Governance

COMPLIANCE

Mercuria is committed to conducting business in a responsible and ethical manner. The company’s Code of Conduct sets out the standards of behaviour that are expected of all employees, and the company’s compliance program is designed to ensure that these standards are met.

Mercuria’s compliance program is comprehensive and covers all aspects of compliance, including anti-bribery and corruption, anti-money laundering, sanctions, market abuse, health, safety and environmental, and human rights.

The corporate responsibility & compliance team is integrated within the trading floors of Mercuria’s offices and works proactively with commercial and federation employees to ensure that the company’s policies and procedures are always followed and good decisions are made.

The Compliance and Business Ethics Committee and the Health, Safety, Security and Environmental Committee provide comprehensive governance structure over Mercuria’s activities. These committees are responsible for overseeing the company’s compliance program and ensuring that it is effective in meeting Mercuria’s high standards of ethical behaviour.

At Mercuria, we are proud of our strong reputation for compliance and are committed to maintaining this reputation by continually improving our compliance program.

Compliance

At Mercuria we are committed to conducting our business with integrity, to high ethical standards, and in a way that is consistent with our values and our principles.

We have an Anti-Bribery and Corruption Policy that establishes a comprehensive set of mandatory guidelines and procedures for us, including all of our employees, subsidiaries, and other partners, to establish guidelines for how to handle situations that could potentially be construed as bribery.

It is our policy to comply with the United Kingdom Bribery Act of 2010 (UKBA), the United States Foreign Corrupt Practices Act (FCPA), as well as anti-corruption laws and regulations of all other countries in which we conduct business. We comply with anti-bribery and corruption legislation and guidelines to ensure fair and proper business conduct in the marketplace.

In addition, our Compliance Program includes a policy and procedure governing the onboarding process for brokers, intermediaries, and the formation of joint ventures. The process enables an enhanced KYC process for these categories of partners. This ensures that anyone undertaking or facilitating business activity in this capacity understands our Anti-Bribery / Anti-Corruption policy, is able to identify actions that could be considered to be bribery or corrupt in nature, and agree to not engage in such actions.

We also provide annual compliance training throughout the calendar year to global employees relating to additions or proposed changes to exchange and regulatory rules, market conduct, internal policies and other learnings such as market and regulatory events. These trainings provide all employees with an appropriate outline and scope of such changes to ensure that they are well acquainted with all rules and regulations to which we must adhere.

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

At Mercuria, we are committed to maintaining the integrity of the markets in which we trade. We ensure that all of our employees who participate in markets do so in a way that is fully compliant with all relevant rules and regulations. We have developed and implemented a robust framework for monitoring our market activity and conducting trade surveillance analysis. Our company-wide compliance culture clearly holds market integrity in the highest regard, and this message is consistently delivered by management across the company.

We have a suite of surveillance tools in place that enable us to scan for unusual behaviours and to closely monitor our communications. We are continually reviewing our processes and data sources, and seeking opportunities to enhance our capabilities to achieve the most effective controls for quickly investigating and resolving potentially legitimate alerts. These tools play a key role in expanding our ability to detect potential rule, regulation, and procedural violations, as well as to conduct a thorough review, escalation, analysis, and, where necessary, remediation of such behaviours.

Mercuria is committed to proactively monitoring the global market risk landscape to identify areas of increased manipulative market behaviour. We will put in place additional tools and reporting capabilities to better mitigate these risks as they arise. 

Counterparty due diligence

Mercuria is one of the largest traders of physical commodities in the world, with a strong reputation for conducting business consistently and ethically. We ensure our high standards by conducting extensive due diligence and research before entering into a new line of business or working with new partners.

We conduct diligent “Know-Your-Counterparty” (KYC) checks to ensure our partners share our values and help mitigate business risks. A thorough KYC evaluation is conducted prior to the execution of any contract or formal business engagement with a third party.

KYC checks help protect Mercuria from involvement in activities such as fraud, money laundering, bribery, human rights violations, and other forms of crime and corruption. By conducting thorough checks, we can mitigate the financial, reputational, regulatory, and strategic risks to Mercuria from other entities and ensure that all of our activities meet our expectations of conducting business in a safe and responsible manner. Working through our robust KYC process also provides a solid foundation for us to work most effectively and collaboratively with our customers and partners.

Mercuria’s KYC procedures reflect the measured and conservative approach we apply to risk management across our business. There are several dimensions to our KYC evaluation, which is designed to provide us with an understanding of a potential counterparty’s commercial strength and compliance standing, as well as giving us an insight into how they measure up against our high ethical standards when it comes to the way they conduct business. The main objective of our KYC and screening procedures is to expose prospective counterparties that have the potential to pose risk to our business or compromise our standards in any way.

Mercuria’s KYC methodology is under constant review to ensure that the latest international standards are reflected in our procedures and opportunities to make improvements to our approach are continually sought and implemented. We seek to utilise the latest technologies to enhance the way we review, monitor, identify, and flag high-risk counterparties and activities. This allows us to identify potential risks accurately and in real time and before we enter into any business that would pose such risks.

