2017 NXP CORPORATE RESPONSIBILITY REPORT

SECURE CONNECTIONS FOR A SMARTER WORLD

1 TABLE OF CONTENTS Overview

Economy Message from our CEO 3 SUPPLIER ENGAGEMENT 39 ENVIRONMENT 58 NXP Supplier Code of Conduct 40 Environment Program 59 OVERVIEW 4 Supply Chain Management 41 Goals 59 Ethical NXP at a Glance 5 Risk Assessments & Audits 43 Certification 60 Standards Sustainable Development Goals (SDG’s) 7 Training 45 Training 60 Sustainability at NXP 11 Validation 45 Reporting Standards 60 Scope of the Corporate Responsibility Report 11 Remediation 46 Validation 60 Social Our Commitment 12 Reducing our Carbon Footprint 61 Responsibility Sustainability Policy 12 EMPLOYEE ENGAGEMENT 47 Phasing Out Ozone-Depleting Substances 71 Material Aspects and Boundaries 13 Community Engagement 48 Substances of Concern 73 Sustainability Organization 13 Career Path 49 Energy Consumption 76 Stakeholder Diversity and Inclusion 50 Water Consumption 78 Engagement ECONOMY 14 Employee Profile 51 Waste 81 Corporate Governance 15 Investor Relations 17 HEALTH AND SAFETY 52 PRODUCT STEWARDSHIP 83 Supplier Business Continuity Management 17 Health and Safety Program 53 Environmental Product Compliance 84 Engagement Goals 53 Conflict Minerals 87 ETHICAL STANDARDS 20 Certification 53 Training 55 APPENDIX 88 SOCIAL RESPONSIBILITY 23 Chemical Safety 56 UN Global Compact – 89 Employee Reporting Standards Engagement Labor and Human Rights 29 56 Communication on Progress 2016 89 Human Trafficking 32 Validation 56 GRI Tables 90 Social Responsibility Auditable Standards 33

Health and STAKEHOLDER ENGAGEMENT 34 Safety Employees 36 Customers 36 Other Groups 36 Environment Industry Associations 36 Who we work with 38

Product Stewardship

Appendix 2 Overview customers, employees and shareholders. Our IoT innovations for example, are part MESSAGE of a radical shift in the way people connect and interact with the objects and devices FROM OUR around them. And our technologies for smart cars and smart cities will help make our Economy world safer, greener and more energy efficient. In fact, today’s consumer can benefit CEO from NXP innovations in every sphere of life, as they are increasingly incorporated into devices at home, in schools and offices, cars and medical products, mobile and wearables. Ethical As a world-leading company, we embrace our responsibility to act according to the Standards highest standards, to know right, and do right. Sustainability means maintaining a safe working environment, promoting good health, minimizing the environmental impact of NXP is a leader in the innovation and our activities and promoting dignity and respect for all employees. It is a broad subject Social manufacture of devices that help shape the future that we have focused into three guiding principles: Responsibility of communications networks and the Internet • ENGAGE: this encourages us to connect and communicate with those around us in a of Things, as well as industries from mobile to way that fosters a positive relationship, both at work and within our communities. automotive, NFC and RF. Our aim is to be the • PROTECT: living up to our responsibility as a global company, protecting the local Stakeholder best semiconductor company in the world, environment and wider world. This also involves ensuring the health and safety of Engagement supporting and empowering our employees every employee, and protecting their human rights. to make a difference for our customers, • RESPECT: this is applied everywhere, in how we act with each other, without bias or shareholders, society and the world at large. prejudice. Respect also covers our relationship with the wider world and our place in it. Supplier Sustainability is a key pillar of our work at NXP, Engagement because we believe that a smarter world begins Setting new benchmarks for sustainability on a sustainable planet. That’s why we constantly The principles set out above also guide NXP towards our goals of reducing carbon look for opportunities to preserve and promote emissions, decreasing consumption of water and energy, increasing recycling, smarter, more energy-efficient and safer ways phasing out chemicals of concern and reducing our workplace injury rate. Many of our Employee Engagement of living. Which brought us to work with the U.S benchmarks have already been adopted in the wider industry, and also by customers, Department of Transport, supplying the winner who work closely with us to raise global standards in sustainability. That is why NXP of its Smart Cities Challenge with the technology is proud to be a signatory of the United Nations Global Compact and work towards to support a smarter transport infrastructure. meeting the goals of the 10 principles on human rights, labor, environment and anti- Health and Self-driving cars, connected vehicles and smart corruption. We remain committed to reporting on our progress and invite stakeholders Safety sensors are all part of the plan, and each of these to partner with us to make a positive impact going forward. innovations is supported or enabled by NXP technology. NXP will continue to engage with the world to deliver on our commitments to protect Environment and respect. We will continue to do this in a sustainable way, with our partners, There are many more examples of how, in a suppliers, customers and shareholders. And we will continue to find new and better world of finite resources and increasing consumer ways to make a difference, and to earn the position of the world’s best semiconductor Product demand, NXP strikes a balance that serves our company. Stewardship

Rick Clemmer Appendix CEO, NXP Semiconductors 3 Overview

Economy

Ethical Standards

Social Responsibility

Stakeholder Engagement

Supplier Engagement

Employee Engagement

Health and Safety OVERVIEW Environment

Product Stewardship

Appendix 4 NXP AT A GLANCE Overview KEY FACTS AND FIGURES

Economy NXP Semiconductors is the leader in innovative high-performance mixed-signal solutions which, combined with deep application insight, enable the secure connections needed for a smarter world. Ethical Standards WORLDWIDE #1 POSITIONS RESEARCH & DEVELOPMENT • #1 in the Identification Industry • Approx. 11,000 engineers in 25 countries Social - Bank cards (#2) • More than 9,000 issued and pending Responsibility - E-Government (#1) patent families - Mobile NFC (#1) • Active in more than 120 standardization - Transportation and access management bodies and consortia Stakeholder cards (#1) Engagement SITES • #1 in Automotive Industry Research and development activities and - Global automotive semiconductors (#1) manufacturing facilities in Asia, Europe and Supplier - Auto non-power analog (#1) the United States Engagement - Auto microcontrollers (#2) • 5 wafer fabs in Austin, Texas (2), U.S.; - Car entertainment (#1) Chandler, Arizona, U.S.; Nijmegen, - In-vehicle networking (#1) The Netherlands; and the country of - Secure car access (#1) Singapore Employee Engagement - Automotive safety* (#1) • 4 assembly and test facilities in Bangkok, Thailand; Kaohsiung, Taiwan; Kuala >100facilities employees±31.000 • #1 in RF power transistors Lumpur, Malaysia; and Tianjin,China

Health and • #2 in communications processors BUSINESSES Safety • Secure connected devices • Secure interface and infrastructure countries33 of years60+ of experience • Secure identification solutions operations in semiconductors Environment *Airbag/ Braking/ Radar/ TPMS • Automotive

HEADQUARTERS Product Eindhoven, The Netherlands Stewardship POSTED REVENUE $9.26 B in 2017 Appendix 5 Overview Our core IP and technology in processing, connectivity and security enables secure connections for a smarter world Economy

Ethical SECURE, CONNECTED END-TO-END SECURITY SMART, CONNECTED SOLUTIONS Standards VEHICLE AND PRIVACY • ADAS: Radar, V2X, Vision, • Mobile transactions Consumer Industrial Fusion, Network processors • E-Government • Mobile audio • Smart home and buildings Social • Car entertainment • Smart bank cards • High-speed interfaces • Smart cities, smart grid Responsibility • In-vehicle networking • User authentication • Smartphone RF • M2M, Industry 4.0 • Secure car access • Embedded security • Personal health and fitness • Intelligent logistics • Cloud and infrastructure • Healthcare • 4.5G/5G networks Stakeholder security Engagement

Supplier Engagement JOINT VENTURES AND OTHER LARGEST OEM CUSTOMERS ABOUT NXP SEMICONDUCTORS MAJOR PARTICIPATIONS (IN ALPHABETICAL ORDER) NXP Semiconductors N.V. (NASDAQ: • Systems on Silicon Manufacturing • Apple ®, Bosch®, Continental™, Ericsson®, NXPI) enables secure connections Employee ® ® Engagement Company (SSMC) Pte. Ltd. (61%) Gemalto , Giesecke & Devrient , and infrastructure for a smarter world, • Datang NXP Semiconductors Co., Ltd. Huawei®, Hyundai®, Kona®, Nokia® advancing solutions that make lives easier, (49%) Networks, Panasonic®, Samsung® better and safer. As the world leader in • Suzhou ASEN Semiconductors Co., Ltd. and ZTE® secure connectivity solutions for embedded Health and (40%)* applications, NXP is driving innovation in Safety • Advanced Semiconductor Manufacturing the secure connected vehicle, end-to-end Co. Ltd. (27%) security and privacy, and smart connected • Cohda Wireless® Pty Ltd. (26%) solutions markets. Built on more than Environment • WeEn Semiconductors Co., Ltd. (49%) 60 years of combined experience and expertise, the company has over 30,000 employees in more than 30 countries and Product posted revenue of $9.26 billion in 2017. Stewardship Find out more at www.nxp.com.

*NXP signed an agreement to sell 40% of Suzhou Appendix ASEN Semiconductors Co., Ltd 6 SUSTAINABLE DEVELOPMENT GOALS (SDG’S) Overview The 17 UN Sustainable Development Goals (SDGs) promote sustained and inclusive economic growth, social development and environmental protection in the interest Economy of creating a world that is just, equitable and inclusive. NXP supports the UN SDG’s with our existing programs and technology that contribute to progress against 13 of the 17 SDG goals. Our programs and products focus on Ethical ensuring healthy lives, achieving dignity, prosperity and justice for all people and Standards protecting our planet for future generations.

The sections below regarding our smart technology, environmental responsibility, Social supplier engagement and social impact demonstrates NXP’s commitment to the SDG’s. Responsibility

Stakeholder Engagement SMART TECHNOLOGY deliver high-quality cooking provider, which can eliminate and retain nutritional elements the need for a healthcare visit Supplier by not overcooking. and reduce costs. Engagement NXP’s RFID is used to improve efficiencies across the entire food supply chain, from farm Employee Engagement to fork translating directly NXP technology advances into less food waste. The use medical and wearables to NXP IoT technology advances of temperature sensors with help connect the devices that agricultural production by integrated NXP RFID tags improve people’s lives. Health and contributing to the European providing in transit data on the NXP technology solutions Safety Internet of Farming 2020 temperature level in real-time NXP technology assists in support sustainable energy (IoF2020). Our technology improving visibility into the monitoring and diagnosing management for green cities will connect sensing and conditions to which perishable immunological pathologies and homes. These applications Environment monitoring technologies products are exposed during onsite and rapidly acquire data range from appliances, smart along the entire agricultural transport. This technology to provide fast and trustworthy building designs, smart homes production chain and enable helps avoid food and medical results. making them more connected, Product the analysis of an impressive waste during transit. convenient and secure. Stewardship amount of data, in a secure and NXP products help make user-friendly manner. portable medical devices easier NXP is committed to its to use, interoperable and leadership role for the next NXP’s RF technology is used to able to remotely relay patient generation of industrial IoT Appendix create cooking appliances that data from home to healthcare and Industry 4.0 applications 7 Overview enabling greater Machine ENVIRONMENTAL resolve social issues such as Safety, Connectivity and RESPONSIBILITY maintaining clean water supply Economy productivity. for our communities. NXP technology helps reduce Our projects focus on the

CO2 emissions by improving reduction of water consumption Ethical the flow of traffic, enabling in manufacturing and increased Standards electrical driving and making NXP uses microprocessor onsite water reuse/recycling. electronics energy efficient. based smartcard technology to store and protect personal We monitor and manage Social information in an eID format. NXP 2020 goal is to reduce the quality of wastewater Responsibility This makes citizen data more water consumption by 30% discharged into the secure, and as a result helps from a 2010 baseline globally. communities in which we combat identity theft and operate by utilizing onsite Stakeholder reduce fraud. That, in turn, At NXP we promote water treatment facilities and Engagement makes government programs environmental management continuous monitoring/testing more effective and more with the goal to help as required by local authorities. NXP solutions support the U.S. efficient, and lowers the cost of Supplier Department of Transportation’s providing services. Increased Engagement Smart City Challenge which security benefits a number of includes real-time vehicle- government-funded activities, to-vehicle infrastructure such as healthcare services, communication systems and social-welfare programs, and Employee Engagement secure public transportation tax collection. smart cars for a more intelligent urban transportation system. NXP’s microcontrollers used in electronic passports deliver Health and Leading cities worldwide will major advancements in Safety employ Intelligent Roadside terms of security. The use of Units powered by NXP ePassports makes it harder to technologies to help smooth present illegally issued travel Environment traffic flow, improve safety documents and helps reduce and emergency response, and black-market trade. provide additional services. Product Stewardship

Appendix 8 Overview NXP products are designed SUPPLY CHAIN NXP’s Social Responsibility to be compliant with EU RESPONSIBILITY Auditable standards requires Economy and China chemical content agents or search companies regulations. engaged in recruitment services for NXP to have a statement that commits to Ethical the respect and diversity in Standards NXP 2020 goal is to reduce providing recruitment services electricity & water consumption to NXP and encourage equal by 30% from a 2010 baseline. opportunity, fairness and Social NXP collaborates, trains, audits respect for diversity Responsibility NXP’s goal is to phase out and re-audits our supply chain chemicals of concern from our NXP 2020 goals is to reduce to verify that the health and manufacturing and recycle our carbon footprint by 30% safety of workers are compliant Stakeholder the chemicals in a responsible from a 2010 baseline. to the NXP social responsibility Engagement manner. auditable standards. NXP’s goal is optimize site NXP 2020 goal for recycling conservation, abatement These standards address living Supplier is recycle 90% of generated projects and substitute conditions and safe and healthy Engagement waste from a 2010 baseline. chemicals to reduce emissions working conditions. NXP The NXP’s Supplier Code of from our equipment. invests in assessments, audits Conduct requires suppliers and capacity building of our to provide decent and safe supply chain. working conditions, decent Employee Engagement living quarters, wage and benefits that comply with applicable wage laws and legally mandated benefits. Health and Safety Working hours shall not be more than 60 hours per week, except in emergency or Environment NXP’s Supplier Code of unusual situations. Workers Conduct requires that suppliers shall have at least one day off shall not harass or discriminate after six consecutive work days. Product based on race, color, age, Stewardship gender, sexual orientation, gender identity in hiring and employment practices such as hiring, wages, promotions, Appendix rewards, and access to training. 9 Overview not directly or indirectly finance make any other employment or benefit armed groups. related decision based on a Economy person’s age, color, gender, gender identity, mental or SOCIAL IMPACT physical disability, national origin, pregnancy, race, Ethical religion, sexual orientation, Standards The NXP’s Supplier Code of veteran status or any other NXP globally collaborates Conduct requires suppliers characteristic protected by with environmental groups to promote inclusion of all applicable law. and programs to clean natural Social irrespective of age, sex, habitats in the places in which Responsibility disability, race, ethnicity, origin, NXP promotes diversity we live and work. religion, economic or other and inclusion by sponsoring status. NXP collaborates with schools employee resource groups. NXP takes action to reduce the Stakeholder and institutions to bring quality These groups enable and degradation of natural habitats, Engagement NXP’s Social Responsibility education to our younger empower a diverse work halt the loss of biodiversity and Auditable standards requires generation. environment throughout our provide financial resources to agents or search companies organization. The teams are: conserve the ecosystems. Supplier engaged in recruitment Through our community Women Leadership Team; Engagement services for NXP to have a engagement and our Asian Cultural Team; Gay, Through corporate sponsorships, statement that commits to sponsorships, employee Lesbian, Bisexual, Transgender employee volunteerism and the respect and diversity in volunteerism and employee Team; Hispanic Education employee giving we are providing recruitment services giving we are committed Awareness Team and Black committed to fostering the Employee Engagement to NXP and encourage equal to promote educational Achievement Leadership Team. sustainable use of the earth’s opportunity, fairness and endeavors that encourage resources and promoting a clean respect for diversity. students to learn about healthy environment. science, technology, Health and engineering and math to help Safety inspire future innovators.

Environment

Product NXP implemented due Stewardship diligence processes, according to our policy, to reasonably assure that tin, tantalum, NXP’s Code of Conduct tungsten and gold in the states that NXP may not Appendix products we manufacture do hire, fire, demote, transfer or 10 SUSTAINABILITY AT NXP Overview NXP believes a company’s corporate responsibility is to continuously In particular, our industry has the potential to directly address improve through our actions to make a positive impact on society. our dependence on fossil fuels and minimize carbon emissions. Economy As a technology company, we want our stakeholders and employees Semiconductors are already reducing the power consumption motivated and excited to work for a responsible company and design of server farms and making consumer appliances operate more products that can change the world. efficiently. They’re also accelerating the deployment of:

Ethical NXP believes that, by building on innovation and providing • Energy efficiency Standards technologies that directly address societal demands, some of the • National and personal security most exciting times for NXP lie ahead. NXP will continue to carry out • Dependence on fossil fuels and minimize carbon emissions corporate responsibility and do our best to be good corporate citizens • Caring for the health of a growing and rapidly aging Social for now and for the future. We believe the semiconductor industry world population Responsibility is poised to take on new challenges. Using the latest semiconductor • Reduce the power consumption of server farms technologies, which produce tiny circuits that can perform advanced • Enabling the shift to hybrid and electric vehicles functions with relatively low power consumption. Our industry can help • Making consumer appliances operate more efficiently Stakeholder address some of the most compelling challenges we face as a society. • Accelerating the deployment of energy-saving Engagement Issues relating to energy efficiency, mobile populations, national and lighting technologies personal security, and caring for the health of a growing and rapidly aging world population. Additional information on NXP technologies It is our collective responsibility, as an industry, to continue this Supplier advancing the compelling challenges can be found in our Sustainable trend of being proactive as we create value for consumers, the Engagement Development Goals section under the Smart Technology. environment, and society as a whole.

Employee Engagement SCOPE OF THE CORPORATE RESPONSIBILITY REPORT Health and Safety This corporate responsibility report which was previously published Environment, health and safety (EHS) performance indicators on the NXP website as an interactive report, provides an overview of measure the EHS performance of our manufacturing facilities from Environment the economic, environmental and social aspects of NXP’s business 2010 through 2017. activities and products. In December of 2015, NXP merged with Freescale Semiconductor. Significant changes have influenced our reporting: Product • 2015 Sold the bipolar business which includes Stewardship This report follows the Global Reporting Initiative (GRI) standards the Jilin China factory as the main reference for its content. The report includes all NXP • 2015 Divested the NXP RF division operations and joint ventures in which we have a majority share. • 2015 NXP merged with Freescale Semiconductor Reporting of employment information is for year end of 2017. • 2017 Divested the NXP Standard Products Business Appendix 11 OUR COMMITMENT SUSTAINABILITY POLICY Overview Our commitment to corporate Ethics Values responsibility is at the heart of our The NXP Code of Conduct defines the NXP has five core Values: raising the bar, Economy ethical standards, policies and business principles and high standards which are engaging curiosity, taking initiative, working practices. To help guide a global team applied to its business practices and those together and developing deep core of approximately 31,000 employees, of its global supply chain. This Code is competence. These values form the basis of we developed programs around these enshrined in the contracts of all employees, our customer-focused passion to win. Ethical key elements: Business Ethics and and encourages respectful, dignified and Standards Transparency, Environment Health professional standards of behavior across Compliance and Safety, Human Rights, and our global network of sites. NXP complies with applicable legislation, integration of corporate responsibility regulations, codes of practice, often going Social into our supply chain. Employees beyond specified standards. Where laws Responsibility NXP has a global workforce that is highly and regulations do not provide adequate For NXP, Secure Connections for diverse, both geographically and culturally. controls, NXP adopts its own standards a Smarter World involves working We are committed to providing a workplace which are vigorously implemented. Local Stakeholder practices that are both responsible that is safe and secure, where every initiatives NXP works closely with partners Engagement and sustainable. We provide a safe employee is empowered to achieve a and individuals to support and strengthen working environment, promote good healthy work-life balance, and everyone is the communities in which we operate. health and minimize the environmental treated with respect and dignity. Supplier impact of our activities. And we work Transparency Engagement hard to do more than comply with Products NXP publishes sustainability results both existing standards. We actively strive NXP is committed to creating the highest internally and externally, showing our to establish a global benchmark for quality products and packages. These targets and measurements on a range of sustainability in our industry. NXP Secure Connections for a Smarter World metrics. Employee Engagement fosters ethical principles and respect for are developed to provide a positive the environment, employees, and the contribution to society. We aim for Dialog communities in which we work. Quality is continuous reduction of environmental NXP engages in open, ongoing dialogs with our number one driver, and as a business impact with each new product generation, employees, customers, investors, the public, Health and our goal is economic success. We go to conserving natural resources and and other key stakeholders to continuously Safety great lengths to ensure that sustainability establishing plans to phase out non-critical improve its sustainability performance. is ingrained in our business conduct at hazardous substances. all levels. This policy affects the way we Environment manage our company, and the way we This policy and its resulting actions are regularly reviewed and updated interact with society at large. to meet our stakeholders’ needs.

