Ethics

GRI

2-18

2022 Annual Report

As one of the largest employers in Poland, the Bank undertakes to conduct and promote ethical business, build an ethical organizational culture and follow the principles of social responsibility.

The Code of Ethics was adopted by resolution of the Bank’s Management Board in 2014. The Code is a set of the most important values, principles, standards of conduct and ethical attitudes determining mutual relations in business and in the Bank’s relations with the outside world. In practical terms, the Code is a tool supporting the popularization and implementation of ethical values at the Bank. Its provisions are binding on the employees and all persons who perform business activities for and/or on behalf of the Bank and/or act as intermediaries in the Bank’s operations. According to the Bank’s Working Regulations, every employee of the Bank is obliged to observe the Code of Ethics.

Measures taken:

defining and promoting standards concerning business decisions and employee attitudes,
increasing awareness of the significance of business ethics among employees by organizing training, workshops and dedicated information campaigns,
defining and promoting key values which are necessary for the implementation of the Bank’s mission, such as reliability, customer satisfaction, continuous improvement and entrepreneurship – these values constitute the basis for the employee competence model,

ensuring that the whole of the Bank’s Group follows uniform standards of ethics,
promoting firms which follow the principles of ethics in their relations with customers, business partners and employees, social involvement in the initiatives addressed to local communities and global projects,
taking steps to ensure a high standard of solutions in the area of ethics (confirmed by certificates),
ensuring that employees have the right to associate and freedom of speech.

The Bank has analysed the ethical risks for each group of stakeholders and takes measures to mitigate such risks:

Stakeholders	Risks	Management
Employees	Corruption and bribery Violating the trade secret Bullying, harassment, other forms of discrimination Violating the terms and conditions of employment	Anti-corruption The Bank mitigates the risks of violating the business secret, bullying, harassment and other forms of discrimination, as well as the risk of violating the terms and conditions of employment by defining the appropriate responsibilities of the employees in this respect and penalties for non-compliance in the Bank’s Working Regulations.
Customers	Unethical sales Unauthorized access to Customer information Unauthorized access to customers’ funds Social exclusion Non-transparent relations with political parties	Misselling Filing complaints and reporting violations A risk of unauthorized access to Customer information, data protection, observing bank secrets Risk of unauthorized access to customer funds Special actions supporting the customers with disabilities The Bank has internal regulations adopted by the Management Board, concerning relations with political parties and defining the principles for opening bank accounts and granting loans to political parties
Counterparties	Corruption and bribery Extortion of trade credit	Anti-corruption Time-time payments
Social surroundings	Corruption and bribery Adverse effect on the environment Adverse effect on the communities	Anti-corruption Impact monitoring Charitable and sponsorship activities

Dissemination of ethics and Bank's values

In 2022, the Bank conducted training activities addressed to all employees of the Bank and to the management staff. The training focused on issues that are important to promote the ethics of team conduct, such as building team relations, identifying emotions, dealing with stress, motivating employees to work and manage the team in change environment.

All newly-employed staff members are informed about the value and the Code of Ethics on the first working days as part of the onboarding process.

In addition, the Bank offers training on ethics and values to agents.

Counteracting the violations of the standards of ethics

In addition to the promotion of the Bank’s values and ethical conduct, the Bank finds it equally important to counteract all forms of violation of ethics in all aspects of the operations referred to above (including counteracting bullying and discrimination). Therefore, the following procedures have been defined in a clear and transparent manner:

reporting any violations – this path is available to every employee in any form (also anonymously),
proceedings to investigate the reported (potential) violations,
monitoring and reporting (also to a competent member of the Bank’s Management Board) the violations identified. These procedures and principles of conduct have been adopted by the Bank’s Management Board.

The Bank’s Code of Ethics and the Bank’s Working Regulations contain provisions concerning, among other things, counteracting discrimination due to gender, age, disability, religion and denomination, race, ethnic origin, nationality, political views, trade union membership, sexual orientation, employment for a limited and/or unlimited period and on a full-time and/or part-time basis.

Each employee is obliged to comply with the Bank’s Code of Ethics and participate in the development and promotion of the organizational culture and the related values.

