SUSTAINABLE DEVELOPMENT PERFORMANCE

FOR NEDBANK GROUP SUSTAINABILITY IS ULTIMATELY ABOUT WALKING THE PATH TO A BETTER FUTURE, TOGETHER, AND HELPING ONE ANOTHER TO COMPLETE THE JOURNEY. THIS PHILOSOPHY DRIVES THE GROUP'S ASPIRATION TO MAKE THINGS HAPPEN, FOR ITS CLIENTS, STAFF, PARTNERS AND SHAREHOLDERS, AS WELL AS THE COMMUNITIES AND ENVIRONMENT IN WHICH IT OPERATES.'
Dr Reuel Khoza: Nedbank Group Chairman

Sustainability in business is no longer an option, it is an imperative that makes sound business and moral sense. It must permeate every aspect of a business and inform the way it thinks, behaves, strategises and operates. This will ensure it optimises returns for its shareholders over the long term, while remaining a relevant business for its staff, clients, suppliers and the communities in which it operates.

Nedbank Group recognises this reality and the impact it has, not just on the realisation of its long-term vision, but also on the day-to-day actions it takes.

The group also recognises that the only effective approach to sustainability is one in which sustainable practices and philosophies are at the core of every aspect of the organisation – impacting positively on people, philosophies, economics, the environment and the country as a whole.

For this reason Nedbank Group’s approach to sustainability is a holistic and integrated one that brings together economic, environmental, social and cultural elements to ensure that sustainability is inextricably woven into the fabric of the organisation and enables it to realise its vision of becoming a leader in sustainability.

This integrated sustainability approach is reflected in the structure of this report, which is why the overviews of each of the business clusters are not exclusively focused on economic matters, but also cover all four sustainability pillars. However, there are many aspects of sustainability within Nedbank Group that cut across the entire organisation. This section of the report offers an overview of these groupwide sustainability initiatives and developments, particularly in the areas of environmental, social and cultural sustainability.

SUSTAINABILITY TARGETS: 2010 AND 2011

Environmental Sustainability          
   2010 target   Status   Performance     2011 target
 Minimising our  environmental  footprint   Achieved   Reduction efforts continued during 2010, with good progress being made against the electricity, travel and overall carbon reduction targets. Paper reduction targets were not met. (See commentary on page 106 for details.) The group remains committed to reducing its carbon emissions further and achieving the target of 12% emissions reduction by 2015, from its 2007 baseline.     Continued carbon reduction, with the overall target being emissions reduction of 12% by 2015, from its 2007 baseline.
Achieving carbon neutrality   Achieved   By offsetting its 2009 carbon footprint (of approximately 213 000 tonnes) Nedbank Group was the first financial services company in Africa to achieve carbon neutrality. Importantly, this was via a ‘reduce first and offset only where necessary’ approach. Please refer to the carbon neutrality case study here for details of the process and resulting benefits for the group and its stakeholders.     Maintaining carbon neutrality.
Increased focus on water efficiency   Achieved   The group’s 2010 water intensity reduction target of 5% per fulltime employee (FTE) from the 2005 baseline was met at the end of 2009. As such, a new target of reducing water usage by 10% per FTE (from 2009 levels) by the end of 2011 has been set. As part of the ongoing water reduction commitment the group has undertaken a number of focused water reduction initiatives (see here for further details).     Continued focus on water efficiency.
Centralised electronic carbon database   Not achieved   The group set out to develop a centralised electronic carbon database to improve the accuracy of the reporting and monitoring of natural resources usage and carbon emissions. Complications in terms of integrating the various data flows from across the organisation meant that this objective was not achieved in 2010. It remains a high priority for 2011.     Centralised electronic carbon database.
     
Social and cultural sustainability    
Remaining a level 2 Department of Trade and Industry (dti) contributor   Achieved   Nedbank Group has been able to strengthen its position by scoring a total of 89,50%. Employment equity and skills development, however, remain under pressure, as natural staff attrition has slowed.