Product Stewardship

Appendix 12 MATERIAL ASPECTS AND BOUNDARIES Overview NXP conducts assessments that aim to align corporate responsibility Some of the issues that we have determined to be of most material goals with NXP’s business objectives. We incorporate feedback to value are Social, Environmental, and Supply Chain Responsibility. Economy inform us of the key corporate responsibility issues and their impact Such topics that we believe are of greatest interest to our on our business. In defining these focus areas, we interviewed our stakeholders, who want to make informed decisions about NXP’s stakeholders, researched best practices in the industry, studied the environmental and social performance are (in alphabetical order): legislative landscape and reviewed the results from our participation Ethical in various industry associations. • Carbon footprint reduction Standards • Chemical management (processes and products) As a result, each category that we report on meets three criteria: • Conflict minerals • Is greatly significant • Energy and water reduction Social • Has a current or potential impact on the company • Human rights Responsibility • A matter over which we, as a company, have a reasonable • Supply chain responsibility degree of control • Worker health and safety

Stakeholder Engagement

Supplier Engagement SUSTAINABILITY ORGANIZATION

Sustainability is the responsibility of the CEO and the NXP The Social Responsibility and EHS Boards have executive level Employee management team. NXP has a Social Responsibility board and an Engagement members representing operations and business groups. The Social EHS Board, responsible for setting the Sustainability and EHS related Responsibility and EHS Boards establishes the strategy and sets vision, policies, standards and improvement plans. It is supported targets, while the sustainability and EHS office performs operational by our Insurance and Risk Management Department, our Business functions. These targets include managing environmental, health, Health and Continuity Management Office, our Facilities and Environment, Health and safety conditions, overseeing the management of chemicals, Safety and Safety (EHS) Councils, which consist of senior EHS managers from monitoring and controlling sustainability related data, supporting our worldwide sites and the Sustainability Office. customers and contracts, coordinating social investment, liaising with industry associations, and delivering internal and external Environment communications on sustainability.

The sustainability office meets regularly with the boards to discuss Product and review NXP’s and our supplier’s performance. Any issues of non- Stewardship conformance are handled in the sustainability office and if needed, issues are escalated to the board.

Appendix 13 Overview

Economy

Ethical Standards

Social Responsibility

Stakeholder Engagement

Supplier Engagement

Employee Engagement

Health and Safety ECONOMY Environment

Product Stewardship

Appendix 14 Overview As part of our commitment to keeping our stakeholders informed about our achievements, our sustainability strategies, and our economic health, the following provides our company’s financial facts and figures and summarize our approach to corporate governance and business continuity. Economy We are a safety-and security-conscious business, and take all reasonable precautions to avoid situations that may threaten the safety or welfare of our employees, their families, our suppliers, our customers, other members of the community, our business or our stakeholders. If a situation threatens the safety and security of people or property, NXP will make every reasonable effort to minimize damage and protect employees, assets, Ethical and corporate reputation, and will endeavor to provide affected audiences with timely and accurate information about the situation. Standards

CORPORATE GOVERNANCE Social Responsibility BOARD OF DIRECTORS the Dutch corporate governance code and members of our board of directors may Under our articles of association and Dutch our board regulations do not allow directors be suspended or dismissed at any time corporate law, the members of the board to participate or vote on such matters. by the general meeting of stockholders. A Stakeholder of directors are collectively responsible for Our non-executive directors will supervise resolution to suspend or dismiss a director Engagement the management, general and financial the executive director and our general will have to be adopted by at least a two affairs and policy and strategy of our affairs and to provide general advice to thirds majority of the votes cast, provided company. Our executive director will be the executive director. Furthermore, the such majority represents more than half Supplier responsible for the day-to-day management non-executive directors will perform such of our issued share capital and unless the Engagement of the company and for the preparation acts that are delegated to them pursuant to proposal to suspend or dismiss a member and execution of board resolutions, to the our articles of association or by our board of the board of directors is made by the extent these tasks are not delegated to a regulations. One of the non-executive board of directors itself, in which case committee of the board of directors. Our directors is expected to be appointed resolutions shall be adopted by a simple Employee Engagement chief executive officer or all directors acting as chairman of the board and another majority of votes cast. jointly may represent our company with non-executive director is expected to be third parties. A conflict of interest between appointed as vice-chairman of the board The board of directors has adopted board the company and one or more of our of directors. regulations governing its performance, its Health and directors is not expected to have any impact decision making, its composition, the tasks Safety on the authority of directors to represent Each director will owe a duty to us to and working procedure of the committees the company. Under our board regulation, a properly perform the duties assigned to and other matters relating to the board of conflict needs to be reported to the board him and to act in the corporate interest directors, the chief executive officer, the Environment of directors and the board of directors shall of our company. Under Dutch law, the non-executive directors and the committees resolve on the consequences, if any. Under corporate interest extends to the interests established by the board of directors. In current Dutch law, in case of a conflict, the of all corporate stakeholders, such as accordance with our board regulations, Product general meeting of stockholders may at stockholders, creditors, employees, resolutions of our board of directors will be Stewardship any time resolve to designate a person to customers and suppliers. adopted by a simple majority of votes cast represent the company. Although current in a meeting at which at least the majority Dutch law allows our directors to participate Our directors will be appointed for one year of its members is present or represented. in deliberations and to vote on matters on and will be re-electable each year at the Each member of the board of directors has Appendix which the respective director is conflicted, general meeting of stockholders. The the right to cast one vote. In a tie vote, 15 Overview the proposal will be rejected. The above independent non-executive directors prior to publication. At least once per year, principles are laid down in Dutch law, the who are appointed as chairman of the the non-executive directors who are part of Economy above-mentioned board regulations and in audit committee, qualifies as an “audit the audit committee report their findings our Articles of Association. committee financial expert” as such term to the plenary board of directors. Our is defined in Item 407(d)(5) of Regulation audit committee also recommends to our BOARD COMMITTEES S-K and as determined by our board of stockholders the appointment of external Ethical While retaining overall responsibility, we directors. Our audit committee assists auditors. The external auditor attends most Standards expect that our board of directors will the board of directors in supervising, meetings of the audit committee. The be able to assign certain of its tasks to monitoring and advising the board of findings of the external auditor, the audit permanent committees. Members of the directors on financial reporting, risk approach and the risk analysis are also Social permanent committees will be appointed management, compliance with relevant discussed at these meetings. Responsibility by the board of directors. The board of legislation and regulations and our code directors will also determine the tasks of of conduct. It oversees the preparation Nominating and Compensation Committee each committee. The board of directors of our financial statements, our financial Our nominating and compensation Stakeholder has established an audit committee and a reporting process, our system of internal committee consists of four non-executive Engagement nominating and compensation committee, business controls and risk management, directors. All four members are each of which having the responsibilities our internal and external audit process independent directors under the Dutch and composition described below and in and our internal and external auditor’s corporate governance rules and under Supplier the attached charters: qualifications, independence and the NASDAQ and SEC compensation Engagement performance. Our audit committee also committee structure and membership Audit Committee reviews our annual and interim financial requirements. The nominating & Our audit committee consists of five statements and other public disclosures, compensation committee determines selection criteria and appointment Employee Engagement procedures for members of our board of directors, periodically assesses the scope and composition of our board of directors and evaluates the performance of its Health and individual members. It is responsible for Safety recommending to the board of directors the compensation package for our executive directors, with due observance Environment of the remuneration policy adopted by the general meeting of stockholders. It reviews employment contracts entered Product into with our executive directors, makes Stewardship recommendations to our board of directors with respect to major employment-related policies and oversees compliance with our employment and compensation-related Appendix disclosure obligations under applicable laws. 16 INVESTOR RELATIONS Overview Our financial statements are records of our quarterly and annual financial statements. financial activity. They include a balance More information about NXP’s financial Economy sheet, income statement, statement of cash disclosures, including links to our financial flow and statement of retained earnings. As statements, can be accessed at a public company, NXP publicly discloses http://investors.nxp.com. Ethical Standards

Social BUSINESS CONTINUITY MANAGEMENT Responsibility

NXP is committed to preparing and Stakeholder planning for serious incidents or disasters Engagement so that we can resume delivery of products and services as soon as possible in the event of a disruptive event. Supplier Engagement To achieve our Business Continuity objectives, we have created a Business Continuity System under the guidelines of ISO 22301 and IATF 16949 Section 6.1.2.3. Employee Engagement The NXP Business Continuity Management includes all NXP businesses, activities and sites under NXP control. NXP deploys a multi-tier approach to business continuity Health and and crisis management. Each tier focuses Safety on a specific risk area and corporate guidelines are established for each tier and are integrated within each business group. Environment

Product Stewardship

Appendix 17 Overview OBJECTIVES management on the progression of define, execute and measure results of risk The NXP business continuity plan has business continuity plan development, mitigation actions to reduce likelihood and/ Economy defined the following objectives: maintenance and testing for all locations or impact of the identified risks. within the scope of the BCM Program. • Prevent or reduce injury to staff • Minimize loss or damage to property, the Corporate Business Continuity Team (CBCT) APPROACH Ethical environment and the extent of disruption The NXP Corporate Business Continuity and Business Continuity strategies are focused Standards • Ensure immediate and appropriate Crisis Management programs are managed on the risks associated with each site. emergency actions are taken and focused via the Corporate Business Each site has identified the potential • Provide an effective, fit-for-purpose Continuity Team (CBCT). The CBCT is a risks that can have an impact on product Social structure for responding to an incident, with cross functional team of senior leaders. This supply to the end customer. Risks may Responsibility pre-determined roles and responsibilities team has been established to enable the include physical factory assets risk, utility • Identify other key business activities company to develop and implement the infrastructure, regional risks or supply risks. required for our NXP organizational BCM Program, to manage incidents and Each site periodically reviews and updates Stakeholder survival in the short-term to continue its business-critical activities the site business continuity plan. The plans Engagement • Identify other business activities that in crisis situations. The CBCT is comprised are documented and maintained at the sites will need to be recovered of several teams that deal with the various and are audited periodically. • Set up suitable alternative means aspects of risk prevention, mitigation and Supplier of operation incident management. Engagement • Identify alternative sources for supplies, CLASSIFICATION OF SITES resources and locations to safeguard and The current membership of the CBCT is NXP conducts its business and operations retrieve vital records comprised of members from technology in approximately 100 sites and in over 30 • Train personnel and familiarize them with and operations, supply chain, procurement, countries worldwide. While NXP provides Employee Engagement emergency and recovery procedures human resources, finance, legal, utmost care at all our sites, we categorize • Communicate effectively with key communication & public affairs, IT, site our sites based on assessed risk, as well as stakeholders such as employees, services, security, quality, sustainability, and size and magnitude of operations. customers, suppliers, investors, media environment, health and safety. • Tier 1 Significant impact if operations are Health and and regulators interrupted. Includes manufacturing sites, Safety Site Business Continuity Team (SBCT) large design centers or sites with critical ORGANIZATION The Site Business Continuity Teams operations e.g. IT data centers. The Business Continuity Management located at each factory, focuses on the • Tier 2 Moderate impact if operations Environment Office is the global coordinator for the risks associated at that site. The purpose interrupted, including design or software Business Continuity Plan. The Business of this team is to identify potential risks in centers and major regional office Continuity Management Office is our factory that can have a major impact on centers. Typically, tier 2 sites will be non- Product responsible for providing guidance and product supply to end customer. manufacturing sites with >150 employees. Stewardship standardization for business continuity plan Some sites may be classified as Tier 1 development, maintenance, testing and This may include physical factory asset risks based on management discretion. maintaining a solution for a centralized such as factory tool set availability, facilities • Tier 3 All remaining low-risk sites, plan retention. The BCM office will systems, utility infrastructure, regional including sales sites or remote locations Appendix provide periodic status reports to senior risks or other supply risks. The team will with <150 employees. 18 Overview BUSINESS IMPACT ASSESSMENT IT BUSINESS CONTINUITY ALERTS The business impact assessments include Information technology business continuity Alerts are in place to notify us in events Economy a focus to three primary areas of likelihood plan addresses the recovery of business- of earthquakes, typhoons, floods, of an event, the impact of an event and critical data systems. Key elements for the explosions, or the like. We also have the recovery time from an incident. Each of IT business continuity are as follows: a geographic information system that these attributes will be given a numerical includes the latitudes and longitudes Ethical score and the team will facilitate sharing • Communication procedures for incident of the manufacturing locations of our Standards of learnings and calibration of scores. management available various material suppliers. Teams receive The review and the update of these plans • Information on executing restoration emails whenever events happen, and shall be reviewed at least once a year. A procedures this immediately triggers a due-diligence Social standard document will be created and • Process to initiate service restoration assessment and an action-planning process. Responsibility utilized across all the factories. teams into action We reach out to factories and vendors • Outline coordination process for in the proximity of the crisis, and if there restoration of operations might be an impact to our supply continuity, Stakeholder PRODUCT SUPPLY CONTINUITY we take mitigation actions. Proactive Engagement The product supply business continuity communication with our customers is also plan assures product delivery to our PROCUREMENT BUSINESS CONTINUITY part of this process. customers. It covers the response The procurement business continuity plan Supplier documentation for internal and external will assure the delivery of raw materials The NXP Business Continuity team Engagement use. Key elements for the product supply to the NXP sites. Key elements of the evaluates risks and potential threats continuity plan are as follows: procurement continuity plan are as follows: periodically and will provide timely communication to our customers should • Response process documentation for • Conduct pro-active risk analysis to an incident occur which impacts our Employee Engagement internal and external use determine key suppliers and determine operations. These communications could • Assessment and response team initiation alternate options vary from an update to an initial assessment for product supply • Work with key suppliers to ensure an survey or more detailed and incremental • Decision making hub related to assurance of supply to NXP follow-up information as an incident is Health and product supply • Evaluate dual sourcing options as deemed managed. Safety • Product allocation needed from risk analysis • Communication protocols for external customers Environment • Repository for communication and event responses

Product Stewardship

Appendix 19 Overview

Economy

Ethical Standards

Social Responsibility

Stakeholder Engagement

Supplier Engagement

Employee Engagement

Health and Safety ETHICAL Environment STANDARDS

Product Stewardship

Appendix 20 Overview NXP’s commitment to the highest standards of ethics and integrity helps us earn the continued confidence of our employees, investors, customers, vendors, and communities. Economy NXP CODE OF CONDUCT

Ethical Our Code of Conduct (the “Code”) ethical situations such as intellectual property all forms of bribery, including promising, Standards translates our commitment into principles, protection, conflicts of interest, anticorruption offering, giving, or accepting any bribes, standards, and responsibilities that help practices, harassment, discrimination corruption, extortion, or embezzlement, and guide our behavior and our decision- and more. Every employee is required to all business dealings shall be transparently Social making. The Code prohibits unethical acknowledge that they have read and will performed and accurately reflected in Responsibility behaviors, such as conflicts of interest, comply with the Code and is encouraged to business books and records. Monitoring kickbacks, bribery, fraud, improper raise concerns when they arise. controls are implemented throughout the accounting, and improper use of company organization to prevent and detect possible Stakeholder assets or funds. The Code mandates The Code applies equally to all our violations of anticorruption laws. Engagement compliance with the laws of the countries activities on behalf of NXP worldwide in which we do business, and conformance and governs all our business decisions, Information regarding business activities, with international standards for labor and including finance, purchasing, supply financial situation, or performance is to be Supplier human rights. It also requires the protection management and specifies policies disclosed in accordance with applicable Engagement of confidential information and intellectual covering labor and human rights, business regulations and prevailing industry property and strict adherence to all public- ethics, environmental compliance, and practices. Falsification of records or reporting requirements. Through the Code, workplace safety and health. misrepresentation of conditions or practices our commitment to ethics and integrity is is unacceptable. Intellectual property rights Employee Engagement ingrained in our daily operations. The Code is not an all-encompassing are to be respected, and the transfer of document, but formulates the minimum technology and know-how is to be done The Code sets out the values that guide requirements for our behavior on behalf in a manner that protects intellectual us as we work to fulfill our ambitions in the of NXP. Additional local rules of business property rights. Standards of fair business, Health and company. It guides us, not only in achieving conduct or ethical behavior may be advertising, and competition are to be Safety compliance with legal requirements and made by BU, Operations, Corporate, and upheld. Appropriate means to safeguard fundamental global standards, but also in Country Management wherever necessary, customer information must be available. raising the bar in our behavior. The Code is as long as such rules are consistent Environment an expression of the best that we are: with our values, our reputation, and the ethical individuals who demonstrate contents of the Code. ORGANIZATION benchmark behavior in our everyday The Ethics Committee consists of the NXP’s Product interactions, and a company that operates SVP & Chief Corporate Counsel, an executive Stewardship as a socially responsible corporate citizen POLICIES AND PROCEDURES representative from Human Resources, the of the world. The code discusses behaviors The highest standards of integrity are to be Director of Sustainability and Environment expected of all of us and advises on ethical upheld in all business interactions. All NXP Health & Safety and the NXP Chief Audit and legal situations we may face in the sites and our suppliers shall have a “zero Executive. The Ethics Committee advises Appendix course of our work. It guides us through tolerance” policy with respect to the Management Team in defining and 21 Overview deploying the Code of Conduct, assure the and countries. The groups and areas that GRIEVANCES AND WHISTLEBLOWERS completeness of recording of the allegation of had lower ratings will be followed up to Employees may submit complaints, either Economy misconduct and assure appropriate action has explore and provide support. anonymously or not, regarding violations been taken for the allegation of misconducts. of the NXP Code of Conduct. The privacy The assurance part of the role is managed INVESTIGATIONS of both the whistleblower and the subject by a subcommittee of the Ethics Committee We monitor and assess compliance of the complaint will be protected to Ethical consisting of the SVP & Chief Corporate and investigate each allegation of non- the fullest extent possible within the Standards Counsel and the Chief Audit Executive. compliance. When a problem is detected, legitimate needs of the law and any ensuing The Ethics Committee is supported by a we analyze the root cause and modify investigation. Retaliation against workers secretary. The Ethics Committee reports to, the relevant internal control system to who participate in such programs in good Social and provides assurance to the Management prevent a possible recurrence. We track the faith or refuse an order that is in violation of Responsibility Team and the audit committee to the NXP company’s compliance performance and the NXP Code of Conduct is prohibited. Board of Directors about the completeness report progress on a quarterly basis to the and adequacy of the actions taken on Chief Financial Officer, General Counsel, Information about the various complaint Stakeholder allegations of misconduct. Human Resources and the Audit Committee channels are clearly communicated, free, Engagement of our Board of Directors. easily accessible, and visible (grievance MANAGEMENT SYSTEMS box, whistleblower service - such as our At all sites, there are processes in place In 2017, allegations were reported to the SpeakUp line, ability to report anonymously, Supplier for communicating clear and accurate ethics committee in which every report was posters, etc.). Workers are trained, upon Engagement information about policies, practices, investigated in order to establish whether the hire in a language they understand. At expectations and performance to workers, allegations constituted violations. In which, our sites, we make use of communication suppliers and customers. 44% of the allegations were substantiated, and programs to ensure that every employee is disciplinary measures were taken according fully informed and understands the policy of Employee Engagement EMPLOYEE ENGAGEMENT to the severity of the breach: an official non-retaliation. All employees worldwide receive training on warning, suspension or dismissal. In addition, NXP’s Code of Conduct. Training typically some cases revealed the need for changes When a complaint or grievance is received, takes about one hour per employee and within the organization, which have now been there is an effective procedure for Health and must be completed every two years. A implemented. All reports are taken seriously documenting, investigating, and addressing Safety targeted population, depending on their and are investigated. Good faith suspicion the complaint or grievance, including roles and geographic locations are assigned is sufficient, as you do not need conclusive appropriate disciplinary actions. The NXP more in-depth ethics and compliance evidence to report a potential issue. Ethics Committee reviews complaints and Environment training based on topics such as anti- grievances, and oversees their investigation. corruption, import-export compliance, The NXP Ethics Committee informs senior insider trading and antitrust. members of management and the Audit Product Committee on the reported cases. When Stewardship In 2016 an ethics survey was sent to our necessary, corrective actions to prevent indirect labor employees to understand the reoccurrence of similar complaints are NXP’s ethical culture and conduct. implemented. Participation rate was at 75% with overall Appendix positive results across businesses, functions 22 Overview

