Corporate Social Responsibility and Business Ethics

Abstract

Corporate social responsibility (CSR) emphasizes that companies need to be accountable not only for the economic results of their activities, but also of the social and environmental results of those activities, which has introduced the concept of “Triple Bottom Line Accounting,” and the idea of a Social Balance Sheet (SBS), or Sustainability Report (SR) which complements the economic performance accountability of the statutory accounts. While such reports are now produced by many companies, and contain much important CSR information regarding also the future sustainability of a company, they sometimes remain of secondary use for the investment analyst, who, in making his share price buy or sell recommendations, tends to concentrate on the hard financial figures, rather than on the softer statements of social mission and results. But this should not detract from the importance and value of the SBS or SR for the economic education of employees and the other stakeholders, including details of the company’s ethics for doing business expressed in a Code of Business Ethics.

Appendices

Appendix 1: Structure of a Sustainability Report (Example Mediolanum Group)

Introduction

– Letter to stakeholders

– Methodology of the report

Profile

– Highlights of financial performance

– Corporate structure

– Historical development

Corporate Identity

– Vision, mission and values

– Business model

– Stakeholder engagement

– Governance, risk management and compliance

Sustainability Indicators

– Financial solidity and stability

– Personalisation, security and innovation

– Multichannel banking and digitalisation and the Family Banker network

– Development of skills and knowledge

– Responsibility to the community

1. Source: Mediolanum Group Sustainability Report 2015

Appendix 2: Code of Ethics and Code of Conduct (Example Mediolanum Group)

11.1.1 Rules of Conduct

The Code of Ethics and Code of Conduct express the rules adopted by the Group.

11.1.1.1 Code of Ethics

Since 2002, Group companies have adopted a Code of Ethics, that is, a set of internal rules aimed at mitigating operational and reputational risk as well as promoting a widespread culture of internal control. The Code also plays a role in the prevention of crimes covered by Legislative Decree 231/2001, as it contains a series of corporate ethics principles recommending, promoting or forbidding specific behaviour, regardless of regulatory provisions. The Code of Ethics is the result of active consultation and participation by the various stakeholders. Updated in September 2013, it is aimed at disseminating ethical values that reflect the Company’s principles, as well as providing a concrete response to its stakeholders: employees, suppliers, customers, partners, local communities and institutions, indicating specific commitments in their regard in terms of the principles of conduct and control. The Group’s stakeholders, however, are also requested to respect such values, creating a reciprocal relationship. The Code is divided into two sections. The first focuses on the values of freedom, excellence, respect, transparency, integrity and fairness, while the second identifies rules of conduct representing specific and mandatory commitments for every employee, helping to build a business culture consistent with our underlying values.

The approach is designed to underscore the key values underpinning the business of Banca Mediolanum S.p.A. and Group companies, as well as the rules through which our values are put into practice on a daily basis. These key ethical values reflect the entrepreneurial spirit that has always been central to the Group: “To believe success is possible while at the same time helping people”.

The principles of conduct and control concern:

• 1. Business relationship management

• 2. The conduct of employees and contract workers

• 3. Socially responsible behaviour

• 4. Occupational safety

• 5. Environmental protection

• 6. The role of the internal control system

There are also rules on:

• Implementing and promoting the Code;

• Dealing with reports of alleged violations; and

• Imposing sanctions for proven violations.

The Code was drafted by a working group made up of representatives from all departments overseeing the principles of conduct and control imposed by the Code. In 2013 an independent Ethics Committee was appointed at the parent company of Mediolanum Group, tasked with promoting and updating the Code. Since its establishment, the committee’s members have included the heads of corporate departments that play a key role in the internal control system as a whole. Those departments include:

• Internal Auditing;

• Compliance;

• Risk Management;

• Sales Network Inspectorate;

• Human Resources; and

• Sales Network.

Reports of alleged violations of the principles contained in the Group Code of Ethics can be addressed by e-mail to codiceetico@mediolanum.it, or otherwise to the company’s e-mail address, to the attention of the Ethics Committee.

The updated Code of Ethics of Banca Mediolanum, approved by the company’s Board of Directors in September 2013, is available on the website www.bancamediolanum.it.

11.1.1.2 Code of Conduct

The Code of Conduct of Banca Mediolanum S.p.A. (updated in 2012) and the Code of Conduct of Mediolanum Gestione Fondi S.G.R.p.A. (updated in 2014) set forth more detailed rules which all Group employees are required to follow in the ordinary performance of their tasks and duties.

The key regulations are set out below:

• 1. Confidential or insider information, whether verbal or electronic, shall not be disclosed.

• 2. Confidential or insider information received from third parties, or by virtue of a position held, shall not be used for personal dealings, including via third parties.

• 3. Speculative investments are prohibited during working hours. Intraday trading is prohibited, that is, the purchase and sale of the same share on the same day.

• 4. Personal dealings—including in the name or on behalf of third parties—in trading derivatives, other derivatives (futures, options, or swaps), short selling, as well as dealings with a frequency that suggests speculative purposes other than those associated with normal investment transactions, are prohibited during working hours.

• 5. Any activity or transaction in which Group employees may have significant personal interests or interests which may be in conflict with those of the company, of existing/prospective customers and/or managed assets, shall be fully disclosed.

• 6. Any gift that, due to its nature or value, may potentially lead to behaviour in conflict with the interests of investors or the company may not be accepted.

Source: Mediolanum Group Sustainability Report 2015