Responsible supply chain

In 2021 the Responsible Supply Chain Policy in the KGHM Polska Miedź S.A. Group was updated, among others, in order to adapt the documentation of the responsible supply chain management process to the requirements of the „Copper Mark” sector standard, as well as to expand the catalogue of unacceptable, potential violations by the Group’s counterparties. The content of the Policy also includes the conclusions of other organisational units of KGHM in terms of ensuring compliance with the expectations of their stakeholders. The updated Policy continues to be an important part of the Responsible Gold and Silver Supply Chain Management System which is subject to an annual, independent, external audit to assure the Company’s adherence to the principles of conflict-free gold and silver under the LBMA Responsible Gold Guidance and the LBMA Responsible Silver Guidance. The current Compliance Report of KGHM Polska Miedź S.A. along with the Report on the independent assurance service is available on the website at the webstite.

In 2018, the Management Board of KGHM Polska Miedź S.A. adopted the “Code of Ethics of the KGHM Polska Miedź S.A. Group”. In order to comply with the most important principles related to counteracting corruption in the KGHM Polska Miedź S.A. Group and in the companies of the KGHM Polska Miedź S.A. Group located in Poland and abroad, in 2020 the Management Board of KGHM Polska Miedź S.A. made a decision, based on a resolution on the implementation of the Anticorruption Management System in accordance with the PN-ISO 37001:2017 standard in the Divisions, the Head Office of KGHM Polska Miedź S.A. and the subsidiaries. Therefore, a number of training sessions were conducted for employees, including those preparing to serve as internal auditors and Plenipotentiaries for the Anticorruption Management System pursuant to PN-ISO 37001:2017. In relation to the implementation of the PN-ISO 37001:2017 standard, in 2021 a new Anticorruption Policy was adopted for the KGHM Polska Miedź S.A. Group. The team appointed to carry out implementation work, with the support of an external expert, prepared new regulations in the area of counteracting corruption, in line with the requirements of the standard, aimed at ensuring the implementation of the Anticorruption Policy in force, which were adopted by a resolution of the Management Board of KGHM Polska Miedź S.A. and are currently being implemented in all the entities of the Group. The basis of the Anticorruption Management System is Corruption Risk Management, based on the identification and assessment of corruption risk in individual processes carried out by entities of the Group. The adopted procedures regulate the process of managing corruption risk in the Group, including the management of corruption risk in relation to Supervised Organisations and Business Partners. They define in detail the standards for dealing with activities susceptible to corruption, including in the event of a conflict of interest, giving and accepting business gifts, contacts with public officials or events which might appear to be a corruption proposal. They also define responsibility for violating the provisions of the Anticorruption Policy and anticorruption regulations.

In order to ensure the correct implementation of the adopted Security Policy and Anticorruption Policy at the KGHM Polska Miedź S.A. Group, security and loss prevention units were established in the Divisions and seven selected domestic companies; their work is regulated by the Operating Instructions of Security and Loss Prevention Units in KGHM Polska Miedź S.A. Group Divisions implemented in 2020 as well as the corresponding Operating Instructions of Security and Loss Prevention Units in the above companies. Ethics and Anticorruption Representatives have been appointed in all domestic and international entities of the KGHM Polska Miedź S.A. Group. In 2019, the Procedure for Disclosing Improprieties and Protecting Whistleblowers in the KGHM Group was updated and adapted to the requirements of the amended Act on public offerings and conditions governing the introduction of financial instruments to organised trading, and on public companies. This procedure is aimed at enhancing the effectiveness of uncovering and resolving situations related to the occurrence of irregularities representing an abuse of regulations applied in the Group, in particular the Code of Ethics of the KGHM Group, the Security Policy and the Anticorruption Policy. The procedure also defines the scope and conditions of Whistleblower protection.

In the entities of the KGHM Group, an Internal Control Procedure was implemented, prepared by KGHM Polska Miedź S.A.’s Safety and Prevention of Losses Section. The audit conducted by the Safety and Prevention of Losses Section comprises the identification and uncovering of fraud, irregularities, abuse, corruption, mobbing, breaches of the Group’s Code of Ethics and monitors the transparency of procurement processes.

Verification of contractors, including in terms of the risk of corruption and the possibility of a conflict of interest, is executed in accordance with the Verification Procedure in procurement, sales and investment processes implemented in 2019 by the Security Department of KGHM Polska Miedź S.A.

In 2020, the “ABCs of Conflicts of Interest. Corporate ethical handbook of KGHM Polska Miedź S.A.” was developed and published. The publication describes in a concise form the issue of conflicts of interest and the regulations on counteracting this phenomenon. It includes a questionnaire, thanks to which every employee can independently check whether the problem of a conflict of interest applies to them. The publication is made available to newly employed employees and is an element of regular training courses on counteracting conflicts of interest organized by Ethics and Anticorruption Representatives. The publication supports raising the organization’s awareness of the above issue. In 2021, online training for employees of KGHM Polska Miedź S.A. was developed and launched on the educational platform concerning the issue of conflict of interest. Every year, educational and information campaigns, competitions and publications are prepared for employees on ethics and counteracting corruption.

