Compliance and anti-corruption

Article 964a ff. Code of Obligations

Concept and due diligence
There is a Group-wide Code of Conduct whose up-to-dateness and relevancy is ensured by the Board of Directors and the Head of Compliance, while the compliance officer is responsible for its implementation in the subsidiaries and is supported by Internal Audit.

We are aware of our economic, ecological, and social responsibility and commit to the following in our Code of Conduct:

Employees are called upon to participate actively in observing the Code of Conduct, including the "Supplement to the Code of Conduct" for production employees. For this reason, the Board of Directors issued a whistleblowing directive in 2013 and has introduced corresponding reporting units, which were further developed in 2023 based on the EU Whistleblowing Directive and the national regulations of the individual EU countries. The process for dealing with reports was defined in a policy that was made available to our subsidiaries in the EU together with an employee information sheet that indicates the relevant reporting units. The subsidiaries are required to set up reporting units on their websites for suppliers, customers, and other third-parties.

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 business units, the compliance officer, the respective managing director of the companies, 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.

The required measures in respect to the German Act on Corporate Due Diligence Obligations in Supply Chains (LkSG) for the affected companies and the Swiss Ordinance on Due Diligence and Transparency (VSoTr) for Swiss companies were also implemented in this financial year. In this context, no human rights or environmental risks, no suspected cases, and a low risk for child labour or no reasonable suspicion or obvious suspicion of child labour was determined. In respect to purchased minerals and metals, the legal thresholds for a reporting obligation were not met, and the companies are therefore exempt from the due diligence and reporting obligations.

Measures including evaluation of effectiveness
Upon joining Arbonia, 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 specific regulations from this are observed and all newly hired employees have signed the Code of Conduct. The Board of Directors receives an internal audit report on this. 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 production employees in a training video.

The Board of Directors is informed about all whistleblowing reports received at the Group as well as about the related investigations and initiated measures. Two whistleblowing cases were reported in the reporting year. The subsequent investigations did not find any indication of unlawful conduct or any shortcomings at the company. No sanctions were imposed due to non-compliance cases either.

Various compliance e-learning courses are available to office staff. One example is the course "Compliance principles", which deals with all key topics of the Code of Conduct and goes into more detail on individual detailed directives and topics, such as conflicts of interest, insider trading, or corruption. After last year’s pilot phase, this course was taught to all office staff in the reporting year. In addition, the modules "Fair competition", "Data protection", and "Fair supply chains" were provided to relevant office staff. Production employees have continuous access to the training video with the most important contents from the "Supplement to the Code of Conduct", which is used at the production sites by the compliance officer.

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 Arbonia. 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 infringements of the Code of Conduct such as corruption cases, embezzlement, infringements of competition law and cartel law, or data protection breaches. Consequences may include fines and possible reputational damage. Internal Audit ensures that all companies are regularly checked for the operability, correctness, safety, and economic efficiency of internal processes and workflows. Larger companies are ideally audited every two years, while smaller companies are subjected to an audit at least every three years. On site, the audit generally lasts a week, although corresponding preparations are made in advance. The audits are mostly carried out by one person, and external support is brought in for more complex cases. Extraordinary audits, for example through our whistleblower reporting system, can also take place.

Key performance indicators
The number of participants in corresponding courses of the e-learning platform for compliance topics is the relevant key performance indicator. In the reporting year, the completion rate of these courses was 87.5%.