PCB Sustainability Report 2021

WE INVITE YOU TO GIVEFEEDBACK

We warmly welcome any feedback you may have on the sustainability report to help us to develop our report and sustainability work even further. Please contact NCAB Group’s Sustainability Manager, Anna Lothsson: anna.lesson ncabgroup.com.

PCBs for demanding  customers

PCBS - SMALL BUT CRITCAL

All electronic products contain a printed circuit board (PCB).  The car you drive, the train you travel on or the ECG system that  monitors your heart. We believe that the best PCB solutions can  only be developed through dialogue with our customers and their  customers. It all starts with the design, the right specifications

and in choosing the right manufacturing partner. Our solution also  includes efficient logistics, on-time deliveries and that the entire  manufacturing process is conducted in a manner that fulfils our  customers’ and, not least, NCAB’s sustainability requirements.

TECHNOLOGY TRENDS

Several technology trends are today driving the applications  in which PCBs are used. Internet of Things (IoT) and artificial

intelligence (AI), in combination with the development of 5G sys-  tems, open up connectivity and communication between devices  and things on a whole new level. With the component industry  following similar trends, PCBs have to be adapted to changing  requirements. The complexity of PCBs will continue to grow  while devices get smaller. Technology looked upon as cutting  edge today, will become standard tomorrow. In this transition,  NCAB is keeping a close eye on the customers’ demands and  the factories’ development plans.

INTEGRATED PCB  PRODUCTION

We call our production method  integrated PCB production, which

in practice means that we work closely  with both our customers and our factories.  We do not own our factories, but we “own”

what is most important: the relationship and  process with both customer and factory. We create  optimum and flexible production conditions through  our strong purchasing power and expertise in PCB  production.

GLOBAL AND GROWING COMPANY

The NCAB Group is a truly global organization, with offices around  the world. Our headquarters are in Sundbyberg, Stockholm,  Sweden. Growth is a priority for us; sustainable growth, together  with our customers as we enter new markets. Growing sustainably  with profit is an integral part of securing and developing our long-  term business. In 2021, we acquired Prevent PCB (Italy), sas-  electronics (Germany), RedBoard Circuits (USA), Elmatica (Nor-  way), and META Leiterplatten (Germany). These acquisitions will  strengthen our market position in Europe and US even further.

OUR VALUES

We work in accordance with our company values:

Quality First

Strong Relationships  Full Responsibility

Our new strategy takes us  to the next level

Climate change, resource scarcity, and the need for social safeguards  along the supply chain have led to sustainability becoming a global priority.

Stakeholders, as well as policymakers, are increasingly focusing on sustainability  performance.

NEW STRATEGY RAISES THE BAR

At the end of the year, we updated our group sustainability strategy.

While social responsibility in the supply chain has long been a  top priority for us, environmental performance such as energy  and resource efficiency, as well as reduction of greenhouse gas  emissions are areas that will be subject to increasing focus going

forward. Broadening our sustainability strategy will ensure that our  sustainability performance improves and meets our vision, as well  as the expectations of our stakeholders.

While we are on track to meeting many of our sustainability  targets, others remain a challenge, particularly in areas such as  materials, waste management and transportation where we need  industry collaborations. Working closely with customers and being  involved from the very beginning of their projects, we can add  significant value to the PCB solutions.

REDUCING CLIMATE IMPACT

To ensure that we focus our efforts on activities that make a real  difference, we have identified and calculated the greenhouse  gas emissions linked to our business throughout the value chain.  Now that we have a clear picture over our climate impact, we are  in a position where we can prioritize and take actions to reduce  our most severe impacts and set emission reduction targets in  line with the 1.5-degree target of the Paris Agreement. This will  also enable us to present data to our customers and to be more  transparent in our offering.

HIGHLY ENGAGED EMPLOYEES

Our success would not have been possible without the dedication of  our highly engaged and competent employees. We are making pro-  gress in our sustainability work thanks to the commitment and hard  work from everyone in the organization, and for this I am sincerely  grateful. Despite the challenges posed by the pandemic, we con-  tinued to meet customer expectations, receiving high scores in the  customer survey, as well as in our employee engagement survey.