Preferential procurement is an area of strength with the overall group operating at levels above 2016 targets. The only challenge in this area is the growth in the black women-owned (BWO) subcategory. Please refer to the dti summary scorecard.

    To maintain level 2 contributor status with improving scores.
Beyond compliance – enhancing access for all to financial services   Mostly achieved   While this is not a requirement under the dti Codes, Nedbank Group remains committed to providing ready access to financial services as part of its vision of becoming a bank for all South Africans. The recovery from the financial crisis and availability of suitable land for property development are some of the factors that inhibited delivery of all internal targets. Despite this, its efforts have gone a long way to furthering access to financial services. Please refer to the ‘Non-scoring performance’ section of the scorecard.     Continue to enhance access for all to financial services.
Empowerment financing   Achieved   Despite the challenging economic backdrop, and this target not forming part of the dti Codes, the group has continued to focus on empowerment and transformation financing as a means of realising its commitment to corporate development in South Africa. Please refer to the ‘Non-scoring performance’ section of the .     Continue to grow our involvement in empowerment financing.

DEPARTMENT OF TRADE AND INDUSTRY SUMMARY SCORECARD


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SUSTAINABILITY GOVERNANCE STRUCTURES AND POLICY FRAMEWORK


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STAKEHOLDER ENGAGEMENT

Effective stakeholder engagement remains central to the effectiveness of Nedbank Group’s collaborative approach to economic, environmental, social and cultural sustainability. Stakeholder engagement enhances risk management and presents the group with numerous opportunities, both to drive performance and extend its positive influence.

While the Group Executive Committee (Exco) remains ultimately responsible for stakeholder engagement, in 2010 Nedbank Group took its commitment to enhanced stakeholder engagement to the next level with the appointment of a dedicated Sustainability Stakeholder Engagement Manager, who is tasked with developing and sustaining relationships with various stakeholder groups.

In keeping with the group’s aspiration to ‘lead through collaboration’, such stakeholder engagement extends far beyond rules-driven disclosure or regulatory requirements. Rather, Nedbank Group considers stakeholder engagement a strategic imperative and seeks continually to evolve and innovate in terms of the way in which it builds inclusive, mutually beneficial relationships based on transparency, respect and idea sharing.

So, while stakeholder engagement within Nedbank Group may be decentralised and take many different forms, the ultimate aim is the same: to work with those who have an interest in the business to ensure sustainable performance and beneficial outcomes for all stakeholders.

The following pages outline the main instances of engagement with key stakeholders in Nedbank Group during 2010. Where no mention is made of specific feedback received, it can be taken that the engagement was of such a nature that no specific resulting feedback or action was deemed necessary by the parties concerned.


SHAREHOLDERS AND INVESTMENT ANALYSTS
Reasons for engagement   Types of engagement
• To provide relevant and timeous information to current and future shareholders, our providers of capital.
• To keep shareholders and the investment relations community informed about Nedbank Group to ensure that its shares trade at a fair value relative to those of peer companies. 		  Investor relations; local and international roadshows; ad hoc communications; annual general meeting and other meetings; conferences and presentations; Securities Exchange News Service (SENS) announcements; media releases; analyst briefings; and feedback via broker reports and the corporate website.
Examples of engagement   Feedback/Resulting sustainability actions
• A total of 142 investor meetings following results announcements.
• Nine broker conferences and seminars.
• Two teleconference presentations.
• Two investor lunches.
• Two annual credit rating reviews.
• Presentations at Investec Consumer Banking Seminar and Funding, Liquidity and Capital Seminar, UBS Global Financial Services Conference, Nedgroup Securities Conference, the 13th Annual UBS Financials Conference and JP Morgan Investment Banking Conference.
• A further 146 other management meetings with shareholders, analysts and rating agencies were held. The content of these interactions, in addition to the items as addressed in the normal course of investor relations, included Nedbank Retail impairments and default advances, the Imperial Bank acquisition, the HSBC proposed acquisition and the legal issues pertaining to Pinnacle Point. 		  The credit ratings from Fitch and Moody’s for the group were affirmed in July 2010 and have remained unchanged since then.
• Sustainability feedback was formally included in the 2010 interim results analyst presentation and results booklet.
• The Nedbank Sustainability Outlook publication was created to encourage a broader understanding of sustainability matters. See here for further details or refer to www.nedbankgroup.co.za for copies of the publication.
• The group received numerous awards for formal communication with shareholders and analysts, as well as reporting in 2010. These represent a pleasing external validation of the positive impact of the group’s efforts to communicate with this important stakeholder group.
In addition to the abovementioned shareholder engagements, Nedbank Group regularly engages with its holding company, OMG, to ensure alignment of policies and methodologies, and the effective capturing of synergies and leveraging of opportunities.


