DISCLOSURE 103-1: EXPLANATION OF THE MATERIAL TOPIC AND ITS BOUNDARY
Corruption is a phenomenon with a worldwide presence, causing economic damage and contributing to an unfavorable business environment by distorting market mechanisms and increasing the cost of doing business. The World Bank estimated that 0.5% of GDP is lost through corruption each year, impeding in particular the economic development of developing countries.
Sika has a group-wide, culturally well established and integrated Compliance Management System (CMS). The Group pursues a holistic approach to compliance and engages the whole organization throughout hierarchies, functions and geographical areas. Sika’s Values and Principles reflect the Group’s management style and culture, which is built on trust, personal responsibility and full transparency at all levels.
DISCLOSURE 103-2: THE MANAGEMENT APPROACH AND ITS COMPONENTS
Sika’s management approach for anti-corruption is intended to avoid negative impacts. In order to provide a clear message to all employees, Sika’s Code of Conduct strictly prohibits any form of active or passive bribery and provides guidance on gift, entertainment, and donations:
NO BRIBERY, NO CORRUPTION
- Avoid any form of either active or passive bribery or corruption.
- Do not offer or accept any favor of any kind (cash, trip, gifts, etc.) for any improper advantage (offer, permit, order, project award, etc.).
Bribery and corruption can take many forms: It may be cash, but also any other favor, like trips or gifts of any kind, which is intended to influence the receiving person’s decision to obtain an improper advantage for the person or entity offering the favor. Except for ordinary gifts and entertainment which do not aim at an improper advantage, it does not matter how big or small the favor or the advantage is, it still is bribery or corruption and is strictly forbidden.
GIFTS, ENTERTAINMENT AND DONATIONS POLICY
- Only give or accept gifts and entertainment which are lawful, reasonable, and in compliance with the local Sika company’s written rules.
- Sponsoring and charitable contributions are permitted in compliance with the local Sika company’s written rules.
- Sika does not contribute to any political party or for a political cause unless approved by Group Management.
In almost all countries reasonable gifts and entertainment (meals, sports, or cultural events, etc.) are an inherent part of business. They become bribery and corruption when they are intended to influence the receiving person’s decision. Trips or multiple day events as well as gifts and entertainment for public officials are especially critical. All Sika companies have implemented written rules based on the corporate model rules to further specify which gifts and entertainment as well as which sponsoring and charitable contributions are permissible in the framework of the Code of Conduct. The rules must also provide for authorization from management depending on the amount involved. Contributions to political parties or a political cause are subject to the approval of Group Management.
The management approach for anti-corruption within Sika includes the following components:
Sika has a zero-tolerance approach concerning bribery and corruption within its own operations and with its suppliers.
Goals and Targets
Sika does not tolerate any incident of corruption.
Compliance is considered mainly a line management responsibility, in particular for General Managers (GMs). Corporate Functions provide appropriate tools and methods to support managers in ensuring compliance of Sika’s business with applicable laws, regulations and internal guidelines, including the Code of Conduct.
Sika’s CMS aims to ensure that governance, risk management and other structures and processes within the Group are not only adequately designed in line with regulatory requirements, but also sufficiently implemented and operationally effective to mitigate risks and prevent financial losses. This includes having a strong and ethical Compliance Culture and clear and consistent Compliance Objectives which are
(i) strategically aligned with business objectives,
(ii) formally approved and supported by the Board and the Group Management, and
(iii) fully understood within the organization.
It also requires to raise awareness on the importance of Compliance risk management, through internal Communication, training and specific initiatives addressing areas of in-creased or recurrent risk exposure, identified through regular Risk Assessments and monitoring.
Beside the Code of Conduct and other key internal compliance policies (such as the Gift and Entertainment Policy and the Sika Trust Policy on internal misconduct reporting), other elements of Sika’s CM are the Compliance Organization, the digital learning on the Code of Conduct and the Sika Trust Line, the web-based reporting platform where employees may report serious misconduct or breaches of Sika’s Code of Conduct in a confidential environment, whenever reporting to other more immediate existing resources, like line management or other specialists, is not feasible or adequate. In this way, the compliance function contributes to the Group’s performance by providing a framework to preserve and strengthen Sika’s corporate culture, improve its corporate governance and mitigate risks. The more effective this framework is, the more successful the organization can be.
- Code of Conduct (PDF) – translated into 36 languages
- Localized Gift & Entertainment Policies
- Supplier Code of Conduct,
- Procurement Manual (Ethics Reports)
Compliance Confirmation: As part of their duties and responsibilities, General Managers at Sika ensure that their companies operate in compliance with applicable laws and Sika’s internal regulations. In 2018, all General Managers renewed their commitment to lead with Integrity by signing a “Compliance Commitment/pledge”, which explains and details what this implies in their daily business.
