2014 SOCIAL RESPONSIBILITY REPORT - Molex · Meeting industry expectations Supply chain...

2014 SOCIAL RESPONSIBILITY REPORT

CONTENTS

2 WELCOME LETTER

3 ABOUT THIS REPORT Report overview Materiality assessment

4 ABOUT MOLEX Overview and key facts Our history Our culture and values Engaging stakeholders

9 PEOPLE DRIVING PROGRESS Employee development Performance management Diversity and inclusion Employee engagement

14 INSPIRING INNOVATION Product innovation A community of innovation Collaborative innovation

17 ACTING WITH INTEGRITY Ethics and integrity Meeting industry expectations Supply chain responsibility Conflictminerals

22 PROTECTING THE ENVIRONMENT AND OUR PEOPLE EH&S management approach Protecting the environment Product compliance Protecting our people

2Molex 2014 SOCIAL RESPONSIBILITY REPORT

Since our last report, a lot has happened at Molex. We became a privately-held company owned by Koch Industries, Inc., celebrated our 75th anniversary, transitioned from a fiscal year to a calendar year, developed a new vision for our organization and expanded our portfolio of products and facilities through several acquisitions.

Some things did not — and will not — change, including our deep commitment to Social Responsibility, Integrity and Compliance and our focus on innovation in everything we do.

During the period this report covers, we enhanced our governance systems and strengthened our focus on integrity and compliance throughout all of our business practices, including Environmental, Health and Safety (EH&S) excellence. We are committed to continuous improvement in these, as well as all other areas of our business, as we continue to find ways to reduce costs, improve efficiencies and minimize our impact on the environment. For example, in calendar 2014, we completed energy audits that are helping us drive progress towards our greenhouse gas reduction goal.

Our attention goes beyond our internal operations. It’s not enough to say we act responsibly — we must cascade our commitment to Social Responsibility, Integrity and Compliance throughout our entire supply chain.

We are working to continually improve our practices by making sure we’re selecting the right partners to do business with all over the world. Responsible sourcing is critically important in all aspects of our business, but especially for conflict minerals which is an important issue in our industry. No matter where they are in our supply chain, we hold our suppliers to the same high standards that we have for ourselves.

We are implementing our vision to be the leading global provider of electronic solutions by developing, enabling and integrating the technologies people use to improve their lives and businesses use to improve their products and performance. And we are committed to realizing our vision through Integrity, Compliance and Social Responsibility. As we look toward a bright future, our challenge will be to make sure that as we grow either organically or through acquisitions, that we continue to meet or exceed industry expectations for these areas.

How well we do business is just as important as how well our business does. We have made a great deal of progress over the past several years but we see many opportunities for improvement. Whether it is products or processes, we are working with our employees all over the world to use resources more efficiently and protect the health and safety of our employees, communities and the environment. Every Molex employee, no matter where they are in the world, is accountable for helping to grow and advance this culture.

Welcome Letter

Martin P. SlarkChiefExecutiveOffcer

Liam McCarthyPresident and Chief OperatingOffcer


Report Overview Molex Electronic Technologies, LLC (Molex) is a wholly-owned subsidiary of Koch Industries, Inc. This is Molex’s fifth Social Responsibility Report. Our previous reports were published based on a July to June fiscal year. Due to an adjustment in our accounting structure, this report will reflect the extended period of July 1, 2013 through December 31, 2014. Future reports will be published annually and aligned with our new calendar year fiscal year.

This report was prepared in accordance with the Global Reporting Initiative (GRI) G4 guidelines for reporting at the core level. We provide a GRI G4 content index describing the nature and location of GRI disclosures in our report on our website. At this time, we have not established an external assurance review process for the report or its metrics. However, the report and its contents do undergo an in-depth internal review process to help ensure they are accurate and relevant. We also employ a formal materiality assessment to help determine the scope and content of the report.

Materiality Assessment In 2013, we conducted a materiality assessment to identify the social responsibility issues that were most important to our stakeholders and our business. We used the following resources as the basis for this assessment:

• The GRI’s 2013 Research and Development Series report, “Sustainability Topics for Sectors. What do stakeholders want to know?”

• The Electronic Industry Citizenship Coalition (EICC) Code of Conduct, Version 4.0

• Customer inquiries and surveys related to social responsibility

• Inquiries and surveys from other external stakeholders

• Publicly available information on the sustainability programs of our peers and competitors

A team of professionals from across Molex — including Communications, Finance, Human Resources, Legal, Procurement, Quality, and Environmental, Health and Safety — reviewed and confirmed the results of our materiality assessment. In 2014, we further refined our materiality assessment based on research provided by an external consultant. The resulting list of material issues and their positions along our value chain are illustrated below.

