4. Governance information
4.1 Quality of services
High quality audit and advisory services are imperative to our license to operate. Without high levels of quality, we would be unable to make an impact on our clients and society. To this end, Quality of services is an important focus area in our Connect for Impact strategy.
Providing social trust by delivering high quality services is crucial for the functioning of reliable economic and social ecosystems, such as financial markets. Hence, our quality ambitions are closely linked to SDG16 (Peace, justice and strong institutions) and are part and parcel of our Connect for Impact strategy. Failure to deliver high quality services to our clients can lead to economic damage and fines and ultimately, to a loss of social trust in our firm.
Our ambition to become the undisputed leader in professional services goes beyond mere volume of our business and includes to be leading in audit and advisory quality, the impact we make, and the position we have in the minds of our clients, stakeholders and people.
We believe the path to undisputed leadership in quality is through high consistent quality of our service delivery, our people and of our unique and integrated transformation solutions. The only way to create this is through differentiation. Differentiating on quality goes beyond technical quality and asks for unique propositions delivered in Deloitte’s own unmatched multidisciplinary model. Furthermore, through our client work we want to have a tangible impact on the key societal challenges in the Netherlands. The societal challenges are translated in the ‘Future of’ themes.
We have an overarching system of quality control that is currently being enhanced through the implementation of the international quality management standard ISQM1. In addition, we have established a differentiated model around our central commitment to quality that has enabled our success. To achieve our business aspiration to become the undisputed leader and really differentiate on quality, we have initiatives across the different elements of our quality model. Progress on these initiatives is being measured based on a set of (strategic) KPIs.
Activities in 2021/2022
We continued to build trust in the financial reporting ecosystem by being at the forefront of Audit and using Deloitte’s broad and deep advisory expertise in increasing the relevance of our audits, for example in ESG, cyber, fraud, continuity, non-financial information and analytics.
For our Advisory Businesses, MDM is and remains the preferred strategy for serving clients, bringing together unrivalled breadth of capabilities and increasing seamless collaboration across all businesses to provide unique propositions across our designated growth platforms. It is a top priority to deliver the quality clients and society expect from us in these large and complex end-to-end transformation engagements. In order to guarantee the quality on these complex transformation engagements we have an active monitoring programme in place where periodic in-flight reviews are performed during engagement performance and additional risk mitigation is taken if needed. Besides that, we closely measure and monitor the client satisfaction scores.
It all comes down to Connect for impact, our call to action and an essential part of the success of our Deloitte strategy. This is more than connecting with clients, partners or suppliers. It also means the connection between our people. At many of our large clients, we provided services from more than one business line. To further improve our collaboration, we are moving towards an allocation system that stimulates collaboration between service lines, implemented enhanced training of our Lead Client Service Partners and their account teams, and further increased collaboration between service lines through our MDM platforms.
To strengthen partner career management and development, we have created the Partner Life Cycle programme. This programme targets career stages and role/succession development and is catered to fit personal needs. We provide necessary and optional learnings, conversations and guidance to grow into, and successfully transition to different partner roles.
Progress on our initiatives is being measured based on a set of (strategic) KPIs (see page 4).
4.2 Ethics and integrity
Our culture of ethics and integrity is fundamental to our Purpose, to making an impact that matters and becoming the undisputed leader in professional services. The number one action to achieving this Purpose is to stand firm for doing the right thing.
Our NSE Code of Conduct sets out our DTTL Shared Values and Global Principles of Business Conduct. These are critical to our reputation and continued success, and are embedded in everything we do: how we serve clients, how we direct our businesses, how we work together and how we contribute to society. Fundamentally, the reputation of our firm rests on the personal ethics of every Deloitter. Our ethics programme is designed to build trust in our professions and among our professionals, strengthen our reputation and relationships with stakeholders, minimise ethical risk, and help all our people to make the best professional choices. This becomes even more important given our growing and more diverse organisation.
