Governance

COMPLIANCE

Mercuria’s commitment to responsible and ethical business conduct is manifested in our robust compliance program. It serves as the cornerstone of our operations, ensuring adherence to the highest standards of behaviour outlined in our Code of Conduct. 

This comprehensive program encompasses all critical aspects of compliance, including: 

  • Anti-bribery and corruption: We maintain a zero-tolerance stance against any form of bribery or corruption, actively safeguarding ethical interactions throughout our global operations.
  • Anti-money laundering: We vigilantly combat money laundering risks through rigorous procedures and controls, upholding financial integrity and promoting a clean business environment. 
  • Sanctions compliance: We meticulously adhere to all relevant sanctions regulations, demonstrating responsible engagement with international legal frameworks. 
  • Market abuse: We prioritize integrity and fairness in our trading activities, ensuring compliance with market regulations and fostering trust in the markets we participate in. 
  • Health, safety and environment: We are dedicated to the well-being of our people and the planet, diligently enforcing stringent health, safety and environmental standards across our operations. 
  • Human rights: We prioritise respect for human rights throughout our value chain, promoting fair and ethical treatment of all individuals with whom we interact. 

Our Corporate Responsibility & Compliance team operates actively within the heart of our trading floors, fostering close collaboration with commercial and federation employees. This proactive approach ensures seamless integration of compliance into everyday decision-making, promoting responsible practices and safeguarding against missteps. Robust oversight of our compliance program is provided by the two dedicated committees previously described: the Compliance & Business Ethics Committee and the Health, Safety, Security & Environmental Committee. 

Maintaining our strong reputation for compliance is a source of pride for Mercuria. We remain deeply committed to this pursuit, continuously strengthening and evolving our program to meet the ever-changing landscape of risk and regulation

In this section

Compliance

Mercuria is committed to operating with the highest integrity and ethical standards, consistent with our values and principles. This responsibility is reflected in our comprehensive Anti-Bribery and Corruption Policy (ABC policy) that provides a set of mandatory guidelines and procedures for all employees, subsidiaries, and partners, to ensure everyone understands how to navigate potentially risky situations.

We rigorously comply with anti-bribery and corruption legislation globally, including the UK Bribery Act 2010 (UKBA), the US Foreign Corrupt Practices Act (FCPA), and relevant regulations in every jurisdiction where we operate. Our commitment and adherence guarantee fair and proper business conduct throughout our global marketplace. 

Mercuria’s commitment to ethical conduct extends beyond our own employees, with our enhanced due diligence for brokers and joint ventures. Our Compliance Program includes a dedicated policy and procedure governing the onboarding process for these third parties, to ensure: 

  • Enhanced Know Your Customer (KYC) procedures: We thoroughly vet these critical partners to verify their legitimacy and ethical practices. 
  • Anti-bribery and corruption awareness: All partners fully understand our ABC policy, can identify potentially risky actions, and are committed to ethical conduct. 
  • Proactive risk mitigation: By establishing this framework, we minimize the risk of unethical conduct within our network. 

We believe in empowering our employees through knowledge, therefore we invest in ongoing compliance training for our global employees. Throughout the year, we provide comprehensive training sessions covering: 

  • Updates on exchange and regulatory rules: Employees stay informed about evolving regulations and market conduct expectations. 
  • Internal policy changes: Employees understand any revisions to our internal policies and procedures. 
  • Market and regulatory events: We share insights on relevant developments affecting our operations. 

These proactive training sessions equip our employees with the knowledge and awareness they need to navigate complex issues and consistently uphold our high ethical standards.

Launched in 2004, the World Economic Forum’s “Partnering Against Corruption Initiative” (PACI) serves as the principal CEO–led platform in the global anticorruption arena, building on the pillars of public-private cooperation, responsible leadership and technological advances. With approximately 90 signatories from different sectors across the globe, PACI undertakes initiatives to address industry, regional, country or global issues tied to anti-corruption and compliance. The PACI Principles, to which we have committed, call for businesses around the world to commit to zero tolerance of corruption in all its forms. PACI encourages members to join collective action initiatives to increase public trust in business, deliver fair markets and level the playing field by fighting corruption.

Trade and communications surveillance

Mercuria remains committed to safeguarding the integrity of the markets in which we participate. We educate employees on the standards required to represent Mercuria in the marketplace and monitor adherence to these behavioural expectations we set in order to comply with relevant rules and regulations. This commitment is deeply embedded within the essence of our compliance culture which is endorsed by management across the organisation.  

