We set an aspiration of carbon neutrality by 2040 and are developing plans to achieve this

Why sustainability matters

Introduction to Sustainability from the CEO

The COVID-19 crisis has put many things in perspective. The pandemic and climate change are both global threats that we all must come together to address. Whilst the pandemic is far from over, climate change is probably the greatest challenge of our generation and the next ten years will be crucial to addressing it. Together, we must reduce CO2 emissions and halt the rise in the Earth’s temperature.

At XP Power, we are committed to partnering with our customers and suppliers in their sustainability journeys, and we strive to become carbon neutral, in line with our strategy of leading our market in sustainability. If the world is to achieve the United Nations Sustainable Development Goals (UNSDGs) by 2030, we must build momentum now — and bring everyone with us.

In 2012, we became the first power converter manufacturer to be admitted into the Responsible Business Alliance (formerly the Electronic Industry Citizenship Coalition) adopting its Code of Conduct. This not only set high standards for environmental performance but also covers the treatment of people, health and safety, business ethics and business systems.

Wherever possible, we have championed sustainable initiatives including solar panels on multiple sites, introducing low-energy lighting, reducing the time and recycling the electricity we use to burn in our products as well as launching a broad range of “green” high-efficiency products which we continually develop to support our customers sustainability agendas.

This is part of the momentum we’ve been building through more than ten years of engagement and innovation in sustainability through our entire supply chain. XP Power seeks to empower all its stakeholders to make the most of their energy and resources. Our high-efficiency products balance the growth and proliferation of electronic devices and a carbon-free future for our planet. Our engineers bring ideas, skills, and innovation to reducing energy usage for our customers. Our people act to reduce XP’s carbon impact and serving local communities around the world.

In 2020, we set an aspiration of carbon neutrality by 2040 and we are developing the plans to be able to achieve this objective. But we appreciate we can and should go further and recognise the greatest impact we can have is on developing high-efficiency power supplies and in supporting our customers on their individual sustainability journeys and partner with vendors who are committed to this journey.

We believe that XP Power can make a positive impact.

Gavin Griggs
Chief Executive Officer

Our Sustainability Strategy is to:

  • Produce quality products that are safe and solve our customers’ power problems;
  • Minimise the impact we and our products have on the environment;
  • Adopt responsible sourcing practices considering social and environmental impacts;
  • Make XP Power a workplace where our people can be at their best ensuring an environment that is safe, diverse, inclusive and attracts and retains the best talent; and
  • Uphold the highest standard of business ethics and integrity.

MATERIALITY ASSESSMENT

The materiality assessment we undertook in 2020 involved engaging with our employees, customers and suppliers regarding what aspects of sustainability were most important to them. This exercise was conducted using a comprehensive survey followed up with a number of meetings where appropriate. We have also taken account of the views of key Shareholders who have expressed their views in terms of what they would like to see regarding sustainability considerations.

By combining the importance of the issues identified by our stakeholders with the significance of their economic, environmental, social impacts and governance on the business, we derive the relative materiality of each issue. A summary of this work is shown in the material issues matrix, including how the factors we assessed aligned with those of XP Power. We are pleased to report that there is very close alignment.

the materiality assesment chart

SUSTAINABILITY ROADMAP

Achievements in 2020

  • Maintained the safety and wellbeing of our people during the COVID-19 pandemic
  • Shipped “XP Green Power” products in 2020 resulting in estimated lifetime CO2 emission savings of over 117,000 tonnes
  • Undertook a sustainability materiality impact assessment with key stakeholders to formulate a sustainability strategy
  • Review and enhanced corporate framework for health and safety management to apply the same minimum standards in all locations
  • Healthy and safety incident rate per 1,000 employees reduced 8% to 10.4
  • Reduced our CO2 emissions intensity by 7% to 27.9 tonnes of CO2 per million GBP of revenue
  • Trained all employees on our Code of Conduct; no reported breaches of the Code during 2020
  • Company car scheme in the UK now only allows electric vehicles

Priorities going forwards

  • Maintain the safety and wellbeing of our people during the COVID-19 pandemic
  • Develop plans to achieve carbon neutrality by 2040
  • Continue to enhance design processes including product reliability, efficiency and safety
  • Conduct annual refresher training on our Code of Conduct
  • Continue to enhance health and safety processes across the Group
  • Reduce CO2 emissions intensity by a minimum of 3% per annum
  • Develop action plans from the results of the Gallup survey to further enhance employee engagement
  • Ship “XP Green Power” products resulting in minimum lifetime CO2 emission savings of 120,000 tonnes

SUSTAINABLE BUSINESS GOALS

The table below shows the linkage between the United Nations Sustainable Development Goals (UN-SDG), XP Power’s business goals, how they are measured, and how this links to our Sustainability Strategy. The Board of Directors has ultimate oversight of, and responsibility for the Company’s Sustainability Strategy

HEALTH AND WELLBEING

good health and well being icon

Health & Safety

Improve the physical and mental health of our people and provide them with a safe place to work

Business KPIs

Reduce the annual lost time from health and safety incidents through implementing best practice in training, incident reporting, audits and risk assessments

2020:
62 days

Target (Year):
Zero days (2021)

GENDER EQUALITY

5.5 Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision making in politic al, economic and public life

gender equality icon

Our People

Create a workplace environment where our people can be at their best ensuring an environment that is safe, diverse, inclusive and attracts and retains the best talent

Business KPIs

Gallup Employee Engagement score

2020:
3.91

Target (Year):
4.18 (2021)

WORK AND ECONOMIC GROWTH

8.8 Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment

decent work and economic growth icon

Our People

Create a workplace environment where our people can be at their best ensuring an environment that is safe, diverse, inclusive and attracts and retains the best talent

Business KPIs

Proportion of women in management roles

2020:
100%

Target (Year):
100% (2022)

REDUCED INEQUALITIES

10.3 Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies and practices and promoting appropriate legislation, policies and action in this regard

reduced inequalities

Our People

Create a workplace environment where our people can be at their best ensuring an environment that is safe, diverse, inclusive and attracts and retains the best talent

Business KPIs

Proportion of women in management role

2020:
31%

Target (Year):
31% (2022)

CLIMATE ACTION

13.2 Integrate climate change measures into national policies, strategies and planning

climate action icon

Our People

We are committed to being a leader in our industry by reducing our impact on the environment. We are committed to reducing energy usage and CO2 emissions resulting from the manufacture and use of our products.