Now, we are looking forward to continuing our sustainability  journey together with our production partners and customers. We  are committed to offering competitive, high quality and techni-  cally advanced PCBs, which are sustainably produced and thus  making us the natural choice for collaboration.

We take on ourchallenges

The world is currently facing many  and deep humanitarian, geo-political  and environmental challenges. In  Europe, the Russian invasion and war

in Ukraine is causing enormous human  suffering. Our view, is that businesses  do have an important role in shaping  society. Acting responsibly, in line with  the values of our different stakeholders,  including owners, employees, suppliers  and customers and with a long-term  perspective of our financial develop-

ment, is the only way we can be a truly sustainable business.  We are committed to continue focusing on social and environ-  mental sustainability, even when times are difficult. And we  firmly believe that the actions we take in these areas are vital for  the successful development of NCAB.

The latest IPCC report is a clear call to act against climate  change, reminding us once again of the urgency and magni-  tude of the challenge. We need to be clear on where we can  have meaningful impact and how we should prioritize. We need  to start with actions that lead to the largest improvements. I

am convinced that the efforts NCAB is making to gain deeper  knowledge about our climate impact throughout the value chain  will pay off. We will get a clearer picture of where our footprint  is greatest, and we can also support customers with important  data. As a sustainability leader in our part of the industry, it is  our responsibility to get the numbers right. Information to stake-  holders needs to be trustworthy.

Looking forward, we will seek collaboration already in the de-  sign phase with customers and suppliers who are frontrunners.  Innovation and partnerships are key to find new solutions. Let  us remember that PCBs are an essential part in every electronic  product. We should not lose any opportunities to reduce our  climate footprint and improve resource efficiency at the same  time as we build a stronger NCAB.

Sustainable business

– a value chain approach

Our focus is on creating value for our stakeholders and taking responsibility throughout our  value chain. This approach helps us to identify opportunities to drive positive change and  minimize negative impact.

Sustainability strategy and goals

NCAB’s sustainability strategy defines our long-term goals and actions to meet  stakeholder expectations. With clear priorities it guides our sustainability work  in the right direction.

We are committed to drive positive changes throughout the val-  ue chain together with our customers and production partners.  Having a value chain approach to sustainability, our strategy  helps us to understand what we must do to reduce negative  impact and accelerate positive change.

MOST MATERIAL SUSTAINABILITY TOPICS

To ensure that our sustainability strategy addresses the material  topics that are most relevant to our business and stakeholders,  we identify and assess our impacts through a materiality assess-

ment process. The latest one was carried out in autumn 2021.  Listening to our stakeholders is crucial when identifying our  focus areas. Topics that stakeholders considered being most  material are presented on page 27. The most significant chang-  es in 2021 compared with the previous materiality assessment  are the increased importance of climate change, circularity, and  sustainable products.

NCAB’s most material sustainability topics are presented as  focus areas in NCABs sustainability strategy (see page 10). For  each focus area, NCAB will set long-term objectives, KPIs and

performance targets. The sustainability strategy was reviewed  and approved by NCAB’s management team and board in  February 2022.

In this report, targets and descriptions can be found for most  focus areas. However, as waste management, business travel  and sustainable product offerings are newly added focus areas  in the updated strategy, there is no performance information for  these areas in this report.

CLIMATE ACTIONS IN FOCUS

Climate change is an urgent long-term global challenge and  NCAB has a responsibility to manage topics related to climate  impact. In close collaboration with our customers and suppliers,  we aim to reduce greenhouse gas emissions in line with the 1.5  degree target of the Paris Agreement. Our value chain approach  helps us to identify emissions in NCAB’s own operations as

well as in our supply chain. Key areas of importance to reduce  climate impact are energy usage in our main factories and  NCAB’s facilities, transportation, and business travel. In 2021,  we mapped emissions throughout our value chain to be able to  prioritize actions and track yearly progress. We calculated  emissions in both NCABs own operation (scope 1 and 2) and in  our value chain (scope 3) in accordance with the Greenhouse  Gas (GHG) Protocol, Corporate Standard. Next, we are aiming to  use this base year calculations of 2021 to set emission reduction  targets in line with the 1.5 degree target of the Paris Agreement.