There is an appointed Ethics Leader in the Netherlands, who is responsible for helping our professionals and leaders in our firm to understand what is expected of them, ensuring that they comply, and seeing that there are appropriate consequences for ethical lapses. The Ethics Leader helps our leaders to set an ethical tone at the top and to build a culture of integrity.
Communication is key to building a consultative and “speak-up” culture. Our Chief Quality Officer is - in her role of NSE Ethics Leader - responsible for ethics within the NSE Firm. The NL- and NSE Ethics Leaders are supported by a Deputy Ethics Officer. Furthermore, the NL Ethics team currently consists of two confidential counsellors (‘vertrouwenspersonen’) and will soon be expanded by an extra internal and an external confidential counsellor. The confidential counsellors are tasked with being the first point of contact for reporters, guidance during the process and aftercare, and have a duty of confidentiality according to the law. It’s not their role to find out the truth, but rather to support the reporter in proposing and discussing possible solutions. Employees, suppliers, business relationships, and other parties can also file a report - if they wish anonymously - using Speak Up, our 24/7 hotline that is run by an independent party. Twelve ethics ambassadors (partners and directors) in our businesses help to broaden the scope of the ethics programme, reaching out to all partners and Deloitte professionals, acting as linking pin between the business and the ethics team, and promoting our core values at a business level. On a periodic basis, the NL Ethics Leader reports on ethics issues and trends and the progress on the ethics programme to the NL Executive Board and NL Supervisory Board.
Activities in 2021/2022
In 2021/2022, all newly promoted partners have attended - or will attend - the ‘Leading with Integrity workshop’, an interactive two-hour session that is delivered across the Deloitte network to all our partners around the world to help them drive consistency in the way they lead and build our Deloitte culture. All promoted directors have attended the Masterclass Ethical Leadership to emphasise the importance of setting an ethical tone at the top and building and maintaining a culture of integrity in their new leadership role. 86% of our professionals completed the ‘Ethics refresher’ (existing partners and employees) or the 'Ethics champion' training (new hires). These learnings provide our people with 60 minutes to pause and reflect on the behaviors that are expected, consider ethical dilemmas, and find out more about what happens after a report has been made.
Especially in the last quarter of 2021/2022, we have seen an increase in the number of reported incidents this year (a total of 94 in 2021/2022, compared to a total of 64 during 2020/2021 and 91 in 2019/2020). Although we cannot be sure about the exact explanation, we assume the return to office after COVID contributes to this observation. Furthermore we believe that the increasing reports of sexual misconduct in the Dutch news has put ‘ethics and integrity’ broadly on the agenda. As a direct response to this development, we organised dialogue sessions within our offices to facilitate the conversation with our employees about ethical and unethical behaviour, what do we expect from each other and the channels to report.
In September 2021, we measured the effectiveness of the ethics programme through our annual voluntary ethics survey. Many of our partners and employees across businesses responded to the survey, providing us with a clear view on how they see Deloitte as an ethical employer.
The survey results show that:
There is an increased perception that Deloitte is an ethical place to work (98%, +1%).The overall awareness as well as the knowledge where to report (82%, -3%) unethical conduct has decreased.
More people reported observed or experienced misconduct and there was a strong feeling that their report was addressed. Experienced retaliation also increased.
Most observed or experienced unethical conduct is related to ‘Respect & Fair treatment’.
Leadership has the most important influence on how our people experience ethics. There is important room for improvement for leadership to regularly put ethics on the agenda.
In addition, we relaunched the Values game, a virtual easy-to-use tool that is designed to kickstart conversations about culture, values and ethical dilemmas. It is meant to create awareness and mutual understanding and can be an easy and meaningful way to connect within teams while working remotely.
A total of 94 cases have been reported in 2021/2022. From February – May 31 the number of cases has more than doubled. The strongest increase is in the cases related to (sexual) harassment (nearly a fourfold increase) and to ‘fair treatment and inequality’ which are more than doubled. Obvious reason for this rise is the return to the office and the growing number of (informal) events after a long period of working from home due to COVID. Four cases concerned incidents of alleged discrimination of which one case is still under investigation and one has been concluded ‘unsubstantiated’. The other two cases were related to the COVID policy.
