Governance
Corporate Governance
Ecopetrol Group’s
Governance Structure
(102-18)
Corporate Governance is the set of rules and practices that oversee the decision-making process and the relationships between the governing bodies of the companies under Ecopetrol Group, with a focus on value generation.
The Corporate Governance Model, for its part, establishes the set of rules and practices that oversee the decision-making process between the governing bodies of the Ecopetrol Group, as well as the relationship between the companies that comprise the Group, to foster balance between the activities undertaken by the companies under Group and monitored by Ecopetrol S.A., to ensure the proper operation of the companies and the Group.
The Corporate Governance System provides a framework for action that facilitates the management and decision-making process of the governing bodies (General Shareholders’ Assembly, Board of Directors, and Senior Management16) and promotes the materialization of synergies between Ecopetrol and the companies under the Group.
Regardless of Ecopetrol’s shareholding level, the following governance instruments help articulate the Group’s relationship:
General Shareholders’ Assembly.
Financial and legal compliance guidelines based on the Group relationship and subordination.
Business unit guidelines and perspectives, and segments determined by the members of the Board of Directors or equivalent body, in line with Ecopetrol’s powers according to the level of shareholding.
16. People of the highest hierarchical level in the administrative or corporate area of the company. They are responsible for the ordinary course of business of the company and are in charge of devising, executing, and controlling its objectives and strategies. Also included are the corporate or general secretary and the Internal Auditor.
On the other hand, for companies whose stakes are shared, the following instruments contribute to articulating Ecopetrol’s role:
Ecopetrol Senior Management Committees
Objectives, indicators, and goals of the companies within the framework of the Ecopetrol Group’s strategy
Code of Good Governance / The Ecopetrol Group’s Corporate Governance Guide / Instructions for governing bodies
Group Relationship Model (management, control, and service activities)
Guidelines and guides issued by different Ecopetrol units or areas applicable to the Ecopetrol Group
Decisions and Attributions Matrix (applicable to the Ecopetrol Group / Subordinates)
Service provision framework agreements
Ecopetrol S.A.’s
Governance Structure
(102-18)
Ecopetrol S.A.’s governance structure is aimed at ensuring the implementation of the corporate strategy, monitoring and evaluating risks and opportunities, and making informed decisions consistent with the Company’s long-term goals.
Board of Directors
Roles and Responsibilities of the Board of Directors
(102-26)
The Board of Directors is the highest governing body at Ecopetrol.
In accordance with the provisions set forth in its bylaws, the Board establishes and efficiently implements Ecopetrol Group’s strategic direction and acts in accordance with the rights of shareholders and the sustainability and growth of the Company. All of the above, pursuant to the provisions established in the Internal Regulations of the Board of Directors, by virtue of which the directors shall perform their duties in good faith, in an independent manner, and with due diligence.
Performance of the Board of Directors, information management, and decision- making process
(102-18)
A total of
30 sessions
were held in the respective period, broken down as follows:
Twelve
12
ordinary meetings,
Of the 30 meetings,
Fifteen
15
extraordinary meetings,
27 (90%)
were held virtually.
In three
3
of them, deliberations and decisions were made by votes.
The remaining
10%
were voting sessions.
The deliberations of the Board of Directors took place with a number equal to or greater than five (5) of its members, and the decisions were made unanimously.
Ecopetrol has internal mechanisms and deadlines for the prior submission of basic information regarding the matters to be discussed by the Board to allow them to learn and prepare the respective session in advance. The decision-making process within the Board of Directors guarantees informed decision- making in each of the stages, considering the powers of the different instances so that their management efforts can focus on strategic issues.
The Committees of the Board of Directors are bodies that support the discussions conducted by the Board of Directors. The General Counsel organizes the topics according to the corresponding matter and assigns them to the different Support Committees of the Board of Directors according to their competence, in line with the provisions set forth in the corresponding internal regulations. These Committees are created and appointed by the Board itself and at least one of the members of each committee must be independent. The main objective of these Board Committees is to review the issues that the Board of Directors should be aware of in advance and issue recommendations.
Relevant decisions made by the Board of Directors
(102-18) (102-31) (102-33) (102-34)
In 2021, the Board of Directors, through its Committees, continued focusing its management efforts on analyzing matters pertaining to the short, medium, and long-term strategy, in order to ensure Ecopetrol’s sustainability as follows:
Audit and Risk Committee (14 sessions)
- Evaluation of the Statutory Auditor, the Internal Auditor, and the Committee
- Approval of the General Internal
- Audit Plan
- Business Risk Map
- Reserves
- Annual individual and consolidated financial statements and dividend distribution project
- Coverage policy
- 20F
- Financing for the energy transition strategy
- Calculation of the 2020 Variable Compensation
- Monitoring of actions undertaken at Ecopetrol and in the other companies under Ecopetrol Group pertaining to their internal control system, risk management system, and ethics, corruption, and fraud reports
- Follow-up on judicial proceedings
- Issuance and Placement Regulations applicable to the Third Round of the Common Shares Issuance and Placement Program
- Cybersecurity
Compensation, Nomination, and Culture Committee (8 sessions)
- Salary increase
- Collective Labor Convention
- Balanced Management Boards (TBG, by its Spanish acronym)
- President evaluation
- Aid for the new work scheme in the “new normality” (Telework)
- Long-term incentives
- CEO Succession Policy
- Cultural Transformation
- People Retooling
- Diversity and Inclusion
- Succession Program and Talent Maps
- 2022 Variable Compensation Plan
- Analysis of the first level organizational structure (areas that depend directly on the Presidency of Ecopetrol)
Business Committee (17 sessions)
- Evaluation and approval for the acquisition of 51.41% stakes in Interconexión Eléctrica S.A. ESP (ISA), owned by the MHCP
- Follow-up on the investment in Permian and release of resources for the 2022 activity plan
- 2022-2024 Financial and
- Investment Plan
- Incorporation of Ecopetrol Singapore Pte Ltd
- Contribution in kind to Cenit’s capital stock by transferring Ecopetrol assets associated with the transportation segment
- Ronda Colombia 2021
- Divestment of strategic assets
- Release of resources for
- project execution
- Update of the Unconventional
- Reservoirs Strategy
Corporate Governance and Sustainability Committee (7 sessions)
- Board of Directors Evaluation
- Integrated Report
- Annual Corporate Governance Report
- Statutory Reform
- Measures to guarantee the protection of the rights of minority shareholders for the 2021 General Assembly
- Candidates to the Board of Directors
- Succession Policy for the members of the Board of Directors
- CEO Succession Policy
- TESG in the industry
- Competencies Matrix and Experience of the Board of Directors
- Board of Directors Diversity and Inclusion Policy
- Human Rights and Business trends
- and strategy
HSE Committee (3 sessions)
- 2020 Financial Statement and management focus on safety, health, and environment in 2021
- Carbon neutrality Roadmap
- Progress in the vaccination schedule and health management (COVID-19)
- Safety and environmental performance
- Circular economy
Technology and Innovation Committee (3 sessions)
- STI Strategy
- Cybersecurity Strategy
- Follow-up on the Technology and Innovation Plan
- Follow-up on Digital Technology
- Follow-up on the Digital Agenda
Special Committee (8 sessions)
On March 25, 2021, the Board of Directors created the Temporary Special Committee to discuss the assessment of Interconexión Eléctrica S.A. ESP (“ISA”).