We welcome any feedback on our social responsibility programs. Please direct any comments or questions to [email protected]

CustomersMolex Operations

Ethics and Integrity

Product Innovation

WorkplaceDevelopment, Engagement, D&I

EH&SEnergy & GHG, Water, Waste, Safety, Product Compliance

R&DManufacturing

Sales & Marketing

Suppliers

http://www.molex.com/ecocare/SocialResponsibility/2014_GRI

mailto:social.responsibility%40molex.com?subject=


ABOUT MOLEX

Overview and Key Facts Molex, headquartered in Lisle, Illinois, USA, is a provider of total electronic solutions. Our key products include connectors, cable assemblies, antennas, optical solutions, printed circuit products, automation and industrial solutions and lighting products. The diverse industries we serve include automotive, information technology, mobile devices, consumer electronics, industrial, telecommunications, medical and aerospace and defense. At year-end 2014, we offered more than 100,000 products and employed about 42,000 people working in 50 manufacturing locations in 17 countries worldwide.

During the reporting period, in addition to the acquisition of Molex by Koch Industries, Inc., we also completed the following acquisitions into Molex:

• FCT Electronics Group

• Westec s.r.l’s GWconnect® product line

• Flamar Cavi Elettici s.r.l.

• Oplink Communications, Inc.

• SDP Telecom, Inc.

Our History Our roots are in the rapid innovation that has driven the world of modern work and convenience — from appliances to smartphones. In 1938, the father-son team of Frederick and Edwin Krehbiel developed a durable, moldable thermoplastic material. The material, which they called “Molex,” was originally used to make items like flower pots, toys and clock cases. But soon after Frederick’s son John discovered the material’s insulating properties, it was put to use in electrical insulation and interconnect applications for household appliances and automobiles in the 1950s and 1960s.

As the needs of powered appliances and electronics demanded new solutions for interconnect components, Molex was there to provide innovations in materials, modules, assemblies and manufacturing. From the 1970s through the 1990s, Molex quality and ingenuity was enabling many of the products we identify with the great progress of the information age, such as calculators, computers, digital technology and telecommunications.

In the new millennium, we expanded our global reach and established ourselves as an electronics and telecommunications leader. Our continuous stream of innovative solutions supports the complex needs of everything from smartphones to electric cars to the most advanced robotics. We are partnering with the world’s leading technology companies to push boundaries and help enable a better, more connected world. You are never far from a Molex product.

About Molex People Driving Progress Inspiring Innovation Acting with Integrity Protecting the Environment and Our People

5Molex 2014 Social Responsibility Report

WE PUSH BOUNDARIES AND HELP ENABLE

A BETTER, MORE CONNECTED WORLD


Our Vision

To be the leading global provider of electronic solutions by developing, enabling and integrating the technologies people use to improve their lives and businesses use to improve their products and performance


Our Culture and ValuesAt Molex, social responsibility is deeply embedded in the choices that we make and the way we operate our business. Our purpose is to create long-term value by providing products and services valued by our customers while efficiently using resources and protecting the health and safety of our employees, communities and the environment. Every employee is accountable for cultivating and advancing this culture, which we believe provides opportunities for each employee to contribute in ways that are meaningful to them and to the company. Our culture is based on a set of shared values and beliefs that are our Market-Based Management® (MBM) Guiding Principles.

Our first three Guiding Principles are essential to our existence and success as a company. The first requires that we conduct all of our work with integrity and courage. The second requires that every employee do his or her part to ensure full compliance with all rules and regulations, at all times. The third requires that our work always be focused on creating value for our customers, our company and society, by the economic means. For us, value is created by making better decisions, pursuing environmental, health and safety excellence, eliminating waste, optimizing and innovating. The remaining Guiding Principles are equally important and essential to make the first three a reality.

MBM® aligns naturally with the core concepts of corporate social responsibility through its focus on economic health, environmental stewardship and social well-being. A company grounded by MBM® strives to make a social contribution. Acting with integrity, ensuring compliance with our own high standards as well as legal requirements, and creating value are hallmarks of good corporate citizenship.


Integrity

Compliance

Value Creation

Principled Entrepreneurship™

Customer Focus

Knowledge

Change

Humility

Respect

Fulfillment

MBM® GUIDING PRINCIPLES


Engaging Stakeholders

As part of our culture and management approach, we regularly engage with a broad range of stakeholders, including our employees, customers, industry groups and the communities in which we do business. We believe this is central to our business success and we provide examples of how we interact with internal and external stakeholders throughout this report. We collaborate with our customers both directly and through our membership in the listed organizations. These organizations provide a common platform to connect and address important industry issues, from technological advancements to environmental and social concerns. The frequency of our engagement with these groups varies but is formal, scheduled and continuous throughout the year.


The Electronic Industry Citizenship Coalition (EICC) A global coalition of more than 100 companies actively working together across the life cycle of the electronics industry to develop respected industry standards for social responsibility.

Conflict-Free Sourcing Initiative (CFSI) An organization providing tools and resources for companies working to address conflictmineralissuesintheirsupplychains.

