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 the economic development of developing countries.

Sika enjoys a high ethical reputation in the market and is perceived by its stakeholders as a reliable partner. Sika believes that sustainable and successful business depends heavily on operating in compliance with laws, regulations and integrity. Accordingly, Sika operates a Group-wide, culturally well-established and integrated Compliance Management System (CMS), which evolves and improves year on year. 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 integrity and responsibility, and full transparency at all levels. 

DISCLOSURE 103-2: THE MANAGEMENT APPROACH AND ITS COMPONENTS

Sika’s management approach to anti-corruption aims at avoiding negative impacts on its reputation and financial costs associated with non-compliance.
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 gifts, 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 (trips, excessive gifts of any kind). It is always intended to influence the receiving person’s decision to obtain an improper advantage for the person or entity offering the favor. It does not matter whether you offer or receive such a favor. It does not matter who the counter party is (government, company or private person). Except for ordinary gifts and entertainment which do not aim at an improper advantage (see section 3) it does not matter how big or small the favor or the advantage is. It still is bribery or corruption which 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 and markets reasonable gifts and entertainment (meals, sporting 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 companies must implement 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 this Code of Conduct. The rules must also provide for authority levels 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:

Commitment

Sika has a zero-tolerance approach to bribery and corruption within the context of its own operations and with its suppliers.

Goals and Targets

Sika does not tolerate any incidents of corruption. Confirmed misconduct leads to dismissal and possible court action.

Responsibilities

At Sika, compliance is considered mainly a line management responsibility, specifically 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 at ensuring 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 raising awareness on the importance of compliance risk management, through internal communication, training and specific initiatives addressing areas of increased 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 core elements of Sika’s CMS are the Group Compliance Organization, the e-learning on the Code of Conduct, the planned e-learning on anti-corruption, and the Sika Trust Line, a web-based reporting platform where employees may report serious misconduct or breaches of Sika’s Code of Conduct in a confidential environment, whenever reporting through other internal channels, such as line management or HR, is not feasible or effective. In this way, the compliance function contributes to the Group’s performance by providing a framework to preserve and strengthen Sika’s corporate value-based culture, improve its corporate governance and mitigate risks. The more effective this framework is, the more successful the organization can be.

POLICIES

  • Code of Conduct (PDF) – translated into 36 languages
  • Localized Gift & Entertainment Policies
  • Supplier Code of Conduct,
  • Procurement Manual (Ethics Reports)
     