The Committee met to review the main points of analysis of ISA’s assessment. The activities of the Committee, pursuant to its mandate, were conducted under the assessment completed by Ecopetrol’s team together with the following external financial advisors hired by the Company for this purpose: Banca de Inversión Bancolombia S.A., Corporación Financiera, and HSBC Securities USA Inc.
Internal controls and risk management
(102-30)
Integrated risk management and internal control at Ecopetrol adheres to the ISO 31000 standard, COSO (Committee of Sponsoring Organizations of the Treadway Commission), COBIT (Control Objectives for Information and related Technology), SOX laws (Sarbanes-Oxley Act), and the Foreign Corrupt Practices Act (FCPA).
Ecopetrol’s Internal Control System places self-control as a fundamental pillar, understood as the attitude of undertaking daily tasks with self-criticism and self-management, and promoting transparent and effective performance to achieve the Company’s goals. This is an exercise conducted by all people at Ecopetrol and supervised by the Board of Directors through the Audit and Risk Committee of the Board, as the highest control body responsible for overseeing the management and effectiveness of the Internal Control System.
As part of the self-control and supervision exercise, certifications and self-assessments are conducted periodically to determine the effectiveness of the controls, the existence of additional risks, relevant risk issues, mitigation measures, and the monitoring of key risk indicators (KRIs).
Conflicts of Interest
(102-25)
By means of its Bylaws, the Code of Good Governance, the Internal Regulations of the Board of Directors, the Code of Ethics and Conduct, and the Instructions for the Management and Prevention of Conflicts of Interest and Ethical Conflicts, Ecopetrol defines the policy and specific internal procedures for knowledge management and the administration and resolution of the situations laid out in the conflicts of interest regime.
The members of the Board of Directors, the CEO, and all Ecopetrol employees have the duty to disclose the conflict situation to which they are exposed. Similarly, they must disclose the direct or indirect relationships amongst them, or with Ecopetrol or other companies under the Group, or with suppliers, clients, or any other stakeholder group, which may give rise to conflicts of interest or affect the decision- making process and the fulfillment of tasks.
In 2021, the Company received
176 reports
related to potential conflicts of interest.
Members of the Board of Directors
(102-22) (102-23) (102-24) (102-25)
Ecopetrol’s Board of Directors is made up of
9
main members,
without alternates, elected through the electoral quotient system by the General Shareholders’ Assembly for periods of two (2) years, who may also be re-elected indefinitely.
The composition of the Board of Directors meets the following legal and statutory criteria, as well as best Corporate Governance practices:
Profile
(i) international knowledge or experience in the activities pertaining to the Company’s corporate purpose and/or knowledge and experience in the field of industrial and/or commercial, or financial activities, business risk, stock market, administrative, legal, or related sciences,
(ii) more than 15 years of professional experience;
(iii) good reputation and recognition for their professional competence and integrity, and
(iv) not partake simultaneously in more than five (5) boards of directors of different corporations, including Ecopetrol.
Independent
The majority of the members of the Board of Directors shall be independent.
Experts
At least one (1) of the members must be a financial expert, in accordance with the applicable regulations of the stock market of the United States of America.
Gender, diversity, and inclusion
Gender, diversity, and inclusion criteria will be considered in the composition of the Board of Directors, with at least one (1) of the nine (9) members being a woman. Gender, diversity, and inclusion will, in any case, adhere to the profile requirements of the members of the Board.
Nomination and Selection of the Board of Directors
(102-24)
The list of candidates is presented by the Nation (Colombia) through the MHCP, in its capacity as Ecopetrol’s majority shareholder. Notwithstanding the foregoing, the other shareholders have the same right to submit alternative options to the proposal presented by the majority shareholder.
However, the members of the Board, once elected, shall equally represent all shareholders, and shall therefore not act in the interest of particular shareholders or shareholder groups. In accordance with their fiduciary duties and obligations, the members of the Board perform their duties in good faith, independently, and with due diligence and caution, always ensuring that their decisions are in the best interest of Ecopetrol.
Table 28.
