Business Integrity

25

Number of compliance reports received and processed

9

Number of events held to raise employees’ awareness of IT security, including a live demonstration of a hacking attack

Responsible Management

Doing the right thing. It sounds simple but presents many companies with challenges. Regrettably, not all employees always play by the rules. When they don’t, the damage to stakeholders, the company itself, and its image can be considerable. That’s why it’s important to systematically prevent and sanction violations of the law or regulations. This is the only way to credibly convey that a company is being managed responsibly and is committed to creating sustainable value. Compliance is an essential part of our integrity and culture. It’s not just the responsibility of our compliance specialists but in particular of our management.

Compliance culture

Our work must be done in strict compliance with all applicable laws. We provide the guidance for this with company policies founded on ethical principles. In matters of integrity, our Management Board leads by example and tolerates no rules violations of any kind. It underscored its attitude by making public its Compliance Commitment.

We face a variety of risks in the markets where we operate. Some of these risks result from company misconduct, which is non-compliance with legal requirements that could lead to personal liability, not only of the persons involved but also of the respective management unit, its directors and officers, and potentially even the whole Uniper Group and its Management Board. Risks that can result from such company misconduct are defined as compliance risks, in which:

  • major legal risks, significant monetary fines, and significant damage to the company’s reputation arise for the entire Uniper Group and its officers and directors due to misconduct and violations of laws and regulations arising from the actions of Uniper staff or third parties acting on Uniper’s behalf
  • a Uniper department or function is not already responsible for mitigating those risks
  • preventive, systematic, and monitoring measures are necessary or are considered to be necessary.

Against this background, the following activities and legal areas are of particular relevance for the Uniper Group and are therefore referred to as compliance topics:

  1. Anti-bribery and anti-corruption
  2. Anti-money-laundering
  3. Antitrust law
  4. Capital market law/insider trading.

Systematically ensuring corporate compliance

Effective January 1, 2016, we have in place a Compliance Management System (CMS) to ensure that we mitigate compliance risks. The CMS sets uniform minimum standards for compliance topics based on processes of the E.ON Group’s CMS. Due to the reorganization of the Uniper Group and especially the establishment of Uniper SE as its parent entity, we developed and installed a CMS that reflects Uniper’s specific compliance risks. We consider the CMS appropriate and effective if it is capable of detecting compliance risks as well as preventing compliance breaches with an adequate degree of certainty. The CMS also incorporates the reporting of any compliance violations that have already occurred, so that the necessary responses and improvements to the CMS may be implemented.

Governance

The Management Board has appointed a Chief Compliance Officer, who reports to the CEO, the Management Board, and the Supervisory Board’s Audit Committee. The Chief Compliance Officer is responsible for our groupwide CMS and is supported by the Senior Vice President for Compliance & Regulation. Business areas and other legal entities have appointed Compliance Officers, who are responsible for implementing the CMS in their respective entities.

Code of Conduct

The Uniper Code of Conduct has the status of a group policy. It covers issues like dealing with business partners, compliance topics, combating corruption, and avoiding conflicts of interest. It applies to all our employees, which is why we inform them at regular intervals about related tasks and examine those areas in which the risk of compliance violations is particularly high.

Uniper Business Policy Enterprise Risk Management

Our Uniper Business Policy Enterprise Risk Management applies to all Uniper entities. It combines several components of our risk management in a single unified whole. This policy defines our risk categories and how we address them across our company. It also ensures that we comply with all legal requirements (KonTraG, BilReg) and factor risk assessments into our strategic and operational decision-making.

Business Policy Compliance

This policy defines Uniper’s key compliance areas and management’s responsibilities.

Compliance Management System (CMS)

The CMS and its concept are defined by the Chief Compliance Officer. Our business areas and legal entities and their Compliance Officers must implement the CMS.

Know-Your-Customer-Assessment

The purpose of this procedure is to mitigate risks by requiring all new trading counterparties, intermediaries and brokers to be subject to a formal risk assessment, generally known as a Know Your Customer/Client (KYC) or Anti-Money Laundering (AML) assessment. A risk assessment must be completed and approval granted prior to trading commencing.

