BAE Systems Plc

Based on public information there is evidence that the company has published two strong statements from the CEO and former Chairman, supporting the company’s entire ethics and anti-corruption agenda. These statements can be found respectively on the company website and in the 2012 Annual Report. The CEO statement in the Code of Conduct is inapplicable as it was not published within the last two years, and statements from the Chairman of BAE Systems, Inc., the company’s North American subsidiary, are inapplicable. The company therefore scores 1. To score higher the company would need to provide evidence of one more statement from the CEO or Chairman in last two years, which support the ethics agenda of the company, or a single statement from the last two years that specifically supports the company’s stance against corruption.

Based on public information, there is evidence that the company’s CEO and Chairman demonstrate a strong, personal, external facing commitment to the ethics and anti-corruption agenda of the company. The CEO gave a speech on the company’s ethics and anti-corruption agenda at the European Business Ethics Forum, 2014. The former Chairman discussed the company’s ethics and anti-corruption intiatives in his 2013 AGM speech. There is also evidence that David Harris, BAE Systems’ Head of Business Conduct, gave an interview in 2012 on business ethics. TI notes that Jerry DeMuro, President and Chief Executive Officer of BAE Systems, Inc, BAE Systems North American subsidary, sits on the Steering Committee of the Defense Industry Initiative on Business Ethics and Conduct.

Based on public information, there is no readily available evidence that the company’s CEO demonstrates a strong, personal, internal-facing commitment, to the ethics and anti-corruption agenda of the company. The CEO issued a statement in the 2014 Ethics Training Facilitators Booklet, explaining why ethical training is important to the company. However, in this question TI is seeking evidence of personal engagement such as speaking at training events or chairing a review of the company’s anti-corruption programme.

Based on public information, there is evidence that the company publishes a statement of values, representing high standards of ethical business conduct, including integrity, honesty and trust. The value of trust is explained thoughout the company’s website and documents, with honesty and responsibility a key component to achieving trust. Similarly, the value of integrity is discussed in regard to policies in the Code of Conduct.

Based on public information, there is evidence that the company is a member of the DII and IFBEC.

Based on public information, there is evidence that the company’s Corporate Responsibility Committee has overall corporate responsibility for its ethics and compliance programme. Clear terms of reference detail what this responsibility entails, for example assisting in the development of strategy on ethical matters and ensuring the Code of Conduct is regularly reviewed.

Based on public information, there is evidence that the company has appointed the Managing Director Corporate Responsibility (MD CR), with responsibility for implementing the company’s ethics agenda. The MD CR leads the company’s global corporate responsibility team and reports directly to the company CEO. The company therefore scores 1. To score higher the company would need to provide evidence that the MD CR is identifiable by name.

Based on public information, there is evidence of regular Board level monitoring and review of the performance of the company’s ethics agenda. In 2013, the Board and the Corporate Responsibility Committee reviewed the status of ethical business matters across the Company. Furthermore, during the first quarter of 2014, the company commissioned the Ethical Leadership Group to review the company’s business conduct programme.

Based on public information, there is limited readily available evidence of a plan that guides the review of the ethics agenda, and that improvement plans are implemented when issues are identified. The Corporate Responsibility team measures the performance throughout the year via the company’s six-monthly Operational Assurance Statement and Quarterly Business Review processes. There is evidence of several monitoring indicators, such as a survey of employee opinions and reporting statistics to the Ethics Helpline and ethics officers, as well as improvement plans being implemented when weaknesses are identified. However, there is limited public evidence of a formal, written plan that guides the Board or senior management review of the ethics and anti-corruption agenda. The company therefore scores 1.

Based on public information, there is no readily available evidence that the company has a formal process, to review and update its policies and practices in response to actual or alleged instances of corruption. However, the company appointed the Woolf Committee to deliver an independent report on the company’s ethics agenda, in response to a corruption scandal. The company therefore scores 1. To score higher the company would need to provide evidence that in the event of any allegations of corruption, the company has a procedure to review and update its policies and practices.

Based on public information, there is evidence that the company has a risk assessment procedure implemented enterprise-wide, which includes an anti-corruption element. The company identifies legal and regulatory compliance as a principal risk in the 2013 Annual Report. The Corporate Responsibility Committee monitors the company’s significant non-financial risks, including those relating to business conduct, with the findings reported to the Board on a regular basis. The responsibility for mitigating risks rests with the line managers of each business. Every six months businesses complete an Operational Assurance Statement (OAS), which consists of a self-assessment of compliance with the Operational Framework and a report showing the key financial and non-financial risks for the relevant business. The key financial and non-financial risks identified by the businesses from the risk assessment processes are collated and reviewed by the Executive Committee, to identify those issues where the cumulative risk, or possible reputational impacts, could be significant.