Business KPIs

CO2 intensity metric

2020:
7.9 kg CO2/£’000 of revenue

Target (Year):
22.3 kg CO2/£’000 of revenue (2025)

INDUSTRY, INNOVATION AND INFRASTRUCTURE

9.1 Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all

indsutry, innovation and infrastructure icon

SUSTAINABLE PRODUCTS

We will continue to develop innovative, high-quality and safe products that consume less energy, use less materials and avoid the use of hazardous substances, and solve our customers’ power problems

Business KPIs

New “XP Green Power” product introductions

2020:
17 product families

Target (Year):
15 product families (2021)

RESPONSIBLE CONSUMPTION AND PRODUCTION

12.5 By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse

12.7 Promote public procurement practices that are sustainable, in accordance with national policies and priorities

responsible consumption and production

SUSTAINABLE PRODUCTS

We will continue to develop innovative, high-quality and safe products that consume less energy, use less materials and avoid the use of hazardous substances, and solve our customers’ power problems

Business KPIs

CO2 estimated lifetime savings from “XP Green Power” products

2020:
117,000 tonnes of CO2

Target (Year):
3% reduction per annum (2021)

PEACE, JUSTICE AND STRONG INSTITUTES

16.5 Substantially reduce corruption and bribery in all their forms

peace, justice and strong institutions

ETHICS AND COMPLIANCE

We uphold the highest standard of business ethics and integrity and expect our suppliers to do the same

Business KPIs

Our goal is to have zero breaches of our Code of Conduct

2020:
0

TargEt (Year):
0 (2021)

Our Sustainable Business Goal is to improve the physical and mental health of our employees and provide them a safe place to work. This aligns with the UNSDG 3 “Good health and wellbeing”.

RESPONSE TO COVID-19

XP Power’s exposure to COVID-19 started earlier than most companies given we have a major manufacturing facility in Kunshan, China. In January 2020, over the Lunar New Year Holiday, the Chinese authorities introduced rigorous epidemic prevention and control measures including travel restrictions to control the COVID-19 virus. We immediately implemented the recommended provisions to control the spread of the virus enhanced by our own control measures, identified through our risk assessments, to ensure the safety and wellbeing of our people. These included:

  • Social distancing;
  • Compulsory wearing of face masks;
  • Sanitisation of hands and feet at the entrance to the site;
  • Temperature checks and monitoring before entering the site;
  • Sanitisation of any vehicles entering the site; and
  • Special distancing and barrier measures in the canteen.

Concurrently, we adopted the same rigorous epidemic prevention and control measures in our Vietnam facility. Vietnam had not been affected by the virus at this stage of the pandemic and the control measures adopted early on by the Vietnamese authorities meant that Vietnam was one of the least affected countries in the world.

Our business continuity plans had considered the possibility of a pandemic and we were immediately able to implement our disaster recovery plan to ensure effective management, control and communication as the crisis developed.

Cases of COVID-19 quickly began to be reported in Europe and we immediately adopted the measures recommended by the local authorities in countries in which we operate, again enhanced by the results of our own risk assessments. These measures included:

  • Working from home wherever possible;
  • Social distancing;
  • Sanitisation on entering any facility;
  • Temperature monitoring and screening on entering any facility;
  • Regular deep cleans and regular sanitisation of surfaces in the facilities;
  • Restrictions on any visitors to the facilities. Where a visit from a non-employee was necessary (e.g. for matters relating to health and safety such as fire extinguisher checks) the same controls were implemented together with a questionnaire and declaration that the visitor had no symptoms nor had been in contact with any persons who had been diagnosed with the virus or who had symptoms; and
  • A track and trace process in the event any employee in a facility developed symptoms or was diagnosed with the virus so people could self-isolate as appropriate.

In regions where we operate with very high local instances of the virus, which includes a number of our facilities in North America, we have also implemented mandatory weekly testing of employees.

We were conscious of the difficulties imposed on our people through long periods of working from home without regular face-to-face contact with their colleagues and the potential implications for their mental health. We held frequent (multiple times per week) all hands video updates to keep our colleagues connected and informed on what was happening. We also conducted a number of specific anonymous surveys to understand how our people were coping in the midst of the pandemic, and in particular working from home. The surveys indicated that we were managing the COVID-19 crisis well and we were able to make changes to help our employees during this difficult time. Some of these changes were practical in ensuring they had the correct equipment to work effectively and safely from home. We also made sure that a third-party Employee Assistance Programme was available to our employees and their relatives should they be experiencing difficulties.

We continue to closely monitor the situation with the virus and the safety and wellbeing of our people remains our absolute top priority during this difficult time.

SAFETY FIRST

Safety is a top priority at XP Power and aside from the specific challenges and importance of safeguarding our people (and contractors) from the COVID-19 virus, health and safety remains of paramount importance to us as a responsible employer. Our health and safety management system is driven from the top with the Board having ultimate responsibility.