Economy

Ethical Standards

Social Responsibility

Stakeholder Engagement

Supplier Engagement

Employee Engagement

Health and Safety SOCIAL Environment RESPONSIBILITY

Product Stewardship

Appendix 23 SOCIAL RESPONSIBILITY Overview NXP believes that social responsibility The NXP Social Responsibility office is undergo the NXP Social Responsibility is important for our employees, the tasked to: audits. Economy global population, our planet and vital 4. Conduct audits of suppliers and for our business success. Because of our 1. Oversee the strategic direction and provide consultation to suppliers that commitment, we strive to be a leader in implementation of the NXP Social require support in establishing Social social responsibility. NXP has developed Responsibility program by establishing Responsibility programs that are aligned Ethical and established a comprehensive set and maintaining the Social Responsibility to NXP standards. Standards of sustainable business initiatives that policies and standards. 5. Manage and track corrective and are incorporated into our core business 2. Ensure compliance of all NXP preventive actions progress of suppliers practices. manufacturing facilities to our Social to ensure that gaps found in supplier Social Responsibility policies and standards by audits are fully addressed. Responsibility Our motto is Engage. Protect. Respect. conducting regular capacity building, 6. Work and collaborate with external This motto engages with our employees, site assessments and audits. stakeholders, i.e., industry associations, coworkers, managers, suppliers, customers, 3. Conduct supply chain risk assessment in customers, NGOs, government Stakeholder our community and other relevant collaboration with the NXP purchasing agencies, etc., to work on progressing Engagement stakeholders. We protect and respect group to determine high priority important social responsibility issues. each life, everyone’s human rights, the suppliers that will be required to environment, and the health and safety of all. Supplier Engagement SOCIAL RESPONSIBILITY OFFICE Social responsibility is the responsibility of the CEO and the NXP management team. Employee Engagement The Social Responsibility board is chaired by the Chief Human Resource Officer and has executive members representing operations and business groups. The Social Health and Responsibility board provides strategic Safety directions and sets targets, while the Social Responsibility office, under the direction of Senior Director of Sustainability and EHS, Environment performs operational functions. The Social Responsibility office meets regularly with the board to discuss and review NXP’s and Product our suppliers’ performance. Any issues of Stewardship nonconformance’s or potential risks are handled in the Social Responsibility office and if needed, issues are escalated to the Social Responsibility board. Appendix 24 Overview GOALS inspections. Audits also include interviews 2. Manufacturing facility management Our goal is to have no core violations or with labor agents, onsite service providers and team–this is a 2-hour training called Economy priority findings within our company from inspection of the employees living conditions. the White-belt training. This training is our own internal audits or from our customer focused on the high-level requirements of audits. NXP’s RBA (Responsible Business TRAINING AND CAPACITY BUILDING the NXP standards on social responsibility Alliance) self-assessment scores are to be NXP continuously trains our employees and and what role the facility management Ethical above 90% for all manufacturing sites. Audit supply chain. Since 2013 over 1,000 key team plays in facilitating the success in Standards scores for our manufacturing sites are to employees have received training on the implementation of the standards. achieve >95%. If a site fails to meet the social responsibility with 120 of these key 3. Manufacturing Facility Social threshold, then an audit will occur every employees certified as RBA lead auditors. Responsibility Steering and Working Social 6 months until the 95% threshold is met. The Black belt training, is the RBA lead Committee–this is a 2-day training, or Responsibility auditor course conducted by Verité in which Green-belt training, providing in-depth RISK ASSESSMENTS AND AUDITS participants are enrolled in a five-day analysis into the specifics of interpreting Regardless of location, whether in the workshop that covers social systems auditing, the NXP Social Responsibility standards Stakeholder Americas, Europe or Asia-Pacific, all NXP investigative skills and management systems and the requirements to successfully Engagement facilities conduct annual risk assessments for to successfully conduct Labor and Ethics implement the program at the facility. social responsibility. As a member of components or a social responsibility 4. Manufacturing Facility Social the Responsible Business Alliance (RBA) program. At the end of the training course, Responsibility subject matter experts– Supplier each NXP factory completes an RBA Self- each student takes a 2-hour written exam, this is an intensive 5-day Responsible Engagement Assessment questionnaire that addresses scored by Verité and is sent for final Business Alliance (RBA) Labor and Ethics topics such as labor, ethics, environment, verification to IRCA (International Register Lead Auditor training, or Black-belt health and safety as well as management of Certificated Auditors). Successful training. The main goal is to train a systems. In addition to the RBA self- completion of this course fulfills the training selected group of subject matter experts Employee Engagement assessment, each facility must also complete requirement of IRCA for labor and ethics at the sites who will be responsible the NXP self-assessment, that is based on auditors to the RBA auditing program. for program implementation, conduct the NXP social responsibility requirements. training for the facility’s general Our focus is to maintain a pool of population, and support the facility in Health and Each NXP manufacturing facility has a sufficiently qualified social responsibility both internal, external and supplier Safety Social Responsibility audit conducted by a champions and subject matter experts for social responsibility audits. NXP-approved third party audit firm. NXP each manufacturing facility. Each year we facilities are required to achieve a score of increase internal communications within The training program content is updated Environment 95% and above to demonstrate success our manufacturing facilities on social and revised whenever there is a change in the deployment of the program and responsibility topics. or revision in the NXP Standards on Social initiatives. All facilities should not have any Responsibility. The NXP standards are Product core violation findings as specified by the NXP internal training is targeted at the reviewed on an annual basis to determine Stewardship NXP standards on Social Responsibility. following audience: the need for a revision based on changing 1. Executive Management Team–this is a regulatory landscape, industry best Audits include many different components, high-level training that covers the NXP practices or in customer requirements and such as document reviews, employee and social responsibility requirements and the expectations. In 2015 the audit program Appendix management interviews as well as facility expectations of the management team. and the standards were revised to include 25 Overview a new section in the NXP standards on the progress towards completing the corrective deploying the Code of Conduct, assure the definition of recruitment fees. This revision action plan. completeness of recording of the allegation Economy provided more clarity on the NXP Employer of misconduct and assure appropriate Pays policy in the recruitment of foreign NXP monitors improvement by measuring action has been taken for the allegation workers. In 2017, the auditable standards the number of core violations, repeat audits, of misconduct. The Ethics Committee were revised to include information frequency of findings, and the closure rates reports to, and provides assurance to the Ethical regarding clarification of fees and expenses, of the corrective actions. NXP measures the Management Team and the audit committee Standards employment contract substitution, the correlation between the self-assessment to the NXP Board of Directors about the total percentage of apprentices, wages for questionnaire scores and the audit scores completeness and adequacy of the actions foreign workers, and the worker grievance for each manufacturing facility and the taken on allegations of misconduct. Social system. The changes were communicated results are within target. Responsibility to all NXP sites and to our supply chain At our sites, we make use of communication through a series of webinars. programs to ensure that every employee REMEDIATION is fully informed. Information about the Stakeholder Re-training is provided when: NXP has clear and widely communicated whistleblower and complaint channels Engagement • A new revision to the NXP Social procedure in place for reporting concerns are clearly communicated, free, easily Responsibility standards is published within our operations. We conduct training accessible, and visible (grievance box, • A significant personnel change occurs and post the grievance SpeakUp line at our SpeakUp service, posters, etc.) Workers are Supplier in a facility sites, on the internet and our internal intranet. trained, upon hire and in a language they Engagement • New facilities are added to the company All employees within NXP and any outside understand, on the whistleblower policy. stakeholder, whether it is a supplier or NGO The effectiveness or success of the training for example can report incidents to NXP. Worker-management engagement is can be measured from the NXP Social openly practiced at all sites, such as regular Employee Engagement Responsibility audit performance. The Ethics Committee monitors and initiates worker-management coffee talks or dialog investigations. The Sustainability Office sessions to programs where workers can raise supports the Ethics Committee when concerns directly to the site general manager. VALIDATION requested. The Ethics Committee along with In NXP, workers are free to raise concerns Health and Each month, key performance indicators are the Sustainability Office then considers the and suggestions to management. NXP Safety reported to the Sustainability Office and the approach to the allegation. These discussions continues to explore new innovative methods management team on topics such as NXP focus on the grievance, the remediation to enhance the worker-management internal audits, NXP internal self-assessment plan when violations are substantiated and engagement process to ensure that Environment scores, signed conformance letters from a corrective action plan is established. workers’ voices are effectively addressed. our supply chain, risk indicators within our supply chain and core violations from our The Ethics Committee consists of the In addition, when worker interviews are Product supplier audits. NXP’s SVP and Chief Corporate Counsel, conducted during an audit, the worker Stewardship an executive representative from Human receives a business card that has the The Social Responsibility office meets with Resources, the Director Environment grievance local phone number and the the purchasing organization monthly and Health and Safety and the NXP Chief Audit email address if they have additional sometimes weekly, to discuss audit results, Executive. The Ethics Committee advises information, concerns or they endure Appendix the approved corrective action plan and the Management Team in defining and retaliation for speaking with the auditor. 26 Overview AWARD, INNOVATION AND LEADERSHIP

Economy Award In November 2016, the Thomson Reuters Foundation, the philanthropic arm of the world’s biggest news and information Ethical provider, awarded NXP with the Stop Slavery Standards Award in the “Policy and Implementation” category. The award is the first global recognition for businesses that have Social excelled in efforts to eradicate forced labor Responsibility from their supply chains. and preventative actions while working Companies from ten global industries NXP was chosen because of its deep closely with external stakeholders. were assessed by independent reviewers Stakeholder commitment to the fight to end modern according to their policies and practices Engagement slavery. Since 2012, the company has made “Modern slavery and debt bondage are with regard to anti-modern slavery. The this a key corporate initiative through its own serious violations of rights and NXP is assessment criteria were developed using operations and across the supply chain. The determined to do what we can to end a combination of existing standards, Supplier company was first in its industry to adopt this,” said Richard Clemmer, CEO of NXP including the UK Modern Slavery Act and Engagement an “Employer Pays” policy and the first to Semiconductors. the California Transparency in Supply require its foreign migrant workers not to Chains Act, as well as other global best release their government-issued documents “As a technology provider working with practice standards. Based on overall scores, to labor agents. hundreds of suppliers globally, we dug NXP demonstrated leading practices with Employee Engagement deeply into our supply chain to ensure evidence of implementation. Today, NXP pays for all related recruitment our workers are not held hostage by labor fees, including transportation costs, and suppliers, making sure that kickbacks and Monique Villa, CEO of the Thomson Reuters provides lockers to keep its workers’ payment demands from employment Foundation and founder of TrustLaw Health and government-issued documents safe. agencies are eradicated. Working with and Trust Women, said: “NXP is a prime Safety The company also carefully selects its our suppliers to do the right thing – train, example of a large global company who recruitment agencies, auditing them to audit, institute corrective action plans, is taking action, going above and beyond verify they are not involved in any forms of re-audit and motivate – we’ve focused on the current legal requirement to ensure Environment bonded or forced labor. cooperative improvement as a corporate their business is not tainted by slavery. strategy and I am very proud of what we Their commitment to transparency and the In addition, NXP has a dedicated team have accomplished to date. We thank the courage they have shown to speak openly Product in place to ensure compliance to these Thomson Reuters Foundation for their work of this issue sets the standard for others Stewardship policies, going well beyond the first-tier and for the opportunity to highlight the to ensure that the fight against slavery is supply chain. This team diligently conducts continuing efforts NXP is making to bring perceived both as a rights priority and a annual risk assessments and audits of its this abhorrent practice to an end once and business imperative.” factories and suppliers, managing corrective for all.” Appendix 27 Overview Innovation their mandatory education before joining emphasize at quarterly town halls the NXP’s goal is to go deeper into the supply the workforce. These actions were done activities and leadership the team is taking Economy chain. In 2016, we went to Indonesia to to ensure that our investigation and audit to work with our supply chain. In addition audit the third-tier labor agents and their covers the entire worker supply chain in to recognition within NXP, the Social sub-agents, who support in the recruitment Indonesia and meets the rigorous NXP Responsibility team has been invited to of workers in the rural villages of Indonesia. standards. During this time, we also numerous speaking engagements by our Ethical The audit covered two main sub-agents in conducted several educational sessions to peers, authorities and industry association Standards Indonesia that directly work with the labor the labor brokers and the workers on NXP to talk about our activities, best practices agents in Malaysia, eleven sub-agents standards. and lessons learned. that recruit from the rural villages, and Social three schools in Medan and Yogjakarta. Leadership Responsibility The school visits provided training on The Social Responsibility team has labor practices and their human rights to been recognized by NXP management. potential candidates once they complete Management regularly recognize and Stakeholder Engagement

Supplier Engagement

Employee Engagement

Health and Safety

Environment

Product Stewardship NXP is setting standards within the semiconductor and electronics industry by being one of the first to set the No Recruitment Fee Policy, to not withhold passports, require working hours be no more than 60 hours per work week, have at a minimum one rest day per every Appendix seven days worked and not hire child labor. 28 LABOR AND HUMAN RIGHTS Overview The importance we place on maintaining Conduct, and to monitor the application his or her identity papers upon starting work high ethical and corporate social of the Supplier Code of Conduct to the for NXP. NXP has taken the extra step of Economy responsibility is reflected in our commitment best of its ability. setting a new standard regarding repaying to the labor and human rights of our fees if found and document retention. employees. Our codes, standards, programs, We have specific standards in place and audit procedures are built around regarding labor and human rights. These In Action Ethical the recognition that everything we do standards are to be strictly followed by Due to the scarcity of local Standards in connection with our work must reflect NXP and all NXP suppliers, such as external workers in Malaysia and the complexities the highest possible standards of ethical manufacturing partners, direct material for obtaining working permits and visas business conduct and our employees are suppliers, tools and machines suppliers as for migrant workers, it’s quite common Social treated with respect and dignity. well as suppliers of logistics and packaging for companies to use the services of labor Responsibility services, and onsite service providers and brokers in Malaysia to hire workers from NXP is responsible for providing a work are thoroughly tested during our audits. countries such as Indonesia, India, or the environment in which ethics, integrity, and Philippines. NXP’s Social Responsibility Stakeholder trustworthiness are accepted and shared, LABOR AND HUMAN RIGHTS FOCUS Audit’s scope includes the recruitment Engagement not just among ourselves but with all our AREAS practices of labor brokers. It was soon stakeholders, including the communities in NXP’s auditable standards on labor and detected that labor brokers in Malaysia which we operate and work. We support the human rights consist of the following would routinely retain migrant workers’ Supplier aim of the International Labor Organization categories: passports. Upon learning about the Engagement (ILO) to arrive at universally accepted labor common practice of withholding migrant standards and have therefore adopted Freely Chosen Employment workers’ passports, NXP immediately internal policies, standards, procedures, We shall under no circumstance make use summoned all its labor brokers to assess and guidelines with respect to the topics of any form of slaved, forced, bonded, the situation and take action. In 2015, Employee NXP required all labor brokers to return Engagement discussed below. indentured, or prison labor. All work must be voluntary and there will not be a passports to the migrant workers. One NXP became a member of the restriction on movement of workers and labor broker rejected the new policies Responsible Business Alliance (RBA), their access to basic liberties. Depending and NXP terminated the relationship as a Health and previously known as the Electronic on local law requirements, everybody is free result. NXP continues to audit the issue of Safety Industry Citizenship Coalition (EICC), to terminate their employment with NXP passport retention in all its facilities and in April 2014. In 2017, NXP maintained upon reasonable notice without penalty. suppliers. Document retention continues its full member status to the new RBA We will only employ, directly or through to be a substantial problem; however, Environment criteria, demonstrating our full support others, such as labor agents, people who actions by companies like NXP represent of the vision and goals of the RBA. are working of their own free will. Workers a significant positive step. The requirements from the RBA Code shall not be required to participate in any Product of Conduct are either part of NXP’s form of forced savings or loan program NXP pays for all fees in the recruitment of Stewardship own Code of Conduct or have been where repayment terms are indicative of workers. Such fees and expenses include included in NXP policies, standards, and debt bondage or forced labor. Paying • Application procedures. NXP also commits to apply fees, deposits or debt repayment for their • Recruitment similar requirements to its suppliers, recruitments or employment is never • Hiring Appendix through the NXP Supplier Code of required and no one shall be deprived of • Placement 29 Overview • Processing fees of any kind, and at any educate our supply chain and students young worker from reprisal and provides stage, including agent, sub-agent, or earned us the 2016 Thomson Reuters the completion of the young worker’s Economy employer operating, administrative, Foundation’s Stop Slavery Award for policy compulsory education. NXP has yet to or overhead costs associated with and implementation. discover child labor in our factories or in our the recruitment, selection, hiring, and supply chain. Audit findings related to child placement of direct and contract workers Child Labor and Young Workers labor in our factories and our supply chains Ethical • Travel fees We will always adhere to the legal minimum are because there is a lack of policies and Standards age requirements in all countries in which procedures on how to manage the situation To address concerns at all stages of we operate. We will never employ children if child labor is discovered. These findings the recruitment process, NXP started a under the age of 16, under the age for are placed in the corrective action plan and Social comprehensive training and audit program completing compulsory education, or is monitored closely until acceptable closure Responsibility of all labor agents and sub-agents in the under the minimum age for employment in is approved. sending and receiving countries to ensure the country, whichever is stricter. To make compliance with the NXP standards and sure all our employees are age-qualified, Working Hours and Rest Day Stakeholder to mitigate the risk of modern day slavery. NXP has a strong age-verification process Our work weeks shall not exceed the Engagement While in the sending countries of the labor during the recruitment and selection maximum set by local law and shall, in any agents and sub-agents, we educate them process. If workers between the ages of 16 event, not be more than 60 hours, including of NXP requirements, such as: Employment and 18 are employed, we will ensure that overtime, except during emergencies or Supplier contracts written in native language of the this work does not affect or preclude their unusual situations. Workers will be entitled Engagement worker, contract shall have accurate written educational opportunities or obligations, to have at least one day off per seven- details in regarding working conditions, nor jeopardize their health and safety, day period. Overtime work is voluntary, nature of work, wages, benefits, working including restrictions on overtime and night unless agreed upon by a collective labor hours, and duration of contract. Contract work. agreement or union contract, or during Employee Engagement shall be the same at the time of recruitment emergencies or unusual situations. Worker and at the receiving country. NXP’s “No Fee NXP has a comprehensive policy that can refuse to work overtime hours without Policy” and no withholding government clearly states the minimum age for workers penalty. Workers will have legally mandated issued documentation is thoroughly and an age-verification process during breaks, holidays and vacation days. Health and discussed in the training sessions. NXP the recruitment and selection process. Adequate and effective policy and systems/ Safety goes through each Labor and Human Rights This includes at a minimum, inspection procedures are established to determine, topics listed. In addition to training our and verification of at least two forms of record, manage, and control working hours, suppliers, we also educate students that identification and visual identification. In including overtime. Environment are potential employees of NXP within the China for example, the national issued villages of the sending country to educate identification can be cross referenced at a Wages and Benefits them on their human rights and what it is Chinese government website to determine Our remuneration shall be consistent Product like to be a foreign migrant worker. After if the identification presented is the real id with the provisions of all applicable Stewardship training and collaboration, NXP audits the issued to that person. wage laws, including those relating to labor agents and sub-agents to help them minimum wage, overtime hours, and legally identify areas of strength and weakness. If an underage worker is found, NXP mandated benefits. In compliance with immediately implements a remediation local laws, workers shall be compensated Appendix Our efforts to eradicate modern day slavery, program which includes protecting the for overtime at pay rates greater than 30 Overview regular hourly rates. Deductions from wages as a disciplinary measure are not Economy permitted. Vacation time, leave periods, and holidays are consistent with applicable laws and regulations. Workers shall be paid in a timely manner. Workers shall always Ethical be aware of the composition of pay and Standards benefits, in a detailed and clear manner, prior to employment. Workers shall receive clear statements in detail, in a language Social understood by workers. All employees, Responsibility whether they are direct or foreign migrant workers are treated the same way at NXP.

