Corporate governance ensures that the business runs in a responsible, qualified, and transparent way. It safeguards the proper management and supervision structures and defines the distribution of rights and duties among the parties involved in the Company, such as shareholders, executive management, company bodies, employees, business partners and customers. Generally, it is a set of legal and executive methods and procedures committing Škoda Auto to maintain a balanced relationship between the Company and its stakeholders.

Corporate Culture and Business Conduct Policies

The trust of customers and stakeholders in Škoda Auto and its products is one of the Company’s most valuable assets. Škoda Auto strengthens public trust and protects its employees and the environment by conducting itself in accordance with the integrity and ethical principles.

Code of Conduct

The Code of Conduct, which defines the essential ethical standards for the entire Škoda Auto Group, has been developed and adopted in the Company and Škoda Auto affiliates in scope. The Code of Conduct clearly defines Company’s general standards for employee behaviour. It applies to all employees, serves as a guide for compliant and correct conduct, forming the basis for all company decisions. This document is built up on common values, statutory requirements as well as internal regulations and offers orientation, guidance, and support guidance in dealing with existing rules and regulations at work.

Additionally, the Code of Conduct for business partners has been implemented across the Group. Its principles have become a part of relevant contractual stipulations with business partners.

Together with the Code of Conduct, the Board of Directors has adopted voluntary commitments to Integrity and Compliance principles like the leadership at the Group. Integrity and Compliance principles are considered in management decisions and form an integral part of the Next Level – Škoda Strategy 2030 and the Sustainability strategy. The Next Level – Škoda Strategy 2030 is supported with specific KPIs enabling regular monitoring and evaluation of the corporate culture in the Company.

The Board of Directors actively supports maintaining the Code of Conduct principles by establishing appropriate internal processes and rules. It also acts on communications and explanations based on the principle of “Tone-from-the-Top”.

Code of Conduct training

The promotion of corporate culture-related matters is ensured through a system of regular employee training. The Code of Conduct, as an essential document, is binding for all employees. It is mandatory for every employee to complete the Code of Conduct training at least once every two years. For administrative personnel the training is delivered in an e-learning form, for blue-collar workers the training is carried out in person. The training session consists of the introduction to conduct principles and rules adopted at the Group level, behaviour examples, and focal points to be contacted in case of doubts or need of support. The Code of Conduct contains statements related to the ban of corruption. Besides the Code of Conduct training and as part of the corporate culture, Škoda Auto has developed and put in place special training courses focused on prevention of corruption and bribery. Škoda Auto monitors the proportion of trained employees, evaluates training process results, and has escalation procedures in place in case of need. The reported proportion of trained employees for the Code of Conduct training is significantly over 99%, but the objective is to achieve a 100% completion rate.

The Company reaffirms its commitment to the relevant international conventions and declarations. It respects, protects, and enforces all applicable regulations for the protection of human rights and children’s rights as a fundamental and general requirement worldwide. Through continuous improvement of processes, systems, and concrete measures, Škoda Auto seeks to assert leadership in the automotive industry with respect to human rights.

The Company applies internal policies and procedures to prevent any violation of human rights. An overarching principle of Škoda Auto’s Social Sustainability Strategy is a full commitment to respecting human rights. Škoda Auto firmly rejects the use of child labour, forced or compulsory labour, and all forms of modern slavery and human trafficking.

This policy applies not only to the Company’s internal operations but also to the behaviour of its business partners, as set out in the Code of Conduct, which is in line with the principles of the UN Global Compact.

For greater clarity, the Code of Conduct provides examples for employees on how to proceed if they suspect a violation of human rights.

The Company’s approach follows the UN Guiding Principles on Business and Human Rights that further refer to the Universal Declaration of Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work, and the OECD Guidelines for Multinational Enterprises.

Compliance management system

As part of the Group, the Company can only achieve success by operating with integrity, complying with worldwide statutory provisions, upholding its voluntary commitments, ethical principles, and responsibility for the protection of human rights.

To foster a cultural change and promote compliant behaviour, the Company actively provides target group-oriented, continuous, and clear communication and training activities. These initiatives are delivered through effective and accessible channels and procedures that are available throughout the organization.