Based on public information, there is evidence that the company has a formal anti-corruption risk assessment for assessing proposed business decisions. When the company is in the process of a merger or acquisition, it carries out assessments of the parties to a potential transaction, and the acquisition target’s key business conduct policies and governance framework. Similarly prospective joint venture partners and suppliers are assessed for a responsible trading policy or a Code of Conduct, and advisers undergo due diligence.

Based on public information, there is evidence that the company conducts due diligence when selecting agents. The company therefore scores 1. To score higher the company would have to provide evidence that it refreshes the due diligence for agents at least every 3 years, and/or when there is a significant change in the business relationship.

Based on public information, there is no readily available evidence that the company has contractual rights and processes, for the behaviour, monitoring, control, and audit of agents, with respect to countering corruption. Despite the Code of Conduct stating that all advisers must meet the company’s standards of conduct at all time, there is no evidence of contractual rights and formal processes to prevent or deal with the occurrence of any violations.

Based on public information, there is evidence that the company makes clear to contractors, sub-contractors, and suppliers, its stance on bribery and corruption and the consequences of breaches to this stance. All supplier contracts contain clauses encouraging them to comply with the company’s Code of Conduct or equivalent standards. Compliance is assessed regularly with high-risk suppliers, and if issues are identified and standards cannot be improved, the company can terminate a contract.

Based on public information, there is evidence that the company addresses the corruption risks associated with offset contracting at a general level. The company states that the non-financial risks of offset activities are clearly assessed and mitigated. The company therefore scores 1. To score higher the company would need to provide evidence that offset contracting corruption risks are explicitly addressed in the company’s offset policies, procedures and contractual terms.

Based on public information, there is evidence that the company conducts due diligence when selecting its offset advisers. Offset advisers go through the same due diligence process as for all advisers, including review by the company’s Business Development Adviser Compliance Panel. The company therefore scores 1. To score higher the company would need to provide evidence that it refreshes the due diligence for agents at least every 3 years, and/or when there is a significant change in the business relationship.

Based on public information, there is evidence that the company has an anti-corruption policy that prohibits corruption in its various forms, including the giving or receiving of bribes and facilitation payments. It also identifies potential forms of corruption such as conflicts of interest and gift and hospitality exchange.

Based on public information, there is evidence that the company has zero tolerance for corruption.

Based on public information, there is evidence that the company’s Code of Conduct is easily accessible to Board members, employees and third parties. It is provided to all new employees and is available on the company website in multiple languages.

Based on public information, there is evidence that the company’s Code of Conduct is easily understandable and clear to Board members, employees and third parties. It is well structured and written in accessible, comprehensible language.

Based on public information, there is evidence that the Code of Conduct explicitly applies to all employees. However, the Code does not include a similar explicit application to Board members. The company therefore scores 1. TI notes that the company states that its leaders must demonstrate the same high standards of conduct as expected throughout the company, and Board members must complete training aimed at applying the company’s ethical standards. However, TI is looking for an explicit statement that the company’s policies also apply to the Board.

Based on public information, there is evidence that the company has a policy on conflicts of interest. The policy is clearly written and includes a definition and examples of potential conflicts of interest. Board members have a separate policy on potential conflicts of interest.

Based on public information, there is evidence that the company has a policy that regulates the giving and receipt of gifts. Employees must ensure that gifts are reasonable and proportionate, and follow set upper limits. Gifts over £25 in value must only be given or received if they are approved in advance by a senior manager and recorded in the gifts and hospitality register. Gifts over £250 in value must only be offered, given or received in exceptional circumstances.

Based on public information, there is evidence that the company has a policy that regulates the giving and receipt of hospitality. Employees must ensure that hospitality is reasonable and proportionate, and follow set upper limits. Hospitality over £50 in value must only be given or received if they are approved in advance by a senior manager and recorded in the gifts and hospitality register. Hospitality over £250 in value must only be offered, given or received in exceptional circumstances.

Based on public information, there is evidence that the company has a policy that prohibits facilitation payments. However, it allows for facilitation payments to be made in situations where an employee’s safety may be at risk. Employees must report any facilitation payments or requests for facilitation payments to the Legal Department.

