DSM Code of Business Conduct

Introduction

The DSM Code of Business Conduct ('the Code') serves as an umbrella for several other DSM regulations and forms the basis for the company's ethical business behavior. In 2017, we updated the Code to emphasize the importance of long-term value creation and our company culture as well as to align it more closely with daily operations. This included:

  • Strengthening our sustainability ambitions by anchoring Brighter Living Solutions into our mission and adding new business principles on low-carbon innovations and water security;
  • Simplifying existing business principles by reducing the number of principles from 31 to 17; and
  • Clearly outlining our aspired company culture, which is supported by the ONE DSM Culture Agenda and the Developing leadership and people management.

Our corporate Strategy 2018: Driving Profitable Growth builds on this foundation. Additionally, we made the Code's e-learning course more user-friendly. It is shorter, customized for the main business functions and includes a simple refresher for long-term employees.

All DSM employees are expected to follow the Code, which is available in seven languages. The full text also appears on the company website. The Managing Board holds DSM's unit management accountable for compliance.

COBO

The DSM values training program contains several e-learning courses on these regulations for all employees or, for certain subject matter, target groups. In 2017, many e-learnings were improved by providing shorter, more inspiring, and targeted content. When DSM acquires a business, integration and compliance plans are rolled out to make sure new employees are trained.

DSM's regulations cover the three dimensions of People, Planet and Profit, of which the most important are listed here:

People: To support DSM's ambition to create an incident-free and injury-free workplace, the Life Saving Rules specify the 12 most important rules that must be followed by all employees to prevent incidents.

The Unlawful Harassment Prevention e-learning emphasizes the importance of the cultural, diversity and non-discrimination aspects of the Code and focuses on effective employee relations, communications, and non-discriminatory practices.

The DSM Privacy Code for Employee Data and the DSM Privacy Code for Customer, Supplier and Business Partner Data prescribe mandatory training for Privacy Officers, HR employees, legal counsels and employees who regularly work with personal data. Anticipating the new European General Data Protection Regulation that comes into force in 2018, privacy procedures were reviewed and adjusted in 2017. The corresponding Privacy e-learning was adjusted accordingly.

A Human Rights position paper is available on the company website. For more information, see Human rights.

Planet: The Basic Course Responsible Care addresses the elements of the Responsible Care Program: Safety, Health, and Environment; Product Stewardship; Security and Sustainability.

Profit: DSM has e-learnings for Global Competition Law Principles and Practices and Global Trade Controls. Compliance is embedded in DSM's systems and processes. DSM master data is screened to check customers and suppliers against embargoes and lists of sanctioned parties.

The DSM Anti-Bribery and Corruption (ABC) Policy and Compliance Manual is shared with selected employees in commercial and business roles. When needed, we have translated this into local language to facilitate better understanding. For example, a Chinese translation of the DSM ABC Policy and Compliance Manual, an easy-to-use ABC checklist, and ABC classroom training are available (integrated into the Competition Law classroom program). The ABC due diligence program for agents and distributors was further implemented during 2017.

The Security e-learning covers DSM's seven Key Security Behaviors. To complete the e-learning, employees are required to read and sign off on the DSM Code of Conduct for Information Security.

DSM also has rules in place on the holding of and execution of transactions in DSM financial instruments and certain other financial instruments related to trading in DSM shares, and where applicable, shares and related financial instruments in other companies. These apply to all relevant employees, including the Executive Committee, the Managing Board, and the Supervisory Board.

Value chain

The business principles most relevant to the supply chain are brought together in the Supplier Code of Conduct and are also structured along the three sustainability dimensions of People, Planet and Profit. The Supplier Code of Conduct, available on the company website in eight languages, is signed off by suppliers in framework contracts, confirming their commitment to sustainability, among other things.

For distributor and agent contracts, the ABC Policy is being translated into terms and conditions that ensure ethical business conduct when these parties act on behalf of DSM or deal with DSM products further down the value chain.

Training and awareness

Employees must regularly refresh their DSM values training. The implementation of this training program continues to progress well. In 2017, a new learning management system has been rolled out globally see Learning and development at DSM. More than 2,000 employees previously using classroom training now have online access to all e-learning courses, greatly increasing efficiency.

At year-end, most employees had completed or refreshed their training (excluding employees of some recently acquired businesses). Certain elements of the program are offered to selected contractors as well as to employees in DSM's joint ventures.