In the KGHM Group, the Anti-Personal Abuse Procedure was implemented, enabling the effective prevention of mobbing in the workplace. A tool which supports the Employer in the question of prevention of mobbing, discrimination and breaches of employee rights are the Ethics Committees appointed in KGHM Group entities, examining suspected violations of ethical standards applicable in the KGHM Group.

Support work and work aimed at raising ethical standards and corporate governance will be continued in 2022.

KGHM Polska Miedź S.A. takes ongoing actions to support and raise standards under the Security and Loss Prevention System in the KGHM Polska Miedź S.A. Group introduced in 2018.

The system is designed first of all to protect the employer’s interests by preventing acts that expose the Company to material loss and reputational harm, and secondly to optimize expenses and investments to generate savings for the KGHM Polska Miedź S.A. Group. The key elements of the system include:

• defined procedures and control mechanisms,
• standardization of procedures and processes in the aforementioned area across the KGHM Group,
• effective prevention of abuse that can lead to losses for the KGHM Group,
• effective detection of committed abuse, inspection and control activities and implementation of corrective mechanisms,
• counteracting corruption,
• improving the ethical awareness of employees.

The Security and Loss Prevention Section in the KGHM Polska Miedź S.A. Head Office is responsible for the implementation, functioning and oversight of the system. Currently, the Section is made up of two Departments:

• The Security Department, comprising among others the Ethics and Anticorruption Procedures Unit, the Loss Prevention and Control Unit, and the Physical and Technical Security Unit,
• The Supply Chain Security Department, consisting of the Supply Chain Monitoring Unit and the Analyses Unit.

In 2018, Ethics and Anticorruption Representatives were appointed in the Divisions and the Polish and international subsidiaries of the KGHM Group. Their work is monitored, supervised and coordinated by the Ethics and Anticorruption Representative for the KGHM Group (as per the applicable procedure, the function is discharged by the Director of the KGHM Security Department).

In the years 2019-2020, security and loss prevention units were established in KGHM Polska Miedź S.A. Divisions and in seven companies in Poland selected on the basis of their level of expenses and domestic threats. The unit heads are responsible for implementation and supervision over the security and loss prevention system, ethics and anticorruption procedures, supply chain security and physical and technical security. They report to the Executive Director for Security and Loss Prevention in KGHM Polska Miedź S.A.

In 2020, KGHM Polska Miedź S.A. (the Head Office and the Divisions) launched two e-learning training modules on ethics, prevention of irregularities (in particular, corruption, abuse, and discrimination) and receiving whistleblower reports in its Head Office and Divisions. The training was provided to all the employees. Training is launched for newly employed persons. In 2021, training courses were completed by 712 participants (this refers to those employed as at 31 December 2021).

In connection with the Management Board’s decision to implement the Anticorruption Management System 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, online training workshops were conducted in the last quarter of 2020 on the requirements of this standard for Ethics and Anticorruption Representatives and Management System Representatives in KGHM Polska Miedź S.A.:

• Practical interpretation of the requirements of the Anticorruption Management System standard according to ISO 37001 – 3 one-day training sessions, number of participants: 71.
• Internal Auditor of the Ethics and Anticorruption Management System based on the international standard ISO 37001, the KGHM Polska Miedź S.A. Code of Ethics and the draft standard ISO/DIS 37002:2020 – 2 two-day training sessions, number of participants: 34.
• Anticorruption Management System Representative according to ISO 37001 – 1 twoday training, number of participants: 17.

On 16 December 2021, e-learning training on problems of conflict of interest was started for employees of KGHM Polska Miedź S.A. having access to the e-learning platform.

In 2019-2021, a number of communication activities were carried out, addressed to the employees of the KGHM Group, promoting ethical standards and contributing to the culture of the organization:

• 6 educational films were published on the topic of the Code of Ethics, abuse prevention, the Whistleblower Platform and protection of Whistleblowers, rules of acceptance and giving of business gifts, as well as prevention of corruption and conflict and interest,
• several articles on related topics were published in the internal Curier magazine and in the Group’s Intranet,
• a special supplement focusing on Whistleblowers was published in Curier, the internal bi-weekly magazine,

• the updated anticorruption Manual was published in an electronic version,
• the “ABCs of Conflict of Interest. Ethics Manual of KGHM” was developed, published and distributed; the publication presents a concise description of the conflict of interest and the company’s regulations for preventing this phenomenon,
• a questionnaire has been developed allowing employees to carry out on their own a voluntary, individual assessment of the risk of conflict of interest,
• an information campaign on the handing of business gifts was conducted.

In 2021, two campaigns were conducted, including competitions:

• a campaign addressed to employees of the KGHM Group to promote the function of Ethics and Anticorruption Representatives,
• a campaign addressed to employees of KGHM Polska Miedź S.A. concerning corruption prevention, including adoption of a new Anticorruption Policy and implementation of the Anticorruption Management System in compliance with the PN-ISO 37001 standard.