The Compliance Confirmation provides a brief definition of Corruption as “the abuse of entrusted power for private gain. Corruption includes practices such as bribery, facilitation payments, fraud, extortion, collusion, and money laundering. It also includes an offer or receipt of any gift, loan, fee, reward, or other advantage to or from any person as an inducement to do something that is dishonest, illegal, or a breach of trust in the conduct of the enterprise’s business or provides an improper advantage or that may result in moral pressure to receive such an advantage”. No corruption cases have been reported in any of the more than 100 Confirmations submitted which comprise all of Sika’s legal entities.
- Compliance Commitment 2018–2019: General Managers of all Sika companies confirm for each fiscal year compliance of the corresponding Sika Company with the Code of Conduct principles, including information to and training of all staff. This annual confirmation allows Sika to receive assurance that the business had been conducted throughout the organization in compliance with the Code of Conduct principles, with particular focus on the following specific topics: Environment, Anti-corruption, Anti-trust and Human Rights Assessments. New General Managers and new Sika Senior Managers have confirmed their pledge to lead with integrity by signing the “Compliance Commitment 2019”. All GMs and Sika Senior Managers have renewed their Compliance Commitment every two years.
- Strengthening of the Sika Compliance Organization: During 2018, Sika further strengthened the Compliance Organization. The Compliance Officer held the annual Compliance Circle at Sika’s headquarter, in August. The purpose of this meeting was to align the team, exchange experiences and develop shared knowledge with the aim to implement a consistent program throughout the Group. As of January 1, 2019 a new Head of Legal & Compliance for the Global Business was appointed and joined the Compliance team. Complementary to the Regional and Area level, Local Compliance Officers support compliance initiatives and give guidance to business in compliance-related matters on local level. The Compliance Team provides guidance to the Group on compliance matters, develops new tools and procedures, addresses compliance cases with the support of other corporate functions having compliance responsibilities (HR, Controlling, EHS, Quality, Procurement, etc) and always in close cooperation with line management. Regional Compliance Officers and Local Compliance Ambassadors operate in close cooperation with the Regional Managers, Area Managers and GMs.
- Compliance Checklist 2018: The Compliance Checklist (2019) to support GMs to accomplish their compliance duties and guide them on Sika’s Compliance Program, its minimum requirements and best practices of implementation - in different areas - to minimize compliance risks (i.e. Procurement, Controlling, HR, etc.) is under review and will be released in Q1/2019.
- Group Audits: Compliance with Sika’s Code of Conduct and other Corporate Policies and Manuals is monitored through regular Group audits (117 in 2017) and legal supervision of the local companies and General Managers.
- Supplier Management: Sika’s Supplier Code of Conduct requests suppliers to respect Sika’s zero-tolerance policy concerning bribery and corruption and avoid any active or passive corruption. Suppliers are required to have systems in place to ensure the proper instruction, training, and auditing of its personnel and sub-contractors to ensure compliance with these principles. Sika performs supplier audits and evaluations to monitor and assess their compliance with Sika’s requirements and the Code of Conduct. Suppliers are obliged to immediately inform Sika of any known violation of the Code of Conduct.
- Training/new e-learning: Anti-corruption is part of the Code of Conduct training for all employees and General Manager briefings. Employees are regularly reminded, at least once a year, of these rules. Corporate functions regularly conduct training sessions and audits. To preserve Sika’s strong compliance culture and to ensure that the Code of Conduct’s principles are understood and adhered to by all employees, Sika has developed an animated e-learning program in addition to regular class training events. The program includes a specific section on Gifts & Entertainment and bribery risk. In 2018, the e-learning program on the Code of Conduct earned the “Silver” Brandon Hall Award in the “Best Compliance Training” category. More than 300 managers have been trained by the Group Compliance Officer. With regard to compliance training, Sika continues to align the content of the Sika Business School to enhance ethical leadership. In 2018, several cross-functional trainings initiatives at regional and local level informed about the importance of the Code of Conduct, an introduction on the new compliance organization, and the main tools available to support management in mitigating risks. To enhance the post-acquisition integration on Compliance of 2 big acquisitions closed in 2018, around 1,000 employees of the FAIST Group and Index in Italy were aligned with Sika’s compliance policy framework and trained on compliance risk and available tools.
