Ethical foundations of governance

The system is designed first of all to protect the employer’s interests by preventing acts that expose the company to material loss and reputational harm, and secondly to optimize expenses and investments to generate savings for the KGHM Polska Miedź S.A. Group. The key elements of the system include:

• defined procedures and control mechanisms,
• standardisation of procedures and processes in the aforementioned area across the KGHM Group,
• effective prevention of abuse that can lead to losses for the KGHM Group.
• effective detection of committed abuse, inspection and control activities and implementation of corrective mechanisms,
• anti-corruption
• improving the ethical awareness of employees.

The Security and Loss Prevention Section in the KGHM Polska Miedź S.A. Head Office is responsible for the implementation, functioning and oversight of the system. Currently, the Section is made up of two Departments:

• The Security Department, in which, among others, the Ethics and Anti-Corruption Procedures Unit, the Loss Prevention and Control Unit, and the Physical and Technical Security Unit have been established.

• The Supply Chain Security Department, in which the Supply Chain Monitoring Unit and the Analyses Unit have been established.

In 2018, Ethics and Anticorruption Representatives were appointed in the Divisions and the Polish and international subsidiaries of the KGHM Group. Their work is monitored, supervised and coordinated by the Ethics and Anticorruption Representative for the KGHM Group (as per the applicable procedure, the function is discharged by the Director of the KGHM Security Department).

In the years 2019-2020, security and loss prevention units were established in KGHM Polska Miedź S.A. Divisions and in seven companies in Poland selected on the basis of their level of expenses and domestic threats. The unit heads are responsible for implementation and supervision over the security and loss prevention system, ethics and anticorruption procedures, supply chain security and physical and technical security. They report to the Executive Director for Security and Loss Prevention in KGHM Polska Miedź S.A.

Since 2017, regular security and loss prevention training has been organised, which included the topics of corruption prevention and conflict of interest, for employees of all KGHM Group entities. The training covers all employees newly employed in KGHM Group entities. Topical training is also organised. In 2018, a specialised training course was carried out, addressed to senior management and their representatives (40 people). All materials and instructions are readily available to Employees on the corporate Intranet site via a dedicated tab devoted to ethics and corruption prevention.

In 2019, on-site training on anticorruption was conducted by an expert from the Central Anticorruption Bureau for persons in managerial and executive positions as well as persons responsible for the procurement processes in companies in the KGHM Group. 5 training courses were held in total, attended by 143 persons.

Regular meetings and training sessions are also organised for the Ethics and Anticorruption Representatives (40 persons). 5 such training sessions were held in 2020. The objective was to improve the abilities of the Representatives and to share knowledge. The Representatives are responsible for the organisation and performance of training sessions on ethics and anticorruption in KGHM Group companies.

In 2020, KGHM Polska Miedź S.A. (the Head Office and the Divisions) launched two e-learning training modules on ethics, prevention of irregularities (in particular, corruption, abuse, and discrimination) and receiving whistleblower reports in its Head Office and Divisions:

• for senior management, the Ethics and Anticorruption Representatives and Members of the Ethics Committee – 636 people completed the training and 98 are currently undergoing the training (as at 31 December 2020),

• for remaining employees with access to the e-learning platform – the training was completed by 4452 people and 1207 are currently in training (as at 31 December 2020).

Because of the decision of the Management Board to implement the Anticorruption Management System in the Divisions and Head Office of KGHM Polska Miedź S.A. and in the Subsidiaries in accordance with the PN-ISO 37001:2017 standard, online training workshops were conducted in the last quarter of 2020 on the requirements of this standard for Ethics and Anticorruption Representatives and Management System Representatives in KGHM Polska Miedź S.A.

In 2019-2020, a number of communication activities were also carried out, addressed to the employees of the KGHM Group, promoting ethical standards and contributing to the culture of the organisation:

• 6 educational films were published on the topic of the Code of Ethics, abuse prevention, the Whistleblower Platform and protection of Whistleblowers, rules of acceptance and giving of business gifts, as well as prevention of corruption and conflict and interest,
• several articles on related topics were published in the internal Curier magazine and in the Group’s Intranet,
• a special supplement focusing on Whistleblowers was published in Curier,

• the updated Anticorruption Manual was published in an electronic version,
• “ABCs of Conflict of Interest. Ethics Manual of KGHM” was developed, published and distributed; the publication presents a concise description of the conflict of interest and the company’s regulations for preventing this phenomenon.
• a questionnaire has been developed allowing employees to carry out on their own a voluntary, individual assessment of the risk of conflict of interest,
• an information campaign on the handing of business gifts was conducted.

In order to enable effective detection of breaches, confidential channels for reporting of irregularities by so called Whistleblowers have been created, both within the Company, as well as from outside of its organisation. Persons who report irregularities and who do so in good faith and non-anonymously (Whistleblowers) are protected under the KGHM Group Procedure of Disclosing Irregularities and Protection of Whistleblowers. Anonymous reports are also accepted and followed up. The channels allow reporting without disclosing one’s personal details.

In 2019, the Procedure for Disclosing Improprieties and Protecting Whistleblowers in the KGHM Group was updated, adapting it to the requirements of the amended Act on public offerings and conditions governing the introduction of financial instruments to organised trading, and on public companies. This procedure is aimed at enhancing the effectiveness of uncovering and resolving situations related to the occurrence of improprieties representing an abuse of regulations applied in the KGHM Group, in particular the Code of Ethics of the KGHM Group, the Security Policy, the Anticorruption Policy and the Corruption Threat Prevention Procedure. In 2019, an additional channel for whistleblowers was launched – the “KGHM Ethics Line” platform available on the corporate website for both employees and third parties, including contractors and customers. The platform is available in four languages – Polish, English, Spanish and Russian. It enables the anonymous disclosure of improprieties and is an alternative channel for other forms of contact – telephone lines, email addresses and addresses for correspondence.

The charts below show the increase in Whistleblower reports in the 2018-2020 period, with events that affected the result marked on the timeline, as well as the procedure, which is followed in the event of a breach of ethical principles in the KGHM Group: