HIGHLIGHTS, FIGURES AND CASES

Our strategic objective for 2015-2020 is to “Enhance human rights due diligence in business processes and fight corruption”. We continue to improve the ethics management at Group-level.

ACTIVITIES IN 2016 (BASED ON STRATEGIC OBJECTIVE AND ACTIONS)

  • The ethics management system was audited by a third party to identify gaps to international benchmarks and best practices to find improvement possibilities.
  • Code of Ethics: The previous version of the Code of Ethics took effect in 2010 and was amended as of 1st February 2012. Based on Ethics Council experiences and the third-party audit results the Code of Ethics was reviewed, and a new Code of Ethics and Business Conduct (CoEBC) was elaborated. Issue is due in early 2017 and roll-out is continuous during this year.

    The CoEBC is available in 13 languages (English, Bosnian, Croatian, Polish, Hungarian, German, Italian, Russian, Romanian, Serbian, Slovakian, Slovenian and Ukrainian). 100 % of all MOL Group employees signed upon entry to get acquainted with our Code and all receive a copy of the new issue.

    The Business Partner Code of Ethics is an extract of the CoEBC highlighting the most important expectations in our supply chain, and it is a component of 91% of supplier contracts.

    74% of Joint ventures where MOL Group stakes are below 51% adopted agreed version of the Code of Ethics.
  • Ethics communication: Ethics awareness raising articles were presented in internal magazines.

    Ethics is a recurring topic in the “Future Reloaded’ sustainability quarterly newsletter.

    MOL Group sponsored a “Business Ethics FAQ for SMEs” publication (HBLF initiative).

    MOL Group Ethics Management System was introduced in ‘Future Leaders’ talent program of Business Council for Sustainable Development of Hungary (BCSDH).
  • Ethics training programme: we placed special emphasis on spreading the Code of Ethics values and norms through ethics trainings.

    In order to raise ethical awareness in retail networks, tailor-made training was conducted for service station operator partners and attendants in Croatia, the Czech Republic, Slovakia and Romania.

    Tailor-made, focus-group specific training materials were prepared for Procurement employees, and in human rights topics, and pilot training sessions were held at MOL LUB Ltd., and at the Annual Sustainable Development workshop for the affected employees of MOL, Slovnaft and INA Flagship companies.

    Based on estimates, eLearning, classroom courses, other ethics training and filling station training events totalled 11,970 hours.
  • Ethics Council, ethics officers: In 2015 the MOL Group Ethics Council`s composition was renewed, and all group level senior managers of business and functional units including the Chief Operating Officers (COOs) of significant MOL Group companies (MOL Nyrt., Slovnaft a.s.) are members of the Ethics Council. We also continue the good practice of assigning to the Council an independent external Ethics Council chairperson, who is a business ethics expert, and one employee representative.

    MOL Group Ethics Council had 22 circular voting in 2016 and two sessions.

    Since 2011 INA Group operates an Ethics Council, from 2015 it reports operation statistics on a quarterly basis to the MOL Group Ethics Council.

    In 2015 Ethics Council operations were reinforced with the establishment of the Group Ethics Officer position at Group Compliance & Ethics organization. The Group Ethics Officer is responsible for managing the ethics grievance and investigation mechanisms and for providing professional compliance activity and decision preparation support for the Council, under the supervision of the external Ethics Council chairperson. This system proved its efficiency in 2016 by reducing average investigation time (in days) by 21% average full ethics process time (in days) decreased by 40% compared to 2014.

    The local ethics operations are conducted by nominated of local ethics officers at every subsidiary having more than 20 full time employees. There are 40 ethics officers at the MOL Group companies.
  • Ethics risk assessment: Ethics risk assessment has been a key pillar of our ethics management system since 2011.

