To prevent risks of corruption, TotalEnergies has implemented a robust, regularly updated anti-corruption compliance program that has been rolled out throughout the Group. The aim of this program is to promote a culture of compliance and transparency, which is key in ensuring the sustainability of the Group’s activities. Failure to comply with such legislation such as the U.S. Foreign Corrupt Practices Act and the French law on transparency, the fight against corruption and the modernization of the economy, is likely to expose the Group to a high criminal, financial and reputation risk, as well as the enforcement of measures such as the review and reinforcement of the compliance program under the supervision of an independent third party.
The commitment of the entire Group and the efforts undertaken are unrelenting in order to ensure the sustainability and continuous improvement of the anti-corruption compliance program, which the U.S. authorities deemed to be appropriate in 2016, thus putting an end to the monitorship that was introduced in 2013.
This program is drawn up by a dedicated organization acting at the Group and business segment levels, namely the Compliance and Legal Risk Management Department, headed by the Chief Compliance Officer, and the Branch Compliance Officers. They coordinate a network of more than 360 Compliance Officers in charge of rolling out and running the program at the subsidiary level. This structured organization lies in close proximity to operational activities while having its own dedicated reporting line.
TotalEnergies' anti-corruption compliance program is based primarily on the following seven pillars: management commitment or “tone at the top”, risk assessment, adoption of internal standards, awareness raising and training of employees, feedback of information, including the whistleblowing system, mechanisms for assessing and monitoring implementation of the program, and imposition of disciplinary sanctions in the event of misconduct.
The constant high level of commitment by the General Management is reflected by the principle of zero tolerance for corruption that is clearly set out in the Group’s Code of Conduct. Managers have a duty to lead by example and are responsible for promoting a culture of integrity and dialogue. This commitment is also expressed in regular statements made by the Chairman and Chief Executive Officer as well as through large- scale communication actions, such as the annual Business Ethics Day organized on the occasion of the UN’s International Anti-Corruption Day and Human Rights Day. The sixth Business Ethics Day in December 2020 was dedicated, like the previous year, to the theme of “Speak-Up”. A live chat with the Chairman and Chief Executive Officer, as well as compliance, ethics and human rights managers, allowed employees to ask questions, particularly concerning reporting any potential breaches of the Code of Conduct.
The commitment of the management bodies is also expressed externally by TotalEnergies joining anti-corruption initiatives and supporting collaborative and multipartite approaches. TotalEnergies joined the Partnering Against Corruption Initiative (PACI)(1) in 2016, thereby adhering to the PACI Principles for Countering Corruption. TotalEnergies's Chairman and Chief Executive Officer became a member of the PACI Board in 2018 and subsequently Co-Chairman of the initiative at year-end 2019. TotalEnergies is also a member of other initiatives that contribute to the global effort against corruption, such as the UN Global Compact since 2002 and the Extractive Industries Transparency Initiative (EITI)(2) since its launch in 2002.
(1) Launched in 2004 within the World Economic Forum, PACI now numbers approximately 90 major corporations and forms a platform for discussion for business leaders and governmental and non-governmental organizations, allowing them to share their experiences and ideas and develop best practices.
(2) The EITI brings together representatives of the governments of the member countries as well as representatives of civil society and business in order to strengthen transparency and governance with regard to income from oil, gas and mineral resources.
To regularly adapt the compliance program to the risks to which TotalEnergies is exposed, these must first be identified and assessed. In addition to the Group’s risk mapping, which includes the risk of corruption, specific corruption risk mapping is produced on the basis of a methodology formalized in a rule adopted in early 2020. This rule provides for two-tier mapping: that of entities coordinated by the Compliance Officer and that of business segments coordinated by the Branch Compliance Officers. At the business segment level, the assessment needs to examine the main types of risk (purchasing, sales, conflicts of interest, gifts and hospitality, human resources, representatives dealing with public officials, mergers and acquisitions, joint-ventures, donations and sponsoring, and influence peddling). This two-tier analysis is aimed at establishing action plans that are appropriate to the risks identified and the realities on the ground. In addition, particularly when assessing corruption risks, employees are provided with tools that help them identify the risk of corruption, e.g. the Typological guide of corruption risks.
Measures are taken to manage the risks identified and specific rules are regularly adopted and incorporated into the Group’s reference framework.
As an essential element of the Group reference framework, the Code of Conduct sets out the behavior to be adopted, in particular with regard to the question of integrity. It prohibits corruption, including influence peddling, and advocates zero tolerance in this area.