More information about our emissions (scope 1, 2, 3) on  page 23.

ENVIRONMENTAL AND SOCIAL GOALS

Because production of PCBs is outsourced, a responsible  supply chain is highly important to us. By requiring sustaina-  ble practices along our supply chain, we promote responsible  management, safe working environment for factory workers and  adherence to human rights & labour rights. But to deliver on our  vision, we are also focusing more on our own as well as suppli-  ers’ environmental performance in the coming years.

NCAB GROUP SUSTAINABILITY STRATEGY 2022-2026

Together with our suppliers and customers we want to create a more sustainable industry with growth and profitability for all.

We believe that strong relationships and transparency are key to achieving this.

SUPPLIERS

Take full responsibility  throughout supply chain

Human rights & Labour rights  Health & Safety

Energy efficiency & Renewable energy  Resource efficiency

Waste management  Climate impact

Zero human rights violations

Full compliance of human rights legislation and NCAB Code of Conduct  Zero high consequence work-related injuries

Increase energy efficiency in PCB production  Renewable energy in PCB production

Environmentally appropriate material used in production and in products.  Increased circularity

Reduce total GHG-emissions (scope 1-3) in accordance with the

1.5 degree target of the Paris Agreement.

NCAB

Attract, engage and  develop the best people

Wellbeing & Work-life balance  Equal opportunities for everyone

Employee satisfaction and engagement

Top scores in employee satisfaction and engagement

NCAB recognized as the most attractive employer within the  electronics industry

Reduce emissions from company cars and business travel  Renewable energy in offices and internal warehouses

Reduce total GHG-emissions (scope 1-3) in accordance with the

1.5 degree target of the Paris Agreement.

Robust risk management and governance, including all relevant  categories of risks.

CUSTOMERS

Steer the sector  in a green direction

Sustainable product development  Sustainable product offering  Transportation

Climate impact

Leadership in sustainable PCBs

Increased awareness of sustainable PCBs among customers  Customers choose environmentally-friendly transportation alternatives  Reduce total GHG-emissions (scope 1-3) in accordance with the

1.5 degree target of the Paris Agreement.

SUSTAINABLE DEVELOPMENT GOALS

NCAB’s sustainability strategy is linked to the Sustainable  Development Goals (SDGs), with the main contribution being to  8 out of the 17 goals (see page 12). In the strategy we illustrate  how our prioritized sustainability areas from our materiality  analysis is connected to the SDGs. The Global Goals, and its  targets, serves as an important guide to develop our business  in line with the direction the world needs to go to build a better  future for everyone. For a full picture of the SDGs, please visit  https://sdgs.un.org/.

SUSTAINABILITY GOVERNANCE

The sustainability strategy is governed by the NCAB Group  management team, with a clear division of responsibility for  the different focus areas. The Group Sustainability Manager is  responsible for driving the overall sustainability work, such as  sustainability strategy, policies and goals.

Working in a responsible and sustainable way is a responsi-  bility that all our employees take on. Sustainability is integrated  into our business model and processes, with each process  owner responsible for activities and for reporting on the  progress made towards achieving their set goals. Sustainability  performance is monitored monthly and discussed at

management team meetings.

NCAB’s COO is responsible for the quality management  system, while NCAB Group, as well as contracted factories, are  ISO 9001 and ISO 14001 certified to ensure all our processes  are unified and of the highest quality. NCAB’s sustainability work  is also based on ISO 26000, an international standard that pro-  vides guidance on how businesses may operate in a sustainable  way. Read more at: www.iso.org. NCAB issues a social responsi-  bility self-declaration, including external verification audits every  third year.

At Board level, the Chairman is responsible for ensuring that  sustainability is on the agenda. Since sustainability is an integral  part of NCABs business, sustainability matters are discussed  continuously at Board meetings.

RISK IDENTIFICATION AND ASSESSMENT

Our approach to risk management has provided NCAB with a  system that allows us to identify and understand emerging and  existing risks, and to prioritize on the basis of existing actions and  the impact of the risk. This approach enables us to focus on the  highest risks. The risk management process also forms part of our  preparations for the annual business plan. This includes an analy-  sis of trends, business opportunities, and risks at local company  and Group level (SWOT). The aim is to enable us to anticipate  and rapidly respond to any changes in societal, environmental  and legislative demands. Each process owner is responsible for  the ongoing evaluation, development and implementation of risk  control methods and processes. The highest risks identified within  each of NCAB’s focus areas are presented in the table above.

