Compliance and anti-corruption program

In the course of 2014 there began a process of analysis and implementation of the “Premium Integrity” anti-corruption program in the main countries in which Pirelli operates. The oversight Program is the reference for the prevention of corrupt practices, and it represents a collection of principles and rules already adopted by Pirelli, supplemented by “new” and specific provisions, aimed at preventing or reducing the risk of corruption, further strengthening the Group’s anti-corruption character.

The anti-corruption program, approved by the Board of Directors, has been communicated to all employees of the Group in their local language.  The document is also available on the company’s website, and can be accessed by all stakeholders, in twenty-two different languages.

The program reaffirms the principles Pirelli has already outlined in the Code of Ethics and in the Behavioural Guidelines, including intolerance of “any type of corruption, in any form or mode, in any jurisdiction, even where such activity has been, in practice, allowed, tolerated, or not prosecuted.For these reasons “it is forbidden for the Recipients of the Code to offer gifts or other benefits that could constitute a breach of rules, or such that are in conflict with the Code, or could, if made public, constitute a prejudice to the Pirelli Group, even if only to its image.”  Pirelli also “maintains and preserves the company's assets, and shall procure the means for preventing acts of embezzlement, theft, and fraud against the Group”, and it “condemns the pursuit of the interests of individuals and/or third parties that are to the detriment of those of the company.”

Pirelli monitors the risk of corruption and, if necessary, it updates the risk analysis in the event of a change to its sphere of operation due to the “entry” of “high risk” countries (based on the Transparency Index), establishing, where appropriate, education & awareness programs. Premium Integrity is developed via the following phases:

  • Mapping of the national and international legal framework regarding rules on corporate responsibility for crimes of corruption;
  • Analysis of Risk Profiles based on two scenarios:
    • perceived risk resulting from combining the level of perceived corruption, associated with the Corruption Perception Index indicator calculated by Transparency International, with the perception of Management regarding the risk level of each country;
    • suitability of the oversight provided derived from a combination of the oversight guaranteed for areas deemed to be potentially at risk of corruption, and the level of control for the country according to the indicator provided by the Internal Audit Department in the Internal Control System.

Analysis of risk profiles allows us to identify a vulnerability ranking for the countries under analysis, as can be seen in the following figure:

CORRUPTION RISK PROFILE ANALYSIS

CORRUPTION RISK PROFILE ANALYSIS

Pirelli is working on deploying the Anti-Corruption Program in the Group, with the aim of adapting it to local conditions.

Moreover, with a view to prevention and control, internal audits carried out by the Internal Audit Department include monitoring of crime risks, including the risk of corruption and fraud.

It should be noted that, even with reference to 2014, there are no cases of corruption to be reported, as well as any legal action regarding corrupt practices.

In the course of 2014 there was completion of training and communication on the administrative responsibility of companies, as set out by Legislative Decree no. 231/2001 which covered the entire workforce (about 1,650 employees) of the Italian companies. In the course of 2014, there was implementation of the Segregation of Duties model, which aims to further strengthen the Internal Control System and prevent fraud.

With reference to contributions to the wider community, Pirelli has, for years, used an internal procedure to regulate charitable donations, contributions, and disbursement of funds to the wider community on the part of Group Companies, in regard to the roles and responsibilities of the departments involved, the operational process of planning, implementation and monitoring, and informational initiatives for the abovementioned projects.

In identifying initiatives responding to local needs, an essential contribution is made by dialogue with NGOs operating locally.  Priority is given to initiatives in which the positive effects on the wider community are tangible and measurable in an objective manner.

Pirelli’s procedure also states that initiatives cannot be promoted that are in favour of beneficiaries for whom there is evidence of direct or indirect disrespect of human rights, employment rights, the environment, or business ethics.

“Pirelli’s Values and Code of Ethics” definitively establish that Pirelli “does not make Contributions or provide any advantages or other benefits to political parties and trade unions, or to their representatives or candidates, subject to compliance with applicable law.

With reference to sponsorship activities, the operating procedure Pirelli uses to regulate the process of designing, planning, approval, management and control of sponsorship activities also establishes the roles and responsibilities of the departments involved, ensuring departmental segregation of activities, with a central approval role given to the Brand and Communication Committee, in accordance with the following principles:

  • synergy with Group strategy and consistency with brand strategies and corporate communications;
  • high visibility and resonance of the sponsored project;
  • a measurable return, in terms of business, or as assessed according to “media equivalent” standards for measuring brand and communications initiatives;
  • morality, honesty and integrity of the sponsored party, of the entities controlled by it or controlling it, or of parties otherwise related to the sponsored party;
  • intended use of the Pirelli trademarks in compliance with Pirelli Group Policy.

As in the case of the abovementioned procedure which regulates Charity, sponsorship rules state that initiatives cannot be promoted that are in favour of political parties, trade unions, or their representatives or candidates, or that are in favour of beneficiaries for whom there is evidence of direct or indirect disrespect of human rights, employment rights, the environment, or business ethics.

In the course of 2014 there was continued support for the work of Transparency International, which Pirelli supports, in educational projects that promote an active role for civic and moral education to strengthen civil society against crime and corruption, with the belief that only through proposed and concrete action for promoting values can there be a general improvement in quality of life.