The Code of Conduct is complemented by a regularly updated set of anti-corruption standards. The Anti-Corruption Compliance Directive, which was updated in 2016, recalls the main principles and organizes the roll-out of the anti-corruption program. It deals, among others, with commitment, training and awareness raising, accounting and bookkeeping, the assessment system and whistleblowing mechanisms. This directive is complemented by rules that deal with more specific subjects in order to prevent the various risks identified.
In January 2020, the Group adopted a single rule to standardize the anti-corruption due diligence processes, to be performed before entering into business relations with third parties (suppliers, representatives dealing with public officials, agents with a commercial activity, beneficiaries of donations, contributions or sponsorship, counterparties in corporate transactions, etc.). In addition, an IT supplier qualification tool, which incorporates the due diligence process, has been gradually deployed since 2019. Due diligence involves collecting information, identifying any risks of corruption and taking the appropriate mitigation measures. This process is performed by the relevant business persons with support from their Compliance Officer, who may call on the Branch Compliance Officer if necessary.
In early 2020, a rule was also adopted to deal with the recording and accounting of expenses covered by the anti-corruption compliance rules.
Other standards deal with high-risk areas, such as gifts and hospitality, which have to be registered and approved by the line manager above given thresholds; conflicts of interest, which must be reported to the line manager and addressed; anti-corruption measures implemented within joint-ventures; and human resources-related processes such as recruitment.
Awareness raising and training
Awareness raising actions are carried out toward all employees. The Group’s intranet contains a section on the fight against corruption which provides employees with various media, e.g. the internal standards and guides such as the booklet entitled Prevention and fight against corruption. Poster campaigns communicating the key messages in the risk areas are held on a regular basis; a campaign on the “Speak-Up” theme among other things, was held before the Business Ethics Day. An initial anti-corruption e-learning course was rolled out in 2011 and a more in-depth e-learning module in 2015. This module is accessible to all employees and mandatory for the targeted personal (almost 43,000 employees) and new hires. At year-end 2020, season one of the anti-corruption e-learning course had been followed by approximately 41,000 people and season two by approximately 39,000 people.
More targeted training courses are also provided for the functions viewed as highly exposed (such as procurement and human resources), whether by the corporate or segment Compliance teams or by the Compliance Officers in the subsidiaries. Several online and face-to-face training sessions are held every year for the Compliance Officers. In 2020, despite the health crisis, these sessions continued and were held remotely.
Feedback of information
The feedback of information is ensured primarily through an annual reporting process. This is performed by the Compliance Officers, reviewed by their Branch Compliance Officer and sent to the Chief Compliance Officer. This reporting helps to monitor the roll-out and implementation of the anti-corruption program, through quantitative indicators on key elements of the program, such as the number of training courses or due diligences performed.
The consolidated data resulting from this reporting, which reflects the results of the implemented policies, is presented once a year to the Executive Committee and the Board of Directors via the Governance and Ethics Committee. This presentation provides an opportunity to report the results of the actions undertaken at the very highest level and to review the roadmap aligned with the identified areas of improvement.
In addition, TotalEnergies takes actions in order to develop a speak-up culture and asks its employees to report any situations that they consider to be contrary to the Code of Conduct. This culture is encouraged by regular communication and a rule was adopted in late 2020 to formalize the procedure for collecting integrity alerts (corruption, fraud and influence peddling); it reminds the various existing alert channels: employees, depending on the option they feel is most appropriate, can contact any manager, human resources, the Compliance Officers or Ethics Officers, or the Group Ethics Committee. Both employees and third parties can refer to this Committee by writing to [email protected]. The Group will not tolerate any retaliation measures or discrimination toward anyone submitting a report in good faith and undertakes to respect confidentiality.
Assessment and monitoring
The anti-corruption program is monitored at the first level by business persons, as well as their line managers and the Compliance Officers who are in charge of ensuring the day-to-day implementation of the rules. At the second level, controls are performed by the Compliance function, in particular through assessment missions (referred to as compliance reviews) that are undertaken by a dedicated team within the Group’s Compliance and Legal Risk Management Department. In addition, the Group’s Audit and Internal Control Division performs an annual off-site inspection to verify the quality of the reporting performed by the Compliance Officers, as well as missions to check the self-assessment by the entities subject to the Sarbanes-Oxley regulations of their internal control framework. At the third level, Group Audit also helps monitor the anti-corruption program through audits called “assurance audits” performed according to a framework that includes compliance topics.
