Ethics & Integrity

GRI 2-23,24,27

Oerlikon’s Group-wide procedures ensure compliance with legal and regulatory statutes, as well as internal standards, including the company’s Code of Conduct (CoC). This oversight encompasses training, communication and consulting activities designed to provide the Group’s divisions and individuals with the information and resources necessary to fulfill their responsibilities and understand their roles in ensuring ethical compliance and behavior.

The chain of ethics and compliance accountability is as follows:

• Group Compliance reports twice yearly to the Audit and Finance Committee (AFC), a committee of the Board of Directors (BoD).
• Group Audit reports all compliance investigations to the AFC.
• All compliance-related matters are communicated to the BoD via the Chair of the AFC or the Chief Legal Officer/General Counsel, who attends all BoD meetings as the BoD secretary.
• The Head of Audit presents all investigations and cases to the AFC. These cases are reported to the BoD by the Chair of the AFC biannually and as required.
• The Compliance Review Board, which is chaired by the Head of Compliance and has the Head of Audit as a member, meets biannually to review all reported cases.
• From January 1, 2022, to December 31, 2022, there were 14 cases.

Oerlikon’s robust compliance and integrity platform has evolved continually since its launch in 2009. Our CoC was updated in 2020, making electronic training annually (instead of every two years) and mandatory.

Complementing the digital training, the Face2Face (F2F) programs provide the CoC training for operational employees without digital access. Further developments to promote ethical behavior include enhancing our business partner integrity screening process and communicating our antitrust compliance program to both internal and external stakeholders.

The compliance program’s framework has three pillars:

1. Prevention: policies, directives, training, the CoC, risk assessment, maturity assessment, compliance councils, internal controls and metrics, examples and Q&A in all employee meetings.
2. Early detection: 24/7 reporting hotline; continuous compliance reviews, controls and internal audits, allegation management process.
3. Response: disciplinary action on compliance breaches, process adaptation, resolution plans, remediation of internal control systems, fine-tuning of policies.

Moreover, Oerlikon has broadened the scope of its governance framework by integrating ethics within its leadership development initiatives, focusing on the following:

1. Providing substantive support to high-performing teams.
2. Reinforcing awareness of our commitment to sustainable practices.
3. Measuring successes against the triple bottom- line parameters.

Above all, the CoC prioritizes Oerlikon’s most significant asset: its extraordinary reservoir of talented people. By promoting company-wide understanding and appreciation of the core values encapsulated in the CoC, our leadership team ensures that our employees comply with and take pride in these standards. This creates our strongest foundation for pursuing the continued evolution of a comprehensive sustainable ethics and compliance governance framework.

In early 2022, we published our new Sustainability & HSE Policy. All policies at Oerlikon are approved by the BoD and EC. Responsibility for oversight and implementation rests with a cross-functional team that includes members from sustainability management, human resources, compliance, legal and procurement.

Oerlikon’s policies are publicly available on its website. Upon issuance of a new, revised or updated policy, we disseminate the information globally via our internal communication platforms such as the intranet and Yammer. The information is also shared with all leaders and senior management to relay to their divisions and teams.

Oerlikon is committed to training all employees with digital access annually. Since 2017, electronic compliance training in the CoC and data privacy has been mandatory for Oerlikon employees. Since then, participation rates for the CoC e-training have improved steadily, with 60% of registered users completing the training in 2017. This figure rose to 90% in 2019, 91% in 2020 and 97% in 2021, excluding employees in Germany due to agreements with worker councils and employees from companies acquired in 2021. In 2022, 95.3% of registered employees worldwide, including staff in Germany and acquired entities, completed the e-training.

In 2020, Oerlikon committed to providing regular CoC training to colleagues without digital access at work. Due to the pandemic, the rollout of the training was delayed. In November 2022, the Surface Solutions Division started rolling out the training and also organized train-the-trainer sessions for several entities to prepare them to conduct training on their own. The goal is to provide the tools and materials for the sites to conduct the training according to the availability of the production employees and their shift schedules. The F2F training at the division will continue into 2023. At the Polymer Processing Solutions Division, synergies are being established with the Surface Solutions Division to offer F2F training to employees. Our longer-term objective is to have more than 95% of all employees trained both digitally and F2F by 2030.

