Business integrity

83%

Percentage of employees who took the basic compliance course in 2017

3

Number of new cases of alleged corruption reported internally at Uniper in 20171

Responsible management

Doing the right thing. It sounds simple but presents many companies with challenges. Not doing the right thing can cause considerable damage to stakeholders and the company itself. 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 our company is being managed responsibly and is committed to creating sustainable value. Compliance is an essential part of our integrity and culture.

We support transparency, both toward and within institutions, to avoid corruption and promote more effective public administration. In accordance with the Universal Declaration of Human Rights, we respect and support human rights—including the prohibition against child and forced labor—across our business activities. We expect our business partners to do the same.

We defined long-term commitments for the topic of business integrity:

  • Have zero tolerance of forced labor, child labor, modern slavery, and human trafficking.
  • Continue to strengthen our compliance culture and protect the business from corruption risks.
  • Foster the development of effective, accountable, and transparent institutions at all levels.

These commitments support SDG 8 and 16:

The material topic business integrity encompasses four subtopics: compliance and governance, human rights along our value chain, transparent trading, and transparency in advocacy groups.

Compliance and governance

The foundation of compliance is good corporate governance, which is of the highest priority at Uniper. It is founded on close and efficient collaboration between the Management Board and the Supervisory Board. It guides all our decision-making and aims to ensure that we achieve success responsibly and sustainably. The Management Board and Supervisory Board endorse the goals of the German Corporate Governance Code, which seeks to promote responsible, transparent corporate governance and controls aimed at enhancing enterprise value in the long term.

Effective January 1, 2016, we have in place a Compliance Management System (CMS) to ensure that we mitigate compliance risks. Compliance risks are defined as major legal risks, significant monetary fines, and significant damage to the Company’s reputation that arise for the entire Uniper Group and its officers and directors due to misconduct and violations of laws and regulations. These could arise both from the actions of Uniper staff or third parties acting on Uniper’s behalf.

Against this background, the following activities and legal areas are of 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.

The CMS sets uniform standards for compliance topics 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. 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 Group-wide CMS and is supported by the Senior Vice President for Compliance & Regulation.

Promoting integrity

Uniper’s business activities are grounded in integrity and respect for the law. They are based on the Uniper Code of Conduct, as amended in October 2017 and approved by resolution of the Management Board. The Code of Conduct requires that all employees in all Group companies comply with all laws and regulations and with Company policies. The Management Board and line managers serve as role models and must act accordingly.

Management Board’s Compliance Commitment

The Code of Conduct sets out principles for dealings with business partners, third parties, and government institutions, particularly with regard to laws on combating corruption, money laundering, antitrust violations, and the financing of terrorism. It also includes issues such as compliance with international sanctions, the granting and acceptance of gifts and hospitality, the involvement of intermediaries, and the selection of suppliers and service providers. Other rules address issues including the avoidance of conflicts of interest and the handling of Company information, property, and resources.

Our compliance policies and procedures ensure the investigation, evaluation, and cessation of reported violations are carried out appropriately by the respective Compliance Officers and our Chief Compliance Officer. Suspected violations of the Code of Conduct can be reported anonymously (for example, by means of a whistleblower report). Violations can lead to disciplinary action and termination of employment.

We must always comply with all legal requirements. Where our Code sets a higher standard than applicable laws, we adhere to the Code.

Excerpt from the Uniper Code of Conduct (2017)

We require our suppliers to observe all principles of the Uniper Supplier Code of Conduct. The Code of Conduct and more information on our CMS can be viewed online.

Although third parties are not subject to the Code of Conduct, we strive to work, whenever possible, with third parties that have comparable principles.

The new Code of Conduct explains corruption risks and provides guidance for addressing them. It also introduces new rules for gifts and hospitality that reflect international legal standards and take into consideration a variety of business situations. Additional materials help our employees to understand the rules so that they can apply them to different business situations.

As in previous years, group-wide training, which covers the Code of Conduct’s main principles and how to apply them, was provided to employees in December 2017. In addition, employees who work in business functions exposed to a high risk of corruption received further training tailored to their function’s particular type of exposure.

In the first quarter of 2017, Uniper introduced quarterly compliance reporting. Its purpose is to monitor the performance of the Compliance Monitoring System.

In 2017 we processed 28 compliance cases in accordance with our company policies. There were nine reports of fraud, three of corruption, four of conflict of interest, and twelve in the “other” categories. All reports involved monetary amounts that were below the threshold we classify as “significant” compliance and legal risks. All cases were investigated and reported in line with our Business Policy Compliance.

Compliance reports received and processed (2017)

2017 2016
28 25

 

In 2017 we incurred no significant fines for violations of environmental law or litigation relating to health and safety.2

In 2018 we put in place a new Know-Your-Counterparty Business Policy to enhance our existing processes for the identification and reporting of more detailed compliance risks potentially posed by new counterparties, no matter where they are located. The purpose of the policy is to uncover counterparty-related risks (such as corruption, money laundering, serious human rights violations, and terrorism financing) before entering into a binding business relationship. Such a policy update was required in order to protect our business from key compliance risks, ensuring at the same time a timely response to our operators. This is especially important for our commodity trading segment, which significantly contributes to the overall business. In 2017 Group Compliance processed 437 counterparty due diligence checks.

