Corporate Governance, Compliance and Anti-corruption
Objectives, Measures and Indicators
GRI
Corporate Governance 102-18, 102-19, 102-22, 102-24, 207-1, 207-2, 207-4
Good corporate governance is a holistic issue for Vonovia that includes every area of the company. Our aim is for the management team to manage and supervise the company responsibly and independently.
Description of objective
Implementation of Group-wide guidelines and business principles
Description of measures
Implementation of uniform standards for corporate governance and employee conduct in the form of Group-wide guidelines, values and business principles:
- Our Business Philosophy: Value-based framework for our commitment in the future
- Our Code of Conduct: Ethical legal framework for our conduct in day-to-day business and expression of our corporate values; promotes and requires fair treatment in dealings with others; was also made available externally in its current form in 2019
- Our Our Business Partner Code: Binding principles of cooperation to ensure integrity and reliability as well as economically and legally compliant conduct
Greater transparency
Code of Conduct has been available to the public, too, since 2019
- 25% of the variable compensation (LTIP) paid to the Management Board is tied to non-financial performance criteria (CSI customer satisfaction index)
- Introduction of variable components of Management Board remuneration (CEO & CFO) linked to ESG criteria (STIP)
- Transparent remuneration practice in accordance with ARUG II for the Management Board and Supervisory Board (see chapter Remuneration Report, AR 2019)
Description of objective
Implementation of stringent corporate governance guidelines
Description of measures
Commitment to the principles set out in the German Corporate Governance Code (GCGC) and use of the principles of the Institute for Corporate Governance in the German Real Estate Industry as a guide by the Management Board and Supervisory Board, including:
- Ensuring the independence of the Supervisory Board as the company’s supervisory body: monitoring the Management Board and providing support with fundamental decisions (12 out of 12 members are independent), structured procedure involving a moderator used for the efficiency review of the Supervisory Board in 2019
- Independent corporate management by the Management Board: informing the Supervisory Board on business development, strategy and potential opportunities and risks
- Transparent selection criteria (incl. diversity criteria) for the Supervisory Board and the Management Board (see chapter Recruitment of Members of Executive Bodies, AR 2019); Supervisory Board members elected by the Annual General Meeting (simple majority)
- Functional and secure audit and control processes: establishment of the Executive and Nomination Committee, Audit Committee and Finance Committee, establishment of additional committees as required to ensure due and proper control
- Monitoring activities performed by the Audit Committee, in particular with regard to the accounting process, the effectiveness of the internal control system, the risk management system and the internal audit system, the audit of the financial statements, sustainability reporting (incl. the Non-financial Declaration) and compliance
Promoting diversity in the company’s executive bodies
- Including diversity criteria other than gender when filling vacant Supervisory Board and Management Board positions
- Supervisory Board: at least 30% women and 30% men; fulfilled with 33% female members
- Management Board: at least 20% women by the end of 2021; already fulfilled with 25% female members
Proportion of women in management and control bodies:
Management Board = 25% Supervisory Board = 33.3%
Description of objective
Establishing tax transparency
Description of measures
Understanding of tax as a responsible taxpayer that also lives up to its social responsibility with regard to the financing of the community
- 2018 tax strategy adopted by the Management Board
- As a multinational company with operating subsidiaries, we pay taxes in Germany, Austria, Sweden and the Netherlands
- Our subsidiaries are not vehicles for tax optimization
- Full compliance with tax compliance regulations
- No use of tax havens
Clearly defined responsibility and control processes and a functioning risk management system
- The Management Board is responsible for the tax strategy; functional transfer to the Tax department
- Regular exchange of information between Head of Tax and CFO on all major tax issues, their current and future impact, the status of the risk survey and the implementation of measures/controls designed to mitigate risk
- CFO provides the Supervisory Board with regular information on key tax issues and the assessment of tax risk
- Implementation of an internal tax compliance management system (that is audited internally and externally at regular intervals) to manage and monitor tax risks centrally
- Transparent cooperation with the tax authorities; complete documentation of tax-related issues
- Our whistleblowing system allows reports to be submitted anonymously and followed up on
More information on tax is available in the 2019 Annual Report
Further information on corporate governance can be found in the 2019 Annual Report (see chapters Corporate Governance, AR 2019, Further Statutory Disclosures, AR 2019, and Non-financial Declaration, AR 2019).