Furthermore, as part of the quarterly certification, legal entity heads must certify that they have met all compliance-related obligations. In addition, all contracts with suppliers, vendors and third parties refer to the Group CoC and Supplier Code of Conduct. All parties who are interested in working with Oerlikon must adhere to Oerlikon’s CoC and/ or their own Code of Conduct.

GRI 2-26

Oerlikon updated its Whistleblowing Policy in 2021. The Whistleblowing Policy is made available to all employees as well as external stakeholders on the company’s website.

Since 2015, we have maintained an active, 24/7/365 reporting hotline, run by an independent third-party provider, to enable concerned colleagues to alert us so that we may act swiftly to prevent or address instances of potential wrongdoing. The hotline provides a mechanism for reporting complaints related to wrongdoing or CoC violations. This includes human rights or human sustainability issues, such as harassment, diversity and inclusion.

Cases pertaining to the misdirection of funds or to physical bullying have led to dismissals with cause of those individuals. Thus, Oerlikon’s CoC ensures that every member of staff has a resource to help guide responsible decision-making in line with our standards of ethics, our culture and values and our commitment to compliance in all our business practices.

To ensure company-wide awareness, we have engaged in ongoing informational campaigns. Initially, we notified employees about the hotline via posters and through training sessions, townhalls and internal communications channels. Operational employees in some jurisdictions had messages sent with their pay notifications. We have also prepared materials that walk employees through the reporting process. Beginning in 2021, a compliance e-training module included an explanation of how to make a whistleblowing complaint and F2F training showing operative employees how to report via the hotline.

In addition, we encourage employees to feel at liberty to raise issues with direct line managers, other colleagues, other managers, human resources, legal and/or compliance. There is a dedicated compliance officer in each of the two divisions of the Group.

GRI 2-25

Both our CoC and our Whistleblowing Policy prohibit retaliation for complaints and allegations brought in good faith. We take all complaints seriously, including those submitted anonymously, and review the evidence provided with the complaint, as well as additional evidence gathered during any investigation.

Group Compliance and Group Audit serve as first-line investigators of complaints received via the whistleblowing hotline, and the Group Compliance Review Board, which is part of the Group’s governance oversight structure, reviews all complaints. When more specific expertise is required, we hire the necessary related experts. Compliance complaints are communicated to the highest governance body, both the AFC and BoD.

Any matter that represents a potential material effect on the company’s profit and loss, for example, due to a potential fine or sanction, or brand reputation, or any incident that has caused harm to any employee that could lead to litigation, is regarded as high risk.

Oerlikon’s Whistleblowing Policy is available online. Employees can also access it in a total of 11 languages in the company’s intranet.

GRI 408-1

Oerlikon does not participate in and does not accept child labor. We support all international conventions pertaining to the nonuse of child labor, and our Supplier Code of Conduct condemns child labor.

The Against the Use of Child Labor Policy is endorsed by Oerlikon’s Board of Directors and was issued in 2021. It includes Oerlikon’s directives on reporting suspected incidences of child labor, investigating those allegations promptly and taking all appropriate actions against the practice of child labor, including, as warranted, sanctions against or termination of relationships with partners or suppliers engaged in those practices.

Oerlikon strongly urges employees or representatives to report any incident or complaint of child labor to their immediate supervisor, their department head, any senior manager of their business unit, their local human resources representative, their local procurement representative or over the Oerlikon 24/7 reporting hotline (SpeakUp).

Any reported allegations of child labor will be promptly investigated. If use of child labor is found in Oerlikon’s supply chains, we will take all appropriate measures to mitigate any risks by developing a responsible solution, which may include work in partnership with the supplier and/or a termination.

