Compliance risk management is done through training and education of employees, a central and regional Ethics and Compliance function, and a range of channels for dialogue on dilemmas, which include access to anonymous whistleblowing, available in 50 languages.
Yara has developed a Code of Conduct for business partners that takes into account internationally recognized and endorsed standards in key areas such as human rights, business ethics and labor conditions. Also incorporated in Yara’s steering system is the Integrity Due Diligence process for business (IDD)partners, identifying potential issues including environmental, human rights or corruption issues.
On a global and regional scale several global trends, not least population growth, resource scarcity and climate change, can be expected to affect Yara’s business. At the same time, these challenges offer a range of business opportunities where Yara is well positioned to offer solutions that meet new market demands. The development of fertilizer products and application with a low carbon footprint and solutions for water-scarce agriculture are key examples of Yara’s response to such global challenges.
Yara’s most significant market risk is related to the margin between nitrogen fertilizer prices and natural gas prices. Although there is a positive long-term correlation between these prices, margins are influenced by the supply/demand balance for food relative to energy.
Yara’s total risk exposure is analyzed, evaluated and summarized at least quarterly at corporate level. Risk evaluations are integrated in all business activities, both at corporate and business unit level, increasing Yara’s ability to mitigate risk and take advantage of business opportunities.
The Board oversees the risk management process and carries out biannual reviews of the company’s most important areas of exposure and internal control arrangements. Reference is made to pages 36–42 in this Financial Report for a more comprehensive description of Yara’s risk management.
Investigation and corporate penalty
In January 2014 Yara acknowledged guilt and accepted a corporate fine of NOK 270 million and confiscation of NOK 25 million imposed by the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (Økokrim). The fine is related to historical irregularities linked to the establishment of Lifeco (Libya), an unrealized project in India and contracts with a Russian supplier. The confiscation relates to earlier phosphate deliveries. The process was initiated in 2011, when Yara proactively informed Økokrim about possible irregular payments at the same time as the company itself instigated an external investigation.
The compliance function in Yara has undergone a significant strengthening since 2009, starting with an increase in central compliance resources, the launch of a company-wide training program and a review of key commercial agreements. 2014 compliance activities focused on a further increase in central and regional compliance resources, implementation of a comprehensive business partner IDD system and close cooperation with other Yara functions such as the Strategy and Business Development team. Employee training, risk assessments and business partner IDDs remain key compliance focus areas for 2015.