NXP believes that social responsibility is important for our employees, the global population, our planet and vital for our business success. We strive to be a leader in social responsibility. NXP has developed and established a comprehensive set of sustainable business initiatives that are incorporated into our core business practices.
We describe NXP’s commitment to Social Responsibility as: Engage. Protect. Respect. NXP engages with its employees, coworkers, managers, suppliers, customers, our community and other relevant stakeholders on social responsibility and sustainability topics. Our goal is to protect and respect each life, human rights, the environment and the health and safety of all.
The CEO and the NXP Management team has the oversight of the NXP Social Responsibility program and initiatives. The Social Responsibility board is chaired by the Chief Human Resource Officer and is made up of members of executive management team representing operations and business groups. The Social Responsibility board provides strategic directions and sets targets, while the Social Responsibility office, under the direction of Senior Director of Sustainability and EHS, performs operational functions. The Social Responsibility office meets regularly with the board to discuss and review NXP’s and suppliers’ performance, and any issues of nonconformance’s and potential risks.
The NXP Social Responsibility office is tasked to:
Our goal is to have no core violations or major findings from our own internal third-party or customer audits. NXP’s RBA (Responsible Business Alliance) self-assessment scores are to be above 90% for all manufacturing sites. Audit scores for our manufacturing sites are to achieve >95%. If a site fails to meet the threshold, depending on the findings, an audit will occur every 6 months until the 95% threshold is met. Working hours must be below the maximum 60 hours per week requirement and one rest day is granted for each six days worked. In 2018, we set a goal to have a corrective action plan closure rate of 80% from supplier audits.
Regardless of location, all NXP facilities globally conduct annual risk assessments for social responsibility. As a member of the Responsible Business Alliance (RBA) each NXP factory completes an RBA Self-Assessment questionnaire that addresses topics such as labor, ethics, environment, health and safety as well as management systems. In addition to the RBA self-assessment, each facility must also complete the NXP self-assessment, that is based on the NXP social responsibility standards prior to an internal third-party audit.
Each NXP manufacturing facility has a Social Responsibility audit conducted by a third-party audit firm. NXP facilities are required to achieve a score of 95% and above to demonstrate the minimal acceptance threshold of compliance in the deployment of the program and initiatives. All facilities should not have any core violations and major findings as specified by the NXP standards on Social Responsibility.
Audits include many different components, such as document reviews, employee and management interviews as well as facility and dormitory inspections. Audits also include interviews with labor agents and onsite service providers.
NXP continuously trains our employees and supply chain. Since 2013 over 1,000 key employees have received training on social responsibility with 120 of these key employees certified as RBA lead auditors.
Our focus is to maintain a pool of sufficiently qualified social responsibility champions and subject matter experts for each manufacturing facility. Each year we increase internal communications within our manufacturing facilities on social responsibility topics.
NXP internal training is targeted at the following audience:
The training program content is updated and revised whenever there is a change or revision in the NXP Standards on Social Responsibility. The standards are reviewed on an annual basis to determine the need for a revision based on changing regulatory landscape, industry best practices or in customer requirements and expectations. In 2015 the audit program and the standards were revised to include a new section in the NXP standards on the definition of recruitment fees. This revision provided more clarity on the NXP Employer Pays policy in the recruitment of foreign workers. In 2017, the standards were revised to include information regarding clarification of fees and expenses, employment contract substitution, the total percentage of apprentices, wages for foreign workers and the worker grievance system. In 2018, the standards were updated to include clarification on the provisions available to nursing mothers and alignment with the verbiage of the RBA Code of Conduct 6.0. These changes were communicated to all NXP sites and to our supply chain through the distribution of the 2018 Supplier Code of Conduct.
Re-training is provided when:
The effectiveness or success of the training can be measured from the NXP Social Responsibility audit performance.
Each month, the Social Responsibility office reports key performance indicators to the Sustainability office on topics such as internal audits and self-assessment scores, working hours and rest days, signed supplier conformance letters, supplier audit scores, core violations from supplier audits, supplier corrective action closure rate and risk indicators within our supply chain.
The Social Responsibility office meets with the purchasing organization monthly and sometimes weekly, to discuss audit results, the approved corrective action plan and progress towards completing the corrective action plan.
NXP monitors improvement by measuring the number of core violations, repeat audits, frequency of findings and the closure rates of the corrective actions. NXP measures the correlation between the self-assessment questionnaire scores and the audit scores for each manufacturing facility and the results are within target.
NXP has clear and widely communicated procedures in place for reporting concerns within our operations. We conduct training and post the grievance SpeakUp line at our sites, on our external website and our internal intranet. All employees within NXP and any external stakeholder, whether it is a supplier or NGO for example, can report incidents to NXP. We are committed to engage with potential or actual affected stakeholders who might be, or are, impacted by the company’s activities and find solutions to remedy any adverse impacts.
At our sites, we make use of communication programs to ensure that every employee is fully informed. Information about the whistleblower and complaint channels are clearly communicated, free, easily accessible and visible (grievance box, SpeakUp service, posters, etc.) Workers are trained, upon hire and in the local language.
Worker-management engagement is openly practiced at all sites, such as regular worker-management coffee talks or dialog sessions where workers can raise concerns directly to the site general manager. In 2018, our Malaysia site launched a grievance mechanism that is downloaded on the workers mobile phone. This mechanism allows workers to report anonymously to management in which we have seen a steady amount of reports coming through this additional grievance mechanism each month and have all been addressed accordingly. NXP is researching the feasibility of extending the service to additional NXP locations. NXP continues to explore new innovative methods to enhance the worker-management engagement process to ensure that workers’ voices are effectively addressed.