Information Technology Industry Council (ITIC) An advocacy and policy organization serving the world’s leading innovation companies with a mission to promote creative solutions that advance the development and use of technology globally.

IPC — Association Connecting Electronics Industries A global trade association that coordinates programs and services to further thecompetitiveexcellenceandfinancialsuccessofitsmembersbydevotingresources to management improvement and technology enhancements, standard development and addressing public policy issues related to the environment, health and safety.

Automotive Industry Action Group (AIAG) An association of automotive supply chain stakeholders that works collaboratively to streamline processes and develop best practices within the industry.

Global e-Sustainability Initiative (GeSI) A leading source of information, resources and best practices for achieving social and environmental sustainability through the engagement of information and communication technology companies.

By actively and continually engaging with these groups, we remain alert and responsive to today’s rapidly evolving business environment and technology.

WE ARE MEMBERS OF THE FOLLOWING:



PEOPLE DRIVING

PROGRESS


Employee Development

We believe that employees are our most valuable asset and employee development is essential to innovation, operational excellence and superior business performance. Technology in the markets we serve evolves rapidly and the skills and talents needed by our team members to meet challenging opportunities must keep pace. We are committed to continued learning and development by providing our employees with the training, tools and support they need to be successful. Aligning our employees’ skills and talents to best support our business needs makes for more meaningful work and accelerated innovation.

Our formal development program includes an online Learning Management System (LMS) that offers relevant on-demand training. Other efforts to keep employees up to date on the latest thinking and industry standards are provided on an as-needed basis. These include conference and industry group attendance and support for targeted, advanced education. The emphasis we place on our employees is a contributing factor that makes us the innovation partner of choice and a preferred employer in our highly competitive industry. We have industry-leading innovation and voluntary retention rates that are consistently above our industry average. Our highest turnover rate is in the Asia Pacific South (APS) region and is due to the region’s particularly competitive labor market.

Performance Management

Our long-term approach to performance management is centered on employees having clearly defined roles, responsibilities and expectations (RR&E). Employees and their supervisors agree on and document an RR&E framework that is unique to them and to which they are then accountable. The RR&E is much more than a job description, as we believe that no two jobs are alike. Expectations are focused on outcomes that are appropriate to each employee’s role and unique skills and talents. RR&E’s embedded responsibilities and accountabilities are regularly reviewed and updated to ensure that each employee is challenged to understand the many ways in which he or she can add value. By focusing on each employee’s individual contributions and responsibilities, the RR&E approach maximizes their ability to contribute. It empowers them to continuously seek new ways to add value, while also rewarding them for it.

ANYONE CAN INNOVATEOur three-year-old “Innovation Challenge” is a popular and exciting forum that encourages innovation from our entire employee community — not just the engineers at our designcenters.Theprogramoffersthe opportunity for employees to submit ideas that address any product or area, including technologies or markets in which we are not active. We have received hundreds of ideas. EightteamsfromourfirstInnovationChallenge presented at a Global Management Team meeting in 2012 and Molex moved forward with three of those ideas. The 2014 Innovation Challenge received 376 ideas of which wearesupportingfivewinningteams.



Diversity and Inclusion

Respect is embedded into our Guiding Principles. Our culture requires an appreciation of diversity where we treat all individuals with honesty, dignity and sensitivity. To us, appreciating diversity means more than accepting differences in aspects such as race, ethnicity or age; it also means bringing together different ideas, opinions and perspectives. We believe that diversity drives innovation and value creation. To instill this deeper understanding of the value of diversity, our Diversity and Inclusion programs have included education for employees at all levels.

We continue to support our Business Resource Groups (BRGs). The BRGs work to identify and address opportunities where their unique perspectives can align with business objectives. BRGs have supported efforts to attract diverse talent, enhance professional development for members, drive community outreach efforts and establish new business connections. At the end of 2014, in addition to the Molex Black Professionals group operating in the

United States, there were also Molex Young Professionals groups in the United States, Germany, China, Japan, Taiwan, Singapore, and Korea, and Molex Women’s Business Councils in the United States, China, Mexico, Singapore, India, Malaysia and Japan. In “Accelerate”, our Global internal publication around Talent Management and Diversity & Inclusion, we highlight the ways our BRGs shape and support our business objectives through their diverse perspectives.

To ensure that Molex’s workforce reflects the communities in which we operate and serves its customers, we engage in outreach and recruitment activities in collaboration with organizations such as the National Society of Black Engineers (NSBE) and the Society of Women Engineers (SWE). In October 2014, we highlighted a “Meet a Female Engineer” series in our Molex Connector blog, an online forum designed to help stakeholders “connect with the connector experts.” We are a SWE corporate member and participated in the 2014 SWE national conference and career fair in Los Angeles, California.

