In recent years, corporate transparency has become increasingly prevalent in the business world. Many companies have now begun to understand that there is also a strong business case to be made for corporate transparency around issues like anti-corruption and corporate governance, and that company transparency represents a critical tool in the fight to reduce corruption risks. Furthermore, these companies are realising that by publicaly and internally revealing more information than they are required to do legally, also allows them to increase trust with their own employees, customers, investors, and suppliers.
For UPM, misconduct is defined as “any behaviour that is not in line with the UPM way of doing business, i.e., it violates the UPM Code of Conduct, corporate policies, or applicable laws.”
The first in a planned annual release, the Integrity Report 2020, published in May 2021, represents a new standard in reporting by UPM and adds to the work undertaken across previous years. The report highlights the central point that corporate transparency is an important part of the UPM culture and that employees should be able to express their concerns, see their concerns being addressed, and trust that UPM will implement the necessary actions, if required.
Setting new reporting benchmarks
According to Essi Heinänen, Director, Compliance & Ethics, UPM, the Integrity Report successfully builds upon the work of the past. “This is a longer story that we are dealing with. We started boosting our transparency culture when we updated our Code of Conduct in 2019, and one of the key messages was ‘Speak up’. We also updated our Report Misconduct channel in 2020 and in 2021 we published the first Integrity Report. And for the year 2021, we will publish our next report this spring. Before this, we published the statistics of the misconduct cases in our annual reports across the last five or so years, but we had not systematically communicated internally about the cases. Therefore, we decided to publish the Integrity Report for our employees.”
What is completely new for UPM is that with the Integrity Report, the company is willing to take a closer look at misconduct statistics and how many cases they had in the previous year, where they occured, and how they were reported. The report also provides anonymous examples of misconduct cases, and describes the consequences of each case, as well as the lessons learned.
For Markus Skrabb, Chief Compliance Officer, UPM, the benefits behind the publishing of the report are clear. “We understand that there is a certain value in providing more transparency to some of our stakeholders and investors. When we published the first Integrity Report, there was a clear driver from UPM to show that we have a certain level of ‘organisational justice’. It’s a factor that is looked upon when considering how effective compliance programmes are in companies and, in general
employees need to get information that makes clear that if any wrongdoing has occured, the company will really act upon it. This strengthens the perception of organisational justice and drives the compliance within the company."
To help enhance both the messaging and the understanding of ethical and legal challenges on topics like corruption, fraud, and conflicts of interest, for example, for the approximate 17,000 employees at UPM worldwide, comprehensive training programmes have been in place for a number of years. These training programmes include Code of Conduct training and communication, and more specific training targeting specific target groups at UPM. In previous years, the statistics by UPM noted that on average, around 22 cases of misconduct were being reported annually between 2011 - 2020, a number that represents around one employee reporting a case of misconduct out of every 800 employees throughout the company worldwide.
Notes Skrabb, “In 2021, we approximately tripled the number of misconduct reports in comparison to previous years. But I think that this is not an indication that we have more cases in general, but more that we have more easily tapped into the cases and that employees now have a lower threshold of raising concerns.”
Making it easier to raise concerns
With reference to the “lower threshold of raising concerns” noted above, during 2020 and 2021, UPM undertook a number of procedures to make it easier for employees to report suspected cases of misconduct. Most notably, the Report Misconduct channel was renewed. The service, now operated by a trusted and independent third-party external service provider, is available for employees and other stakeholders globally 24/7, in over 40 languages.
According to Skrabb, this enhancement of the Reporting Misconduct channel has already paid dividends. “In the past we had a lower number of cases, and we were a little bit uncomfortable with being below the international benchmark of companies similar to our size. At the time it became a question of whether our system was not as effective as other companies and there was the concern that employees were more afraid of speaking up. But now we are getting more information and more insight into what is ongoing, and now we are more aligned with the other companies of our size.”
All that said, it is clear that not every time the misconduct channel is utilised it means that a genuine case of corruption, fraud or conflict of interest has occured.
Says Skrabb, “Of course, not all allegations are substantiated, and some people may speak up about something that they perceive to be an example of misconduct, but actually that may not be the case. But we don’t want to reduce these examples because it is good that people are alert. I am happy to live with a certain level of cases as long as we able to avoid the most systemic or serious ones.”
Looking at the big picture, what has become increasingly clear for UPM is that even if misconduct cases cannot be substantiated, they still represent an important tool to improve their controls, monitoring and processes. But, as noted in the Integrity Report 2020, conflict of interest misconduct is clearly the largest reported area and to that end, policies on this topic have been made clearer and an entire section on conflict of interest has been written in the Code of Conduct.
For Heinänen, the publishing of the first Integrity Report has ultimately proven to be a very positive step forward. “There’s a red line in all of these actions,” she says, “and we are trying to be more transparent and talk about organisational justice. It is about being credible and this a positive thing that we are mature enough to publish information on misconduct cases and to make visible that these things happen and that we do have processes in place to mitigate the risks and the procedures in place to address the topics.”
Skrabb, likewise, is in agreement. “The more people who are aware and are educated on these risks, the more they may detect wrongdoings if they occur. To that end, the annual publishing of this Integrity Report will definitely reduce the risk going forward,” he concludes.