We have a corporate health and safety framework, which clearly defines the persons who are responsible and accountable for health and safety at each of our key sites. The procedure also defines the minimum standards required at each key site, which can be summarised as follows:

  • Risk assessments based on the activities performed at each site, which are reviewed and updated annually;
  • An annual internal audit of the health and safety processes at each site to ensure they are in line with the corporate procedure;
  • Health and safety metrics are recorded covering health and safety incidents and near misses and these are reported and analysed. The Board of Directors reviews these health and safety metrics at each Board meeting;
  • Metrics relating to walk through safety audits, fire drills and update of risk assessments are also recorded and monitored; and
  • Consideration is given at each site to ergonomics, laboratory and electrical safety, legal requirements, use of chemicals, use of equipment and tools, facility preparedness and evacuation, and slips, trips and falls.
sustainabilty section health an safety diagram

The Company has invested during 2020 to enhance health and safety due to COVID-19 including social distancing and signage, thermometer and temperature scanners, physical screening, COVID-19 testing, sanitisation materials and deep cleaning costs.

In addition, we have enhanced health and safety through expenditure on improved product racking, use of health and safety consultants, advisers and auditors.

XP Power’s health and safety policy is available on our website at xppower. com/company/policies. The key elements of our policy are to maintain a healthy and safe working environment to minimise the number of occupational accidents and illnesses and ultimately achieve an accident-free workplace. We are committed to this goal and to achieving continual improvement. We encourage our people to look out for each other to keep us all safe.

SAFETY PERFORMANCE

We report all health and safety incidents including near misses whether or not they resulted in lost time. We actively encourage the reporting of near misses so we can analyse those events and learn and make improvements. There were two near misses reported in 2020. Our incident rate is calculated as the total number of incidents divided by the average number of employees expressed as incidents per 1,000 employees. Our target is to have an incident rate of zero.

In 2020 we had 22 health and safety incidents and 2 near misses. Of these, 10 incidents resulted in total lost time of 62 days. Two incidents in China were serious enough to contribute 50 days of absence from work. One was a slip on a wet surface resulting in 30 days of absence, and one was a slip on the stairs resulting in a broken foot, which caused 20 days of absence. We continue to review all accidents and near misses to ensure we learn from them and improve the environment to keep all employees safe from harm or injury. No incidents resulted in death or serious injury of any persons. We provide all our employees with health and safety training appropriate to their role.

HEALTH AND SAFETY INCIDENTS

  2020 2019 2018 2017 2016
Asia 10 7 6 9 6
Europe - 3 8 9 2
North America 12 11 3 14 5
Total 22 21 17 32 13
Average number of employees 2,108 1,859 1,972 1,953 1,506
Incident rate per 1,000 employees 10.4 11.3 8.6 16.4 8.6

HEALTH AND WELLBEING

We encourage our employees to have active lifestyles and, where facilities allow, we provide showers so our people can exercise during their breaks or be able to cycle to work. Some of our sites have five-a-side football teams or participate in softball leagues. We have also provided yoga sessions in some sites during lunch time. Our Chinese facility has a frequently used outside basketball court and our Vietnamese facility a five-a-side football pitch. Unfortunately, these activities have had to be cancelled during the pandemic but we are keen to resume them once we can safely do so.

We operate a comprehensive Employee Assistance Programme (EAP) in Europe and North America, which we intend to roll out in Asia in 2021. This EAP service provides a complete support network that offers confidential expert advice and compassionate guidance 24/7, online and by phone in the relevant language, covering a wide range of issues, and wellbeing resources both to our employees and their immediate families.

Image of xp power softball team
Image of xp power softball team
photo of womens football team

Our Sustainable Business Goal is to create an environment where our people can be at their best. This aligns with the UNSDGs 5 “Gender equality”, 8 “Decent work and economic growth”, and 10 “Reduced inequalities”

EMPLOYEE ENGAGEMENT

Our vision is to not only deliver the ultimate experience for our customers but also for our people. We want XP Power to be a great place to work. Pauline Lafferty is the designated Non-Executive Director responsible for workforce engagement and ensuring the views of our employees are heard at the Board level and are taken into account in Board discussions and decision making. Pauline is ideally qualified for this role as a former Chief People Officer and a person who is passionate about employee engagement.

We use a number of methods to engage with our people including a Gallup engagement survey conducted in December 2020 that had an excellent participation rate 94% across the entire workforce. 2020 was the first year we have used the Gallup survey and we scored a respectable 3.91 out of 5.00 placing us at the 38th percentile rank in the Gallup database. The survey results are being used to drive further employee engagement and we are targeting to improve our score to 4.18 in 2021.

We also conducted two specific pulse surveys relating to COVID-19 during 2020 and held numerous all hands video meetings to keep our people connected and to answer any questions or concerns they had.

FREEDOM OF ASSOCIATION

We allow all of our employees to freely associate with any relevant unions. Our employees in Vietnam are members of the local union.

TALENT MANAGEMENT AND SUCCESSION PLANNING

Talent management and succession planning for the Executive Directors and Senior Leadership team is reviewed and discussed at Board level. In June 2020 Anna Mealings joined the Group as Chief People Officer and in Q4 of 2020 established people and organisational plans for 2021 with each member of the Executive Leadership Team. Anna and the Board will be reviewing talent management and succession planning during 2021 including the layer below the Executive Leadership team.

REWARD AND RECOGNITION

All our employees receive annual performance evaluations. We operate various bonus schemes and all non-sales commissioned employees are eligible to participate in either our general or executive bonus scheme. The overall bonus pools are determined by the level of adjusted profit before tax and operating cash conversion. Individual bonuses are then allocated based on individual performance.

We also have a number of spot recognition award schemes and have a CEO award, which is made annually for each region and globally to individuals who have gone significantly beyond what is expected of them. These awards are sometimes awarded to teams rather than individuals to recognise and promote collaboration.

