Principal Financial Group 2023 Sustainability Report: Maintaining an Ethical Culture

Originally published in Principal Financial Group 2023 Sustainability Report

Maintaining an ethical culture

We have built a strong reputation for being an ethical and trustworthy company. That’s why we enforce anti-bribery and anti-corruption practices and policies, and show honesty and integrity as we interact with our customers, business partners, and each other.

Our approach 

Our Ethics and Compliance Program is grounded in our core value of doing what’s right. To maintain high ethical standards, we reinforce the understanding of and adherence to our Global Code of Conduct, related policies, and legal and regulatory requirements across the organization by delivering education, training, and conducting risk assessments.

We gauge our ethical culture by conducting an annual survey among our employees. The Ethical Culture Survey, administered through a well-respected external party, identifies both positive and potentially challenging insights into our corporate culture. This enables us to benchmark our results year-over-year and to compare our results with industry peers and cross-industry participants.

Our actions and performance in 2023 

The 2023 results of the survey reflected our employees’ belief in our commitment to maintain a strong ethical culture, adhering to our Global Code of Conduct and core values, and assuring we do what’s right. The results make clear that our employees understand our policies and procedures and trust that we maintain a “safe to say” environment. When benchmarked against our peer group, Principal consistently scores at or above industry standards on many of the pillars that comprise the survey.

We regularly benchmark our Ethics and Compliance Program through our membership of the Business Ethics Leadership Alliance (BELA), a group sponsored by the Ethisphere Institute, and the Department of Justice Guidance. The Enterprise Chief Ethics and Compliance Officer shares assessment results with executive leadership and the Audit Committee of the Principal Board of Directors.

This marks the 13th time Principal has been recognized for its ethical leadership and business practices since the Ethisphere list launched in 2006.

Recognized as a 2024 World’s Most Ethical Companies® honoree: Ethisphere (December 2023)¹

Alignment with our Global Code of Conduct 

All employees must complete annual training and acknowledgment related to our Global Code of Conduct (Code). The computer-based training (CBT) course covers topics that are contained in the Code. The topics covered rotate on a three-year basis. They include anti- bribery and corruption, human rights and human trafficking, economic sanctions, insider trading, antitrust and competition laws, social media and news media, employee pressure, protecting and using company assets, conflicts of interest, intellectual property, complaint handling, gifts and entertainment, political activity, financial crimes, and whistleblowing.

Topics covered in the 2023 CBT included reporting Code violations, employee pressure, protecting and using company assets, conflicts of interest, intellectual property, and bribery and corruption. Once they complete the training, employees sign an attestation of understanding and acceptance. Every Director and employee of Principal is accountable for following the Code.

In 2023, 99.9% of active employees completed training on our Global Code of Conduct. We used quizzes to test participants’ knowledge of the material and concepts covered in the course.

• 99.9% of active employees completed training on our Global Code of Conduct
• Ranked as one of America’s Most Responsible Companies 2024: Newsweek (December 2023)
• Included in the 2024 JUST 100 and recognized as one of 2024 America’s Most JUST Companies: JUST Capital (December 2023)

The Ethics and Compliance team, Corporate Special Investigations Unit, management, and other compliance personnel, regularly review the effectiveness of the Code by:

• monitoring the Ethics Hotline and reviewing metrics for trends,
• releasing an Annual Report of Investigations to employees via our internal employee website,
• requiring annual Code training for all employees,
• conducting an annual ethical culture survey,
• tracking employee views of ethics and compliance policies on our internal employee website each quarter,
• completing annual risk assessments, and
• reporting quarterly to various compliance areas, which includes closed investigations and outcomes.

Each year we provide Ethical Culture Survey results to leaders and identify areas of strength as well as opportunities for improvement. We also supply suggestions and resources for having regular ethics-related discussions with their teams.

Reporting unethical behavior 

If our employees, customers, or business partners need to report concerns about unethical or fraudulent activity pertaining to Principal, they can do so through the Ethics Hotline by phone (U.S. only) or submit an online reporting form (available globally). Both offer anonymous options where geographically allowed. Anonymous concerns go directly to a third party not affiliated with Principal.

Employees also have the option to report suspicious activity to the Enterprise Chief Ethics and Compliance Officer, the Chief Compliance Officer in their area, the Chief Privacy Officer, the employee relations consultant or Human Resources, or a member of the Corporate Special Investigations Unit. In addition to the Code of Conduct, the methods for reporting suspicious activity are outlined in various Enterprise policies (e.g., the Whistleblower Policy, the Compliance Policy, the Anti-Bribery and Corruption Policy) and are available to employees.

We regularly remind employees about the Ethics Hotline to report suspected fraudulent or unethical activities. In 2023, 100% of submissions to our Ethics Hotline were fully reviewed and investigated.

Every year, representatives from each compliance area work together to produce a consolidated enterprise compliance risk assessment, which identifies key compliance risks across the organization. The 2023 results, which are currently being finalized, will help inform the compliance team’s strategic focus.

Anti-bribery, anti-corruption, and conflicts of interest 

We are committed to supporting international and local efforts to eliminate corruption and financial crimes. To ensure we stay vigilant, we conduct annual anti-bribery and corruption (AB&C) risk assessments.

The Enterprise Chief Ethics and Compliance Officer is accountable for the AB&C Policy and program, and reports bribery and corruption risks to the Audit Committee of the Board of Directors. In 2023, 100% of Board members and executive and senior management teams were provided with materials on AB&C, trends in the industry, and were kept informed of future priorities of our program.

No charges were filed by any regulator against Principal for corruption in 2023.

Read more:

• Anti-Bribery and Corruption Policy
• Anti-Money Laundering Policy
• Global Code of Conduct (PDF)
• Reporting Fraud of Unethical Conduct
• OFAC/Sanctions Policy
• Political Activity Policy

Annual ethics and compliance related trainings

Additional training is provided to targeted employee audiences based on their roles and responsibilities on an ad hoc basis, such as financial crimes training (elder financial exploitation, anti-money laundering, and economic sanctions) as well as anti-bribery and corruption for audiences that have a higher risk of bribery in their work.

Audience/Training Content

• Board of Directors: Global Code of Conduct
• All active employees: Global Code of Conduct
• New leaders: Discrimination, harassment, and retaliation (including sexual harassment)
• New employees: 
  • Making privacy a priority
  • Identifying and preventing fraud
  • Global Code of Conduct
  • Conflicts of interest
• U.S. employees: Discrimination, harassment, and retaliation (including sexual harassment)
• Principal international employees: Anti-bribery and corruption

Additional training is provided to targeted employee audiences based on their roles and responsibilities on an ad hoc basis, such as financial crimes training (elder financial exploitation, anti-money laundering, and economic sanctions) as well as anti-bribery and corruption for audiences that have a higher risk of bribery in their work.

What’s next 

In 2024, we remain focused on benchmarking and ongoing evaluation of our Ethics and Compliance Program, providing employee communications and training on key risk-related topics, and maintaining a pulse on our ethical culture through our annual ethical culture survey.

¹2024 designation is based on results as of August 2023.

To learn more, read the Principal Financial Group 2023 Sustainability Report.

Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Company®. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., member SIPC and/or independent broker/dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392.​

3665773-072024