Members of the Board of Directors
Members of the Board of Directors
(102-22) (102-23) (02-25) (405-1)
| Name | Seniority on the Board of Directors | Committees in which he/she participates | Attendance at committee meetings (%) | Attendance at Board of Directors meetings | Does he/she own Ecopetrol S.A. | Other boards that they partake in | |
|---|---|---|---|---|---|---|---|
 | Carlos Gustavo Cano Sanz Independent President of the Business Committee | 5 years (member since 2017) |
|
| 100% | No | Minka S.A.S. |
 | Hernando Ramírez Plazas Independent President of the HSE Committee | 4 years (member since 2018) |
|
| 96% | No | N/A |
 | Cecilia María Vélez White Independent | 1 year (member since 2021) |
|
| 95% | Yes |
|
 | Esteban Piedrahíta Uribe Independent President of the Corporate Governance and Sustainability Committee | 2 years (member since 2019) |
|
| 95% | Yes |
|
 | Luis Santiago Perdomo Maldonado Independent President of the Special Committee | 2 years (member since 2019) |
|
| 100% | No | Mineros S.A. |
 | Sergio Restrepo Isaza Independent President of the Audit and Risk Committee | 2 years (member since 2019) |
|
| 100% | No | President of the Board of Directors at Grupo BIOS S.A.S. Member of the Board of Directors at:
|
 | Juan Emilio Posada Echeverri Independent President of the Compensation, Nomination, and Culture Committee | 2 years (member since 2019) |
|
| 100% | No |
|
 | Germán Eduardo Quintero Rojas | 2 years (member since 2019) |
|
| 80% | No | Financiera de Desarrollo Nacional (FDN) |
 | Luis Guillermo Echeverri Vélez Independent President of the Board of Directors President of the Technology and Innovation Committee | 2 years (member since 2019) |
|
| 100% | No |
|
Fuente: Secretaría General y soporte a Presidencia
Table 29.
Age range members Board of Directors
Age range members Board of Directors
(405-1)
1 (11%)
Older than 70
6 (67%)
Between 60 and 70
1 (11%)
Between 50 and 60
1 (11%)
Between 40 and 50
Source: Secretary General
Collective Knowledge of the Board of Directors
(102 -27)
The members of the Board of Directors have extensive experience and knowledge in a variety of areas, allowing them to make informed decisions and bring different and innovative perspectives to the table.
Table 30.
Experience Board of Directors
Experience Board of Directors
| Energy industry and/or energy transition | |||||||||
| Administration, Senior Management, and/or Leadership | |||||||||
| Government affairs and/or public policy | |||||||||
| Financial and/or Stock Market | |||||||||
| Business risk management | |||||||||
| Human Resources and/or Talent Development | |||||||||
| Legal and/or corporate governance | |||||||||
| Technology and/or Innovation | |||||||||
| Health, Safety, and/or Environment | |||||||||
| Sustainability | |||||||||
| Business strategy and/or project management |
Fuente: Secretary General
Ecopetrol is a Company operating in a changing environment that presents permanent challenges at a strategic and operational level. For this reason, the members of the Board of Directors undergo constant training on emerging trends, soft skills, and issues associated with the Company’s management of risk.
In 2021, the Board of Directors participated in the following training sessions:
Discussion about compliance, free competition, and data protection led by the Superintendent of Industry and Commerce, Andrés Barreto González.
Participation in the Ecopetrol Virtual Customer Day, together with IHS Markit, where they analyzed the challenges and opportunities faced by Ecopetrol in its efforts toward zero emissions.
Discussion on the risks identified by Miller & Chavaliers and by Deloitte.
Virtual courses on cybersecurity and the Code of Ethics and Conduct.
(102 -28)
The Company implements the following evaluation mechanisms for its Board of Directors:
Self-assessment (qualitative)
Quantitative evaluation by management indicators
Independent evaluation (external)
Peer evaluation (qualitative)
The 2019 and 2020 results of a structural and formal analysis of the performance and corporate governance policies adopted by the Board of Directors at Ecopetrol as a collegiate body were received in 2021 The evaluator considered the following the best practices for the optimal operation of a board of directors:
- Composition
- Responsibilities of the Board of Directors
- meetings
- Committees
- Internal information management
- External communications
- Interaction
- Agenda
- Discussion and decision making, and
- Strategic goals
The evaluation results were positive and showed that the performance of the Board of Directors is higher than the international standards assessed.
Remuneration of the members of the Board of Directors
(102-35) (102-36)
The Directors are not entitled to any kind of variable remuneration.
The fees of the Directors for attending the meetings of the Board of Directors and/or the Support Committees are set by the General Shareholders’ Meeting, which to date, are equivalent to six (6) current legal monthly minimum wages17, corresponding to COP 5,451,156 in 2021 for each session held by the Board of Directors or the Committees of the Board of Directors. The General Shareholders’ Meeting may set the fees in another unit of value, considering the nature of the
The total amount of fees paid to the Board of Directors in 2021 was COP 3,756,689,199.18
17. According to the decision recorded in Minutes 026 of 2012 of the General Shareholders’ Meeting.
18. Of this amount, COP 117,805,449 correspond to the payment of fees for sessions held in 2020.
Remuneration of the members
of Senior Executives
(102-35) (102-36)
The compensation policy is designed to offer competitive compensation, with reference to the mining- energy market, in order to attract and retain the best talent to guarantee the Company’s sustainability.
To monitor Ecopetrol S.A.’s position in relation to the reference market, a wage competitiveness study is conducted every year by a firm specializing in a quantitative methodology for assessing positions, best compensation practices, and organizational issues. Based on the conclusions of the study, actions are reviewed and defined to offer competitive compensation to attract and build the loyalty of the required talent according to Ecopetrol’s Strategy and needs.
As for the compensation of Senior Executives, the comparison is made against a select market made up of business groups and/or large domestic companies to monitor the level of competitiveness of Senior Executives at Ecopetrol S.A.
(102-36) (102-37)
The environmental, social, and governance elements are identified by means of the materiality assessment, which are a priority for the Company and for the stakeholders. They are the underlying factor of the corporate strategy for Value Generation with TESG. The variable remuneration of Senior Executives is subject to their effective management of said strategy, including prioritized TESG elements.
As mentioned in the compensation section, the main components of Total Compensation at Ecopetrol are fixed compensation, variable compensation, and benefits.