Adherence to nonuse of child labor is clearly defined in our policy and CoC as well as our Supplier Code of Conduct but is managed locally and by suppliers themselves. We currently do not have a system in place that gathers data regarding which operations and suppliers are considered to have significant risks of such incidents.

GRI 409-1

Oerlikon is committed to a safe work environment that is free from and provides protection against human trafficking and slavery, including forced labor and unlawful child labor. Oerlikon does not tolerate or condone human trafficking or slavery in any part of its global organization. Oerlikon prohibits human trafficking and slavery.

Employees, contractors, subcontractors, vendors, suppliers, partners and others through whom Oerlikon conducts business must not engage, be involved in or participate in any practice that constitutes human trafficking or slavery. The Policy Against Human Trafficking and Slavery is endorsed by Oerlikon’s Board of Directors and was issued in 2021. It includes Oerlikon’s directives on reporting suspected incidences of human trafficking or slavery, investigating those allegations promptly and taking all appropriate actions against the practices of human trafficking or slavery, including, as warranted, sanctions against or termination of relationships with partners or suppliers engaged in those practices.

As with the process defined for child labor, Oerlikon strongly urges employees to report any incident or complaint of human trafficking to their immediate supervisor, their department head, any senior manager of the business unit, their local human resources representative, their local procurement representative or over the Oerlikon 24/7 reporting hotline (SpeakUp).

Any reported allegations of human trafficking will be promptly investigated, and Oerlikon will take appropriate disciplinary action for the violation of this policy, which may include the discharge of employees, subcontractors and agents.

Our operations and suppliers must adhere to nonuse of forced or compulsory labor, which is clearly stipulated in our policy and CoC and Supplier Code of Conduct. Management, tracking and actions taken are handled locally and by suppliers themselves. We currently do not have a system in place that gathers data regarding which operations and suppliers are considered to have significant risks of such incidents.

Although Oerlikon does not undertake specific human rights reviews or impact assessments, we do carry out frequent employee and labor relations/rights risk assessments of our own operations in various countries across the world as well as thorough compliance audits of our policies, including human resources, with applicable legislation and corporate policies and instructions.

We will continue to monitor our business and the industries and markets we serve to identify additional areas of compliance focus through 2030 and beyond.

GRI 205-1,2

Oerlikon and its employees are neither to engage nor assist in any behavior that might be construed as corruption or bribery. We support all international conventions and local laws that govern anti-corruption and anti-bribery.

Since 2012, Oerlikon Anti-Corruption and Anti-Bribery directive that was approved by the EC has been in effect. The directive, which defines our ethical business conduct principles in alignment with the CoC, provides specific guidance with regard to active, passive, direct and indirect corruption, direct or indirect benefits, corruption and bribery, political contributions, charitable contributions, facilitation payments and giving or receiving of gifts, hospitality and entertainment. The directive is available on Oerlikon’s intranet and website. This topic is covered as part of the annual CoC e-training and F2F training for employees, and all employees are expected to take decisions that align with the principles it details.

As valid for all breaches, Oerlikon strongly urges employees to report any incident or complaint of corruption or bribery to their immediate supervisor, their department head, any senior manager of the business unit, their local human resources representative, their local procurement representative or over the Oerlikon 24/7 reporting hotline (SpeakUp).

GRI 406-1

Oerlikon is committed to a work environment in which all individuals are treated with respect and dignity. Each individual has the right to work in a professional atmosphere that promotes equal employment opportunities and prohibits discriminatory practices, including harassment. Therefore, Oerlikon expects that all relationships among persons in the workplace will be business-like and free of bias, prejudice and harassment.

In 2021, Oerlikon issued a Non-Discrimination and Anti-Harassment Policy, endorsed by Oerlikon’s Board of Directors, to underscore the importance of this topic within the company.