Reporting violations

Non-compliance with laws and company policies – in particular violations of anti-corruption, anti-money laundering and anti-terrorism regulations, competition law, insider trading rules, and capital market law – is not a successful business practice and might lead to personal liability, not only of the persons involved but also of the respective Group company, its directors and officers, and potentially even the entire Uniper Group.

We consider violations of the law and deviations from our company policies to be economic risks. The Management Board therefore calls on all employees to report any potential violation of the law, our Code of Conduct, or our other company policies.

Infringements will not be tolerated (zero tolerance). We would rather abandon business deals and internal targets than violate laws or policies. No supervisor is allowed to issue instructions to the contrary or to tolerate any infringements.

Excerpt from the Management Board’s Compliance Commitment

Reports can be made by email (Compliance@uniper.energy) or telephone to our Chief Compliance Officer, Senior Vice President for Compliance & Regulation, and Compliance Officers. Employees may also use our whistle-blowing hotline to contact – anonymously, if they wish – an independent ombudsperson, who will pass the information on to our Chief Compliance Officer for processing. In addition, employees may direct general questions about compliance issues to Group Compliance or our Compliance Officers.

We received 25 compliance reports in 2016 and processed them in accordance with our company policies. There were eleven reports of fraud, ten of corruption, two of conflict of interest, and two in the “other” category. All reports involved monetary amounts that were below the threshold we classify as “significant” compliance and legal risks. All cases are investigated and reported in line with our Business Policy Compliance.

We incurred no significant fines for violations of environmental law in 2016.

On February 1, 2016, a fire broke out in the boiler house of Berezovskaya, one of our power plants in Russia, causing significant damage. Thankfully, no one was hurt. There was also no adverse impact on the public or any subsequent litigation.

To keep our employees up to date on compliance developments, in 2016 we launched a special Compliance Page on our internal social media platform.

Information security

A company’s integrity can only be ensured if confidential and sensitive data are secure. Adhering to our security rules for the digital world is therefore very important for us. In 2016 we held nine events for around 300 employees to raise awareness of IT security, including live demonstrations of how hackers operate and how employees can protect themselves at work and at home. The topic seemed to hit a nerve, because during the lively discussion sessions our employees had a wealth of suggestions and questions that we intend address this year.

As an operator of so-called critical infrastructures, we must meet certain statutory requirements in Germany. Consequently, in 2016 we began to prepare our Information Security Management Systems  at several business units for certification under ISO 27001.

Responsible lobbying

Energy supply is a heavily regulated business and is the subject of intensive political debate, particularly with regard to climate protection. Europe’s commitment to climate protection is fundamentally altering its energy supply system. Throughout the transition to a low-carbon future, however, the energy supply must remain secure, reliable, and affordable. To meet these expectations, we need a policy and regulatory environment that enables us to take action that makes business and environmental sense. Adequate representation of our business interests is essential for the successful operation of our assets and for our strategic prospects. We conduct an intensive dialog with a variety of external stakeholders, such as government entities, political parties, regulatory agencies, and trade associations. This dialog is crucial for our positions on issues to receive consideration in the decision-making process. Our “Uniper in Dialog” information lounge can be found at party conferences in Germany on a regular basis. We’re committed to keeping our lobbying activities transparent at all times. This is the only way to avoid the suspicion of undue influence on policymaking and to prevent damage to our reputation.

Policies, codes, memberships

Company policies, codes, and guidelines provide clear guidance for our political affairs. Our Stakeholder Management Policy defines the roles, responsibilities, and communication pathways. It also requires that sponsorship measures must be approved by the Uniper Management before signing the contract. Our Code of Conduct strictly regulates any financial contribution to public officials.

Uniper is listed in the European Union Transparency Register for organizations and self-employed individuals engaged in influencing the making and implementation of EU policy. Our number in the register is 285977820662-03.

Our Group Tax Guidelines define how our various entities work together on tax matters. To ensure that we pay all our tax obligations fully and on time, the Tax department is closely involved in the operating activities and processes of our units.