(102-35)
The CEO’s total compensation at Ecopetrol S.A.’s consists of an estimated ratio of
40% fixed compensation and
60% variable compensation.
The CEO’s short-term variable compensation is subject to roughly 70% compliance with the annual business results reflected in the balanced management and scorecard (TBG, by its Spanish acronym) of the Group, which includes financial (Operating Cash Flow, Total Unit Cost, execution of the Investment Plan and the optimization thereof, among others) and sustainability metrics. Long-Term Incentives (ILP) consider three-year extraordinary business metrics, where priority is given to the strategic focuses of the Group.
(102-38) (102-39) (WEF 18)
In 2021, the fixed compensation of the CEO was
7.99 times
the average fixed compensation of a company worker, and a general salary increase of
3.31% was allocated to all workers.
Ethics, Compliance,
and Transparency
Ecopetrol and its Group have a Comprehensive Policy that includes ethics and transparency as its fundamental pillars: “We frame our actions around ethics and transparency, hence, we have zero tolerance for acts that constitute fraud, corruption, bribery, money laundering, the financing of terrorism, and violations of the FCPA, in compliance with national and international laws applicable.” The same is stated in Article 46 of Ecopetrol S.A.’s bylaws. In addition to the foregoing, the “Always Ethical” principle is included as part of the Declaration on Culture, which implies, among others, acting with integrity at all times and following the guidelines of the Code of Ethics and Conduct.
Ecopetrol’s ethics and compliance strategy arises from the Compliance Program, which is designed to ensure the ethical and comprehensive behavior of senior executives, workers, beneficiaries, contractors, suppliers, partners, and other related parties by assuming special accountability for the internal control of the company. The Code of Ethics and Conduct is the pillar of the Compliance Program.
The Code expressly rejects money laundering, the financing of terrorism, fraud, bribery, and corruption in all its formats (violations of the FCPA, transnational bribery, gifts, entertainment and hospitality, conflicts of interest, facilitation payments), as well as lobbying, political contributions, antitrust and anticompetitive practices, among others. Unethical conduct is not tolerated.
The Code of Ethics and Conduct also contains superior guidelines of mandatory application that specifically include the rejection of any form of discrimination, social responsibility, and respect for Human Rights, and the rejection of sexual harassment in the work environment.
In addition, the Compliance Program also adheres to the laws, regulations, guidelines, and best practice manuals for the fight against corruption, fraud, bribery, money laundering, and the financing of terrorism.
19. Anti-Fraud and Anti-Corruption Manuals, Manual for Managing the Risk of Money Laundering (ML) and the Financing of Terrorism (FT); Internal Control System Manual for the Ecopetrol Group; Manuals for the Management of Contracts and Agreements; Instructions for the management and prevention of conflicts of interest and ethical conflicts; Guide for handling Gifts, Courtesies, and Hospitality; Guide for the Prevention of Corruption in the Negotiation of Lands and Easements; Guide for the prevention of compliance risks in the process of new businesses at Ecopetrol S.A.; Risk Management Guides in the Ecopetrol Group; Guide for the preservation of internal order and decision-making by superiors; Procedure for managing ethics and compliance issues, including applicable actions for violating the Code of Ethics and Conduct; Procedure for Addressing the Congress of the Republic; Procedure for the Planning, Authorization, and Subscription of Sponsorships and the Acquisition of Promotional Materials, among others; Procedure for managing social, environmental, and/or relational investment projects.
Ethics and compliance
training and communication
training and communication
Virtual training for workers
97.5%
of Ecopetrol employees took the course on the new Code of Ethics and Conduct that was launched in September 2021;
Risk Management and Internal Control Course:
99.7%
of employees.
Fiscal Control and Relationship Course:
97%
of recipients.
Streaming of Charlas e+ Conocimiento
A total of
5,874 connections
were registered in the talks broadcasted on the following topics:
- Fight against bribery
- Prevention of money laundering and the financing of terrorism
- Free competition
- Risk management and culture
- Fraud prevention
- Corruption
- Domestic violence
- Sexual harassment in the workplace
- Foreign Corrupt Practices Act – FCPA
Ecopetrol also streamed the session known as “Let’s explore the Single Evidence Registry (RUE, by its Spanish acronym) together,” with 341 connections.
Specialized training
Employees
In the training courses, 7,220 asistencias participants were registered:
- Update to the Code of Ethics and Conduct and the compliance program;
- Conflicts of interest;
- The Public Officer regime;
- Collective initiatives;
- Anticompetitive and monopolistic practices;
- Sexual harassment20;
- Due diligence and money laundering;
- Gender equality;
- Risks, opportunities, and controls;
- Stock trading and skills;
- Information ownership, responsibility, and security;
- Facilitation payments;
- Cartagena Refinery Ethics Seminar;
- Information Technology controls;
- Preparation in the processes under the Quality Management System audit conducted by Icontec;
- Training for workers holding critical roles on the general issues of the Integrated Risk Management System (hereinafter SRI, by its Spanish acronym);
- Induction on the Internal Control System (SCI, by its Spanish acronym) to the critical positions of the different areas (HSE, EPP, VGS).
Particularly on the topic of risk management,
45 training courses
were taught to 10,197 people,
including the following topics: “How to deal with risk?”, “What is the Integrated Risk Management System?”, “What is risk analysis for work execution?”, “Hazard and risk analysis and evaluation”, and “Procurement risks”, among others.