To uphold this commitment, we continue to implement trade, voice and electronic communications surveillance tools to:   

  • Scan for trade anomalies: Our systems actively scan for unusual behaviour and potential red flags, minimizing the risk of undetected misconduct.  
  • Scrutinize electronic and voice communications: We closely monitor communications channels to identify behaviour which is not aligned with our ethical and regulatory obligations.  
  • Enhance controls: We continuously refine our processes and data sources, seeking innovative ways to improve our surveillance mechanisms. This enables us to swiftly investigate and resolve potentially legitimate alerts with maximum efficiency.  

Mercuria’s surveillance program empowers us to effectively:  

  • Detect violations: We can proactively identify any potential breaches of rules, regulations, or internal procedures.  
  • Conduct comprehensive analysis: Any potential violation undergoes a thorough review, including escalation, analysis, and, if necessary, appropriate remediation.  
  • Mitigate emerging risks: We vigilantly monitor the global market risk landscape, anticipating and proactively addressing areas where manipulative behaviours may arise. During 2023 Mercuria invested in an enhanced Communications Surveillance tool to respond to such risks. This ultimately enhances Mercuria’s reporting capabilities so that we can adapt to evolving threats.  

Through this comprehensive and evolving surveillance framework, we aim to safeguard the fairness and trust that underpins our operations and activity within the commodity markets. 

Counterparty due diligence

Mercuria’s commitment to ethical conduct begins at the foundation: comprehensive counterparty due diligence. Before forming any new business relationship, we delve into a comprehensive “Know-Your-Counterparty” (KYC) process to ensure our partners share our values and uphold the highest ethical standards. This robust framework safeguards Mercuria from a multitude of risks, including fraud, money laundering, corruption, human rights violations, and more. 

Our multi-dimensional KYC program surpasses a simple compliance check. We diligently assess a potential partner’s:

    • Commercial Strength: Are they financially stable and operationally reliable? Can they fulfil their commitments with integrity? 
    • Compliance Standing: Do they adhere to all relevant regulations and industry best practices? Are they free from legal sanctions or negative reputational baggage? 
    • Ethical Alignment: Do their values and business practices adhere to Mercuria’s commitment to responsible conduct and sustainability? Are they involved in activities such as fraud, money laundering, bribery, human rights violations, and other forms of crime and corruption? 

    By examining these critical dimensions, we gain a clear picture of a potential partner’s true nature, empowering us to make informed decisions that safeguard our ethical and financial well-being. 

    Proactive evolution, continuous improvement.

    Mercuria recognizes that a static due diligence framework cannot keep pace with ever-evolving risks and technologies. We therefore proactively evolve and continually refine our KYC procedures. This dedication manifests in: 

    • Embracing cutting-edge technologies: leveraging advanced tools and data analytics to enhance risk identification, real-time assessments, and informed decision-making. 
    • Partnering with best-in-class providers: collaborations with established data intelligence companies such as Dow Jones, WorldCheck, and Polestar’s PurpleTRAC to supplement our internal evaluations with trusted, independent data sources. 
    • Regular process review and updates: continuous assessment and refining of our KYC methodology to ensure it reflects the latest international standards and best practices. 

    Mercuria’s due diligence extends beyond simply vetting potential partners. Our rigorous procedures also apply to contractors, service providers, vessels, products, and storage facilities. This comprehensive approach ensures consistent risk mitigation across every facet of our operations, regardless of location or type of engagement. 

    We understand that our reputation rests not only on our own conduct but also on the principles and practices of those we associate with. Therefore, we remain dedicated to ongoing due diligence improvement, ensuring we consistently select partners who share our belief in ethical and responsible business practices. 

    A focus on Katon, Mercuria’s in-house central KYC database

    KATON is Mercuria’s in-house central KYC database and multi-party workflow tool. Developed over the course of the last two years by Mercuria’s IT division, under the guidance from the Mercuria Corporate responsibility & Compliance team that oversees KYC processes, KATON is our primary database for verifying and recording information about third parties.  KATON allows us to utilize technology to review, monitor, identify and flag counterparties and activities faster and more accurately.  KATON has digitalized our KYC requirements which are set according to our entity risk assessment matrix.  KATON’s automated workflow ensures that all KYC is completed consistently and accurately according to our high standards and requirements whilst supporting real-time collaboration across internal stakeholders.

    All potential new counterparties must go through Mercuria’s KYC due diligence process before any deals can be agreed or any payments can be made or received, all payments are blocked prior to completion and approval of KYC of the entity. As the business expands, KYC has become increasingly important. Our new platform allows for real-time status updates improving communication throughout the business and ensuring that all counterparties have met our criteria.

