Corporate governance

Complying with rules and laws

Compliance

We act with integrity in our working and business relationships—in other words, in accordance with applicable law and our internal body of rules and regulations. A key benchmark for our behavior in the company, toward our business partners, our customers, and in society is a Group-wide Code of Conduct that provides all of us with binding guidelines.


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MTU’s long-term commercial success is founded on responsible actions carried out in full compliance with all applicable laws. Our Code of Conduct and internal guidelines contain clear requirements for employees and provide an authoritative point of orientation.

For the success of our company and for our collaboration with our stakeholders, compliance is essential. MTU conducts its business as a fair employer, business partner and customer, and advocates transparent competition where all parties are on an equal footing. Integrity and responsible conduct are core values of our corporate culture and are embedded in the MTU Code of Conduct, which is binding for all employees, managers and members of the Executive Board. The Code defines clear standards for working with stakeholders such as customers, suppliers, authorities and business partners. As such, it is an important tool for implementing responsible business practices.

This Group-wide Code of Conduct includes topics that are important to us, including key compliance issues such as corruption prevention or antitrust law. We revised the standards in the reporting year to reflect relevant current developments. One result of this revision is that the topics of human rights and data protection have been given greater weight. We have informed our employees about the new version of the guidelines through our internal media channels.

Key topics of the Code of Conduct

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→ MTU’s Code of Conduct

All employees must be familiar with and comply with the legal provisions and company regulations relevant to their work. Managers have a particular responsibility to uphold these requirements and regulations and to act as role models. We also expect our business partners to fully comply with all applicable laws. A separate Code of Conduct applies for suppliers. → Code of Conduct for Suppliers The MTU Principles (“We shape the future of aviation”) are an integral part of our corporate culture; they help us act in a consistent and reliable manner.

External standards and memberships

As a signatory to the UN Global Compact (UNGC), one cause we have committed ourselves to is preventing corruption within our company Principle 10 of the UNGC. In the interests of maintaining sustainable corporate leadership, we take our lead from the German Corporate Governance Code, whose requirements we comply with fully, and from international compliance standards, such as the Good Practice Guidance on Internal Controls, Ethics, and Compliance issued by the Organization for Economic Cooperation and Development (OECD). Our commitment to fighting corruption extends beyond the company as well; we are also a member of the TRACE International anti-corruption initiative. Through the German Aerospace Industries Association (BDLI), we are represented in the Aerospace and Defense Industries Association of Europe (ASD), and we are a signatory to ASD’s standards against corruption and bribery and in support of equal and fair competition.

 

Anti-corruption

One focus of our compliance activities is the prevention of corruption. MTU condemns corruption of any kind as well as all other forms of white-collar crime. In addition to the Group-wide Code of Conduct, our internal regulations concern the prevention of corruption and apply especially to customer events, donations, sponsoring and the approval process for sales consultants.

Our contribution to SDG 16

SDG 16 “Peace, justice, and strong institutions” calls for a significant decrease in all forms of corruption and bribery. With our compliance system in place, we are actively taking steps to combat corruption and bribery, minimize the risk thereof and support fair competition. We expect our suppliers to uphold the same standards that we do. In 2020, too, there were no incidents or suspicions of corruption at MTU—a contribution to sustainable development as defined by SDG 16.

Peace, justice, and strong institutions

→ Learn more about our contribution to the SDGs of the UN’s 2030 Agenda

 

A compliance system for all of MTU

As the final decision-making authority, the CEO holds responsibility for the company’s business ethics and anti-corruption policy. The core functions responsible for ensuring ethical and correct conduct are a Compliance Board and a Compliance Officer. Both the Compliance Board, whose members are top managers from various departments, and the Compliance Officer hold Group-wide responsibility. The Compliance Officer’s duties include conducting preventive measures, investigating incidents of white-collar crime, and collaborating closely with the Compliance Board in further developing the compliance system. The Compliance Board holds regular and ad hoc meetings, the latter at the request of the Compliance Officer. The Compliance Officer provides quarterly updates to the Executive Board and the Supervisory Board’s Audit Committee, which for its part informs the plenary meetings of the Supervisory Board. The Supervisory Board’s Audit Committee oversees the Executive Board’s compliance activities.

In addition, the managing directors of the sites must ensure that all compliance-relevant provisions and regulations are adhered to within their areas of responsibility, and they must see to it that compliance is appropriately embedded in the local organization.

MTU’s compliance organization

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The core functions responsible for ensuring ethical and correct conduct at the company are a Compliance Board and a Compliance Officer.

 

Zero-tolerance approach to violations

We want to prevent compliance violations and ensure that business decisions are made with integrity. We do not tolerate any kind of conduct that violates laws or regulations. We respond to reports immediately and appropriately, and take disciplinary action in the event of detected violations. In such cases, MTU applies a principle of zero tolerance, which includes disciplinary measures, termination of the employment contract, or civil or criminal proceedings. As in previous years, we did not confirm any suspected instances of corruption in the reporting year. We also did not receive any formal complaints regarding corruption. No significant fines were levied against MTU for breaches of applicable laws, and it faced no legal action stemming from corruption or due to antitrust or anticompetitive practices. In 2020 as in previous years, we had no reportable violations regarding data protection. Similarly, there were no substantial violations of the principles underpinning the Code of Conduct in the reporting year.

