NEDBANK GROUP’S
APPROACH TO SUSTAINABILITY

As South Africa’s ‘green bank’, Nedbank Group has an enviable reputation for consistently demonstrating absolute commitment to sustainability principles across its various operations. Sustainability considerations have formed part of the group’s core focus for some 18 years – long before their importance became widely recognised within the broader business community. Sustainability is integral to Nedbank’s strategic objectives and is fully incorporated into the way the group conducts its business, formulates its risk management processes, implements policies to govern behaviour and conduct, and assesses the performance of its employees, managers and executives.

Nedbank Group has embraced sustainability in all its facets, by placing environmental, social and ethical matters at the heart of the business. The group’s values, risk management, and business processes underpin its strategic approach to sustainability and reflect the desire of the business to preserve the future for all its stakeholders.

Ultimately, Nedbank Group embraces sustainability, not just as an environmental or social issue or as one element of governance or ethics, but rather as a means of bringing all of these issues together into a business model designed to ensure the long-term growth of a successful bank – for the benefit of all.

Nedbank Group aims to be a responsible corporate citizen at all levels. It recognises that a primary focus of its business is to maximise shareholder value, but while paying due regard to the social and environmental impact associated with such achievement.

Human rights are enshrined in the group’s strategies, policies, procedures and processes, and transformation and black economic empowerment (BEE) are actively pursued. The group remains absolutely committed to the development of an engaged, progressive, high-performance culture, underpinned by integrity and a clear code of ethics.

Acknowledging that the challenges of climate change extend beyond the environment, and also impact the economic and social arenas, Nedbank Group holds itself accountable to address climate change, and has approached this by issuing a climate change position statement and by setting reduction targets in respect of its energy, paper and water usage, as well as its business travel.

The group is fully aware of its responsibility to Make Things Happen for the communities that support it, and on which it has an impact. As a major banking group in a country in which sections of the community are beset by a lack of education, extreme poverty and ill health, the group considers it a privilege to be in a position to help address these issues.

2008 IN SUMMARY: A SUSTAINABILITY OVERVIEW

In 2008 Nedbank Group continued to instil a culture of sustainability across its operations. The bank succeeded in translating a number of strategic aspirations into positive actions, integrating sustainability measures as components of its various business processes, and incorporating specific sustainability measures into performance assessments.

Based on the belief that engagement has the potential to encourage change, the group continues its efforts to ensure that its culture, values and policies influence the behaviour of those with whom it partners and interacts.

The year saw Nedbank continuing its support of the UN Global Compact and its principles on human rights, labour issues, the environment and anti-corruption as well as its commitment to the Equator Principles. The group continues in its role as Cochair of the United Nations Environment Programme Finance Initiatives (UNEP FI) African Task Force and is actively engaged in the development and financing of sustainable solutions within the African context.

Access to finance was one of the bank’s major growth areas and Nedbank reached 1 million Mzansi clients.The reduction in retail bank fees over the past two years has also served to make Nedbank the most affordable of the big four banks –particularly in the lower-income and mass markets.

The group remains firm in its belief that its employees are at the heart of its success and has continued its efforts at recruiting and retaining the best talent in South Africa.The culture of the bank was further enhanced in 2008 by the ongoing promotion of behavioural change through employee participation. Staffmembers responded by consistently looking beyond themselves to the needs of others, undertaking extensive voluntary work, and making significant financial contributions to those less fortunate.

Conservation remains a key sustainability focus area and the bank’s partnership with the World Wide Fund for Nature –South Africa (WWF-SA) entered its third year. In 2008 the total contribution to The Green Trust by the Nedbank Group reached more than R90 million since inception – money that has been well-spent on over 150 major environmental projects, with nearly R70 million of it going into conservation.

The year under review also saw the group partnering and supporting the African Chapter of the Prince’s Rainforest Trust, a collaborative effort to stop deforestation in Africa.

As part of its commitment to environmental management and, particularly, the minimisation of its carbon footprint, the group issued a climate change position statement, supported by intensity reduction targets and measures aimed at managing and minimising its carbon footprint.

These and other material sustainability issues are discussed in detail in the full 2008 Nedbank Group Sustainability and Transformation Report and are outlined briefly on the following pages.

ENTERPRISE GOVERNANCE: ‘MOST RESPECTED BANK’

Refer to full Sustainability Report, section 2: Enterprise Governance and Compliance

The sustainability of Nedbank Group’s operations is ensured by means of strict adherence to competitive governance and compliance practices, which include good governance, strong ethics and a culture of compliance; effective management of social, environmental and ethical risks; and a commitment to responsible lending.

The group’s governance and compliance philosophy recognises the importance of ensuring ongoing adherence to legislative, regulatory and supervisory requirements as a critical component of effective risk management and sound enterprise governance.

Enterprise governance is at the heart of the group’s operations and strategically links good governance to effective performance management. The enterprise governance and compliance framework ensures a consistent focus on day-to-day governance requirements without losing sight of the long-term growth and profitability of the group. Add to this our commitment to proactive compliance with regulatory statutes and standards, and well-governed, regularly monitored internal policies and procedures, and the group boasts a governance and compliance approach that is not only industry-leading, but also highly enabling for the whole Nedbank Group.

