ECONOMIC SUSTAINABILITY

CODE OF ETHICS AND BUSINESS CONDUCT

Nedbank Group regards its values as an effective way of ensuring consistent action and behaviour across the group. The group values were developed in consultation with all employees and provide a clear framework on which the culture of the organisation is built.

The group values are as follows:

Value	Application
Integrity	Be honest, trustworthy, truthful, consistent and open. Act according to the highest ethical standards. Communicate openly, directly and ethically.
Respect	Treat others as you would have them treat you. Use diversity as strength. Listen to others and treat all people with dignity. Provide individuals with fertile ground in which to grow. Treat everyone in the organisation as important. Foster individual strength to build the greater whole.
Accountability	Be prepared to make commitments and be judged against your commitments. Deliver on commitments. Take responsibility for your actions.
Pushing beyond boundaries	Play to the maximum of your abilities – as individuals, as teams and as an organisation – across boundaries. Always strive to break new ground, fuelled by passion and commitment.
Being people-centred	Invest in people. Create empowering environments through development, support, mentoring, coaching, recognition and reward. Always be aware that people are the source of our bank’s strength and success.

During 2009 the Nedbank Group Code of Ethics was reviewed to incorporate the Conflict of Interest and Gift Policies and was renamed the Nedbank Group Code of Ethics and Business Conduct (‘the Code’). In recognition of the need for strong leadership in living our values, Nedbank Group requires the Board of Directors to recommit to the Nedbank Group Board Ethics Statement on an annual basis. Such annual recommitment serves not only to inform all new directors of the ethics statement, but also to refocus the minds of current directors on their ethical duties as directors of Nedbank.

A staff competition entitled ‘Crack the Code’ was run, which challenged employees to summarise the Code of Ethics in 10 key points. The winning entry was adapted and incorporated into the Code as the group’s new employee pledge.

The Nedbank Employee Pledge

• I will always strive to do what is best for my bank, my country and my planet.
• I will treat others as I want to be treated by them.
• I will abide by the values, policies and procedures of the bank, the laws of my country and the universal human principles of all that is good and just.
• I will be honest, reliable, fair and open in everything I say, write and do and accept responsibility for the consequences.
• I will protect the bank’s assets, information and reputation.
• I will value and respect the diversity of beliefs, cultures, convictions and habits of the people of our bank and the countries in which we operate.
• I will disclose to the bank any real or perceived situation where my private interests or the interests of a member of my immediate or extended family or other person close to me may interfere with the interests of the bank.
• I will not give or receive gifts or benefits in contravention of the policies of the bank.
• I will seek new, better and more innovative ways to do my work and do it to the utmost of my abilities.
• I will not remain silent in the face of dishonesty, malice, disrespect, intolerance or injustice.

Awareness of the Code of Ethics has been a key focus area in recent years and is considered a crucial element in ensuring that governance becomes a living reality for all employees. To this end 105 interactive staff, management and board awareness sessions further reinforced the values and ethics during 2009. This raised ethics awareness has resulted in a substantial decrease in dismissals and misconduct for the year under review.

In 2006 EGC produced a DVD entitled 'Voices of the Past', about the great civilisation of Mapungubwe, which highlighted the key lessons Nedbank Group could learn from the success of this great African kingdom. The aim of this story was to teach employees that a successful business can only be sustained with values at its core. In 2009 EGC produced another DVD entitled 'Wisdom of the Past', which told a different story of Mapungubwe and documented its eventual failure to impart valuable lessons on the reasons organisations fail and encourage ethical behaviour and the reporting of misconduct.

During the year a further 14 awareness communications were sent out across the group, covering aspects of ethics, conflicts of interest and gifts. EGC worked together with the Group Finance Division and invited the Ethics Institute of South Africa (EthicSA) and the South African Institute of Chartered Accountants (SAICA) to train the group's governance, compliance and risk officers as well as our accounting staff on the topics of ethics, King III and SAICA requirements. The Tip-offs Anonymous reporting line was also profiled during training, creating awareness of employees' responsibility to report incidents of unethical behaviour. EthicSA is assisting Nedbank in the rollout of its training programmes, and two accredited ethics officers form part of the EGC Division. As part of the planned induction programme for 2010, Nedbank will require all new employees to sign the employee pledge.

The Compliance Tool, launched in 2008, provides a computer-based mechanism for the declaration of all gifts given and received and serves as a repository for declarations of outside interests. At the year-end 90,1% of all permanent employees had either submitted a nil return or a declaration of outside interest on this centralised electronic system. The tool has also resulted in considerable paper savings. The code was distributed via the tool for acknowledgements during 2009 and 84% of staffmembers completed the ethics acknowledgement exercise. The Conflicts of Interest Policy was also sent out via the tool during 2009, as was the Gift Policy, which was acknowledged by 76% of employees.

The Compliance Tool is continually enhanced to suit business requirements. A monitoring guideline has been developed to monitor a sample of all current declarations of outside interest. The objective is to ensure accurate and comprehensive declarations.

The year 2009 saw the Nedbank Group's Ethics Officer building on the existing good relationships with various external stakeholders, including the African Institute of Corporate Citizenship, EthicSA, the Human Rights Commission, the United Nations Global Compact and the National Business Initiative (NBI). The Ethics Committee, Group Risk Services, Human Resources (HR), Internal Audit and the Internal Ombudsman also assist in the reporting and resolution of ethics issues that arise in the business.

The Nedbank Group Supplier Code of Conduct was developed and is attached to all contracts managed by Group Procurement. EGC conducted two awareness sessions during 2009, outlining the Code, Conflicts of Interest Policy and Gift Policy to more than a hundred vendors and suppliers.

The number of respondents in the Nedbank Staff Survey increased from 11 735 in 2008 to 16 646 in 2009 (a response rate of 58,3%). For the fourth consecutive year the ethics indicator was the highest and most positive indicator in the survey, improving from 86% to 90,2%. This is proof that awareness initiatives regarding ethics, conflicts and gifts are well-received and effective.

It was accepted, in principle, by the Group Executive Committee (Exco) that an ethics measurement be incorporated into the balanced scorecards of all employees in the group and that this should occur in a phased manner. In 2009 ethics was included in the Group Exco scorecards as a modifier and measured by the Nedbank Ethics Indicator (NEI).  The NEI is a scientific assessment, as required from a compliance perspective by King III so as independently to verify conformance to established principles and standards of ethical behaviour. The NEI also measured the capacity of the organisation to manage ethical risk. The correlation with the Nedbank Group Staff Survey and Barrett Survey is noteworthy. The overall finding of the NEI was that Nedbank Group is exposed to elevated medium risk. Feedback sessions were held with cluster executive committees to discuss the findings and make recommendations for improvement.