GOVERNMENT
Reasons for engagement   Types of engagement
  • To build and strengthen relationships with government, both as a partner in the development of the country and as a current or potential client.
    • To provide input into the legislative development process that will affect the activities of the group.
   Public sector business; support and advisory services offered; support of government social initiatives; and input into regulatory developments.
Examples of engagement   Feedback/Resulting sustainability actions
• Ongoing interactions with government Departments through Nedbank Group’s position on The Banking Association South Africa’s (BA SA’s) working committees to the Department of Human Settlements, the Department of Agriculture, the Department of Environmental Affairs, the dti, and the National Treasury.
• Commentary provided on numerous regulatory developments in 2010. Some of these included the Waste Act, the National Climate Change Policy, Carbon Taxes and the Integrated Resource Plan 2 (IRP2). Comment
on IRP2 has been provided in the context of the existing Integrated Energy Plan (IEP) and Renewable-Energy Feed-in Tariff (REFIT).
• Input on policy as well as negotiations in an effort to establish a Financial Sector Code to replace the Financial Sector Charter (FSC).
• Nedbank Group actively participated in BASA’s ‘Teach a Child to Save’ project. staff members visited schools in six provinces and reached 9 125 children through the campaign, which is aimed at improving the financial literacy level of children at an early stage.
• Participation with the dti in the design and calibration of a new funding support model for small, medium and micro-enterprises
(SMMEs).		   • Value-added approach to building public sector client relationships has resulted in additional business being secured with numerous government Departments, including:
− Department of Energy
− National Consumer Commission
− Department of Economic Development
− Tlokwe Municipality
− New Partnership for Africa’s Development (NEPAD)
− Department of Water Affairs
− SA National Parks
− SA Weather Services
− City of Tshwane
− Department of Public Works (Expanded Public Works Programme)
• Nedbank Group is actively involved in policy development and negotiations as part of the new Financial Sector Code. Negotiations in this regard continue.
• Commendations were received for all participants in the ‘Teach a Child to Save’ project and Nedbank has agreed to continue the project in 2011.
• The dti has acknowledged the value added by Nedbank Group in the design of the new funding support model and has accordingly requested that the group be one of its first partners in implementing the model.


