The following pages contain salient points from the 2009 Sustainability Report. While every effort has been made to include a summary of all relevant information, we would like to refer you to the 2009 sustainability report for full details of the groups sustainability efforts. The sustainability report is available from any Nedbank branch or can be accessed at www.nedbankgroup.co.za.
This overview includes highlights of the 2009 sustainability initiatives and outlines Nedbank Groups integrated approach to sustainability, which focuses on the four areas of economic sustainability, social sustainability, environmental sustainability and cultural sustainability.
Despite the challenging economic and market conditions experienced during 2009, Nedbank Group remained committed to its aspiration to Make Things Happen for all its stakeholders. The group recognises that its ability to do so and continue adding value to the lives of others and the environment is largely dependent on it embracing a holistic approach to all business dealings and remaining focused on the fundamental elements of sustainable banking.
As a result, 2009 saw Nedbank Group focused on building on its commitment to environmental preservation, social upliftment, continued transformation and the fostering of a corporate culture to drive sustainability all of which are integral aspects of the banks sustainability. Such an integrated sustainability approach positions the bank to respond to the needs of stakeholders and to make a valuable contribution to the future of South Africa.
The success of the integrated sustainability approach has been recognised through a number of accolades, including being recognised in the Ask Afrika Trust Barometer® as the company that is doing the most to address its impact on the environment; taking the leading position in the South African Carbon Disclosure Project Leadership Index, and receiving South Africas first four-star Green Star SA rating for the Nedbank phase II corporate headoffice building.
Acknowledgements aside, for Nedbank Group sustainability is ultimately about walking a path to a better future, together with all its stakeholders. This philosophy lies at the heart of the groups ongoing sustainability journey and drives it to realise its vision to Make Things Happen for its clients, staff, partners, shareholders, communities, and the environment.
One of the key lessons that Nedbank Group has learned on its sustainability journey is that it is not the profitability of a business that ensures its sustainability, but rather the sustainability of a business that drives its success and profitability.
With this lesson has come the understanding that sustainability cannot be achieved through isolated initiatives.
To become a truly sustainable and resilient organisation encompasses every facet of the organisation, which is why placing sustainable practices at the heart of business operations is a priority for Nedbank Group.
And since the journey towards sustainability must take place in a holistic, integrated manner, Nedbank Groups sustainability focus brings together the essential elements of economic, environmental, social and cultural sustainability with a view to unlock synergies and to maximise the benefits of the necessary connection between these four sustainability focus areas.
To this end sustainability is incorporated into every aspect of the groups business. It informs the way it thinks, behaves, operates and plans. Which is why the past year has seen a particular focus on developing and implementing an integrated group sustainability business plan to drive sustainability forward, to measure progress accurately, and to ensure that the sustainability efforts of all the parts of Nedbank Group contribute to the sustainability journey of the whole, thereby ensuring the resilience of Nedbank Group.
The global economic crisis of 2008 and 2009 highlighted the importance of economic sustainability, which is not solely dependent on external factors or operating environments. This understanding that economic sustainability is one of the cornerstones of a viable and resilient business led Nedbank Group to focus more intensely on developing and implementing worldclass governance and compliance practices and hone its risk management skills in 2009. In so doing the bank is positioning itself to continue growing shareholder value, protecting the financial interests of its clients, employees and suppliers, and contributing positively to the economic future of the country regardless of outside economic forces beyond its control.
Nedbank Group remains committed to the management of funds in its care and the diverse investments it makes. Competitive governance and compliance remain strategic imperatives, and a focus on good governance remains at the heart of operations linking corporate governance and compliance to performance management.
The Nedbank Group Enterprise Governance and Compliance Framework ensures a consistent focus on day-today governance requirements, while maintaining a view of the long-term, sustainable growth and profitability of the group.
Nedbank Group subscribes to King II and has developed a comprehensive implementation and monitoring plan during the past seven years to meet its requirements and recommendations. A review of the recently launched King III Governance Code, undertaken to assess Nedbank Groups existing governance practices, revealed that the business is already practising sound governance principles that are on a par with the required international standards. The group also complies with the Code of Banking Practice.
Values are seen as an effective way of ensuring consistent action and behaviour across the group. The group values provide a framework on which the culture of the organisation is built. The Nedbank Group Code of Ethics and business conduct was reviewed in 2009 and used as a basis for the groups new employee pledge.
Nedbank Group is acutely aware of the challenging global conditions facing the banking industry, and it continues to commit itself to worldclass risk management as an integral component of its business. The groups risk philosophy emphasises the importance of risk as a business component. For this reason Nedbank Group does not seek to avoid risk, but rather strives to understand risk, manage it effectively, and evaluate it in the context of its potential for reward. Emphasis is placed on producing high-quality, sustainable earnings that will attract a premium rating for the group and protect the interests of shareholders, depositors and other stakeholders.