Table 11: Incidents: number of reported occurrence
Fair treatment or inequality
Harassment and sexual harassment
Other or inquiry
Our Ethics Operational Plan 2021-2023 is based on the number and nature of the ethics incidents and results of our ethics survey (see above). The main priorities are:
We need to further stimulate role model behaviour.
We have to pay important attention to creating trust in reporting and mitigating (the risk of) retaliation.
We must increase awareness of our ethics programme and reinforce a strong “speak-up” culture.
Anti-Corruption has always been part of Deloitte’s ethical principles. We are against corruption in all its forms and want to contribute to good governance, economic development, and the improvement of social welfare wherever we do business. As Deloitte, we are committed to make an impact on society, as a role model for positive change and our responsibility is to familiarise ourselves, understand and act in accordance with all relevant policies and laws both in spirit and in intent. The impact of corruption and Financial Crime as a whole is huge and the consequences are global, resulting not only in financial losses but also in criminal behaviour and humanitarian disasters.
The Anti-Corruption programme strategy and objectives are determined by our Anti-Corruption Committee and the progress of our operational plan is regularly discussed within this committee. Members of this Committee are all subject matter experts and relevant stakeholders of the Anti-Corruption programme. Together with our Reputation & Risk Leader, the Committee is responsible for actively overseeing the Anti-Corruption programme.
Our fully implemented and comprehensive Anti-Corruption Framework consists of seven different elements that mitigate the risk of corruption within Deloitte and supports our employees and partners with guidelines to report corruption if needed. These elements include: Governance, Policies, procedures and guidelines, Training & Communications, Risk assessment, Testing & Monitoring, Third Party Due Diligence, Consultation, Incident Response and investigations
Anti-Corruption is fully implemented in our policies, procedures and guidelines. Next to the global policies, Deloitte Netherlands also has to comply with the NSE Anti-Bribery and Corruption policy and applicable legislation.
Activities in 2021/2022
In June 2021 the Anti-Corruption risk assessment was performed at NSE level. In this year’s assessment, senior risk leadership across the business and Geographies of NSE were consulted and actively involved. As procedures are already in place to mitigate the key risk areas, no gaps in controls were identified. The overall results were shared with the Anti-Corruption Committee.
Portfolio Risk Reviews
Furthermore, during the year, Anti-Corruption as a risk was discussed with our Assignment Partners in the Portfolio Risk Reviews. The Assignment Partners are asked to take a critical look at their portfolio concerning the corruption risks and make sure necessary mitigating measures are implemented.
Testing & Monitoring
The Anti-Corruption Framework is tested and monitored yearly. The focus is on two aspects: the operating effectiveness of the Anti-Corruption elements, and process level testing.
Internal Audit (IAF) performed specific internal audit procedures for Deloitte the Netherlands in the period from March 2020 – March 2021. Following the risk assessment no gaps in controls were identified, and the only actions raised related to enhancing guidance and awareness in some areas for ongoing programme enhancement. Other actions focus on the bedding in of existing processes and continuing to increase awareness and reviewing future testing and monitoring activities to stay in line with regulatory and global requirements.
All findings and actions resulting from the internal audit were closed at the beginning of 2022.
In 2021/2022, no incidents of corruption were reported through our internal reporting systems. In parallel, no legal cases were brought forward implicating Deloitte in any (alleged) incident of corruption. Per May 31, 2022, the completion rate of our mandatory anti-corruption training stood at 96%.
Deloitte reported 233 instances (2020/2021: 174) of unusual transactions that we encountered in our work for clients to the Financial Intelligence Unit of Dutch government during the reporting year. By reporting these transactions, Deloitte contributes to the prevention of money laundering and financing of terrorism and complies with the reporting obligations of the Dutch Money laundering and terrorism financing Act (WwFT).