Stakeholder Humane Treatment Engagement There shall not be harsh or inhumane treatment of workers, including any sexual harassment, sexual abuse, corporal Supplier punishment, mental or physical coercion, age, gender, sexual orientation, ethnicity, that a person must not join a union or must Engagement or verbal abuse; nor is there to be the disability, pregnancy, religion, political terminate membership in a trade union. threat of any such treatment. Employees affiliation, veteran status, union membership, shall be able to communicate openly with or marital status in hiring or employment NXP respects the right to be represented management regarding working conditions practices such as promotions, rewards, or by trade unions and other employee Employee Engagement without having to fear reprisal, intimidation, access to training. organizations. NXP will, whenever or harassment. Disciplinary policies and applicable, engage in the negotiation procedures in support of these requirements NXP is committed to providing an attractive process either on its own behalf or through shall be clearly defined and communicated working environment for employees and we employers’ associations. Local rights and Health and to workers. There will be no restriction of will recruit, hire, and promote employees co-determination will be fully respected with Safety workers’ access to basic physical comforts solely on the basis of suitability for the job. a view to reaching agreement on the terms such as toilets, bathrooms, drinking water or We will recruit, select, provide opportunities and conditions presented by employees. medical facilities. There will be free exit and for development and training, and Environment entry of facility or dormitories and will not promote on the basis of objective and non- Workers shall be able to openly limit access to specific times of the day. discriminatory criteria. communicate and share grievances with management regarding working conditions Product Non-discrimination and Diversity Freedom of Association and Collective and management practices without fear Stewardship NXP is committed to diversity in its workforce Bargaining of reprisal, intimidation, or harassment. and encourages equality of opportunity NXP recognizes the freedom of employees More information about grievance and and fairness. Therefore, we do not tolerate to establish or join an organization of their whistleblower policies can be found in NXP’s any kind of harassment or discrimination choice and will respect this right. We will not Code of Conduct. Appendix based on, among other things, race, color, make employment subject to the condition 31 HUMAN TRAFFICKING Overview NXP is committed to respecting rights and transfer, or receipt of persons by means of labor. Our suppliers are obliged to comply upholding the values and high standards threat, force, coercion, abduction, fraud, with NXP’s Supplier Code of Conduct and Economy of ethics as expressed in our NXP Code of or payments to any person having control all applicable laws, rules and regulations. Conduct. NXP has a zero-tolerance policy over another person for the purpose of The NXP Supplier Code of Conduct uses for slavery and trafficking. exploitation. NXP allows all employees the structure and contains language from the freedom of association, the right to the Responsible Business Alliance (RBA) Ethical In 2015, the International Labour collective bargaining, the abolition of child Code of Conduct, and includes additional Standards Organization reports that almost 21 labor and the elimination of discrimination. NXP specific requirements on slavery and million people are victims of forced labor. NXP forbids suppliers and recruiters trafficking. NXP is aware that slavery and trafficking from charging fees to employees during Social is an issue within the semiconductor recruitment processes, or withholding NXP continues to update its policies, Responsibility industry. It is NXP’s policy that we and government issued documents. procedures and training as needed to seek our suppliers shall not traffic in persons appropriate safeguards in its operations and or use any form of slave, forced, bonded, NXP expects our suppliers to respect supply chain. Stakeholder indentured, or prison labor. This includes rights, including maintaining policies and Engagement the transportation, harboring, recruitment, procedures to prevent the use of forced

Supplier Engagement

Employee Engagement

Health and Safety

Environment

Product Stewardship

Appendix 32 SOCIAL RESPONSIBILITY AUDITABLE STANDARDS Overview NXP’s Auditable Standards on Social Responsibility is widely regarded as one of the most stringent sets of auditable standards in the industry. It begins with a rigorous deployment of Economy the standards to all NXP facilities, through capacity building and regular audits of our global manufacturing sites, we ensure that the standards are implementable. Then we deploy the standards to our supply chain and external manufacturers. Ethical Audits help us accomplish our objectives Health and Safety Standards by bringing a systematic, disciplined NXP has auditable standards in place approach to evaluating and improving the for occupational safety, emergency effectiveness of risk management, control, preparedness, occupational injury and Social and governance processes. At present, we illness, industrial hygiene, physically Responsibility have in place different but complementary demanding work, machine safeguarding, internal audit types: system audits that sanitation, food, housing, health & safety Management Systems assess the continued and sustained communication, worker health, and safety NXP requires our internal and external Stakeholder compliance to the NXP and Certification committees. More information about NXP’s sites to have policy statements, endorsed Engagement standards, local and execution audits, and policy towards health and safety can be by executive management, that cover audits to improve NXP’s Environment, found in the Health and Safety chapter. corporate social and environmental Health & Safety (EHS) performance. responsibility and affirm their commitment Supplier Additionally, our customers and 3rd party Environment to compliance and continual improvement. Engagement certification auditors regularly conduct NXP has auditable standards in place for There also are clearly identified company audits of our facilities. We work to address adequate and effective programs to reduce representatives in place who are responsible any issues identified in the audits. or control pollution and conserve resources, for implementation of the management ensure safe handling of hazardous materials, systems and associated programs. Senior Employee Engagement The Auditable Standards on Social and provide workers with adequate training management reviews the status of the Responsibility consist of the following and personal protection equipment. More management system on a regular basis. categories: information about NXP’s policy towards the environment can be found in the Additionally, programs shall be in place Health and Labor and Human Rights Environment chapter. to identify the labor practices and ethics Safety NXP has auditable standards in place risks associated with the operations for freely chosen employment, child- Ethics performed. There shall be determination labor avoidance, working hours, wages NXP has auditable standards in place of the relative significance for each risk, Environment and benefits, humane treatment, for business integrity, appropriate and implementation of appropriate nondiscrimination, freedom of association disclosure of information, fair business/ procedural and physical controls, to control and collective bargaining, and diversity. advertising/competition, data privacy, the identified risks and ensure regulatory Product More information about NXP’s policy and whistleblower protection/anonymous compliance. At all our sites, we there shall be Stewardship towards labor and human rights can be complaints. Information about NXP’s policy, a process in place for communicating clear found in the Labor and Human Rights organization and implementation towards and accurate information about policies, chapter. ethics can be found in the Ethics chapter. practices, expectations, and performance to workers, suppliers, and customers. Appendix 33 Overview

Economy

Ethical Standards

Social Responsibility

Stakeholder Engagement

Supplier Engagement

Employee Engagement

Health and Safety STAKEHOLDER Environment ENGAGEMENT

Product Stewardship

Appendix 34 Overview We operate in many different countries and Stakeholder Interaction ship to most countries in the world and have Customers Customer loyalty program Economy close relationships with customers, other Customer meetings multinational electronics companies, and Customer management support industry associations. Customer supply chain report Joint research and development Ethical Our business brings us into contact with a Standards Joint strategy development very wide range of stakeholders and requires Exhibitions and trade shows that we be sensitive to those interactions. Employees Town hall meetings We believe that dialogue leads to mutual Print and web-based media Social understanding, and with it a mutual Employee surveys Responsibility commitment to sustainable development. People Performance Management (PPM) We made stakeholder dialogue a part Employee councils, union meetings of our management processes and our Stakeholder Sustainability Policy. Suppliers, Subcontractors Supplier Code of Conduct Engagement Supplier meetings We address the interests of each group Supplier audits through various methods and make Communities Information meetings Supplier regular assessments of our effectiveness. Newsletters Engagement We continue to strengthen our approach, Community projects creating an additional structure where Local networking needed and improving the overall quality Local, national and international regulatory Industry associations of each interaction. Some examples of our bodies Advisory bodies Employee stakeholder interactions are given here. Engagement (Local) networking/lobby activities Funded/non-funded lighthouse projects Investors Supervisory board meetings Health and Ad hoc involvement Safety Bondholders Quarterly results call Financial presentations, meetings Media Interviews Environment Products and competence presentations Financial presentations, conference calls Electronics/semiconductor industry Industry associations Product Standards committees Stewardship Non-governmental Organizations (NGOs) Ad hoc involvement Academia University programs Appendix Joint research and development Local networking 35 Overview EMPLOYEES NXP has been soliciting input from events, highlighting how we address key We communicate with our employees in customers about the overall relationship issues associated with energy, mobility, Economy several ways, using print and web-based since 2010 through an annual formalized security, and health. media along with face-to-face events. feedback system. This direct feedback For instance, we have a company-wide continues to be instrumental with prioritizing circulation of a weekly email news bulletin improvement efforts, resource allocation, OTHER GROUPS Ethical (NXP Now), and we share recent external and additional investments required to To address other stakeholder groups, such Standards and internal news items on NXP’s intranet best support our customers. This feedback as public authorities, industry analysts, home page. Many of our operations have is detailed enough to identify the specific and the media, we use a global in-house their own news bulletins and intranet sites, interactions deemed most critical in team that cooperates closely with a few Social populated with local and global NXP news. supporting our customers’ business strategic partners, such as a PR agency. In Responsibility We deliver regular communications from requirements as well as to how we are external relations, we use a worldwide “hub- our Management Team under the banner of currently performing with each of them. and-spoke” network of people, including MT Update. Employees are invited to send This allows us to take action in the most experienced public affairs specialists, who Stakeholder comments or questions to the Management customer-focused manner. actively engage with elected representatives Engagement Team. The Management Team’s feedback of our stakeholder groups. and answers are then posted online where Our Customer Loyalty program uses vendor- they can be read by all employees. rating surveys and dedicated customer Supplier meetings to verify that we are delivering with INDUSTRY ASSOCIATIONS Engagement Our Quarterly Town Hall Meetings are a excellence and satisfying our customers. We are a member of many industry particularly effective way for us to deliver The vendor-rating surveys include questions organizations, participate in more than information to everyone in the company. on environmental and social responsibility, 65 standardization bodies and consortia, Feedback shows that employees appreciate so we can identify areas of concern and and are active in several other initiatives Employee Engagement these meetings, which give them the implement corrective actions. Customers around the world. Where relevant, we opportunity to interact with colleagues, rank us on various aspects of our operations, help define specifications, establish new hear about the company’s plans, and pose including product quality, business markets, promote fair trade, protect the questions or express concerns directly to fulfillment, and business creation. environment, and ensure health and safety Health and senior management. Alongside this form in the workplace. Our participation in Safety of open discussion, we conduct regular We use face-to-face meetings to create industry organizations lets us interact with employee engagement surveys that close relationships with our customers, and governments and regulatory bodies on a measure the clarity and effectiveness of our extend those relationships to our website number of key issues. We often advocate Environment communication and capture feedback for and with appearances at industry tradeshows stringent regulations but occasionally lobby direct application within the organization. and other events. These events are an to prevent bans on substances that are effective way to show our latest product essential to our processes and currently have Product developments to existing and potential no alternatives. In such cases, we typically Stewardship CUSTOMERS customers, and give us the opportunity to recommend seeking commitments to strictly To ensure we develop products that meet or exchange ideas with our colleagues, track minimize use until viable alternatives are exceed customer expectations, our Marketing industry trends, and discover new ideas. found. and Sales teams work closely with our key Members of our management team often Appendix accounts to align our development roadmaps. deliver keynotes and presentations at these 36 Overview with RRMI help promote the common goal of understanding and mitigating the Economy impacts of extraction and processing of raw materials in the supply chain.

As a member of the European NXP became a member of the Electronic Ethical Semiconductor Industry Association Industry Citizenship Coalition (EICC) in Standards (ESIA), we are also a member of the 2014, now named the Responsible Business World Semiconductor Council (WSC), an Alliance (RBA). In 2018, NXP was elected organization that participates in several to the RBA Board of Directors. We believe In 2016, NXP joined the European Social outreach activities. that the collaborative efforts and shared Partnership for Responsible Minerals Responsibility tools and practices that membership in the (EPRM) as a strategic partner. The EPRM We chair the ESIA committee for RBA provides will be the most efficient way is a multi-stakeholder partnership in which Environment, Safety & Health (ESH). The for NXP to make progress towards social governments, NGOs, and private sector Stakeholder committee is involved in several cooperative responsibility within the electronics industry. work together, aiming to increase the Engagement technical projects and addresses such issues demand for responsibly sourced minerals as chemical management and preparation NXP is a member of the from conflict-affected and high-risk areas. for the EU’s REACH program, energy savings, Responsible Labor Initiative The EPRM serves as a knowledge platform Supplier use of PFCs, health and safety, quantitative (RLI) in which NXP is on where organizations can share knowledge Engagement targets, and EU legislation. the steering committee on due diligence and support activities to and actively engaged in improve the conditions in the mining areas. all work groups. NXP will work diligently across the In 2017, NXP became a Employee Engagement steering committee and the work groups signatory to the United to align our due diligence practices across Nations Global Compact. multiple industries to better address the The UN Global Compact NXP is a member of the Global Business root causes of forced labor. is an initiative that Health and Coalition against Human Trafficking(GBCAT) . encourages businesses worldwide to adopt Safety GBCAT is a global coalition of corporations NXP is a member of the sustainable and socially responsible policies committed to eradicating trafficking in Responsible Mineral and to report on their implementation. supply chains, including forced labor and Initiative (RMI) where we The UN Global Compact is a principle- Environment all sex trafficking, notably child prostitution. regularly collaborate with based framework for businesses, stating GBCAT is a thought leaders’ forum for other complementary ten principles in the areas of human rights, developing and sharing best practices in programs and initiatives in labor, the environment, and anti-corruption. Product addressing the vulnerability of businesses to the conflict mineral area. NXP is now part of a global network from Stewardship human trafficking in their operations. GBCAT The RMI provides tools and resources to which we can learn and to whom we companies work together across different make sourcing decisions that improve our can offer ideas and scalable solutions to sectors and regions, each playing their own due diligence for responsible sourcing. NXP society’s challenges. part, suited to their sector and comparative is also a member of the RBA’s Responsible Appendix competencies. Raw Materials Initiative (RRMI). Our efforts 37 Overview WHO WE WORK WITH

Economy

Ethical Verité is an international NGO that conducts Standards assessments, training, consulting, and research to ensure safe, fair, and legal working conditions in over 70 countries. Social Verité takes aim at serious problems: child Responsibility labor, slavery, systemic discrimination against women, dangerous working conditions, and unpaid work. Verité is recognized as a leader Stakeholder in the field of corporate social responsibility, Engagement and NXP engages with Verité to ensure our program is best-in-class, and to establish a benchmark within the electronics industry. Supplier Engagement

Employee Engagement ELEVATE is a global services firm specializing in supply chain social, environmental and business performance. ELEVATE is conducting the Workplace of Choice Health and program, sponsored by the RBA, on foreign Safety migrant worker protection. The Workplace of Choice is a pilot program focused in Malaysia. NXP is participating in this Environment program which helps assess our Malaysian facility, conduct independent worker surveys, increase communication, provide education Product and additional helpline resources to our Stewardship workers. Working with ELEVATE helps NXP understand workers’ needs, wishes, and perceptions, and allows us to address and improve internal management Appendix systems and processes. 38 Overview

Economy

Ethical Standards

Social Responsibility

Stakeholder Engagement

Supplier Engagement

Employee Engagement

Health and Safety SUPPLIER Environment ENGAGEMENT

Product Stewardship

Appendix 39 Overview NXP has a strong commitment to sustainability and social responsibility. NXP SUPPLIER CODE OF CONDUCT Economy NXP pursues mutually beneficial relationships with its suppliers and NXP’s suppliers commit in all their The NXP Supplier Code of Conduct consists contractors and seeks to award business activities on behalf of NXP to operate in of standards relating to labor and human to those suppliers that are committed to full compliance with the laws, rules, and rights, health and safety, environment, Ethical observe the applicable rules of law and to regulations of the countries in which they business ethics, and elements of an Standards support and respect human rights. NXP operate. Beyond this, NXP’s suppliers are acceptable system for managing code is committed to ensuring that working expected to comply with the NXP Supplier conformity. conditions in our supply chain are safe, that Code of Conduct. The NXP Supplier Code Social workers are treated with respect and dignity, of Conduct is based on the NXP Code of Suppliers must adopt or establish a Responsibility and that our products and processes are Conduct and the NXP Auditable Standards management system that is related to environmentally responsible. on Social Responsibility, and draws on the content of the NXP Supplier Code of internationally recognized standards Conduct. The management system must Stakeholder NXP depends on more than 10,000 to advance social and environmental be designed to ensure (a) compliance with Engagement suppliers from countries around the world. responsibility. The NXP Supplier Code of applicable laws, regulations, and customer Regardless of region, NXP recognizes Conduct uses the structure and contains requirements related to the supplier’s that innovative thinking, collaboration, language from the Responsible Business operations and products; (b) conform Supplier and transparency creates long term Alliance (RBA) Code of Conduct, version to the NXP Supplier Code of Conduct Engagement sustainability. We proactively work with our 6.1. Other recognized standards used and (c) identify and mitigate operational suppliers to: as references for the Code are the risks related to the NXP Supplier Code of Universal Declaration of Human Rights, Conduct. It must also facilitate continuous • Reduce environmental and social impacts the International Labour Organization, improvement. Employee Engagement • Mitigate sustainability risks Social Accountability International, and • Improve operational efficiency the Ethical Trading Initiative. Using the • Mitigate employee safety hazards listed references, the NXP Supplier Code • Respect human rights of Conduct also includes elements, Health and modifications and clarifications from our Safety Our suppliers range from external audits conducted internally and externally manufacturing partners, direct materials according to best practices found. suppliers, tools and machines manufacturers Environment as well as logistics, packaging services The NXP Supplier Code of Conduct is and onsite service providers. We hold owned by the Sustainability Office and our suppliers accountable for responsible is approved by the Social Responsibility Product conduct and performance by requiring board, consisting of executive NXP leaders. Stewardship them to comply with applicable laws and The Supplier Code of Conduct is reviewed regulations as well as the NXP Supplier annually to determine the need for a Code of Conduct. revision based on changings social and regulatory landscape, industry changes or Appendix customer requirements and expectations. 40 SUPPLY CHAIN MANAGEMENT Overview NXP’s purchasing policies require our suppliers to certify that they comply with Economy NXP standards and with the laws of the country or countries where such suppliers do business. In 2015, NXP inserted language into our supplier contracts that Ethical require suppliers to abide by the NXP Standards Supplier Code of Conduct. Suppliers submit a signed conformance letter stating that they abide by the NXP Supplier Code Social of Conduct. Responsibility Key suppliers are required to go through an annual Supplier Risk Assessment and Stakeholder complete an NXP Self-Assessment. Engagement NXP works with suppliers to meet our requirements. We provide suppliers with Supplier opportunities to rectify problems and Engagement implement a corrective action plan. It is our goal to improve worker conditions and make working conditions in the host country, to recruitment of workers. Suppliers must an impact on the supply chain, not just pass including nature of work, wages, benefits, regularly evaluate these contractors’ or fail. In the rare instance that a supplier is and duration of contract at the time of performance and conformance against Employee Engagement unable or unwilling to meet our requirements recruitment in the workers’ native language. these requirements. and work on a corrective action plan, NXP Suppliers must not require workers to will terminate the business relationship. surrender original identification documents. NXP has adopted an Employer Pays policy Suppliers must also ensure the same with in the recruitment of workers. This policy is Health and its employment agencies. Suppliers must a clear contractual agreement with partners Safety RECRUITMENT PRACTICES ensure that workers are free to leave their in our supply chain. The NXP Employer NXP suppliers must have adequate and employment upon giving reasonable Pays policy requires that the supplier shall effective written employment policies notice, with no penalty. Suppliers must be responsible for payment of all fees and Environment and procedures. Suppliers must take not place unreasonable restrictions on expenses. Such fees and expenses include, measures to ensure compliance with laws movement of workers and their access to but are not limited to expenses associated on recruitment of workers in sending and basic liberties. Suppliers cannot require with recruitment, processing, or placement Product receiving countries. Suppliers must ensure workers to participate in any form of forced of workers. Stewardship workers are not required to pay fees, savings or loan program where repayment deposits, or debt repayments for their terms are indicative of debt bondage Additional details on NXP’s efforts to recruitment or employment. Suppliers or forced labor. Suppliers must clearly investigate ethical recruitment practices must provide the worker, prior to departure communicate the NXP’s Supplier Code is available in our ethical recruitment Appendix or hiring, with accurate written details of of Conduct and requirements pertaining documentary. 41 Overview PRODUCT CONTENT RESTRICTIONS requirements of the NXP “ECO-Products level to verify compliance with the NXP NXP is required to provide information and Substance Control for Products and requirements. NXP’s “Dark Green” Economy evidence to its customers of compliance Packaging”. The supplier must provide Policy specifically targets materials that to the European Union‘s Directive on NXP with full material content declarations should not contain RoHS Substances, the Restriction of Hazardous Substances and provide annual analytical test reports Halogens and Antimony Oxides above the (RoHS), and other product regulations such performed by a third-party laboratory established limits. Suppliers must certify Ethical as Registration, Evaluation, Authorization certified to ISO/IEC 17025. For all material that they have gathered and verified Standards and Restriction of Chemicals (REACH). groups, specific substances are analyzed information about substances present in Suppliers must, therefore, meet the annually on a homogeneous material raw materials, parts, or products it supplies to NXP using appropriate methods (i.e. Social internal design controls, declarations and Responsibility analytical testing) to ensure its accuracy and completeness, and attest that such information is true and correct to the best Stakeholder of their knowledge. Engagement

