused on human rights and the environment

Material topics:
  • Supplier screening and managing negative impacts within the supply chain

Strategic pillars: Our communities Be a responsible corporate citizen with programs focusing on transformative learning, resilient communities, and inclusive societies

Material topics:
  • Community engagement and charitable giving

1 The identification of a topic or other matter as "material" for purposes of this report does not and should not be interpreted to mean that it is material for any other purpose, including for the purpose of our financial statements or the documents we file with the U.S. Securities and Exchange Commission.

ESG governance

Leading with an ESG lens

Good governance—it’s the foundation of Lam’s business and critical to our success. This makes it imperative that the highest levels of our leadership are involved in our governance approach. Our leadership emphasizes financial performance while integrating ESG principles into day-to-day operations.

Given the breadth of ESG issues for a company of our size and reach, oversight of ESG issues occurs within our existing Board governance framework. Our CEO and members of the CEO staff participate in our ESG Executive Steering Committee. And members of our management team provide regular updates to the Board and its committees and engages them to discuss ESG strategy, gain alignment on goals, and report on progress.

In 2021, we formed a new net zero leadership team that is responsible for working with business units to integrate climate considerations into decision-making processes, driving progress on our net zero strategy, and tracking GHG performance on our climate goals.

Our Board believes that board diversity is important to serving the long-term interests of Lam’s stockholders. To underscore this, we adopted a change to Lam’s Corporate Governance Guidelines in 2021 that reflects the commitment of the Board’s Nominating and Governance Committee, when identifying potential director candidates outside the Company, to actively seeking out qualified candidates who reflect diverse backgrounds, skills and experiences. Under our current Corporate Governance Guidelines, diverse backgrounds are defined to include diversity of gender identity, LBGTQ+ identity, race, and ethnicity. We draw from this diverse pool from which Board nominees are chosen, and we instruct any third-party search firms retained for a related search to include such candidates for consideration. Learn more about inclusion and diversity at Lam in the Workplace section of this report.

Lam’s ESG governance structure and primary responsibilities

Oversight
Lam Research Board of Directors

Overall ESG oversight

Nominating and Governance Committee

ESG priorities

Compensation and Human Resources Committee

Workforce-related issues

Audit
Committee

Ethics and compliance and information security

Management
ESG Executive Steering Committee

Guides ESG strategy, approves and supports initiatives, drives accountability

ESG Leadership Team

Proposes goals, develops and executes strategy, and embeds ESG into operations management system

Net Zero Leadership Team

Drives progress toward
net zero goal

Implementation
Topic-specific Working Groups

Executes on key issues

Engaging our stakeholders

Through our materiality assessment and other activities, we engage with a diverse group of stakeholders around the world, including our employees and stockholders, the communities we work in, and the organizations that promote the sustainable growth of our industry. Their valued perspectives inform our ESG strategy and goals.

How we engage:

Community

  • Interactions through community collaborations and volunteerism
  • Participation in conferences and forums
  • Philanthropic investments

Customers

  • Customer Support Business
  • Group interactions
  • Global Customer Operations engagement and support
  • Industry conferences
  • Regular business review meetings

Employees

  • All employee meetings
  • Employee resource groups
  • Employee surveys
  • Inclusion index
  • Performance and
  • development discussions
  • Professional development

Industry organizations

  • Conference participation
  • Innovation collaborations
  • Memberships

Policymakers

  • Direct engagement through our Global Government Affairs group
  • Trade organization participation such as the National Association of Manufacturers, SEMI, and the Semiconductor Industry
    Association

Stockholders

  • Annual meeting of stockholders
  • Participation in conferences
    and forums
  • Quarterly earnings
    conference calls
  • Regular calls and
    in-person meetings

Suppliers

  • Annual ESG supplier surveys
  • Annual Supplier Day (with Excellence Awards)
  • Monthly supplier
    scorecard reviews
  • Regular Supplier Town Halls
  • Strategic business reviews
    as needed

Decarbonizing the
world, together

Decarbonizing the
world, together

Addressing climate change is one of the biggest challenges the world faces today, and we all have a role to play. Lam’s own R&D and manufacturing activities, and the manufacturing and transportation of goods in our supply chain, have climate impacts. So do our products when they are in use by our customers. Therefore, when we accelerate our own climate action, we help our customers do so, too.