Open-access reporting system for all stakeholders

We have set up a global whistleblower system that allows employees and external stakeholders to report instances of unlawful conduct to the Compliance Officer. Tips and reports can also be submitted anonymously via a web-based reporting system, iTrust, which is available in various languages. →  iTrust The Compliance Officer reviews all submitted reports. If any are found to be credible, the Compliance Officer initiates the investigative steps necessary. The ways we have established for reporting non-compliance are communicated to employees through internal media channels and explained to external stakeholders in writing or on our website.

We treat the identity of the whistleblower and the information they impart as confidential—even if the suspicion turns out to be unfounded. This is ensured by means of an internal regulation. We wish to make it clear that whistleblowers acting in good faith shall not be penalized or disadvantaged by the company in any way. In addition, employees can confide in their superiors, the legal department or HR.

 

Limiting risks of non-compliance

We have put various control mechanisms in place to ensure compliance throughout the company and to minimize risk. All fully consolidated sites are regularly surveyed about compliance-relevant incidents, and 2020 was no exception. No significant incidents were reported here during that year. The Compliance Officer additionally inspects all sales support consulting contracts for possible corruption risks before they are placed or renewed, 2020 included, and found no indications of corruption. Potential consultants are also subject to an assessment by an independent provider of due diligence services. The contracts require the sales consultants to stipulate that the ASD anti-corruption standards are binding. The corporate audit department conducts regular audits in which it checks business processes and procedures for conformity to legal requirements and adherence to internal guidelines. Due to the pandemic, these were conducted in part remotely in 2020.

In addition, our dialogue with the political sphere is governed by certain rules. More about our exchange with policymakers in the chapter Stakeholder dialogue

 

Compliance training for prevention

To ensure a functional compliance culture, MTU puts a high priority on investigating possible forms of misconduct as well as communicating and raising awareness of compliance issues among employees. When new employees are taken on, we inform them about our Code of Conduct and require them to sign a declaration to uphold it. We also present and discuss the Code of Conduct at the introductory event for new employees. We regularly train our employees and managers across all hierarchies on the Code of Conduct and on specific compliance-relevant topics such as antitrust law. This applies in particular to all new hires. In 2020, training courses on corruption prevention were held primarily as e-learning classes on the Code of Conduct, and courses on antitrust law were held as live events (via Skype) for employees and managers from relevant areas such as sales, purchasing and program management. Furthermore, the members of the project team responsible for setting up our new site in Serbia underwent external anti-corruption training. All in all, we trained over 3,000 employees across all MTU sites on compliance matters in the reporting year. In addition, we continuously provide information about and raise awareness of individual compliance issues, such as data protection, in a way suitable for each target group. The Compliance Officer and the legal department can also advise employees and managers as needed.

3,000
employees trained
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We carry out continuous education, because we focus above all on prevention: more than 3,000 employees from various areas completed training courses on compliance topics in 2020.

 

Responsible international trade

Another key compliance topic for us is observance of international trade law, also known as trade compliance. Customs and export control laws govern which products, services and technical data we are permitted to sell or provide and to where, to whom and for what purpose. This regulatory framework is binding for all the company’s divisions, affiliates and employees worldwide. The need to comply with the applicable regulations is also specified in the MTU Code of Conduct. → Export control law is outlined in the non-financial statement in the 2020 Annual Report (p. 105)

MTU has its own organizational unit dedicated to ensuring effective trade compliance: the international trade compliance department provides the internal framework for implementing uniform process standards throughout the company. These include a review of existing approval requirements, e.g. before shipping documents, software or components, as well as controls relating to bidding procedures vis-à-vis sensitive countries. The international trade compliance department has cross-divisional authority to issue certain directions, which extends to the right to stop deliveries. In addition, the department’s head reports directly to the Chief Operating Officer in the latter’s capacity as the person in charge of exports at MTU Aero Engines AG.

In the reporting year, MTU issued the internal Group Export Control Directive to regulate holistic trade compliance obligations, responsibilities, principles and process principles for the entire Group. Furthermore, over 3,000 employees affected by export control regulations have received training as part of a new concept.

  

Data protection and IT security

In our business activities, we take care to provide comprehensive data protection. In times like these and especially given the increasing levels of digitalization in society and the world of work, such protection is becoming more and more important. We took this development into account when revising the Code of Conduct and have emphasized data protection as an explicit concern of MTU. This meant making protection of personal data in accordance with applicable legal provisions mandatory.

We have established a management system for data protection and expect all employees to comply with its regulations, a requirement that is also set out in the Code of Conduct. We have appointed data protection officers or coordinators in all of our Group companies, who are instructed in all relevant regulations. The aim is to achieve uniform data protection and data security standards for the handling of personal data throughout the Group that meet the requirements both of the EU General Data Protection Regulation (GDPR) and of the national legislation applicable at each location. The Executive Board is briefed on data protection once a month.

We also intensively discuss the topic of IT security, as this is a fundamental prerequisite for our business success. MTU has an IT security management system in place and implements appropriate protective measures on a technical and organizational level to ensure its IT systems are stable and secure. This also includes an internal body of rules and regulations that we have established in line with the international ISO 27001 standard.

Outlook

We aim to continuously improve our compliance system and to always ensure that our Group regulations are up to date. To that end, we regularly evaluate whether changes or amendments are necessary. In doing so, we draw on a wide range of input, including concerns raised by our employees. Currently, we are overhauling the Group’s data protection guidelines. As a global company, we require a uniform level with a standard in place that applies across the Group worldwide.


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