Organisational culture

As a result of a resolution adopted by the Management Board of KGHM Polska Miedź S.A. in 2020 to implement the Anticorruption Management System (AMS) in the Divisions and Head Office of KGHM Polska Miedź S.A. and in the Subsidiaries in accordance with the PN-ISO 37001:2017 standard, work started in 2021 aimed at implementing the standard in the KGHM Polska Miedź S.A. Group. As part of this implementation work, the following regulations were prepared in 2021:

Considering the implementation of the Anticorruption Management System (SZDA) in the KGHM Polska Miedź S.A. Group in compliance with the PN-ISO37001 standard, a new Anticorruption Policy was adopted in December 2021 by a resolution of the Management Board of KGHM Polska Miedź S.A.

Pursuant to the Policy, the KGHM Polska Miedź S.A. Group underscores its commitment to fighting corruption in business, by the way of adopting and uncompromising observance of the “zero tolerance for corruption” principle while ensuring compliance with legal regulations and voluntary commitments for fighting corruption.

The adopted Policy applies to all employees and collaborators of entities from the KGHM Group as well as business partners, including suppliers and clients. Pursuant to the content of the Policy, it is prohibited to participate in any activities having features of corruption involving offering, promising, giving, accepting, demanding or soliciting undue benefits, both financial and non-financial, especially in connection with performing official duties. The policy also prohibits any retaliation against persons who refused to hand in or receive undue benefits.

Pursuant to the adopted Policy, any person who takes part in an event bearing features of corruption or is a witness to or having information on such an event is obligated to report it immediately, while the top management undertakes to ensure to the reporters dedicated confidential communication channels and protection against retaliation.

Pursuant to the Policy, disciplinary proceedings are started against those who are guilty of breaching anticorruption regulations.

In each entity from the KGHM Group, persons have been appointed whose duties are to ensure anticorruption compliance and who are granted appropriate authorizations, while remaining independent and impartial.

The Policy has been communicated and is generally available to employees, counterparties, persons working for the Group or on its behalf.

Following the principle “prevention is better than cure”, the KGHM Group manages corruption risk, identifying and eliminating factors which increase it by implementing adequate supervisory measures. Within the implemented AMS, a resolution adopted by the KGHM Polska Miedź S.A. Management Board introduced new procedures in the area of corruption risk management, ensuring compliance of activities performed by the entities from the KGHM Group with the adopted Anticorruption Policy. The procedures regulate, among others, rules for handling business gifts, situations having features of corruption or a conflict of interest.

Employees are prohibited from offering or accepting any material benefits in relation to the performance of professional duties. The only exception is giving and accepting business gifts in line with the local norms and cultural customs, provided that the giving and accepting of gifts cannot lead to a situation in which such behaviour could be considered as an attempt to exert pressure or persuade the recipient to act against their duties. Detailed rules pertaining to giving and accepting customary business gifts have been defined in the Procedure of Handling Actions of Corruptive Nature.

Employees are required to avoid any actions or decisions in a situation of a conflict of interests. If a conflict of interest occurs or is possible, employees are obligated to disclose it. Particular scrutiny is exercised with respect to business transactions in the procurement, sales and investment processes, including an option of a third party audit, in order to ensure that such transactions meet the highest standards of ethical and transparent business operations (due diligence of business partners).

KGHM Polska Miedź S.A. is guided by high ethical standards across the procurement process. The Code’s main message is to guarantee the professionalism and honesty of the persons responsible for the procurement processes. The document also contemplates issues such as preventing conflicts of interest as well as equal treatment of suppliers to ensure compliance with the principles of fair competition.

The procurement procedures in force in KGHM Polska Miedź S.A. are precisely defined in the „Procurement Policy of the KGHM Polska Miedź S.A. Group”, while the selection of suppliers is carried out in compliance with the principle of transparency and the equal treatment of economic entities.

The goals set forth in the Procurement Policy are:

• ensure transparency in the process of making decisions,
• monitoring of all purchases by introducing a joint system for managing the procurement process, and
• ensure the efficient optimisation of costs, mainly by standardising the assortment, optimising technical specifications and market diversification.