As well as recognition schemes, we also provide health care benefits and life assurance according to the customs in the regions in which we operate.

NUMBER OF STAFF BY YEAR BY REGION

  2020 2019
Europe 165 174
North America 375 444
Asia 1,723 1,275
Total 2,263 1,893

Employee turnover by year

  2020 2019 2020 2019
Europe 9 18 5% 10%
North America 38 34 10% 8%
Asia 534 546 31% 43%
Total 581 598 26% 32%

Trade union representation

  Average number of employees represented % of employees represented
Europe - -
North America - -
Asia 1,200 70%
Total 1,200 53%

DIVERSITY AND INCLUSION

Becoming a truly diverse and inclusive Company is not only the right thing to do, it is crucial to helping us grow our business, innovate, attract and retain talent, and engage the people who buy our power solutions. Different experiences, views and opinions allow us to explore many more options when considering decisions, which we believe results in better outcomes from the business and our various stakeholders.

We operate globally and recognise the cultural differences that may exist in the countries in which we do business. We recognise that a truly diverse workforce reflects our markets and will help us succeed in those markets. We will not tolerate any form of discrimination.

We are committed to equality of opportunity in all of our employment practices, procedures and policies. When we hire or promote someone, we choose the best candidate irrespective of age, race, national origin, disability, religion, gender, gender reassignment, sexual preference, marital status or membership/non-membership of any trade unions. We apply the same standards when selecting business partners.

Our policy is to aim:

  • To create an environment in which individual differences and the contributions of all team members are recognised and valued.
  • To create a working environment that promotes dignity and respect for every employee.
  • To not tolerate any form of intimidation, bullying, or harassment, and to discipline those that breach this policy.
  • To make training, development and progression opportunities available to all staff.
  • To promote equality in the workplace, which XP Power believes is good management practice and makes sound business sense.
  • To encourage anyone who feels they have been subject to discrimination to raise their concerns so we can apply corrective measures.
  • To regularly review all our employment practices and procedures so that fairness is maintained at all times.

The Board of Directors has oversight of the Company’s diversity policy, which is also available on our website at xppower.com/company/policies. Our diversity policy is also embedded in our Code of Conduct and our employees receive online training regarding our both our Code of Conduct and diversity.

The Group is supportive of flexible working policies such as working from home, part-time, and flexible hours according to the requirements of the position.

In the UK, for employees with more than two years’ service we pay maternity or adoption leave for three months at 100% of salary compared to the statutory six weeks at 90% of salary. We also provide two weeks paid paternity leave at 100% of salary compared to statutory paternity leave of two weeks at £151 or 90% of usual pay if lower.

We have chosen to publish our gender pay gap data even though we have fewer than 250 employees in the UK and are, therefore, exempt from gender pay gap reporting. We are committed to eliminating any form of discrimination. One in three of the women in the bottom quartile work part-time, which explains their over representation in this quartile. 40% of our UK workforce are female.

UK GENDER PAY GAP

Genders in each pay band: 2020 2019 2018 2017
  Male Female Male Female Male Female Male Female
Lower quartile pay band 40% 60% 40% 60% 48% 52% 33% 67%
Lower middle quartile pay band 58% 42% 58% 42% 52% 48% 48% 52%
Upper middle quartile pay band 77% 23% 77% 23% 72% 28% 74% 26%
Upper quartile pay band 92% 8% 92% 8% 90% 10% 81% 19%

EMPLOYEES BY GENDER AND REGION AS AT 31 DECEMBER 2020

  Male Female Total
Europe 105 60 165
North America 258 117 375
Asia 761 962 1,723
Total 1,124 1,139 2,263

GENDER DIVERSITY STATISTICS

  Male Female Total Male Female
Board 5 2 7 71% 29%
Executive Management 6 1 7 86% 14%
Management 88 39 127 69% 31%
All other 1,025 1,097 2,122 48% 52%
Total 1,124 1,139 2,263 50% 50%

TALENT AND CAREER MANAGEMENT

Developing our talent is key to our ongoing success and in June 2020 we recruited a Chief People Officer who created People and Organisation Plans with each of our executive leaders identifying enablers to drive the attainment of our plan in 2021 and beyond. We also have commenced a People Leadership Programme where we provided learning opportunities and feedback to 96% of our people leaders (anyone with more than four direct reports).

An online learning portal (Learning Management System) was implemented during 2020 and rolled out to all employees that allowed us to deliver a number of pieces of training, including Code of Conduct training, in multiple languages to all of our people. This tool is also being used for onboarding new employees and for training on new information technology tools such as our various cyber security applications. All of our employees have access to our learning management system.

We have six apprenticeships programmes in areas such as finance, human resources, information technology and logistics.

COMMUNITY PARTNERSHIPS

We believe that it is important to contribute to the communities in which we operate and this resonates well with our employees. We allow every employee to take a paid day’s leave to contribute to a charitable or worthy cause in the community. As COVID-19 made many volunteer activities difficult in 2020, we encouraged our employees to donate blood to help alleviate the shortages caused by COVID-19 and allowed them to use their community time off for this purpose.

Community activities in 2020:

  • A campaign to encourage our people to donate blood across the globe to help alleviate shortages caused by COVID-19 (we allowed them a paid day off in order to do this).
  • Our Southern California office participated in a clothing and food drive in September. We organised a curbside drop off for our employees working from home and we collected bags of clothing, baby essentials, and boxes of food.
  • In New Jersey during February we organised a food drive and donated over 300 kg of groceries to local food banks to help those in need.
  • Our team in Gloucester, Massachusetts, participated collected a similar amount of provisions for local food banks in March 2020.

