The Way We Work Refreshment - 14Jun16

What is Fonterra’s standard?Ethical Behaviour Group Policy Fraudulent and Unlawful Activity Disclosure Group Standard requires disclosure of any of the following: “illegal and disreputa

The Way We WorkEthics at Fonterra

6/16/24

“Compliance with the policy is a condition of employment

Breaches or non-compliance may result in disciplinary action

The severity of the breach will determine the action taken

This may include the termination of employment or cessation of

contractual agreements ”

CONSEQUENCE TO NON-COMPLIANCE

It’s everybody's responsibility…

1 Understanding and awareness

of Fonterra’s Group Policies

The Way We Work (TWWW)

and Ethics

How does it work?

· It’s an independent, confidential service

provided externally by Deloitte

· It is for reporting issues like theft, fraud,

harassment, misconduct or other unethical

behaviour

· Accessible via telephone, website or e-mail

· Specially trained staff available on the

• What connects us all around the world is our shared story, vision and

values and a consistent approach to the way we treat one another, our shareholders, our customers, our business partners and our local

communities Some companies call this a ‘code of business conduct’ We

simply call this The Way We Work.

• Fonterra’s purpose is to be the world’s most trusted source of dairy

nutrition This trust must be earned, and we can only achieve this if we apply our core value of ‘Do what’s right’, every day, everywhere across our Co-operative.

• The Ethics Portal is a central hub of information and resources designed to support you to do this

Fonterra Ethics Framework

Assurances, Performance management, Processes, Controls

All policies, processes and guidance is available on Milkyway ( Quick Links )/ Ethics Portal

Ethics – across the business

 Business records accurate, truthful

and conform to accounting policies

and system of internal control

 Fair treatment of our people

 Conflict of Interests

 Gifts

 Corporate Hospitality and

Entertainment

 Corporate political activities

 Environment & Sustainability

 Supplier Customer interactions

 Anti-corruption laws

 Behaviour at the workplace (Harrassment, Alcohol, Improper IS use)

 Product Safety

 Sales & Marketing (truthful labelling)

 Protect confidential Information

 Safeguard assets

 Social Media

 Research Standards

Bribery, Corruption & Fraud

“The offering, promising, giving,

accepting or soliciting of an

advantage as an inducement for

an action that is illegal, unethical or

a breach of trust Inducements

can take the form of cash, gifts,

loans, fees, preferential

treatment, hospitality or other

“A small bribe, also called a

‘facilitating’, ‘speed’ or ‘grease’

payment; made to secure or expedite the performance of a routine or necessary action to which the payer has legal or other entitlement”.

Example:

Granting a permit, licence or other official document that qualifies a person to do business;

Bribery, Corruption and Facilitation Payments are prohibited

Fraud

Examples of cases

• Engineering clerk dismissed over use of cover quoting

and improper vendor selection

• Medical sales manager dismissed for improper

procurement practices – procuring from vendor with

conflict of interest, approving POs and invoices but the

goods were never supplied, not required, or hugely

overpriced

• Marketing director in court over cheating company –

setting up own company to provide marketing services;

approving inflated invoices

What is Fonterra’s standard?

Ethical Behaviour Group Policy

Fraudulent and Unlawful Activity Disclosure Group Standard requires

disclosure of any of the following:

“illegal and disreputable business measures including bribes, kickbacks

and corrupt payments are strictly prohibited”

•An unlawful, corrupt or irregular use of company funds

•An act, omission or conduct that poses a serious risk to H&S

•An act, omission or conduct that goes against legislative or

regulatory requirements

•An act, omission or conduct that constitutes a criminal offence

•An act, omission or conduct that contravenes The Way We Work or

Policy Framework

Conflict of Interest

Conflict of Interest (COI)

1 Where Conflict occurs

Conflict of Interests

can occur when:

• You make a business decision

for Fonterra that is motivated

by personal gain

• When your work at Fonterra

gives you information or influence which could be used

to create a personal gain

• Where you have a financial,

private, family, personal or business interest which interferes with, or appears to interfere with the interests of Fonterra

“In a small country like ours,

conflicts of interest in our working

lives are natural and unavoidable

The existence of a conflict of

interest does not necessarily mean

that someone has done something

wrong, and it need not cause

• An employee starts a company that provides similar services to similar clients as those of her full time employer.

• A manager provides paid consulting services on the

weekend to a company customer or supplier.

• If an immediate family member, partner, friend, or close business associate becomes employed by a competitor or potential competitor of Fonterra.

• Employees in a family or close personal relationship must not have a reporting relationship in the business.

• A male manager dates a female employee who reports to

him.

