Ethics and business conduct
Approach to promoting fair business practices
EVRAZ recognises that business transparency facilitates trust-based relations with all stakeholders and enhances the economic and social environments in which the Group operate. The Group has high standards for employees and contractors in terms of fair business conduct, and places emphasis on demonstrating a responsible approach to preventing, identifying, and responding to cases of bribery, corruption and other types of malpractice. In the event of fraud, EVRAZ makes every effort to eliminate the consequences, address the causes, and prevent the reoccurrence of such cases in the future.
EVRAZ adheres strictly with the requirements of both Russian and international legislation, including the Russian Law “On Preventing Corruption”, the UK Bribery Act, and the US Foreign Corrupt Practices Act.
The Group has elaborated a set of internal documents on business ethics, which must be complied with by all employees of the Group. These comprise:
- The Code of Business Conduct.
- The Anti-corruption Policy.
- The Anti-corruption Compliance System Policy.
- The Anti-corruption Training Policy.
- The Charitable donation and Sponsorship Policy.
- The Gifts and Business Entertainment Policy.
- The Hotline Policy and whistleblowing procedures.
- The Conflicts of Interest Policy.
- The Human Rights Policy.
- The Diversity and Inclusion Policy.
- Modern Slavery Statement.
The Anti-corruption Policy and Code of Business Conduct are two key documents that set forth the principles and norms of ethical behaviour adopted by the Group. In the previous reporting period, these documents were duly updated in order to reflect the changes that took place in the Group since their first appearance in 2013. In 2020, EVRAZ continued to update the documents and supplemented the Anti-corruption Policy and Code of Business Conduct with policies on managing conflicts of interest and on sponsorship and charity activity. These procedures allow more efficient management of corruption-related risks.
All employees of the Group are obliged to adhere to the ethical principles set out in the Code of Business Conduct. The Code refers to such principles as equality of rights and opportunities, respect for people, rejection of all forms of discrimination and slavery, zero tolerance towards corruption, as well as the following principles of conducting business.
Approaches to combating corruption and adherence to ethical business conduct are applicable for all Group entities and are implemented across all levels. The Audit Committee (which reports to the Board of Directors), together with compliance managers, play the key role in anti-corruption activity. The committee is responsible for monitoring the overall effectiveness of the Group’s anti-corruption system, investigations in this area, and issues related to corruption risks.
Compliance managers, who have been appointed at each significant subsidiary, actively monitor employees’ compliance with internal documents, examine reports of possible cases of corruption and other malpractice, conduct respective investigations when necessary. The results of investigations (reports and related recommendations) are presented to the business unit’s senior management, the Group’s compliance manager, and the Vice President, сompliance with Business Procedures and Asset Protection support.
In addition, compliance managers monitor charity and hospitality expenses, conduct checks of potential and existing business partners, analyse and prevent potential conflicts of interests, and are involved in monitoring tender procedures.
Anti-corruption risk management
EVRAZ adopts a systematic approach to identifying, assessing, and managing risks related to corruption and bribery. The main documents governing the Group’s handling of these risks are the Anti-corruption Policy and Anti-corruption Compliance System Policy.
At the end of each year, compliance managers at all subsidiaries perform a comprehensive analysis of corruption-related risks in respect to all assets and business processes of the Group. For business processes that are by nature most vulnerable to risks (procurements, payments, sales, charity and sponsorship, government relations, and others), a detailed analysis of the system of controls and procedures is performed. Compliance managers monitor existing risks and proactively identify new and emerging ones. Information on risks is reported to the Audit Committee.
The corruption risk assessment for 2020 was made in January 2021, due to the COVID-19 pandemic. The Group is proud to report that the robustness of its anti-corruption practices and policies allowed it to quickly adapt to the uncertainties brought on by the pandemic and ensure the integrity of business ethics. In 2020, there were no investigations initiated into suspected corruption involving state or public authorities. However, compliance managers’ own leads regarding potential fraudulent schemes between unscrupulous managers and suppliers/providers led to investigations. The employees involved were dismissed and vendors banned.