In line with the principle of zero tolerance and in application of the Code of Conduct and the Anti-Corruption Directive, any infringement of the anti-corruption standards must give rise to disciplinary action, up to dismissal. The Group’s resolve in this matter is recalled in communication media intended for employees as well as on the intranet. This resolve, which results from management commitment, contributes, with the other pillars described above, to the robustness of the anti-corruption compliance program.
Fighting tax evasion
With a presence in more than 130 countries through 1,118 consolidated entities, TotalEnergies carries out its operations in a constantly changing environment and is subject to an increasingly complex set of tax regulations, which may be in conflict when combined or subject to varying interpretations, thus giving rise to potential tax risk.
In this context, TotalEnergies has developed a responsible tax approach based on clear principles of action and rigorous governance rules as set out in its tax policy statement, which was released in 2014 and is available to the public.
Since 2017, TotalEnergies has also filed country-by-country reporting with the French tax authorities. For the first time, in February 2021, after an analysis of the transactions carried out by the Group’s French and European entities since July 2018, TotalEnergies finalized its review and filed its cross-border arrangements disclosure obligations falling within the scope of application of Directive DAC 6 aiming at fighting tax evasion. No aggressive tax schemes have been identified.
In 2019, in accordance with its tax policy, TotalEnergies entered into the Tax Partnership with the French authorities, upon inception of the program, thus pursuing greater transparency, dialogue and trust. In May 2019, TotalEnergies also endorsed the Responsible Tax Principles developed by the B Team, a non-profit organization bringing together business leaders and representatives of civil society with the aim of promoting a sustainable form of economic and social development.
In 2020, consolidated current income taxes amounted to $2,450 million. The effective tax rate of the Group, computed out of the adjusted net operating income, was 27.8% in 2020.
(3)Refer to URD 2020 p.445 – 9.3 Report on the payments made to governments
Promoting financial transparency
TotalEnergies is committed to ensuring full transparency in respect of the revenue generated by its activities. The Group actively participates in intergovernmental initiatives and dialogue in this regard.
Promoting transparency among host States
The Extractive Industries Transparency Initiative (EITI) brings together international and local players from civil society, 55 host States, several OECD member governments and dozens of extractive companies. Its main purpose is to improve transparency in investments and transactions between governments and companies from the extractive industry. Because it reaches all international oil, gas, mining and commodities players in EITI member countries, this initiative also contributes to strengthening the principles of accountability, fair competition and good governance.
TotalEnergies joined the EITI as soon as it was launched at the 2002 Johannesburg Summit. The Group has always supported this initiative and continues to be actively involved, particularly with the presence of a TotalEnergies representative on the Board of Directors.
Promoting the principles of transparency is part of a framework which is respectful of the sovereignty of the host countries: no lasting result can be achieved without the voluntary commitment of the States. In conjunction with the initiative's secretariat, the Group is committed to promoting the EITI principles among the host States in which it operates, and to assist them in the practical implementation of these principles.
TotalEnergies supports governments efforts towards advancing transparency in accordance with the EITI framework. An example is TotalEnergies' public stance in favour of the publication by host governments of all our Petroleum contracts and licenses, whenever signed.
To do this, TotalEnergies strives to:
- foster dialogue between our management and representatives of States, civil society and the EITI;
- participate in the efforts of the EITI Board and its main committees;
- promote the EITI and its principles among the States in which it operates through national committees and, more generally, whenever it has the opportunity;
- share resources and recommendations based on our experience.
The initiative is consistently recognised through the G7 CONNEX Initiative, the OECD Policy Dialogue and by the Partnership Against Corruption Initiative (co-chaired by TotalEnergies' Chairman and CEO).
Why support the EITI?
The EITI has the advantage of being a voluntary, win-win initiative.
For companies, a transparent approach should facilitate the emergence of stable economic and political conditions, guaranteeing the sustainability of their investments. This process contributes to improved relationships with our shareholders and greater confidence in the markets. It also allows for better risk management and relationships with local communities.
Conversely, the stabilization of economic conditions attracts foreign investors, contributes to sustainable development of the host State and reduces poverty. The International Monetary Fund and the World Bank pay special attention to how transparent countries are, and as such encourage EITI membership.
Local communities benefit from a better understanding of how oil revenues are allocated.
Finally, host countries, civil society, investors and international organizations all benefit from an effective dialogue. The EITI promotes good governance which strengthens public institutions and raises civic awareness.
In addition to our commitment to the EITI, we report payments made by the Group's extractive companies to the governments, States and territories in which we operate in compliance with French law and the EU Accounting Directive. We detail the total amount and type of payment, by country, by project and by government in our annual universal registration document.