Nedcor views sustainable development as an
essential component in the growth and improvement of the
company, our country and the rest of the world. Finding a
balance between economic objectives, social upliftment activities
and environmental responsibility is an integral part of our
business strategy, guiding the manner in which we operate
as a business.
Nedcor fully endorses the recommendations of the King Report
on Corporate Governance for South Africa (King II), and a
King II implementation plan is in place for the organisation.
Nedcor has further incorporated the management of environmental
and social risks into its Enterprise-wide Governance and
Risk Management Frameworks to ensure that they are properly
integrated into the organisations strategy.
We are committed to listening to stakeholder suggestions
and strive to improve our levels of disclosure and communication
with all our stakeholders even further to ensure that sustainability
considerations continue to permeate every aspect of our business.
In recognition of the progress made in managing sustainability
matters during 2004 Nedcor was included in the JSE Securities
Exchange Socially Responsible Investment (SRI) Index and
is one of only four South African companies to be included
in the Dow Jones World Sustainability Index.
detailed information can be found in the Nedcor
2004 Sustainability Report. The Nedcor
2004 Sustainability Report has been compiled in line with the Global Reporting
Initiative (GRI) guidelines and selected environmental reporting
indicators that have been developed specifically for the
Nedcor is committed to ensuring accurate,
regular and transparent communication with its shareholders
and the investment community
to provide them with a greater understanding of the groups
performance and strategic plans.
In the past year communication activities included extensive
local and international roadshows, participation in local
and international conferences, one-on-one meetings with shareholders
and analysts as well as presentations by members of Nedcors
Executive Committee. A substantial amount of information
regarding Nedcor was also made available to shareholders
and the investment
community in the rights offer circular, which was produced
in the first half of 2004.
To provide investors and other stakeholders with further
independent information Nedcor engaged Moodys rating
agency formally to evaluate the group, along with the groups
two existing formal rating agencies, Fitch and CA-Ratings.
In line with the groups commitment to improving segmental
disclosure, a risk-weighted capital allocation methodology
was introduced towards the end of 2004. Matched maturity
funds transfer pricing was also implemented and the allocation
of costs between business units was refined. Although there
is still room for further improvement in segmental disclosure,
the segmental results now provide a far better reflection
of the performance of each business unit within the group
and should aid investors in making more informed decisions.
There is an increasing recognition by financial
services companies the world over of the importance of
excellence as the only sustainable differentiator within
the industry. Nedcor subscribes to this belief, maintaining
a sustained focus in this area during 2004. This focus
on client service will be continued and intensified during
Nedcor recognises the need for retaining client loyalty,
expanding services to a broader client base and continuing
to improve client service. Aligning the organisation with
a client-driven business model is one of the five areas of
the groups strategic focus.
To this end the group underwent a reorganisation towards
the end of 2004 to ensure that all client businesses were
incorporated into three client clusters Nedbank Retail,
Nedbank Corporate and Nedbank Capital to improve client
service and accountability. Cross-sell initiatives are being
undertaken to ensure that the bank is providing a full portfolio
of services to its clients. The group is also focusing on
initiatives to increase the number of clients for whom it
is the primary banker in both the corporate and retail markets.
During 2004 Nedbank Retail was reorganised to improve client
service and accountability by creating integrated standalone
home loan, card and microlending businesses as well as integrating
retail and branch operations. There was also a focus on implementing
integrated credit scoring to improve turnaround times, various
client retention programmes and targeting the youth market
and small and medium enterprises as specific growth areas.
Nedcors client awards in 2004 include the Ombudsman
for Banking Services Award for Excellence in Customer Complaint
Handling and the Code of Banking Practice Award for Adherence
to the Code (second consecutive year) as well as an individual
excellence award to client service consultant, Shaun Kearns.
2004 proved an exceptionally challenging
year for the Nedcor Group, particularly from a people perspective.
The less than
favourable business performance during the preceding two
years resulted in the voluntary and business-initiated
retrenchment of 2 045 of our people and a complete restructuring
Coupled with the appointment of a new group executive team
and relentless media scrutiny, the tough climb back to the
top has affected every employee to a greater or lesser extent.