SHAREHOLDERS: ‘BEST PLACE TO INVEST’

Refer to full Sustainability Report, section 3: Shareholders

Nedbank Group recognises that sound investment decisions can only be made when the investor has sufficient information at his or her disposal.As the owners of the group, Nedbank shareholders have a vested interest in its sustainable success, and the group itself has a responsibility to ensure that they have all the information they need to make considered investment choices.

The group therefore places top priority on providing shareholders with up-to-date, comprehensive information regarding its activities and performance. In this way shareholders are not only empowered to make informed investment decisions, but also encouraged to provide valuable feedback to enhance operations and profitability.

In 2008 Nedbank Group was again widely recognised and applauded by the local and international financial services industries for the quality of its investor relations.

CLIENT SERVICE: ‘BEST PLACE TO BANK’

Refer to full Sustainability Report, section 4: Our clients

As a bank for all South Africans, Nedbank Group recognises that sustainable success begins and ends with satisfied clients. Which is why, in 2008, the group once again devoted considerable resources and energy to listening to its clients, understanding their unique needs, and delivering appropriate solutions to Make Things Happen for them.

Attracting, retaining and delighting clients remain fundamental aspects of Nedbank Group’s sustainable business success. Superior client service is a key strategic focus area – as is expanding the group’s client base, particularly into previously unbanked communities. In addition to the ongoing enhancement of the products and services offered by the group’s three main business clusters, namely Nedbank Retail, Nedbank Corporate and Nedbank Capital, 2008 saw the group in its entirety sharpening its focus on delivering excellence in client service. Client satisfaction index results over the past three years have continued their upward trend.A notable 2008 achievement was Nedbank’s rating as the top service bank in South Africa for the second year in a row by the independent Ask Afrika Orange Index.

During 2008 there was a significant focus on the South African small and medium-enterprise (SME) market, as it is Nedbank Corporate’s view that small- and medium-sized enterprises have a crucial role to play in job creation, income generation, and the overall economic growth of the country. Nedbank also continued to build its capacity to fund affordable-housing developments.

In line with the strategy to expand into selected areas throughout Africa, Nedbank Group and Ecobank Transnational Incorporated (ETI), the parent company of Ecobank Group, have entered into a strategic business cooperation relationship to give clients access to a combined Pan-African banking network covering 30 countries (including South Africa) with over 1 000 branches and banking outlets across the continent.

Nedbank Capital, as the first African bank to have subscribed to the Equator Principles, continued to focus on responsible lending.The third annual Nedbank Capital Green Mining Awards, which acknowledge and celebrate the contribution that responsible mining and mineral beneficiation makes to the economic development of Africa, took place in 2008.

To position Nedbank and its clients appropriately for a carbon-constrained future Nedbank Capital established a dedicated carbon finance team to view carbon dioxide and other emissions holistically.

EMPLOYER OF CHOICE: ‘BEST PLACE TO WORK’

Refer to full Sustainability Report, section 5: Our staff

As a bank that has built its success on doing things differently, Nedbank Group recognises that it is its employees that differentiate the bank from its competitors. In 2008 the group built on its commitment to staff to celebrate their differences, continue transforming, and create a culture in which all employees can realise their potential, achieve their career and personal aspirations, give back to their communities, and Make Things Happen, for themselves and others.This was achieved via a particular focus on the four human resources areas of building a unique culture for competitive advantage, embedding talent management, ongoing learning and development, and accelerating transformation.

In 2008 the group developed and implemented a comprehensive employment equity plan that includes both qualitative and quantitative measures, as well as ongoing review and enhancement of the group’s remuneration and recognition programmes.Talent plans were also developed in all business clusters and Group Human Resources finalised its legislative and governance processes for people with disabilities.

Surveys conducted among employees showed solid improvements on the group’s culture alignment scores and increasingly positive staff culture results, particularly in the areas of leadership and communication.

The intention in 2009 and 2010 is to continue promoting employment equity and implementing the diversity management programme as a key driver of the organisational culture.

SUPPLIER RELATIONS: ‘PARTNERING FOR MUTUAL SUCCESS’

Refer to full Sustainability Report, section 6: Supplier relations

Nedbank Group’s relationship with its suppliers is built on mutually beneficial partnerships that not only ensure a reliable supply of required products and services, but also assist those suppliers to grow and develop their organisations for the benefit of the economy, the environment and society as a whole.

A dedicated BEE procurement management unit is located within the central group procurement area and this unit sets the framework rules for BEE procurement based on the agreed Nedbank Procurement Policy, while engaging with all business clusters in achieving group BEE goals and targets. The formalised Group Procurement Policy was amended and updated during 2008 to include a Supplier Code of Conduct. Regular supplier forums were also conducted to discuss problems and find solutions.

