NXP is committed to ensuring that working conditions in our supply chain are safe, that workers are treated with respect and dignity and that our products and processes are environmentally responsible.
Engaging with our supply chain on social and environmental issues are key pillars in our Sustainability and Human Rights Policies and a prominent part of our supplier engagement strategy and goal setting.
|100% Key Suppliers Sign Supplier Code of Conduct Conformity Statement||99% of Suppliers Signed the NXP Supplier Code of Conduct Conformity Statement|
|85% Corrective Action Plan Closure Rate||88% Closure Rate on Corrective Action Plans for Supplier Audits Past 90-day Maturity|
|100% Certified Mineral Smelters||100% Certified Mineral Smelters|
|Supply-Chain Due-Diligence and Collaboration||Follow-Up Due-Diligence Surveys with External Manufacturing Partners and Wafer Suppliers on the Use of Polycrystalline Silicon Originating from Regions Deemed High Risk for Forced Labor|
We require our suppliers to comply with the NXP Supplier Code of Conduct and the laws of the country or countries where our suppliers conduct business.
NXP engages with advisory firms Verisk Maplecroft and Verité to identify potential risks in our supply chains annually.
We ensure high-risk suppliers complete an NXP self-assessment and provide any supporting policies and/or documentation.
We collaborate with suppliers to verify compliance with applicable laws, the NXP Supplier Code of Conduct, and NXP Auditable Standards on Social Responsibility.
NXP works collaboratively and consultatively with suppliers to support and enable corrective and preventive action plans for continuous improvement.
We confirm that suppliers are recruiting workers and sourcing minerals ethically to meet legal and NXP requirements.
Risk is calculated according to three scoring categories – country, product and spend risks – which assigns a risk factor as either <60;50% (medium risk), 50% – 70% (high risk) or 71% – 100% (priority risk).
In 2022, we assessed 6,437 suppliers and identified 130 medium-risk suppliers, 118 high-risk suppliers and 19 priority-risk suppliers. The 2022 supplier risk assessment identified priority-risk suppliers in two countries/regions, Mainland China and Malaysia.
Since 2013, when we began our Supplier-Audit Program, we have conducted 184 supplier audits. That includes labor-agent audits as well as verification audits, which began in 2014.
In 2022, we conducted 12 announced onsite audits and two remote audits for suppliers. In addition to the 14 supplier audits we conducted ourselves, we reviewed and monitored 15 Responsible Business Alliance (RBA) Validated Audit Program (VAP) audits initiated by other RBA members with the same supply base.
Audits conducted in 2022 addressed a selection of high-priority suppliers who had previously been audited to a social-responsibility standard. At three of the five suppliers we had previously audited, we noted a maturity in social-responsibility practices and found they had improved on their previous performance.
The number of nonconformances identified compared to the number of audits conducted, and the number of priority violations identified compared to the number of audits conducted – are higher in 2022 than in 2021. We conducted more audits in 2022, and this tends to increase the number of nonconformances we find.
In 2022, we focused our supply-chain audits on Malaysia, because we anticipated that tight COVID-19 pandemic restrictions would impact the businesses and operations of that country/region's suppliers and their workers.
Calculating nonconformances using our five categories of standards helps us to identify trends, provide a strategic focus, and adjust our engagement plan to continue improving our supply chain.
Although 2022 included two remote audits and did not evaluate all five categories, Freely Chosen Employment is still the most frequently reoccurring nonconformance.
The 14 audits conducted in 2022 uncovered 33 priority violations. The top three categories of priority findings were No Fees, Working Hours and Rest Days.
The closure rate for 2022 was 88%, compared to 89% in 2021. The lower closure rate is largely due to the fact that we conducted nearly twice as many audits in 2022. The lower rate can also be attributed to increased strain on the supply chain during the pandemic, and the production ramp-up to overcome the semiconductor shortage.
Each month we report key performance indicators (KPIs) to the Sustainability Office on topics such as violations and nonconformances from our supplier audits, signed conformance letters, closure rate for corrective action plans and quarter-on-quarter risk indicators within our supply chain.
Reports are reviewed frequently throughout the year by the Environmental, Social and Governance (ESG) Management Board, which is composed of NXP executive and non-executive leadership. The ESG Management Board discusses the progress that has been made, areas for improvement and new targets. Quarterly reviews are conducted with the Ethics Committee, and monthly reviews are conducted with the Quality Leadership Team. Monthly and sometimes weekly meetings are held with procurement managers to discuss the results of a supplier audit, the corrective action plan and the supplier's progress toward closing out their nonconformances.
Suppliers are required to have workplace grievance mechanisms in place that ensure the confidentiality, anonymity and protection of whistleblowers who may report any complaints, issues or concerns. The grievance mechanism must be available in the workers' languages. Suppliers must train their workers on the grievance mechanism and communicate the process to them, so workers can raise concerns without fear of retaliation.
NXP acknowledges that we are putting the worker in a vulnerable situation with a private interview, where potential negative impacts could occur, such as retaliation or discrimination. NXP addresses this by providing the NXP grievance mechanism and an agreement with the supplier that retaliation or discrimination will not occur. We monitor and assess compliance, and investigate every allegation. These investigations may involve the NXP Ethics Committee. No allegations were received from our supply chain in 2022.
Training focuses on our suppliers and their onsite service providers. The mode of training can be a one-to-one consultation training, a two-hour classroom training or a webinar session conducted by the NXP Social Responsibility Team with support from the site's subject-matter experts. The training is the full requirement of the NXP Supplier Code of Conduct. Supplier training is done:
Coaching the supplier on best practices and providing RBA’s e-learning academy are also part of our supplier trainings.
Aligning NXP’s products, operations and engagements with the UN Sustainable Development Goals to combat global challenges related to economic, social and environmental sustainability.
We are here to answer any inquiry regarding our corporate sustainability efforts, including EHS and environmental product compliance.