Minimum safeguards under EU Regulation 2020/852 (EU Taxonomy)1 is one of the criteria for determining whether an activity is environmentally sustainable.

The purpose of the minimum safeguards is to prevent activities from being labeled as environmentally sustainable in case they involve negative impact in the area of:

  • human rights, including labor rights (e.g., countering such a phenomenon as mobbing);
  • corrupt practices;
  • non-compliance with tax regulations;
  • unfair competition;
  • exposure to controversial weapons2;

According to Article 3 of the EU Taxonomy, in order for an economic activity to qualify as environmentally sustainable, the entities which conduct it must adhere to the principles of minimum safeguards, i.e., operate in accordance with international social and ethical standards. According to Article 18 of the Regulation, minimum safeguards are the procedures used by the company to ensure compliance:

  • OECD Guidelines for Multinational Enterprises
  • UN Guiding Principles on Business and Human Rights, including:
    • the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labor Organization (referred to as ILO) on Fundamental Principles and Rights at Work; and
    • principles and rights set forth in the International Bill of Human Rights.

Implementation of minimum safeguards in PZU and PZU Group in 2023

PZU and subsidiaries with activities in line with the EU Taxonomy comply with the principle of minimum safeguards, as indicated by the Sustainability Platform and the indicated Commission notice. In the PZU Group’s insurance and reinsurance companies, minimum safeguards are examined in terms of own and investment activities.

In 2022, by decision of the Management Board, PZU joined the United Nations Global Compact (UNGC) and thereby accepted the UNGC’s 10 Principles in the areas of human rights, labor, environment and corruption prevention, which are designed to help business achieve the UN Sustainable Development Goals.

  • 2-23
  • 2-25
  • S1-17

Human rights

The PZU Group’s human rights policy was adopted by a resolution of the PZU Management Board on April 7, 2021. In 2023, the PZU Group updated its Human Rights Policy with a declaration of conduct in accordance with the international guidelines for the protection of human rights listed in Article 18 of the EU Taxonomy Regulation.

PZU Group entities have declared their adoption of the Human Rights Policy, thereby committing to respect human rights in accordance with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. The due diligence process is standardized across the PZU Group. In 2023, PZU conducted a study of the operation of this process across PZU Group entities that have operations in line with the EU Taxonomy.

Respect for human rights is at the heart of building relationships with key stakeholder groups:

  • employees
  • clients;
  • suppliers and business partners; and all other stakeholders.

Provisions in the Human Rights Policy obligate the PZU Group to undertake a human rights’ due diligence process. This process is carried out according to defined internal rules and guidelines. In 2023, in line with this process, PZU implemented a number of activities as shown in Table 1. The process will be developed and updated in the years to come.

XLS

A step in the due diligence process Actions completed by PZU SA
Step 1. Adoption of and adherence to a human rights policy that obligates the company to undertake a due diligence process in all processes and areas of the organization
  • PZU updated Human Rights Policy in line with UN and OECD guidelines
  • PZU appointed a Management Board Representative for Human Rights in the PZU Group to ensure a consistent approach to human rights management across the PZU Group
Step 2. Identification and assessment of the adverse effects of the organization’s actions on human rights, taking into account the actions of stakeholders (business relations, supply chain)
  • PZU identified human rights that may be negatively impacted in its insurance, reinsurance, investment and operations (in the areas of purchasing, employee relations, occupational health and safety, personal data protection)
  • PZU mapped the vulnerability of human rights and identified situations in which they may be violated. A summary of the identified rights is provided Table 2.
Step 3. Taking action to halt, prevent, mitigate and remedy identified adverse impacts of the organization’s operations on human rights
  • From the vulnerability map, priority actions are derived. PZU made changes to its processes in the purchasing and investment areas. In 2023, the Code of Conduct and ESG Best Practices for PZU Group’s Suppliers was revised
  • TFI PZU added a provision to property lease contracts included in the portfolios of funds managed by TFI PZU whereunder both parties undertake to comply with the UN Guiding Principles on Business and Human Rights approved by the Council of Europe on June 16, 2011, and to take all measures to prevent violations of these rights. The lessee must also confirm that it has effective procedures and tools in place to monitor and minimize the risk of human rights violations and procedures against, bribery, unfair competition and unauthorized tax practices
Step 4. Monitoring the effectiveness and efficiency of the applied measures from point 3.
  • PZU prepared a list of KPIs by which it monitors the effectiveness and efficiency of its human rights activities
Step 5. Public reporting by the company on its approach to the due diligence process. Reporting on the steps the company has taken to avoid adverse impacts of the organization’s operations on human rights.
  • In November 2023, PZU posted an update to its Human Rights Policy and a commitment to a human rights due diligence process
  • No problems were found with effective communication with stakeholders regarding human rights
Step 6. Providing countermeasures and related cooperation in this regard. This includes the creation of complaint mechanisms (or participation in such processes) where individuals or groups can raise their concerns about adverse impacts on human rights
  • Human rights reports in the PZU Group will be handled by the Client Ombudsman. Reports are accepted in local languages at the following email address rzecznikklienta@pzu.pl or the correspondence address of the Client Ombudsman at PZU headquarters in Warsaw
  • How the reports are handled by PZU is described in its internal procedure for preventing human rights violations
  • In 2023, PZU conducted educational activities on human rights. The thematic workshop on human rights in business was attended by 246 employees. Internal communications published an article on adapting the PZU headquarters building to the needs of people with disabilities
XLS