Examples of community activities our people have engaged in from previous years across our various locations include:

  • Collaboration with the local food banks, distributing food bundles by going door to door to underprivileged households.
  • Collection of refuse in local fields and roadways. The total amount of refuse collected during one day exceeded 100 kg.
  • Helping to sort, distribute and prepare food for residents of the local Rescue Mission Centre. We have developed a good relationship over the past three years with this organisation that is local to our Southern California location.
  • Food drives and collections at some of our other locations that are donated to local food banks. This has been done during the non-holiday season as this is when donations are most in need.

We believe that we should give back to the communities in which we work as they make up an integral part of our lives.

The Group made cash donations to local charities totalling £1,490 in 2020.

Our Sustainable Business Goal is to be the leader of our industry regarding environmental matters and minimise the impact we and our products have on the environment. This aligns with the UNSDG 13 “Climate action”.

MANAGING ENVIRONMENTAL PERFORMANCE

XP Power is committed to be the world leader in our industry by reducing its impact on the environment. We will strive to improve our environmental performance by:

  • As a minimum, complying with all relevant environmental legislation and regulations as they relate to each location and community in which we operate.
  • Employ best practices to maximise the efficient use of resources to minimise waste and prevent pollution.
  • Focus on promoting an environment of continuous improvement and risk mitigation through identifying objectives and setting measurable goals.
  • Consider and respond to environmental issues through all phases of our product lifecycle.
  • Communicating our environmental policy and objectives to our suppliers and employees and encourage their participation in environmental best practices.

Our Environmental Policy is available on our website at xppower.com/company/policies.

The Company has an Environmental Management System with accredited certification to international standard ISO 14001:2015. Compliance is ensured through our internal audit process together with external assessments by our registrar, British Standards Institution (BSI). The Group has not had any environmental incidents in 2020 and has not received any environmental fines or improvement notices in the last 12 months.

We continue to collaborate annually with the Carbon Disclosure Project. We submit our environment performance data to the Carbon Disclosure Project and this data is accessible through the Carbon Disclosure Project website at www.cdproject.net.

Our Environmental Committee consists of a network of site representatives who drive improvement in our environmental performance and promote awareness of environmental and sustainability matters amongst our people. The Committee is chaired by Sean Ross, who is also our Vice President of Quality Assurance. We also publish a quarterly “Green Newsletter” publicising and encouraging environmental and community initiatives. The contributions our people made to local communities are set out in the Community Partnerships section of this report. Polly Williams is the Non-Executive Director who provides oversight for environmental and climate matters.

ENERGY AND GREENHOUSE GAS EMISSIONS

The Group has taken a number of actions to reduce its energy consumption as follows:

  • Recycling of burn-in power used in manufacturing in China and Vietnam.
  • Efficient building insulation and air conditioning system in Vietnam.
  • We believe our Vietnam facility to be the most environmentally friendly in our industry and it was the first building in Vietnam to be accredited with the BCA Gold Mark+ relating to its environmental performance.
  • We use high efficiency T6 or LED lighting in our facilities.
  • Vietnam and the UK have PV solar panels generating electricity from sunlight.
  • We provide electric car charging in our Californian and UK facilities for our employees to drive electric cars.

However, by far the largest impact the Group can have on reducing CO2 emissions is by developing and promoting its “XP Green Power” products, which had ultra-high efficiency and low standby power. These products consume less power and therefore result in lower CO2 emissions over the whole lifetime of the customer’s equipment. We are producing high-efficiency products with efficiency rates up to 95% while historical efficiencies in the industry have typically only been around 80%. As we have demonstrated in the past, the example below helps convey the significance of this delta in efficiency rating:

  • XP Power supplies a 95% efficient product to power a 100 watt load. 105 watts of input power is required to deliver 100 watts at this level of efficiency.
  • Competitor supplies an 80% efficient product to power a 100 watt load. 125 watts of input power is required to deliver 100 watts at this level of efficiency.
  • Moving from 80% efficiency to 95% is actually a five-fold saving in waste energy.

The waste heat as highlighted above is calculated in Watts. There is a significant difference considering there is a fivefold improvement in energy wastage and the overall potential for savings will be throughout the entire lifetime of electronic equipment. To achieve these efficiency gains requires a greater number of higher cost components and more complex circuits.

“XP Green Power” products also have functionality that enables them to consume less energy when on standby mode while not powering the customers’ application. The return on investment of a higher-efficiency product can be captured in terms of consumption of electricity. The full payback on electricity costs is usually within the first year of use. Therefore, we continue to promote and encourage the use of these high efficiency products.

We anticipate that the trend in the market through both demand and legislation for higher-efficiency products is expected to continue in the electronics industry. These legislative requirements are projected to extend across various industries from consumer equipment to the healthcare and industrial markets that we serve.

We measure our CO2 emissions in accordance with the internationally recognised Greenhouse Gas (GHG) Protocol and our metrics include Scope 1 and Scope 2 emissions. Scope 3 CO2 emissions represent estimated CO2 emissions from air travel and paper usage. As the Group’s sustainability programmes develop we will capture more of our Scope 3 emissions and aim to reduce them and will disclose them in our annual sustainability report.

The Group is targeting a 3% annual reduction in our CO2 emissions intensity metric. Actions in order to achieve this are reduction in burn in times for mature products, reduction of air freight to use more sea and rail and evaluation of packaging. However, our biggest contribution to reduction in CO2 emissions is from adoption of our “XP Green Power” products. The CO2 emission savings from these products consistency exceed the combination of our Scope 1 and Scope 2 CO2 emissions.

“We shipped “XP Green Power” products in 2020 with estimated lifetime CO2 savings of over 117,000 tonnes."

