INTEGRITY AND COMPLIANCE
Roll call personnel at Tizapa unit
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We upheld our historic vocation for integrity and for inspiring trust in our stakeholders last year by strengthening our Integrity and Compliance Strategy, one of the pillars that sustain this group. The strategy provides a series of guidelines for creating an integrity framework that will promote a culture consistent with our Vision, Values, Code of Conduct, and with applicable laws and regulations.
According to this premise, and bearing in mind that 2020 was an unprecedented year because of the effects of the COVID-19 pandemic, we redoubled our efforts to continue operating on the basis of a shared vision and values in order to adapt to an increasingly demanding, complex and regulated environment.
The programs and actions stemming from our Integrity and Compliance Strategy are integral and permanent components of our business processes, and must constantly evolve. Their efficacy and practicability require continuous improvement, and will be sustained if all of us who work at Peñoles strive to be consistent in our words and actions. To the extent that these initiatives succeed in developing mechanisms for informed decision-making, our actions can remain aligned with regulations and best practices in various spheres, which together will guarantee our endurance in the long term.
Tailings deposit at Tizapa
Regulatory framework
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Regulatory compliance.
To continue operating in strict accordance with the law, we conducted a due diligence process check in our 27 business units and workplaces to verify 11 issues: environment, occupational health, industrial safety, union relations, human resources, tax matters, telecommunications, civil aeronautics, mining, energy and agriculture. These were conducted according to our Regulatory Compliance System, an internal mechanism that provides the areas in question a set of criteria by which they can demonstrate fulfillment of their obligations, self-evaluate and automatically identify any shortfalls.
As a result of this compliance verification, potential risks resulting from the anomalies detected in the process were identified and quantified; their level of criticality was determined and efforts were focused on the areas of greatest risk. Seventeen final reports were issued in which 3,129 current obligations were analyzed, distributed with varying degrees of preponderance among four divisions: Mines, Metals-Chemicals, Exploration and Administrative Services.
STRENGTHENED BY
our vision, values and strategy.
Flotation area at Madero unit
In November, the Regulatory Management Area of the Compliance Office held a virtual seminar entitled “Regulatory compliance and its importance at Peñoles.”
Fiscal |
Telecommunications |
Aeronautics |
Mining |
Agriculture |
Energy |
Health |
Labor and HR |
Environment |
Labor relations |
Safety |
Total |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Business unit and topics | 18 | 18 | 3 | 8 | 4 | 8 | 14 | 27 | 16 | 15 | 3 |
134 |
| Total obligations | 40 | 8 | 15 | 28 | 4 | 10 | 195 | 113 | 1,622 | 16 | 1,078 |
3,129 |
| Total reports | 1 | 1 | 1 | 1 | 1 | 1 | 2 | 4 | 2 | 2 | 1 |
17 |
Based on these reports, management coordinated with all areas to devise action plans for avoiding economic, operating, business continuity and reputational contingencies. Progress toward these plans was tracked on an ongoing basis during the second half of the year. This effort resulted in an improvement in the compliance index for four of the five issues where problems were detected.
We also kept our regulatory mapping of the industry constantly up to date to reflect changes in national laws, and organized an awareness-raising campaign for more than 100 people in different areas regarding the importance of strengthening a culture of regulatory compliance.
In November, the Regulatory Management Area of the Compliance Office held a virtual seminar entitled “Regulatory compliance and its importance at Peñoles,” whose main focus was strengthening a culture of regulatory compliance within the company. The event consisted of five sessions, held virtually for people working directly or indirectly with regulatory compliance, particularly those involved in the Regulatory Management System.
The seminar was attended by 92 people from various divisions: Exploration (including Exploration Peru), Engineering and Construction, Mining, Metals-Chemicals and Administrative Services. The areas of specialization among those attending—meaning the areas in which they work at Peñoles—were environment, health, safety, union relations, human resources, tax matters, energy, telecommunications, mining, and agriculture.
Magnesium oxide plant at Química del Rey
Personal data
Through various actions we complied fully with the regulatory framework on two specific issues: personal data and NOM-035-STPS-2018 (NOM 035).
As to the former, the company’s Personal Data Committee defined and published the policies, procedures and manuals regarding the transmission and protection of personal data collected by the various areas, and coordinated a risk analysis of how they are stored. Also, to train and build Peñoles employee awareness about this issue, we continued our partnership with the National Institute for Information Transparency and Access (INAI), called INAI Allies, regarding the protection of personal data.