In parallel, the planned HSSE & Sustainability Know-Your-Counterparty Business Directive will establish a Group-wide sub-process for identifying and reporting the main environmental, social, and governance (ESG) risks of all new potential counterparties, intermediaries, and business partners before any business deals are finalized. The new ESG Due Diligence procedure will contain more rigorous checks on potentially significant adverse human rights and environmental impacts related to our counterparties.

The procedure will accord with the UN Guiding Principles on Business and Human Rights (2011) and the latest version of the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (2016).

In 2017 specific sustainability-related assessments were undertaken for proposed projects in Spain and Pakistan. In 2018 similar ad hoc assessments were carried out before new long-term gas purchase contracts were negotiated.

Corruption and bribery

Corruption and bribery promote crime and social inequality. Non-compliance with laws and company policies aimed at combating corruption may lead to criminal and civil liability, not only of the persons involved but also of the respective Group company, its directors, and officers, and may potentially damage Uniper’s reputation.

Engaging in any type of corruption, whether with public officials or in the private sector, is a breach of the Uniper Code of Conduct. Employees are prohibited from offering, promising, or giving anything of value (such as money, gifts, offers of employment, or other benefits) to gain business or to influence any action or for any other advantage, especially to a public official. They are likewise prohibited from doing so indirectly through a spouse, partner, relative, or friend.

As of October 2016, Uniper conducted a Group-wide Compliance Risk Assessment (CRA) of all business functions. Corruption was one risk area of the CRA. In 2017 the results were communicated internally to the business functions, and appropriate response measures were taken. The CRA’s findings were taken into consideration in the drafting of the new Code of Conduct that took effect in October 2017.

High-profile compliance violations that have occurred at other companies show that business relations with intermediaries (including any type of agent, advisor, representative, and so forth) pose a higher risk of corruption and bribery. We only use intermediaries in accordance with our Business Policy Intermediary Agreements, ensuring that the intermediary’s fee or commission will not be used to make illegal payments on our behalf.

Three new cases of alleged corruption were reported internally at Uniper in 2017. Two of these were closed, and one is still pending. Because two cases reported in 2016 were still open, a total of three cases of alleged corruption were pending at year-end 2017. All the cases have been or are being investigated.

Responsibility along our supply chain

We run a global commodity trading business and offer consulting 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. In 2017 the average score was 43: 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 30. Medium-risk counterparties are those with a CPI score between 30 and 59.

At least on an annual basis, we perform a worldwide assessment based on a combination of economic and social indexes to map potential country-specific issues (such as working conditions, violation of political rights and civil liberties, and security threats) which may directly affect Uniper if new business opportunities are pursued. The results of this assessment lead to different due diligence requirements and mitigation measures, particularly when negotiating with new counterparties operating in medium or high-risk countries.

In line with our Code of Conduct, we select our suppliers, service providers, and other business partners using a predetermined procedure and on the basis of objective and comprehensible criteria, including their integrity. Our goal is to do business with companies that provide their employees with a safe and healthy workplace. At a minimum, companies must ensure that their employees have access to drinking water and sanitary facilities and must take adequate steps to maintain a safe work environment. They must not tolerate child or forced labor.

Human rights along our value chain

Uniper does business around the world, including in countries where fragile institutions are not always fully able to protect basic human rights. Because we consider human rights violations unacceptable for any entity operating ethically and correctly, respect for human rights is embedded into our business policies and procedures, ensuring that we do not benefit from breaches of human rights.

Modern slavery, unlawful compulsory displacement, and forced and child labor can still happen in countries with a history of insufficient standards for the protection of human rights. Furthermore, instances of violence and inhumane and degrading treatment can occur in high-risk areas and in more stable countries that have weak institutions. From our perspective, the occurrence of such situations, which may be an undesirable indirect consequence of business activities in such countries, would adversely affect the safety and security of employees and contractors, particularly during travel. Although rare, these risks may negatively affect the quality of operations and reduce confidence toward us and our business partners. They may also increase the chance of lawsuits, cause project delays, incite social unrest, and, ultimately, harm our reputation.

Our sourcing and trading of coal and gas may have an indirect impact on human-rights-related issues resulting in a potential risk exposure. We also face potential risks when providing engineering and energy services in areas such as the Middle East, Central and South-East Asia, and North Africa. Failure to take adequate measures to prevent, monitor, and mitigate these risks would significantly increase the risk potential.

For coal procurement, we strive to mitigate these risks by participating in Bettercoal, a not-for-profit initiative established by a group of major European utilities committed to a more responsible coal supply chain. Bettercoal directly engages the major coal producers worldwide through a dedicated assessment program. The goal is to help mining companies, specifically those in risky countries, to promote the economic development of local communities and the protection of human rights.