RESPONSIBLE SOURCING OF MATERIALS Supplier Suppliers must have a policy to reasonably Engagement assure that the minerals in the products they manufacture do not directly or indirectly finance or benefit armed groups that are perpetrators of serious human rights abuses Employee Engagement around the world. Key areas of concern include the Democratic Republic of Congo and adjoining countries and other high-risk regions for the extraction or transit of raw Health and materials. Safety Tantalum, tin, tungsten, and gold smelters and refiners must be certified by an Environment approved third-party audit program. Suppliers must exercise due diligence on the source and chain of custody of these Product minerals and make their policies and due Stewardship diligence measures available to NXP upon NXP’s request. In addition, suppliers must submit a valid Conflict Mineral Reporting Template (CMRT) to NXP. Appendix 42 RISK ASSESSMENTS AND AUDITS Overview ASSESSMENTS facility and dormitories. We require that supplier from our supply chain. NXP conducts an annual risk assessment self-assessments, policies, processes, and Economy on our suppliers to determine the high-risk procedures are sent to NXP before the audit. Supplier audits are accompanied by a suppliers that are identified to participate NXP Lead Auditor and a qualified audit in the NXP Social Responsibility Audit In 2013, NXP began auditing suppliers and team from a NXP approved 3rd party program. This risk assessment is conducted has since audited over 100 suppliers, with audit firm. Audits include many different Ethical on existing suppliers and all new suppliers. 23 of them occurring in 2017. We monitor components, such as document reviews, Standards In addition, all NXP suppliers are required the progress of the supplier until the issues employee and management interviews to sign a statement of conformity with NXP’s are satisfactorily resolved. This may involve and facility inspections. Audits also include Supplier Code of Conduct. repeat audits to close out the findings. In interviews with labor agents and inspection Social 2017, 8 of our suppliers received verification of the employees living conditions. The Responsibility NXP subscribes to a third-party monitoring audits. Should a supplier continue to not NXP Social Responsibility Audit program is service, which uses a multi-level process meet our standards, NXP will limit new conducted in accordance with the following to identify and evaluate the potential risks business and or seek to eliminate the process flow: Stakeholder to the NXP Supplier Code of Conduct. Engagement This robust risk assessment methodology enables NXP to pinpoint and prioritize hotspots across our supply chain. The Supplier monitors’ evaluation of risks is based on Engagement a variety of factors, such as a business’s geographic location, manufacturing processes, and a workforce profile. Employee Engagement AUDITS NXP’s Social Responsibility Audit is a collaborative and consultative process Health and aimed at guiding suppliers and ensuring Safety they can meet the NXP Supplier Code of Conduct and the associated requirements of the auditable standards. Environment While NXP reserves the right to conduct unannounced audits on our supply chain, Product we have rarely found that an unannounced Stewardship audit is required. NXP conducts announced audits on our supply chain which analyzes three main aspects 1) Documentation 2) Management Interviews 3) Worker Appendix Interviews and 4) Physical inspection of 43 Overview 1. Supplier risk assessment corrective and preventive action scheduled after corrective actions are The process starts with a Supplier Risk plans to be submitted by a supplier submitted by a supplier and approved Economy Assessment to evaluate which suppliers within a set period of time. The three by NXP. have a high priority to be audited by classifications are core violation, major NXP. non-conformance and minor non- 7. Annual review conformance. Upon completion of the annual audit Ethical 2. Training cycle, NXP conducts a review to Standards Once a supplier is selected for an If a core violation is discovered, the determine if any suppliers that were audit, NXP analyzes whether additional supplier is given the opportunity to audited in the preceding year will be training is needed. improve performance, but the supplier’s required to be re-audited in the next Social response to, and adequate resolution year. A re-audit is required based on the Responsibility 3. Self-assessments of, a core violation is non-negotiable. severity of audit results. The supplier then completes the NXP In the case of immediate risk of life, the Supplier Self-Assessment and sends supplier is given 24 hours to complete The audit findings and the resulting Stakeholder back to NXP, including any applicable corrective actions. In other cases, the corrective action plans help us to identify Engagement policies and documentation. supplier is allowed seven days for trends and create an opportunity to help submission of the corrective action suppliers enhance their sustainability 4. Onsite audit plan and 30 days for completion of capabilities. The top ten findings for each Supplier The onsite audit is led by a team of plans. Sanctions for unresolved core year is summarized in the chart below for Engagement auditors from a third-party audit firm violations can result in the withdrawal or our supplier audits: qualified by NXP and supported by a termination of business. NXP lead auditor. Depending on the size and complexity of the supplier’s Other findings can be registered as Employee Engagement operations, a typical audit requires two major or minor non-conformance. A or three full days. The scope of the corrective action plan report for these audit covers labor and human rights, findings is issued to the supplier within environment, safety and health, business two weeks after the closing meeting. All Health and ethics, management systems and corrective actions for major and minor Safety compliance to the NXP Supplier Code actions must be approved by NXP. In of Conduct. These audits are conducted this case, the supplier must send NXP so suppliers can improve their business corrective action plan updates every 30, Environment processes and procedures. The 60, 90 days. All corrective actions must audits are not intended to pass or be closed within 90 days. fail a supplier, but rather to guide the Product suppliers in a cooperative approach. 6. Follow-up Stewardship NXP may conduct verification audits If you’d like more information regarding our 5. Supplier corrective action plan to assess whether a supplier has audit program, please watch our video The audit can result in one of three fully addressed all corrective and about the Social Responsibility Audit. classifications for findings that require preventative actions. These audits are Appendix 44 TRAINING VALIDATION Overview Training is focused on our suppliers and onsite service providers. The Economy mode of training is either a 2-hour classroom training or through a webinar session, conducted by the NXP Social Responsibility Office with support from Ethical the site subject matter experts. The Standards training is the full requirement of the NXP Supplier Code of Conduct. Supplier training is done: Social • During the on-boarding of new Each year we report publicly on our NXP monitors improvement by measuring Responsibility suppliers; and annual top ten supplier audit findings. the number of core violations, repeat • Before a supplier’s upcoming NXP Social Each month key performance indicators audits, frequency of findings, and the Responsibility Audit are reported to the Sustainability Office number of months required to eradicate Stakeholder on topics such as core violations from the core violations. Engagement Training is also conducted when the our supplier audits, signed conformance supplier requests training. Coaching the letters from our supply chain, and quarter NXP measures our supplier’s improvement supplier of best practices and providing over quarter risk indicators within our by monitoring and approving the Corrective Supplier RBA’s eLearning academy are also a part supply chain. Action Plan (CAP). The CAP acts as a tool Engagement of our supplier trainings. for communication to NXP on how issues Reports are reviewed by the Social will be remediated. NXP is committed In addition to the traditional face-to-face Responsibility Board, composed of to collaborating with suppliers to design and webinar training, NXP is also in the NXP executive leadership, at least twice management systems that address Employee Engagement process of developing eLearning tools per year. Midyear review discusses the the issues. An effective CAP includes that will enable continuous learning on progress that has been made, areas for remediation plans that fix the immediate social responsibility topics. An eLearning improvement and what has gone well. issue and create a management system to module is in development in collaboration The end of year review discusses targets prevent the issue from reoccurring. Health and with an institution of higher learning. This and the overall improvement the team Safety module will be an innovative game-based has made. NXP has seen improvement with the program with specific focus on Human results and the closure of findings and Trafficking and Forced/Bonded Labor. The Social Responsibility office meets with the attention to detail to close out such Environment the purchasing managers monthly and findings. The supplier self-assessment sometimes weekly to discuss key supplier scores are also a measure that we review audit results, the corrective action plan year over year to see how their scores are Product and their progress towards closing out improving as they begin to strengthen Stewardship their findings. their program.

Appendix 45 REMEDIATION Overview

Economy

Ethical Standards

Social Responsibility

Stakeholder Engagement

Supplier Engagement

NXP has clear and widely communicated concerns or they experience retaliation. Resources, the Sr. Director Sustainability, procedures in place for reporting concerns Workers may submit concerns anonymously, Environment, Health & Safety and the Employee Engagement or potential violations to the Supplier Code if they so desire. NXP Chief Audit Executive. The Ethics of Conduct within our supply chain. NXP Committee advises the Management Team suppliers shall have a grievance mechanism RESOLVING ISSUES in defining and deploying the Code of in place for their employees. The Ethics Committee in coordination Conduct, assuring the completeness of Health and with the Sustainability Office appoints recording of the allegation of misconduct Safety Any stakeholder can report incidents to a team that has the correct experience and assuring appropriate action has been NXP. Even workers of our suppliers are to investigate the allegation. The Ethics taken for the allegation of misconduct. given NXP’s anonymous, confidential Committee along with the Sustainability The Ethics Committee reports to, and Environment NXP complaint email and the local phone Office then considers the approach to the provides assurance to the Management number. allegation. These discussions focus on Team and the Audit Committee of the NXP the grievance, the remediation plan when Board of Directors about the completeness Product WORKER VOICE violations are substantiated and a corrective and adequacy of the actions taken on Stewardship When worker interviews are conducted action plan is established. allegations of misconduct. during a supplier audit, the worker receives a NXP business card that has the NXP The Ethics Committee consists of NXP’s complaint local phone number and email Senior Vice President & Chief Corporate Appendix address if they have additional information, Counsel, an executive from Human 46 Overview

Economy

Ethical Standards

Social Responsibility

Stakeholder Engagement

Supplier Engagement

Employee Engagement

Health and Safety EMPLOYEE Environment ENGAGEMENT

Product Stewardship

Appendix 47 COMMUNITY ENGAGEMENT Overview We believe in making a positive difference our employees to learn new things, high ethical and social standards is also in the communities where we live and work. grow in their careers, and reach their full reflected in our engagement with our Economy Through corporate sponsorships, employee potential. We believe development is a employees and the communities in which volunteerism and employee giving, we are mutually beneficial partnership, between we live and work. We demonstrate this committed to supporting our communities the company, our employees, and their commitment in the workplace by placing in the following three focus areas: managers, that results in higher levels of a high value on diversity and inclusion, by Ethical employee engagement, contribution, and taking action against all forms of harassment Standards • Education: Promoting educational satisfaction. NXP’s culture is based on the or improper labor practices, and by keeping endeavors that encourage students values of being fair and treating each other our health and safety standards high. In the to learn about science, technology, with respect. These values are based on community, we support quality of life and Social engineering and math to help inspire common ethical standards and included in provide educational opportunities through Responsibility future innovators. NXP’s Code of Conduct. various voluntary activities undertaken by • Health and Wellness: Supporting our employees. employee and community health and The importance we place on maintaining Stakeholder wellness programs focused on increasing Engagement physical activity and promoting a healthy lifestyle. • The Environment: Fostering the Supplier sustainable use of the earth’s resources Engagement and promoting a clean, healthy environment.

Our employees share our vision. Employee Engagement Volunteerism and community service are encouraged, and there is widespread participation in company-organized initiatives, aimed at serving our communities Health and and the world. Most major NXP sites have Safety their own volunteer programs, covering such areas as education, wellness, charity fundraisers, events for the disadvantaged, Environment park clean-ups, and more.

Our employees are the ones who put Product our corporate values into daily practice. Stewardship The dedication, ingenuity, and creativity they bring to their work enable us to be insightful, engaging, inventive, and committed to excellence. We work hard Appendix to create an environment that enables 48 CAREER PATH Overview NXP fosters a culture that appreciates a vast array of online learning resources assessment with feedback, coaching, employees who take initiative. We offer delivered at NXP by tapping into NXP mentoring and extends even further into Economy various avenues for career progression. Our Skillport. Available to all employees, the the classroom setting via our portfolio of Career Ladder helps employees progress NXP Skillport site includes books, videos, Management & Leadership Development equally within their specialty—following skill briefs e-learning courses spanning a Program offerings, such as the Technical the path to Technology Expert, becoming wide range of professional development Leadership Program, Influence & Ethical a master in Project Management, or taking subjects important to individual and team Accountability, Collaborative Leadership Standards the more traditional Line Management success at NXP. in the 21st Century (known as CLiC), route to lead people, functions, and • Talent Development Programs includes and the NXP Leadership Development businesses. everything from job rotations, stretch Program, our most exclusive program Social assignments and special project roles to offering for our high potential leaders Responsibility SUPPORTING PERSONAL GROWTH peer networking, job shadowing and who are developing toward top level Gaining experience is the bedrock for mentoring opportunities that are available leadership roles. For those who prefer personal growth. We also believe that on both a formal and informal basis to self-study on topics of Management Stakeholder everyone should take responsibility for their throughout NXP today. We also run a & Leadership Effectiveness, we offer a Engagement own development, so you will not find a range of internal leadership programs curriculum bundle in NXP Skillport called rigid structure with lists of courses that must covering everything from manager the Leadership Advantage that can be be attended. Instead, we favor a much more fundamentals to executive level leadership. used in whole or in part to prepare for Supplier flexible approach to career development. • Leadership Development Programs leadership roles and key challenges that Engagement occurs through pivotal experiences, formal leaders face within NXP today. • Technical/Functional Development is grounded in on-the-job learning. Applied know-how is important and we rely heavily Employee Engagement on our internal experts for knowledge sharing and transfer, along with product, tools and systems training. We also encourage and support memberships Health and in relevant technical and professional Safety organizations. • Skill & Knowledge Acquisition comes from tapping into the vast network of Environment technical experts and subject matter professionals within NXP today. Employees at our major hub sites Product throughout the globe can leverage the Stewardship NXP Connect Lunch program to identify and network with colleagues from across the business over lunch for the purpose of knowledge exchange and career-centered Appendix dialogue. Employees can also leverage 49 DIVERSITY AND INCLUSION Overview NXP recognizes that each employee brings something unique to the RESPECT FOR OUR FELLOW EMPLOYEES–OUR ANTI- company. We are comprised of thousands of unique individuals, each DISCRIMINATION POLICY Economy with their own viewpoints, histories, experiences and paths of discovery. At NXP, we treat each other with respect and fairness at all times–just as we wish to be treated ourselves. We value diversity and inclusion, We welcome and embrace our employees’ diversity by fostering and respect the culture and customs of our fellow employees, respect for everyone’s differences and promoting a collaborative business partners and customers around the world. Ethical inclusive work environment. We invite every NXP employee to Standards bring their whole self to work, without exception. Our mission is to We never allow unlawful discrimination or harassment into our continue championing an inclusive work environment to attract the workplace. (Unlawful discrimination means treating others differently best talent and to ensure diversity of thought in everything we do. or making employment-related decisions on the basis of a legally Social protected trait). Responsibility The NXP approach to Diversity and Inclusion will be centered on the following: NXP never hires, fires, demotes, transfers, or makes any other • Create an inclusive work environment to attract the best talent and employment-related decision based on a person’s: Stakeholder to ensure diversity of thought Engagement • Cultivate an environment where employees feel welcomed, valued • Age and are comfortable being themselves • Color • Engage employees and leverage the diversity of thought and life • Gender Supplier experiences • Gender identity Engagement • Mental or physical disability • National origin • Pregnancy • Race Employee Engagement • Religion • Sexual orientation • Veteran status • Any other characteristic protected by applicable law Health and Safety

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Appendix 50 EMPLOYEE PROFILE Overview The employee profile information is as of December 31, 2017. The data below does not include employee information from the Standard Products divestment that occurred in 2017. Economy

NXP Employee Category Indirect Labor by Region Indirect Labor New Hires by Region Ethical Standards

Social Responsibility

Stakeholder Engagement

Supplier Engagement Gender of Workforce

Employee Direct Labor by Region Direct Labor New Hires by Region Engagement

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Environment Voluntary Employee Attrition

Product Stewardship

Appendix 51 Overview

Economy

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Health and Safety HEALTH AND SAFETY Environment

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Appendix 52 Overview NXP is committed to providing a workplace that is safe and secure, where every employee is empowered to achieve a healthy work-life balance. Our goal is to create a workplace that is healthy, safe, and free of occupational injury and illness for all employees. NXP employees are aware of Economy their role and responsibility to fulfill and sustain NXP health and safety policies, management systems and standards, and are actively involved in promoting a safety culture.

NXP has one of the lowest injury rates We strive to create a workplace that is GOALS Ethical in the semiconductor industry. While healthy, safe and free of occupational injury We are working towards Standards this accomplishment is something we for all employees. NXP has not received any our long-term goal of are very proud of, there is still more that fines or sanctions in connection with non- having zero work-related can be done. Each site has their own compliance with Health and Safety laws and injuries, using the OSHA Social challenges, although with challenges comes regulations. standard for measuring Responsibility opportunities. and reporting. The severity rate at NXP represents the numbers of days away from In 2017, we addressed some of HEALTH AND SAFETY PROGRAM work. Stakeholder these opportunities with more formal The key Health & Safety principles are Engagement engagements with employees through embedded in our Corporate Sustainability NXP’s recordable case rate and severity rate safety committees, setting strategies as well Policy as signed by the CEO. The have steadily decreased in recent years and as investigating incidents. In addition, more Sustainability policy is developed and are lower than the recorded international Supplier awareness through safety posters can now deployed by the Sustainability Management benchmark. Engagement be seen at each factory providing guidance team. Within the Sustainability Management on what is right vs. wrong. Blogs and Teams, the Corporate Environment Health newsletters were communicated across NXP and Safety (EHS) Manager and the EHS CERTIFICATION to raise awareness of many safety topics. Councils have several responsibilities. The Occupation Health Employee Engagement An ergonomics task force was established They establish EHS-related risk mitigation and Safety Assessment to collaborate and share best practices strategies, develop and deploy standards, Series (OHSAS) 18001 across all factories. A new risk assessment programs, and procedures to benchmark certification program tool was created to help those employees and reduce EHS-related risks, use NXP specifies the requirements Health and performing a new task assess the job in a EHS expertise to share resources with and for an occupational Safety safe manner. We designed and installed appoint people to programs and projects health-and-safety management system. equipment to rigid specifications to worldwide, develop EHS requirements for The specifications help organizations ensure employee safety. We implemented manufacturing sites, and define EHS targets. control their EHS risks and improve their Environment stretching programs, oversaw physical performance. All NXP manufacturing sites therapy consultations, and provided The EHS Council has defined an employee are OHSAS18001 certified. The certificates alternate health therapy options. Additional focused EHS program. The program covers can be viewed here. Earlier in 2018, ISO Product projects such as optimizing the shelf heights employee-related issues, such as how to created ISO 45001 which is a new standard Stewardship at the factories is another example of how prevent and reduce occupational injuries, that replaces OHSAS18001. NXP plans NXP is always searching for the best way to and involves staff training sessions on to be fully compliant and certified to ISO protect our employees. topics such as emergency and recovery 45001 by 2020. procedures. Appendix 53 Overview

RISK ASSESSMENTS, SELF- Economy ASSESSMENTS AND AUDITS All NXP manufacturing facilities conduct annual risk assessments for Environment, Health & Safety covering all EHS related Ethical ISO Standards. The Risk Assessments Standards allow the sites to evaluate potential Environmental Risks or Safety Hazards, weigh them against the likeliness of Social occurrence, and proactively mitigate Responsibility those risks and hazards through programs, procedures and engineering controls.

Stakeholder EHS MS Self-Assessments are done Engagement annually via a checklist that each site completes, evaluating the Management System elements of the EHS ISO standards. Supplier Each site follows up with their findings of Engagement their corrective actions. As a member of the Responsible Business Alliance (RBA) each NXP factory completes an RBA Self- Assessment questionnaire that addresses Employee Engagement topics of environment, health and safety as well as management systems.

NXP Corporate EHS conducts internal Health and EHS audits at each manufacturing site, in Safety conjunction with a consultant and senior EHS management from other sites. These internal audits are conducted every two are audited each year. A sampling of EHS NXP facilities are required to demonstrate Environment years and audit findings are categorized compliance and management systems are success in the deployment of EHS as part of according to severity. The corrective actions audited and a formal report is issued and the social responsibility audit. All facilities for these findings are formally reported and corrective actions taken and tracked until should not have any core violation findings Product tracked via an audit management system. we demonstrate to LRQA that they were as specified by the NXP standards on Social Stewardship effectively closed. Responsibility. The Social Responsibility Third party audits are conducted by our Audits include many different components, registrar (LRQA). Each year, on average, Each NXP manufacturing facility has a such as document reviews, employee and they evaluate two sites plus the Corporate Social Responsibility audit supported by management interviews as well as facility Appendix EHS function. LRQA determines which sites a NXP-approved third party audit firm. inspections. 54 Overview TRAINING Injuries To ensure that everyone at our sites has Economy the right skills and disciplines to minimize the risks of illness and injury, we provide many hours of employee training worldwide each year. A range of educational programs Ethical provide on-the-job training as well as Standards specialized training in environmental matters, quality controls, ergonomics and chemical health and safety. Thanks to these Social training, the number of illnesses and injuries Responsibility have decreased.