Specific Actions

  • Compliance Commitment: As part of their duties and responsibilities, GMs at Sika ensure that their companies operate in compliance with applicable laws and Sika’s internal regulations. All GMs, Senior Managers and local management team members renewed their commitment to lead with integrity and be compliance role models by signing the “Compliance Commitment 2020-21”. In particular, they promised (i) to “report and escalate serious violations or well-founded concerns related to bribery/corruption” to their superior and/or the Area Manager, the Regional Manager or Group Compliance, and (ii) to make sure that suspected misconduct receives proper and timely follow-up, and that employees who report suspected misconduct in good faith are not subject to retaliation.”
  • Compliance-GRI Confirmation: The Compliance-GRI Confirmation is sought from each GM on an annual basis. It 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”. Again, this year, no accusations of corruption were reported with the Compliance-GRI Confirmation in any of the more than 100 countries in which Sika is present.
  • Strengthening of the Group Compliance Organization: During 2019, Sika further strengthened the Group Compliance Organization. The Group Compliance Officer took over the additional role as Head of HR and now reports directly to the CEO. Moreover, several new employees joined the Compliance team with a full-time role: a Senior Compliance Manager, assuming the full-time role of Sika’s Deputy Group Compliance Officer, a Junior Compliance Manager and a Compliance Manager (previously working as Compliance Area Manager Africa, joining on March 1, 2020 on a 60% basis). The compliance team of the newly acquired Parex Group, located in France, has also been integrated and will take on a part-time role in supporting the Europe South area. Finally, two new positions with partial compliance responsibilities resulted from the geographical reorganization of the Americas region. Overall, 3.6 FTE are now fully assigned to the Group Compliance Organization. The other team members are assigned to compliance tasks on a part-time basis. This includes the Group Compliance Officer, the Group Data Protection Manager, the four Regional Compliance Officers, as well as another 10 compliance officers operating at area or local levels.
  • Group Audits/Compliance Audit Program: Compliance with Sika’s Code of Conduct and other corporate policies and manuals is monitored through regular Group audits (125 in 2019) and legal supervision of the local companies and GMs. A proposal to introduce a Compliance Audit Program covering ethical leadership, anti-corruption, anti-trust and third parties screening is under review. In 2019, the compliance function defined a three-step action plan for a Compliance Audit Program which is awaiting approval by the Audit Committee.
  • Supplier Management: Sika’s Supplier Code of Conduct requests suppliers to respect Sika’s zero-tolerance policy concerning bribery and corruption and, thus, to 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 subcontractors 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 Supplier Code of Conduct. Sika is increasingly requested to certify compliance not only regarding its own activities, but also regarding those of its suppliers. Accordingly, Sika has started to improve and strengthen its Third-Party Due Diligence efforts. Under the lead of Corporate Procurement, Sika has agreed to join “Together for Sustainability” (TfS), an industry-driven organization in which the major chemical companies participate (see graph below) with the aim of developing and implementing a global assessment and audit program for their supply chain.
  • Training/new e-learning: Anti-corruption is part of the Code of Conduct training for all employees and GMs. 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 to supplement the regular class training events. The program includes a special section on Gifts & Entertainment and bribery risks. Employees are regularly reminded, at least once a year, of these rules. Other corporate functions regularly conduct targeted training sessions and audits. In 2019, more than 450 managers were trained on anti-corruption and other compliance matters by members of the Group Compliance Organization. For the compliance trainings, Sika uses the Sika Business School's programs for the enhancement of ethical leadership. In 2019, several cross-functional training initiatives at regional and local level provided information on the importance of the Code of Conduct, introduced the new compliance organization, and outlined the main tools available to support management in mitigating compliance risks. As part of the post-acquisition integration of the Parex Group in 2019, around 4,000 former Parex employees were aligned with Sika’s compliance policy framework and trained on compliance risks and the available tools. A new e-learning on anti-corruption is planned for 2020.
  • Internal Reporting Tool: To preserve and foster Sika’s strong culture of trust, integrity and transparency, Sika developed a new web-based, independent reporting platform with 24/7 access, the Sika Trust Line (available in 35 languages) and used as anonymous whistleblower tool. It was rolled out throughout the organization as part of an Awareness-Raising Campaign on Compliance, which started in 2016 and was completed in 2019, with an additional 11,000 employees trained across the regions. The Sika Trust Line is an externally hosted reporting channel where Sika’s employees may anonymously raise legitimate complaints regarding serious misconduct, such as corruption incidents, and/or other breaches of Sika’s Code of Conduct, in a safe and confidential environment. Reports are treated confidentially and there is a clear non-retaliation policy in place. The Sika Trust Policy (now available in 40 languages) defines clear rules and processes on rights and obligations relating to internal misconduct reporting. In the course of the Awareness-Raising Campaign, more than 25,000 employees received information and training on the tool.
  • Anti-fraud: In 2019, Sika continued its cross-functional effort to mitigate cyber-fraud risks. Throughout the year, the IT Security Team issued numerous alerts, raising the group-wide awareness regarding external security threats and fraud attempts. Local Sika organizations were assisted in raising awareness through themed fraud and IT security newsletters on principles and practices for mitigating cyber risks.
    With cyber threats and targeted 'attacks' rapidly increasing, Sika employees and local IT departments were also trained on how to respond to detected threats and escalate perceived IT problems promptly to Group IT. An ad hoc IT security training for employees was rolled out globally to increase awareness and support local organizations in the timely identification of cyber risks. More than 8,500 employees completed the training. With regard to internal fraud, an anti-fraud training initiative launched in 2017 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. In 2019, the Regional Controller/Compliance Officers provided further training on how to prevent and detect internal fraud. 
  • Support of Transparency International: Sika financially supports Transparency International in its global fight against corruption. 
     
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 identify root causes and monitor the implementation of improvement measures.
  • 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 the applicable laws. A standard incident reporting and response process has been developed to provide guidance for Sika’s management on the procedures to be followed in case of suspected criminal acts or material misconduct. 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 Trust Line are automatically forwarded to the Group Compliance Officer who conducts and/or supervises the investigation process. The Sika Trust Line (available in 35 languages) is an independent reporting platform available 24/7 and used as an anonymous whistleblower tool. Reports are made anonymously and handled confidentially. There is a strict non-retaliation policy in place. 
  • Overview of compliance cases: Sika’s Group Compliance Officer regularly reports to the Audit Committee of the Board of Directors, the Group Management and the External Auditors about known compliance cases and the corrective actions taken.
  • General Managers’ briefings: GMs 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.

A highly motivated team with expertise on all processes was the basis for a successful implementation of the efficiency enhancement program

MANAGEMENT COMPETENCE
Sika Australia: A highly motivated team with expertise on all processes was the basis for a successful implementation of an Operational Efficiency enhancement program.