The policy clearly defines that no one shall be discriminated against on grounds of race, color, national origin, religion, sex, age, physical disability, mental disability, medical condition, ancestry, alienage or citizenship status, marital status, creed, genetic information, height or weight, sexual orientation, gender, gender identity, gender expression, transgender status or any other characteristic protected by law. Oerlikon prohibits and will not tolerate any such discrimination or harassment.

The policy specifies that everyone at Oerlikon has the duty to promote non-discrimination and not to tolerate harassment and sexual harassment. This cross-sectional task lives from the active support of all employees of Oerlikon. The global human resources team is responsible for implementing this policy.

Essential elements of this policy are:

• Recruiting, hiring, training and promoting in all job classifications without regard to race, color, national origin, religion, sex, age, disability, alienage or citizenship status, marital status, creed, genetic information, height or weight, sexual orientation, gender identity or gender expression or any other characteristic protected by law.
• Each employee has the opportunity to contribute his/her best according to his/her abilities and qualifications.
• Redress of discrimination and harassment, the removal of barriers and prejudices, also with regard to career opportunities.
• Ensuring that all personnel actions and practices are administered in a fair, equal and consistent manner.
• Harassment, sexual harassment of any kind and behavior will not be tolerated and will be prosecuted according to the legal regulations.

In 2022, Oerlikon did not receive any complaints from customers or prospects in relation to our use of their personal data or direct marketing activities.

There was no data security breach requiring a notification to data protection authorities. All our employees passed their annual Group-wide General Data Protection Regulation (GDPR) training in 2022.

At Oerlikon, we have data protection policies and guidelines that define data protection requirements as well as roles and responsibilities. We also have privacy notices dedicated to customers and prospects. These policies and privacy notices are aligned with applicable data protection laws, in particular the GDPR and UK and Swiss data protection requirements.

Oerlikon’s tax strategy is executed in compliance with our CoC as well as all applicable laws and regulatory requirements, including those that pertain to timely completion and filing of tax returns and those related to disclosure of tax positions. We seek to have a transparent relationship with the tax authorities in the countries in which we operate and conduct tax audits as required to provide requested information in a timely manner.

The company does not engage in aggressive tax planning and does not use complex structures or offshore havens to minimize its tax liabilities. In addition, we adhere to arm’s-length principles and comply with local laws and regulations for pricing of intercompany transactions.

Oerlikon’s Chief Financial Officer, a member of the EC, is responsible for all financial matters relating to operational management and is supported by a team of qualified tax professionals in support of the Group companies.

GRI 2-6

The international trade of goods is essentially free but may be subject to restrictions or prohibitions that states impose to safeguard their national security interests and the peaceful coexistence of people, or to prevent the proliferation of weapons.

These regulations may relate to purchases, sales, services, technology transfers or payments. Additional restrictions may target behavioral changes of individuals, entities or states, and the scope of such sanctions may encompass (but need not be limited to) asset freezes or travel bans, or may even take the form of total embargoes.

Embargoes usually arise in response to United Nations Security Council resolutions, decisions of the Organization for Security and Co-operation in Europe (OSCE) or common positions of the EU Council or the US government. Several countries, including Russia/Belarus, Iran, Cuba, North Korea, Syria and Sudan, are currently subject to sanctions regulations.

Management Approach

Oerlikon’s top management attaches importance to the topic and directs all employees to practice unconditional compliance. Additionally, we support nonproliferation efforts and may refrain from a transaction in cases of continued concerns regarding the end-use application. This self-restraint prevails over commercial interest.

To ensure sustainable trade compliance, Oerlikon has implemented a robust Internal Control Program that is regularly monitored, continuously developed and safeguarded by state-of-the-art IT measures.

Given the complexity and fluid nature of this subject, we provide employees with training as well as updates on international trade control provisions and the company’s policies and procedures, which are designed to ensure that they have:

• Information related to traded items, such as their nature, origin, components, value and technical characteristics; and
• Confirmed the end use and the end user as well as third parties or agents involved.

Violation by any Oerlikon employee may lead to disciplinary action, including termination of employment.