Declaration and reporting

NFLoR

Every year, management verifies and confirms that they comply with laws and internal rules through the Non-Financial Letter of Representation (NFLoR) process. Exceptions must be reported and actions planned and documented. In 2017, this process was made more efficient. Detailed compliance controls listed in the NFLoR statement were embedded in the Internal Control framework and as such became part of the Internal Control Self-Assessment process performed by managers at different layers in the organization. Any deficiencies were documented and reported up through the process and tool. This information, along with audit findings, investigation data and test results from the Compliance function, informed the BU and functional leaders of material risks, deficiencies and areas for improvement to be disclosed in their NFLoR statements. The NFLoR statements, and the BU/function Compliance Risk Review results, were discussed at the NFLoR review meeting between the BU/function leader, the Compliance Director, Legal Director and the responsible Executive Committee member. The Executive Committee member then reported the results to the CEO and the General Counsel. The overall results were reported to the Executive Committee, Supervisory Board and internal and external auditor as part of the year-end Compliance Report. The results of this NFLoR process, in combination with the Internal Control Self-Assessment process and the internal audit results, form a basis for the Statement of the Board of Management in this Report 2017. Reported areas of attention include the need for additional competition law training to mitigate risk resulting from increased profit targets, environmental law developments and enforcement in China, external fraud attempts and cyber-attacks and preparing for the GDPR.

Individual declarations

Annually, employees confirm their awareness of, and compliance with, the Code of Conduct as part of their year-end performance evaluation. Each year, designated employees must also confirm compliance with competition laws and AkzoNobel’s competition law policy as part of the Competition Law Compliance Declaration process. This reminds them of the rules and invites them to disclose any concerns. In 2017, the declaration was preceded by the launch of our new digital training and various other communications to improve understanding and engagement. In 2017, over 12,000 employees signed the declaration.

Reporting

To ensure that management is well informed, there are several compliance reporting procedures in the company. Quarterly, progress on compliance programs and actions, investigation findings and training completion are reported to the BU and function Compliance Committees. Monthly, the status of investigations is reported to the Finance Director and Legal Director. Also monthly, an update on compliance matters is reported in the Business Review Meeting. The General Counsel periodically reports to the Executive Committee and Audit Committee on important compliance matters, developments and initiatives. Mid-year and year-end, the General Counsel and Compliance Director submit a written report on material compliance matters, SpeakUp! data and progress on compliance programs to the Board of Management, Executive Committee and Supervisory Board. The results of the NFLoR form part of the year-end report.