20. In partnership with the ICBF (Colombian Family Welfare Institute).
Ethical Mentors
100% (68) of ethical mentors were trained on the following topics,
and they replicated that information
2,538 times
in their respective areas:
- Update to the Code of Ethics and Conduct;
- Instructions on conflicts of interest;
- Collective initiatives;
- Facilitation payments;
- Anticompetitive and antitrust practices;
- Integrated risk management system – SRI;
- Information ownership, responsibility, and security;
- Sexual harassment;
- Participation in politics;
- ML/FT;
- Manual for the LA/FT/FPADM (money laundering, the financing of terrorism, and weapons of mass destruction) self-control and risk management system
Board of Directors and Senior Executives
The Board of Directors was trained in:
The following matters were discussed with Senior Management at the Executive Committee:
- Code of Ethics and Conduct;
- Inappropriate behaviors in work settings during
- the pandemic;
- Conflicts of interest and ethical conflicts;
- PACI Collective Initiative;
- Facilitation Payments;
- Discrimination;
- Anti-competitive and anti-trust practices, free competition;
- Sexual harassment;
- Information leakage;
- Share trading;
- Inabilities applicable to Public Officers;
- Participation in politics;
- Manual for the LA/FT/FPADM self-control and risk management system;
- CGR Citizen and Environmental Participation; and
- Politically Exposed Persons (PEPs).
Contractors, allies, suppliers, partners
All Ecopetrol contractors, suppliers, allies, and partners are recipients of the Company’s Code of Ethics and Conduct.
100% of the partners and 100% of the suppliers/contractors have acknowledged in writing that they are aware of said information and that they are implementing said code.
Training was imparted to
100% of Ecopetrol's contractors, suppliers, allies, and partners
using communication pieces on the following topics:
i) Transparency; ii) sexual harassment; iii) Ethical behaviors against COVID; iv) Integrity APP; v) conflicts of interest; vi) bribery; vii) free competition; viii) fraud; ix) ethics hotline; x) Code of Ethics and Conduct, among others; and they were handed the Ethics and Compliance Kit21, in order to encourage the creation and strengthening of compliance programs.
21. The Ethics and Compliance Kit contains: the Code of Ethics and Conduct, Guide for handling gifts and courtesies, Instructions on conflicts of interest, inabilities, incompatibilities, and prohibitions, compliance program, Anti- corruption Manual, Anti-Fraud Manual, LA/FT/FDPM Manual
Community
A total of
14 workshops
on the Code of Ethics and Conduct were held with Ecopetrol’s communities in different regions<sup title=”Piedemonte, Orinoquía, and Sur regional units.”>22</sup>. They counted with the participation of
358 attendees,
including children from rural schools, who were taught Ecopetrol’s Code of Ethics for children.
Training sessions on the Prevention of Sexual Harassment were offered in collaboration with the ICBF, with 127 participants from the regional units23. Training on human rights and Ecopetrol’s Code of Ethics and Conduct was also imparted to the military forces.
With regard to the Code of Ethics and Conduct,
77 communications pieces
were prepared on the following topics and received electronically
1,012,334
times:
- Code of Ethics and Conduct;
- Compliance Program;
- Prevention of LA/FT/FPADM;
- Bribery; v) Facilitation Payments;
- Conflicts of Interest;
- Disciplinary Capsules, among others,
Thus covering
100% of Ecopetrol workers, contractors, customers, suppliers, allies, and partners.
Comunidad en Práctica (Community in Practice) received 1,557 visits throughout the year, for a total accumulated of 7,252. Materials were distributed on the FCPA, compliance risks, LA/FT/FPADM, bribery prevention, conflicts of interest, sexual harassment, internal ethics and compliance regulations, among others.
22. Piedemonte, Orinoquía, and Sur regional units.
23. Middle Magdalena, Northern Santander, Arauca, Meta, Putumayo, and Northern Regional Unit.
Transparency
Committed to an ethical and transparent behavior, Ecopetrol has established guidelines to steer the expected behavior of its employees and other stakeholders. Ecopetrol strives to stay ahead of global trends and best practices to ensure that its actions in the value chain and in the relationship with its stakeholders are always based on transparency and trust.
(102-16)
Below are Ecopetrol’s ethical principles:
Integrity
Responsibility
Respect
Commitment to life
These principles are enshrined in the Code of Ethics and Conduct, which is approved by the Board of Directors. This includes the behavioral rules and standards expected of the following persons:
- Members of Boards of Directors and workers at Ecopetrol S.A. and its Business Group.
- All natural or legal persons who have a relationship with the Company, including:
- Beneficiaries
- b. Shareholders
- Contractors
- Suppliers
- Agents
- Partners
- Clients
- Allies (including Joint Ventures)
- Bidders
- The personnel and firms hired by the contractors to execute
- the activities agreed with the Company
The Commitment to Transparency survey, where parties ratify the Code of Ethics and Conduct and their commitment to it every year, achieved historical results with a 99.42%. participation rate.
(205-2) (WEF 4)
Ecopetrol guarantees the awareness and implementation of the Code by its recipients by asking them to sign the following documents:
- The Statement of Information and Responsibilities of the members of the Board of Directors, where they commit to “learn and apply (.) the Code of Ethics”.
- The Commitment to Transparency, whereby workers and senior management annually ratify their awareness of the Code and their commitment to comply with it.
- The ethical clause in the contracts and agreements, whereby contractors, suppliers, allies, and Joint Ventures affirm the following:
- Their awareness, commitment, and implementation of the Code of Ethics and Conduct, as well as the ethical and anti-corruption guidelines governing Ecopetrol.
- Their commitment to act with transparency and to report any violation of ethical principles via the ethics hotline.
- Their obligation to keep records and report them in accordance with accounting standards, with all transaction details.
- To no incur in conflicts of interest.
- Facilitation payments, gifts, promises, or other advantages, whether directly or through any other person or entity, for the use or benefit of any public officer, are prohibited.
- Training of third-party personnel on Ecopetrol’s ethical provisions.
- Right to audit compliance with anti-corruption regulations by Ecopetrol’s counterparties.
- Contract termination for breaching the provisions set forth in the ethics and transparency clause.
- Related parties must also sign the following formats: i) prevention of money laundering and the financing of terrorism; ii) commitment to contractual integrity. It is worth mentioning that these clauses and formats are also signed by our security service providers.
- Regular training and instruction on the code for
- board members, workers, Joint Ventures, contractors, and others.