Regarding the second, when the NOM-035-STPS-2018 and NMX-R-025-SCFI-2015 standards took effect, strategies, procedures and protocols were designed and implemented to comply with those regulations, so that we can identify and mitigate psycho-social risk factors, ensure the productivity of our workplaces, prevent violence in the workplace, encourage labor equality and non-discrimination and with all of this to encourage a favorable working environment.
A multidisciplinary work group was created to work on the policies and procedures necessary to comply with the standard, and an information campaign was developed for all personnel. In October, questionnaires were applied to 94% of our staff in order to detect those subject to severe traumatic events or psycho-social risk factors and thus to define and carry out action plans to ease these problems. In addition to reducing risk factors, these plans will encourage labor equality and non-discrimination. Awareness sessions were given to staff from the Compliance, Human Resources, Safety, Health and Legal departments.
For 2021, we intend to continue more rigorously the compliance evaluations and regulatory mapping for the 11 regulatory issues that require special monitoring, and we will continue training on the importance of regulatory compliance at Peñoles for all our personnel. This will lead to a greater awareness and clarity on the issue of regulatory compliance and its importance in this group.
Awareness sessions were given to staff from the Compliance, Human Resources, Safety, Health and Legal departments.
1. Laboratory at the Capela mining unit; 2. Inside the mine, Bismark unit.
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To the above, we must add the guiding principles we are known for.
VISION
MISSION
VALUES
CODE OF CONDUCT
INTERNAL COMPLIANCE SYSTEM
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Additionally, we comply with the following principles:
Integrity and Compliance Program
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Our Code of Conduct is a guide to the specific behaviors expected of us in our daily activities and our interaction with stakeholders. It has six sections. The first explains the philosophy, purpose, frame of reference for decision-making and commitment to our values. The second focuses on our actions as employees, the importance of reporting unethical conduct, whistleblower protection and conflicts of interest. The third describes how we should deal with our stakeholders (stockholders, customers, suppliers and contractors, employees and the community). The fourth addresses our comprehensive responsibility in the area of sustainable and social development, and our policy of zero tolerance for undesirable situations, gifts and attentions. The fifth offers guidelines on how to protect our assets, information and intellectual property. Finally, the sixth section tells us where to find further information or inquire about matters that arise in the daily performance of our duties.
The Compass of behavior, meanwhile, is a didactic tool that explains our frame of reference for making decisions, particularly when questions arise about how to act in situations that fall under certain categories defined in the Code of Conduct or under applicable laws and regulations. This tool is distributed to all employees through Peñoles’ internal communication media.
In 2020 we also actively publicized our TRIL values—trust, responsibility, integrity and loyalty—through training sessions, shift meetings, interactive dynamics in our internal publications (Integración newsletter), our internal website and distribution of mementos to all our employees.
3,129
current obligations were distributed among four divisions: Mines, Metals-Chemicals, Exploration and Administrative Services.
Our Code of Conduct is a guide to the specific behaviors expected of us in our daily activities and our interaction with stakeholders.
We strengthened our integrity practices
In order to extend the integrity framework to all of Peñoles, sustained by its vision, organizational values and Code of Conduct, promote trust from the very highest echelons of the company (“tone from the top”), and encourage every employee to internalize the expected behaviors, we took the following initiatives:
3,516
employees certified their understanding and signed their re-commitment to integrity; this meant a 100% participation rate.
Which are the rules?
Is my decision consistent with the rules?
Could my decision be misinterpreted? Is it clear?
Am I giving a good example?
Who would it benefit or hurt?
What would my family say?
Am I acting against my personal values?
Do I need to consult with others?
Am I being pressured?
Am I the right person to make this decision?
Am I following the rules?
Have I thought about the consequences?
Can I tell my family about it?
Can I take an informed decision?
Reducing risk exposure
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In order to continue promoting a solid integrity culture in our operations, we generate mechanisms that prevent any situation that might threaten our continuity, endurance and reputation, based on the correct identification of functions and pertinent risk management, as well as taking preventive measures.