Due to the changing landscape and increase of various legislation in the financial crime area, the Global and NSE Financial Crime Community has been introduced in 2021. The purpose of this community is to exchange knowledge and experience in preventing and detecting financial crime and to secure compliance with legal requirements across our network.
Financial Crime encompasses three pillars being Anti-Corruption, Anti Money Laundering and Sanctions/Trade Controls. In February 2022, Russia invaded Ukraine and this has lead to a range of sanctions imposed on Russia by the US, UK and EU. Deloitte NL has subsequently implemented various initiatives to ensure we do not violate any of these sanctions.
Our ambition is to further develop and expand the existing relationships and enhance the collaboration within the three pillars.
4.4 Privacy and security
Companies gather a considerable amount of data. Making sure that data is safe, is an onerous task. We use the data from our clients to deliver our services and support them in more inclusive and responsive decision-making. Our clients will only trust us with their data if they are convinced that their data is secure with us. The prevention of data leakage is therefore a top priority as data leaks can harm our clients, and our reputation as a trusted business partner, and lead to significant monetary fines. Deloitte follows a well-defined data breach procedure in order to adequately address any data breach.
New Global tools and vendors go through an extensive Data Protection Assessment Service (DPAS) to provide NSE privacy and confidentiality SME’s all the information needed for their approval or non-approval. Local software tools and vendors are assessed through the Global Technology Operating Model (GTOM) process, meaning all relevant Subject Matter Experts (SME’s) will review the application in one meeting from a privacy, security and IT perspective. This way Deloitte only cooperates with vendors that ensure the same level of data protection and confidentiality as Deloitte.
New Assets that Deloitte develops for clients go through the Certify to Sell process which also includes privacy, confidentiality and security assessments. Moreover, to ensure employees operate in a privacy and confidentiality minded manner, privacy and security awareness is at the top of Deloitte’s training agenda. This is reflected in the “Secure the Future” privacy & security training that all employees must complete.
Activities in 2021/2022
Working from home during the COVID-19 crisis has accelerated the demand for new and innovative tooling to connect both with clients and colleagues. For all new tooling, we maintain solid and robust assessment of privacy and data security measures in order to safeguard client and Deloitte data. Our IT and security teams stepped up to the challenge enabling all our practitioners to work from home in safe and secure environments while also offering additional tooling and other resources, thus providing a robust environment for our people, also at home.
Despite our efforts, in 2021/2022 77 data leaks were internally reported. We received no complaints regarding breaches of client privacy or loss of customer data. In three cases, we notified personal data breaches to the supervisory authority in conformity with the legal requirements of the ‘Wet meldplicht datalekken’ (Law on mandatory reporting of data leaks).
One report filed concerned a notebook from a team member involved with the investigation into the purchase of personal protective equipment as commissioned by the Dutch Ministry of Health, Welfare and Sport (VWS) had gone missing. Deloitte has taken its responsibility and has notified both VWS and the Dutch Data Protection Authority of this loss.
4.5 Sustainable procurement
We buy goods and services to operate our business with a total influenceable spend of around €200 million. Our main procurement categories are:
External staffing: our flexible workforce structurally consists of a variety of independent experts. In addition, we have contracts with staffing agencies through which we can employ temporary specialists on demand;
Housing: all our office space is rented;
Mobility: we operate a fleet of approximately 3,500 leased cars and have preferred suppliers for international travel;
Facility services: all our facility services (such as cleaning, security, catering, maintenance) are outsourced; Technology: we purchase hardware, software and IT services to deliver our services.
Due to the nature of our business, most of our suppliers are based in the Netherlands. In the reporting year there were no major changes in our strategic supplier base.
Our procurement activities have both positive and negative impacts. The main positive impact is that we fuel economic activity and growth. Secondly, by maintaining long-term relationships with strategic suppliers, we believe that we are able to grow together, not only economically, but as responsible businesses that are coming up with new solutions to the challenges that we jointly face. Examples of such relationships are our standing relationships with LeasePlan, CBRE and Shell.