In addition, when worker interviews are conducted during an audit, the worker receives a business card that has the local grievance phone number and the email address if they have additional information, concerns or they endure retaliation for speaking with the auditor.
The Ethics Committee monitors and investigates allegations on potential violations of the Business Code of Conduct or the Supplier Code of Conduct. The Ethics Committee then considers the approach to the allegation, and, when violations are substantiated, a corrective action plan is established.
The Ethics Committee consists of NXP’s SVP and Chief Corporate Counsel, an executive representative from Human Resources, the Senior Director of Sustainability and Environment Health and Safety and the NXP Chief Audit Executive. The Ethics Committee reports to and provides assurance to the Management Team and the audit committee to the NXP Board of Directors about the completeness and adequacy of the actions taken on allegations of misconduct.
In November 2016, the Thomson Reuters Foundation, the philanthropic arm of the world’s biggest news and information provider, awarded NXP with the Stop Slavery Award in the “Policy and Implementation” category. The award is the first global recognition for businesses that have excelled in efforts to eradicate forced labor from their supply chains.
NXP was chosen because of its deep commitment to the fight to end modern slavery. Since 2012, the company has made this a key corporate initiative through its own operations and across the supply chain. The company was first in its industry to adopt an “Employer Pays” policy and the first to require its foreign migrant workers not to release their government-issued documents to labor agents.
NXP pays for all related recruitment fees, including transportation, medical and other administrative costs and provides lockers to keep government-issued and personal documents safe. The company also carefully selects its recruitment agencies, auditing them to verify they are not involved in practicing any forms of forced and bonded labor.
In addition, NXP has a dedicated team in place to ensure compliance to these policies, going well beyond the first-tier supply chain. This team diligently conducts annual risk assessments and audits of its factories and suppliers, managing corrective and preventative actions while working closely with external stakeholders.
“Modern slavery and debt bondage are serious violations of rights and NXP is determined to do what we can to end this,” said Richard Clemmer, CEO of NXP Semiconductors.
“As a technology provider working with hundreds of suppliers globally, we dug deeply into our supply chain to ensure our workers are not held hostage by labor suppliers, making sure that kickbacks and payment demands from employment agencies are eradicated. Working with our suppliers to do the right thing – train, audit, institute corrective action plans, re-audit and motivate – we’ve focused on cooperative improvement as a corporate strategy and I am very proud of what we have accomplished to date. We thank the Thomson Reuters Foundation for their work and for the opportunity to highlight the continuing efforts NXP is making to bring this abhorrent practice to an end once and for all.”
Companies from ten global industries were assessed by independent reviewers according to their policies and practices with regard to anti-modern slavery. The assessment criteria was developed using a combination of existing standards, including the UK Modern Slavery Act and the California Transparency in Supply Chains Act, as well as other global best practice standards. Based on overall scores, NXP demonstrated leading practices with evidence of implementation.
Monique Villa, former CEO of the Thomson Reuters Foundation and founder of TrustLaw and Trust Women, said: “NXP is a prime example of a large global company who is taking action, going above and beyond the current legal requirement to ensure their business is not tainted by slavery. Their commitment to transparency and the courage they have shown to speak openly of this issue sets the standard for others to ensure that the fight against slavery is perceived both as a rights priority and a business imperative.”
NXP’s goal is to go deeper into the supply chain. In 2017, we went to Indonesia to audit the second-tier labor agents and their sub-agents, who support in the recruitment of workers in the rural villages of Indonesia. The audit covered two labor agents in Indonesia that directly work with the labor agents in Malaysia, sub-agents that recruit from the rural villages and three schools in Medan and Yogjakarta. The school visits provided training on labor practices and their human rights to potential candidates once they complete their mandatory education before joining the workforce. These actions were done to ensure that our audit covers the entire worker supply chain in Indonesia and meets the rigorous NXP standards. During this time, we also conducted several educational sessions to the labor brokers and the workers on NXP standards.
In 2018, the Senior Director of Sustainability and EHS was elected to the Responsible Business Association (RBA) board. Throughout 2018, board work consisted of working on the steering committee for the Responsible Minerals Initiative and more recently transitioned to the steering committee for the Responsible Labor Initiative. In addition to the steering committees, additional work was conducted on outreach, panels and initiatives to represent the RBA.
2018 was another productive year for NXP as we shared our best practices and worked cooperatively in the Global Business Coalition against Human Trafficking (GBCAT) association to address global human trafficking issues. We worked together across different sectors and regions to demonstrate our commitment to eradicating trafficking in supply chains, including forced labor and sex trafficking. 2018 was specifically focused on Trafficking Survivor Empowerment and Employment as well as subject matter expert capacity building.
As a signatory to the United Nations Global Compact, we reported on progress and highlighted our innovations and leadership in our supply chain. Our social responsibility program is another way we can offer ideas and solutions to society’s challenges.
The Social Responsibility team has been invited to numerous speaking engagements with our peers, authorities and industry association to talk about our activities, best practices and lessons learned. One highlight in 2018 was the invitation to speak at the United Nations Forum on Business and Human Rights where we discussed our human rights due diligence practices within a complex value chain. At the Forum, NXP shared our experience in tackling modern day slavery in the recruitment and hiring of foreign migrant workers and our due diligence work deep in the labor supply chain in Indonesia. NXP management has also recognized the program at quarterly town halls, highlighting the activities and leadership the team is taking to work with our supply chain.
NXP is setting standards within the semiconductor and electronics industry by being one of the first to set the No Fee Policy, to prohibit the withholding of passports, to control excessive working hours, to have at a minimum one rest day per every seven days worked.