Ericsson's Business Ethics and Anti-Corruption

Since December 2019, Ericsson has been under a Deferred Prosecution Agreement (DPA) with the US Department of Justice (DOJ) to resolve criminal US Foreign Corrupt Practices Act (FCPA) charges and a consent judgment with the Securities and Exchange Commission (SEC) to resolve related civil claims. On October 21, 2021 Ericsson received correspondence from the DOJ stating its determination that the Company had breached its obligations under the DPA by failing to provide certain documents and factual information. At this time we cannot provide further details about the determination by the DOJ or predict the outcome of the resolution of this matter. Ericsson has taken steps to avoid a recurrence of the issues that led to the breach determination and is committed to cooperating openly and fully with the DOJ and its Independent Compliance Monitor consistent with all terms set out in the DPA.

Cultural Transformation
Ericsson continued to strengthen and enhance its Ethics and Compliance (E&C) Program in 2021 with a focus on the global cultural transformation to ingrain ethical, responsible and sustainable business practices everywhere the Company operates. One cornerstone of that transformation is Ericsson’s new value of integrity, added in 2021. Concurrently, Ericsson launched a company-wide E&C strategy which focuses on ensuring that integrity is embedded into Ericsson’s culture and ways of working to foster accountability, build trust and respect with customers, business partners and regulators, and drive sustainable success. The Company empowers its employees and business partners to take part in the transformation by providing them with tools and information to make fact-based, integrity-driven decisions.

Updated Code of Business Ethics
Ericsson’s newly revised Code of Business Ethics (COBE), launched in 2021, outlines the Company’s fundamental ethical principles and expectations. It reflects the Company’s commitment to conduct business with integrity, consistent with all internationally recognized human rights principles and the applicable laws and regulations where Ericsson operates. COBE is applicable to all individuals performing work for Ericsson (including the Board of Directors and the President and CEO) and has been translated into 43 languages to ensure that it is understood by all. The Company reviews and updates COBE periodically and frequently runs an acknowledgment process, including during 2021, to ensure that everyone performing work for Ericsson has read and understood it.

Policies and Procedures
In addition to launching COBE, Ericsson has also been working towards enhancing and simplifying its E&C-related policies, procedures and processes to provide clarity, improve their user-friendliness and to set up adequate controls for high-risk transactions. Relevant examples include the new revision of the Gifts, Entertainment and Hospitality (GEH) Group Instruction and the global roll-out of the enhanced Third-Party Management (TPM) Program to identify and mitigate corruptionand integrity-related risk in connection with third party relationships (see page 26 on Responsible management of suppliers). Ericsson also launched guidance embedding E&C into the mergers and acquisitions process, ensuring adequate oversight of strategic transactions and the Company’s portfolio of non-wholly owned companies.

Training and Communications
Ericsson has developed engaging communications and trainings on E&C-related topics to promote integrity-driven behaviors by employees and third parties. The Company launched “Putting our values into action – a guide to E&C for Ericsson Leaders” which includes resources that enable all leaders to embrace their E&C responsibilities. Notable new trainings include instructor-led workshops for senior executives and middle-management on leading with integrity and solving ethical dilemmas and a targeted anti-bribery and -corruption (ABC) e-learning for line managers and employees in highly exposed roles. In addition to these specific trainings, all employees must take a mandatory online ABC training which is frequently refreshed. Additional trainings are also available for employees in more exposed positions to ensure that they are equipped to face compliance risks inherent to their positions. Training is a mandatory condition to contracting with certain third parties where risk of corruption is higher.

Risk Assessment
Ericsson has continued to develop its compliance risk assessment process, which is used to identify and manage compliance risk and evaluate the effectiveness of the E&C Program. In 2021, Ericsson completed risk assessments of select units in each of its Market Areas, also including transaction testing in certain high-risk geographies. The risk assessments identified several risk areas in need of further attention, such as heightened risk of potential conflicts of interest between employees and external suppliers, the need for continued attention and improved guidance in connection with public official interactions and further improvement of third-party management.

Allegation Management and Investigations
Ericsson launched new steering and guidance documents, as well as a new Speak up reporting tool and case management system. The new system manages the allegation and investigation process from end-to-end and facilitates timely and consistent disciplinary and remedial measures, promoting accountability for non-compliant and unethical conduct.

Reward and Sanctioning
The Company’s willingness to instill a change of culture is reflected in its performance assessment structure, which includes a new Integrity goal for all employees and new ethics and compliance targets that impact the Short Term Variable compensation of executives. Ericsson addresses breaches of COBE by way of consequence management for employees and for third parties as well as process and control enhancements (see page 18 for overview of disciplinary actions).

Digitalization, Monitoring, and Controls
Digitalization has also been at the core of Ericsson’s E&C-related improvements in 2021. An E&C Portal has been deployed to facilitate controls by the Compliance Office around highrisk transactions, including benefits provided to third parties, particularly public officials. The newly-launched allegation case management system enables enhanced analytics of compliance-related incidents.

In addition, Ericsson has launched an integrated E&C reporting and analytics application to support overall program deployment, monitoring and testing. Central to those monitoring and testing efforts is the design and deployment of the Anti-corruption Internal Control System over core anti-corruptionrelated processes, such as GEH, TPM, and hiring, which progressed during 2021 and will continue in 2022.

All of the actions carried out by the Company during 2021 contribute to the realization of its three-year strategy for the implementation of a mature E&C Program where integrity, ethics and compliance will be reflected not just in core company values, but also consistently within its day-to-day business operations and with understanding and full ownership across the organization. Ericsson is continuously updating its E&C operational plan for the future, to ensure the effectiveness and sustainability of the E&C Program in the years ahead.

Originally published in Ericsson's 2021 Sustainability and Corporate responsibility Report