Raising awareness of ethical business conduct
A commitment to ethical behaviour underpins EVRAZ’s corporate culture, and the Group therefore focuses on raising awareness of ethical principles among employees and contractors.
Mandatory requirements in the form of corporate policies and documents are published on EVRAZ’s internal and external websites, so that each employee and other stakeholders can refer to them at any time. The Group also introduces new employees to the principles of ethical behaviour and ensures that all employees are aware of and have access to up-to-date information as well as any changes in regulatory documents.
EVRAZ’s education initiatives in the field of ethical behaviour make a significant contribution to preventing corruption and bribery. Top management are committed to raising the employees’ awareness of strict ethical standards of business behaviour. They systemically and regularly elaborate on its importance and value in communication with specialists, managers, and administrative personnel. For the past several years Group’s employees have attended an online anti-corruption course. Developed by Thomson Reuters, it covers such topical issues as business gifts, hospitality, supplier communications, and charity. The course consistently emphasises that, if an employee suspects that inappropriate behaviour has taken place, they should contact compliance managers or call the Hotline. In 2020, over 3,400 employees throughout the Group completed online anti-corruption training.
In 2020, EVRAZ decided to improve its in-house capabilities and to move beyond externally provided trainings. The Group is now developing its own Learning Management System, which will considerably enhance the effectiveness of employee training management, as the courses will become more frequent and relevant to the specifics of the Group’s operations. The course Anti-corruption Policy Requirements has already been elaborated by the Group and is implemented. The course will be assigned to each employee every two years, it contains assignments and tests on issues covered in the Anti-corruption Policy. In addition, the Group has elaborated a course on the Code of Business Conduct and is working on a conflicts of interest course. Together, these courses will form a single programme that is mandatory for all managers of the Group.
EVRAZ also requires compliance with the principles of ethical behaviour on the part of suppliers and counterparties. To this end, each contract contains an appendix with a reference to the need to comply with EVRAZ anti-corruption requirements and a link to the website where the Anti-corruption Policy is published. In 2020, the Group worked out a course on EVRAZ anti-corruption principles for suppliers and counterparties, which has already been taken by around 300 counterparty managers. In 2021, it is planned to further develop the Learning Management System, improve the training system for counterparties on the Group’s principles in the sphere of ethical business conduct.
EVRAZ encourages employees and stakeholders to adhere to the principle of transparency and to report cases of misconduct or issues that they find concerning or suspicious, using a 24/7 whistleblowing hotline which guarantees anonymity.
The Group operates two separate whistleblowing hotlines:
- The Corporate Whistleblowing hotline for all major plants, including the Siberia Region (Steel and Coal segments), the Urals Region (Steel segment), EVRAZ Vanady Tula, and EVRAZ Metall Inprom.
- The EVRAZ North America (“ENA”) hotline.
Incoming reports are registered in the IT system and then allocated to relevant specialists (e.g. HR, HSE, Security), depending on the subject of the report. The specialists then analyse the report and take specific measures to resolve the issue. If the report is not anonymous and the person has provided contact details, the Group informs them about the status of the report as well as respective measures taken.
All complicated, controversial, or sensitive issues and handled by the Hotline Committee (for the Corporate Whistleblowing hotline) and the Hotline Team (for the ENA whistleblowing hotline), which include senior executives, so the Group can be confident that all appropriate measures are taken to address reports.
As a result of the well-structured process in place for handling reports, year-to-year there is growing confidence in the whistleblowing hotlines among the Groups’ employees and stakeholders. In 2020, 1,096 reports were submitted via the Corporate Whistleblowing hotline, and 49 via the ENA hotline. Out of all the reports received, 50 related to fraudulent intent. The respective contracts with the employees concerned were terminated, and necessary measures were taken to prevent such cases from reoccurring in the future and to eliminate the consequences.