NCAB’S SUPPLY CHAIN IN BRIEF

The factories we cooperate with are listed in our Preferred  Supplier List (PSL). We divide them into Main, Spot and Special  Project factories. 73%* of our total spend is on the main fac-  tories that are located in China (20), in Europe (4), and in the  USA (1). Since the highest risks, but also our strongest impact is  in the main factories in China, these are the ones we focus on in  our sustainability work. The 20 main factories in China include  29 NCAB approved manufacturing sites.

OUR RESPONSIBILITY AS A GLOBAL COMPANY

NCAB Group is a global producer of printed circuit boards.

Our vision is to be “The number 1 PCB producer wherever we  are”. This means that we must apply a responsible approach in  everything we do; socially, environmentally and ethically, and we  expect that our suppliers also do that. We support the Principles

of the UN Global Compact as well as the UN Guiding Principles  on Business and Human Rights (UNGP). Our commitment

to respect human rights and to prevent and mitigate negative  environmental impacts is defined in our Sustainability policy and  Code of Conduct for Suppliers.

Our approach to sourcing minerals and metals is in line with  the Responsible Minerals Initiative (RMI), including the OECD  Due Diligence Guidance for Responsible Supply Chains of Miner-  als from Conflict-Affected and High-Risk Areas. In addition to tin,  tantalum, tungsten and gold, cobalt has been added to the list of  minerals for which NCAB requests information from suppliers.

The most significant risks in our main factories in China are pri-  marily related to occupational health & safety (especially handling  of chemicals), human rights & labour rights, and environmental  impact. These risks have been identified during our audits and in  dialogue with factory workers and factory management.

HIGH DEMANDS IN THE QUALIFICATION PROCESS

We work with our production partners in long-term partnerships  and put high demands on them. To be qualified as a main factory,  listed on NCAB’s Preferred Supplier List (PSL), factories must:

Sign and comply with our Code of Conduct for Suppliers,  which is aligned with the Responsible Business Alliance  (RBA) requirements.

Pass our quality and sustainability audits

Be ISO 9001 certified (quality management system)

Be ISO 14001 certified (environmental management system)

Report on conflict minerals and cobalt according to the frame-  works provided by the Responsible Minerals Initiative (RMI)

and follow the Responsible Minerals Assurance Process (RMAP)

Follow legislation covering raw material content (RoHS,  REACH, TSCA, and California Proposition 65)

Comply with local regulations covering social compliance and  environmental impact

In 2021, two new factories passed NCABs sustainability audits  in the approval process and were approved as Main factories  and added to the Preferred Supplier List (PSL).

REGULAR AUDITS IN MAIN FACTORIES

To continuously improve sustainability performance, NCAB con-  ducts audits in the Chinese main factories on a regular basis on  site. The actual and potential impact of our production partners  are assessed within the parameters of human rights, working  conditions, health and safety, environment, and business ethics.  All factories must have management systems in place to ensure  continuous improvements in these areas.

Sustainability audits of all main factories in China are conduct-  ed every other year. In between those periods, follow-up audits on  specific improvement areas are carried out. Conducting regular  audits enables us to get a clear picture of factories sustainabil-

ity performance and clarifies what we need to focus on in each  factory. In 2021 we conducted 11 full scope audits, (whereof 2 in  potential factories, i.e. those undergoing the NCAB approval pro-  cess), and 10 follow-up audits. Read more about how we conduct  our audits on page 16.

HIGH DEMANDS IN THE QUALIFICATION PROCESS

We work with our production partners in long-term partnerships  and put high demands on them. To be qualified as a main factory,  listed on NCAB’s Preferred Supplier List (PSL), factories must:

Sign and comply with our Code of Conduct for Suppliers,  which is aligned with the Responsible Business Alliance  (RBA) requirements.