WE BELIEVE THAT DIVERSITY DRIVES INNOVATION AND VALUE CREATION

MOLEX WOMEN’SBUSINESS COUNCIL



Total Workforce

Management

17% 83%

56% 44% Total Workforce

Management

66% 85%

12%

8%

12% 6%2%

6%

1% 1%

Employee Engagement

With nearly 42,000 employees across the globe, it is important to recognize the many ways our diverse employee population deploys unique perspectives and talents to create value. We have vibrant and highly interactive employee engagement programs designed to promote our common culture and values while encouraging active teamwork to create a strong sense of community for our employees globally.

Employees all over the world have access to print, video and multimedia communication resources to learn with and from each other. They are encouraged to submit videos and stories highlighting accomplishments for inclusion into a variety of popular video series, newsletters and online blogs. Our intranet website provides ways for employees to comment and interact within each communication channel. To support local engagement, the Molex Corporate Communications group maintains a program to help facilities implement communication initiatives at the local level.

Consistent with our commitments in our global polices and our legal obligations, we respect the rights of our employees to engage in lawful collective bargaining practices where they choose to do so. 8% of our global workforce is currently covered by a collective agreement.

BY GENDER:

AMERICAS EUROPE

ASIA

BY GEOGRAPHY:

BY SELF-REPORTED ETHNICITY (US ONLY):

Caucasian Asian African American Hispanic Other

Total Workforce

69% 24%7%

Management

49% 41%10%



WE ARE VERY PROUD OF OUR GLOBAL

ENGAGEMENT EFFORTS AND

ABILITY TO FOSTER A VIBRANT AND

SATISFYING WORK ENVIRONMENT

Engagement in Action:

The following are highlights of activities initiated by our employees to engage with each other and/or support their local communities.

Chengdu Social Responsibility Team Supports Quake-Damaged School

An earthquake that devastated China’s Sichuan Province in April 2013 seriously damaged the ShaPing Primary School near our Chengdu facility in China. Our employees collected books, school supplies, and outerwear for the children that our facility Social Responsibility Team delivered when they visited the school. Volunteers also provided English lessons for the students which were received with much enthusiasm. Because of the extreme damage to the school, our Molex Chengdu facility is helping ShaPing relocate to a new and safer campus.

Molex Thailand Reef Initiative and Beach Cleanup

In 2014, 380 volunteers from our Thailand facility did their part to restore deteriorated reefs in the Gulf of Thailand by planting 480artificialreefs.Theartificialreefsaremanmade structures that eventually form underwaterhabitatsforfishandotherwildlife. Volunteers also combed the Nang Ram beach at Sattahip, Chon Buri, removing garbage and other debris.

National Bike Challenge’s Team Molex

This program challenges cycling teams to record their miles ridden in friendly competition with teams from across the United States. The annual competition promotes health, wellness and community. In 2014, Team Molex went global (allowed by the program’s rules since Molex is headquartered in the United States), recruiting 584 participants cycling on four continents. Our team logged an impressive 243,000miles,winningasixthplacefinishin the overall competition.

Shannon Christmas Shoeboxes

Employees from our facility in Shannon, Ireland, packed and wrapped nearly 8,000 shoeboxesfilledwithsimpleChristmasgifts for children in need. This volunteer effortwaspartoftheannualTeamHopeChristmas Shoebox Appeal. Team Hope is an Irish charity that works with children across Eastern Europe and Africa.



INSPIRINGINNOVATION


Product Innovation

A culture of innovation permeates all levels of our company and drives our success. We put our innovative spirit to work in order to find solutions to meet complex technical challenges. The rapid proliferation and capacity of technology, like mobile devices and Internet and telecommunications applications, requires faster, smaller and more powerful solutions. To keep pace, we encourage and reward breakthrough thinking. We typically invest between five and seven percent of our annual net revenue in global research and development. This is a significant commitment relative to our peers within our industry. Throughout the design and manufacturing stages, we provide the assurance that our solutions meet the most stringent quality standards and are in full compliance with regulatory and customer requirements — a challenge in today’s global and rapidly changing business and regulatory environment.

We also offer tools to help others get started on their innovation journeys. Our customer website allows users to easily browse the products and capabilities Molex provides. Customers can build preliminary models of the solutions they need and, when they are ready, our team helps turn their ideas into new products.

A Community of Innovation

We are active in championing careers and achievement in science, technology, engineering and mathematics (STEM). Through 2014, Molex has contributed over $1 million to STEM-based learning organizations including the Children’s Discovery Museum in California, the Arkansas Discovery Network, and the Museum of Science & Industry and the SciTech Museum — both in Illinois. In addition to monetary support, employees regularly participate in on-site activities and programs that help children explore STEM subjects.