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Supplier In Action Engagement Analysis of the types of injuries and which employees are most affected, we determined that ergonomics in our Employee factory was a risk for our employees. Engagement That is why in 2017, an ergonomics global task force was created. Now each manufacturing facility has an Health and ergonomics trained task force member. Safety These task force members went through extensive workshops and training to address the ergonomic challenges at all Environment manufacturing sites. Task force members are continuously learning best practices as they conduct risk assessments and Product then communicate across the global task Stewardship force to implement best practices. At NXP we are always finding new ways to keep our employees safe. Appendix 55 Overview CHEMICAL SAFETY REPORTING STANDARDS results from our Sustainability Reporting Chemicals are essential to our Our Health & Safety Database is part of our System and Health & Safety databases, Economy manufacturing processes, our R&D Sustainability Reporting System and connects discuss the progress of improvement activities, and our laboratories. For this all our manufacturing and non-manufacturing projects, and set expectations for the next reason, we have in place strict mechanisms, sites worldwide, providing consistent, period. based on risk assessment and risk- reliable Health & Safety performance data Ethical management measures, including technical for the company as a whole. Our reporting To ensure reliable, accurate, and complete Standards safety measures, clear procedures, and manuals contain instructions for these reporting, internal data audits of the thorough education and training. We systems, including definitions, procedures, manufacturing sites and the larger office also give special attention to emergency- and calculation methods. and R&D sites are conducted. The audits Social response skills related to chemical check for proper reporting procedures and Responsibility management and working with chemicals. Health & Safety data is reported monthly data trails. We conduct regular evacuation exercises and validated by the Sustainability Office. and routinely practice for emergency In 2017, data reported covered 98% of our Stakeholder situations. Many of our employees are employees. We aim for 100% coverage. Engagement volunteer members of Emergency Response Teams and receive dedicated training. We require that all our manufacturing sites have VALIDATION Supplier employees with professional emergency The Sustainability Office validates data and Engagement skills, and, at our larger office locations, information entered in the Sustainability we have employees trained for emergency Reporting System and Health & Safety response. databases according to the frequency given in the reporting standards. Validation Employee Engagement consists of the following steps: • Check for completeness of data (locations and parameters) Health and • Compare data from the reporting period Safety with data from previous periods • Determine whether changes in data are significant Environment • Seek explanations for significant data movements • Compare linked data (e.g. number of Product illnesses and injuries versus lost work days) Stewardship • Investigate notable events The EHS Operations Team performs monthly reviews with the manufacturing Appendix sites. During these reviews, we examine the 56 Overview GOAL NXP has been committed to its goal of achieving zero accidents in Economy the workplace.

STRATEGY Our global management approach is to strengthen NXP’s safety Ethical culture through training, audits, publications, communication, and Standards sharing best practices. Above all, we continue to urge managers to take ownership of safety matters and adopt a proactive attitude, In 2017, our severity rate saw a slight increase to 2.87. The severity demonstrating leadership on the ground through their visible rate is a calculation that gives a company an average of the number Social involvement. of lost days per recordable incident, which indicates how severe the Responsibility injury was. Issues and root causes are shared and communicated PERFORMANCE across all sites. Practices and behaviors are checked during audits, Our recordable case rate was 0.15 for 2017, which continues to be and we are continuing to raise awareness and promote vigilance. Stakeholder better than the semiconductor industry. In 2017, we deployed our Our goal is to drive further improvements in employee behavior and Engagement ergonomics program, through which we aim to control, measure, and working conditions. We continue to encourage our employees and decrease the levels of risk within our operations, optimizing working managers to be proactive, by providing training and awareness on conditions for our employees and removing unnecessary tasks or the early detection of hazards, and unsafe behavior and conditions. Supplier those that add no value. As an example, our manufacturing sites Engagement evaluate workstations and activities, and then define, implement, and monitor corrective measures and improvements.

Employee Engagement

Health and Safety

Occupational illness and injuries are decreasing. We attribute this to Environment our efforts to making our work places safer.

In Action Product Our Oak Hill site has been recognized by United States Stewardship OSHA as a “Voluntary Protection Program (VPP) Star Site”, which recognizes NXP as a top tier performer with excellent programs and great results. This recognition is given by OSHA only to top performing industrial sites within the United States. Appendix 57 Overview

Economy

Ethical Standards

Social Responsibility

Stakeholder Engagement

Supplier Engagement

Employee Engagement

Health and Safety ENVIRONMENT Environment

Product Stewardship

Appendix 58 Overview NXP is committed to the prevention of pollution and conservation of the earth’s natural resources, both locally and globally. NXP does this through the development of sustainable products, materials, and manufacturing processes. We drive continual improvement of our processes to protect Economy the environment by designing, implementing and maintaining a management system and programs to achieve our objectives. We also require that our contractors and suppliers adopt prudent environmental principles and practices. We are working to be an industry leader in reducing, reusing, and recycling waste. NXP has not recorded any significant spills, fines or sanctions in connection with non-compliance with environmental laws and regulations since 2007. Ethical Standards In 2017, our Environment and Facilities NXP complies with applicable legislation NXP’s 2020 environmental goals are based team collaborated and made significant and regulation. Where laws and regulations on a 2010 baseline. By 2020, NXP wants improvements to our products, materials and do not meet our standards, NXP adopts its to reduce electricity usage by 30%, reduce Social manufacturing processes. These projects own, leading and vigorously implementing water usage by 30% and reduce our carbon Responsibility are strongly supported by the management standards to protect the environment. footprint by 30%. In addition, NXP has team and in result won NXP awards across NXP drives continual improvement in its an objective to recycle 90% of all waste the globe. NXP Kaohsiung won the silver performance by designing, implementing generated and phase out chemicals Stakeholder award for energy savings and our Austin and maintaining a management system and of concern. Engagement facilities was the winner of the Austin Water’s the programs to achieve its objectives. Excellence in Pretreatment Award. Our environmental program focuses on Supplier environmental issues including: Engagement ENVIRONMENT PROGRAM Key environment principles are embedded • Minimizing greenhouse gases in our Corporate Sustainability Policy as • Reducing our energy use, water signed by the CEO. The Sustainability consumption, and waste production Employee Engagement policy is developed and deployed by the • Managing hazardous materials Sustainability Management team. Within the Sustainability Management Teams, the GOALS Corporate Environment Health and Safety Health and (EHS) Manager and the EHS Councils have Safety several responsibilities. They establish EHS- related risk mitigation strategies, develop and deploy standards, programs, and Environment procedures to benchmark and reduce EHS- related risks, uses NXP EHS expertise to share resources with and appoint people to Product programs and projects worldwide, develops Stewardship EHS requirements for manufacturing sites, and defines EHS targets.

Appendix 59 Overview CERTIFICATION manufacturing facility that a) we own, rent, The ISO 14001 certification or lease and manage, b) has 50 or more Economy program specifies people working in production, and c) is the requirements for consolidated for our financial reporting. an Environmental management system. Ethical The specifications VALIDATION Standards help organizations The Sustainability Office validates data and control their risks and improve their information entered in the Sustainability performance. Manufacturing and some Management System according to the Social non-manufacturing sites (Eindhoven) are frequency given in the reporting standards. Responsibility ISO14001 certified. Validation consists of the following steps:

• Check for completeness of data (locations Stakeholder TRAINING and parameters) Engagement To ensure that everyone at our sites has • Compare data from the reporting period the right skills and disciplines to minimize with data from previous periods environmental risks, employee training is • Determine whether changes in data are Supplier conducted worldwide each year. A range of significant Engagement educational programs provide on-the-job • Seek explanations for significant data training. In addition, specialized trainings in movements environmental matters, quality controls, and • Investigate notable events chemical management are conducted. Employee Engagement The Sustainability Office performs In 2017, EHS started working on monthly reviews with all front/back- implementing across all sites, a process end manufacturing sites. During these for workers of all levels to participate and reviews, we examine the results from our Health and consult in EHS incident investigations and Sustainability Management System, discuss Safety management systems planning. the progress of improvement projects, and set expectations for the next period.

Environment REPORTING STANDARDS To ensure reliable, accurate, and complete We use a Sustainability Management reporting, the Sustainability Office also System to gauge our performance. Our conducts internal data audits of the Product reporting manuals contain reporting manufacturing sites and the larger office Stewardship instructions for these systems, including and R&D sites. The audits check for proper definitions, procedures, and calculation reporting procedures and data trails. methods. Environmental data is reported and validated by the Sustainability Office Appendix monthly. Data is reported on every 60 REDUCING OUR CARBON FOOTPRINT Overview

Economy

Ethical Standards Greenhouse gases are gases in the atmosphere that act like a blanket or glass roof around the earth, trapping in heat that would otherwise escape to space. This is commonly referred to as the “greenhouse

Social effect.” Carbon dioxide (CO2) is the most significant greenhouse gas Responsibility released by human activities and is emitted mostly from the burning of fossil fuels like coal, oil, and natural gas. Other greenhouse gases include methane and nitrous oxide. Stakeholder Engagement Semiconductor manufacturing is not considered a major contributor to global warming, but our operations do directly and indirectly emit greenhouse gases. We measure, manage and report our Scope Supplier 1 & 2 emissions. Emissions are reported in terms of tons of CO2 Engagement equivalents.

GOAL NXP’s 2020 goal is to reduce our emissions by 30% from a baseline Employee Engagement year of 2010 (normalized to our wafer output). STRATEGY NXP’s strategy to reduce greenhouse gas emissions is to first directly Health and reduce our greenhouse gas emissions through process optimization, Safety site conservation, and abatement projects. As part of this effort, our combined sites had multiple greenhouse gas (GHG) reduction projects such as: Environment • Optimizing building operations and product testing processes Product • Using more efficient lighting technologies and schedules Stewardship • Powering down equipment when not utilized • Installing new abatement equipment to reduce Perfluorinated Compounds (PFC) emissions • Using substitute chemicals to reduce heat transfer fluid emissions Appendix from our equipment 61 Overview

PERFORMANCE NXP’s reduction target is an “absolute” emissions reduction, Economy Between 2010 and 2017, our normalized total emissions for Scope meaning a commitment to reduce regardless of the expended 1 and 2, (direct and indirect) decreased by approximately 16%. Our growth of production. Our Scope 1 Emissions include fossil fuel to

production normalizer is based on the square centimeter of silicon heat buildings, the use of PFCs and N2O in our manufacturing of wafers produced. integrated circuits, and the use of HTFs, such as HydroFluoroCarbons Ethical Standards (HFCs) and Perfluoro Ethers for device testing and cooling purposes. Our Scope 2 Emissions include electricity purchased. Our Scope 3 Emissions include business travel and product transport. Social Responsibility Below is the percentage of each category.

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Appendix 62 Overview SCOPE 1 EMISSIONS FOSSIL FUELS In 2017 our normalized Scope 1 emissions decreased Fossil fuels are hydrocarbons, primarily coal, fuel, oil, or natural gas. The Economy by 16% from a 2010 baseline. burning of fossil fuels by humans is the largest source of CO2 emissions. Fossil fuels are still the main source of energy in the global economy.

At NXP, the most commonly used fossil fuel is natural gas, used for Ethical heating and humidity control in our clean rooms. NXP’s use of natural Standards gas depends strongly on both the external temperature and internal production activity within the manufacturing facilities. Diesel is also used at NXP for back-up generators. Social Responsibility From 2010 to 2017, our normalized fossil fuel emissions decreased by more than 35%.

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Appendix 63 Overview PERFLUOROCARBONS (PFCS) process tools, we add POU abatement, when feasible. If such POU PFCs are essential chemicals in today’s semiconductor manufacturing abatement is not feasible, we look for measures elsewhere in our Economy processes. When it comes to etching integrated circuitry onto silicon factories to compensate for the emissions. Recently, the Oak Hill and wafers, or cleaning the internal chambers of deposition equipment, Nijmegen fab installed abatement equipment to further reduce the

there are no alternatives for PFCs. Without them, semiconductor emissions of PFCs (NF3, CF4, C2F6). companies would not be able to produce the complex, high Ethical performance ICs that have become so essential to our daily lives. From 2010 to 2017, our normalized total PFC emissions decreased Standards Nevertheless, PFCs pose a serious dilemma for every semiconductor by over 33%, even though many of our products have become more company. We have essentially exhausted the two most cost-effective complex, requiring additional manufacturing steps and hence more options for PFC reduction–process optimization and switching to PFCs. Social alternative gases. Responsibility We recognize the undesirable impact PFCs have on the environment and have joined with others in the semiconductor industry to Stakeholder seek ways to minimize their use. For example, NXP signed the Engagement Memorandum of Understanding in the US, and the Memorandum of Agreement in Europe, to voluntarily reduce the emissions of PFCs. The industry, as a whole, achieved this target before the 2010 Supplier deadline. The European Union has recognized the semiconductor Engagement industry’s proactive approach by granting an exemption to the so- called F-gases regulation. It is a voluntary agreement. No ban on the use of PFCs for critical applications has been imposed on the semiconductor industry in Europe. We are, however, committed to Employee Engagement looking for alternatives. Like the rest of the semiconductor industry, NXP Semiconductors remains strongly devoted to its proactive management of PFC Health and emissions. We support the New 2010-2020 Global Semiconductor Safety Industry Voluntary Agreement, including the Best Practice Guidance which addresses worldwide emissions from semiconductor manufacturing for the present decade. The agreement is supported Environment by all members of the World Semiconductor Council, and covers the optimization of production processes (so they consume less greenhouse gases), the replacement of greenhouse gases with Product global warming potential (GWP)-free or lower-GWP alternatives, and Stewardship use of the most up-to-date abatement technology. NXP also has its own goals for the reduction of PFC emissions. We proactively review Point-Of-Use (POU) abatement when we maintain, Appendix replace or relocate existing fab tools. As we upgrade existing 64 In Action In Action Overview Perfluorocarbons (PFC’s) Nijmegen facility uses emissions contribute to 29% of NXP’s Perfluorinated compounds such as total carbon footprint, so in 2017 at Oak C2F6 and CF4, and are used by NXP Economy Hill, Austin, Texas, a team of EHS and for chamber cleaning of dielectrics fab engineers began collaborating to deposition tools and for dry etch. In focus on reducing PFC consumption and 2017, the facility took two major optimizing PFC abatement units. steps to reduce PFC emissions. The Ethical reduction of the PFC emissions was Standards Reducing PFC consumption optimizes the to first implement NF3 remote plasma equipment and methodology by cutting chamber cleans. Secondly, abatement the cleaning time across multiple steps systems (Centrotherms) were installed Social – thus reducing our consumption and reducing the PFC emissions. These two Responsibility reducing the amount of PFC’s emitted initiatives had an emission reduction of to the atmosphere permanently by 4% approximately 45% for our Nijmegen from a 2016 baseline. Optimizing the facility. Stakeholder abatement units reduces our carbon Engagement footprint permanently by 24% from a 2016 baseline.

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Appendix 65 HEAT-TRANSFER FLUIDS (HTF’S) substances” are to be phased out. The phase-out date differs NXP uses HTFs for device testing, for cooling purposes from country to country. NXP has strict rules in place, regarding all Overview (manufacturing tools, facilities, and air-conditioning), and in a few ozone-depleting substances, calling for their phase-out well before cases as a fire suppressant. legislation comes into effect. More information on the use of ozone- depleting substances is in Phasing out Ozone-Depleting Substances Economy During the manufacture of semiconductor devices, HTFs serve as below. coolants in chillers, removing excess heat during many manufacturing processes. During semiconductor device testing, devices are From 2013 to 2017 our normalized HTF emissions decreased by immersed in containers of HTFs, cooled or heated to a desired more than 7%. Ethical temperature to verify their integrity, and exposed to HTFs to prevent Standards overheating during certain tests. HTFs are also used to attach semiconductor devices to circuit boards via solder, which may be melted by the vapor of an HTF heated to its boiling point. Social Responsibility Some of the HTFs we use are ozone-depleting substances and, as such, are strictly controlled. For instance, the European Union has adopted regulation EC No 1005/2009 on substances that deplete Stakeholder the ozone layer. By order of this regulation, the so-called “controlled Engagement

In Action Supplier Aligning with the 2020 goal, the Kuala Lumpur site Engagement committed to reduce Heat Transfer Fluid (HTF) emissions which is used for testing hermetically sealed RF products.

HTF’s are used to detect pin hole leaks on RF power amplifiers. Employee However, during the testing there are two steps within the testing Engagement procedure that releases HTF’s into the atmosphere which are due to vapor diffusive loss and fluid drag out. HTF’s contribute to one of the highest emission of GHG from the Kuala Lumpur site. Health and Safety A team of 9, from various organizations, came together to redesign the test apparatus to reduce the HTF emissions into the environment. They redesigned the chip carrier so there is less Environment drag out of HTF. Another project found a chemical substitute is more environmentally friendly with reduction of 10% Global Warming Potential (GWP). From January to September 2017 we have reduced a total of 24,169 metric tons of CO emissions Product 2 Stewardship or 25.6% reduction! There is ongoing work to make even more reductions such as capturing the vaporized solvent through the cooling process and recycle it in a closed loop system by distillation. Appendix 66 Overview

N2O Nitrous oxide is a colorless, non-flammable, non-CO2, global-warming gas. It is naturally present in the atmosphere, as part of the earth’s Economy nitrogen cycle, and comes from a variety of natural sources. However, human activities, such as agriculture, fossil-fuel combustion, wastewater management, and industrial processes, are increasing the amount of N2O in the atmosphere.

N2O is used in semiconductor processes, such as the chemical vapor deposition of silicon dioxide, doped or undoped silicon oxynitride, Ethical diffusion, rapid thermal processing and chamber seasoning. Standards

Emissions from N2O are minor compared to other emissions such as those from PFCs. From 2010 to 2017 the normalized N2O emission

decreased by almost 10%. However, the absolute N2O emissions have increased due to very specific process related requirements. Social Responsibility

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Appendix 67 Overview

NOX, SOX AND VOC Additional emissions are nitrogen oxides (NOx), sulphur oxides (SOx) and volatile organic compounds (VOC). NOx and SOx are air pollutants that Economy arise from a wide variety of sources but mainly as a result of combustion. NOx is a term used to refer to nitric oxide (NO) and nitrogen dioxide (NO2). SOx refers to sulphur dioxide (SO2).

At NXP, predominate NOx and SOx emissions are from the manufacturing processes of integrated circuits. Minimal NOx and SOx Ethical emissions come from our boilers. VOC emissions result from use of Standards chemicals such as solvents used in the photolithography manufacturing process. VOCs include isopropyl alcohol (IPA) and other solvents.

Social From 2010 to 2017, the following normalized emission percentages for NOx, SOx and VOC are as follows: NOx decreased by 12%, SOx Responsibility decreased by 73% and VOC decreased by 35%. However, our absolute VOC has increased slightly due to specific process requirements.

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Appendix 68 Overview SCOPE 2 EMISSIONS Electricity (Manufacturing and Non-Manufacturing) Emissions NXP’s Scope 2 emissions are reported for electricity purchased. From The indirect CO2 emission for electricity results from the combustion Economy 2010 to 2017, the normalized Scope 2 emissions decreased of fossil fuel in third-party power plants. by almost 16%. Absolute Scope 2 emissions are remaining stable.

The CO2 conversion factor is defined as the standardized figure

used within NXP to calculate the average amount of CO2 emissions, Ethical resulting from the use of energy sources. These conversion factors Standards are country-specific and are based on information made available by the International Energy Agency.

Social From 2010 to 2017 our normalized total electricity emissions Responsibility (which includes manufacturing and non-manufacturing) decreased more than 18%, even though many of our products became more complex, requiring additional manufacturing steps and hence more Stakeholder electricity to manufacture. Engagement

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Environment The use of electricity and our approach to saving energy is reported in the “Energy” section.

Product Stewardship

Appendix 69 Overview SCOPE 3 EMISSIONS Business Travel NXP’s Scope 3 emissions are reported for product transportation and Business travel makes up a very small part of our CO2 emissions. Economy business travel. From 2010 to 2017, the absolute Scope 3 emissions Medium-and long-haul flights emit less CO2 per passenger km than decreased by over 19%. short-haul flights, and rail travel is approximately 50% less CO2- intensive per passenger mile than air travel. Emissions from flights are calculated by using flight-distance categories (short, medium, Ethical Product Transportation In 2017, our CO2 emissions from transporting semi-finished products or long haul), along with the distance and average flight emission Standards between factories, and from transporting fully finished products to factors provided by the U.K. Department of Environment, Food, and

warehouses and customers, was estimated at 18,709 tons CO2 for Rural Affairs (DEFRA) as of 2013. legacy NXP only (based on kilograms per km).

Social Total CO2 emissions from business travel in 2017 was 22,446 tons

Responsibility From 2010 to 2017 our product transportation emissions decreased of CO2 compared to the 2010 baseline of 27, 508 tons of CO2. We by 21%. We are consolidating our central distribution centers attribute this reduction to efficient business travel. and optimizing our shipping routes in which we contribute to the Stakeholder reduction of product transportation emissions. The standard value of Engagement reference for calculating airfreight CO2 is 0.567 kg per km. This is a value set by the Intergovernmental Panel on Climate Change (IPCC).