The Company has implemented an effective Compliance Management System (CMS), in line with the Group principles, applicable legislation and internal regulations. The Company pays particular attention to its duty to observe valid legal and internal regulations. This ensures that Škoda Auto and its relevant affiliates comply with the requirements that stem from legal and ethical rules applying to, for example, economic competition, the financial and tax sectors, environmental protection, and employee relations, which includes the promotion of equal opportunities. The Company, along with its relevant subsidiaries and affiliates, has implemented a comprehensive and structured CMS to ensure compliance with all applicable regulations. This includes, but is not limited to, principles related to anti-corruption, anti-money laundering, and prevention of terrorist financing. Additionally, the CMS covers areas such as gifts and invitations, sponsorships and donations, business partner due diligence, and the avoidance of conflicts of interest.

The CMS as such is organised according to seven elements: Compliance culture and values; Compliance objectives; Compliance risks; Compliance programme and processes; Compliance organisation; Compliance communication and training; Compliance monitoring and improvement.

Learn more about the CMS seven elements here.

Risk management system – three lines of defence

Škoda Auto has implemented a system of three lines of defence to identify, report and mitigate compliance risks and to investigate potential concerns about unlawful behaviour or behaviour in contradiction with the Company Code of Conduct and other internal policies and regulations. All functions representing the first line of defence are responsible for assuring all relevant business processes. The second line of defence is represented by the organisational units responsible for Compliance Management systems, including Governance, Risk & Compliance and Legal Affairs. Those units are responsible for setting rules and play a preventive role including giving support to the first line of defence. Their preventive role consists in making appropriate risk analyses to detect and prevent behaviour which might be in contradiction with the Company rules. The third line of defence is represented by the Internal Audit. This function is responsible for assuring that processes are sufficiently performed by the representatives of the first line of defence. The Internal audit performs this control via its auditing activities within planned and extraordinary audits during the year.

Integrity management system

The integrity topic covers a number of areas, processes, and initiatives within Škoda Auto, directly relevant for compliance principles, corporate culture, and diversity. To build harmony across these topics while ensuring understanding across Škoda Auto, the Company has laid down a set of key principles of integrity that are based, among other things, on applicable legislative and internal regulations, the Group’s, and principles and the principles of the Ethics and Compliance Initiative (ECI). The necessity to act in accordance with integrity principles is also firmly rooted in the Next Level – Škoda Strategy 2030. Škoda Auto believes that only honest and reliable conduct in
accordance with its integrity principles will enable the Company to win and build the trust of its employees, customers, shareholders, business partners, and the general public.

Towards this end, the Integrity Management System has been built in recent years as the framework for systematic assessment of integrity, as well as for its further development at Škoda Auto. This is the only way to keep this topic sustainable and thereby make Škoda Auto successful in the future market. The Integrity Management System is based on goals and measures defined by Škoda Auto. The purpose is to ensure that Škoda Auto’s management team, its employees, and relevant third parties follow the principles of integrity as expected by the Company.

To administer the topic of integrity sustainably at Škoda Auto, there is a so-called integrity organisation under Group Guideline 31: Organisation of functions – Governance and Integrity, Risk Management, Compliance and Legal set at the Company. The integrity organisation is headed and managed by the Head of Škoda Auto’s Governance, Risk and Compliance department, in the position of Brand Chief Integrity Officer.

Learn more about Integrity at Škoda.

Whistleblowing system

The Company has implemented a Whistleblowing system to deal with reports of serious regulatory violations which may significantly harm the Company’s reputation or financial interests and could severely violate the fundamental ethical values of the Company. This system is administrated by the Governance, Risk, and Compliance organisational unit and serves for communication of possible concerns about violations of valid legal and/or internal regulations and Company rules. With the help of this system, both employees and external representatives can reliably and anonymously give any kind of incentive for its further investigation. Protection of individuals who reported any non-ethical behaviour incident is granted and managed in the internal regulations defining the Whistleblowing system as such. Concurrently the first line managers are obliged to announce any breach of valid legal and/or internal regulations or Company rules they detect. For the most critical and urgent topics, there is a special process implemented at the Group level called Hot-topic reporting. This process is used for reporting Compliance principle-based breaches.

In the case of personal matters, employees have the option to file a personal complaint directly with the Social Relations and HR Compliance/Human Resource Planning organisational unit or any relevant HR department within the HR disciplinary process. This is in addition to the availability of the Whistleblowing system. Such complaints are addressed separately.