Compliance and Anti-corruption 205-2
Good compliance management makes a key contribution to a company’s sustainable development and value creation. It is also essential in order to act and be accepted as a reliable and trusted partner. This is why we are aiming for systematic adherence to all of the provisions and laws that apply to the company.
In 2019, we expanded our compliance management system further and strengthened the safeguarding mechanisms. As part of this process, we included relevant processes in Group guidelines and worded them transparently. The Management Board has overall responsibility for the compliance management system.
Description of objective
Implementation of a Compliance Management System (CMS)
Description of measures
Extensive and secure monitoring of compliance rules
- Regulatory framework in the form of Vonovia’s own Compliance Guidelines, which are consistent with the Principles for the Proper Performance of Reasonable Assurance Engagements Relating to Compliance Management Systems (IDW AsS 980) and also take the implementation principles for the UK Bribery Act 2010 into account.
Implementation of other key documents setting out provisions on how to handle compliance issues and anti-corruption
- Code of Conduct
- Business Partner Code
- Inspection guidelines
- Group guidelines on guideline management
The guidelines and codes apply in both Germany and Austria. Comparable regulations are also in place at our subsidiary Victoria Park in Sweden.
3 policies published
> Whistleblowing guidelines
> Guidelines on the prevention of money laundering
> Declaration of Respect for Human Rights
Implementation of clear responsibilities
- Management Board: responsibility for the implementation of the CMS
- Compliance Committee: regular updates to the CMS and adjustments to reflect current requirements; meets several times a year (at least four times)
- Members of this committee: the compliance officer, compliance managers, the ombudsperson, representatives from the Internal Audit, Risk Management and HR Management departments as well as the works council
- Remit of the committee members:
- Compliance officer: central point of contact for compliance matters and potential cases, identification of compliance risks, definition of measures for preventing and discovering risks
- Compliance managers and specialists: supporting the compliance officer from within the departments
- External ombudsperson: recording information regarding potential compliance cases – also on an anonymous basis, confidential contact for all employees and business partners
- Supervisory Board: receives extensive information on compliance and corruption issues as well as on existing guidelines and procedures on a regular basis; the Compliance Report, which is submitted to the Audit Committee, provides information on suspected cases of corruption as well as corruption measures and training
More information on our website.
https://www.vonovia.de/en/ueber-vonovia/ueber-uns/compliance
Description of objective
Compliance training
Description of measures
Implementation of regular training sessions on compliance topics, taking individual needs into account
- Regular training on topics such as capital market compliance, AML, anti-corruption, data protection, Code of Conduct, compliance for managers
- Training for all employees on the contents of the Code of Conduct
- Face-to-face training sessions in blocks for employees in the relevant functions (e.g., procurement, sales, construction management, finance, etc.)