We’re ready to prove it

When it comes to mitigating the impacts of climate change, time is of the essence. In 2021, Lam announced a net zero goal to reduce GHG emissions along a science-based trajectory. Net zero is a climate action goal to balance the greenhouse gas emissions going into the atmosphere with the reduction and removal of gases from it. As we work toward this goal, we aim to enable our customers and suppliers to reach their own decarbonization goals, while supporting Lam’s cultural imperatives, corporate strategy, and business growth ambitions.

We’ve developed a net zero pathway that details how Lam’s business units, product teams, and supply chain vendors will contribute. Key milestones along our journey to net zero include:

Net-zero roadmap
2021
  • Announced science-based target (SBT) intention and net zero pathway
2025
  • Reduce Scope 1 and 2 (market-based) emissions by 25% from a 2019 baseline
  • Achieve 12 million kWh in total energy savings
  • 80% of top direct suppliers by spend set SBTs
  • 83% of customers by revenue set SBTs
2030
  • Achieve 100% renewable energy
  • Reduce Scope 1 and 2 (market-based) emissions by 46% from a 2019 baseline
  • 95% of top direct suppliers by spend set SBTs
2040
  • Achieve net zero operations (Scope 1 and 2)
  • Achieve absolute reduction in supply chain emissions (goal to be set in the future)
2050
  • Achieve net zero emissions

We plan to achieve our energy and climate goals by activating multiple strategies: investing in renewable energy and energy efficiency while working with our suppliers and customers to reduce upstream and downstream emissions. Supporting our progress will be several cross-cutting tools and practices:

  • Net zero governance and leadership support, including a net zero leadership team and cross-functional working groups
  • Funding mechanisms, which are embedded into Lam’s financial decision-making processes
  • Careful management of current and projected emissions data
  • Internal communications and employee engagement to help us build momentum
  • Standards and frameworks, such as SBTi and TCFD, that enhance Lam’s credibility among external stakeholders
  • Close collaboration with our customers and suppliers

Assessing climate risk

Like all companies, Lam faces risks related to climate change. These risks include disruptions to our manufacturing facilities due to extreme weather events and laws and regulations imposed due to climate change concerns. In 2021, we worked with a third party to undertake a deeper analysis of the climate risks and opportunities that could have an impact on Lam.

These include:

Risks

  • Changing customer expectations
  • Competitors developing lower-impact products
  • Operational disruptions from flooding, natural hazards, rising temperatures, and/or water stress
  • Natural hazards leading to supply chain disruptions and/or preventing access to the operational workplace
  • Regulation of Lam’s direct operations, customer operations, and/or raw materials (e.g., carbon pricing)
  • Reputational impacts from poor performance on external climate-related engagements
  • Water stress impacting major customer operations

Opportunities

  • Expansion of end-use markets
  • Improving resilience of business operations through asset hardening
  • Operational footprint reduction
  • Reduced resource consumption of sold products

As we learn more about the potential likelihood and impact of these risks, we will continue to share our management and mitigation efforts with stakeholders. The Appendix to this report includes a full inventory of our disclosures to the TCFD, the Sustainability Accounting Standards Board (SASB), and the Global Reporting Index (GRI). Our alignment with the following key TCFD categories is as follows:

TCFD Category Aligned Practices at LAM
TCFD Category: Metrics and Targets Aligned Practices at LAM:

2025 and 2030 GHG reduction goals aligned with Science Based Targets Initiative (SBTi) methodology

Scope 3 emissions inventory to understand impacts in the value chain

2050 goal to achieve net zero across all emissions scopes, with interim goals for 2030 and 2040

TCFD Category: Risk Management Aligned Practices at LAM:

Multiple leading enterprise risk management practices

Strong governance to manage and escalate risk to appropriate levels

TCFD Category: Strategy Aligned Practices at LAM: Leadership involvement and oversight on ESG strategy
TCFD Category: Governance Aligned Practices at LAM:

Board-level ESG oversight

Regular ESG reports to the Board and the Nominating and Governance Committee

Net zero leadership team and cross-functional working groups

Annual net zero objectives integrated into corporate accountability systems and review

TCFD Category: Reporting Aligned Practices at LAM: Consistent climate-related metrics reported to CDP and in our annual ESG Report

Ethics and Compliance

Conducting business
with integrity

Our business has thrived for more than 40 years by embracing innovation while remaining true to our Core Values. Our customers choose us because they trust our products, our people, and our performance. We aim to earn their trust by ensuring that what we do is reliable, accurate, and executed with a high level of quality, integrity, and sound governance.