Zero

Amount of contributions to political organizations and parties

We also participate in the policymaking process through our membership in trade associations and other organizations. For example, we’re a member of the European Federation of Energy Traders. Our employees must notify the Uniper Corporate Office about their membership in trade associations and comparable organizations as well as their contributions and donations to them. Requests to join organizations of which we are not yet a member must be approved by our Political & Regulatory Affairs department. We continue to strive for compliance with all ten principles of the UN Global Compact. Due to the restructuring involved in the spinoff from E.ON (still Global Compact member), however, we are planning to file our own application during 2017.

Industry/purpose

Name (geographic reach)

Range of annual contributions €

 

Gas

 

 

Zukunft ERDGAS e. V. (Germany)

1,500,000 to 1,600,000

Eurogas (Europe, global)

100,000 to 150,000

INES – Initiative Erdgasspeicher [Gas Storage Initiative] (Germany)

20,000 to 50,000

International Gas Union (IGU) (global)

10,000 to 20,000

Coal

Bettercoal (global)

60,000 to 80.000

Coal Industry Advisory Board (CIAB) (global)

10,000 to 15,000

Verein der Kohleimporteure (VdKi) [Association of Coal Importers] (Germany)

Under 5,000

Technology

VGB PowerTech e.V. (Europe)

300,000 to 400,000

AGFW E.V. – Der Energieeffizienzverband für Wärme, Kälte und KWK e. V. [Association for Energy-Efficient Heat, Cooling, and Cogeneration]

50,000 to 100,000

Hydrogen Europe (Europe)

Under 20,000

DVGW -Deutscher Verein des Gas- und Wasserfaches e.V. (Germany)

5,000 to 10,000

Climate protection

SBP – Sustainable Biomass Program (global)

Above 100,000

IETA (Europe)

Under 20,000

Innovationsforum Energiewende (Germany)

Under 15,000

This list of Uniper’s memberships shows key associations and initiatives that may be directly or indirectly related to our material sustainability topics. Their membership can be highly diverse and it’s not always possible to assign them unequivocally to individual sustainability topics. Nevertheless, these memberships are fundamentally relevant to our work in the area of sustainability. We classify our memberships by their geographic focus (global, European or nationwide in Germany).

Responsibility in our supply chain

Abiding the law and acting ethically are not just the highest priorities within our own organization. We also need to prevent possible violations by our suppliers. We run a global commodity trading business and offer consultancy services to third parties in developing new energy and infrastructure projects. As such, the risk of corruption and money-laundering must be managed with the utmost attention. Consequently, our business partners and their affiliates are subject to a comprehensive risk assessment and sanctions check.

The extent of the challenge is indicated by Transparency International’s Corruption Perceptions Index (CPI), which rates the risk of corruption by country. The highest score a country can achieve is 100. In 2016 the average score was 43: the countries below this threshold are more exposed to corruption, money-laundering, and bribery risks. We give special attention to commercial counterparties in this risk area or registered in countries with a score below 50. Uniper operates in Russia through its fully consolidated entity Unipro, which has an office in Azerbaijan. Both Russia and Azerbaijan are considered risky countries by Transparency International, which assigns them scores of 29 and 30, respectively. In 2016 Uniper entered into transactions with companies from 11 countries considered at a high risk of corruption. This represents a minority of our overall business activity.

List of high-risk countries (below 2016 CPI Index average) where Uniper had deals in 2016

List of high-risk countries (below 2016 CPI Index average) where Uniper has established operations

Mid-risk Countries (below 50 CPI Index) where Uniper had deals or established operations

 

CPI average: 43

Mozambique

27

Russia

29

Greece

44

Kazakhstan

29

Azerbaijan

30

South Africa

45

Ukraine

29

India

40

Oman

45

Iran

29

 

 

United Arab Emirates

46

Pakistan

32

 

 

Italy

47

Algeria

34

 

 

Hungary

48

Thailand

35

 

 

 

 

Columbia

37

 

 

 

 

Indonesia

37

 

 

 

 

Albania

39

 

 

 

 

Brazil

40

 

 

 

 

China

40

 

 

 

 

Turkey

41

 

 

 

 

Deals: commodity trading, consultancy services or other binding agreements. Vessel registration countries such as Liberia or Panama are not included, as Uniper does not own any vessels.
Established operations: fully-consolidated entities or representative offices.