Our prevention mechanisms are sustained by the Three Lines of Defense model, which determines the importance of each Peñoles area in promoting a culture of corporate integrity and compliance. The model is conceptualized as follows:
1st Line:
The responsible areas implement and operate strategies, courses of action and controls to avoid risks associated with unlawful behavior like fraud, bribery and corruption; to guarantee compliance with all current laws, regulations, policies and procedures; and to protect assets and information.
2nd Line:
Within the scope of their responsibilities, the compliance officer (i) identifies exposed areas and assists in mitigation activities; (ii) follows up regularly to ensure compliance controls are working effectively; and (iii) notifies Peñoles’ Ethics and Corporate Values Committee, or the Audit Committee, as the case may be, of their activities and significant findings. The compliance officer aligns their activities with other corporate governance and risk management areas at the company.
3rd Line:
Based on international control criteria, standards and practices, independent areas like the internal audit department or external auditors, as the case may be, provide opinions about the efficacy of risk management, the internal control system, and the company’s corporate governance processes. As for the Compliance Program, this third line makes sure that directives, processes and controls are appropriately implemented, attain their goals and are regularly evaluated.
1. Roll call personnel at Sabinas; 2. Virtual meeting, Sabinas plant.
In order for management to be able to identify, prioritize and determine responsibility for existing or potential threats to our business sustainability, we took the following key actions:
The Three Lines of Defense determine the importance of each Peñoles area in promoting a culture of corporate integrity and compliance.
Another success story consisted of integrating the due diligence process in the drafting of contracts, where the Legal area, in coordination with Compliance, determined that, as a prior step to the drafting of any contract, all third parties must have completed their due diligence process.
Money-laundering prevention
To address the requirements of the Federal Law on Prevention and Identification of Money-Laundering (the Anti-Money-Laundering Law), the following preventive and remedial actions were taken:
In 2021 we have various activities planned to deal with expected changes in the applicable regulations and detailed tracking of activities to ensure that we are able to respond to any external request.
External Code of Conduct
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In 2021, Peñoles will be publishing an External Code of Conduct intended for all outside stakeholders, consistent with our Integrity and Compliance Strategy as well as our internal Code of Conduct. This document expresses Peñoles’ commitment to corporate responsibility and recognizes that close cooperation with its commercial partners is essential to its vision, ensuring ethical conduct in all its business through a responsible supply chain that promotes environmental protection and guarantees the well-being and development of society.
The External Code of Conduct is based on Peñoles’ internal regulations, and it was also developed in keeping with compliance laws, internationally recognized standards like the United Nations Global Compact, the basic conventions of the International Labor Organization (ILO) and the guidelines on corporate social responsibility issued by the Organization for Economic Cooperation and Development (OECD) and the United Nations.
The Code will ensure that all of our external relations are grounded firmly in corporate integrity and strict compliance with the law, so that we can avoid any situations involving bribery, corruption, conflict of interest, fraud, money-laundering or terrorism financing. Also, to ensure responsible sourcing, the Code includes terms on environmental protection, occupational health and safety, and respect for human and labor rights. It stipulates rules on the protection of intangible assets, private information and intellectual property and provides tools for external stakeholders to ensure their compliance with the Code and request guidance in the event of any questions or concerns.
The External Code of Conduct is a guideline for action by external stakeholders, and all external partners will be required to familiarize themselves with and accept it in order to begin and maintain commercial relations with Peñoles.
Development of new guidelines
The Internal Regulation System, which incorporates all of Peñoles’ policies, procedures, guidelines and standard practices, disseminates the following polices and procedures in place for keeping the White Book up to date, including Compliance duties:
2021
Peñoles will be publishing an External Code of Conduct intended for all outside stakeholders.
1. Attendants to the “Better company” workshop at Capela; 2. Employee at the Legaria headquarters.
Peñoles exige que todos sus empleados cumplan con las normas anticorrupción aplicables para asegurar la confianza de nuestros grupos de interés.
Anti-Corruption Program
Peñoles complies voluntarily with national and international principles in order to avoid situations that affect the impartial and objective performance of our duties. Among these are the General Law on Administrative Responsibility, or indirectly (attraction clause) regulations like the UK Bribery Act or the U.S. Foreign Corrupt Practices Act. Peñoles requires all of its employees to comply with applicable anti-corruption regulations in order to maintain the trust of all our stakeholders: community, employees, shareholders, customers, suppliers and governments.