• Have you recently been offered any special discounts, gifts, trips, hospitality, rewards or favours by potential

distributors/ customers? (e.g free travel; free samples for

your own use)

Finance/ Business conflicts

• To protect the individual from actual or potential

business conflicts, mandatory requirements apply

The employee MUST NOT:

a Hold a financial or material interest in a company

without prior full disclosure to Fonterra through the

Conflict of Interest (COI) Register that:

– Operates in a recognised current or future key milk

Finance/ Business conflicts

b Receive personal discounts or other benefits that are not

legitimately available to all Fonterra employees

c Engage in any other business or outside activities as an

employee, Director, consultant or in any other capacity

without Fonterra’s prior written consent

d Enter into any contracts, business interests and/or

activities that may conflict in any way with Fonterra’s

interests, or the employee’s responsibilities, or reflect

negatively on Fonterra’s operations or Fonterra’s

reputation

e Take part in, or be in any way involved with, any

Fonterra business decision that involves an organisation

that employs the spouse or partner, or an immediate

family member of a Fonterra employee.

Voluntary commitments

• Fonterra recognises the value of participating in voluntary activities, and

supports employees in fulfilling their commitments.

• Employees must ensure that voluntary commitments do NOT:

a Adversely impact on their ability to satisfactorily carry out the requirements of

their employment with Fonterra Employees who are members of volunteer

emergency services, representative sports teams, and military reserves should

notify their Manager as soon as practicable regarding mandatory training and/or

fulfilling volunteer duties

b Rely on or use Fonterra’s brand, reputation, or any aspect of Fonterra’s operating

procedures while carrying out volunteer activities

c Imply the volunteer activity or association is endorsed by Fonterra Any statement

or position (including political) taken by the voluntary body of which the employee

is a member must not be delivered in a way to associate, or imply association,

with Fonterra

Conflict of Interest disclosure

• Individual is responsible to

notify conflict of interests

• It must be updated annually

irrespective of the actual or

potential conflict remaining the

same

• Managers are responsible for

dealing with conflicts of

interests

• All conflict of interests to be

registered in the Employee COI

party – Employees who are privy to information that has the potential to influence Fonterra’s share price and/or reputation

Managing conflict of interest

Your Manager has six options to consider when deciding how to deal with a Conflict of Interest that you have declared.

RECORD (it may be sufficient to record a Conflict of Interest on the Register)

RESTRICT (it may be possible to restrict your participation in an activity where

a conflict exists)

RECRUIT (it may be possible to engage a third party to conduct or oversee

a process that may otherwise be influenced by a conflict)

REMOVE (it may be possible to remove you from a process or situation

where a conflict exists)

RELINQUISH (it may be possible to relinquish the conflict, for example, sale of

shares)

RESIGN (it may be necessary to ask you to temporarily or permanently

step down from a role that is impacted by the conflict)

Tell me what to do? Register

Gifts

and Entertainment/Hospitality

Gifts and Entertainment/Hospitality

• Reasonable small tokens and/or

hospitality may be acceptable or

provided if they:

- do not place the recipient under any

obligations or appear to obligate the

recipient;

- are not recurring or systematic;

- are within normal custom or protocols;

and

- are not capable of being misinterpreted

- do not create an expectation that the

business relationship will be altered or

influenced

- do not cause the individual or Fonterra

reputational damage if the action or

event was publically disclosed.

• The offer or acceptance of cash is

unacceptable under any

circumstances

• Employees must not offer or accept

any form of gift or corporate hospitality/entertainment if Fonterra is

currently in negotiation, or is

scheduled to be in negotiation, with the other party.

• Employees must have the required

delegated authority to offer a gift or

corporate hospitality/entertainment

Amount Reporting Approval

Under USD49 • Not required • Not required

USD50 – USD 249 • Must be recorded in the Gift

Register.

• Manager’s written approval must

be attached.

Manager’s written approval

required prior to offer or Receipt.

required prior to offer or Receipt.

USD 2500 + • Must be recorded in the Gift

Gifts and Entertainment/Hospitality

To report or not to report

Corporate/ Hospitality/

Entertainment

• Use common sense, if public

disclosure of the event could cause

Fonterra public embarrassment, do

not attend

• Giving or receiving reasonable

business-related entertainment,

conducted in the interest of Fonterra

is appropriate, provided it does not

negatively influence business-related

decisions, or could be perceived as

influencing business decision

• If there are current or approaching business negotiations with the

company issuing the invitation, regardless the value, you must decline

• If you are unsure of your obligations, you must talk to your manager

Tell me what to do? Register

REGISTER http://workgroup.fonterra.com/sites/TheEthicsPortal/default.aspx

Challenge – not always obvious

What to do?

Responding to the difficult situations

• Discuss with your immediate manager

• Uncomfortable with this approach?

• HR

• Fonterra The Way We Work Hotline

• Independent/Confidential provided by Deloitte

• Accessible via telephone, website, email

Key takeaways

• Everyone’s responsibility

• Comply with Fonterra’s Group Policies, Standards and TWWW

• Being consistent with Fonterra’s Values

• Heightened Awareness

• Understand and manage corruption risks

• Act and report

• If in doubt, seek advice

• Consequence

I still have questions

References:

• Ethics Portal

• Conflict of interest register

• Gifts register

• Ethical Behaviour Group Policy

• The Way We Work (Code of Business Conduct)

• You manager

• HR

• Internal Audit

Thank you