Higher standards for suppliers

According to our Code of Conduct, “suppliers, service providers and other business partners should be selected using a pre-determined procedure and on the basis of objective and comprehensible criteria considering their integrity”. In 2016, we’ve started restructuring our general procurement policies, in order to implement such provisions and define clear onboarding practices.

The goal is to do business with companies that can provide their employees with a safe and healthy workplace. At a minimum, they must ensure that their employees have access to drinking water and sanitary facilities and take adequate steps to maintain a safe working environment. They must not tolerate child and forced labor.

We also expect our suppliers to address the environmental impact of their business operations. We will expect them to maintain high standards for business ethics, to obey applicable laws, and not to tolerate corruption, bribery, fraud, or extortion. A similar restructuring is expected in 2017 for our commodity trading segment, in order to protect our business from the key compliance risks related to anti-competitive behavior, corruption, or money laundering.

Initiative for a better coal supply chain

Being a global energy and commodity trading company, it is important for us to conduct robust fuel supply management, that enables us to identify early and minimize all the risks arising from our daily operations. This includes the risk of negative impacts on people and the environment in our coal supply chain. We believe the best way to do this is to actively participate in a joint effort aimed at increasing transparency and promoting the reduction of the negative impacts of poor environmental, social, and governance practices along the entire coal value chain.

For this purpose we maintained our commitment to Bettercoal, the only global, not-for-profit initiative that has been established by a group of major European utilities in 2012 to promote the continuous improvement of corporate responsibility in the coal supply chain. Bettercoal directly engages the major coal producers worldwide through a dedicated assessment program. The goal is to help the mining companies, specifically those in risk countries, to promote the economic development of local communities and the protection of human rights. Particularly important is the evaluation of the working conditions of the miners and the practices related to environment, health and safety. In 2016 Bettercoal members defined a country-prioritization strategy to concentrate the efforts on a few key countries, in particular Russia, South Africa, and Colombia. As a member sourcing from these countries, we endorse Bettercoal and embrace the Principles of the Bettercoal Code.

Uniper Coal Sourcing Countries in 20161

1Figures reflect amounts supplied to our European power plants and storage facilities.

Million tonnes

Australia

0.2

Colombia

4.1

Germany

1.1

Kasachstan

0.1

Mozambique

0.5

Poland

0.1

Russia

3.2

South Africa

0.7

United Kingdom

0.3

USA

  0.9

The Bettercoal initiative has been working to partner with other international initiatives such as the Organisation for Economic Co-operation and Development (OECD) and relevant national governments to gain traction and diplomatic legitimacy.

In our coal operations we use the information shared on the dedicated Bettercoal database to better evaluate the risks associated with our coal suppliers. For this reason we encourage them to be part of this comprehensive assessment program. In September 2016, together with Unipro, we supported a Bettercoal mission to Russia, aimed at getting more coal producers and traders onboard. In November, together with other Bettercoal members, we joined a mission in South Africa organized by the Dutch Ministry of Foreign Affairs and the global NGO ActionAid, which is also working to improve conditions in the coal supply chain. In 2017 we plan to participate in visits of mining companies, and local communities  and to meet with other stakeholders in these communities to better understand the specific challenges there.

In four years Independent Bettercoal assessors conducted audits in coal mines in Colombia, Russia, Indonesia, Poland, and the United Kingdom. to ensure that requirements are being met. So far, 23 large coal producers have been engaged in the assessment program.

The Secretariat of the Bettercoal Initiative evaluates the results of these efforts. It then works with suppliers to design improvement plans and documents how the plans are implemented. You can find more detailed information at bettercoal.org.

Assured Content

Selected figures were independently audited and are identified by the “audited” check symbol   .
Qualitative content related to the Management Approach was also part of the assurance.

Download the Assurance Statement here