Nedbank Group Limited has again strengthened its regulatory capital ratios in 2009, with a Tier 1 capital adequacy ratio of 11,5% (2008: 9,6%) and a total capital adequacy ratio of 14,9% (2008: 12,4%). The core Tier 1 capital adequacy ratio was 9,9% (2008: 8,2%).
Nedbank Limited has also strengthened regulatory capital ratios, with a Tier 1 capital adequacy ratio of 11,7% (2008: 9,8%) and a total capital adequacy ratio of 15,6% (2008: 13,1%). The core Tier 1 capital adequacy ratio was 9,6% (2008: 8,0%). All capital adequacy ratios are now well above the groups target ranges, including core Tier 1. They include unappropriated profits at the year-end to the extent that these are not expected to reverse and are expected to be appropriated subsequent to the year-end.
Nedbank Groups capital adequacy ratios increased significantly over the past two years due to a strong focus on the optimisation of risk-weighted assets (capital), enabled by enhancing data quality and more selective asset growth using our economic-profit-based philosophy of managing for value, the retention of earnings, the profits made on the disposal of Visa shares in 2008 and the issuing of some non-core Tier 1 capital instruments.
Nedbank Group seeks to play a central role in uplifting the economy of South Africa and improving the lives and futures of all its people. As such, socioeconomic development and community upliftment form a significant part of the banks strategic intent.
Nedbank Groups vision to become a bank for all South Africans sees the bank firmly committed to improving access to its products and services through steady growth in distribution points and tailored banking services, particularly in those areas of the country where access to banking and financial services has so far been scarce or non-existent.
Over the past three years Nedbank Retail has invested significantly in a range of banking channels, most notably automated teller machines and low-cost physical distribution points. This has led to a considerable improvement in Nedbanks banking footprint, particularly in the mass-market areas where the bank was previously underrepresented.
Nedbank Group has also focused on consumer education, enhancing service delivery and competitive pricing to support access to finance further.
Nedbank Group aspires to partner with government departments and institutions in economic and social development initiatives. The groups Public Sector Business Unit services the public sector, including central, provincial and local government, state-owned enterprises and various government agencies and commissions. The group has also played a key role in the public sector infrastructure rollout by providing funding and guarantees to state-owned enterprises and large metropolitan municipalities.
A key focus of Nedbank Group for 2010 is the design, development and implementation of a multifaceted learning and skills development programme aimed at creating awareness among clients and the broader SA public of issues around sustainability, and helping to modify the behaviour of individuals and communities where Nedbank Group has a footprint.
Enterprise development is considered a groupwide imperative and forms part of Nedbank Groups commitment to the sustainable growth and development of the SA economy.
To this end the group continues to focus on the achievement of preferential procurement targets and 2009 saw the groups Black Economic Empowerment (BEE) Procurement Unit helping further to embed preferential procurement policies and procedures across the organisation.
The Nedbank Foundation is the primary corporate social investment (CSI) arm of Nedbank Group and is integral to the organisations achievement of its Deep Green aspiration of being highly involved in the community and environment. The foundation contributes significantly to community upliftment and development programmes that are both empowering and sustainable. To ensure the long-term effectiveness of the contributions it makes the foundation focuses its CSI efforts on the key areas of education, community development, socioeconomic development and staff volunteerism. Thanks to the equitable spread of contributions across these focus areas in 2009 the Nedbank Foundation now enjoys a footprint across all nine provinces. During 2009 the Nedbank Foundation spent R30,5 million (2008: R27,2 million) in support of more than 291 projects.
The Nedbank Affinities continue to offer clients of the bank a unique opportunity to partner with it in support of causes that are close to their hearts, simply through making use of specified affinity-linked products, and at no cost to themselves. The Nedbank Affinities are:
As South Africas green bank, Nedbank Group embraces its role in conserving the countrys natural resources for future generations. The groups commitment to the environment is integral to its business strategy and a focus area of its integrated sustainability approach.
The groups environmental policy is aimed at ensuring that business is conducted in a responsible, fair and honest manner, and in keeping with governments stated objectives in terms of environmental protection.
Addressing the impacts of climate change and playing a proactive role in ensuring resilience for the bank and its stakeholders remained key for Nedbank Group in 2009. In addition to conducting a variety of awareness campaigns among various stakeholders, the group undertook many initiatives with the specific aim of growing a green culture among its staff and suppliers.
During the year intensity reduction targets were incorporated into groupwide performance assessment measures, while a Group Environmental Forum working committee was established to track performance against these targets on a monthly basis and drive awareness.