Nedbank Group remains committed to achieving its stated procurement targets for SMEs as a means of contributing to enterprise development (ED) in South Africa and helping to empower BEE businesses. In 2008 the group achieved an overall BEE spend ratio of 53,7% (2007: 53,1%).

SUPPORTING COMMUNITIES: ‘THE CARING BANK’

Refer to full Sustainability Report, section 7: CSI and staff volunteerism

In keeping with its aspiration to be ‘highly involved in the community’, Nedbank Group actively continued seeking out opportunities to contribute to local communities and nonprofit organisations as part of its sustainability commitments in 2008.

The group is committed to contributing to the upliftment of people and communities across the country and does so via an accessible, cooperative corporate social responsibility programme that encourages staff involvement and strives to deliver sustainable, life-changing benefits to those it touches, rather than merely being a financial handout.

During the year under review Nedbank Group built further on its reputation as a caring bank, and intends continuing in this vein in 2009 by Making Things Happen and making a positive contribution to the lives of those in need through the proactive identification of developmental needs.

Ultimately the group aims to become a benchmark of effective corporate social investment (CSI), and the total donation of some R43,5 million to CSI projects in 2008, the steady growth in takeup of Nedbank Affinity-linked products, as well as the ongoing contribution by staffmembers through the various volunteerism projects, constitute further steps towards realising this vision.

MINIMISING OUR IMPACT ON THE ENVIRONMENT: ‘THE GREEN BANK’

Refer to full Sustainability Report, section 8:The environment

Nedbank Group recognises that being a financial services organisation doesn’t excuse it from taking responsibility for looking after the environment. In fact, the group considers it a strategic imperative to minimise any possible negative environmental effects of its operations, and encourages its business partners, suppliers and clients to do the same.The bank’s commitment to the environment extends far beyond legislative compliance, and is an integral part of its strategy and a core focus area of its sustainability efforts.

In 2008 the group was once again included in the Dow Jones World Sustainability Index (DJSI) – the fifth year in succession that this has been the case. Nedbank Group is one of only 25 banks worldwide and three companies with primary listings in South Africa to be included on the index.

As the first South African bank to join the UNEP FI Unit in 2004, the group continued its support during 2008 by cochairing the UNEP FI African Task Force, which has the responsibility for ensuring close collaboration between more than 280 banks, insurance and reinsurance companies, fund managers and venture capitalists to promote links between the environment and financial performance. Nedbank also participated in the Climate Change Work Stream’s Project Energy Efficiency Survey conducted during 2008.

Closer to home, Nedbank Group cemented its Environmental Policy, which sets out high-level principles for environmental management across the group and forms part of its operating philosophy, policies, standards and values. In 2008 the group also further embedded the principles contained in its environmental and corporate responsibility policies by including specific focus areas and deliverables in a corporate responsibility framework. The bank also established a group environmental forum with the aim of, among others, ensuring the effective coordination of environmental initiatives across the group.

Climate change remains a core focus area and Nedbank Group believes in playing its part in increasing energy efficiency and reducing carbon emissions. In line with its commitment to the environment, the group drew up a formal climate change position statement in 2008 to serve as a public declaration and pledge to reduce its impact on the environment by limiting energy, paper and water usage and reducing carbon emissions.

To position Nedbank and its clients appropriately for a carbon-constrained future Nedbank Capital established a dedicated carbon finance team to view carbon dioxide and other emissions holistically.

2008 saw Nedbank Group involving itself in efforts to stop deforestation in Africa and preserve our world’s rainforests by joining the Prince’s Rainforest Project (PRP), the African chapter of which is aimed at helping to focus attention on Africa and find solutions for the problem of deforestation on the continent.

The bank’s unique conservation partnership with WWF-SA, which spans some 18 years, was strengthened in 2008 with WWF-SA providing direct input into Nedbank Group’s sustainability and environmental policies, strategies, systems and training, while the group provided finance to a number of WWF-SA projects.

TRANSFORMATION: ‘A BANK FOR ALL’

Refer to full Sustainability Report, various sections Nedbank continues to approach transformation from a foundation of trust in which all staffmembers and stakeholders are given the time and opportunity to make their voice heard on the issue. Transformation is still viewed as a strategic imperative and a business opportunity rather than a matter of legislative compliance. In all its transformation efforts balance remains key, and the business case for transformation is driven at three levels by stakeholders, clients and staff.

In 2008 the group enjoyed the following highlights in terms of its ongoing transformation efforts:

CONCLUSION

As a company that continually strives to be economically viable, socially responsible and environmentally sound, Nedbank Group continues to protect and grow its reputation as the country’s truly ‘green bank’. In this way the group continues to live out its commitment to Make Things Happen by serving as a driver of sustainability both within its business and on a far broader scale.A gratifying achievement was receiving the Emerging Markets Sustainable Bank of the Year Award for the Middle East and Africa at the Financial Times Sustainable Banking Awards function in London for the second year in a row.

Please refer to www.nedbankgroup.co.za for an electronic copy of the complete 2008 Transformation and Sustainability Report.