Pass our quality and sustainability audits

Be ISO 9001 certified (quality management system)

Be ISO 14001 certified (environmental management system)

Report on conflict minerals and cobalt according to the frame-  works provided by the Responsible Minerals Initiative (RMI)

and follow the Responsible Minerals Assurance Process (RMAP)

Follow legislation covering raw material content (RoHS,  REACH, TSCA, and California Proposition 65)

Comply with local regulations covering social compliance and  environmental impact

In 2021, two new factories passed NCABs sustainability audits  in the approval process and were approved as Main factories  and added to the Preferred Supplier List (PSL).

RISK ASSESSMENT AND KEY FINDINGS

Occupational Health & Safety

Everyone has the right to a safe workplace. In our sustainability  audits, we thoroughly review how chemicals are stored in factories  and used in production. Common areas that we address include  personal protection equipment (PPE), training on how emergency  leakages can be prevented and handled. We check the installations  of illuminated evacuation signs, fire alarms and equipment, as well  as fire drills and first aid preparedness.

Despite the many improvements that have been made within  Health and Safety, this is an area where key findings are still being  identified related to for example occupational health checks, incor-  rect use of personal protective equipment (PPE), missing emergen-  cy exits, evacuations signs and lack of fire-fighting equipment.

Human rights & Labour rights

The most relevant human rights risks assessed in our audit pro-  cesses are related to wages and benefits, working hours, discrim-  ination, youth and child labour, occupational health and safety,  sourcing of raw materials, freedom of association and forced labour.  Going forward, we will expand our risk-analysis to identify salient  human rights risks beyond our first tier of suppliers. We aim to align  our risk-processes with the UN Guiding Principles for Business and  Human Rights (UNGP).

Within human rights & labour rights, many factories still lack  solutions to handle overtime work. Even among those factories that  have secured minimum wages, provide overtime payments, annual  vacation and insurance payments, there is still room for improve-  ments in factory processes and management systems.

Conflict-free minerals

NCAB is committed to only use conflict-free minerals. The 3TG  minerals (tin, tantalum, tungsten and gold) as well as cobalt must  not be linked to violence and human rights abuses in conflict areas.  Tin and gold are metals frequently used in the production of PCBs.  Cobalt is sometimes used when plated gold is specified. We require  our factories to work exclusively with smelters that are compliant  with the Responsible Minerals Initiative (RMI). We train our factories  in how to apply the RMI audit scheme to control their supply chain.  The supply chain is reviewed at least once a year, and when NCAB  check routines and documentation on site in the audits.

Environmental responsibility

NCAB sets environmental requirements for production partners  that cover handling of waste water and emissions to air, checking  compliance to local law and that valid discharge permits are in  place, handling of chemicals, and waste management. Waste pre-  vention and waste handling are core topics during factory audits.

We measure and compare the factories’ monthly yields against  their targets in the production process. Deviations are followed-up  through factory meetings, where among other things, meas-

ures for improvements are discussed. We also engage with our  customers at an early stage to optimize the PCB design in order  to reduce the amount of scrap, materials, chemicals and energy  used in the manufacturing process. We are not reporting on waste  this year as the information is either incomplete or unavailable for  us. Going forward, we will be focusing more on this topic.

SUMMARY OF AUDIT FINDINGS

The main areas regarding non-compliance for the 2019-2021 are:

Occupational Health & Safety: missing personal protective  equipment (PPE) control and insufficient occupational health  examination control.

Human rights & Labour rights: exceeding working hours and  lack of overtime compensation and insufficient social insurance  for employees.

Environmental responsibility: insufficient non-hazardous waste  control and insufficient chemical management.

Management systems: absence of policies and insufficient  internal follow-up and internal audits.

No critical findings were recorded in any audit in 2021. We have  not found any evidence of child labour in our audits, nor have we  faced any cases of forced labour. Major part of non-compliance  are related to the absence of policies and insufficient management  systems to control risks. For detailed information on key findings  and improvements see pages 25-26.

FOLLOWING UP PROGRESS

We regularly follow up if progress has been made in factories  on specific issues that we’ve found in audits. Critical findings  are followed up as soon as possible and major finding within six months. When non-conformances are found, a corrective action  plan is agreed upon with the factory within two weeks after  audit. NCAB conducted 10 follow-up audits in 2021.