37
different compliance training formats
Description of objective
Establishment of a system to prevent and combat corruption
Description of measures
Implementation of preventative measures, e.g., clear requirements and guidelines on how to deal with gifts and invitations
- Implementation of target group-specific training measures
- Introduction of an advisory service for employees to clarify any questions
- Easy access for employees via the intranet and employee information
- Introduction of a digital monitoring tool to ensure documentation
Implementation of strict measures
- Introduction of the whistleblower portal and corresponding Group guidelines. Option for staff and externals to contact an independent third party if they want to report suspicious cases
- Tone at the top: management conduct that is consistent with all corruption prevention requirements
Introduction of a risk-based anti-corruption system
- Implementation of a risk analysis based on the DICO risk catalog by the compliance officer in consultation with the Management Board and the responsible department heads
- Implementation of measures by the department heads in departmental guidelines and work instructions
- Review of measures by the compliance officer in coordination with the Internal Audit department
Establishment of an anti-corruption system
Description of objective
Definition of regulations to protect whistleblowers
Description of measures
Development of whistleblowing guidelines to ensure that any misconduct is consistently identified
- Supplements the Compliance Guidelines, the Business Partner Code and the guidelines on the internal control system
- Sets out further details on the procedure for reporting incidents and the framework for preventing and detecting corruption or irregularities
Introduction of a whistleblower system
- Option for employees, customers and business partners to report identified or suspected violations, also anonymously
- Reporting of possible breaches of the regulations that apply within the company to all compliance specialists and managers
- Consistent investigation of reports and sanctioning of violations
Description of objective
Introduction of money laundering prevention guidelines
Description of measures
Establishment of a risk-based system to detect and prevent money laundering-related issues
- The system covers all of the relevant requirements set out in the German Money Laundering Act (Geldwäschegesetz), particularly the checks on the beneficial owner
- Increased due diligence for transactions > € 10,000/month, e.g., involving the Legal department
Description of objective
Publication of a Declaration of Respect for Human Rights
Description of measures
Preparation of a Vonovia Declaration of Respect for Human Rights
- Clarification of Vonovia’s commitment to a pluralistic democratic society and zero tolerance for human rights violations
- Clear commitment to the core labor standards of the International Labour Organization (ILO) and the principles of the UN Global Compact on human rights
Description of objective
Establishment of reliable protection for personal and company-related data
Description of measures
Establishment of reliable protection for company-related data (cyber security)
- Definition of a fundamental level of information protection to preserve the company’s values and image and to comply with statutory requirements and the related tasks via IT guidelines
- An IT security administrator has been appointed to achieve the IT security objectives; the security administrator reports directly to the CIO
- Companies and specialist departments are responsible for security risks relating to information and data that is predominantly created, collected, used or processed within their sphere of responsibility
- Management of the process via IT
- Raising awareness of information security issues among employees as a fundamental prerequisite for information security
Ensuring compliance with data protection requirements and personal data protection
- Binding, uniform Group-wide rules (Group guidelines) established to ensure the processing of personal data in accordance with the General Data Protection Regulation
- Clear assignment of responsibilities and contacts for all relevant areas of the Group via data protection coordinators in the specialist departments
- Establishment of the position of company data protection officer
- Regular training on data protection
0
Number of proven cases
of corruption
In the 2019 fiscal year, there were isolated suspected cases of corruption, which we investigated diligently. None of the cases were confirmed. 205-3
There were several immaterial compliance violations or suspected cases in 2019. This demonstrated clearly that our established system functions well; the cases were reported and addressed and the appropriate action has been taken. 419-1
The subject of antitrust law is of particular importance to us, for example, in connection with company acquisitions. We inform the German Federal Cartel Office as soon as possible of any potential acquisitions and begin the integration of acquired companies or portfolios only following approval. There were no violations of competition law guidelines in 2019. 206-1
Adherence to Environmental, Labor and Social Standards in the Supply Chain 102-9, 102-16, 308-2, 414-1, 414-2
Vonovia already relies on a transparent and fair procurement process based on defined procurement and compliance guidelines. We continuously explore the possibilities that a sustainable supply chain has to offer. The aim is to ensure that our business partners and their subcontractors comply with the applicable labor and social standards. This relates primarily to construction activities that are not carried out via Vonovia’s in-house technical service. Vonovia also pursues this objective when purchasing materials and procuring all indirect materials and other services. In order to ensure this, procurement is split into centralized and decentralized units. Close and continuous dialogue with all business partners gives Vonovia an insight into, and access to, subcontractors, which serves to provide opportunities for control and builds trust.