ACSA & Nadbank and Partnering with Tlokwe Municipality

REGULATORY BODIES
Reasons for engagement   Types of engagement
To maintain good relationships with regulators and ensure compliance with their legal and regulatory requirements, thereby retaining Nedbank Group’s various operating licences and minimising its operational risk.   Ongoing meetings and interaction with regulators, including prudential visits and statutory reporting.
Examples of engagement   Feedback/Resulting sustainability actions
• Sound relationships are maintained with all regulators and supervisors, including: the Financial Intelligence Centre (FIC), the South African Reserve Bank (SARB), JSE Limited (the JSE), the Financial Services Board (FSB) and relevant offshore regulators.
• Engagement with SARB takes place through various forums, from trilateral meetings with the board and group audit committees to one on-
one meetings with various executive officials at prudential meetings.
• Engagements with the FIC regulators and supervisors take place on a bimonthly basis through the Nedbank/Regulators Anti-money
Laundering (AML)/Combating the Financing of Terrorists (CFT) meeting. Further engagement takes place through formal and informal communication channels. The bimonthly meetings enable Nedbank Group to communicate with the regulator and supervisors to ensure compliance with their requirements and obtain clarification, where necessary.
• In terms of the FSB obligation to ensure that financial service providers comply with the requirements of the Financial Advisory and Intermediary Services (FA IS) Act the FSB supervision Department conducted a Nedbank Group review during July 2010. The review included interviews with the Chief Executive (CE), the Chief Governance and Compliance Officer, managing executives, cluster governance and compliance heads, FAIS key individuals and FAIS representatives as well as onsite visits to several Nedbank branches.		   • Trilateral meetings held with the board and group audit committees.
• A total of 37 SARB prudential meetings were held and no major concerns were raised during these engagements.
• Following the FIC engagements, accountable and reporting institutions were registered by 1 December 2010, cash threshold reporting was implemented and historical STR information was aligned.
• No material deficiencies were raised by the FSB during its closing review meeting. The FSB acknowledged Nedbank Group for its support and the provision of information required for its review. The formal FSB report is anticipated in due course.
• Engagements in 2010 focused on cash threshold reporting, accountable-institution and reporting-institution registration, product approvals, suspicious-transaction reporting (STR) and training. Positive feedback was received on the rollout of initiatives and confirmation was received of the alignment of STRs. Guidance was provided on requirements for products and approval of products.

 

STAFF
Reasons for engagement   Types of engagement
• To ensure that Nedbank Group remains an employer of choice by providing a safe, positive and inspiring working environment.
• To understand and respond to staff needs and concerns.
• To provide all staff with direction and pertinent information regarding the activities and strategic focus areas of the group.		   • A robust combination of face-to-face, written and broadcast communications. These included culture and engagement surveys, roadshows, email, intranet, data casting and magazines and relevant training.
Examples of engagement   Feedback/Resulting sustainability actions
• Three groupwide surveys conducted and feedback provided.
• Altogether 16 countrywide, formal face-to-face roadshows with Group Executive Committee members.
• Four formal interactions with the Group Executive Committee countrywide via audiovisual broadcasts.
• 3sixty magazine (six editions) annually and daily online email updates.
• An annual engagement on the group’s strategic direction held with top management.
• Monitoring and consulting with staff across the group on employment equity matters via NEEF.		   • Specific research was undertaken with middle management following the results of the surveys, and training interventions were developed to address some of the findings. In addition, managers were given extra support with the production of an electronic newsletter
containing pertinent information on managing others effectively. Three editions were distributed in 2010.
• A number of employee wellbeing events were held in 2010. These events included a Men’s Health Day and World Aids Day celebrations.
• Nedbank Group launched free HIV testing for Nedbank Group employees.

 

