2018Governance

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 our company's ethical business behavior. Our corporate strategy builds on this foundation. 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.

The DSM values training program contains several e-learning courses on these regulations for all employees or, for certain subject matter, specific target groups. 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. In the revision of the Life Saving Rules, improved standards of warehouse safety have been included. The corresponding e-learning course will be updated in 2019.

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. In 2018, additional concise e-learnings were introduced to train our employees on the consequences of the new European General Data Protection Regulation, such as the timely reporting of privacy breaches.

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 for Global Trade Controls. Compliance is embedded in our systems and processes. Company 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. Where appropriate, this is provided in local languages to facilitate better understanding. For example, the DSM ABC Policy and Compliance Manual, an easy-to-use ABC checklist, and ABC classroom training (integrated into the Competition Law classroom program) are available in Chinese. The ABC due diligence program for DSM agents and distributors was further implemented during 2018.

The Security e-learning covers our seven Key Security Behaviors. To complete this e-learning, employees are required to read and sign off on the DSM Code of Conduct for Information Security. In the fourth quarter of 2018, a Cyber Fraud Awareness e-learning was introduced as an additional training to increase awareness among all employees regarding prevalent types of cybercrime.

We also have rules in place on the holding 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 our supply chain are brought together in the Supplier Code of Conduct and are also structured along the three dimensions of People, Planet and Profit. The Supplier Code of Conduct, available in eight languages on the company website, 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 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 2018, our learning management system was supplemented with an external portal to enable relevant contractors and other third parties to follow courses of the DSM values training program. At year-end, most employees had completed or refreshed their training (excluding employees of some recently acquired businesses).

A Review Team, chaired by the Vice President Group 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 2018, no breaches were reported.

Letter of Representation

At the end of each year, management of all 34 operational units signs 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

We apply zero-tolerance consequence management to violations of the Code. Under our whistleblower procedure (DSM Alert), most violations 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 also reports independently to the Audit Committee of the Supervisory Board twice a year. Any individual not employed by DSM who might wish to voice a concern regarding violations of the Code may also contact the DSM Alert Officer via the company website.

In 2018, 28 Alert cases (reports of potential violations of the Code) were received by the DSM Alert Officer, two of which were reported by an external party. This is at the same level as in previous years. There were three potential bribery and corruption cases reported. After investigation, none of these three cases could be substantiated.

The table on the following page gives an overview of all reported violations of the Code, with a breakdown by Triple P dimension and region. Proven serious violations may result in dismissal or other forms of consequence management. In line with this policy, 42 employees were dismissed in 2018 because of breaches of the Code or other legal or local company regulations. In addition, 112 employees received another form of consequence management (official warning or suspension). Over the years, the number of dismissal cases has remained about the same, whereas there is an increase of other kinds of consequence management cases being reported.

People: Most of the cases in the People dimension relate to violations of the Life Saving Rules. Inappropriate behavior that does not contribute to a safe and healthy working environment (discrimination, sexual and other kinds of harassment) is also reported in this dimension. Health and safety in the workplace are 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 2018 due to irresponsible behavior on the part of an employee. This violation led to a minor environmental incident.

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