A Review Team, chaired by the Vice President Corporate Risk Management, monitors implementation of the DSM values training program. This team also monitors internal and external developments around corporate ethics in order to promote and safeguard the company's values and reputation.

Employees for whom competition laws are most relevant must confirm their compliance with the rules set out in the DSM Competition Law Compliance Manual. In this statement, they confirm that they are not aware of any violation of competition laws by DSM. Sign-off levels are excellent. Alleged breaches are reported to, and discussed with, Group Legal Affairs. In 2017, no breaches were reported.

Even with training, sometimes employees may come across dilemmas when they put the Code into practice. Employees can request dilemma workshops to calibrate 'what is right' and 'what is wrong'. These workshops build on DSM's company culture, which is based on openness, fairness, and trust. This helps continuously improve business integrity in daily operations.

Letter of Representation

At the end of each year, the management of all 33 operational units sign off on a Letter of Representation. With this, they confirm the compliance of the unit and its employees with applicable laws and regulations, the Code and related values training, and DSM's corporate policies and requirements (see Risk management).

Consequence management

DSM applies zero-tolerance consequence management to violations of the Code. Under our whistleblower procedure (DSM Alert), most Code incidents are reported to and dealt with by local line management. Where this is not considered appropriate, complaints are made directly to the DSM Alert Officer. In all cases, consequence management practices (e.g. official warning, temporary suspension, dismissal) are in place to support compliance with the Code. The DSM Alert Officer reports to the Managing Board and reports independently to the Audit Committee of the Supervisory Board twice a year. Non-DSM employees wishing to voice a concern regarding violations of the Code can also contact the DSM Alert Officer via the company website.

In 2017, 24 Alert cases (reports of potential violations of the Code) were received, two of which were reported by an external person or party. This is at the same level as in previous years. There were two potential bribery and corruption cases reported. One case has been investigated, but the report could not be substantiated. The other case is still under investigation.

The table on the following page gives an overview of all reported Code violations, with a breakdown per Triple P dimension and per region. Proven serious violations of the Code can result in dismissal or other forms of consequence management. In line with this policy, 36 employees were dismissed in 2017 because of breaches of the Code or other legal or local company regulations. In addition, 88 cases were reported that have led to other kinds of consequence management (official warning or suspension). Overall this is at approximately the same level as in 2016.

People: Most of the cases in the People dimension are related to violations of the Life Saving Rules or inappropriate behavior. Safety and health in the workplace has a priority for the company and incident-reporting channels are well known.

Planet: There was one violation of the Code reported in the Planet dimension in 2017 due to irresponsible behavior by an employee. This violation did not lead to a serious environmental incident.

Profit: Most of the cases that were reported in the Profit dimension were related to the incorrect registration of working hours, conflicts of interest and fraudulent expense claims.

Implementation of the DSM values
2017
2016
Training and awareness e-learning:
% of targeted employees trained
  
General
  
- Code of Business Conduct
90%
97%
People
  
- Life Saving Rules
97%
99%
- Unlawful Harassment Prevention
88%
98%
- Data Privacy Knowledge
96%
90%
Planet
  
- Basic Course Responsible Care
100%
98%
Profit
  
- Global Trade Controls
96%
92%
- Anti-Bribery and Corruption
98%
93%
- Security
96%
97%
   
DSM Competition Law:
  
% of targeted employees signed off
  
- DSM Competition Law compliance annual statement
99%
99%
   
Violations of the Code:
  
Number of dismissals / other consequence management
  
Triple P breakdown
  
- People
28/79
20/58
- Planet
0/1
3/5
- Profit
8/8
9/13
Regional breakdown
  
- Europe & Africa
18/21
13/31
- Americas
13/61
14/37
- Asia-Pacific
5/6
5/8
Total
36/88
32/76
   
Alert cases (whistleblower procedure):
24
24
Number substantiated / not substantiated / under investigation
  
Triple P breakdown
  
- People
1/9/2
11/10/0
- Planet
0/0/0
0/0/0
- Profit
3/7/2
2/1/0
Regional breakdown
  
- Europe & Africa
2/4/2
2/2/0
- Americas
1/7/1
7/9/0
- Asia-Pacific
1/5/1
4/0/0
Total
4/16/4
13/11/0