Rolls-Royce PLC

Based on public information, there is evidence that the CEO and Chairman have each issued several strong statements, which promote the company’s whole ethics and anti-corruption agenda. These statements can be found in the 2013 and 2012 Annual Reports, the Global Code of Conduct and on the company website.

Based on public information, there is evidence that the CEO’s AGM speech in 2013 demonstrated a commitment to the company’s ethics and anti-corruption agenda, along with a number of newspaper articles. However, these are in response to allegations of misconduct, rather than examples of unprompted external engagement. Instead evidence suggests that this engagement has been delegated, with Head of Business Ethics Paul Hyman taking part in a panel discussion on whistleblowing. The company therefore scores 1.

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.

Based on public information, there is evidence that the company publishes a statement of values representing high standards of business conduct, which includes trust. However, the company does not go into sufficient depth by explaining how this value is demonstrated in company policies. The company therefore scores 1. To score higher the company would need to provide evidence that at least one more value is listed and that it is explained in detail.

Based on public information, there is evidence that the company belongs to the AeroSpace and Defence Industries Association of Europe (ASD) and is a member of the International Forum on Business Ethical Conduct’s (IFBEC) Steering Committee.

Based on public information, there is evidence that the Ethics Committee has overall corporate responsibility for the company’s ethics and compliance programme. Clear terms of reference detail what this responsibility entails, for example reviewing compliance with the company’s Code of Conduct and improving bribery and corruption prevention policies.

Based on public information, it is unclear who the company has appointed with responsibility for implementing its ethics and anti-corruption agenda. The Director of Risk is responsible for overseeing a ‘holistic ethics and compliance improvement programme’ in line with Lord Gold’s recommendations, and has a direct reporting line to the Chairman of the Ethics Committee. Public searches easily reveal the name of the Director of Risk: Mark Serfozo.

Based on public information, there is evidence that the company has ordered two external reviews of its ethics and anti-corruption agenda. In 2009, with the assistance of an independent firm of auditors, the Company conducted a review to measure its anti-corruption policies and procedures against a range of industry guidelines and regulations, such as the Woolf Committee report. Most recently in January 2013, the company appointed Lord Gold to lead a review of the company’s compliance procedures, in response to allegations of misconduct.

Based on public information, there is limited evidence of a formal, written plan, which guides the Board or senior management review of the company’s ethics and anti-corruption agenda. The Ethics Committee reviews the agenda based on evaluating the company’s policies and practices, making recommendations to the board, reviewing reporting mechanisms, and ensuring policies receive the appropriate level of independent review. Also, there are a number of examples that suggest improvement plans are implemented when issues are identified. In 2013 the company approved a revised version of the Global Code of Conduct, issued a new training programme and updated and re-launched the Ethics Line. An updated Supplier Code of Conduct will be issued in 2014. The company therefore scores 1. To score higher the company would need to provide further evidence of a written plan that clearly guides how the review of the ethics and anti-corruption agenda is undertaken.

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 instances of corruption. However, in 2013 the company appointed Lord Gold to lead a review of its ethics and anti-corruption agenda in response to allegations of malpractice. The company is now developing a protocol to ensure that the company’s Legal, HR, Compliance and Ethics functions work in a co-ordinated manner, when investigating potential compliance breaches. As such, although the formality of the process is not clear based on public available information, TI assesses that such a process does exist. The company therefore scores 1.

Based on public information, there is evidence that the company has a risk assessment procedure implemented enterprise-wide. As part of this enterprise risk management system, compliance is an identified risk. It is managed by the legal and compliance team, using the company’s compliance programme. The Director of Risk leads a team across the company that is responsible for implementing overall risk policy and processes. Ownership for risk management is devolved to business units, supported by a network of risk champions and risk managers. Each business formally reviews their risks at least twice yearly, with continuity plans put in place to mitigate continuity risks. Every six months, the risk committee reviews the key risks that the businesses report, in accordance with the enterprise-wide risk management system.

Based on public information, there is no readly available evidence that the company has a formal anti-corruption risk assessment procedure for assessing proposed business decisions.

Based on public information, there is evidence that the company conducts due diligence when selecting and reappointing agents. The level of due diligence is dependent on the intermediary’s risk rating. The selection and renewal process, which includes due diligence, takes place at least every two years.

Based on public information, there is evidence that the company has contractual rights and processes for the behaviour, monitoring, control, and audit of agents with respect to countering corruption. The company has the right to audit intermediaries, and the Sector and CFBUs will carry out regular monitoring. Intermediaries are contractually bound to comply with legal and business ethics standards.

Based on public information, there is evidence that the company makes clear to contractors, sub-contractors, and suppliers, its stance on bribery and corruption. Suppliers must conduct their business to a high ethical standard and comply with relevant legislation on bribery, corruption and prohibited business practice. The company therefore scores 1. To score higher the company would need to provide evidence of contractual rights to apply sanctions in the event of a breach of its contract.

Based on public information, there is limited evidence that the company addresses the corruption risks associated with offset contracting at a general level. The company states that the compliance team’s broader areas of responsibility include offset compliance. The company therefore scores 1. To score higher the company would need to provide evidence that the corruption risks of offset contracting are explicitly addressed in offset policies.

Based on public information, there is evidence that the company conducts due diligence when selecting and reappointing its offset advisers. The company’s Global Intermediaries Policy applies to offset advisers, with the level of due diligence dependent on each individual’s risk rating. The selection and renewal process, which includes due diligence, must take place at least every two years.