Our Ethics and Compliance (E&C) program sets the standards and principles for how we do business. Our program is designed to meet evolving requirements and encompasses the following major areas: risk management, policies and procedures, training, communications, and investigations. Our chief compliance officer, who reports to the chief legal officer, with dotted-line reporting to the Chair of the Audit Committee of the Board, manages the E&C function and leads a global team. In 2021, we formed an E&C Steering Committee to further strengthen our program. This Committee provides operational guidance on our E&C program and promotes an ethical and compliant culture throughout the organization by supporting the E&C function in achieving its program requirements.

Protecting and enhancing our culture promotes an ethical working environment for our employees. Last year we launched a global ethics culture employee survey to identify and measure strengths and areas of opportunity. The survey results, which were communicated at an all-employee meeting, will be used to prioritize enhancements to our program.

Our Core Values

Our culture is built on our Core Values. These values underpin our commitments to sustainable growth and to working together for a better world. In 2021, we added two new core values: Agility and Inclusion and diversity.

Achievement

Agility

Honesty and integrity

Inclusion and diversity

Innovation and continuous imporovement

Mutual trust and respect

Open communication

Ownership and accountability

Teamwork

Risk management

Our dedication to continuous improvement means we assess internal and external risks, refine our programs, and adjust our goals. As we operate globally and continue to grow, we are exposed to a changing regulatory landscape, as well as bribery and corruption challenges, which make enhancing our risk management program a priority.

We take a risk-based approach to due diligence and we have strengthened our third-party risk management through our compliance questionnaire and Supplier Code of Conduct.

Policies and procedures

It’s not just what we do, but how we do it that matters. Our employees are dedicated to a values-driven culture. To reinforce this, we created our Global Standards of Business Conduct (GSBC), which outline expectations for ethical workplace behavior.

Kelley Kinney
senior director, ethics
and compliance

“When faced with a challenging situation at work, our employees ask themselves not just the foundational question of whether the law and our policies permit the activity, but also whether the conduct is ethical and consistent with our Core Values.”

The GSBC address various issues such as: protecting confidential information, prohibiting bribery and corruption, and giving or receiving gifts, meals, travel, and entertainment. They also cover workplace conduct issues such as harassment, discrimination, and conflicts of interest created by relationships. We regularly review and update our GSBC so that they remain relevant to our business. Additional policies and procedures provide further guidance on specific ethics and compliance areas, including:

  • Anti-bribery and corruption
  • Anti-harassment
  • Conflicts of interest
  • Conflicts of interest created by relationships
  • Gifts, meals, travel, and entertainment
  • Insider trading
  • Reporting Concerns

Training

We are focused on training our employees to ensure they are empowered to make ethical decisions. Employees are required to complete an annual online training course that reinforces their understanding of selected topics covered by the GSBC. We exceeded 99% completion rate* for this training. We also deliver targeted training sessions to further increase awareness of our policies and processes. In 2021, E&C delivered more than 50 virtual training sessions to leadership teams, new hires, and employees whose role and/or location put them at higher risk.

*Employee completion rate was calculated by excluding: 1) employees who were on leave of absence during the reporting period; or 2) employees who left the company during the reporting period before completing the training. The reporting period was from November 2021 to March 2022.

Communications

We work diligently to communicate practical guidance and lessons learned from investigations with all employees. In 2021, we held “Ask Me Anything” sessions with our chief compliance officer. We also distributed four compliance bulletins providing guidance on our policies and specific risk areas, so our employees have the tools and knowledge to make ethical decisions.

Investigations

At Lam, employees have the right and responsibility to raise concerns to their managers, senior management, human resources, and E&C. Employees and third parties, including contractors, suppliers, and customers can make a report by phone or through the web by using our Ethics Helpline.

Over

99%

of our employees completed
our 2021 GSBC training*

*As of March 2022.

