Compliance

A culture of complying with the law and ethics - the compliance function (compliance management)

Literally translated, "compliance" means being in accordance with the letter of the law. Acting in line with the law is expected of every employee, and rules of ethics and responsibility for actions towards co-operators, clients or business partners are in effect equally for everyone.

PGE Group's compliance function

PGE Group's compliance management function covers solutions that apply to all PGE Group employees, including the management and leadership teams; it also encompasses all entities within the Group.

The main aim of the compliance function at PGE Group is to support PGE Group's Strategy as the most effective and flexible energy group in Poland and to minimise the risk of non-compliance, which could result in penalties or sanctions being imposed or reputation being lost as a result of a failure to adapt to regulations and standards that are stated in law or constitute best practices in this area.   

In order to effectively achieve the above key goals, PGE Group is:

• Building an organisational culture that is based on respect for the law and ethical rules and sustainable development principles, especially through internal regulations such as the Code of Ethics, Code of Conduct for Business Partners and Anti-Corruption Policy.
• Implementing clear and transparent processes ensuring the ability to identify, explain and immediately rectify violations of the rules.
• Conducting educational activities and communication concerning matters that are related to respect for the law and internal regulations as regards compliance and honest attitudes.

Organisation of PGE's compliance function

Supervisory Board of PGE S.A.

The Supervisory Board of PGE S.A. oversees and monitors PGE Group's compliance management system, evaluates the effectiveness of the system and the compliance function, based on periodic reporting, among other things. The Supervisory Board's Audit Committee is tasked with on-going supervision of the compliance system.

Management Board of PGE S.A.

As part of the internal control system, the Management Board of PGE S.A. implements and maintains an effective compliance management system, separate from the risk management function and internal audit function, implements appropriate and effective solutions that ensure that PGE Group's employees and management will conduct business in a fair, ethical, consistent manner in compliance with the law and regulations and PGE Group's internal guidelines. The Management Board of PGE S.A. especially directs the compliance management process at the entire Group and ensures the resources to effectively perform the process, provides the unit responsible for compliance with the right access to information and data that is essential to implement its tasks and sets out general directions for compliance management. The Management Board presents to the Supervisory Board (including the Audit Committee) relevant information and reports regarding PGE Group's compliance management system.

Compliance Department at PGE S.A.

Organisational unit at PGE S.A. that is in charge of PGE Group's compliance function, whose director reports to a member of PGE S.A.'s management board.

Compliance structure at PGE Group's business lines, segments and other PGE Group companies

At business lines and business segments, the compliance function is implemented through designated compliance coordinators.

Performance of Compliance Programme for 2017

As part of the Compliance Programme, the following tasks were completed at PGE Group in 2017:

Expansion of system for reporting irregularities or suspected irregularities and handling such reports

Activities intended to promote and develop the reporting system were conducted in 2017. The compliance department examined all reports concerning potential irregularities. The reports were examined and, in justified cases, explanatory and corrective procedures were conducted. As regards the above, very close cooperation is maintained with the security department and audit department. An important element strengthening the reporting system was the adoption in November 2017, in agreement with compliance coordinators at PGE Group companies, of the "General Procedure - Submitting and handling Non-Compliance Incident Submissions at PGE Dystrybucja S.A. and protecting whistleblowers." The procedure clarifies rules for reports, their classification, reporting and indicates guidelines for conducting explanatory procedures and corrective actions.

Combating corruption

As a supplement to PGE Group's internal regulations, on October 13, 2017, the Management Board of PGE S.A. adopted "PGE Group's Anti-Corruption Policy." The policy concerns rules for combating corruption, avoiding conflicts of interest at the Group, giving and receiving business gifts, and introduces a division of responsibilities and tools for managing the process of combating corruption, such as: cyclical analysis of corruption risk, anti-corruption education, monitoring and description of processes. As part of implementing activities, the provisions of the Anti-Corruption Policy were discussed at a dedicated conference which was attended by the management boards of all PGE Group companies, the management of PGE S.A. and compliance coordinators.

We created a special section for employees on the corporate Intranet dedicated to anti-corruption activities, explaining the key aspects of the procedure and legal provisions, clarifying the issue of business gifts, register of benefits and conflict of interest. We also provide information on how to report unfair or corruptive behaviour observed at PGE Group companies. At PGE Group, we approach this subject very seriously and we protect the whistleblower, i.e. a person reporting fraud, unfair actions or breaches of law in good faith, by ensuring the confidentiality of the whistleblower's personal data and protecting the whistleblower against any sort of revenge or mutual accusation stemming from the report.

In 2017, all 21 of PGE Group's companies that have a compliance function were subject to analyses in terms of corruption risk.

As part of detailed activities, area programmes were implemented such as:

• Attitude of respect at PGE Group - the aim of this programme was to develop consistent solutions at PGE Group to combat discrimination, mobbing, molestation and other reprehensible behaviour.
• Safety of corporate information at PGE Group - the "Procedure for classification of information at PGE S.A." was implemented.
• Workplace health and safety - implementation of solutions strengthening internal oversight of workplace health and safety processes and supporting the development of safe working conditions at PGE Group.
• Procurement - introduction of solutions strengthening internal oversight of purchasing processes at PGE Group.

Monitoring changes in the law

In 2017, analysis of legal acts was performed at PGE Group, as a result of which over 1000 laws and internal regulations concerning the compliance area were identified.

Compliance risk

The compliance department together with the risk department analysed the process of identifying and assessing risks at PGE Group as regards compliance and analysed the effectiveness of the tools being used. As a result, a common approach and procedure were developed to draft risk sheets and risk profiles. It was established that Compliance Risk Sheets, used to evaluated risk at business lines, will be used by the compliance department to evaluate risks at other PGE Group companies covered by the compliance management system. The first compliance risk assessment was performed at these companies in 2017.

Internal compliance processes

PGE Group companies received guidelines from the compliance department regarding the appointment of a compliance coordinator for the business segment and concerning organisational solutions.