Description of objective
Ongoing optimization of sustainable supplier management
Description of measures
Continuous revision and updates to the contractual basis from a supplier management perspective
- Business Partner Code of Vonovia SE: sets out provisions governing conduct that is fundamentally economically, legally and ethically compliant for all forms of business relationships and is binding for all subcontractors, suppliers, business partners and their subcontractors
- Code of Conduct of Vonovia SE: establishes a commitment to economically and legally compliant behavior and to compliance with the guidelines for preventing corruption in dealings with all subcontractors
- General Terms and Conditions of Contract for Construction Services of Vonovia SE (“AVBau”): set out provisions governing all commissioned construction services
- General Terms and Conditions of Purchasing of Vonovia SE: set out provisions governing all orders placed for goods or services that do not relate to construction services
- Privacy policies for subcontractors and business partners: set out provisions governing the processing of personal data in relationships with business partners and subcontractors
- Individual contractual provisions: individual contractual arrangements as the basis for longer-term, intensive cooperation
- Victoria Park: Code of Conduct serves as a Business Partner Code at the same time
All documents are available at the following link (German only):
www.vonovia.de/de-de/ihre-services/fuer-geschaeftspartner
Compliance with, and review of, the Business Partner Code
The Business Partner Code provides the economic, legal and ethical basis for a business relationship in the spirit of partnership, and:
- Also applies to third parties, i.e., subcontractors of Vonovia’s direct contractual partners
- Sets out clear expetations regarding integrity, legal compliance and ethical conductc
- Has to be signed to indicate binding acceptance and put into practice in all business practices
- Is subject to regular monitoring of compliance by the direct contacts
- Among other things, stipulates that illicit employment must be ruled out, that the legal minimum wage must be paid and that valid German regulations on occupational safety and human rights, and applicable environmental laws, must be observed
- Is supplemented by Vonovia’s Declaration of Respect for Human Rights – reaffirms the commitment to the ILO core labor standards as well as the principles of the UN Global Compact on human rights
- Is not valid in Austria and Sweden, as they have their own codes
Contractual measures to ensure compliance with labor and social standards in new construction/development
- Compliance ensured by implementing standard processes for tenders using suitable systems
Development of subcontractors by the procurement department
- Establishment of a Group-wide supplier assessment system
- Quantification of key performance indicators (KPIs)
- Definition of suitable measures such as the implementation of annual reviews and supplier audits
- Stringent monitoring using a blacklist and, if necessary, phasing out
Description of objective
Introduction and development of the Vonovia partner portal
Description of measures
Commissioning and continued development of the Vonovia partner portal for service providers and suppliers as a key component of system-supported risk and supplier management
- Structured onboarding using a two-stage registration process
- Traffic light model to ensure transparency regarding the validity of all relevant documents and, as a result, central documentation of key documents, including the minimum wage declaration, the exemption certificate and all other trade-specific approvals
- System-supported supplier assessment based on a questionnaire
New partner portal
launched for service providers and suppliers
Since the beginning of 2020, several hundreds of service providers and suppliers have already been managing their documents and master data using the partner portal. New suppliers can:
- Register with Vonovia online and submit applications to qualify as potential business partners
- Upload all of the key information and documents during the registration process
- Be approved by the central procurement department after a two-stage approval process and confirmation of the Business Partner Code as well as after granting their consent to all other contractual principles
Central documentation of key documents/licenses for affected trades and product groups
Further system support in supplier management
Implementation of regular supplier assessment process involving the procurement department and the specialist departments to lay the digital foundation for further-reaching supplier development
Description of objective
Ensuring environmental protection standards
Description of measures
Ensuring professional and environmentally friendly disposal of demolition materials and rubble
Minimizing the risk of hazardous or toxic materials being used:
- By arranging for building materials to be purchased by Vonovia’s procurement department
- By implementing a systematic TÜV Rhineland Toxic Materials Management System (TOGs®), in which all information is recorded, documented and evaluated centrally
- As a basis for conducting risk assessments and developing operating and handling instructions
Vonovia does not tolerate corruption under any circumstances. In the event of repeated violations of the Code or other legal provisions, we take appropriate steps and terminate the business relationship entirely. 205-3
As Vonovia operates within a strictly regulated and controlled legal framework within the European Union, possible challenges relating to human rights are not considered to be material to Vonovia’s business model. This explains why the Code of Conduct, for example, does not contain any explicit provisions on “living wages” and “living conditions” – the stringent statutory requirements in Germany, Austria and Sweden go far beyond international basic standards. The procurement department, however, acts as a watchdog in this regard by selecting suppliers accordingly (see above) in order to ensure the protection of fundamental rights and adherence to the law.