The Company encourages outstanding ethical behavior by choosing Ethical Mentors in all areas, which is the recognition of workers who closely adhere to the principles set forth in the Code of Ethics and Conduct. Furthermore, Ecopetrol directly and personally acknowledges each of the workers who sign the Commitment to Transparency and grants them an academic certificate from the Ecopetrol University for having successfully completed ethics and transparency related courses.
Table 31.
Code of Ethics and Conduct
Code of Ethics and Conduct
| Stakeholder group | Scope of the Code of Ethics and Conduct (%) | Written/digital acknowledgment of the awareness of the Code of Ethics and Conduct (%) | Training on the Code of Conduct (%) |
|---|---|---|---|
| Employees | 100 | 99 | 100 |
| Contractors and suppliers | 100 | 100 | 100 |
| Subsidiaries | 100 | 100 | 100 |
| Joint ventures24 | 100 | 100 | 100 |
Source: Corporate Vice Presidency of Compliance
24. As of 10% ownership.
Ecopetrol provides an Ethics Hotline on its website – available to workers, contractors, suppliers, clients, allies, business partners, and other third parties, which allows them to establish communication and receive advice by formulating issues (from the recipients about how to act in compliance with the code of ethics) and submitting queries (due diligence procedures), as well as reporting potential violations of the Code of Ethics and Conduct.
(102-17) (WEF 4)
Ecopetrol cuenta con la Línea Ética – disponible para trabajadores, contratistas, proveedores, clientes, aliados, socios de negocio y otros terceros a través de su página web que permite comunicar y obtener asesoramiento mediante la formulación de dilemas (dudas de los destinatarios del código de ética en el actuar conforme al mismo) y consultas (procedimientos de debida diligencia), así como para reportar posibles transgresiones al Código de Ética y Conducta.
The Corporate Vice-Presidency of Compliance is responsible for handling the cases registered in the ethics hotline by using the procedure for the management of ethical issues. This is a corporate channel operated by an independent international company, thereby providing total transparency in the process 24/7, in Spanish, English, and Portuguese all year round.
At Ecopetrol and its Group, there is zero tolerance for retaliation against the persons who report acts contrary to the Code of Ethics and Conduct; for which, the Company ensures:
Anonymity
Confidentiality of information
Data Protection
Possibility for the reporter to follow up on the complaint
Timely response
The Ethics Hotline is disclosed to 100% of the workers, 100% of suppliers and contractors, and to the communities in the areas of operation of the Company, by implementing the above-mentioned mechanisms.
The results of the 2021 Commitment to Transparency Survey show that
99.6% of workers
are aware of the ethics hotline.
The following channels are available to access the Hotline:
International Line
(Free International Prefix) 018009121013
National Line in Bogotá
+573103158600 extension 43900
In 2021,
580 issues and
424 queries
were received through the Ethics Hotline, of which,
99% were processed in 2021
and
100% were handled on time.
The queries addressed were mainly about due diligence by the counterparts, form reviews, and ethics and compliance clauses. The issues were mostly associated with kinship between Ecopetrol workers or applicants with contractor personnel and their relationship with previous jobs.
(205-3) (WEF 4)
In 2021, the following reports related to possible violations of the Company’s Code of Ethics and Conduct were received:
Table 32.
Report status
Report status
| Report status | Number |
|---|---|
| Reports under evaluation | 93 |
| Unconfirmed violation reports | 69 |
| Confirmed violation reports | 30 |
| Total Reports | 192 |
Source: Corporate Vice Presidency of Compliance
Table 33.
Report topics
Report topics
| Report status | Number |
|---|---|
| Conflicts of interest/bribery/corruption | 35 |
| Violation of rules and procedures | 80 |
| Disrespect, mistreatment, or hostile environment | 9 |
| Discrimination | 0 |
| Sexual harassment | 4 |
| Other | 2 |
| Total | 130 |
Source: Corporate Vice Presidency of Compliance
Table 34.
Breaches related to report topics
Breaches related to report topics
| Violaciones relacionadas con: | Number |
|---|---|
| Conflicts of interest/bribery/corruption | 2 |
| Violation of rules and procedures | 24 |
| Disrespect, mistreatment, or hostile environment | 0 |
| Discrimination | 0 |
| Sexual harassment | 2 |
| Other | 2 |
| Total | 30 |
Source: Corporate Vice Presidency of Compliance
(102-17) (205-3) (WEF 4)
As shown in table 34, 30 violations of the Code of Ethics and Conduct were identified in 2021, which were justified, and for which the following actions were taken:
17 dismissals
within the Company
16 notifications
to the Disciplinary Control Management
Two (2) cases
referred to the Attorney General’s Office
Three (3) reports
to the Financial Information and Analysis Unit (UIAF, by its Spanish acronym)
Four (4) preventive ethics conversations
(102-17) (205-3)
None of the verified issues were related to bribery, facilitation payments, FCPA violations, financial fraud, or events that affect the accounting or reasonableness of the Company’s financial statements.
Neither Ecopetrol, nor the natural persons acting on behalf of the Company, were sanctioned or investigated by external authorities in relation to acts of corruption, bribery, fraud, or FCPA violations.
Anti-corruption
(102-16) (205-1)
Ecopetrol S.A. approaches ethics and transparency from a zero-tolerance standpoint. For this reason, the Company has an Anti-Corruption Policy applicable to the Ecopetrol Group, which addresses issues such as bribery and provides guidelines on donations, sponsorships, and other contributions. In 2021, 100% of the Company’s operations were evaluated for corruption-related risks.
In the last four (4) years, no investigations or sanctions were filed against the Company for acts of bribery and corruption.
(102-16) (205-3) (WEF 4)
To ensure complete accountability to its stakeholders, and awareness of the leadership role that the Company plays in the country and in the sector, Ecopetrol S.A. discloses the following information related to acts and behaviors defined in its Code of Ethics and Conduct.
Ecopetrol S.A. has not incurred any sanction or made any agreement with the authority to avoid the imposition of sanctions in the last four (4) years, nor is it currently involved in any process related to anticompetitive practices.