Origin of coal supplied to our power plants in Europe

By country

m metric tons

2017

Canada

0.1

Columbia

2.7

Germany

1

Mozambique

1

Norway

0.1

Russia

2.3

South Africa

0.2

United Kingdom

0.3

USA

1.2

Venezuela

0.1

As part of Bettercoal’s country-prioritization strategy, in March 2017 Uniper joined a Bettercoal delegation for a stakeholder engagement campaign in Bogota and in the Cesar mining region in Colombia. The purpose was to have all the major coal-mining companies in the region participate in the Bettercoal Supplier Assessment Process. A second mission took place in April 2018 to seek further engagement of the companies and align expectations with the Colombian National Action Plan on Business and Human Rights. Thanks to these campaigns, it is expected that by the end of the second quarter of 2018 the vast majority of Colombian thermal coal will come from Bettercoal suppliers, enhancing Bettercoal’s role in supporting the country’s peace-building and social development efforts.

Uniper has held periodic discussions with several nongovernmental organizations focused on ESG issues, particularly those relating to human rights along the coal supply chain. This Group-wide campaign to meet, and engage with, relevant international NGOs and local groups active in Europe started in August 2017 focusing on addressing human rights violations in the Colombian coal industry.

To promote an inclusive discussion, in December 2017 in Rotterdam Uniper Benelux hosted the annual Dutch Dialogue on Coal, an event promoted by the Ministry of Foreign Affairs, the main utilities operating in the Netherlands, and the Port Authority. Colombia’s Deputy Ambassador to the Netherlands ended the plenary session with an update on the peace process in Colombia and an outlook on the post-coal era in the mining regions, calling for a collective effort to build peace in the country. Together with other concerned Bettercoal members, Uniper is working to encourage the reconciliation efforts in these regions.

Transparent trading

We are committed to respecting open markets and fair competition. Our employees may have access to confidential information about the Uniper Group and other companies or about financial instruments relating to such companies. If such information could significantly influence the prices of stock, derivates, or other securities relating to the Uniper Group or the prices of securities of other (unrelated) companies, the information could qualify as inside information, which is subject to several insider-trading restrictions in different legal systems. It is unfair to other investors who do not have access to the inside information, as the investor with the inside information could potentially make far larger profits than an investor without access to it.

It is imperative that every employee complies with the applicable legal provisions. We have therefore implemented Group-wide policies and training to assist Uniper employees to better understand the fundamental provisions of European Union insider-trading regulations and to explain how Uniper employees should treat confidential information.

The Uniper Trading Compliance & Regulation eLearning places a special emphasis on prohibitions and obligations and the conduct required for our employees by the external regulations, in particular, for the European Union, the Regulation on Market Integrity and Transparency (REMIT) and the Market Abuse Regulation (MAR). The eLearning module includes a section on competition law. Both REMIT and MAR prohibit insider trading and market manipulation in the markets within their respective scope.

Transparency in advocacy groups

Energy supply is a heavily regulated business and is the subject of extensive political debate, particularly with regard to climate protection. Europe’s commitment to climate protection is fundamentally altering its energy supply system. To meet these challenges, 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 us to communicate openly and transparently with representatives of political parties and institutions and to explain our positions. As an example, Uniper uses the “Uniper in Dialog” format to engage in stakeholder discussions at, for example, party conventions in Germany to answer questions about our business activities. We’re committed to keeping activities in advocacy groups 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 guidance for our political affairs. Our Stakeholder Management Policy defines roles, responsibilities, and communication pathways. It also requires that sponsorships must be approved by Uniper management before a contract is signed. Our Code of Conduct sets strict guidelines for monetary contributions to public officials.

Uniper’s memberships in key associations and initiatives (2017)

Industry/purpose

Name (geographic reach)

Range of annual contributions €

 

Gas

 

 

Zukunft ERDGAS e. V. (Germany)

1,600,000 to 1,700,000

Eurogas (Europe, global)

100,000 to 150,000

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

20,000 to 40,000

International Gas Union (IGU) (global)

15,000 to 20,000

Coal

Bettercoal (global)

70,000 to 90.000

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

CO2 Value Europe (Europe)

Under 20,000

EnerChain P2P Trading Project (Europe)

Under 20,000

Climate protection

SBP – Sustainable Biomass Program (global)

100,000 to 200,000

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. The membership of these associations and initiatives can be highly diverse, and it is not always possible to assign them unequivocally to individual sustainability topics. Nevertheless, these memberships are fundamentally relevant to our sustainability effort. We classify our memberships by their geographic focus (global, European, or Germany).

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.

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.

We support the UN SDGs since 2017. This includes SDG 16 for peace, justice, and strong institutions. We want to foster the development of effective, accountable, and transparent institutions at all levels.

1The definition of a significant fine is related to the materiality of the direct economic impact on the organization’s financial performance

2Three new cases of alleged corruption were reported internally at Uniper in 2017. Two of these were closed, and one is still pending. Because two cases reported in 2016 were still open, a total of three cases of alleged corruption were pending at year-end 2017.