Rolls-Royce Holdings plc – Annual report – 31 December 2018
ETHICS AND COMPLIANCE
We work hard to create an environment where everyone in Rolls-Royce can work safely, act with integrity, and deliver excellence. This helps ensure that we are a company that people want to work for and want to work with. It helps to keep us strong, sustainable and resilient as a business.
We continue to meet the requirements of the DPAs entered into in 2017, including reporting progress made with our ethics and compliance programme. During the year we published an enhanced code of conduct (Our Code), as well as a suite of consolidated Group policies. Our Code focuses on our new values and behaviours, and brings together our commitments to adhere to the highest standards and to supporting our people to be at their best. Our Code applies to all employees, wherever they are located.
We have a zero tolerance approach to misconduct of any kind, and will take disciplinary action, up to and including dismissal, in the event of a breach. In 2018, 59 employees (2017: 65 employees) left the Group for reasons related to breaches of Our Code.
Our Code sets out the behaviours and principles we expect each of our people to demonstrate. It also provides guidance on how to apply these principles in our daily activities through real life examples. Our Code can be accessed online or as a mobile app, as well as in booklet form. In 2018, 99% of managers certified their commitment to adhere to these principles; 98% of employees completed our ethics training. We flow these commitments to our suppliers through our Supplier Code of Conduct, which was also reviewed during the year. All suppliers are contracted to adhere to this, or to a mutually agreed alternative.
Anti-bribery and corruption
Our Code and anti-bribery and corruption policies are clear in our commitment not to tolerate bribery or corruption of any form. During 2018, we continued to take steps to strengthen our anti-bribery and corruption compliance, including updating our policies and continuing our monitoring and assurance work.
Our due diligence is dependent on the level of risk that a particular third party presents, and may include verification visits, screening, interviews and obtaining reports from specialist providers. This year we have conducted a number of external audits on some of our highest-risk third parties. We also conduct extensive due diligence before entering into joint ventures, and are working with our existing joint ventures to enhance their own ethics and compliance programmes.
Those employees who have a higher likelihood of exposure to potential bribery and corruption, due for example to their work location or role type, are required to complete dedicated training. This year’s training focused on gifts and hospitality.
We are committed to maintaining the highest ethical standards, and to maintaining and improving global policies and processes to avoid any potential complicity in human rights violations related to our operations or supply chain.
This commitment, including our position on forced labour, involuntary labour, child labour, and human trafficking, is embedded within Our Code, as well as our Global Human Rights policy and Supplier Code of Conduct. Human rights due diligence is embedded within our operating systems and processes, including recruitment and procurement processes.
More information on our approach can be found in our anti-slavery and human trafficking statement, available at www.rolls-royce.com.
For more information see Safety & Ethics Committee Report, pages 96 to 101.
SAFETY & ETHICS COMMITTEE REPORT (extract)
Ethics and compliance
Following the DPAs, much of the Committee’s focus in the year has been on overseeing the Group’s ethics and compliance work plans – see Ethics and Compliance report on page 48. This included obligations to the regulators and monitoring progress in implementing the recommendations put forward by Lord Gold in his reports. Lord Gold attended all Committee meetings during the year and updated the Committee on how he has been overseeing and supporting this work, as well as reporting on his particular areas of focus and activities. This included: continuing his engagement with employee focus groups to understand how the ethics and compliance programme is working in practice; monitoring the continuing work to embed the right behaviours and attitudes across the organisation; and assessing the resource needed to drive the programme, both centrally and within the businesses.
The Group’s ethics and compliance workplans were reported to the Committee throughout the year, including monitoring resourcing of the teams across the organisation. We noted the reports of a good level of engagement by ITP Aero as it sought to align to the requirements of the Group’s programme, having joined the Group at the end of 2017.
At each of our meetings during the year, we received an update from the General Counsel on the Group’s continuing dialogue and co-operation with regulators and government agencies. We also received reports and briefings from the head of ethics and compliance on ethics and compliance matters generally.
We continued to keep the level and nature of adviser engagements under review following a significant reduction in 2017 and were notified of any claims received during the year from any advisers who had been terminated in the past.
The Committee reviews statistics and details of Ethics Line reports at our meetings and in 2018 we observed that bullying and harassment were prevalent themes. This had also been picked up as a theme by Irene Dorner in her role as Employee Champion and brought to the Board’s attention. This warranted a focused response and in December we received a briefing from the Chief People Officer and members of his team, with input from the head of ethics and compliance, on the planned campaign activity to seek to drive out such behaviours. We will review the impact of this activity during 2019.
In autumn 2018, we oversaw the roll-out of our enhanced code of conduct and a suite of refreshed and simplified Group policies combined into one simple manual for employees. The Group’s enhanced code of conduct was developed in digital format including a mobile-enabled app, allowing employees to access it wherever they are, which is of particular benefit to shop floor workers or those in remote locations. The launch of Our Code was supported by new training modules that were subject to mandatory completion during the year, with managers who failed to do so being subject to capped performance reviews. Of the population of several thousand managers required to complete the training, only one failed to do so by the due date without having acceptable grounds for mitigation; a remarkable improvement on previous completion rates for core training modules.
We also monitored the Company’s ongoing compliance with the General Data Privacy Regulations and progress with the Company’s application for Data Privacy Binding Corporate Rules.