SOCIAL AND ENVIRONMENTAL NON-GOVERNMENT ORGANISATIONS AND COMMUNITIES
Reasons for engagement   Types of engagement
• To create partnerships that will best facilitate Nedbank Group’s integrated sustainability activities.
• To obtain input from communities and representative non-government organisations (NGOs) regarding key focus areas.
• To obtain input from environmental experts to ensure that Nedbank Group’s operations are taking place in the most environmentally responsible manner.
• To create awareness of Nedbank Group’s integrated sustainability initiatives.		   Ongoing support of projects and interaction by the Nedbank Foundation with a wide variety of non-profit and government organisations. Environmental/Sustainability partnerships with the World Wide Fund for Nature South Africa (WWF-SA), Cambridge Programme for Sustainable Leadership, University of South Africa (UNISA) Advisory Council on Business and Climate Change and the United Nations Environment Programme Finance Initiative (UNEP FI).
Examples of engagement   Feedback/Resulting sustainability actions
• The Nedbank Foundation works closely with the local leadership of the communities within which it operates to identify the most appropriate and meaningful projects to fund. During 2010, in partnership with Wiphold, the Imbizo process was used to engage with numerous local communities.
• The World Cup and the teachers’ strike resulted in the 2010 matric pupils facing additional challenges. As education is a large focus area for the foundation, it found a solution together with numerous other NGOs and the Department of Education to aid students.
• Nedbank Group has a formal conservation partnership with WWFSA and as such WWF-SA was represented on the Nedbank Group Environmental Forum and the Nedbank/WWF Carbon-neutral Task Team.
• Nedbank Group is represented on various UNEP FI committees and workstreams, including the role of chair of the UNEP FI African Task Force and cochair of the Water and Finance Workstream.
• Various engagements with the UN Global Compact.
• The Cambridge Programme for Sustainable Leadership facilitated a think tank session with Nedbank Group’s sustainability, product and strategy teams.
• UNISA Advisory Council on Business and Climate Change– Nedbank Group, along with other corporates, has provided input into the climate-related research, stakeholder engagements and education programmes.		   • In the Mbashe District of the Eastern Cape one of the needs identified by the elders was access to water. The group’s response was the Hippo Roller Project .
• The Matric Revision Programme was the joint response to the issues raised by pupils, NGOs and the government alike.
• WWF-SA consistently challenges the Nedbank Group environmental status quo and has been involved in the setting of intensity reduction targets and the achievement of carbon neutrality.
• During Nedbank Group’s chairmanship of the UNEP FI ATF membership was expanded and this has resulted in a greater African participation in relevant environmental issues.
• Nedbank Group contributed to the UNEP FI Liquidity Series to drive awareness of global water issues.
• Nedbank Group’s Communication of Progress in terms of the UN Global Compact was well-received and met all requirements. Nedbank Group provided input into the UN Global Compact’s human rights initiative for South Africa.
• New products and initiatives are under development as a result of a think tank session and there is greater internal cohesion in terms of greening efforts.
• Climate-related programme developments are underway and interactions are ongoing.

 

SUPPLIERS AND CONTRACTORS
Reasons for engagement   Types of engagement
• To maintain an ideal and timeous supply of goods and services for Nedbank Group’s operations.
• To assist suppliers in ensuring their own viability through education, early-payment terms and other support.
• To encourage environmentally responsible practices in the group’s supply chain.		   Ongoing interaction with suppliers and contractors includes supplier education workshops, a quarterly newsletter on sustainability matters and one-on-one negotiations.
Examples of engagement   Feedback/Resulting sustainability actions
• Nedbank Group focused on increasing its spend with black economic empowerment (BEE) suppliers, with particular focus on BWO
businesses.
• Nedbank Group engaged with suppliers to share its environmental journey and to encourage suppliers to change their behaviour.
• The group conducted independent life cycle analyses (LCA) to understand the full environmental impact of the various paper types.
• Approximately two dozen environmentally friendly stationery products were evaluated to ensure environmental and business needs
are met.
• Courier services were evaluated to reduce costs and carbon emissions.		   • The focus on improving the group’s rate of spend proved successful as the spend with BWO businesses rose by almost 3% in 2010 to 5,24%.
• In terms of spend Nedbank Group’s largest suppliers are in the information technology (IT) domain. It is pleasing to see that a large number of these suppliers are actively working to reduce their carbon emissions. Disappointingly, however, following a survey, only 3% of the group’s new suppliers onboarded in 2010 have an environmental policy in place. Accordingly, in 2011, efforts will focus on working with suppliers to improve this position.
• Paper suppliers were engaged with to gain a better understanding of the results of the LCA and to encourage further improvements in their
environmental practices.
• While environmentally friendly stationery items were a good fit with the group’s environmental policies, the costs were excessive. The possibility of combining orders with other organisations is being investigated to benefit from economies of scale.
• The group’s main courier vendor has introduced new vehicles with improved fuel efficiency and a bigger load capacity. A careful evaluation of all collection routes resulted in an overall travel reduction.