Based on public information, there is evidence that the company prohibits political contributions. Company funds may not be used to contribute to any political campaign, political party, political candidate or any of their affiliated organisations.

Based on public information, there is evidence that the company has a policy on engagement in lobbying activities. Any employee who lobbies must comply with applicable laws and internal policy, and consult with management before any contact is made with government officials or employees. External lobbyists must be appointed in accordance with the company’s Advisors Policy, with the exception of certain domestic lobbyists in the US, who are subject to separate legislative controls. The Group Business Development Director submits an annual report to the Corporate Responsibility Committee which outlines the company’s lobbying activities. The company therefore scores 1. To score higher the company would need to provide evidence that it publically discloses the issues on which it lobbies.

Based on public information, there is evidence that the company regulates charitable contributions, in order to prevent undue influence or other corrupt intent. Charitable contributions must be in accordance with the Code of Conduct, not be paid to third-party fundraisers or directly to individuals, and not place existing business partners under any obligations. Additionally, organisations set to receive charitable contributions must be vetted through a recognized organisation to ensure that contributions will be used for charitable purposes. All company charitable contributions must be reported to the Executive Committee via the Company Giving Committee which oversees these activities. A list of recipients of charitable contributions for 2013, are declared in the 2013 Annual Report.

Based on public information, there is evidence that the company provides written guidance, to help Board members and employees understand and implement the firm’s ethics and anti-corruption agenda. The Code of Conduct contains short question and answer sections. Similarly, training material that contains several applicable scenarios is permanently available on the company’s website, along with corresponding videos.

Based on public information, there is evidence that the company has an explicit anti-corruption training module, as part of its ethics and compliance training programme. The company’s Essential Training Framework contains an anti-bribery and corruption module, a facilitation payments and conflicts of interest module, a gifts and hospitality module, and an adviser module. However, evidence suggests that these anti-corruption modules are only provided to executive employees.

Based on public information, there is evidence that training on the Code of Conduct, which includes an anti-corruption policy, is mandatory for all employees. This training programme includes a gift and hospitality section and a conflicts of interest section.

Based on public information, there is evidence that Board members receive training on the Code of Conduct, which includes an anti-corruption policy. This training is provided to all employees and the company states that it is regularly refreshed. The company therefore scores 1. To score higher the company would need to provide evidence that Board members receive anti-corruption training at least every three years.

Based on public information, there is evidence that the company provides tailored anti-corruption training for employees in sensitive positions.

Based on public information there is evidence that the company has a clear process by which employees declare conflicts of interest. Employees are instructed to inform their managers, with the conflict of interest recorded and resolved as soon as possible. The company therefore scores 1. To score higher the company would need to provide evidence that employees are instructed to declare conflicts of interest to an independent department.

Based on public information, there is evidence that the company has a commitment to apply disciplinary procedures to all employees who violate the Code of Conduct. However, the company uses the word ‘may’, rather than wording that signifies an explicit commitment such as ‘will’. Also, as the Code of Conduct does not explicitly state its application to Board members, it is unclear if disciplinary procedures will be applied to Board members who violate the Code of Conduct. The company therefore scores 1.

Based on public information, there is evidence that the company has multiple, well-publicised, secure channels, for employees to report concerns or instances of suspected corrupt activity. These channels include a Human Resources contact, the Legal department or an ethics officer. In particular, an externally operated Ethics Helpline is available 24/7, via freephone or email. This system allows employees to speak to someone in their own language and report anonoymously.

Based on public information, there is readily available information that across geographies, all employees have access to more than one reporting channel. Employees can report using a Human Resources contact, a Legal department, an ethics officer, or the Ethics Helpline.

Based on public information, there is evidence, that the company has formal and comprehensive mechanisms, to assure itself that whistleblowing by employees is not deterred and that whistleblowers are treated supportively. The company collects Ethics Helpline usage statistics which are made publically available. Key monitoring indiactors are reviewed by the CR Committee, including the number of new contacts, the average time taken to close contacts, the number of contacts that were made anonymously, and the number of contacts that were substantiated. Trends and issues are then identified and fedback as improvements into the company’s wider ethics agenda.

Based on public information, there is evidence the company has well-publicised resources available to all employees, where advice can be sought on corruption-related issues. The resources include a Human Resources contact, a Legal department, an ethics officer, or the Ethics Helpline.

Based on public information, there is evidence that the company has a nn-retaliation policy for bona fide reporting of corruption. Evidence also suggests that disciplinary measures are applied to employees who breach this policy.