In order to counteract violations of ethics, the Bank applies separate internal regulations: “The Principles for counteracting bullying and discrimination, and the procedure for handling complaints concerning the violation of employee rights”. The employees report such cases to dedicated email addresses.

The Bank analyses the cases reported through dedicated internal channels also in terms of non-compliance and violations related to conflicts of interests.

In addition to promoting values among the employees, the Bank also monitors employee complaints for potential violations of the standards of ethics. The competent Members of the Bank’s Management Board are informed quarterly about employee complaints in the areas they supervise and the way in which the case has been resolved. The Members of the Management Board are also entitled to review the documentation concerning the examination of the complaint. Moreover, the President of the Bank’s Management Board is informed quarterly about all complaints filed by employees.

In addition, in 2022 the Bank’s Management Board and the Supervisory Board approved the revision of the Code of Ethics. The new rules specified:

that behaviours that are inconsistent with ethical attitudes indicated in the “Code of Ethics of PKO Bank Polski S.A.” are unacceptable,
the process of verification and assessment of compliance with ethical standards at the Bank As part of the implementation of this process, the Bank’s Management Board, based on the “Report on compliance with ethical standards at the Bank” prepared in 2021, conducted a positive assessment of compliance with the ethical standards set out in the Code of Ethics of PKO Bank Polski S.A., and informed the Supervisory Board about the results of the assessment.

In accordance with the regulations concerning the assessment of suitability of candidates for Management Board members and the members of the Management Board of PKO Bank Polski S.A. adopted by PKO Bank Polski S.A., in assessing suitability in terms of the guarantee of the proper performance of duties, the Supervisory Board takes into account the criteria of reputation, integrity and ethical conduct of candidates for the members of the Bank’s Management Board (as part of the preliminary assessment) as well as the members of the Bank’s Management Board (as part of the periodic assessment). If a candidate for a Management Board member and/or a Management Board member is found unsuitable in terms of the guarantee, the candidate may not be appointed to the body or measures may be taken to dismiss a member of the body from their position. Similar principles apply in the policy on the assessment of suitability concerning the members of the Bank’s Supervisory Board.

Ethics in the Bank’s Group

The entities of the Bank’s Group have implemented the Company’s Code of Ethics based on the template sent by the Bank, which means the application of uniform principles across the entire Bank’s Group.

Communication of critical concerns

[2-16] In the employment area there are mechanisms in place to promote and monitor compliance with the ethical standards at the Bank, including mechanisms for monitoring situations violating these principles, in particular those which may have a negative impact of the organisation on stakeholders, as well as the manner of dealing with business relations and the social environment based on, among others, the internal complaint procedure introduced, the Code of Ethics and reporting obligations towards the Management Board and the Supervisory Board. Within these mechanisms:

Members of the Bank’s Management Board receive information on occurrence of violations in their reporting areas on a quarterly basis,

As part of the annual report on compliance with ethics at the Bank, the Management Board and the Supervisory Board of the Bank receive comprehensive information.

In 2022, no significant concerns were raised in the employment area, and therefore no significant concerns were raised to the Management Board and Supervisory Board of the Bank regarding negative influence of the organisation on its stakeholders, including those related to business relations.

As part of the functioning of an anonymous system for notifying violations to the Bank’s Management Board or the Supervisory Board, there were no information indicating any irregularities which resulted in the organisation’s critical influence on its stakeholders.

Collective knowledge and assessment of the effectiveness of the management board and the supervisory board in terms of sustainable development

[2-17] Assessment of the knowledge, skills and experience of members of the Management Board and Supervisory Board of the Bank on sustainable development, including the ability to manage ESG risk and the impact of ESG risk factors on Bank’s operations, is one of the verification criteria as part of preliminary and periodic (annual) suitability assessments (members of the bodies) and collective (the Bank’s bodies) suitability assessments.

GRI: 2-18

introduction/update of the Bank’s internal regulations relating to the Bank’s undertaking of activities in the ESG area,
determination by the Bank of non-financial indicators and objectives and their performance,
development of the Bank’s strategy aimed at achieving ESG objectives and sustainable development,
setting managerial objectives to members of the Bank’s Management Board covering the ESG area, including customer and employee satisfaction indicators as well as implementation of the Bank’s strategy.