BUSINESS PARTNERS
Reasons for engagement   Types of engagement
• To continue learning through interaction with industry and crosssectoral organisations.
• To establish and build strategic partnerships.
• To use business associations as a forum to promote Nedbank Group’s viewpoint on key issues.		   Membership of industry associations and bodies [BA SA and the National Business Initiative (NBI)]; strategic partnerships such as with the group’s black business partners (BBPs), Wiphold, Brimstone and Aka Capital.
Examples of engagement   Feedback/Resulting sustainability actions
• Ongoing participation in all BASA working groups and projects remains a key imperative. Nedbank Group is a member of a variety of committees within BA SA, dealing with specific sustainability aspects.
• Engagements with the NBI Climate Change Working Group.
• BBPs are represented on relevant Nedbank Group committees and forums, eg the Transformation and Sustainability Board Subcommittee and BEE Forum.		   • Nedbank Group participates actively in the BASA Sustainable Finance Forum, an umbrella/strategic body that addresses issues critical to the long-term sustainability of the banking sector. Meetings are held monthly as well as when ad hoc issues arise.
• Nedbank Group has provided commentary on environmental regulatory developments through the NBI structure.
• Learnings from interactions with the NBI and BASA have served to enhance the group’s sustainability focus in a number of business areas.
• Referrals were received from clients, resulting in revenue generation in the Corporate and Capital areas.
• Successful community engagements or Imbizos were held to help to deepen Nedbank’s relationships with the communities in Centani and Dutywa.

 

CLIENTS
Reasons for engagement   Types of engagement
• To make current and potential clients aware of Nedbank Group’s products and services.
• To understand and resolve client concerns or complaints and utilise these to improve service.		   Business interaction via Nedbank Group outlets; client education workshops; client satisfaction surveys; client complaint lines and call centres, and marketing and advertising activities.
Examples of engagement   Feedback/Resulting sustainability actions
• AskOnce service delivery campaign.
• CMAT™ assessment.
• Ask Afrika Orange Index.
• Internal client satisfaction scores.
• Client complaint tracker system.
• Consumer education.
• Small-business seminars.		  

Six major themes were raised by clients during 2010, including:

Issue Action
• Access to finance
• Access to financial services
• Improved service levels
• Relevant products
• Financial literacy		 • Refer to the Nedbank Business Banking and Retail business
overviews section.
• Sustainable Development
Performance section.

 

 

MEDIA
Reasons for engagement   Types of engagement
• To use the media as a channel to communicate with relevant stakeholders.
• To position Nedbank Group proactively as a thought leader, the bank of choice for all South Africans and a responsible corporate citizen.
• To respond to media queries as they pertain to banking and relevant industry activities, including environmental issues.		   Communication and relationship building with key journalists and general media to position a brand-led organisation proactively (external communication of the Nedbank Group leadership, brand, values and product offering).
Examples of engagement   Feedback/Resulting sustainability actions
• Daily liaison with various media contacts regarding business-related issues.
• Formal media briefings were held on the appointment of Mike Brown, M-PESA and 360life product launches, achievement of carbon neutrality, participation in the intensified matric education drive, as well as numerous product launches and relevant industry issues such
as client indebtedness.		   • Top of mind for the media in 2010 were issues that related to the proposed HSBC deal, Pinnacle Point, carbon neutrality, Mike Brown’s appointment, interest rate trends, economic trend data such as the consumer price index, the Imperial Bank integration and the annual pricing review.
• Nedbank Group spokespeople availability was raised as an issue by the media. This has been actively addressed through deliberate one-on-one relationship building with key journalists and media training for relevant spokespeople.

 

UNIONS
Reasons for engagement   Types of engagement
To maintain a good working relationship with the unions and obtain approval or reach consensus on any decisions or projects that require changes in working conditions or to the operational requirements of the business.   Group Human Resources (HR) manages labour relations with the unions on an ongoing basis and consults on any changes in working conditions, restructures of the business, as well as performance management issues. This includes consultations on the resolution of alleged unfair labour practices to ensure the fair and equitable treatment of staff.
Examples of engagement   Feedback/Resulting sustainability actions
• Monthly and quarterly consultations by means of special joint committee meetings.
• Annual salary negotiations.
• Workplace engagements via NEEF.
• Updates on the achievement of staff meeting the legislated FAIS qualification requirements.
• Positive feedback from unions on the group’s ongoing integrated sustainability initiatives in the community.		   • Approval of the Workforce Skills Plan.