Beyond supporting initiatives that encourage a passion for STEM, we also work to foster entrepreneurial spirit. Our partnership with the Illinois Science and Technology Coalition’s “Corporate Start-up Challenge” began in 2012. The program pairs Fortune 500 companies headquartered in Illinois with Illinois-based start-ups to further encourage local innovation and drive economic opportunities. These connections can lead to joint product development, go-to-market opportunities, investments or acquisitions. Our first Demo Day consisted of 15 emerging companies presenting to approximately 20 of our product and industry experts. As a result of the Demo Day, we engaged with several of the participants and recently announced our first program success with an investment in wireless connectivity provider, NuCurrent.

2012319391587

2013

2014

NEW PRODUCTS:

319362398

2012

2014

2013

PATENTS:

20.0%19.9%20.4%

2012

2014

2013

SALES FROM NEW PRODUCTS:



Collaborative Innovation

We are most effective at driving innovation when we work collaboratively with our customers, utilizing our talent and experience to find solutions to our customers’ challenges. Recently, the power of our collaborative approach was demonstrated through the interconnect system we developed with Dow Chemical Company for their groundbreaking POWERHOUSETM Solar System. The shingles are both a roofing solution and a source of clean renewable energy. They are designed to be handled and installed like standard asphalt shingles but include integrated photovoltaic (PV) cells. The interconnect

system includes three Molex products that link the shingles together, providing electrical circuitry that converts solar power into usable energy. Our solutions for the Dow POWERHOUSETM Solar System won a 2014 Chicago Innovation Award for collaboration, our third Chicago Innovation Award in six years.

We also worked collaboratively with John Deere to design and develop a high-voltage/current interconnect system that facilitated the ultrasonic welding process for a product cable attachment. The Molex innovation increased the durability of the John Deere end product and reduced disruptions across the product’s life span.

Our efforts with John Deere to improve the product earned us the 2014 John Deere Innovation Award. Award selection criteria include creativity, feasibility, collaboration and bottom-line impact.

2014 John Deere Innovation Award

2014 Chicago Innovation Award



ACTING WITH INTEGRITY


Compliance and Ethics

Our MBM® Guiding Principles direct us to conduct all affairs with integrity and to comply with all applicable legal requirements. These principles are critical components of the Molex Code of Conduct and its supporting policies, programs and practices. We believe that full compliance at all times is essential to long-term business success, provides a competitive advantage, and creates long-term value for our stakeholders and society. To ensure that we are consistently and efficiently working toward that common purpose throughout the company, as of 2014 all key compliance functions are included under the Global Compliance and Ethics department, reporting directly to the Chief Operating Officer. The function includes EH&S, Commercial Compliance, Social Responsibility, and Security. The Compliance and Ethics team works closely with corporate, functional, divisional and regional leadership to develop and implement policies, standards and performance assurance programs. Legal is a particularly important, but separate, functional partner that reports directly to our Chief Executive Officer.

During the reporting period, Compliance and Ethics initiatives focused on expanding the resources necessary to more effectively identify, evaluate and mitigate risks within our operations. Staff was added in key regions such as Asia and tools were deployed which support compliance assessments, internal reporting, and training and education. We worked on strengthening commercial compliance programs addressing anti-bribery and anti-corruption, government interaction, international trade compliance, and overall commercial compliance assurance. We also conducted a series of commercial compliance reviews that included education and engagement efforts to better prepare facilities to systematically and effectively identify and address risk. The results are captured in corporate and facility level risk management improvement plans and follow-up includes the sharing of learnings and best practices across the company.

In 2014, we continued to educate and promote employee awareness around key policies, including the Molex Anti-Bribery and Corruption Policy and the Molex Code of Conduct. Additional training is provided to targeted functions or regions based on organizational role. We encourage our employees to ask questions and raise concerns when they have them. Our 24-hour Molex Integrity Line, operated through an external service provider, allows anyone to do so, anonymously if they choose, via phone or web.



Our Compliance & Ethics oversight committees, described below, provide further performance assurance.

• Our executive-level Compliance and Ethics Committee (CEC) provides oversight for all compliance and ethics policies and programs. It includes senior management from Legal, Compliance, Operations, Finance and Audit. The CEC meets quarterly.

• Our Allegation Oversight Committee (AOC) is a working group responsible for addressing allegations made through our internal and external communication mechanisms, including the Molex Integrity Line. The AOC oversees allegation intake, triage, root cause analysis and response. It includes representatives from legal, compliance, operations, audit, human resources and finance.TheAOCmeetsmonthly.

• Local Integrity Committees are a Molex best practice that have been adopted across our global operations. Committees include members of the plant leadership team who champion compliance programs and performance at the local level.

Meeting Industry Expectations

The EICC is a nonprofit coalition of more than 100 companies dedicated to protecting the environment and supporting the rights and well-being of workers employed in the global electronics supply chain. Our work with the EICC plays a central role in ensuring that both our operations and the operations of our direct suppliers meet respected industry standards for environmental protection and social responsibility. EICC standards are accepted by our key customers and are integrated into our supply chain management systems. In 2014 we aligned our practices to prepare us to transition from applicant to full member status in 2015. Full membership requires adoption of the EICC Code of Conduct, completion of facility self-assessment questionnaires (SAQs) to identify areas of greatest social, environmental and ethical risks, and facility audits. We are updating our Molex Code of Conduct and Molex Supplier Code of Conduct to align with the EICC Code of Conduct.