This joint Procurement Policy applies to all of the Divisions of KGHM Polska Miedź S.A. and to all of the companies of the Group which are critical elements of the production process. The basic tenets set forth in the aforementioned document are carried out with the aid of IT tools.

In 2021, in the area covered by the Procurement Policy of the KGHM Polska Miedź S.A. Group, 3248 suppliers (being the number of bidders taking active part in procurement proceedings) cooperated with the KGHM Polska Miedź S.A. Group, out of which 2203 suppliers were selected.

The share of suppliers outside of Poland is relatively low. The number of non-Polish suppliers in 2021, in respect of the aforementioned information, amounted respectively to 168 and 104, or around 5% of all suppliers to the Company.

KGHM works with all types of suppliers: contractors, intermediaries, wholesalers. These include suppliers of raw materials, components, end producers and distributors. Additionally, within the Group, KGHM Polska Miedź S.A. utilises the services of a Logistics Operator – specialised companies providing supplyrelated functions (Mercus Logistyka, KGHM Metraco, Energetyka).

In 2021 there were no significant changes in the sources of supply of materials, goods and services to KGHM Polska Miedź S.A. There was no recorded dependence on a single or multiple customers or suppliers.

KGHM Polska Miedź S.A. is strengthening its position as an honest and ethical business partner, which cares about the Company’s image as well as social matters. In terms of procurement subject to the aforementioned Policy, the Company strives to ensure that those with whom the Company cooperates meet ethical business standards and operate in a socially responsible manner.

The copper smelters and refineries of KGHM Polska Miedź S.A. produce electrolytic copper from their own concentrates as well as from purchased copperbearing material (concentrates, copper scrap and blister copper). In 2021, the production of electrolytic copper from purchased copper-bearing material amounted to 196.2 thousand tonnes, and represented 34% of total electrolytic copper production.

For the most part, this production came from copper scrap (135.4 thousand tonnes of copper; 23% of total electrolytic copper production), which is supplied to KGHM’s metallurgical plants by KGHM Metraco S.A. – a 100%-owned subsidiary of KGHM Polska Miedź S.A.

The procedure was adopted by Resolution of the KGHM Polska Miedź S.A. Management Board in September 2018. The objective of the Procedure is to prevent abuse at work, by way of implementation of a prevention system and definition of a procedure to be followed if abuse does occur. The procedure is designed to build and enhance an organizational culture based on good interpersonal relations between and among employees.

The procedure describes a catalogue of actions designed to prevent abuse, actions to be taken if abuse does occur, and defines obligations of the employer and employees in this respect. The Procedure applies to all employees of the KGHM Polska Miedź S.A. Group, regardless of the type of contract or position held. Every employee who believes they have experienced or have witnessed behaviour displaying features of abuse, has the right to lodge a Report. Such a report is lodged in a process defined in the Procedure for Disclosing Improprieties and Protecting Whistleblowers, using dedicated channels, subject to the stipulation that in this case it is necessary to disclose personal details of the reporting employee, the employee(s) who may been subjected to abuse and the employee(s) committing actions or behaviour displaying the features of abuse. The case is examined by the Ethics Committee of the relevant entity of the KGHM Group. Employees are familiarized with the content of the procedure at the time of hiring and periodically, as part of classroom and e-learning training courses.

Compliance with the Procedure is supervised by the work place manager, who is also responsible for the appointment of the Ethics Committee members. The Committee carries out the proceedings related to abuse initiated in connection with receipt of a report. The Ethics and Anticorruption Representative plays an important role in counteracting abuse. The Ethics and Anticorruption Representative conducts preventive actions, including organization of training for Employees, participates in investigation of the abuse reports, is responsible for receiving the reports and initiating further proceedings in accordance with the Procedure of Disclosing Irregularities and Protection of Whistleblowers. A number of abuse reports that are examined by the Ethics Committee pertain mostly to conflicts at the work place. Early detection of such cases, possible thanks to the solutions implemented by KGHM, allows for de-escalation and prevents occurrence of abuse.