Human rights and freedoms Employer and operations (human resources, health and safety, GDPR) Value chain Investor Insurer
Right to life X X
Right not to be subjected to torture or cruel, inhuman and/or degrading treatment or punishment, freedom from mobbing X X
Right of access to water and sanitation X X
Right to health X X X X
Right to social security, including social insurance X X
Right to an adequate standard of living X X
Right to work and the right to enjoy fair and favorable working conditions (wages, working hours) X X X X
Right to form and join trade unions and the right to strike X X
Right not to be held in slavery, servitude or forced to do forced labor X X
Right to privacy/right to digital security and privacy X X X
Right to equality before the law, equal protection under the law, and the right to protection from discrimination (including nondiscrimination in employment, equality between men and women). X X X X
Minority rights X
Right to democratic elections, to participate in public affairs X
Right to freedom of opinion, expression and the right to information X
Right to education X
Right to freedom of movement X
Authors’ right to moral and material benefits from works X

In 2023, against PZU and PZU Group entities there were no:

  • final and unappealable court convictions of labor law or human rights violations,
  • cases before the OECD National Contact Point (OECD NCP) that would lead to the OECD NCP finding the entities have acted inconsistently with the OECD Guidelines for Multinational Enterprises,
  • allegations before the Business and Human Rights Resource Center.

Fair competition and corruption prevention

PZU and PZU Group entities have appropriate internal processes and procedures in place for managing anticorruption activities. PZU and PZU Group entities review internal regulations in the area of corruption risk management to ensure that they are up-to-date, and keep documentation to confirm this objective. The above regulations being in place at the company ensures the company’s compliance with the OECD Guidelines for Multinational Enterprises, which contain a total of 12 guidelines in the areas of corruption and competition.

PZU and PZU Życie are fully compliant with the 2023 OECD Guidelines for Multinational Enterprises (the companies meet 12 of the 12 corruption and competition guidelines identified by PZU). In 2023, PZU clarified the provisions of the regulations on the rules for accepting and giving gifts at PZU and PZU Życie by noting that it is inadmissible to use third parties (an open catalog of persons) to give money to government officials or employees of business partners, their relatives or associates. This change is good practice and did not constitute a loophole. PZU and PZU Życie were certified in July 2023 for compliance with ISO 37001 (anti-corruption management system).

Corruption prevention policies, including the AntiCorruption Program in place at PZU and PZU Życie, are described in Section Prevention and Detection of Corruption and Bribery.

PZU and PZU Group entities are building awareness of competition law within the organization through the preparation and implementation of an effective training program and outreach activities. In PZU and PZU Życie, there is a competition law training program for new employees, an annual program for executives and those in positions with a higher risk of non-compliance with competition law, an online program for all those affiliated with PZU, and an ad hoc program if a need arises. PZU and PZU Życie take ongoing measures to promote competition law-compliant activities and procedures, including the clarification of competition law concerns as part of ongoing counseling. The PZU Compliance Department conducted competition law training in 2023 in accordance with the training plan.

In 2023, there were no corruption or competition law breach lawsuits against PZU or PZU Group entities. There is no final and unappealable conviction by a court in a corruption case during the reporting year of the company or its senior management.

Tax issues

PZU and PZU Group entities treat tax management and compliance as an important part of their business. They have appropriate tax risk management strategies and processes in place, as required by UN and OECD guidelines in this regard.

In 2023, PZU and PZU Życie pursued their obligations under the prevailing tax law, in line with the Tax Group’s Tax Strategy for 2021-2023 and by following the “PZU Group’s Tax Policy” and other internal tax procedures. Tax matters at PZU and PZU Życie are handled by a qualified team in a dedicated unit (Tax Policy Department). Tax matters were treated with due diligence in 2023 under the supervision of the Director of the Tax Policy Department and the Board Member in charge of the Finance Division. Tax obligations are met pursuant to prevailing tax laws and adopted internal regulations. In situations where tax laws have changed, internal regulations are subject to review, and the Tax Policy Department staff apply tax laws directly until internal regulations are adopted. PZU and PZU Życie pay their tax liabilities within the timeframes specified in tax regulations.

In 2023, there was no final and unappealable judgment for PZU and PZU Group entities by the Provincial Administrative Court or the Supreme Administrative Court confirming a violation of tax law.

Controversial weapons

PZU and PZU Group entities are not engaged in activities related to controversial weapons (anti-personnel mines, cluster munitions, chemical and biological weapons).

1. According to the Report published by the EU Sustainable Finance Platform on Minimum Safeguards in the EU Taxonomy (Final Report on Minimum Safeguards, October 2022)
2. According to the European Commission notice (2023/C 211/01)

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