Our social responsibility audit program is conducted by EICC-approved third-party providers in accordance with the EICC audit protocol. Where it adds value, we also conduct additional internal or third-party audits to ensure we identify, address and control other risk areas. We monitor audit findings through to closure using our internal dashboard tools and communicate status updates to senior managers on a monthly basis.

MOLEX GOVERNANCE STRUCTURE:

Molex Board

Environmental, Health & Safety

Commercial Compliance

Social Responsibility

Security

Chief Operating Officer

COMMITTEE STRUCTURE:

Molex Board

CEC

AOC

Local Integrity Committee

Compliance and Ethics

Chief Executive

Officer

Legal

Other



Supply Chain Responsibility

Our supply chain is global and complex. We have more than 100,000 unique products that require metals, plastics, finished and semi-finished component parts, and packaging. These raw materials are procured throughout the world with most of our spend in 2014 occurring in the Asia Pacific South region. An equal amount of spend occurred in the Asia Pacific North and the North America regions with the remainder attributed to Europe.

We hold both our own facilities and our supplier facilities to the same high standards expected by our customers and the EICC. We inform our direct suppliers of these requirements through our contractual agreements and our supplier portal, Molex SupplierNet. The website provides an overview of Molex environmental and social requirements, as well as access to the Molex Supplier Code of Conduct and other relevant policies and standards. We evaluate supplier risk associated with

OF SITES COMPLETING SAQ IN 2014

100%0

auditsCONDUCTED IN 2014

high risk sitesIDENTIFIED

21

EICC AUDIT METRICS: SPEND BY REGION:

27%

27%

41%

5%Europe

Asia Pacific North

U.S. and Mexico

Asia Pacific South

labor, ethics and EH&S concerns using an internal risk assessment tool which incorporates industry standard practices. Suppliers must submit a risk assessment survey and self-certify conformance to Molex requirements through SupplierNet. By providing a consistent framework for supplier information beyond quality, prices and logistics concerns, the risk assessment results allow us to make more informed supply chain management decisions.

In addition, our supplier management program includes a formal onboarding program for direct suppliers to acquaint them with EICC and Molex requirements. EICC provides training and education materials for members in order to build supply chain capacity and improve performance. We are leveraging educational materials compiled by the EICC, incorporating key topics into our supplier Learning Management System (LMS), and working collaboratively with our suppliers to better understand and manage social and environmental risks. This will be a focus area in 2015. We are currently developing new performance metrics for our supply chain management program. These metrics will address Molex Supplier Code of Conduct compliance certification, risk assessments, audit management and supplier training.



Our Global Procurement Council oversees our supply chain management program. The council includes corporate and product division procurement leaders and works collaboratively to create alignment, set strategic direction and objectives, and monitor progress against supply chain performance goals. Our supplier monitoring tools include a robust supplier scorecard. In 2014, the supplier scorecard was updated to add social responsibility metrics to its existing environmental metrics. The scorecard is updated monthly and collaboratively maintained by our procurement and quality assurance functions.

Conflict Minerals

The U.S. Securities and Exchange Commission (SEC) requires public companies to disclose their use of tin, tantalum, tungsten and gold (3TG) that

originated in the Democratic Republic of the Congo or an adjoining country. Their concern is that the sale of these so called “conflict minerals” could be used to fund or benefit armed conflicts in the region. Molex is a privately held company and excluded from the SEC requirements. However, we still believe it is important to ensure that the 3TG used in our products are responsibly sourced. We participate in the Conflict-Free Smelters Sourcing Initiative (CFSI) to stay engaged in industry activities to address this complex issue. As part of our participation, we leverage the CFSI Conflict-Free Smelting Program (CFSP) audit process to identify legitimate smelters and refiners found to be compliant by the program.

The Molex Conflict Minerals Policy requires us to ensure that we do not directly or indirectly engage with suppliers where

there is a reasonable risk that they are sourcing from, or linked to, any party committing human rights or related abuses. In support of this policy, we are actively engaging in supply chain due diligence. Consistent with industry best practices, we conduct surveys and mapping exercises of our current suppliers, collecting and analyzing data annually (at a minimum) to identify at-risk smelters. We also reach out directly to smelters that serve our supply chain and encourage them to participate in the CFSI program to demonstrate their commitment to being conflict-free.