Nedbank Group was encouraged by the acknowledgement of the SA Carbon Disclosure Project, which named Nedbank Group as the leading company in terms of the transparency of its carbon disclosure and reporting.
Nedbank Groups commitment to fighting climate change was taken to the next level in 2009 with the announcement of the banks commitment to carbon neutrality. This commitment represents the next phase of the banks climate leadership journey and will take it beyond the management and reduction of carbon emissions to a position of offsetting its residual carbon footprint. Building on its long relationship with World Wide Fund for Nature South Africa the group partnered with the organisation in establishing a carbon-neutral task team to inform its carbon-neutral strategy and carbon-offsetting approach.
Late in 2009 Nedbank Capital and Wildlife Works Inc signed an agreement on an East African carbon project Rukinga Wildlife Sanctuary, Africas first large carbon finance deal.
On 15 October 2009 the Nedbank Group phase II corporate headoffice building became the first building in South Africa to be awarded a Green Star South Africa rating. This achievement comes one year after the Green Building Council of South Africa launched its first rating tool, the Green Star South Africa.
Nedbank Group continued its support of the United Nations Environment Programme Finance Initiative (UNEP FI) during 2009 by co-chairing the UNEP FI African Task Force, which addresses sustainability issues in the African context. The group has joined, and is co-chairing, the Water and Finance Workstream, which focuses on industry usage of water and water-offsetting initiatives. Nedbank Group contributed to the workstreams first publication in the Chief Liquidity Series Agribusiness, which included a study on the impact of water scarcity on agriculture.
The Green Affinity, which has served as a vehicle for over R100 million in support of The Green Trust since its inception in 1990. In 2009 R5,4 million was donated to The Green Trust (R5,35 million in 2008).
As an employer of more than 27 000 people and a business that utilises a wide variety of services and products procured from many suppliers, Nedbank Group is in the privileged position of being able to influence the thoughts, attitudes and behaviours of many South Africans, develop leaders and help create a society that values and embraces diversity and works together for the greater good of all.
Increasingly the Nedbank Group employee profile is being transformed to be more representative of the demographics of the people it serves. The banks transformation journey gained significant momentum in 2009, with an enhanced focus on employment equity (EE) as a key driver of transformation. Nedbank Groups efforts in this regard were rewarded with the third place overall in the 2009 Financial Mail Top Empowered Companies Survey and 10th place in the EE pillar of the same survey. This makes Nedbank the most empowered company among all financial services companies in South Africa. Nedbank is also encouraged by our level-two BEE contributor status.
To manage the workforce profile and costs, and mitigate the risks and challenges faced during the economic downturn Nedbank Group was required to institute a recruitment freeze during 2009.
Despite this, the vision of making Nedbank Group a great place to work serves as a constant reminder that its employees are its most important asset, and that their happiness, productivity and development are crucial to the sustainable success of the bank as a whole.
The four key people focus areas identified in 2008 were therefore retained as the foundation of the groups people strategy for 2009. These are:
As part of its Employee Wellbeing Programme the group offers confidential, professional consultation on any personal problems at no cost to employees. The group is also committed to instilling a healthy work/life balance in its employees and, in 2009, the flexible work practices on offer were enhanced with the implementation of two-, three- and four-day week options.
Nedbank Group has adopted policies that enforce its commitment to addressing HIV/Aids in a proactive, positive, supportive and non-discriminatory manner. The group offers treatment to HIV-positive employees through its HIV/ Aids management programme, which forms part of the Nedgroup Medical Aid Scheme structure. Free antiretroviral drugs are provided as part of a managed-care programme.
The extent to which employees engage effectively with their managers has been recognised as a key factor in the retention, motivation and development of employees. To ensure such engagement Nedbank Group has implemented various mechanisms, including management conversations, performance feedback sessions, team interventions, recognition functions, and cluster- and group-based roadshows.
A career choices model serves as the career development framework at Nedbank Group and, when linked to the Management Development Programme, affords employees an opportunity to identify the skills required to follow a particular career path and plan their development accordingly. The group also implemented a coaching and mentoring framework through which it offers employees both internal and external coaches, with a particular focus on supporting the professional and personal growth of its people.The alignment of Nedbank Group’s business goals, individual performance and employee development is a significant part of developing a high-performance culture. The group’s holistic performance management process enables it to assess business performance against the set strategic focus areas, ensures that employees are on track to achieve their targets and contributes to the achievement of business objectives.