In 2018, the Management Board of KGHM Polska Miedź S.A. adopted by resolution a Personal Data Protection Policy. The Policy lays down the rules of processing and securing personal data in KGHM Polska Miedź S.A., pursuant to Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation, hereinafter: GDPR). The Policy has been adopted to ensure that data processing in KGHM proceeds in compliance with the GDPR and other personal data protection regulations, and to be able to demonstrate this compliance. The Policy is subject to reviews and updates, in keeping with the rules laid down therein. The Policy applies to all the personal data processed in KGHM Polska Miedź S.A. for the purposes of the Company’s activities. Under the Policy, the object of protection is personal data, processed in IT systems, as well as recorded otherwise on media, including paper form and electronic media. The places where personal data is so processed must be secured in a manner defined by the Policy. The duty to protect personal data processed by KGHM and to apply the Policy covers all persons with access to personal data, regardless of their position, place of work and type of employment relationship. Every person about to have access to personal data may process the data exclusively based on an authorization (delegation). All persons having access to personal data are obliged to familiarize themselves with the Policy and other related documents, and to apply the provisions thereof.

The Policy is consistent with other internal regulations regarding security of information and IT systems applicable in KGHM.

Updates to the Policy are supervised by the Data Protection Officer of KGHM Polska Miedź S.A. (DPO). The DPO and the DPO Team have been appointed to support KGHM Polska Miedź S.A. as a personal data controller in fulfilment of duties imposed in the area of personal data protection. The DPO Team holds regular meetings every week at which the status of works is updated and issues are discussed connected with personal data protection at the Head Office and in the Divisions of KGHM Polska Miedź S.A.

The following documentation remains in direct relation with the Policy:

• Record of personal data processing activities,
• Record of categories of personal data processing activities (Processor’s Record),
• Form of authorization to process personal data and record of authorizations issued,
• Form of agreement to entrust the processing of personal data and record of executed entrustment agreements,
• Procedure for verification of an entity processing personal data,
• Procedure for handling breaches of personal data protection with a record of such breaches,
• Balance tests for data processing based on a PDC’s legitimate interest,
• Instruction for a data protection impact assessment (DPIA),
• Procedure for reviewing requests of a data subject with a record of such requests,
• Form of consent to personal data processing,
• Principles of security by design and privacy by default.

The above records as a whole aim to ensure appropriate personal data processing at KGHM Polska Miedź S.A. and make it possible to show fulfilment of the duties imposed on KGHM as personal data controller or processor.

As a socially responsible company, KGHM Polska Miedź S.A. applies due diligence procedures. In doing so, it attaches importance not only to respect for human rights, lawful terms of employment, environmental norms, freedom of establishing trade unions, compliance of operations with generally applicable laws, no child labour and no extraction of production raw materials from conflict sources (the so-called “conflict minerals”) but also wants to cooperate with business partners who share these values. For this reason, KGHM’s customers and suppliers are obligated to declare in writing their compliance with the aforementioned principles, by signing the so-called Customer Card and Supplier Card, which is an important factor of the business decisions on undertaking cooperation with the given partner.

The Internal Audit Department follows the international internal audit standards. The standards cover 14 areas, with ethics being one of them. When performing internal audit tasks, the risks of potential fraud, conflict of interests or other activities which are not compliant with the Code of Ethics and other internal regulations are analysed. Any areas with increased risk of unethical behaviour are consistently identified and taken into account in the development of the annual audit plan.

The purpose of the Procedure is to define consistent and uniform rules for conducting Internal Control by the Security and Loss Prevention Section.

The Procedure defines how the Control Process is performed by the Section’s units, defines and assigns roles in the Control Process, delineates the framework of cooperation of its participants, as well as lists the scope of activities to be performed in the Process. The scope of audits conducted by the Security and Loss Prevention Section covers: identification and detection of fraud, irregularities, abuse, corruption, personal abuse and violations of the Group’s Code of Ethics and facilitates the monitoring of transparency of and control over procurement processes.