WE CONDUCT SURVEYS AND MAPPING EXERCISES

OF OUR CURRENT SUPPLIERS, COLLECTING

AND ANALYZING DATA ANNUALLY



PROTECTING THE ENVIRONMENT

AND OUR PEOPLE


EH&S Management Approach

At Molex, EH&S excellence is our goal — for us that means going above and beyond regulatory compliance when and where necessary to protect human health and the environment. In 2014, our corporate EH&S and Compliance and Ethics teams were combined. Combining these functions creates alignment and value for the company by driving compliance in all areas of our business. It has also helped to strengthen the message that we never accept noncompliance, unsafe behaviors or unsound environmental practices for the sake of production or financial objectives, as these limit our ability to create shared value for our stakeholders.

Our manufacturing processes include plating, molding, stamping and finishing. Plating, which involves the application of metallic coatings to components, uses electricity, water and a variety of chemicals that can affect air, water and waste streams, as well as employee safety if uncontrolled. Molding, stamping, and other finishing and assembly work may involve equipment that present safety hazards that must also be effectively controlled. The corporate EH&S team works with plant- and division-level functions to develop and implement company-wide EH&S policies

and programs. In addition to ensuring compliance with regulatory and customer requirements and industry standards, the team also oversees efforts to identify and address EH&S risks and achieve EH&S-related performance goals. As a responsible corporate citizen, we are committed to providing a safe and healthy workplace while using environmentally safe practices during the design and manufacture of our products.

We also have a corporate policy to address specific EH&S management system elements that we call ECOCARE. ECOCARE defines minimum expectations for our global operations, ensuring a common approach to EH&S risk management. To provide additional confidence in the scope and quality of our EH&S management systems, many of our facilities are certified to international standards. At the end of 2014, 33 Molex facilities were certified to the International Organization for Standardization (ISO) 14001 environmental management system and 18 facilities had safety management systems certified under the Occupational Health & Safety Assessment Series (OHSAS) 18001 standard.

EstablishandimplementeffectiveEH&S management systems.

Comply with all relevant EH&S legal and other requirements.

Operate our facilities in a way that considers the efficient use of natural resources and provides a safe and healthy workplace. Develop products that minimize environmental impact.

Continually improve our EH&S performance and operations.

Advise Molex employees and business partners of the importance of adhering to ECOCARE.

Reduce or eliminate emissions and discharges through pollution prevention activities. Prevent injury and illness through management practices.

Educate employees to work in an environmentally responsible and safe manner.



Protecting the Environment

We understand that our business operations impact the environment and we are committed to environmental excellence as a company-wide standard of performance. In addition to the basic expectation of compliance with legal, company and customer requirements, our ECOCARE policy requires us to continuously identify and address risks to human health and the environment.

We require facilities to understand the sources of risk to the environment that arise from our operations and to take appropriate measures to control or eliminate those risks. To manage our global environmental impact, we also require facilities to measure and report performance on relevant metrics including energy, water and waste management, and expect to see continuous improvement. We regularly collect, validate, and analyze facility-level EH&S performance data and keep management apprised of important trends.

Energy use is the single-largest source of GHG emissions for Molex. In our last report, Molex announced a five-year goal to reduce GHG emissions by 15 percent from our 2013 baseline. In 2014, our efforts towards achieving this goal were focused on conducting targeted energy audits at our largest facilities in order to identify a pipeline of future projects and best practices for energy efficiency that can be shared across the organization.

During the reporting period, we conducted energy audits at seven facilities around the world. The audits included detailed analysis of the cost and energy savings of potential energy-efficiency projects. We used the results to begin to identify and share low- or no-cost energy saving

opportunities and create a pipeline of capital projects. While our GHG emissions increased in 2014, in part due to a 200,000 sq. ft. expansion at our Chengdu, China facility, we expect to significantly improve our performance and save costs as a result of these initiatives in the coming years.

ENVIRONMENTAL PERFORMANCE

Units CY12 CY13 CY14

ENERGYFuel Consumption1 GJ 209,579 224,518 230,713

Electricity Consumption2 GJ 1,669,942 1,678,691 1,710,926

Total Energy Consumption GJ 1,879,521 1,903,209 1,941,639

EMISSIONSScope 1 t 13,856 14,900 15,297

Scope 2 t 287,231 289,985 298,120

Scope 33 t 3,551 4,438 5,647

WATERConsumption4 m3 2,327,926 2,553,296 2,489,147

Discharge m3 1,049,342 1,227,219 1,142,180

WASTENon-hazardous t 18,857 21,845 23,639

Non-recycled t 4,677 4,764 4,902

Recycled t 14,180 17,081 18,737

Hazardous t 2,423 2,843 1,816

1 Fuel consumption includes only non-renewable sources.2 Energy use from heating, cooling and steam is N/A. We do not sell energy related to heating, cooling, steam or electricity.3 Americas region employee business travel booked through our travel agency.4 This includes municipal water sources. We do not use a significant amount of water from surface, ground, rain or wastewater sources.

