Policies and management tools

On 14 December 2012, the Parent Company's Board of Directors approved the new Code of Conduct, which replaced the pre-existing Ethical Code of the Generali Group, becoming the main reference guide for the Group's social responsibility policies. In fact, the document refers to the fundamental principles which Generali draws inspiration from, the principles of correctness and integrity first and foremost, and explicitly outlines the commitments undertaken by the Group in the field of sustainability. The Code of Conduct defines the minimum standards of conduct that employees and third parties operating on behalf of the Group, e.g. agents, suppliers and consultants, are required to observe. To this end, the role assigned to persons within the organisation who hold positions of responsibility should be pointed out, who are required to engage in exemplary behaviour and promote a culture of ethical conduct which conforms to the rules within the respective spheres of competence.
The new Code is designed as a tool for practical and constant consultation and, for this purpose, also includes explanatory notes and concrete suggestions.

In order to ensure the most accurate roll-out of the rules of the Code within the company environment, said code is supplemented by a system of Group Rules, issued by the Group CEO.

In terms of the contents of the Code of Conduct, of particular note is the considerable attention focused on promoting diversity with a view to ensuring inclusion, transparency and truthfulness in direct communications with all stakeholders, on the management of conflicts of interests and the fight against corruption, bribery, money laundering and terrorism financing.

In order to ensure compliance with the Code, the Group encourages anyone to report conduct engaged in by employees or by third parties operating on behalf of the Company (agents, suppliers, consultants, etc.) that they, in good faith, deem to be inappropriate, ensuring the reporting party is protected from any kind of reprisal. In order to overcome any remaining qualms over reporting events which may potentially endanger the Group's business affairs and reputation, reports can also be sent anonymously, unless prohibited by local law. Two Group reporting channels have been set up, which operate alongside already existing local channels: e-mail (concerns.co@generali.com) and post (Group Compliance - Business Integrity - Via Machiavelli 3, 34132 Trieste). The Generali Group Compliance Helpline is due to go online, a dedicated line accessible via phone or web and managed by an external specialised and independent supplier.

As already stated, the Ethical Code of the Group remained in force until December 2012; therefore, any reports of breaches during the year were managed in application of the provisions contained therein. In particular, the Corporate Social Responsibility department received a total of two reports of breaches of the Ethical Code: the first, sent by a client, related to an alleged lack of correctness, while the other, sent by an employee, concerned an alleged instance of discrimination.
Based on the investigation results, both were, however, considered to be without grounds. Lastly, a report received in 2011 is still pending.

Some documents issued prior to the publication of the Code of Conduct remain in force, which govern specific aspects.

The first is the European Social Charter of the Generali Group, adopted by the Parent Company in 2006 and drafted in collaboration with the European Works Council (EWC). The document reconfirms the guiding principles on the protection of collaborators and, more generally, the Group's image, valid in all member states of the European Union in which the Group operates.

The aspects that characterise the contents of the document are full respect for the fundamental minimum rights of collaborators; the promotion of social dialogue between management and workers' representatives; the search for better strategies for the management, protection and enhancement of human resources; compliance with trade union rights and workers' representation, as well the exercise of the associated functions.

The Ethical Code for suppliers of the Generali Group, approved by the Parent Company's Board of Directors in December 2011, sets out the general principles that must form the basis of valuable relations with contractual partners.

In this document, the Group guarantees its suppliers conduct characterised by correctness, transparency and confidentiality, asking them to align themselves with the company policies when carrying out their activities and ensuring their compliance also at all levels of the respective supply chains.

The Code includes the introduction of procedures for monitoring suppliers to check compliance with the requirements demanded and the preparedness to take corrective actions and to apply sanctions (which may result in the termination of the contract) in instances of non-compliance.

More detailed information is provided in the chapter Suppliers in this document.

The tools Generali employs to manage its sustainability policies also include the Ethical Guidelines for Investments, which define the minimum requirements that must be observed by all Group investments in relation to certain environmental, social and corporate governance aspects (ESG). The Group's objective is to leverage its role of institutional investor, so that it can also effect change through investment activities, by calling for its investee companies to act responsibly, with particular regard to protection of the environment, of the human rights of workers and of the local communities affected by its activities, and to the rejection of any corrupt practice.

The approach adopted by the Group involves the exclusion from its investment universe of issuing companies that do not satisfy the parameters established, contained in an ethical filter which is applied to own investments in its portfolios (69% of total assets under management in 2012), with the exception of unit-linked investments and third party assets.

In particular, investments are prohibited in financial instruments issued by companies that, directly or through subsidiaries:

  • produce weapons that, when used normally, may violate fundamental humanitarian principles (cluster bombs, antipersonnel mines, nuclear weapons, etc.);
  • sell military equipment or weapons to countries on the European Union's arms embargo list, published by Stockholm International Peace Research Institute (SIPRI);
  • are involved in serious or systematic violations of human rights, serious environmental damage, serious instances of corruption, or other particularly serious violations of fundamental ethical standards.