The Ethics Helpline is operated by an independent third party and is available to anyone who wants to ask a question about, or report potential violations of the GSBC, other policies, regulations or laws. It is accessible through both our external and internal websites, and interpreters covering over 75 foreign languages are available for phone submissions. Concerns may be reported anonymously, where allowed by law, and all reports are treated confidentially. Our Reporting Concerns Policy provides guidance to employees on raising concerns on a variety of issues, including financial concerns.

E&C investigates allegations involving alleged kickbacks, bribery, trade secret theft, insider trading, conflicts of interest, corporate card and expense abuse, among other issues. In 2021, our E&C team shared with employees its investigations reporting data for 2021, including trends compared to 2020, report volume, claim types, anonymous reporting rate, the substantiation rate at which E&C concluded a violation occurred, and aggregated corrective action taken for substantiated cases.

Cyber, government
affairs, and tax

Protecting data and intellectual property

Safeguarding our corporate, employee, customer, and supplier data is a top priority for us. It is essential to maintaining our business and retaining stakeholder trust. Our global information security strategy proactively evolves in real time to address emerging threats, minimize cybersecurity risk, and incorporate the latest best practices and technologies. In 2021, we continued to expand and strengthen our information security program with a focus on protecting Lam’s intellectual property.

Our program is led by our chief information security officer, who reports on a regular basis to the Audit Committee and the full Board. To continually improve our program, we collaborate with world-class industry peers and global security researchers, and hold International Standards Organization (ISO) 27001 certifications for information security for nine sites. In addition, we screen suppliers for information security controls that protect our information as well as that of our suppliers.

Employees also play a critical role in preserving information security. We educate employees on cyber threats, and all employees participate in mandatory information security and privacy training each year. We also conduct periodic tests of random user populations to determine which users are vulnerable to real attacks and reinforce security awareness training. In 2021, we did not experience any cyber incidents that resulted in a material adverse effect, nor any losses or breaches of customer data that resulted in a material adverse effect.

Pillars of our information security program

Product Security and Engineering

focused on driving enhanced security in products and applications development

Governance, Risk and Compliance,
and Identity Access Management

focused on risk management, compliance, and identity governance for internal/external users and access control

Security Operations Center

responsible for detecting, analyzing, and responding to potential cybersecurity threats

Government affairs

Sound public policy is imperative to fulfilling our mission to drive breakthroughs that define the next generation. We pursue a collaborative approach to policy engagement, working alongside our industry, supplier, and customer stakeholders to advocate for our priorities at the local, state, and federal levels. We work to engage the policy process in the areas of taxes, trade, export control policy, research and development, business operations, and other areas key to our business strategy. This engagement is critical to ensure that the interests of our customers, employees, and stockholders are properly represented at all levels of government.

Our Global Government Affairs (GGA) group, led by our vice president of GGA, directs these efforts. Our lobbying and political activities are governed by our Global Standards of Business Conduct, and our Political Activity and Government Affairs Policy. As a matter of company policy, Lam makes no direct political contributions of any kind to political parties or candidates, nor does Lam engage in indirect political spending, such as through its supply chain, consultants, or third-party political organizations such as 501(c)(4) entities. We remain active in various business and trade associations that align with our company imperatives, such as the National Association of Manufacturers, SEMI, and the Semiconductor Industry Association. Some portion of our trade association dues may be used, by the associations, for political advocacy efforts. Lam Research does not engage in undisclosed political spending, such as contributions above the cost of our membership dues to trade or business associations for political activities. For more details, please refer to our Public Policy Engagement and Political Activity statement located in the Corporate Governance section of our website.

Global taxation

For all types of taxes, our approach is to consistently comply with legal, regulatory, and internal control requirements while supporting our business and commercial strategy. Our approach to global taxation is intended to ensure we:

  • Adhere to all applicable global tax laws, filings, and reporting disclosures
  • Account for tax risks in accordance with the applicable accounting standards and have internal controls in place over our tax reporting processes
  • Align our transfer pricing policies with the guidelines of the Organisation of Economic Co-operation and Development (OECD), as well as with all of the jurisdictions in which we operate
  • Apply the arm’s length principle when conducting intercompany transactions

We have a network of internal and external tax and finance professionals who are knowledgeable in various direct and indirect taxes and who monitor ongoing tax law and business changes, so that we may adapt processes and deliverables accordingly. This network, along with our framework regarding internal policies and controls, seeks to ensure the complete and accurate communication of tax positions and risks through established governance and reporting processes to our management and Board of Directors.