Compliance and anti-corruption
Article 964a ff. Code of Obligations
Concept and due diligence
Employees are called upon to participate actively in observing the Code of Conduct, including the “Supplement to the Code of Conduct” for production employees (blue collar) (jointly referred to as “Code of Conduct” in the following). For this reason, the Board of Directors issued a whistleblowing directive in 2013 and has introduced whistleblowing reporting units. The whistleblowing concept was further developed in 2023 based on the EU Whistleblowing Directive and in accordance with the national regulations of the individual EU countries. The process for dealing with reports was defined in a policy which was made available to our subsidiaries in the EU together with an information sheet indicating the relevant reporting units.
Arbonia has designated a compliance officer in each division. These people are responsible for implementing Group specifications in the corresponding subsidiaries. All employees who identify violations of the Code of Conduct are requested to report them to the internal or legally prescribed external reporting units. The CEOs of the divisions, the divisional compliance officers, the Head of Compliance and the Head of Internal Audit function as internal reporting units. The protection of the reporting employees is a central element of the whistleblowing concept. Whistleblowers must not be subject to any disciplinary, legal, or other actions that could be to their detriment due to their reporting. In the reporting year, Arbonia introduced a supply chain policy for minerals from conflict and high-risk zones as well as for products or services with a risk of child labour. This policy is to be incorporated into a risk management system. In addition, risk officers were appointed and risk assessments were carried out. No suspected cases of child labour were identified during this process.
Measures including evaluation of effectiveness
Upon joining the Arbonia Group, all employees sign the Code of Conduct and commit to upholding the company’s values as well as its ethical and social principles. Internal Audit checks that all new employees have signed the Code of Conduct and also checks selected aspects of the Code. The Board of Directors receives an internal audit report with the results. In addition to the Code of Conduct, the Board of Directors issued the “Supplement to the Code of Conduct” in 2018, which is specially addressed to production employees. This contains in-depth regulations for production – for example, concerning resource handling, occupational safety and environmental protection. It does not contain topics such as competition law. The “Supplement to the Code of Conduct” is hung in the factory halls in the form of posters and explained to the employees by means of the blue collar training video.
After new national whistleblower legislation came into force at the end of 2022 and in 2023, the people responsible for this area in our subsidiaries received training on the EU Whistleblower Directive and the need to implement a local whistleblower reporting unit. To take into account digitisation in the field of compliance as well, Group Management approved the introduction of various compliance e-learning courses for office employees (white collar) and a training video with the most important contents from the “Supplement to the Code of Conduct” for production employees (blue collar). The blue collar training video was made available to the divisional compliance officers on 1 June 2023 for use at the production sites. The e-learning courses, starting with the “Compliance principles” module, were sent to selected office employees in December 2023 as part of a pilot project. The “Compliance principles” module is set to be rolled out to all office employees in 2024. Selected office employees will also receive one or more of the following modules: “Fair competition”, “Data protection” and “Fair supply chains”. The directive regarding the Swiss Ordinance on Due Diligence and Transparency in relation to Minerals and Metals from Conflict- Affected Areas and Child Labour (VSoTr) was introduced at the Group companies in Switzerland, accompanied by training sessions.
Material risks and how they are handled (own scope of business and, where applicable, business relationships)
The subject of compliance is an integral part of the risk management process of the Arbonia Group. It is defined as an operational risk and encompasses the infringement of existing laws, regulations and contracts with subsequent sanctioning. At Group level, compliance is currently classified as a medium-high risk. Possible violations relate to tax payment, transfer pricing, infringements of the Code of Conduct at production sites, corruption cases, embezzlement, infringements of competition law and cartel law, data protection breaches, or the unlawful sharing of software licences. Consequences may include fines and reputational damage.
Key performance indicators
Following the establishment of the new e-learning platform for compliance topics, the number of people participating in the corresponding courses represents a relevant performance indicator.
We are aware of our economic, ecological and social responsibility and commit to the following in our Code of Conduct:
- Respecting human rights, with particular regard to the prohibition of child labour,
- Ensuring the health and occupational safety of employees,
- Cooperating with suppliers who have committed to sustainable operating activities and fulfil their social responsibility,
- Observing environmental protection standards and
- Using resources carefully.
Managing risks
In 2023, Arbonia started work on the introduction of a management system for handling risks. This included developing a supply chain policy for minerals and metals potentially originating from conflict and high-risk zones and another for products or services where there is reasonable suspicion of child labour. Furthermore, Arbonia is working on a system for tracing back the supply chain. This involves appointing employees to determine and evaluate the risk of harmful consequences in Arbonia’s supply chain. They create a risk management plan and implement measures to minimise the identified risks. In addition, they ensure that compliance with due diligence obligations regarding minerals and metals is checked by an independent specialist. The underlying rules are based on internationally recognised regulations, particularly the guiding principles of the OECD.
Directives
The Code of Conduct was updated in the reporting year with some minor changes. In addition, amendments were made to a number of directives which supplement the general Code of Conduct within the Arbonia Group. These directives include the anti-corruption directive, the directive on gifts and the directive for protection against sexual harassment, bullying and discrimination. The competition directive was also updated in 2022. The Code of Conduct and some of the further directives have been translated into up to twelve languages and are available on the Intranet for office employees. A water policy and a waste policy have also been in place in the company since the 2022 financial year.
Two further compliance directives were introduced in the reporting year. The first of these relates to the Swiss Ordinance on Due Diligence and Transparency in relation to Minerals and Metals from Conflict-Affected Areas and Child Labour (VSoTr). The first step is to check whether the import and processing quantities exceed the threshold below which a company is exempt from the due diligence and reporting obligations regarding conflict minerals. The purchasers at the Swiss companies confirmed that the legal thresholds were not exceeded for 2023.
The next step is to check whether there is a particular risk of child labour in relation to products distributed by the Swiss subsidiaries within Switzerland or worldwide. Companies that can prove they only have a low risk of child labour are exempt from the due diligence and reporting obligations. For the 2023 financial year, the purchasers at the Swiss companies as well as the Head of Corporate Procurement and supply chain compliance officer confirmed that there was a low risk of child labour for the Arbonia Group.
The other new directive relates to working with tools based on artificial intelligence (AI) (see “Data protection and cyber- security”). The use of ChatGPT and translation tools such as DeepL or Google Translate entails risks with regard to trade secrets and personal data. For this reason, Arbonia has defined restrictions for AI-based tools: The directive contains a list of key terms which are not permitted to be entered in AI-based tools.
Whistleblowing concept
The Board of Directors is informed about all whistleblowing reports and the associated investigations as well as initiated measures. Two cases were reported through whistleblowing in the reporting year. In both cases, the subsequent investigations did not find any indication of unlawful conduct or any shortcomings within the company. No sanctions were imposed due to non-compliance cases either.
Code of Conduct training
The compliance training previously provided virtually and in person by Arbonia Compliance is now being replaced by the compliance e-learning courses. These courses deal with all key topics of the Code of Conduct and go into more detail on individual directives and topics, such as conflicts of interest, insider trading, data protection, competition and cartel law, fair supply chains, as well as corruption.