    Not only is KATON crucial for real-time status updates, but it is also important for monitoring and reviewing existing counterparties. Mercuria seeks to regularly monitor its supply chain to help ensure that Mercuria in no way contributes to human rights abuses or violence or exploitation in conflict affected areas. KATON was developed internally, allowing our KYC team to continually review its KYC methodology to ensure that it remains up to date with developing international standards.

    In an effort to continually improve our processes, we are currently building out KATON’s capabilities to digitalize and enhance our business ethics and human rights due diligence processes.  Mercuria has completed, and continues to enhance as we move to more jurisdictions and business lines, a very detailed risk assessment of ethical and human rights risks which allows us to ensure that we do not come into contact with these risks in our day to day dealings.

    Additionally KATON has become a crucial tool in our sanctions monitoring and enforcement programme.  Mercuria takes a very conservative approach to implementation of all sanction regimes and fully complies with all sanction laws and regulations around the world.  As sanctions regimes across the globe have become more complex, such as introduction of sectoral sanctions regimes, Mercuria has bolstered its systematic controls, training programmes and compliance oversight of all activities.

    Human rights due diligence

    Respecting human rights: a core commitment.

    At Mercuria, we are aware of our responsibility to the communities where we operate. We are highly committed to ensuring our activities never contribute to human rights abuses, and this commitment permeates every aspect of our business. 

    Building ethical value chains.

    Our comprehensive KYC processes go beyond mere compliance checks. They are designed to identify, prevent, and mitigate any potential human

    rights risks, both within our own operations and throughout our supply chain. By actively fostering ethical partnerships and collaborating with suppliers and contractors who share our values, we aim to build robust value chains that protect human rights and contribute to wider societal well-being.

    Mercuria’s human rights due diligence framework rests on four fundamental pillars of action: 

    1. Proactive Risk Identification: We proactively assess and identify any actual or potential human rights risks across our entire business ecosystem. This vigilance extends beyond our own practices and encompasses potential risks associated with our suppliers, contractors, and all other business partners.
    2. Responsible Action and Leverage: Upon identifying risks, we rigorously assess our responsibilities and implement appropriate actions to mitigate them. This may involve collaborative efforts with partners to elevate their human rights practices, or internal measures to minimize our own footprint and potential impact.
    3. Effective Risk Mitigation and Protection: Once actions are taken, we remain vigilant in monitoring and reviewing our progress. This ensures continued risk mitigation and protects workers, communities, and all individuals potentially impacted by our operations.
    4. Continuous Vigilance and Improvement: Recognizing the ever-evolving nature of human rights risks, we embrace continuous improvement. Our due diligence processes are constantly monitored, reviewed, and updated to ensure they remain effective in identifying and mitigating any contemporary human rights challenges.

    Mercuria understands that respecting human rights is a core ethical imperative as well as a legal obligation. Through our robust due diligence framework, active collaboration with partners, and unwavering commitment to continuous improvement, we strive to make a positive impact in the communities where we operate and leave a legacy of respect and empowerment.

    Asset due diligence

    Mercuria’s commitment extends beyond meeting present energy needs; we actively promote the development of a sustainable future. We strategically pursue investments, partnerships, and financing opportunities that support operating assets and physical operations aligned with our core energy commodity trading, while simultaneously advancing the crucial energy transition towards lower-carbon and more sustainable solutions.

    In this dynamic landscape, Environmental, Social, and Governance (ESG) considerations are embedded into our strategy, driven by a company-wide commitment to contribute to achieving net-zero carbon emissions by 2050. This dedication is led by our management, ensuring leadership and direct focus on sustainable progress. 

    Identifying potential new investments requires robust evaluation and rigorous due diligence. We meticulously review not just counterparties, partners, and primary service providers, but also the intrinsic ESG risks associated with each opportunity. Compliance with the highest environmental, health & safety, and ethical standards – as outlined in our Code of Conduct – is non-negotiable. Our assessments are forward-looking, considering the potential asset’s entire life cycle and its long-term impact. 

    Mercuria’s Deal Execution Committee (DEC) provides a robust, comprehensive, and collaborative risk assessment and deal structuring. This committee harnesses the expertise of key functions – finance, credit, corporate responsibility & compliance, risk, legal, tax, treasury, operations, and relevant trading heads – to collectively analyze all potential risks associated with each transaction. Their insightful inputs culminate in a comprehensive review document, presented for final approval by the CEO, President, or Executive Vice President, ensuring every decision aligns with our commitment to responsible and sustainable growth.

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