Based on public information, there is evidence that the company prohibits corruption in its various forms, including the giving and receiving of bribes, facilitation payments and corrupt gift and hospitality exchange.

Based on public information, there is readily available evidence that the company has zero tolerance policy for birbery and corruption.

Based on public information, there is evidence that the company’s ethics and anti-corruption policies are easily accessible to Board members, employees and third parties. The Global Code of Conduct, the Global Anti-Bribery and Corruption Policy, the Global Gifts and Hospitality Policy and the Global Intermediaries Policy are all available on the company website. In particular, the Global Code of Conduct is available in 20 languages.

Based on public information, there is evidence that the company’s ethics and anti-corruption policies are written in accessible, comprehensible language, without dense, legal terms.

Based on public information, there is evidence that the company’s ethics and anti-corruption policies explicitly apply to all employees. The company therefore scores 1. To score higher the company would need to provide evidence that its ethics and anti-corruption policies explicitly apply to Board members.

Based on public information, there is evidence that the company has a policy on conflicts of interest. It is easily understandable and examples are provided. Board members have a separate conflicts of interest policy, whereby the Nomination Committee evaluates any conflicts of interest.

Based on public information, there is evidence that the company has a policy for the giving and receipt of gifts to ensure that such transactions are bona fide and not a subterfuge for bribery. It clearly states that gifts must not improperly influence a business decision and be reasonable in value and frequency. In particular, the policy sets both clear upper limits for gift exchange and values necessitating senior authorisation. For example, employees must receive approval from a compliance officer before giving gifts with a company logo and worth over £150.

Based on public information, there is evidence that the company has a policy for the giving and receipt of hospitality to ensure that such transactions are bona fide and not a subterfuge for bribery. It clearly states that hospitality must not improperly influence a business decision and be reasonable in value and frequency. In particular, the policy sets both clear upper limits for hospitality exchange and values necessitating senior authorisation. For example, employees must receive approval from a compliance officer before giving hospitality worth more than £200.

Based on public information, there is evidence that the company has a clear policy that prohibits facilitation payments. Facilitation payments made in duress must be reported to a member of the security or compliance team.

Based on public information, there is evidence that the company prohibits political contributions.

Based on public information, there is evidence that the company has a policy on engagement in lobbying activities. The company states that all lobbying activities are ethical and comply with applicable laws. Employees engaging in lobbying are instructed to gain authorisation from Government Relations in their region and receive appropriate registration in their respective country. TI notes that the company is registered in the EU’s Transparency Register.

Based on public information, there is no readily available evidence that the company prohibits or regulates charitable contributions, in order to prevent undue influence or other corrupt intent.

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 company’s Global Code of Conduct contains several question and answer sections and a TRUST model for ethical decision-making.

Based on public information, there is evidence that the company has a training programme on its ethics and compliance systems, which includes an anti-corruption policy. The company therefore scores 1. To score higher the company would need to provide evidence of an explicit anti-corruption module as part of its ethics and compliance training programme.

Based on public information, there is evidence that the company’s training programme on its ethics and compliance systems is mandatory for all employees. Periodic refresher training is also compulsory.

Based on public information, there is some evidence that the company provides anti-corruption training to Board members. In 2013, the Board received training in ethics conducted by the Head of Business Ethics and it attended a seminar on developments in corporate law and regulation. However, it is not clear that this training is refreshed on a regular basis or at least every three years. The company therefore scores 1.

Based on public information, there is no readily available evidence that the company provides tailored ethics and anti-corruption training for employees in sensitive positions.

Based on public information, there is no readily available evidence that the company has a clear and formal process by which employees declare conflicts of interest. It is unclear if employees should report conflicts of interest to their managers, with no evidence suggesting this is carried out in writing, or to the Ethics Line. To score on this question the company would need to provide evidence that employees are clearly instructed to report conflicts of interest either to their managers in writing or 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 its ethics and anti-corruption policies. However, the company does not express an explicit commitment, as it uses language such as ‘may’, rather than wording such as ‘will’. In addition, the ethics and anti-corruption policies only state their application to employees. The company therefore scores 1. To score higher the company would need to provide evidence of its explicit commitment to apply disciplinary procedures, to both employees and Board members found to have engaged in corrupt activities.

Based on public information, there is evidence of well-publicised, secure, confidential channels, for employees to report concerns or instances of suspected corrupt activity. These channels include managers, an independent department such as HR or a local ethics officer. In particular, an externally operated Ethics Helpline is available 24/7 by telephone or online. Employees are able to report anonymously in multiple languages.

Based on public information, there is evidence that all employees, in all geographies, have access to more than one reporting channel. Whistleblowing channels include an independent department such as HR, local ethics officers or the Ethics Helpline.

Based on public information, there is some evidence that the company has comprehensive and formal mechanisms to assure itself that whistleblowing by employees is not deterred. In July 2013 the company agreed to establish an oversight committee to monitor the operation of the Ethics Line and ensure it remains effective and efficient. The company therefore scores 1. To score higher the company would need to provide evidence of detailed analysis of whistleblowing data or independent employee surveys.

Based on public information, there is evidence that the company has well-publicised resources available to all employees, where advice can be sought on corruption-related issues. Employees can raise ethics concerns with their local ethics officer, an independent department such as HR or the Ethics Helpline.

Based on public information, there is evidence that there is a commitment to non-retaliation for bona fide reporting of corruption. Evidence shows that disciplinary measures may be applied to individuals who retaliate against anyone who raises a concern in good faith.