    In 2015 we further developed this activity with widely applied probability / impact matrix approach and with external human rights and corruption risk benchmarking of countries where MOL Group operates. 65 subsidiaries (including 16 subsidiaries consolidated by INA d.d.) from 19 countries provided input to the risk assessment process.
  • According to the results the highest ethical risks in MOL Group are breaches of HSE and property protection (Security) rules, corruption (incl. gifts to business partners and conflicts of interest), harassment/bullying, the private use of corporate assets, information security breaches, and personal data protection. As a Downstream-specific risk, trade restrictions that potentially affect deals with partners were identified. Possible disputes with local communities were identified as an Upstream-specific risk. According to external benchmarks, the riskiest countries for MOL Group operations (both from a corruption and from a human-rights perspective) are Kazakhstan, Iraq, Pakistan, Russia, and the Ukraine.


    Impact / Consequence (score) Most typical ethics risk scores
    Very High (5) Money laundering, terror financing Fair trade violation Corruption HSE breach  
    High (4) Child labor Sanction listed partners InfoSec
    breach
    Fraud Business partner gifts
    Medium (3) Political / religious discrimination Discrimination Intellectual property violation
    Negligent damages to property
    Privacy,
    personal data
    protection
    Conflict of interests
    Low (2) Freedom of beliefs violation Bullying "Bossing" Local communities Property security Harassment
    Very Low (1) Freedom of assembly violation Political
    activity at
    work
    Right to paid
    leave
    violation
    Right to free time Private usage of corporate assets
    Probability / Likelihood (score)

    In order to decrease risks, several initiatives have been rolled out:

    • Integration of an ethics compliance questionnaire into our supplier prequalification system
    • Security training at MOL Group companies, including the topics of avoiding fraud and conflicts of interest, and abiding by house security rules
    • Human rights training for security staff in Pakistan
    • A retail fuel-loss risk assessment matrix was drawn up, and a related pilot project for identifying cases of fraud was completed by the Security Anti-fraud Team

ETHICS CASES

The Group Ethics Officer (a member of the Group Compliance and Ethics unit) coordinates responses on behalf of the Ethics Council to grievances and reports addressed to the Ethics Council via the ‘Speak Up!’ whistle-blowing system, investigations into ethics-related issues, whistle-blower protection and ethics-related questions, and provides general decision-making support.

Cases of misconduct are detected and investigated using various mechanisms throughout the MOL Group by applying the principle of subsidiarity. Cases are inspected by the Ethics Council only if the whistle-blower has turned to (or the concerned functionary escalates the case to) the Ethics Council, thus the Ethics Council statistics does not mirror every – typically minor or trivial – internal ethics, compliance or security investigations. Data about these cases can be found in corresponding chapters of MOL Group Sustainability Annual Report.

The number of reports submitted via ‘Speak Up!’ and ethics investigations has increased over the last five years. Compared to the 90 ethics-related complaints/reports submitted in 2015, a higher number (93) were received by MOL Group and the INA Group Ethics Councils in 2016. This continuous increase indicates an improvement in awareness about ethics issues by internal and external stakeholders, in line with our strategy. The proportion of ethics-related reports arriving from external (non-MOL Group company employee) stakeholders decreased (53% of the total in 2015; 30% in 2016).

 
 

In 63 cases launching investigation was justified and in 24 cases ethical misconduct was verified. *(As of the end of 2016, 13 investigations were ongoing.)

External reports were primarily submitted by customers (37%), suppliers, supplier subcontractors and employees (22%), concerned other third party, citizens (11%), and former service-station partners and employees (11%). One report/grievance was filed by a former employee and one by a shareholder (8%). In 11% of external reports, the relationship with MOL Group was not revealed, since whistle-blowers have the option not to disclose such details.

Consequences for ethical misconduct included the termination of six employment contracts and one supplier contract, eight written disciplinary notices, and two verbal disciplinary warnings. In three cases the Ethics Council made recommendations about how to correct and improve business processes, and in one case the Ethics Council ordered a customer to be reimbursed. Regarding three complaints concerning fake job offers made by fraudsters in the name of MOL, criminal charges were initiated. One employee with theft-related disorders who had caused minor damage to colleagues was ordered to attend therapy. There were no confirmed cases of corruption but in one case of a confirmed conflict of interest, disciplinary measures were initiated.

In 2016, stakeholders sought advice from the Ethics Council regarding dilemmas without reporting any misconduct in 7 instance.