ENERGY CONSUMPTION AND EMISSIONS DATA

  FY20 FY19
  UK Global
(excl UK)
Total UK Gloabl
(excl UK)
Total
  Emissions
Scope 1 (tCO2e) - 9 9 - 12 12
Scope 2 - loaction based (tCO2e) 68 6,283 6,351 58 5,321 5,379
Total scope 1 and 2 (location) 68 6,292 6,360 58 5,333 5,391
Scope 3 (tCO2e)
Intensity ratio (per Group turnover) (tCO2e/£M)
19 550 569
29.7
187 429 616
30.0
Estimate lifetime savings from “XP Green Power”
products (tCO2e)
    117,00     108,000
  Energy (kWh)
Oil - 32,300 32,300 - 44,450 44,450
Gas 11,710 956,293 968,003 9,671 1,296,433 1,306,104
Total non-renewable fuels consumption (kWh) 11,710 988,593 1,000,303 9,671 1,340,883 1,350,554
Total non-renewable electricity consumption (kWh) 123,725 10,668,213 10,791,938 150,511 9,907,011 10,057,522
Total non-renewable energy consumption (kWh) 135,435 11,656,806 12,792,241 160,182 11,247,894 11,408,076
Total renewable energy consumption (kWh)            
Solar-generated electricity 3,346 39,605 42,951 1,862 43,644 45,506
Total operational energy consumption (kWh) 138,781 11,696,411 12,835,192 162,044 11,291,538 11,453,582

ESTIMATED LIFETIME SAVINGS FROM “XP GREEN POWER” PRODUCTS

We have included the estimated lifetime savings from the “XP Green Power” products that we have shipped during 2020 which is significant and even in one year more than offsets our Scope 1 and Scope 2 CO2 emissions. This is a significant positive impact we are having on reduction of CO2 emissions.

These “XP Green Power” product are our high efficiency products, which consume less electricity while powering the load and while in standby mode when compared to the average power converter. In estimating these savings we have assumed the following:

  • An average power converter is 80% efficient (“XP Green Power” products are generally around 90% efficient).
  • The power converter will run for 8 hours a day, 5 days a week, 50 weeks a year for 7 years in the customers’ equipment.
  • The customer will run the power converter at 75% of its rated power.
  • One kWh of electricity produces 0.418 kg of CO2.

A power converter operating at 90% efficiency is actually wasting less than half what a power supply operating at 80% efficiency does. Consequently, the savings in energy and therefore CO2 emissions of the lifetime of the product are very compelling.

THIRD-PARTY VERIFICATION

For 2019 and 2020, we engaged Intertek to advise us on our how we should capture and report our environmental data. The accuracy of our energy, water, paper, solar power, green power and CO2 emissions data disclosed in this report have been independently reviewed by Intertek.

WATER CONSUMPTION

We have determined that our operations are considered as low water usage and we do not have operations in any regions with high water-stress. Water is not used in the design, manufacturing or services of our products. However, XP Power recognises water is finite and therefore considers water management throughout all activities of the Company and that water should be treated in a manner that will protect it for future generations. We therefore try to limit water use and employ best practices to reduce its usage in all our facilities. This includes rainwater capture and reuse in our Vietnam facility and the deployment of reduced flush toilets in a number of our facilities.

Our water usage is tracked and monitored as one of our key environmental metrics across the business.

Our Water policy is to:

  • Employ best practices to maximise the efficient use of water and minimise pollution and waste.
  • Regularly review and report on the water use of our facilities and activities.
  • Commit to continuous improvement in responsible water management through identifying objectives and setting measurable goals.
  • Involve and educate employees, contractors and customers in our water use programmes.
  • Engage with suppliers to encourage their participation in responsible water management best practices.
  • Disengage with any suppliers who may be found to be negligent or non-compliant with responsible water management and who do not aggressively implement corrective actions.

Our Environmental Committee has ultimate oversight of the Water policy.

Our water policy is also available on our website at xppower.com/company/ policies.

WATER CONSUMPTION AND INTENSITY METRICS

  2020 2019 2018 2017 2016
Freshwater usage (m3) 43,429 30,478 39,605 39,480 32,582
Intensity ratio (m3 per £m revenue) 186 152 203 237 251
Intensity ratio (m3 per employee) 20.6 16.4 20.1 20.2 21.6
Average number of employees 2,108 1,859 1,972 1,953 1,506

The reduction in water consumed in 2019 was the result of not requiring extra shifts of production at our China facility and a faulty water meter not recording the total amount of water used. We aim to reduce our water usage per employee by 3% per annum.

WASTE MANAGEMENT

XP Power is committed to be the world leader in our industry by reducing its impact on the environment. Our Environmental Committee is responsible for our Environmental Policy (available on our website at xppower.com/company/ policies including waste management.

Our manufacturing processes produce relatively little waste. The main single source of waste is the excess solder from the wave solder machines, so called “solder dross”. This is returned to the manufacturer to be recycled into new solder. In 2020, we sent 8,579 kg of solder dross for recycling and received back 5,602 kg of recycled solder, which is a 65% recovery rate.

We also use certain chemicals to clean flux from printed circuit boards, which is itself cleaned using activated carbon. We dispose of these chemicals and the containers in which they are delivered through a certified professional third party who is licensed to deal with safe disposal of these materials. Paper and other packaging is collected by recycling providers.

2020 WASTE MANAGEMENT

  Solder Hazardous waste Total waste
Sent for recycling (kg) 8,579 - 8,579
Recycled solder received (kg) 5,602 - 5,602
Net waste professionally disposed 2,977 10,415 13,392
Recovery rate 65% 0% 42%
Intensity ratio (kg per £m revenue) 13 44 57

The Group also recycled 301 (2019: 269) tonnes of paper and packaging during the year.

