Code of ethics

The Code of Ethics aims to ensure compliance of the conduct of employees with the highest standards based on the values adopted by KGHM Group employees: safety, cooperation, performance orientation, responsibility and courage.

Additionally, other relevant policies and procedures are employed to effectively implement the rules and values included in the Code of Ethics globally at the KGHM Polska Miedź S.A. Group level. Their implementation satisfies global corporate governance standards as well as the increasing expectations of our stakeholders, including our clients and financial institutions.

In order to standardize the approach to ensuring compliance defined as observance of the requirements arising from the applicable legal (external and internal) regulations or voluntarily assumed legal obligations and standards, the Management Board of KGHM Polska Miedź S.A. adopted the Compliance Management Policy at the KGHM Polska Miedź S.A. Group and the Compliance Management Procedure and Methodology at KGHM Polska Miedź S.A. in 2020.

A consistent compliance system in the KGHM Polska Miedź S.A. Group is an element of effective management as part of corporate governance through e.g. a more efficient response and readiness for regulatory changes, care for reputation and ethical culture building in the organisation as well as awareness raising and enhancement of the sense of responsibility for compliance among employees. The work supporting and raising standards of the compliance function will be continued in 2021.

In previous years, KGHM Polska Miedź S.A. was actively involved in broad consultations accompanying the process of developing the Copper Mark standards, in which it presented its own observations on the wording and content of the standard. Obtaining the Copper Mark is required for KGHM Polska Miedź S.A. to continue its free commercial exchange, in particular to ensure easier maintenance of its registration of cathodes on the London Metal Exchange (LME), which is introducing additional responsible supply chain requirements in 2021. Creation of the Copper Mark standard is a response of the copper industry to the expectations and requirements of the broad group of stakeholders (commodity exchanges, investors, financial institutions, non-government organisations, etc.) regarding the compliance of registered copper producers with the principles of socially responsible business as well as with ethical, environmental and organisational standards. In 2020, the Management Board of KGHM Polska Miedź S.A. adopted a resolution giving its consent to launch the process of acquiring the right to use the Copper Mark by its selected Divisions. The agreement signed on 17 July 2020 by KGHM Polska Miedź S.A. and The Copper Mark and the Letter of Commitment signed on the same date constitute a commitment of KGHM Polska Miedź S.A. to go through the whole accreditation process to confirm compliance with the requirements of the Copper Mark standard in 2021.

In 2018, the Management Board of KGHM Polska Miedź S.A. adopted the new “Code of Ethics of the KGHM Polska Miedź S.A. Group”. In order to comply with the most important principles related to counteracting corruption in the KGHM Polska Miedź S.A. Group and in the domestic and international companies of the KGHM Polska Miedź S.A. Group, the Anticorruption Policy and the Corruption Threat Prevention Procedure in the KGHM Polska Miedź S.A. Group were updated. The Procedure sets forth in detail the standards of conduct in situations, in which corruption may arise and points to criminal responsibility for violations. It is applied in order to minimise the risk of corruption and situations that encourage corruption, including the conflict of interest, which may arise during the functioning of the KGHM Group. The Business Gifts Instruction is attached to the procedure.

In 2019, the wording of the procedure regulating conflicts of interest and acceptable gifts was updated. In the Divisions and in seven of the domestic companies, units for overseeing security and loss prevention were created, whose operations are regulated by the Instruction implemented in 2020. Ethics and Anticorruption Representatives have been appointed in all of KGHM’s entities, domestic and international. In 2019, the Procedure for Disclosing Improprieties and Protecting Whistleblowers in the KGHM Group was also 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.

Entities of the KGHM Polska Miedź S.A. Group implemented an Internal Control Procedure for the Security and Loss Prevention Section at KGHM Polska Miedź S.A. Audits conducted by the Security and Loss Prevention Section comprise the identification and uncovering of fraud, improprieties, abuse, corruption, personal abuse and breaches of the Group’s Code of Ethics.

A review of business partners, including in terms of corruption risk and the possible conflicts of interest, is conducted in accordance with the “Procedure of review in procurement, sales and investment proceedings” implemented in 2019 and pursued by the Security Department at KGHM Polska Miedź S.A.

In 2020, the Management Board of KGHM Polska Miedź S.A. decided 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. The decision was followed by a series of training workshops for employees, including training for prospective internal auditors and Representatives on the Anticorruption Management System in accordance with PN-ISO 37001:2017. The implementation is planned at the end of 2021.