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.

Mercuria conducts prudent due diligence as part of its standard operating procedures. This includes conducting due diligence prior to entering into acquisitions, making investments, or forming joint ventures. Mercuria is aware of the challenges that can arise from sourcing materials in areas affected by conflict or other governance issues, and has developed enhanced due diligence procedures for these higher-risk jurisdictions.

Mercuria takes special care to regularly monitor its commodities supply chain to help ensure that it does not in any way contribute to human rights abuses, violence, or exploitation in conflict-affected areas. The company’s procedures are designed to identify any human rights breaches that may have already occurred or are under investigation. Mercuria’s ongoing due diligence also provides assurance that any counterparties it works with are not the subject of legal sanctions and that it is not dealing in any sanctioned products.

Mercuria’s due diligence and KYC practices extend beyond its counterparties to its contractors and service providers. These organizations are carefully considered before being selected to help Mercuria conduct its business activities. All of Mercuria’s procedures are based on a risk assessment, and higher-risk jurisdictions and activities are subjected to enhanced scrutiny.

Mercuria has specific requirements and vetting procedures for vessels and product, as well as for specific processes for vetting prospective storage facilities. The company utilizes independent laboratories, surveyors, and due diligence services to help with these processes in certain scenarios.

Mercuria utilizes the services of a number of well-established data intelligence companies in the commodities industry to help with its due diligence process, namely; Dow Jones, WorldCheck, Polestar’s PurpleTRAC, Lloyds Informa and Infospectrum. These companies provide Mercuria with necessary targeted and extensive information on the maritime, shipping, and commodities sectors, so the company is equipped to make well-informed timely decisions based on independent and verified data sources.

Mercuria is committed to continuously developing and improving its due diligence procedures. As such, the company regularly updates and reviews its processes and information sources to ensure that it always has the most up-to-date and accurate information possible.

Human rights due diligence

Mercuria is accountable to the communities in the locations where we conduct business. We have a responsibility to ensure that our activities do not contribute to human rights abuses, and we take this responsibility seriously.

Our thorough KYC processes are designed to identify, prevent, and mitigate against any human rights breaches. We also develop ethical value chains that advocate human rights and support wider societal goals.

Our due diligence process has four key objectives:

  1. Identify any actual or potential human rights risks. This includes risks that may arise from our own activities, as well as risks that may be associated with our suppliers, contractors, and other business partners.
  2. Identify our responsibilities and leverage the appropriate actions. Once we have identified the risks, we need to assess our responsibilities and take the appropriate actions to mitigate those risks. This may involve working with our suppliers and contractors to improve their human rights practices, or it may involve taking steps to reduce our own impact on human rights.
  3. Mitigate any risks and ensure protection of workers and others who may be impacted by our operations. Once we have identified the risks and taken the appropriate actions, we need to monitor and review our progress to ensure that the risks are being mitigated and that workers and others are being protected.
  4. Monitor and review to ensure no new risks are evolving. The world is constantly changing, and so are the risks to human rights. We are vigilant in monitoring and reviewing our due diligence processes to ensure that they are up-to-date and can identify and mitigate any of the risks associated with human rights.

    Assets due diligence

    Mercuria is committed to meeting the immediate and real-time energy needs of its customers, while also developing and promoting future sources of energy and the infrastructure that will be essential to the future transformation of the energy sector.

    To this end, Mercuria strategically seeks equity stakes, partnerships, or financing to support operating assets or physical operations that are aligned with its trading business in energy-related commodities as well as those involved in and advancing the energy transition to lower carbon and more sustainable forms of energy.

    In a changing energy landscape, Mercuria seeks out new opportunities and strives to remain at the forefront of these transformations. Environmental, social, and governance (“ESG”) factors have become increasingly important to Mercuria’s strategy. In particular, combating climate change and helping the world achieve net-zero carbon emissions by 2050 has been fully embraced across all teams within the company and driven by the strong direction of the Group CEO, who is personally leading this activity.

    As part of its ongoing efforts to identify potential new investments in assets or other business ideas, Mercuria has a robust process in place to review potential counterparties, partners, and primary service providers associated with those opportunities. In addition, Mercuria’s due diligence process encompasses a broad range of perspectives, including the evaluation of ESG risks that may be associated with the investment. Mercuria expects that compliance with the highest environmental, health & safety, and ethical standards, as well as in accordance with Mercuria’s values and principles, expressed in its Code of Conduct, can be demonstrated. Beyond considering current compliance status and operational risks, Mercuria’s processes look forward through the full expected life-cycle of the asset.

    Mercuria has created a framework for review, known as its Deal Execution Committee (DEC), which is designed to assess and quantify all aspects of the risks associated with executing any deal as well as the structure of the transaction itself. Within this framework, the heads of the various functions, including finance, credit, corporate responsibility & compliance, risk, legal, tax, treasury, operations, and the related products trading heads, collaborate to take input from their respective functions into an overall review document, which is then presented for final approval by one of the CEO, President, or Executive Vice President.

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