CORPORATE RESPONSIBILITY

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Supplier Responsibility
 

2014 Snapshot


  • NVIDIA merged its two manufacturing operations into one global effort run by our executive vice president of operations, re-evaluating critical suppliers and streamlining government and customer requirements
  • We conducted an internal assessment of our operations, using EICC’s audit protocol
  • We integrated a global supplier compliance management solution
 

Our commitment to producing responsible products requires us to pay close attention to our supply chain. We work with the subcontractors who manufacture our products to monitor and improve their social and environmental performance, and we require them to comply with international guidelines for responsible practices and material safety.

We are a member of the Electronic Industry Citizenship Coalition (EICC) and have adopted the EICC Code of Conduct as our supplier management framework. We use this framework to drive our own practices as a supplier to the world’s largest electronics companies and we use it for the suppliers who manufacture and assemble our products. We have integrated EICC risk assessment tools, auditing protocols and educational resources into our supplier management practices. The EICC enables NVIDIA to leverage the collective weight of more than 100 electronics companies and provides a platform that lets us go above and beyond compliance, as described below.

Supply Chain Structure

We do not directly manufacture the semiconductor wafers or printed circuit boards used in our products, nor do we manufacture the company’s branded devices. We use a fabless manufacturing strategy and employ world-class suppliers for all phases of the manufacturing process, including wafer fabrication, assembly, testing and packaging. We also contract with manufacturers to build, test, and distribute our branded devices.

Taiwan Semiconductor Manufacturing Company (TSMC) manufactures our semiconductor wafers. TSMC has a long history of corporate responsibility performance and has been recognized for two years in a row as a semiconductor industry leader by the Dow Jones Sustainability Index. The company has reduced its greenhouse gas footprint per fab and its water usage per wafer-layer over the past five years. Per-unit wastewater discharge also has decreased, and the waste-recycling rate in TSMC’s overseas fabs increased within the same time period. TSMC joined the EICC in late 2014.

Our two main contract manufacturers for company-branded devices are Foxconn and BYD. We have conducted annual customer-managed audits on our product lines since 2012, and in 2015 we will incorporate EICC’s Validated Audit Process (VAP) protocols into our existing audit template.

EICC
NVIDIA has been a member of the EICC since 2007. Our employees participate in various workgroups and serve on the board of directors.
 

EICC Member Compliance

Compliance Element
NVIDIA’s Requirement
NVIDIA Performance
 
Risk assessment on all critical suppliers
100%
100%
 
 
Self-assessment questionnaires (SAQ) completed by suppliers in top 80% of NVIDIA spend
100%
100%
 
 
Validated Audit Process (VAP) among 25% of high-risk suppliers
0
We conducted one VAP audit (for a new supplier), and two customer-managed audits in 2014. In 2015, NVIDIA’s audit cycle requires that we request eight suppliers to go through VAPs and will conduct two customer-managed audits using the EICC VAP protocol.
 
 
Corrective action plans (CAP)
0
We managed five CAPs from the 2013 auditing season. For the two CAPs related to working hours, we will continue to monitor these CAPs to ensure that suppliers demonstrate an effective process for working-hours conformance.
 
 
 

Performance with the EICC Code

EICC Code Element
NVIDIA as Supplier
NVIDIA as Customer
 
Labor
Updated NVIDIA’s code of conduct to strengthen human rights language

Certified an additional NVIDIA employee for labor/ethics auditing
Worked with suppliers to track working hours through VAP, CAPs or EICC working-hours templates
 
 
Health and Safety
Completed the health and safety portion of SAQ

Conducted an annual tour of all NVIDIA offices to audit health and safety
Closed CAPs on all health and safety issues

Required improvement plans on health and safety as part of OHSAS18001
 
 
Environmental
Submitted water and supply chain (score 92C) to CDP investor

Completed EICC-ON carbon/water/waste survey

Reset GHG goals

Participated in Environmental Sustainability Work Group
Collected carbon, water, waste data from all silicon suppliers and contract manufacturers to determine carbon emissions and water consumption per product

Required compliance with environmental standards (see chart on left of page)

Required suppliers to submit environmental improvement plans

 
 
Ethics
Continued membership in Conflict-Free Sourcing Initiative (CFSI)

Participated in CFSI, due-diligence data collection work groups
Actively engaged all suppliers to collect smelter data for conflict minerals program

Implemented third-party supplier management solution to better track supplier progress
 
 
Management System
Participated in VAP work group

Participated in new Code of Conduct development
Risk assessment on all critical suppliers

Conducted quarterly business reviews of suppliers
 
 
 

Internal Assessment Results

In 2014, we conducted an internal risk assessment of NVIDIA operations using the EICC Validated Audit Process.

  • Management systems: We employ management systems based on ISO standards to drive continuous improvement. Each management system provides a working framework for our policies, procedures, monitoring and corrective actions.
  • Labor and Ethics: The nature of our business model as a fabless semiconductor manufacturer helps to lower risk elements for issues that surround labor and ethics. Our exposure to citations for labor and ethics violations is extremely low to nonexistent. We have a robust system for soliciting and rectifying confidential notifications on suspected labor or ethics issues.
  • Environmental Control and Management: Environmental awareness is central to our perspective, and we strive to manage our facilities efficiently. Our environmental risk elements may increase due to aging buildings, but our fabless model allows us to obtain an elevated level of control and management of hazardous waste, wastewater, air emissions, e-waste and recycling.

Areas needing improvement in 2014 included:

  • Improving our Code of Conduct language related to our commitment to supplier responsibility, our suppliers’ expectations of EICC compliance, human rights, equal employment, diversity, freedom of association and child/forced labor. This work is underway for the first half of 2015.
  • Implementing auditing controls to ensure that our human resource teams were tracking the hours of hourly workers. This has been put into place.
  • Evaluating major indirect suppliers (specifically that serve onsite at our Santa Clara, Calif., headquarters) against the EICC code elements to ensure that appropriate practices are in place. This is an ongoing effort within NVIDIA.

2015 Goals

Functional Area
Strategy
Supplier management operations
Align the Product and Social Compliance teams under the newly formed Operations group. Establish a unified set of procedures for monitoring our suppliers’ product and social compliance.

Align with Ops management teams for our systems-critical suppliers, memory suppliers and printed circuit board manufacturers to ensure response to our quarterly scorecards, self-assessment requirements and VAP audit schedules.
 
 
Product compliance
Improve product compliance documentation for system-level products.

Transition our GPUs away from claiming RoHS Exemption 15.

Survey the systems-level supply chain to identify RoHS compliance risks and initiatives.
 
 
Conflict minerals
Perform an internal audit of the conflict minerals due-diligence process to prepare for the SEC-required external audit in 2016.

Achieve a response rate of greater than 90 percent on the Conflict Minerals Report Template for all approved suppliers.