Performance review of the Bank’s Management Board and Supervisory Board with regard to fulfilment of entrusted obligations, including monitoring the management of the organisation’s impact on ESG issues, is assessed in several respects, including through periodic monitoring of:

the implementation of the indicators and non-financial objectives related to the ESG area,
implementation of management objectives of the Bank’s Management Board members, including the implementation of the Bank’s strategy
the impact of the organisation on the stakeholders and the social environment,
control/review mechanisms in the area of compliance with corporate governance,
the discharge of liability process,
reporting and suitability assessment mechanisms for members of the body,
a settlement mechanism of management objectives of the Bank’s Management Board members, as well as
ESG ratings assigned to the Bank, which remain at the medium level.

Conflict of interest

[2-15] The principles of managing conflicts of interest are adopted by the Bank’s Management Board and approved by the Supervisory Board.

Members of the Supervisory Board are obliged to immediately inform the Supervisory Board of any circumstances that may cause a potential conflict of interest affecting their relations with the Bank’s Group, including their activities in the Supervisory Board. The Chairman of the Supervisory Board takes a decision not to provide a member of the Supervisory Board in respect of whom there are circumstances giving rise to a potential conflict of interest with documents and information deliberated on by the Supervisory Board related to the matters to which the conflict pertains. Moreover, a member of the Supervisory Board is obliged to inform permanent participants of the meeting of the Supervisory Board about the conflict of interest which occurred and/or which may arise, refrain from participating in the discussion, and refrain from voting on the adoption of a resolution on the matter to which such conflict pertains.

A member of the Management Board is obliged to refrain from any professional and/or non-professional activity that could lead to a conflict of interests and/or otherwise have an adverse effect on their reputation as a member of the Bank’s management body. A member of the Management Board shall be obliged to submit to the Supervisory Board, at the latest on the date of election, a written declaration on all other professional activities, membership in the management and/or supervisory bodies, and stock or shareholdings, if as a result of their possession, a member of the Management Board is entitled to exercise at least 5% of votes at the general meeting (the shareholders’ meeting). A member of the Management Board may not, without the consent of the Supervisory Board, engage in any business competitive with the Bank or the entities of the Bank’s Group, nor participate in companies engaged in competitive activities towards the Bank or the entities of the Bank’s Group as a partner (shareholder) or a member of management or supervisory bodies, and may not, without the consent of the Supervisory Board, participate in any form of provision of work or other services to entities engaged in competitive activities towards the Bank or entities of the Bank’ Group.

The President of the Bank’s Management Board shall be informed on a monthly basis about conflicts of interest concerning all employees of the Bank. In addition, the Bank’s Management Board and the Supervisory Board are informed on a quarterly basis about the number and subjects of conflicts of interest notifications concerning all employees of the Bank.

The Bank makes available, on the public website, the relevant information concerning the policy of managing conflicts of interest and information adopted at the Bank regarding the Bank’s management of significant conflicts of interest and conflicts that could arise due to transactions concluded by the Bank with entities operating in the Bank’s Group (Principles for the management of conflicts of interest (pkobp.pl)). The disclosure shall include identification of possible types of conflicts of interest, including identification of key controls, such as segregation of duties, information barriers, exclusion from decisions taken. Information on material conflicts of interest or conflicts of interest that could arise due to transactions concluded by the Bank with the Bank’s related parties and the scope thereof shall be submitted by the Bank to the Polish Financial Supervision Authority. The following information shall not be disclosed publicly: personal data, bank secret, and/or company secret.

In cases where it is not possible to eliminate the impact of the identified conflict on the customer’s interest, the Bank shall inform the customer about the conflict of interest identified in relations with the customer and about actions taken to protect the customer’s interests. If a conflict of interest is disclosed, the Bank shall request the customer to confirm their will to conclude and/or continue the agreement or the provision of the service.