General Notes: These metrics have been recalculated due to changes in the calendar year structure; metrics will not align with previous reports. Metrics include all Molex-owned facilities and major design or distribution centers >25,000 sq. ft. except for acquisitions and divestures completed in 2013 – 2014. We follow the guidelines set forth in The Greenhouse Gas (GHG) Protocol: A Corporate Accounting and Reporting Standard (Revised Edition) for estimating GHG emissions and setting the boundaries.



WE ARE COMMITTED TO

ENVIRONMENTAL EXCELLENCE AS

A COMPANY-WIDE STANDARD

ENERGY EFFICIENT LIGHTING PLATING PROCESS IMPROVEMENTS WATER EFFICIENCY

Lighting throughout our facility in Nogales, Mexico, was upgraded from fluorescent bulbs to energy-efficient LED light tubes, doubling lamp life from 25,000 to 50,000 hours. The upgrade reduced facility heat load resulting in less energy use for air conditioning and reduced GHG emissions associated with purchased electricity. The project also resulted in reduced maintenance labor costs and the elimination of mercury-containing lamps. Employee feedback has been overwhelmingly positive as the LED lighting greatly improved light quality throughout the production environment. The National Chamber of Industries in Mexico (CANACINTRA) awarded Molex Nogales its Industry of the Year award in 2014 in recognition of the re-lamping project.

Engineers at our Shanghai, China facility implemented new technology to treat the wastewater onsite. The new treatment technology reduced the concentration of hazardous chemicals in the wastewater and allowed it to be disposed of through the facility’s sanitary sewer system rather than being collected and shipped offsite for treatment as hazardous waste. The plating solution provides an annual cost savings of approximately $225,000 per year and reduces the risks associated with handling and transporting the untreated wastewater. These efforts helped contribute to a 36 percent reduction in global hazardous waste generation.

Since 2011, our Singapore facility has reduced its water use per unit of product by 55 percent. Almost 90 percent of the facility’s water used by cooling towers, plating processes, and sanitation is recycled water. Additionally, more than 50 percent of the plating process wastewater is further recycled back into the plating process by the in-house wastewater treatment plant. Water meters throughout the facility measure daily water use from individual processes and can quickly spot leaks and other inefficiencies. The Singapore national water agency (PUB Water) has a water efficiency buildings (WEB) certification system. In 2014, Molex Singapore was awarded PUB Water’s WEB Silver certification.

Continual Improvement Examples



Product Compliance

We provide reliable, high-quality electronics solutions that are designed to comply with global regulations, industry standards and customer requirements concerning the use of restricted or prohibited substances. Our corporate EH&S team is responsible for oversight of all product compliance activities, such as policy, programs and performance measurement and monitoring, and works closely with a global team of divisional product compliance leaders to achieve effective implementation. Engineering and procurement professionals, along with operations staff, further support product compliance during design, sourcing and manufacturing activities.

Our publicly available “Molex Chemical Substances Specification for Products and Packaging: for Customers” describes our approach to managing product environmental compliance. This single, global specification describes the management systems and associated process controls used to effectively manage potential product compliance. Examples of process controls include routine X-ray fluorescence (XRF) screening and third-party substance testing of incoming materials and components to reduce risks. Our company-wide information management system further enables us to better manage compliance by providing immediate access to product compliance information. For example, the

system can provide detailed composition data for the components of a particular metal alloy used in a particular product. This gives us the ability to quickly assess our products to verify compliance to requirements as they arise.

In 2014, we increased the product-related environmental information available to the public on www.molex.com. Through our website, users can quickly and efficiently obtain compliance information, including downloadable certificates of compliance for multiple products. In addition, customers can request compliance information directly through the online Molex Customer Portal. Our continued strategy to optimize our information management system puts us in an excellent position to further reduce risk and increase responsiveness to customers. We expect to implement a new product compliance monitoring process in 2015 and will share compliance performance metrics results in future reports.

Protecting our People

Our people are our most important asset. We foster a safe work environment and expect employees to act in support of our safety culture for the benefit of themselves and those around them. We expect employees to raise concerns about unsafe work conditions and to report all workplace incidents so that we can conduct appropriate root cause analysis and implement proper corrective action and control measures.

It is important that our employees understand the workplace risks within their roles, and we provide appropriate training to ensure they know how to perform tasks safely. At the corporate level, we are working to develop additional global standards to provide a consistent approach to common risk areas such as operations involving automated and high-speed equipment and hazardous energy. To provide further performance assurance, we are going through the process of collecting and validating global occupational health and safety data. Our analysis will be used to drive further improvements in safety performance across the organization and will be available as a metric in future reports.

The achievement was recognized by the Arkansas Department of Labor and Arkansas Governor Mike Beebe.

3MHOURS OF WORK WITHOUT A LOST TIME ACCIDENT FROM

July 2013 - October 2014

Our facility in Little Rock, Arkansas completed


2014 SOCIAL RESPONSIBILITY REPORT - Molex · Meeting industry expectations Supply chain...

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