As observed, by doing so, the Group not only wishes to rule out the risk of involvement in activities that are not in keeping with its principles, but also influence the conduct of issuing companies. Through dialogue (analysis of corporate documents, targeted communications, oneto- one interviews), companies are therefore encouraged to act in a responsible manner, and are required to justify any conduct observed that does not conform to the above ethical standards. Solely where the companies do not meet these standards and continue to engage in the behaviour observed, is provision made for their exclusion from the investment universe, which results in the sale of positions present in the portfolio as quickly as possible, in view of the need to protect the portfolio's value.

Furthermore, to ensure consistency of conduct for safeguarding the Group's reputation, the exclusion from investments must also coincide with the exclusion from insurance policies and/or supply contracts with the companies involved, involving the prohibition to sign new contracts, once the existing ones have expired.

Constant monitoring of information published by government sources, international bodies and non-government organisations allows the Group to gain knowledge of potential breaches of the ethical principles defined and commence dialogue with the companies involved.Compliance with the Principles for Responsible Investment (PRI) and participation in numerous international initiatives and networks, including the European Forum for Sustainable Finance (EUROSIF), the Forum per la Finanza Sostenibile (FFS) and the CRO Forum Sustainability Working Group, also allow the Group to compare its own stance with the policies adopted by the main international players in the financial industry regarding responsible investments, helping to establish guidelines and common approaches to promoting the adoption of best practice. To this end, the two documents produced by the CRO Forum Sustainability Working Group in 2011 and 2012 should be noted, concerning possible measures that an insurance company may adopt, as both investor and insurer, to manage the reputational risks related to its involvement in controversial activities concerning anti-personnel mines and cluster bombs ("Banned Weapons") and the extraction of oil from bituminous sands ("Oil Sands").

Given that there must be consistency between the investment policy and the voting policy, the Generali Group also strongly favours integrating ESG elements into its voting policy. Generali Investments, for example, started this process, favouring the presentation, at General Meetings, of resolutions concerning the dissemination of best practices relating to governance, professional ethics, social cohesion and environmental protection, and undertaking to rule, on a case-by-case basis, on the proposals put forward by shareholders in this regard. The primary goal is to establish genuine dialogue with company directors and managers and to encourage them to consider such topics in the performance of their activities.

The Generali Group's responsible investment policy is embodied not only by the approach described, involving the exclusion of issuing companies considered unethical, but also by the offering of SRI (Socially Responsible Investment) investment products for which the Group is able to select the best companies in relation to the corporate social responsibility and sustainable development policies adopted, and in support, through private equity initiatives, of certain companies operating in the renewable energy and innovation sector.

For more in-depth information on these aspects, see the chapter Clients, section Socially responsible investment products, and the chapter Environment and Climate Change, section Climate change risks and opportunities.

In 2012, through the Council on Ethics for Investments, the dedicated company body composed of managers of the departments most involved in investments and managers of the Corporate Social Responsibility department, in addition to two external members from the academic world, the Group successfully evaluated the re-admission of a previously excluded company to the investment universe, given the reasons for the exclusion no longer existed, and proposed the exclusion of a new company, as the dialogue entered into did not produce the desired outcome.

In addition, through Generali Investments, in-depth analyses were conducted on a sample of companies belonging to the sectors considered at risk from a sustainability point of view, such as those involved in the extraction of oil from bituminous sands and companies operating in the tobacco industry. After evaluating the general consistency of the conduct observed with the Group's ethics criteria, dialogue was entered into with those entities that did not meet the criteria.

The list of companies considered unethical by the Group currently contains about thirty companies. At the end of 2012, unethical investments in the portfolio totalled around 200 thousand euros.

The Environmental Policy of the Generali Group, approved by the Parent Company's Board of Directors on 31 july 2009, has been defined as part of the project for the introduction of a Group Environmental Management System (EMS), launched in 2009 and still being implemented.
The document is a statement of Generali's commitment to protecting the environment and contains the guiding principles which must be complied with in the management of all significant environmental aspects, in order to ensure that company development and protection of the environment are compatible.

The Environmental Policy also defines the Generali objectives and commitments in this respect. The Group aims to contribute positively to sustainable development through management decisions geared towards a reduction in the direct and indirect environmental impacts of its business.

The chapter Environment and Climate Change in this document provides insights on the subject.

The Generali Group has prepared and adopted various tools for preventing and counteracting conduct that is not in keeping with the principles of correctness, legality and transparency.

In Italy, the Organisation and Management Model was adopted, targeted at preventing the possible commission of the offences envisaged by Legislative Decree no. 231/2001 by employees, agents and anyone having relations with the Group, hence helping companies to avoid incurring any administrative liability.