People with disabilities (PWD) are a specific focus area in the ongoing transformation efforts of the group. The Nedbank PWD Forum was fully operational in 2009 and the chairperson of the forum is a permanent member of the Nedbank Employment Equity Forum. This ensures that any issues relating to employees with disabilities receive the necessary attention in a formalised and consultative manner. The forum, made up of cluster representatives, monitors performance against EE targets for PWD on a monthly basis.As a bank that is committed to being highly involved in the community and environment, Nedbank Group is committed to encouraging and enabling its staff to share their skills and talents in service of others. The groups staff volunteerism programme caters for employees who wish to give of their time to worthy causes. A variety of opportunities are made available for volunteerism and the giving of financial support through initiatives like the Nedbank Team Challenge, the Local Hero Programme and Payroll Giving.
Nedbanks Occupational Health and Safety (OHS) programme was once again of the highest standard in 2009, with more than 95% compliance of headoffice sites, regional offices and branches to the OHS Act (85 of 1993) and its regulations.
|Headline earnings (Rm)||4 277||5 765||5 921||The group is solidly profitable, but earnings declined in the context of the global financial crisis. Earnings were impacted by increasing retail impairments and reduced NII from reduced endowment earnings following the 450 basis point decrease in interest rates. ROE and ROA metrics declined in line with the reduction in earnings, and a stable capital and asset position being maintained.|
|Diluted headline EPS (cents)||983||1 401||1 429|
|Efficiency ratio (%)||53,5||51,1||54,9||Good expense management, but declined owing to lower income and inclusion of joint ventures.|
|Total capital adequacy (%)||14,9||12,4||11,4||Capital position strengthened significantly above the group’s internal targets.|
|Assets under management (Rm)||93 625||84 381||85 438||Domestic asset management showed good growth.|
|Number of permanent employees||27 037||27 570||26 522||Good progress. Refer section 5 for further details.|
|Black staff at executive level (%)||40||30||30|
|at senior management level (%)||27,88||26,96||22,25|
|at middle management level (%)||46,89||44,64||35,99|
|at junior management level (%)||74,39||72,76||48,88|
|Training and skills development spend as percentage of payroll||4,32||4,05||2,02|
|Overall BEE spend ratio (%)||83,4||62,0||48,1|
|Compliance (%) to the Nedbank Group Occupational Health and Safety (OHS) Programme||Above 95||93,56||91,22||Measured in terms of Nedbank’s OHS Policy, which is more stringent than legislation requires. Compliance in terms of the Occupational Health and Safety Act: 98,88% (2008: 98,56%).|
|Corporate social investment (CSI) spend (Rm)
(Nedbank Foundation, other foundations and trusts and Nedbank Affinities)
|68,31||38,01||37,12||Increase is due to a new bursary scheme as well as increases in spend from the Community Trust and BoE Education Fund.|
|Socioeconomic development spend (Rm)||72,55||66,90||45,30||Good progress. Refer section 4 for further details.|
|Electricity consumption (kWh)||95 546 670||98 710 927||100 580 577||Good housekeeping initiatives and technical interventions for lighting and air conditioning to continue reduction of electricity consumption.|
|Water consumption (kilolitres)||310 210||373 935||445 459||Good housekeeping initiatives and rolling out of technical interventions to reduce water consumption.|
|Waste reduction: Landfill (tonnes)||552||674||774||Waste sent to landfills has decreased due to better sorting, which in turn has increased recycling.|
|Total recycled materials glass, plastic, tin, cardboard and paper (tonnes)||454,91||419,20||396,20||Increase in recycling is due to waste being sorted more efficiently, and therefore less waste going to landfill.|
|Paper consumption (tonnes)||989||1 007||1 047||Refer to the overview of the 2009 carbon emissions in the Environmental sustainability section.|
|Total carbon emissions (tonnes)||213 606,23||135 468,69||129 946,25||Please refer to section 4 for further details.|
|The Green Trust disbursements (Rm)||5,31||5,35||5,3||Details of The Green Trust projects are contained in section 4, page 66.|
|Total environmental expenditure (Rm)||31,5||13,6||6,5||2009 increase due to R15m spend towards carbon neutrality.|
|Dow Jones World Sustainability Index||Yes||Yes||Yes||Only SA bank included in index, 2009: 77% (2008: 74%).|
|JSE Social Responsibility Index||Yes||Yes||Yes||Included since launch of index in 2004.|
|Includes CSI and sports development and consumer education.||2007 figures restated.|
|Includes CSI and developmental sponsorship, external bursary scheme and consumer education.||2008 base restated for certain premises as a result of (i) amended billing and occupation statistics and (ii) to reflect actual data now available where averages were used in initial 2008 calculation.|
|Includes CSI and consumer education.||Data converted from cubic metres (as previously reported) to tonnes.|
|Campus sites only.||2008.|