In 2020, the Group developed and published the “ABCs of Conflict of Interest. Ethics Manual of KGHM Polska Miedź S.A.”. The publication presents a concise description of the conflict of interest and the Company’s regulations for preventing this phenomenon. It contains a questionnaire, with which any employee may check for themselves whether the issue of conflict of interest applies to them.

The KGHM Polska Miedź S.A. Group also implemented an Anti-Personal Abuse Procedure, enabling the effective prevention of personal abuse in the workplace. In the area of preventing personal abuse, discrimination and violation of employee rights, the employer is supported by Ethics Committees appointed in KGHM Polska Miedź S.A. Group entities, which investigate suspicions of breaches of ethical standards in place in the KGHM Group.

The work to support and raise ethical and corporate governance standards will continue in 2021.

The fundamental Ethical Standards are implemented through the principles of ethical conduct, which are described in the diagram below:

The communication and implementation of Ethical Standards in the KGHM Polska Miedź S.A. Group is facilitated by a system of codes, policies and procedures. Their implementation satisfies global corporate governance standards as well as the increasing expectations of our stakeholders, including our clients and financial institutions.

In accordance with the best corporate governance practices, we have adopted the following principles, policies and instructions, which introduce global, unified standards adapted to the laws applicable in all jurisdictions in which the entities of the KGHM Polska Miedź S.A. Group operate.

In order to standardize the approach to ensuring compliance defined as observance of the requirements arising from the applicable legal (external and internal) regulations or voluntarily assumed legal obligations and standards, the Management Board of KGHM Polska Miedź S.A. adopted the Compliance Management Policy at the KGHM Polska Miedź S.A. Group and the Compliance Management Procedure and Methodology at KGHM Polska Miedź S.A. in 2020. A consistent compliance system in the KGHM Polska Miedź S.A. Group is an element of effective management as part of corporate governance through e.g. a more efficient response and readiness for regulatory changes, care for reputation and ethical culture building in the organisation as well as awareness raising and enhancement of the sense of responsibility for compliance among employees. The work supporting and raising standards of the compliance function will be continued in 2021.

In order to improve the standards of compliance with the competition law, in 2020 the Management Board of KGHM Polska Miedź S.A. adopted the Instructions to prevent violations under competition law, which expand on and detail the Competition Law Policy in the KGHM Polska Miedź S.A. Group, which was updated in 2019. In December 2020, a training was conducted for Local Competition Law Representatives in the KGHM Polska Miedź S.A. Group. The work supporting and raising the standards of compliance with the competition law will continue in 2021.

In 2020, the Procedure for assessing the supply chain for gold and silver in KGHM Polska Miedź S.A. was updated to increase the efficiency of the process while maintaining compliance with the current LBMA Responsible Gold Guidance V8 and LBMA Responsible Silver Guidance V1. The system for managing the responsible gold and silver supply chain is subject to an annual, independent, external assessment to confirm the Company’s adherence to the principles of conflict-free gold and silver under the LBMA Responsible Gold Guidance and the LBMA Responsible Silver Guidance. The current Compliance Report of KGHM Polska Miedź S.A. and the Report on an independent assurance service is available on the website.

The agreement signed on 17 July 2020 by KGHM Polska Miedź S.A. and The Copper Mark and the Letter of Commitment signed on the same date constitute a commitment of KGHM Polska Miedź S.A. to go through the whole accreditation process to confirm compliance with the requirements of the Copper Mark standard in 2021.

In 2020, KGHM Polska Miedź S.A. created a Valuable Gifts Storage in its Head Office and implemented the Instructions for running the storage accepted on the basis of the Business Gifts Instruction, which constitutes Attachment 1 to the Corruption Threat Prevention Procedure in the KGHM Group.

Entities of the KGHM Group implemented the Internal Control Procedure for the Security and Loss Prevention Section at KGHM Polska Miedź S.A. Audits conducted by the Security and Loss Prevention Section comprise the identification and uncovering of fraud, improprieties, abuse, corruption, personal abuse and breaches of the Group’s Code of Ethics.

A review of business partners, including in terms of corruption risk and the possible conflicts of interest, is conducted in accordance with the “Procedure of review in procurement, sales and investment proceedings” implemented in 2019 and pursued by the Security Department at KGHM Polska Miedź S.A.

In 2020, the Management Board of KGHM Polska Miedź S.A. decided 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. The decision was followed by a series of training workshops for employees, including training for prospective internal auditors and Representatives on the Anticorruption Management System in accordance with PN-ISO 37001:2017. The implementation is planned at the end of 2021.