(206-1)
An investigation conducted by the Superintendence of Industry and Commerce related to anti-competitive practices concluded in 2021, with the Superintendence determining that neither Ecopetrol nor its workers conducted practices contrary to free competition. However, it ordered Ecopetrol to structure and/or strengthen an alert system to identify possible infractions against the free economic competition regime in its business activities, by means of the various actions deployed in different parts of the national territory. Also, to communicate the decision to their respective contractors in the region to warn them about these situations.
(406-1) (WEF 20E)
There were no cases of discrimination in 2021 (race, color, sex, religion, political opinions, nationality, social origin, age, disability, immigration status, HIV condition, gender, sexual orientation, genetic predisposition, lifestyle, among others), therefore, it was not necessary to undertake any repair plans.
Table 35.
Operations assessed for risk of corruption
Operations assessed for risk of corruption
(205-1)
| Operations evaluated in relation to corruption risks | Unit of measurement | 2021 |
|---|---|---|
| Number of operations | # | 43 |
| Percentage of operations | % | 100 |
Source: Corporate Vice Presidency of Compliance
Conflicts of interest
At Ecopetrol, the concept of Conflict of Interest goes beyond the definitions in the Law, and also encompasses any action or circumstance that may imply a conflict of interest or that subtracts objectivity, fairness, independence, or impartiality from a situation, due to private interests or decision-making in one’s own benefit or that of a third party and/or to the detriment of Company interests.
Ecopetrol defines the specific internal policies and procedures to raise awareness, manage, and solve situations related to the conflict of interest regime by means of its Bylaws, the Code of Good Governance, the Internal Regulations of the Board of Directors, the Code of Ethics and Conduct, and the Instructions for the Management and Prevention of Conflicts of Interest and Ethical Conflicts.
The documents that make up Ecopetrol’s internal policy and procedures related to Conflicts of Interest can be consulted at the website.
Similarly, Ecopetrol’s guidelines on conflicts of interest extend to:
Bidders
Contractors
Suppliers
Clients
Partners or allies
By means of the Code of Ethics and Conduct, and clauses and contractual formats applicable to them, these groups commit and agree to act in accordance with Ecopetrol’s ethical principles and to not incur in conflict situations.
(102-25)
The Corporate Governance Report, which is part of this Report, contains more detailed information regarding conflicts of interest, including publications of the related party and existence of a controlling shareholder. Also, details related to the participation of Board Members in other Boards of Directors can be consulted in the Corporate Governance chapter of this report.
In 2021, 176 reportes conflicts of interest were reported.
For details about the most relevant cases, go to the Corporate Governance Report.
Donations, sponsorships,
and political contributions
and political contributions
Facilitation payments, involvement in political activities through contributions and donations that do not comply with the budgets of Article 355 of the Political Constitution, activities and payments for lobbying services, and the diversion of money from social investment activities or sponsorships towards political activities or activities outside the purposes established by the Company are strictly prohibited at Ecopetrol and its Group.
In compliance with the provisions of Article 110 of the Political Constitution, and Article 27 of Law 1475 of 2011, the employees of Ecopetrol Group are prohibited, even in their personal capacity, from financing or making contributions or donations to political parties, movements, or campaigns, or from inducing others to do so.
Considering the aforementioned prohibitions, in 2021, the value for facilitation payments, lobbying services, and political contributions or donations was
COP 0
Donations that comply with the Political
Constitution and assignments at no cost
Constitution and assignments at no cost
In 2021, the donations made by the Company, in compliance with the budgets of Article 355 of the Political Constitution, amounted to
COP 305,006,504.
Risk management system
(102-15) (WEF 6)
Integrated risk management at Ecopetrol adheres to ISO 31000, COSO 2013, and COSO ERM 2017 standards, and it is governed by the provisions of the internal regulations incorporated in the Bylaws, the comprehensive policy, the Code of Good Governance, manuals, guides and instructions established for this purpose that set the general guidelines for risk management, allowing the Company to make informed decisions, contemplating possible events that positively or negatively impact the objectives of the Company and its Group.
The Integrated Risk Management System (SRI) is led by the Corporate Vice Presidency of Compliance (VCU), as an independent area, by means of the Corporate Integrated Risk Management Administration (GIR, by its Spanish acronym), which was created to ensure the design, implementation, management, maintenance, and continuous improvement of the SRI, along with its deployment to the companies of the business group. It is supervised by the Board of Directors through the Audit and Risk Committee of the Board of Directors (CAUJD, by its Spanish acronym), which verifies the establishment of the system, analyzes and recommends business risks for the approval of the Board, and follows-up on risk management.
(102-19) (102-20) (102-29) (WEF 2)
At Ecopetrol, the Corporate Vice President of Compliance, María Juliana Albán, holds the highest-ranking position after the CEO, that is responsible for risk management at the operational level. Her reporting line on risk management is the Company’s CEO and the Audit and Risk Committee of the Board of Directors. For its part, Ecopetrol’s CEO, Felipe Bayón, holds the highest- ranking position with risk management and audit responsibilities at an operational level. In this position, his reporting line is directly to the Audit and Risk Committee of the Board of Directors.
For its part, the Corporate Internal Audit Management is responsible for evaluating and proposing improvement actions on the effectiveness of the Company’s Risk Management System.
All Company employees are responsible for understanding and identifying the risks they are exposed to in exercising their duties and within the processes in which they participate, and for properly dealing with manageable risks while exercising their duties, in compliance with the principles, framework, and processes of the SRI and in line with the Code of Ethics and Conduct.
In terms of the companies under Ecopetrol Group, Ecopetrol, through the VCU, exercises governance, guides, issues guidelines, defines practices, and monitors risk management, in order to unify guidelines, favor synergies and interaction, improve and ensure control, and making timely and appropriate decisions. The performance of the subordinates is shown in the periodic compliance reports submitted to Ecopetrol.