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Appendix 70 PHASING OUT OZONE-DEPLETING SUBSTANCES Overview Some fluorinated gases, such as hydrochlorofluoro­carbons (HCFCs), As of 2007, we phased out use of all ozone depleting substances are ozone-depleting substances, since these cause degradation of (ODS) in our manufacturing processes, and their use for Economy the ozone layer that protects the earth and its inhabitants against manufacturing is now prohibited in all our manufacturing sites. When excessive UV radiation. In response to the Vienna Convention for an air-conditioning system that uses ODS refrigerants are scheduled the Protection of the Ozone Layer and the Montreal Protocol on for replacement, we replace it with a new system that doesn’t use Substances that Deplete the Ozone Layer, many countries have them. The great majority of ODS refrigerants have been replaced Ethical adopted regulations on substances that deplete the ozone layer. or are in the process of being replaced with non-ODS alternatives Standards Under these regulations, so-called “controlled substances” are to be wherever possible and practical. In 2017, we continued to install new phased out in the coming decade. chillers at some sites to remove Class 2 ODS refrigerants such as CFC-22 and CFC-134. Social Responsibility

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Appendix 71 Overview

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Appendix 72 SUBSTANCES OF CONCERN Overview The production of semiconductor devices uses except those that are indispensable to the manufacture of our devices and don’t yet various chemicals and materials, both in front- have a proven alternative. We are searching for alternatives as quickly as possible. Economy end manufacture (wafer fabs) and in back-end operation (assembly). Some of these are highly Substances of Concern: Emissions specific and vital to NXP’s process technologies and Some substances of concern are emitted during production. These and other products. Compared to other industry sectors, the emissions are thoroughly monitored using programs in place to minimize our Ethical semiconductor industry uses more chemicals and emissions overall. Standards materials, but typically in lower volume and in a highly controlled way. We have several programs in place For example, we have several emission-reducing measures already in place, that regulate our use of hazardous chemicals–in fact, covering such manufacturing items as scrubbers and washers (which use ammonia, Social we follow some of the toughest practical standards fluorides, bromides, nitric acid, NOx, and SOx), VOC burners, collection systems Responsibility in the industry for protecting our customers, our for liquid waste (which use fluorides, phosphates, sulfuric acid, and solvents), a local employees, and the environment. treatment plant for fluoride, calcination, bio-filters, and more.

Stakeholder NXP has the ambition to be ahead of new chemical Engagement legislation and customer requirements. NXP also complies with all relevant national and international legislation in force. Chemical management is therefore Supplier one of the cornerstones of NXP’s sustainability Engagement program. There are two primary goals of our chemical management programs. We must control the risks posed by chemicals in NXP production processes, with respect to the safety and health of workers and Employee Engagement to the environment (pollution, global warming, ozone depletion, etc.).

We maintain centralized databases that register and Health and classify the more than 400 substances we use in roughly Safety 2,500 process chemicals and preparations, along with the more than 2,000 product-related materials and sub-parts used by our manufacturing operations. We Environment update these databases frequently to be sure they reflect the latest information. All NXP employees who deal with these items can access the databases Product to view helpful information, including material-safety Stewardship data sheets, workplace instructions cards, warning labels, baseline occupational health and environment information, and instructions for exporting, transporting, handling, and storing a given substance. Appendix We aim to discontinue the use of all these substances 73 The table below lists the substances of concerns emissions, to air and to wastewater. The figures are based on measurements and calculations. Overview

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Appendix 74 Overview Beyond Baseline Requirements In a number of areas, we go beyond Economy baseline laws and regulations to support voluntary agreements that promote industry-wide sustainability. For example, we comply with the World Semiconductor Ethical Council’s (WSC’s) Voluntary Agreement for Standards PFOS (PerFluoroOctyl Sulfonates). In early 2009, after three years of deliberation, the Stockholm Convention COP4 discussions Social on PFOS finished by listing PFOS in Responsibility Annex B, which means it can still be used for a few critical applications, including semiconductor photolithography. As of Stakeholder 2017, we eliminated all manufacturing use Engagement of PFOS. As a result, the emissions from this non-critical use were discontinued, as specified in the WSC Voluntary Agreement. Supplier Engagement In Action In 2017, NXP became PFOS Free. Teams of process and equipment engineers worked together on this Employee challenging project. They had to assess Engagement the replaced materials in terms of risk and quality. Hundreds of tests and thousands of engineering hours were spent on Health and development, re-integrations and new Safety designs.

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Appendix 75 ENERGY CONSUMPTION Overview PERFORMANCE From 2010 to 2017 the normalized electricity consumption Economy decreased by 18.9%. The graph below is for our manufacturing facilities normalized to our wafer output of cm2. Ethical Standards Semiconductor manufacturing is an energy-intensive process, and, as a result, our sustainability programs place a high priority on reducing our energy consumption. The majority of our energy is Social consumed within our manufacturing facilities. A very minor portion Responsibility of the electricity is generated onsite with diesel generators. A small portion of energy consumption we purchase comes from renewable resources such as wind energy. Stakeholder Engagement

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Health and GOAL Safety To reduce normalized electricity consumption by 30% in 2020 from a 2010 baseline.

Environment STRATEGY NXP’s strategy to reduce the normalized electricity consumption is to find opportunities within sites for conservation projects and Product operational efficiency improvements. In 2017, individual sites had Renewable energy is an initiative that some of our locations have Stewardship several electricity conservation projects and initiatives such as taken on as they work towards our 2020 electricity reduction goals. optimizing building operations, installing energy efficient equipment, Electricity consumed at the Austin manufacturing sites include using more efficient lighting technologies and powering down renewable wind energy. We have projects dedicated to electricity equipment when not utilized. reduction and identifying new opportunities to purchase renewable Appendix energy. 76 Overview The NXP sites continue to work towards efficient equipment. There are other projects that are optimizing the energy consumption by reducing energy consumption. Optimizing replacing all bulbs with LED bulbs and turning off equipment when not in use. Economy processes and replacing or upgrading equipment are key means of improving In Action energy efficiency. Some examples are: In 2017, every manufacturing site embarked on projects to reduce energy reduce the air flow velocity in the clean consumption. While there were hundreds of projects related to energy, these are some of Ethical room, reduce and optimize exhaust and the highlights with the biggest contribution to reducing energy consumption. The Kuala Standards air extraction systems, upgrade air dryers, Lumpur site reduced the condenser water temperature, adjusted the chillers configurations reduce cooling tower outlet temperature, and reduced excess lighting levels to save energy. The Bangkok site completely overhauled and purchase energy efficient equipment old equipment and optimized chillers and handlers for some of their energy reduction Social such as new chillers, compressors and projects. The Oak Hill site reduced the exhaust flow back to manufacturers specifications. Responsibility vacuum pumps. Our Nijmegen site alone The Kaohsiung site optimized the variable frequency drive on air handlers to cycle airflow at replaced 69 vacuum pumps for more energy a variable rate as well as optimize the variable frequency drive on the pumps in the chillers.

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Appendix 77 WATER CONSUMPTION Overview

Economy

Ethical Standards NXP recognizes that water is a critical natural resource that is of strategic importance to our business and the communities in which we operate. We are committed to continuously improve our water Social efficiency and minimize our water use and ensuring high standards of Responsibility effluent and wastewater treatment. Semiconductor manufacturing is a water-intensive process, and, as a result, our sustainability programs place a high priority on water conservation. The processes involved Stakeholder in manufacturing semiconductors require large volume of pure water. Engagement They also produce wastewater that can impact the environment. NXP identified its impacts on water resources and developed a strategy.

Supplier For most of our manufacturing sites, our primary water supply is local Engagement municipal water. Our activities then affect local communities as well as the environment.

Employee GOAL Engagement To reduce our normalized water usage by 30% by 2020 from a 2010 baseline.

STRATEGY Health and NXP’s strategy to reduce our normalized water consumption is Safety through conservation and recycling opportunities for our office and manufacturing sites. Our sites conducted several water conservation initiatives, such as reusing water and improving processes. Environment PERFORMANCE From 2010 to 2017, NXP’s normalized water consumption decreased Product by more than 23%. This includes water that is extracted and purchased. Stewardship

Appendix 78 Overview NXP GLOBAL WATER STRESS SCORES water use goals for new technologies. A The Water Stress Index (WSI) quantifies baseline water stress at the catchment level, while also significant amount of water use is related to Economy identifying localized variations within the catchment boundaries. A risk category is assigned produce silicon wafers during fabrication. to each catchment based on the ratio of water use to renewable supply, enabling users to We work with semiconductor equipment visualize the inherent water stress in that area. Within catchments, the map reflects different manufacturers to optimize and reduce levels of combined domestic, industrial and agricultural water demand. water consumption within our tools and Ethical processes. In addition, another strategy is Standards to reuse the water after the manufacturing process for other industrial purposes and continue to increase efficiency of how Social water is used throughout the process. For Responsibility example, some sites will treat industrial water from manufacturing operations and recycle it to replace incoming water that Stakeholder is used for cooling towers, scrubbers and Engagement abatement equipment. Additional projects are underway and under consideration and will be selected based on the input from Supplier local stakeholders and environment groups Engagement and prioritized based on the impact on direct, long-term improvements to the local water supply. Employee Engagement Although our ultimate vision is to continuously reuse water in semiconductor manufacturing, we currently discharge water from our operations in compliance with local Health and Index values are divided into four risk supply through the year, and subsequently permits. We focus on the quality we return Safety categories to aid interpretation: extreme levels of water stress exhibit distinct to municipal water treatment operations, (0.0-2.5), high (>2.5-5.0), medium (>5.0- seasonal fluctuations. where it can be reused for other purposes 7.5) and low (>7.5-10.0). Each of these within the community or returned to the Environment categories are shown on the map in a Many of our operations are located in semi- environment. We monitor and manage different shade. Countries are also assigned arid regions that may become increasingly the quality of wastewater discharged into a rank, based on their relative position in vulnerable to prolonged droughts. As the communities in which we operate by Product each index, where the country ranked 1 the impacts of water use greatly vary by utilizing onsite water treatment facilities and Stewardship is the highest risk. The index is based on location, we rely on water experts at our continuous monitoring/testing as required mean annual water stress, and therefore the sites to research and manage ways to by local authorities. Our water discharge seasonality of water stress is not captured. reduce consumption. Our efforts include methods vary by site, based on the needs In some areas, well-defined wet and dry incorporating water conservation elements of individual communities. Appendix seasons produce marked variations in water into the design of our facilities and establish 79 Overview We pay attention on the local communities where we operate by avoiding pollution Economy from the discharge of water from our manufacturing operations. Wastewater is treated in dedicated treatment plants, which are either located on-site or established Ethical in collaboration with local authorities. To Standards remove any risk, pollution substances are eliminated first. Once a sufficient level of purity is obtained that is compliant with Social local regulation, water is discharged into the Responsibility natural environment.

Stakeholder Engagement In Action In response to a severe In Action drought, the Kaohsiung site began Supplier In Nijmegen, an intensive several water-saving initiatives and Engagement reduction program expands the reuse of recycles and reuses more than 80% reclaim water saving up to 20% of the of their water. A new procedure for normal usage of water per year. Bangkok wastewater has yielded considerable switched from a Deionization (DI) system savings. Wastewater from wafer sawing is Employee to an Electro-Deionization (EDI) system, recycled in soft-water tanks, through the Engagement which uses no chemicals, eliminates the use of Ultra Filter (UF) and active-carbon In Action need to send water to a wastewater systems. A new Reverse Osmosis (RO) In 2017 there were 8 projects treatment plant, and makes it so the system will provide additional recycling across four sites that focused on water Health and water can be reused in other processes. of waste water from sawing, in RO water reclaim. Examples listed are the biggest Safety The new EDI system has saved water tanks. As an added step, wastewater from contributors to reduction of water and led to a dramatic reduction in the wafer grinding will soon be recycled in consumption. At ATMC, the flow rate use of chemicals. Other projects across cooling towers, via Dissolved Air Flotation was optimized on the reverse osmosis Environment the company include taking our process (DAF), fiber-filter, and active-carbon system to reduce water consumption. waste water and re-running it through systems. These new water-processing The Oak Hill site optimized the filers to our water purification plant for reuse. systems are already generating significant enable additional reclaim of water and Product In some facilities, we reuse our recycled savings. Within just six months, the standardized water usage on similar tool Stewardship water within our tools such as abatement system reduced water consumption by sets. At Kuala Lumpur, water recycling units. In addition, we have processes in 35%, going from 1,700 to 1,100 tons per was increased in various systems. The place to reuse test/sample water through day. Also, because the plant is generating Chandler site hooked up process tools our deionized water plant for subsequent less wastewater, the site has less of an to their reclaimed water system to offset Appendix reuse in other areas. impact on the surrounding environment. water consumption. 80 WASTE Overview Semiconductor manufacturing generates hazardous and non- hazardous waste, office and other types of waste. Most of the waste Economy generated from our operations is tied to the manufacturing of our products. We have waste reduction programs in place at our sites to handle and manage hazardous and non-hazardous waste in an environmentally responsible manner. All manufacturing sites have Ethical ongoing programs to reduce the amount of waste generated and Standards increase the percentage of waste recycled. To continue progress toward our goal to increase our recycling rate of both hazardous and non-hazardous waste, multiple groups across NXP are working Social to identify innovative ways to recycle or recover waste streams for Responsibility reuse, or even convert them into sources of revenue.

For waste that requires specialized handling, we only ship to vendors Stakeholder equipped with the knowledge and expertise to properly reclaim, Engagement recycle, or destroy it. All handling of our waste is done according to global and local rules and regulations.

Supplier GOAL Engagement Increase the recycle rate of both hazardous and non-hazardous waste to 90% by 2020.

Employee STRATEGY Engagement NXP’s strategy is to prevent waste and increase our recycling initiatives by improving our recycle programs and expand material reclamation efforts. The plan is:

Health and • Continue to recycle/reuse spent materials Safety • Continue to identify new opportunities to recycle • Establish more recycling vendor possibilities in local regions • Continue to compost food waste at most of our facilities Environment PERFORMANCE Our total waste is calculated for our fabs and assembly operations. Product In 2010 our recycling rate was 65% and in 2017 the recycling rate Stewardship increased to 76%. Of total waste, 64.5% of waste comes from wafer fabs and 35.5% from assembly operations. Of our total waste, 76.2% is recycled, 17% goes to landfill, and 6.8% is incinerated.

Appendix 81 Overview While our products are not typically subject to recycling or e-waste laws, we work with others to identify shared solutions for our Economy used products. We also take steps to integrate environmental considerations into the design phase of our products to minimize environmental impacts of our products at their end of life. Ethical PACKAGING Standards To make sure our products reach our customers undamaged, we use special packaging materials to protect them during shipment. Since we only deliver to other businesses, none of our packaging materials Social are received by consumers. We are committed to using sustainable Responsibility pack-and-ship methods, and use specially designed packaging tubes and shipping trays that are easy to recycle.

Stakeholder We advise our customers on the possibilities for recycling, and know Engagement that most of our larger customers already have recycling programs in place, but we don’t have accurate figures on how much of the packaging is actually recycled. Supplier Engagement We work with our packaging suppliers to drive changes in the materials that we use to ship products between our sites and our customers. Our long-term vision is to have a sustainable packaging program for all inbound, outbound and return shipments. Our packaging uses mainly Employee Engagement paper and cardboard (2,764 kilotons) and plastic (1,566 kilotons) in 2017. The 2017 packaging data does not include all legacy Freescale data. We intend to include all legacy Freescale data in future reports.

Health and E-SCRAP RECLAIM Safety NXP has a very proactive “reclaim” program and uses the best available technology to manage e-scrap. E-scrap is collected from factories, test centers and subcontractors around the world. The Environment materials collected include process metallic scrap pieces, parts and fixtures, failed test devices and ICs, engineering materials, test architecture boards, chemicals, silicon in all forms and manufacturing Product process byproducts containing metallic components. NXP processes Stewardship these materials not only to recover the value of metals and silicon, but to do so in the most environmentally sound method available with minimal waste going to the landfill. The smelter captures nearly 100% of the material available for recovery. Appendix 82 Overview

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Appendix 83 ENVIRONMENTAL PRODUCT COMPLIANCE Overview At NXP, our goal is to provide finished goods, subassemblies, and laws, and regulations. environmentally preferred products packaging materials delivered and used Economy that meet both regulatory requirements at levels above our established threshold, HAZARDOUS SUBSTANCES and specific restrictions on hazardous to ensure that no NXP products put on Formal guidelines have been introduced substances and minerals. the market contain any substances that gradually over several years by various are restricted by law or other regulations. bodies substantiating NXP’s own drive Ethical Our global Environmental Compliance While most substances on this list are to eliminate hazardous substances from Standards Organization for Products (ECO-Products) not permitted by law, a number of them our products. Directives such as RoHS manages our corporate product compliance are not permitted by NXP in view of (Restriction on Hazardous Substances procedures for: upcoming legislation, or their impact on the in Electrical and Electronic Equipment), Social environment, health and safety. REACH (Registration, Evaluation, and Responsibility • End of Life Vehicle Directive in the Authorization of CHemical substances), European Union (ELV) The ECO-Products Substance Control WEEE (Waste from Electrical and Electronic • Restriction of Hazardous Substances in the for Products and Packaging also contains Equipment) and ELV (End of Life Vehicle) Stakeholder European Union and China (RoHS) a number of restricted substances. Use impose better control over waste Engagement • Regulation on Registration, Evaluation, of these substances is allowed, but any management of electronic devices. Authorization and Restriction of Chemicals intentional use of these substances above (REACH) the declaration threshold must be reported RoHS Supplier as specified in this list. Most substances NXP declares that its semiconductor Engagement We work closely with our supply chain are placed on the list because of health products (including homogeneous sub- to document our product compliance. risks in their use and or processing. Others components) are designed to be RoHS Documentation includes full material are placed on the list because they limit compliant and meet the requirements composition declarations using the IPC- recycling, are scarce, or have a high defined under Directive 2011/65/EU of the Employee Engagement 1752 template; certificates of analysis environmental impact in mining. In this way, European Parliament and of the Council of for RoHS substances using an IEC 62321 NXP encourages suppliers to look for and June 2, 2011 on the restriction of the use of recommended analytical technique; and start using alternatives. certain hazardous substances in electrical reasonable country of origin inquiries for and electronic equipment. NXP RoHS Health and conflict minerals using the Conflict Minerals To provide our clients with more information compliant semiconductor devices contain Safety Reporting Template (CMRT). about product content, as well as detailed no more than 0.1% lead (Pb) by weight per information of Lead-Free and Halogen-Free homogeneous material, or else the devices NXP only qualifies new semiconductor products, we offer the Product Content may contain lead (Pb) for uses allowed by Environment packages with environmentally preferred Search Tool. NXP also provides information the RoHS Directive as amended. materials in which the use of hazardous to IMDS (International Material Data materials is kept to a technically necessary System). In IMDS, all chemicals present Lead (Pb) Product minimum. For this purpose, we created in finished automobile manufacturing The potential health hazard posed by lead Stewardship the ECO-Products Substance Control for are collected, maintained, analyzed, (Pb) contamination is a major concern Products and Packaging. and archived. IMDS facilitates meeting to everyone. In 2010, together with the obligations placed by automobile four other leading companies (Bosch- It specifies substances that are not manufacturers, and thus on their suppliers, Division Automotive Electronics, NXP Appendix permitted in materials, parts, (semi-) by national and international standards, Semiconductors, Infineon Technologies, 84 Overview and STMicroelectronics) NXP formed a in the near future. Some products, such 2. Discourage too many non-preferred consortium, known as the DA5 (Die-Attach 5), as the majority of our DIP, SIL, and QFN Dark Green solutions and encourage to jointly investigate and standardize the packages, have been Pb-free for many years. standardization. Economy acceptance of alternatives for high-lead 3. Convert existing products. solder for attaching die to semiconductor Halogens 4. Combine Dark Green’s introduction with packages during manufacturing. For We make a distinction between Green thin-wire and Cu-wire changes to control environmental reasons, the semiconductor and Dark Green Products. Green Products cost and quality. Ethical industry is making every effort to eliminate are RoHS-compliant products, while Dark These activities reflect NXP’s deep Standards high-lead solder wherever feasible. Any Green products are fully RoHS-compliant commitment to developing eco-friendly solution will require substitute material products that comply with the European products and to integrate environmental development and evaluation, internal Union directive 2011/65/EU and are free of safety aspects in all manufacturing processes. Social semiconductor process and product Halogen and Antimony. Our specification “Dark Green” products can be recognized by Responsibility qualification, and semiconductor production for these products has been set at 900 the “Halogen Free” logo on the box label. conversion to guarantee product reliability. ppm, which is significantly better than the By jointly developing and qualifying an industry standard. Our specification for In Action Stakeholder alternative, the DA5 consortium aims Dark Green Products also applies to all The Dark Green product line Engagement to identify and provide lead-free and chlorinated and brominated compounds. started with a request from some of our environmentally friendly solutions as quickly It is one of our key focus areas to restrict leading customers in the mobile-phone as possible. The consortium also aims to all chlorines and bromines, not just those segment. Concerned about the Supplier understand the risks of current and future that are flame retardants, in our Dark Green disposability of their products, they Engagement legislation and provide a common message products. The shift to halogen-free formats were looking to replace two of the to legislating bodies (by, for example, does not change any product parameters flame retardants used in IC packaging, supporting requests for exemption or affect existing qualification, such as the that contained halogen and antimony extensions). automotive standards as defined by the oxide. Since NXP works very closely Employee with our customers, our suppliers, and Engagement AEC (Automotive Electronics Council). NXP’s Pb-free initiative, which supports our NXP customers benefit from this transfer our manufacturing sites to find better commitment to sustainability, ensures the to Dark Green, since environmental alternatives, we took on the challenge. complete removal of lead from our entire safety is becoming more important The reality is that changing the chemical Health and device portfolio without adversely affecting for manufacturing processes, and end formula in a semiconductor product is no Safety technical specifications or our customer’s customers view it as a value in its own right. easy task. The manufacturing process is manufacturing processes. extremely delicate and complex, so making Formal legislation restricting halogen and even a minor change can have a serious Environment Recycling and careful disposal is one antimony oxide is now under discussion and impact. In the end, we developed a new approach to address the health hazard of NXP, as a leader in the field, is providing kind of packaging, called Dark Green, that lead. But at NXP, we believe prevention technical expertise that will help legislators doesn’t use halogen or antimony oxide Product is better than a cure so we’ve made the make informed decisions. NXP’s Dark Green and, as an added bonus, is more resistant Stewardship manufacturing process Pb-free. We are Policy concerning IC packages aims to do to moisture. It doesn’t require dry-pack actively engaged in researching new several things: processing, which involves drying the soldering materials, processes, and package- package and sealing it in plastic, and that terminal plating, with the aim of making our 1. Qualify cost-effective Dark Green delivers an added saving on energy and Appendix broad product portfolio completely Pb-free compounds for existing packages. resources. 85 Overview REACH WEEE ELV We have procedures in place to ensure The European Union (EU) Directive In determining the ELV status of its Economy we follow all the relevant local, regional, regarding Waste Electrical and Electronic products, NXP relies upon its suppliers’ and global laws that govern our business, Equipment (WEEE, Directive 2012/19/EU) material content data certification for including the regulations that require requires “producers” of certain electrical each homogeneous material in the producers and importers of chemicals to and electronic equipment to develop product(s) that they or their subcontractors Ethical register their substances along with the recycling programs to allow the end user provide. Therefore, NXP declares that its Standards information needed to use them safely. to return WEEE for recycling. The definition semiconductor products are designed to be of “producer” is broad and can potentially ELV compliant and meet the requirements REACH (Registration, Evaluation, and include various entities in a products life of the EU-Directive 2000/53/EC (End of Social Authorization of CHemical substances), cycle (e.g. manufacturer, distributor). Life Vehicles, ELV) and its amendments. Responsibility which is the European legal framework for NXP semiconductor devices do not contain chemicals in force since June 1, 2007. As of Each EU Member State has implemented cadmium, mercury or hexavalent chromium December 2017, the REACH Substance of national legislation detailing specific above the allowable limits as defined in the Stakeholder Very High Concern (SVHC) list includes 174 requirements for WEEE implementation in End-of-Life Directive dated 18 September Engagement candidates and 43 authorized substances. that Member State. Some other non-EU 2000. Substances found in the REACH Annex countries have laws similar to the WEEE XIV, and in Annex XVII (with applicable Directive; however, the scope and producer NXP ELV compliant semiconductor devices Supplier restrictions) are on the prohibited or responsibility requirements vary from those contain no more than 0.1% lead (Pb) by Engagement restricted substances list. Substances in of the WEEE Directive. weight per homogeneous material, or else the Candidate List (REACH SVHCs) may the devices may contain lead (Pb) for uses be categorized as Prohibited, Restricted or NXP Semiconductors is primarily a allowed by the ELV Directive. Any lead Declarable. NXP products and packaging component manufacturer. Therefore, currently contained in these products meets Employee Engagement do not contain substances found in Annex NXP’s current products are generally not the criteria for exemptions as found in XIV and Annex XVII. NXP has identified considered within the scope of the WEEE Annex II of Commission Directive 2013/28/ materials within its products and packaging Directive until they are incorporated into a EU dated 17 May 2013. materials that may contain EU REACH SVHC final product. Health and candidate substances in excess of 0.1% by Safety weight. Some of NXP Semiconductor products contain brominated flame retardants in the plastic encapsulation. Plastics Environment containing brominated flame retardants are considered a WEEE relevant substance. NXP semiconductor products that do not Product contain brominated flame retardants are Stewardship easily identifiable by the Halogen-Free logo on the packaging label.