- Internal Reporting Tool: To preserve and foster Sika’s strong culture of trust, integrity and transparency, Sika has developed a new web-based reporting platform, the Sika TrustLine (available in more than 20 languages). It has been rolled-out throughout the organization as part of an Awareness Raising Campaign on Compliance, together with the new e-learning program. The Sika TrustLine is an externally hosted reporting channel where Sika’s employees may raise legitimate complaints regarding serious misconduct, such as corruption incidents, and/or breaches of Sika’s Code of Conduct, in a safe and confidential environment, whenever reporting to other most immediate existing resources, like line management or other superiors, is not feasible or adequate.
- Anti-fraud: Thanks to the cross-functional Fraud Awareness Initiative launched in 2017 by the Controlling function, Sika was able to mitigate cases of attempted external fraud, such as Social Engineering (CEO-fraud or “President”Fraud) and the receipt of Fraudulent Invoices. Though the overall risk is growing due to an improved level of sophistication and an increased number of external cyber-attacks, Sika’s employees have been trained with ad-hoc sessions and provided with material to help them identify and report at Regional and Corporate level fraud attempts at an early stage. With regard to internal fraud, the above training initiative has introduced prevention techniques to avoid potential key fraud risk events and detection techniques to uncover fraud events when preventive measures fail or unmitigated risks are realized, through checklists, which list typical red flags to support the monitoring and auditing activities in identifying fraud schemes. In 2017, the Regional Controller/Compliance Officers have cascaded within the organization to all Area and Local Controllers their first training.
- Awareness Campaign on Compliance: In 2018, as part of the internal Global Awareness Raising Campaign on Compliance, Sika progressed in the roll-out internal Global Awareness Raising Campaign on Compliance, covering additional 24 countries and training more than 7,000 employees in the different regions. The global awareness campaign focusses on an e-learning program on the code of conduct, and the Sika Trust Line, an internal web-based platform for reporting serious misconducts.
- A defined procedure on reporting and an aligned communication campaign throughout the organization about the Sika TrustLine support a speak-up culture and deter misconduct.
- Compliance Audit Program: A proposal to introduce a Compliance Audit Program covering anti-corruption, antitrust, third parties screening and ethical leadership in under review. During 2019, the Compliance function will define the most effective plan, tailored to the organization’s needs, in close cooperation with Group Management and subject to the approval of the Audit Committee.
- Support of Transparency International: Sika financially supports Transparency International in its global fight against corruption
- EU General Data Protection Regulation (GDPR): Privacy regulation is becoming more complex with the proliferation of new technologies, in an increasingly data-driven world. On May 25, 2018 the EU General Data Protection Regulation (GDPR), which qualifies as the most important change in the last 20 years, became enforceable. To comply with the GDPR requirements, Sika has performed a risk-assessment and implemented a program covering in 2018 25 European countries (EU/EEA) and 47 Sika companies. During Phase 2, the organization will be extended globally, so as to include also other countries and Regions in the future (CH, APAC and the Americas). A general e-learning for all EU employees on the main principles of the GDPR has been developed internally and will become available in 2019 in 22 local languages.
- Sanctions/Embargos: Sika is operating as a global company and committed to meeting economic sanctions and export control obligations, as they relate to movement of products/services across borders, including payments/financial flows. Based on a renewed global sanction risk assessment, Sika identified some critical countries, which require a targeted program for managing and monitoring sanctions risk. Sika also defined actions to mitigate risks and closely monitors developments.
Disclosure 103-3: Evaluation of the management approach
Sika evaluates its management approach through:
- Monitoring: Sika investigates reported cases of corruption and any corrective action to be taken according to a defined incident response process (see below). Confirmed cases and actions taken are followed up by the Compliance function and reported annually to the Audit Committee of the Board of Directors. Management approaches are adapted accordingly.
- Evaluation of results from audits: Group Audit results are implemented in the management system, and regular follow-up reports are presented to monitor improvements.
- Investigations: Internal Audit conducts audits on a regular basis and in case of suspected corruption or fraud. All reports of potential corruption cases within Sika are investigated and properly followed up according to applicable laws. A standard incident reporting and response process has been developed to provide guidance to Sika’s management on the procedures to be followed in case a criminal act or a material misconduct is suspected or detected. Highly sensitive incidents and criminal acts, such as corruption cases, must be reported and escalated to the Group Compliance Officer irrespective of the source. Corruption reports generated via the Sika TrustLine are automatically forwarded to the Group Compliance Officer who shall conduct and/or supervise the investigation process.
- Overview of compliance cases: Sika’s Group Compliance Officer regularly reports to the Audit Committee of the Board of Directors about known compliance cases and corrective action taken.
- General Managers’ briefings: General Managers are regularly instructed and briefed about anti-corruption requirements in the companies.
Sika monitors and evaluates the effectiveness of its management approach according to target achievement. The management approach has been reviewed and adapted accordingly.