In 2020, the Group also developed and published the “ABCs of Conflict of Interest. Ethics Manual of KGHM Polska Miedź S.A.”. The publication presents a concise description of the conflict of interest and the Company’s regulations for preventing this phenomenon. It also contains a questionnaire, with which any employee may check for themselves whether the issue of conflict of interest applies to them.

The KGHM Group also implemented an Anti-Personal Abuse Procedure, enabling the effective prevention of personal abuse in the workplace. In the area of preventing personal abuse, discrimination and violation of employee rights, the employer is supported by Ethics Committees appointed in KGHM Group entities, which investigate suspicions of breaches of ethical standards in place in the KGHM Group.

The work to support and raise ethical and corporate governance standards will continue in 2021.

The fundamental document of the Security and Loss Prevention System of the KGHM Group is the KGHM Polska Miedź Code of Ethics, the amended and extended version of which was adopted by a Resolution adopted by the Management Board of KGHM Polska Miedź S.A. in June 2018. It is the basis for actions and conduct in the Group, hence the frequent reference to the Code in this document.

The KGHM Group’s Code of Ethics is based on the aforementioned values and constitutes a guidepost for all the decisions and actions taken in the Parent Entity and the KGHM Group. There are supporting acts regulating the areas of: prevention of corruption, prevention of conflict of interests, security and transparency of procurement processes, verification of external counterparties and prevention of employee rights violations, including discrimination and abuse. The Code of Ethics of the KGHM Group is a collection of rules applicable to the employees of the Parent Entity, KGHM Group companies and cooperating entities. It is one of the pillars of KGHM’s organisational culture, deeply rooted in mining and smelting traditions. They constitute the genetic code of our community, building its professional identity.

The KGHM Group’s Code of Ethics aims to ensure that the employees follow the highest standards based on the adopted values. The status of a global leader and international corporation obligates us to keep the highest business ethics standards. It is also related to the challenges resulting from the richness of national cultures within which we operate.

In keeping with current business practice, including in the mineral resource industry, our business partners, suppliers, customers and stakeholders expect companies to have clearly declared ethical regulations.

In June 2018, the Management Board of KGHM Polska Miedź S.A. adopted the KGHM Polska Miedź S.A. Code of Conduct. By doing this, the Company declared its commitment to sustainable development and respect for principles of ethics and transparency and best industry practices of socially and environmentally responsible enterprises. The Code of Conduct is based on the KGHM Group Code of Ethics. Both documents regulate standards of conduct observed by the Company. The Codes are an integral, mutually interconnected whole, based on consistent assumptions and values followed by the Company.

The Code of Conduct is a powerfully practical document. Its purpose is to be a guide and support for the employees, showing where to look for answers and who to approach if in doubt about decisions made in everyday situations. The Code of Conduct provides an easy to understand presentation of the Company’s values for all employees, regardless of their position.

The idea of adopting and pursuing the Code of Conduct and the Code of Ethics was presented in 2018 and is continuously repeated to employees via the internal portal (intranet: “KGHM to My” at extranet.kghm.com). The Codes are distributed in the printed version during training sessions held by the Ethics and Anticorruption Representatives in all Divisions and Companies of the KGHM Polska Miedź S.A. Group. The Code of Conduct and the Code of Ethics are published for the general audience on www.kghm.com, in the Investors/Corporate Governance/Code of Ethics and ESG Code of Conduct tab.

Every KGHM Group Entity establishes an Ethics Committee. The primary task of the Committee is to conduct investigations in response to reports on irregularities consisting in violation of the ethical standards defined in the Code of Ethics, and to recommend corrective and disciplinary actions to the workplace manager.

A report can be filed by:

• every Employee who has been harmed by actions described in the list of issues reportable to the Ethics Committee;

• every person who has witnessed actions described in the list of issues reportable to the Ethics Committee;

The investigation conducted by the Committee covers issues that require determination of the actual facts of the matter, in other words disputable issues or those having unclear causes. The investigation is not in conflict with, nor does it replace, the right to pursue claims in accordance with generally applicable laws. Members of the Committee are obliged to resolve the breaches of ethical principles given in the KGHM Group Code of Ethics in an impartial and efficient manner, giving equal treatment to all parties to the proceedings. The Committee operates pursuant to its Regulations, and observing the generally applicable laws and internal regulations of a given KGHM Group Entity.