The SRI establishes the set of principles, the reference framework, and the processes for the COMPANY to manage the effects of uncertainty related to the fulfillment of its objectives, in order to maximize opportunities, help define strategies, and make informed decisions.
Graph 23.
Integrated Risk Management System
Integrated Risk Management System
Source: Corporate Vice Presidency of Compliance
The risk levels at Ecopetrol, which are managed under the SRI, are specified as follows:
Graph 24.
Risks levels
Risks levels
Related to risks directly associated with the Company’s strategy, strategic objectives, and/or balanced management dashboard, represented in the business risk map.
Related to risks that respond to process and/or management system objectives, according to the Company’s process map.
Related to risks at a technical detail level.
Source: Corporate Vice Presidency of Compliance
The SRI works by executing the risk management cycle, which analyzes the objectives to identify the risks and define the adequate controls to mitigate the occurrence or impact thereof. This cycle comprises the following five (5) stages:
Graph 25.
Risk Management cycle
Plan
Defining the scope of the activities and analysis of the internal and external context.
Identify Risk identification based on the perspective of other people involved in the analysis of the information 
Assess
Cause and effect analysis. Assessment according to probability and impact.
Address
Selecting and implementing options to address the risk.
Communication, follow-up, and registration
information Exchange, feedback, and continuous monitoring.
Source: Corporate Vice Presidency of Compliance
Risk management monitoring is conducted permanently by Internal Risk Management to identify risk alerts, verify the execution of mitigating factors (controls and treatment actions), and determine actions against any arising materialization, in order to maintain risks within defined tolerance and acceptance levels. These levels are established in the Risk Assessment Matrix (RAM) approved by the Board of Directors, which is used for the inherent and residual assessment of the risks identified by the Company. The relevant results of this follow-up, such as the identification of opportunities for improvement in the design of the indicators related to issues such as the calculation of formulas, the adjustment of alert limits to guarantee their effectiveness and implications, or possible additional impacts identified in the horizontal correlation and vertical risk analyzes, are periodically reported to the Executive Committee (ExCo) and the Audit and Risk Committee of the Board of Directors.
Business Risk Management
The construction and updating of the business risk map is conducted collectively, based on internal and external environment analyzes, considering market trends, the specific risks for Ecopetrol Group companies, as well as management standards, benchmarks, and industry risks, whose sustainability indices and radars are normally subject to analysis and review.
The monitoring of business and process risks is conducted by the Corporate Risks Management and Internal control Management respectively, to identify alerts, verify the execution of mitigating factors, and ensure actions against materializations reported by the responsible parties, in order to maintain the risks within defined tolerance and acceptance levels. The relevant results of these monitoring efforts are periodically reported to the ExCo and the CAUJD in their management reports, or depending on the occurrence or criticality, during the monthly sessions held.
Emerging Risk Management
In 2021, Ecopetrol identified 13 trends categorized as: social, environmental, economic, technological, and geopolitical. From the analysis of these trends, 24 potential emerging risks were identified, which were evaluated based on their potential impact and the speed in which each of them will emerge. The result of this evaluation is presented below:
Graph 26.
Emerging Risks
Emerging Risks
Source: Corporate Vice Presidency of Compliance
In accordance with the foregoing, the emerging risks identified are the following:
Table 36.
Emerging risks
Emerging risks
Acceleration in the race towards
net zero emissions
The risk that climate change and sustainability initiatives (e.g., Colombian Climate Action Law, COP 26 Glasgow 2021 tax credits, carbon credits) and the acceleration of reliable and profitable green alternatives may affect Ecopetrol’s energy diversification portfolio and strategic priorities and lead to increased expenses related to green initiatives and a reduction in demand for Ecopetrol’s main products.
Technology-enabled
natural capital solutions
The risk that Ecopetrol does not adequately adapt its technological capabilities and strategies (for example, nature-based solutions, Big Data analysis, remote sensing, robotics and drones, artificial intelligence) to effectively enable, evaluate, and report on the reduction of its impact on Colombia’s biodiversity (e.g. pollution, habitat loss, deforestation, and GHG emissions), given Colombia’s growing sustainable development commitments leading to tighter regulatory scrutiny and impacting Ecopetrol’s strategic efforts and operations to minimize the Company’s impacts on relevant ecosystems.
Source: Corporate Vice Presidency of Compliance
Given the emerging risks, the potential impacts for Ecopetrol have been identified and specific mitigation activities have been defined, whose evolution is permanently monitored in order to trigger the corresponding warning signals.
Risk culture
Ecopetrol is aware that culture influences all aspects of risk management and at all levels and instances. To this end, the Company encourages a set of desired behaviors and attitudes related to risk management, in line with the culture statement, which can be viewed by clicking on the following link.
To reinforce the risk culture, the Company contemplates indicators that affect variable compensation on an annual basis, as part of the performance evaluation at all hierarchical levels:
HSE: Fatalities or environmental incidents
(5% to 10%)
Internal control faults reported by the external auditor
(2.5% to 100%)
Ethical incidents and disciplinary sanctions
(100%)
If none of these events occurred, all Ecopetrol employees would receive the respective variable compensation without any deductions, that is, 100%. However, upon the occurrence of any of these events, this bonus will be deducted in the proportions described above, in accordance with the Company’s variable compensation guidelines.
A self-assessment exercise and quarterly reporting from the process owners also takes place, as specified in the Internal Control System (SCI) section, to identify and report potential risk events, and others, as part of the first line-of-defense activities. In 2021:
- Employees took SRI perception surveys to establish the level of appropriation of these concepts and define the corresponding strengthening strategies.
- A virtual Risk Management course was imparted to all workers
- Communication pieces were created alluding to integrated risk management in the company.
(102-27)
Finally, the nine (9) members of the Board of Directors have received risk management training, specifically in:
- Risk management in operations conducted with third parties and risks associated with geopolitical changes
- Risk Management Podcast
- FCPA Act training by Miller Chavalier and FCPA Law training by the VCU
To learn more about the training imparted to board members, go to page 149 of this report