Our Sustainable Business Goal is to reduce the CO2 emissions resulting from the use of our products and minimise the impact we and our products have on the environment. This aligns to the UNSDG 9 “Industry, innovation and infrastructure” and 12 “Responsible consumption and production”.

BOOSTING INNOVATION

In order to have a sustainable business, we need to continue to develop products and solutions that are innovative and solve our customers’ power problems. When we engaged with our key customers in 2020 regarding sustainability, product design was their top material impact and scored even higher than customer experience and satisfaction.

Power conversion technology has been evolutionary rather than revolutionary advancing as new materials and components become commercially available rather than driven by completely new ways of rectifying or converting voltages.

We consider that we have the broadest and most up-to-date product portfolio in our industry. Our engineering teams monitor and evaluate new components as they become available and their price points drop to a level where they become commercially viable in our products. We continue to integrate sustainability into our product design as follows:

  • Energy efficiency – We have consistently led the industry in developing high-efficiency “XP Green Power” products, in the industrial and medical sectors, which consume and therefore waste less electricity. This is while powering the application or while the application is on standby mode. This results in significantly reduced CO2 emissions over the lifetime of the customer’s equipment, which is often seven to eight years. We estimate that our high-efficiency products shipped in 2020 alone will reduce CO2 emissions by over 117,000 tonnes over their lifetime of use.
  • Novel materials – We have incorporated novel components into our higher-end products where economic to do so such as highly efficient silicon carbide devices. We have also made use of new semiconductor components for the control of our power supplies, which allow “soft switching” to obtain very high-efficiency rates and allow low standby power ratings to be achieved. There are some exciting developments in power transistor technology, which we will be using as soon as price points allow. This will allow significant reduction in the size of power converters and increase their efficiency in some applications.
  • Product lifecycle management– Our design processes consider the complete product lifecycle of our power conversion products from the outset. This means we are considering how the product will be disposed of and recycled at the end of its useful life before we design it. Interestingly the characteristics of a product which make it more energy efficient also increase its reliability and its useful lifetime. Highly efficient products run cooler, which increases the lifetime of the key components, which are sensitive to heat such as electrolytic capacitors. They also frequently allow the product to operate without an electromechanical fan to exhaust the waste heat – one of the most unreliable components of a traditional power conversion system.
  • Hazardous substances – We avoid the use of hazardous substances in our products facilitating their recycling at the end of their lifetime and reducing their impact on the environment.
  • Low carbon manufacturing – As well as designing our products so they are highly efficient, we also consider the manufacturing process. Traditionally products undergo “burn-in” after manufacture to eliminate early failures by running them under stress. When we burn-in our products we recycle the power in the manufacturing facility to significantly reduce our carbon footprint. Burn-in cycles are monitored and reduced based on the defect data further reducing CO2 emissions.
  • Product safety – A power converter is a safety critical part of any electrical system or application as it provides the isolation barrier between the user of the end equipment and the potentially lethal high voltage mains electricity. A drug delivery system is an excellent example where a steel needle could be inserted into a vein of a patient, directly connected to the mains via a conducting solution containing the drug, passing through the drug delivery machine, connected to the mains via the power converter. All our products are 100% tested for isolation using a high voltage. In addition, all our medically approved products are 100% tested for mains leakage current to ensure their absolute safety. All XP Power products come under the remit of our ISO9001 registration.

RESPONSIBLE SOURCING

Code of Conduct

We have a comprehensive Code of Conduct that we regularly refresh. All of our employees are trained regarding our Code of Conduct to ensure they are aware and understand its contents. We also require our suppliers to adhere to this Code of Conduct, which covers, amongst other things, diversity, modern slavery and human trafficking, health and safety, business integrity and ethics, environment and sustainability. Our supplier qualification and ongoing audit programme review compliance with our Code of Conduct and we will disengage with suppliers who do not meet these standards.

XP Power's code of conduct is available on our website at XPPOWER.COM/COMPANY/POLICIES

Conflict Minerals

XP Power supports the initiatives and regulations to avoid the use of any “conflict minerals”, which originate from mining operations in the Democratic Republic of the Congo (DRC) and adjoining countries. These involve tantalum, tin, tungsten and gold. We only purchase our electronic components from reputable sources and purchases of materials such as solder are only purchased from vendors who are on the Conformant Smelter & Refiner Lists. We also obtain information from our suppliers concerning the origin of the metals used in the manufacture of XP Power products. In this way, we can assure ourselves and our customers that we are not knowingly using conflict minerals in our products.

Our supply chain organisation is responsible for the qualification and ongoing monitoring or our suppliers.

XP Power's code of conduct is available on our website at XPPOWER.COM/COMPANY/POLICIES

Our Sustainable Business Goal is to have zero breaches of our Code of Conduct and uphold the highest standard of ethics and integrity. This aligns to the UNSDG 16 “Peace, justice and strong institutions”.

Business ethics and compliance are extremely important to XP Power. The first of our five core values is Integrity and this is, therefore, embedded into our culture. It is also embedded into our Code of Conduct and the policies outlined in the following sub-sections.

We ensure compliance with our Code of Conduct firstly by ensuring all employees are trained on its contents so they are aware of it and understand it. This occurs through our online Learning Management System on an annual basis. The Company also relies on our general financial controls, authority matrix and by general management oversight and review of financial and other reporting. In addition, we have an independent whistleblowing service available to employees who do not feel able to raise issues of concern to their line manager or their superior. The Audit Committee is responsible for monitoring and compliance matters are regularly reviewed by the Board of Directors.

Over the last three years, only one breach of our Code of Conduct was substantiated. This occurred in 2019 in our Chinese manufacturing facility and was brought to light through our whistleblowing process. The incident was investigated by a third party and involved collusion between two employees and a supplier, and resulted in the individuals concerned being summarily dismissed from the Company.