Reporting improper conduct without fear of reprisal
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As a result of changes in Peñoles’ integrity and compliance structure, in 2020 we strengthened the corporate structure for addressing complaints and the investigation protocol applicable within the group. The purpose is to provide channels for prompt, independent and free reporting of conflicts of interest, situations and behaviors that go against our vision, institutional values, Code of Conduct, or the law. With this, we can continue building a climate of trust, openness and credibility in addressing and dealing with cases without fear of reprisal.
Línea Correcta is publicized among all employees as a reminder in the first quarter of every year. We also have permanent channels for communication through our intranet or Peñoles’ external website at www.penoles.com.mx/botón, where there is a box that provides a link to Línea Correcta.
All reports received are sent to the Ethics and Corporate Values Committee for evaluation. In the more serious cases, the committee decides together on the disciplinary measures that should be applied. These actions take into account the procedure for receipt, attention and follow-up on reports of unethical conduct, and the procedure for evaluating and investigating reports of unethical conduct.
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Statistical information
In 2020 Línea Correcta received a total of 77 reports. Grouped by category:
Human resources :
49 reports
(abuse of authority, abuse of trust, sexual harassment, improper conduct on the job, nepotism, favoritism, professional negligence, working environment)
Compliance:
21 reports
(conflicts of interest and other categories associated with compliance)
Compliance - Fraud:
7 reports
Remedial actions and disciplinary measures
Based on the reports received by Línea Correcta, the following remedial actions or disciplinary measures were taken shown in the table above.
WHITE BOOK, INCLUDING COMPLIANCE DUTIES
Remedial actions and disciplinary measures
Human |
Compliance |
Fraud |
Compliance- |
Total cases |
|
|---|---|---|---|---|---|
| Employee dismissals | 4 | 3 | - | - | 7 |
| Documented reprimands | 11 | 1 | - | - | 12 |
| Improved controls | 1 | 2 | - | - | 3 |
| Employees transferred | 1 | - | - | - | 1 |
| Cases closed for insufficient evidence to begin an investigation |
4 | - | - | - | 4 |
| Lack of evidence to support claim | 7 | 6 | - | - | 13 |
| Pending closure * | 4 | - | 1 | - | 5 |
| In process of being addressed | 18 | - | 4 | 10 | 32 |
* Investigated with remedial/disciplinary action in process
Note: The process of addressing these cases was affected by pandemic conditions, which complicated the corroboration process, as well as the reorganization of the reporting structure, which is now distributed among the Human Resources, Labor Relations and Compliance offices.
Both employees and external stakeholders can use the Línea Correcta hotline through various channels:
Toll-free phone number:
800 002 8477
Website:
https://penoles.lineacorrecta.com/
Online Chat
E-mail:
[email protected]
Employees at Capela offices
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Peñoles receives no government financial aid or assistance of any kind, nor made any political contributions.
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In 2020 there were no pending legal actions relating to monopolistic practices, unfair competition or corruption. We received no significant fines or sanctions for failure to comply with the law.
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No incidents of extortion, abuse, discrimination, slavery or forced labor, unfair labor practices, violations of indigenous rights or any other human rights grievances were filed.
Recognitions
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We maintained our Good Delivery distinction from the London Bullion Market Association, certifying us as a company free of conflict throughout our precious metal supply chain. The Good Delivery certification is proof of the high quality and purity of the bars of gold and silver we produce, which means we have met standards regarding international human rights, anti-money-laundering and terrorism financing, and that we have a responsible supply chain that avoids products from areas at risk or in conflict.
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Fortune magazine in Spanish included Peñoles in its ranking of the 30 Most Ethical Companies 2020, published in the June issue. Industrias Peñoles came in eleventh out of 97 companies that met all the requirements for registry. We were the only mining company that participated in the study, and we also came in second in the category of “Ethical business philosophy.”
Furthermore, during the year, Industrias Peñoles received the Ethics and Values distinction in the category of “Major Mexican companies” from the Mexican Confederation of Industrial Chambers (Concamin). Similarly, the magazine Expansión included us in the IC500 Index of companies committed to integrity, which have zero-tolerance policies toward corruption and bribery.
Good Delivery
We maintained our distinction from the London Bullion Market Association, certifying us as a company free of conflict throughout our precious metal supply chain.
Aerial view, Sabinas unit
In this 2020 Report we present the sustainability performance of the operations of Peñoles and the generation of shared value with the groups of interest.