On the downside, for certain goods there are risks of undesired activities down the supply chain. These risks can be in the areas of integrity, environmental performance, or human rights compliance.
To ensure that we make the right purchasing decisions, we have implemented due process. Every new vendor must be assessed using our Business Relationship Assessment Tool. After an assessment request has been made, the supplier is subject to a due diligence process for independence issues (Does working with the supplier jeopardise our independence as an (audit) firm?), integrity related issues (Does the supplier have a known case history for corruption, money laundering or other unwanted behaviour?) and other relevant topics (What is the general reputation of the supplier? Is there a known case history regarding breaches of commonly accepted standards?). We maintain a list of preferred suppliers who are fully vetted in our BRAT process.
All suppliers are subject to our General Purchasing Conditions. These govern the relationship between the supplier and Deloitte, and contains – among others - the obligation for the supplier and their subcontractors to adhere to the Deloitte Supplier Code of Conduct. The Code contains provisions around human rights, labour, environment, ethics, and integrity and anti-corruption. In addition, the Code creates the possibility and channels to report suspected breaches of the Supplier Code.
General oversight and support for our procurement process lies with our Procurement team. The Procurement team based in the Netherlands is part of our global procurement team (CoRe). CoRe Procurement manages global and local procurement programmes on behalf of Deloitte member firms. With subject matter experts located around the world, CoRe Procurement oversees our global supplier spend, while leveraging the full capabilities of the Deloitte network to reduce costs, create efficiencies, and improve supplier service levels.
As a large part of our total CO2 emissions are caused by the goods and services that we buy, as part of our WorldClimate programme DTTL has committed to 67% of our suppliers (by emissions) to adopt emission reduction targets congruent with the Paris 1.5⁰ ambition by 2025. The progress against this target is tracked by DTTL.
Activities in 2021/2022
We have put a lot of focus on our strategic suppliers developing Science Based Targets to help them create a strategy to achieve the goals of the Paris Agreement. A part of this is that we are working with our strategic suppliers to have them report their carbon emissions to the Carbon Disclosure Project (CDP).
Furthermore, even though our Supplier Code of Conduct contains a lot of requirements around sustainability, we have analysed multiple ways to embed sustainability in all of the steps, tools, templates and contracts applicable to the procurement process.
Adding to this, we have developed a sustainable procurement team that specialises in creating awareness around sustainability and how to ensure that sustainability aspects are becoming more apparent in our supplier selection, contracts and negotiations.
We ensure that all of our new suppliers are approved by our Reputation and Risk Leadership office after a thorough business relationship assessment. During a supplier assessment, we check whether the new supplier relationship can jeopardise our independence and if the new supplier is known for unethical or illegal behaviour, for example money laundering, human rights violations, or corruption). For high-risk purchases or contracts greater than €150k, there is always involvement from our Procurement professionals. In addition, for certain categories of services, such as IT, there are additional requirements around data security and system integrity. We perform regular checks to confirm that this process is always being followed.
All of our procurement personnel are trained in our WorldClimate ambitions. They are equipped to support our businesses in sustainable decision making throughout the procurement process.
All of our new suppliers are approved by the Reputation and Risk Leadership office through a Business Relationship Assessment.
As our General Purchasing Conditions are mandatory in all our purchasing agreements, we believe the coverage of our Supplier Code of Conduct to be 100%.
We can still improve on implementing more sustainability requirements into our existing contracts. In order to achieve this, we need to connect more with our longer standing suppliers to start the conversation.
In the near future we are working towards an environment where we have more data available to us about our suppliers and their environmental impact. We are looking at ways to evaluate our suppliers through sustainability scores. Based on this, we will work the suppliers to help them achieve the goals set out in the Paris Agreement.
Adding to this, we are developing a sustainable procurement team that specialises in creating awareness around sustainability and how to ensure that sustainability aspects are becoming more apparent in our supplier selection, contracts and negotiations.
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