Prevention of money laundering

In December 2022, the Bank’s Management Board updated a policy for preventing money laundering and financing of terrorism (AML), which applies to all entities of the Bank’s Group. The purpose of this Policy is to prevent the use of the Group’s products in the activities related to money laundering and/or financing of terrorism. The Policy defines the standards that should be observed by the Bank, its subsidiaries and all persons working for them, including permanent and temporary associates, consultants, contractors, external agents and their employees (see here, questionnaire: here)

The Policy is one of the internal procedures defining the scope of the transfer of data, regulations, obligations, standards and measures used to prevent money laundering and financing of terrorism. The Bank and the Group companies develop, implement, update and enforce the internal AML regulations.

identification and verification of the Customer,
monitoring of transactions in order to assess whether customers’ transactions are consistent with the known customer profile and the intended nature of business relationships (identification of unusual and suspicious transactions and examination of the source of funds where appropriate),
recording of above-threshold transactions,
monitoring of sanctions to prevent establishing prohibited relationships by checking whether the customer is present on sanction lists,
method of exchange and protection of information,
financial security measures, including identification of beneficial owners,
manner of storage of documents and information,
manner of fulfilment of obligations comprising the provision of information about transactions and notifications to the General Inspector,
manner of popularizing the knowledge of the regulations on preventing money laundering and financing of terrorism among the Bank’s employees,
reporting of actual and/or potential violations of the regulations on preventing money laundering and financing of terrorism by the employees,
internal control and/or oversight of the compliance of the operations with the regulations on preventing money laundering and financing of terrorism and the principles of conduct set out in the internal regulations,
principles of documentation of the difficulties identified in connection with the verification of the identity of a beneficial owner and measures taken in connection with the identification of a natural person holding a senior managerial position as a beneficial owner,
verification of financial institutions as part of the process of establishing correspondent relationships (LORO, exchange of RMA keys).

The Group applies financial security measures before establishing a business relationship with a customer and then reapplies them during the relationship at the intervals adequate to a given customer’s risk.

If the Group cannot apply one of the basic financial security measures, it takes appropriate steps in accordance with Article 41 of the Act on preventing money laundering and financing of terrorism, i.e. it does not establish business relationships, does not carry out an occasional transaction, does not conduct transactions via a bank account, terminates business relationships.

The Group identifies and verifies customers and beneficial owners, determines the risk of money laundering and financing of terrorism, monitors customers’ transactions and, in the event of identifying circumstances which may indicate money laundering and/or financing of terrorism and/or a well-founded suspicion of money laundering, it takes appropriate measures, including putting transactions on hold, blocking the account and/or freezing the funds.

the lists published by the General Inspector based on the resolution of the United Nations Security Council passed under Chapter VII of the United Nations Charter, concerning threats to international peace and security caused by terrorist attacks, in particular the lists referred to in section 3 of resolution 2253 (2015) of the United Nations Security Council and/or in section 1 of resolution 1988 (2011) of the United Nations Security Council,
the list of persons and entities subject to special mitigating measures, published by the General Inspector of Financial Information (GIIF),
the lists published on the basis of the regulations of the Council of the European Union,
the list of persons and entities to whom the measures referred to in the Act on special solutions in the field of counteracting aggression in Ukraine and used to protect national security published by the Ministry of Interior and Administration are applied,
the lists announced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).

The persons performing AML duties participate in training programmes concerning the execution of such duties

Within their organizations, the Bank and its subsidiaries appoint AML officers responsible for the exchange of information among the Group entities. The Bank performs periodic reviews of the Group policy at least annually. It also prepares quarterly information on counteracting money laundering and financing of terrorism, which is presented by the AML and CFT Department Director to the Bank’s Management Board.

The Group operates in accordance with the laws of each country in which it conducts its activities and cooperates with institutions which are tasked with preventing money laundering and financing of terrorism (the GIIF in Poland and the relevant financial analytics institutions for the foreign branches).

The most recent update of the Anti-Money Laundering and Terrorist Financing Policy of 2022 was aimed at strengthening the supervision within the Bank’s Group on obligations implemented in these entities under AML/CFT.

Benefits for the Supervisory Board and the Management Board

Anti-corruption