ENGAGEMENT BEYOND AUDITS

We want to work together with our production partners and  share knowledge to reduce cases of non-conformances and  improve their sustainability performance. We aim to have a long-  term and trustful relationship with our factories and emphasize

and support on developing the skills and competencies of factory  employees responsible for social compliance, health and safety.  We also ensure these topics are part of the workers’ annual  internal training plan.

Climate report

NCAB’s ambition is to reduce the climate impact of its own operations as well as  emissions in the supply chain. This is the first time NCAB measures emissions  covering all three scopes (1-3) according to the GHG protocol standard. Data  collected and included in calculations are described below, and where data were  not yet available NCAB will continue to work to get this data ready during 2022.

NCAB’s reported emissions are quantified based on the  methodology of the Greenhouse Gas (GHG) Protocol, Corpo-  rate Standard. In 2021, calculations of NCAB’s emissions in  its own operation (scope 1 and 2) corresponded to 565 tonnes  CO2e and in the supply chain (scope 3) 91 839 tonnes CO2e  (see which emissions are included in scope 3 below). The  calculations of emissions are based on data collection from

internal sources (19 different functions within NCAB Group local  companies and Factory Management team). External data has  come from sources such as production partners who provided  data on energy consumption within the PCB manufacturing, and  logistic partners who provided information about transportation.  Whenever possible, primary data sources have been used.

When specific data hasn’t been available, screening calculations  of emissions have been done based on standard estimates.

SCOPE 1 includes direct emissions from own operations. For  NCAB, this means GHG emissions from fuel used in company  cars. Data was collected on Diesel, Petrol and HVO company  cars. Calculation emissions for company cars in scope 1 are  based on estimated fuel consumption and emission factors for  petrol- and diesel driven cars.

SCOPE 2 includes emissions from indirect energy from electric-  ity and heat purchased and used in NCAB offices and internal  warehouses. Local NCAB companies were asked to account for  the purchased electricity, district heating or other heating source  used in NCAB offices and owned warehouses. The emissions

were calculated based on emission factors for each country  (source: UNFCCC*) where offices and internal warehouses are  located. The type of the purchased energy was also taken into  account, meaning that contracts for renewable energy were  included in the calculations. This led to a lower climate impact  figure being obtained. Heating for two of our offices come from  the combustion of natural gas, as part of heating of the building  where offices are leased.

Non-renewable electricity: The climate impact of purchased  non-renewable electricity was calculated by multiplying the kWh  of purchased electricity with the emission factor for the energy  mix in each country (source: UNFCCC*).

100% Renewable: The climate impact of purchased 100 %  renewable electricity was calculated by multiplying the kWh  of purchased electricity with the emission factor from the EPD

(Environmental Product Declaration) standard of Swedish hydro-  power from Vattenfall. This EPD was used to represent 100 %  renewable energy.

SCOPE 3 includes data representing the manufacturing of  PCBs, transportation and business travels. The energy con-  sumed in the manufacture of the PCBs represents the largest  part of the greenhouse gas emissions in scope 3. The energy  consumed in manufacturing was collected directly from the  main factories in China, covering 77% of NCAB’s total spend in  China. The data was extrapolated to cover 100% of manufactur-  ing in China, which stands for 89% of NCAB’s total spend. GHG  emissions calculations were based on estimated country emission

factors (source: UNFCCC*). Data from PCB manufacturers in  Europe, Taiwan, USA are to be included during 2022.

Transportation of the PCBs stands for the second largest  emissions. The scope of the calculations covers transportation  of PCBs from Hong Kong to Europe and USA sourced by NCAB.  Transportation between local warehouses and customer, “last  mile”, were not included in the calculations. The majority of

the reported emissions from transportation are based on data  reported by logistic service providers, with a smaller part being  estimated.

In 2021 we didn’t include the following in the scope 3 calcula-  tions: waste, emissions from mining and production of raw mate-  rials that are sourced and used in the manufacturing, emissions  from the use of sold PCBs, and emissions from the end-of-life  processing of sold PCBs. Due to lack of data, we are not able to  report the amount of emissions from these sources 2021.