MODERN SLAVERY

XP Power supports the Modern Slavery Act 2015 and this is explicitly included within our Code of Conduct. We do not engage in any slavery or human trafficking activities and we are strongly against any offences of slavery, servitude forced labour and/or human trafficking. XP Power has also adopted a corporate policy, which has been communicated to all employees through our Code of Conduct.

XP Power's code of conduct is available on our website at XPPOWER.COM/COMPANY/POLICIES

Modern Slavery Policy

XP Power is committed to a work environment that is free from modern slavery.

This is achieved by:

  • Communicating that as an organisation we do not engage and are strongly against any offences of slavery, servitude/forced labour and/or human trafficking.
  • Performing due diligence on our supply chain. We would immediately disengage with any supplier that does not have the same vision on forced labour as XP Power.
  • Complying with all relevant legislation including the Modern Slavery Act 2015.
  • Adopting this policy within our Code of Conduct.

This policy is supported by all levels of the XP Power organisation. Any abuse of human rights would be acted upon immediately and appropriate action taken.

All of our employees are trained regarding our modern slavery policy through the annual Code of Conduct training managed through our online Learning Management System.

WHISTLEBLOWING

XP Power is committed to an environment where open, honest communications are the expectation. Employees should be comfortable in bringing any concerns forward where they believe violations of policies or standards have occurred in the secure knowledge that they will be taken seriously and there will be no adverse repercussions where they have acted in good faith. This is embedded into our Code of Conduct.

We operate an internally well publicised confidential whistleblowing programme through an independent third party called “Speak up” in every country in which we operate in the local language whatever that might be. This service allows employees to raise concerns over a website or phone in their local language on an anonymous basis if they wish. Any whistleblowing report is automatically reported to the Senior NonExecutive Director by the independent third-party provider.

Our whistleblowing policy encourages our employees to report issues that they are not comfortable raising with their line manager or their superior where they have a reasonable belief:

  • Our Code of Conduct has been breached.
  • A criminal offence has been committed, is being committed, or is likely to be committed.
  • A person has failed, is failing, or is likely to fail to comply with a legal obligation.
  • A miscarriage of justice has occurred, is occurring, or is likely to occur.
  • The Health and Safety of any individual has been, is being or is likely to be, endangered.
  • The environment has been, is being or is likely to be damaged.
  • Information tending to show any matter falling within any one of the above categories has been, is being or is likely to be deliberately concealed.

The “Speak Up” process is completely confidential and the Company protects employees who are whistleblowers from any detrimental treatment resulting from any whistleblowing providing they acted in good faith.

In 2019 there were two whistleblowing events, one of which could not be substantiated after thorough investigation. The other incident was investigated by a third party and involved collusion between two employees and a supplier and resulted in the individuals concerned being summarily dismissed from the Company. There were no whistleblowing events in 2020.

XP is proud to have a culture of openness and honesty; we have developed this independent ‘Speak Up’ process to guarantee that employee experiences of legal or ethical misconduct will be heard and acted upon quickly wherever it occurs within the business. The Company is committed to taking appropriate action with respect to all qualifying disclosures which are upheld.

ANTI-BRIBERY AND CORRUPTION

It is the XP Power’s policy to conduct all of its business in an honest and ethical manner. We will not at any time take or give bribes or other means of inducement to obtain improper advantage. The Company takes a zero-tolerance approach to bribery and corruption and is committed to acting professionally, fairly and with integrity in all its business dealings and relationships wherever it operates and implementing and enforcing effective systems to counter bribery.

Our policy on anti-bribery and corruption is embedded in our Code of Conduct on which all our employees receive annual training. Our Code of Conduct’s section on bribery and corruption is detailed and includes numerous examples so that our employees can clearly understand what is acceptable and what is not acceptable. The requirements of our Code of Conduct are communicated to our suppliers and they are required to comply with its provisions.

We use our online Learning Management System which was rolled out worldwide in 2020 to manage and monitor the training of our employees. Our Code of Conduct was refreshed in 2020 and all employees were required to complete our Code of Conduct training and acknowledge that they understand the Code.

The Board of Directors is ultimately responsible for compliance with all aspects of our Code of Conduct. There were no instances of bribery or corruption in 2020 to which the executive management or Board were aware.

HUMAN RIGHTS

In accordance with our commitment to the United Nations Universal Declaration of Human Rights, we support and respect internationally recognised labour rights, including freedom of association, the avoidance of discrimination, the abolition of forced and child labour and antislavery legislation. We do not support forced and child labour and we expect the same commitment from our stakeholders.

Our policy on human rights is set out in our Code of Conduct and all employees are trained on this on an annual basis.

The Board of Directors is ultimately responsible for compliance with all aspects of our Code of Conduct including human rights.

INFORMATION SYSTEMS AND TECHNOLOGY

The Group considers that it has appropriately robust and secure information technology (IT) systems while acknowledging that no IT system can be absolutely secure.

The Group IT Director is responsible for the integrity and security of the IT systems and communications network. The Group has processes in place for penetration testing, data back-up and recovery. It also has various processes, software and hardware in place to prevent data security breaches and unauthorised access to the Group’s systems and data.

The Group also conducts regular cyber security training and awareness to ensure that our employees remain alert to cyber security threats.

TAX TRANSPARENCY

The Group is committed to compliance with all applicable tax laws and regulations in all the jurisdictions in which it operates or is required to make filings. All required tax filings are made accurately and on time with the relevant authorities. It is the Group’s policy not to engage in any aggressive tax planning or tax avoidance schemes.

GOVERNMENT CONTRACTS

The Group has no direct relationships where it sells products or services to any government entity