Appendix 86 CONFLICT MINERALS Overview Minerals regulation, NXP developed and perform due diligence with respect to the implemented a policy and due diligence sourcing of conflict minerals and to file annual Economy process to reasonably assure that the tin, reports relating to use of conflict minerals. tungsten, tantalum and gold in the products NXP will comply with the conflict minerals we manufacture do not directly or indirectly diligence and reporting obligations required finance or benefit armed groups. under the Act. To meet the obligations, NXP Ethical has implemented a comprehensive due- Standards NXP Conflict Minerals Policy diligence process. NXP is a company with a strong commitment to social responsibility. We believe that as a NXP suppliers, including contractors Social All of the smelters and/or refiners (SORs) sustainable company, we need our suppliers and external manufacturers, are required Responsibility reported on the NXP CMRT are Certified and contractors to join us in this commitment to comply with NXP’s Supplier Code of according to RMI and/or LBMA. We provide based on a shared set of values and Conduct, which includes requirements updates when new data is received. NXP principles. relating to conflict minerals and responsible Stakeholder is participating in several engagements to sourcing. NXP suppliers shall have a policy Engagement address the conditions related to the minerals There has been increased awareness of to reasonably commit that the tantalum, in the supply chain. We are also participating violence and human rights violations in tin, tungsten and gold in the products they in initiatives to add cobalt and other the mining of certain minerals from the manufacture do not directly or indirectly Supplier minerals to the scope and are committed to Democratic Republic of the Congo (DRC) and finance or benefit armed groups that are Engagement continuous improvement of the entire conflict surrounding countries. NXP shares the deep perpetrators of serious human rights abuses minerals due diligence infrastructure. concern about sources of minerals from these in the Democratic Republic of Congo or an conflict zones and is therefore committed adjoining country. NXP suppliers shall exercise to make its products DRC conflict-free and due diligence on the source and chain of Employee Regulation Engagement The Conflict Minerals regulation in the United obtain full transparency throughout its supply custody of these minerals and shall make their States (Section 1502 of the Dodd-Frank Wall chain. due diligence measures available to NXP Street Reform and the Consumer Protection upon NXP’s request. Act) applies to companies who must report NXP supports the goals and objectives of Health and to the Security and Exchange Commission Section 1502 of the Dodd-Frank Act, which NXP has obtained information from suppliers Safety (SEC). These companies are required to aims to prevent the use of conflict minerals concerning the origin of the metals that are review their products and determine whether that directly or indirectly finance or benefit used in the manufacture of NXP’s products. tin, tungsten, tantalum and gold (3TG) are armed groups in The Democratic Republic of Based upon information provided by our Environment necessary for production. If necessary for the Congo (DRC) or an adjoining country as suppliers, NXP does not knowingly use metals production, companies are required to defined in the Act (Conflict Region). Conflict derived from the Conflict Region that directly evaluate their supply chain and declare minerals include: columbite-tantalite (coltan) or indirectly benefit armed groups that are Product whether 3TG originate in and around the (i.e., tantalum), cassiterite (i.e., tin), gold, perpetrators of serious human rights abuses. Stewardship Democratic Republic of the Congo from wolframite (i.e., tungsten) or their derivatives sources that finance civil rights abuses. and could expand to include any other If such sources are identified, NXP will take mineral or their derivative determined by the actions to remove them from its supply chain. NXP is dedicated to ensuring conflict-free U.S. Secretary of State to be financing the Appendix sourcing. To comply with the Conflict DRC conflict. The Act requires companies to 87 Overview

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Health and Safety APPENDIX Environment

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Appendix 88 Overview United Nations Global Compact Commitment Letter Economy Communication on Progress

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Appendix 89 GRI CONTENT INDEX Overview Disclosure GRI Standard Disclosure Disclosure Title Response Number Number Economy GENERAL DISCLOSURES

Ethical GRI 102 General Disclosures 102-1 Name of the organization About NXP Standards GRI 102 General Disclosures 102-2 Activities, brands, products, and services About NXP

Location of headquarters About NXP Social GRI 102 General Disclosures 102-3 Responsibility GRI 102 General Disclosures 102-4 Location of operations About NXP

GRI 102 General Disclosures 102-5 Ownership and legal form Investor Relations Stakeholder Engagement GRI 102 General Disclosures 102-6 Markets served About NXP

GRI 102 General Disclosures 102-7 Scale of the organization About NXP Supplier Engagement GRI 102 General Disclosures 102-8 Information on employees and other Employee Profile workers

Employee GRI 102 General Disclosures 102-9 Supply chain Supplier Engagement Engagement GRI 102 General Disclosures 102-10 Significant changes to the organization Scope of the Corporate and its supply chain Responsibility Report Health and Safety GRI 102 General Disclosures 102-12 External initiatives Stakeholder Engagement

GRI 102 General Disclosures 102-13 Membership of associations Stakeholder Engagement

Environment GRI 102 General Disclosures 102-14 Statement from senior decision-maker Message from our CEO

GRI 102 General Disclosures 102-15 Key impacts, risks, and opportunities Corporate Responsibility Product Stewardship GRI 102 General Disclosures 102-16 Values, principles, standards, and norms NXP Code of Conduct of behavior

Appendix 90 Overview Disclosure GRI Standard Disclosure Disclosure Title Response Number Number Economy GRI 102 General Disclosures 102-17 Mechanisms for advice and concerns Ethical Standards about ethics Ethical Standards GRI 102 General Disclosures 102-18 Governance structure Corporate Governance

GRI 102 General Disclosures 102-19 Delegating authority Corporate Governance

Social GRI 102 General Disclosures 102-20 Executive-level responsibility for Corporate Responsibility Responsibility economic, environmental, and social topics

Stakeholder GRI 102 General Disclosures 102-21 Consulting stakeholders on economic, Stakeholder Engagement Engagement environmental, and social topics

GRI 102 General Disclosures 102-22 Composition of the highest governance Corporate Governance Supplier body and its committees Engagement GRI 102 General Disclosures 102-23 Chair of the highest governance body Corporate Governance

Employee GRI 102 General Disclosures 102-24 Nominating and selecting the highest Corporate Governance Engagement governance body

GRI 102 General Disclosures 102-26 Role of highest governance body in Corporate Governance setting purpose, values, and strategy Health and Safety GRI 102 General Disclosures 102-27 Collective knowledge of highest Corporate Governance governance body

Environment GRI 102 General Disclosures 102-28 Evaluating the highest governance body’s Corporate Governance performance

Product GRI 102 General Disclosures 102-29 Identifying and managing economic, Corporate Responsibility Stewardship environmental, and social impacts

GRI 102 General Disclosures 102-31 Review of economic, environmental, and Corporate Responsibility Appendix social topics 91 Overview Disclosure GRI Standard Disclosure Disclosure Title Response Number Number Economy GRI 102 General Disclosures 102-32 Highest governance body’s role in Corporate Responsibility sustainability reporting Ethical Standards GRI 102 General Disclosures 102-33 Communicating critical concerns Corporate Responsibility

GRI 102 General Disclosures 102-34 Nature and total number of critical Ethical Standards concerns Social Responsibility GRI 102 General Disclosures 102-35 Remuneration policies Investor Relations

GRI 102 General Disclosures 102-36 Process for determining remuneration Investor Relations Stakeholder Engagement GRI 102 General Disclosures 102-40 List of stakeholder groups Stakeholder Engagement

GRI 102 General Disclosures 102-42 Identifying and selecting stakeholders Stakeholder Engagement Supplier Engagement GRI 102 General Disclosures 102-43 Approach to stakeholder engagement Stakeholder Engagement

GRI 102 General Disclosures 102-44 Key topics and concerns raised Stakeholder Engagement Employee Engagement GRI 102 General Disclosures 102-45 Entities included in the consolidated Investor Relations financial statements

Defining report content and topic Corporate Responsibility Health and GRI 102 General Disclosures 102-46 Safety boundaries GRI 102 General Disclosures 102-47 List of material topics Corporate Responsibility

Environment GRI 102 General Disclosures 102-48 Restatements of information Scope of the Corporate Responsibility Report

Product GRI 102 General Disclosures 102-49 Changes in reporting Scope of the Corporate Stewardship Responsibility Report

Appendix 92 Overview Disclosure GRI Standard Disclosure Disclosure Title Response Number Number Economy GRI 102 General Disclosures 102-50 Reporting period The reporting period covers calendar year 2017. Ethical Standards GRI 102 General Disclosures 102-52 Reporting cycle Annually

GRI 102 General Disclosures 102-53 Contact point for questions regarding the [email protected] report Social Responsibility GRI 102 General Disclosures 102-54 Claims of reporting in accordance with the Scope of the Corporate GRI Standards Responsibility Report

Stakeholder GRI 102 General Disclosures 102-55 GRI content index As shown. Engagement

ECONOMIC PERFORMANCE Supplier Engagement GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Investor Relations

GRI 201 Economic Performance 201-2 Financial implications and other risks and Investor Relations Employee opportunities due to climate change Engagement

PROCUREMENT PRACTICES Health and Safety GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Supplier Engagement

Environment ANTI-CORRUPTION

GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Product GRI 205 Anti-corruption 205-2 Communication and training about anti- NXP Code of Conduct Stewardship corruption policies and procedures

Appendix 93 Overview Disclosure GRI Standard Disclosure Disclosure Title Response Number Number Economy ENERGY

Ethical GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Environment Standards GRI 302 Energy 302-1 Energy consumption within the Energy , Water and Waste organization Social Responsibility GRI 302 Energy 302-3 Energy intensity Energy , Water and Waste GRI 302 Energy 302-4 Reduction of energy consumption Energy , Water and Waste

Stakeholder GRI 302 Energy 302-5 Reductions in energy requirements of Energy , Water and Waste Engagement products and services

Supplier Engagement WATER GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Environment

Employee GRI 303 Water 303-1 Water withdrawal by source Energy , Water and Waste Engagement GRI 303 Water 303-2 Water sources significantly affected by Energy , Water and Waste withdrawal of water Health and Safety GRI 303 Water 303-3 Water recycled and reused Energy , Water and Waste

Environment EMISSIONS GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Environment

Product GRI 305 Emissions 305-1 Direct (Scope 1) GHG emissions Reducing our Carbon Footprint Stewardship GRI 305 Emissions 305-2 Energy indirect (Scope 2) GHG emissions Reducing our Carbon Footprint

Appendix 94 Overview Disclosure GRI Standard Disclosure Disclosure Title Response Number Number Economy GRI 305 Emissions 305-3 Other indirect (Scope 3) GHG emissions Reducing our Carbon Footprint

Ethical GRI 305 Emissions 305-4 GHG emissions intensity Reducing our Carbon Footprint Standards GRI 305 Emissions 305-5 Reduction of GHG emissions Reducing our Carbon Footprint

GRI 305 Emissions 305-6 Emissions of ozone-depleting substances Reducing our Carbon Footprint Social (ODS) Responsibility GRI 305 Emissions 305-7 Nitrogen oxides (NOX), sulfur oxides Reducing our Carbon Footprint (SOX), and other significant air emissions Stakeholder Engagement EFFLUENTS AND WASTE

Supplier GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Environment Engagement GRI 306 Effluents and Waste 306-2 Waste by type and disposal method Energy , Water and Waste

Significant spills Environment Employee GRI 306 Effluents and Waste 306-3 Engagement GRI 306 Effluents and Waste 306-4 Transport of hazardous waste Energy , Water and Waste

Health and ENVIRONMENTAL COMPLIANCE Safety GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Environment

Environment GRI 307 Environmental 307-1 Non-compliance with environmental laws Environment Compliance and regulations

Product Stewardship

Appendix 95 Overview Disclosure GRI Standard Disclosure Disclosure Title Response Number Number Economy SUPPLIER ENVIRONMENTAL ASSESSMENT

Ethical GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Supplier Engagement Standards GRI 308 Supplier Environmental 308-2 Negative environmental impacts in the Supplier Engagement Assessment supply chain and actions taken Social Responsibility EMPLOYMENT

GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Employee Profile Stakeholder Engagement GRI 401 Employment 401-1 New employee hires and employee Employee Profile turnover

Supplier Engagement LABOR/MANAGEMENT RELATIONS

GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Social Responsibility Auditable Standards Employee Engagement GRI 402 Labor/Management 402-1 Minimum notice periods regarding Social Responsibility Auditable Relations operational changes Standards Health and Safety OCCUPATIONAL HEALTH AND SAFETY

GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Health and Safety Environment

Product Stewardship

Appendix 96 Overview Disclosure GRI Standard Disclosure Disclosure Title Response Number Number Economy GRI 403 Occupational Health 403-1 Workers representation in formal joint Each manufacturing site and Safety management–worker health and safety provides various opportunities Ethical committees for employee representation Standards and feedback. These may include committees, incident investigation, safety meetings, etc. NXP is certified to OHSAS Social 18001, and plans to be fully Responsibility compliant to ISO 45001 by 2020.

Stakeholder GRI 403 Occupational Health 403-2 Types of injury and rates of injury, Health and Safety Engagement and Safety occupational diseases, lost days, and absenteeism, and number of work-related fatalities Supplier Engagement GRI 403 Occupational Health 403-3 Workers with high incidence or high risk NXP has monitoring programs and Safety of diseases related to their occupation that ensure exposures in the workplace is minimized and Employee does not adversely affect worker Engagement health.

TRAINING AND EDUCATION Health and Safety GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Career Path

GRI 404 Training and Education 404-2 Programs for upgrading employee skills Career Path Environment and transition assistance programs

DIVERSITY AND EQUAL OPPORTUNITY Product Stewardship GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Diversity and Inclusion

Appendix 97 Overview Disclosure GRI Standard Disclosure Disclosure Title Response Number Number Economy NON-DISCRIMINATION

Ethical GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Ethical Standards Standards

FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING Social Responsibility GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Labor and Human Rights

GRI 407 Freedom of Association 407-1 Operations and suppliers in which the Labor and Human Rights Stakeholder and Collective right to freedom of association and Engagement Bargaining collective bargaining may be at risk

CHILD LABOR Supplier Engagement GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Labor and Human Rights

GRI 408 Child Labor 408-1 Operations and suppliers at significant risk Labor and Human Rights Employee for incidents of child labor Engagement FORCED OR COMPULSORY LABOR

Health and GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Labor and Human Rights Safety GRI 409 Forced or Compulsory 409-1 Operations and suppliers at significant Labor and Human Rights Labor risk for incidents of forced or compulsory Environment labor SECURITY PRACTICES

Product Disclosure of management approach Supplier Engagement Stewardship GRI 103 Management Approach 103-1 - 103-3 GRI 410 Security Practices 410-1 Security personnel trained in human rights Supplier Engagement policies or procedures Appendix 98 Overview Disclosure GRI Standard Disclosure Disclosure Title Response Number Number Economy HUMAN RIGHTS ASSESSMENT

Ethical GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Social Responsibility Standards GRI 412 Human Rights 412-1 Operations that have been subject Social Responsibility Assessment to human rights reviews or impact assessments Social Responsibility GRI 412 Human Rights 412-2 Employee training on human rights Social Responsibility Assessment policies or procedures

Stakeholder GRI 412 Human Rights 412-3 Significant investment agreements and Supplier Engagement Engagement Assessment contracts that include human rights clauses or that underwent human rights screening Supplier Engagement LOCAL COMMUNITIES

Employee GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Community Engagement Engagement GRI 413 Local Communities 413-1 Operations with local community Community Engagement engagement, impact assessments, and development programs Health and Safety SUPPLIER SOCIAL ASSESSMENT

Environment GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Supplier Engagement

GRI 414 Supplier Social 414-1 New suppliers that were screened using Supplier Engagement Product Assessment social criteria Stewardship GRI 414 Supplier Social 414-2 Negative social impacts in the supply Supplier Engagement Assessment chain and actions taken Appendix 99 Overview Disclosure GRI Standard Disclosure Disclosure Title Response Number Number Economy MARKETING AND LABELING

Ethical GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Product Stewardship Standards GRI 417 Marketing and Labeling 417-1 Requirements for product and service Product Stewardship information and labeling Social Responsibility SOCIOECONOMIC COMPLIANCE

GRI 103 Management Approach 103-1 - 103-3 Disclosure of management approach Investor Relations Stakeholder Engagement

Supplier Engagement

Employee Engagement

Health and Safety

Environment

Product Stewardship

Appendix 100 SECURE CONNECTIONS FOR A SMARTER WORLD

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