In order to acknowledge the legislative amendments made recently, and the organisational changes which occurred within the Group, in view of a constant process of improvement, a series of activities were launched in 2012, targeted at updating the Model, by making its contents and structure more consistent with the actual operating situation.

The document is composed of a General Section which outlines, among other things, the Supervisory Body in charge of overseeing the functioning and observance of the Model, as well handling its updating, and various Special Sections, containing legislative analyses of the offences cited by the Decree and the main principles of conduct on which behaviour in all areas potentially at the risk of offence must be based. Each of these sections identifies: the company departments involved, the so-called sensitive activities, the specific offences theoretically possible, the associated methods of commission or the conduct instrumental in the commission of the offences, the preventive controls and the relevant duties of the Supervisory Body.

Another tool designed to discourage and combat any type of fraudulent behaviour engaged in by collaborators to the detriment of the Group is the Internal Fraud policy.
The document was issued by Assicurazioni Generali on 27 September 2010 and later adopted by all companies of the Generali Group.

The policy focuses exclusively on internal fraud, that is defined as an intentional act that is illegally performed by one or more staff members, i.e. employees, regardless of their function, classification and/or level as well as other staff members to the extent that is consistent with their contract type, directly or by way of third parties, in order to obtain a profit for themselves or for others. Such act causes or may cause damage, as well as non-economic damage, to the Group and/or lack of compliance by the Group, provided that it is directly or indirectly related to the activities carried out by the staff members within his/her relationship with the Group. Therefore, the document outlines a set of principles and organisational strategies to efficiently and effectively combat internal fraud.

Guidelines and minimum standards of conduct which Group companies must comply with in order to combat money laundering and international terrorism financing are contained in the Group Anti-money laundering Policy, approved by Assicurazioni Generali on 6 july 2012 and then adopted by the other Group companies worldwide. The guidelines in the document acknowledge the recommendations of the Financial Action Task Force and the provisions contained in Directive 2005/60/EC.

The main objective is to highlight the conduct to be adopted in order to prevent the use of financial transactions for the purpose of money laundering - understood as the process by which proceeds from a criminal activity are disguised to conceal their illicit origin - and financing of terrorism - which occurs when a person, by any means, directly or indirectly, provides or collects funds with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out an offence envisaged by the legislation. The document also sets out the responsibilities, duties and operating methods to be adhered to in risk management.

In Italy, the Group Anti-money Laundering Policy was approved along with the Manual for Anti-money Laundering Procedures, which defines the operating details for each individual company.

Lastly, in order to avoid conflicts of interests, in compliance with the provisions of the Consob Regulation adopted by means of Resolution no. 17221/2010, Related Party Transaction Procedures were prepared.

The document governs related party transactions entered into, not only by Assicurazioni Generali, but by subsidiaries too, with the objective of ensuring that said transactions are carried out in observance of the principles of transparency and substantive and procedural correctness.

Further details on the forms of corruption mentioned above are available in the section Corruption of this chapter.

The Charter of Sustainability Commitments was drafted in the first few months of the year, a document requested by the Parent Company's Top Management, which was approved by Assicurazioni Generali's Board of Directors on 9 May 2013. It is an important document, which extends the approaches to managing objectives relating to significant aspects, adopted a few years ago in the environmental field, also to other relevant social responsibility issues. In fact, the Charter contains the strategic objectives the Group intends to pursue as a priority and the social and environmental commitments to meeting these objectives.

The sustainability objectives and commitments included in the Charter are not separate from the industrial ones, but instead supplement them, to help the Group reach them by creating value for all stakeholders; therefore, first of all, they are based on the contents of the new Code of Conduct and the Business Plan of the Group. The aforementioned strategic objectives and commitments will be reviewed whenever deemed necessary, to ensure they are always in line with social and environmental needs, the changes to Group activities and the expectations of stakeholders.

The document Sustainability Objectives and Commitments for 2013-2015 constitutes an integral part of the Charter, which specifies the goals the Group undertakes to achieve over a three-year period. In particular, for each strategic objective, medium- and short-term goals are identified in one or more macro areas (governance, clients, employees, contractual partners, community, environment and innovation) and detailed information is provided on the actions the Group proposes to take to achieve them; for greater clarity, the activity or performance indicators to be used to monitor the results achieved are also specified.

The Charter of Commitments also includes the 2013- 2015 environmental objectives and targets defined in accordance with the procedures of the Environmental Management System. The Board of Directors of the Parent Company will, henceforth, commit strongly to achieving these objectives and targets.

The results obtained in the previous year will be accurately checked on an annual basis, assessed on the basis of the indicators monitored, and objectives and commitments will be reintroduced for the subsequent three-year period.

For the above reasons, the Charter of Commitments also constitutes a tool for increasing the transparency of communications with all stakeholders, who can objectively verify, year after year, whether, and to what extent, the Group has fulfilled the commitments outlined in the document.