To improve staff morale Chief Executive,Tom Boardman, and
executives have conducted numerous staff roadshows, and staff
have been involved in formulating the groups strategy
and initiatives such as Talk to Tom were put
Nedcors employment equity strategy is ensuring that
the organisations demographics are appropriately aligned
with and meet the aspirations of the Financial Sector Charter
It is part of the culture of the group that employees often
participate in upliftment and developmental work, including
the Local Hero Programme,Team Challenge and their own initiatives.
Nedcors ranking in the Deloitte & Touche Employer
of Choice Survey improved from 79th to 56th in one year.
Nedcor recognises that the FSC has become
an integral part of our business, as well as of the development
of South Africa,
and seeks to go beyond the targets and mere compliance. As
part of the groups commitment to lead in transformation
considerable progress has been made in many areas of the
FSC, but there are still some where we face a challenge in
meeting the FSCs targets. An Executive Transformation
Committee, whose membership includes representatives from
the executive management team as well as specialists from
across the group, focuses on monitoring and improving the
Nedcor has implemented employment equity, as a matter of
course, long before the promulgation of legislation in this
regard. The implementation of the FSC coincided with the
second half of the Nedcor/BoE merger, when our key focus
the delivery of synergy savings and the migration of BoE
clients, which may have affected our ability to deliver on
some aspects of the FSC.
Derek Muller, a director in the Chief Executives
Office, is Chairman of the Operating Board of the Banking
Council of South Africa, as well as the representative of
the banks on the Financial Sector Charter Council. During
2004 he acted as Chairman of the Banking Councils Transformation
Committee. Dereks involvement with the Banking Council,
both at board and operating council level, provides him with
insight into the workings, resolutions and recommendations
of all industry workgroups.
In liaison with one of the other major banks, Nedbank has
established an inter-bank measurement group to institute
a standard approach to measurements and reporting, especially
in areas where no targets or measurement methodologies have
yet been established or approved. This is working well, ensuring
consistency in both interpretation and measurement methodologies.
A project team, led by Derek Muller, was established during
March 2004 to address the FSC requirements of direct and
indirect ownership in the group. This project is in the completion
phase, following extensive consultation with a variety of
interest groups and government. The deal will be addressing
black economic empowerment (BEE) equity ownership by a broad
cross-section of interests including black staff and management.
The provision of banking products to individuals who are
defined as previously disadvantaged is a strategic imperative
for Nedcor. While the group has an existing presence in this
market through Peoples Bank, it is finalising research on
its entire client base to identify where new products and
services may be offered. There is also a focus on low-income
housing and the bank has launched an educational programme
for 800 black estate agents and is developing a range of
products to address FSC issues in this essential area. Nedcor
is currently lagging the other major banks in the opening
of Mzansi Accounts, which is mainly attributable to a lack
of footprint in the appropriate markets, when compared with
the groups competitors. Approximately 40 000 accounts
have been opened to date. The target for 2005 to 2008 is
to open 200 000 new accounts per annum.
Nedbank Corporate and Nedbank Capital have been active
over many years in facilitating BEE financing transactions,
involving ownership transfer to black interest groups. They
have been active in all aspects of advisory and legal services,
debt financing, equity raising and working capital support.
Nedcor is committed to procuring an increasing amount of
its total purchases of goods and services from black-owned
or black-influenced companies. BEE credentials of the groups
top 100 suppliers, who account for 75% of total spend, have
been validated. We managed to raise BEE spend from 8,8% in
2003 to in excess of 22% in 2004.
An integrated human resources strategy for the retention
and attraction of black managers and women has been tabled
and signed off by the Group Exco.
Nedcor remains committed to reaching its staff empowerment
targets and further progress was made in 2004. Black people
now comprise 31% of the group executive, 13% of senior management,
22% of middle management, 36% of junior management and 33%
of the Nedcor Board. 1,4% of the 2004 payroll was spent on
training and development of black staff.
Corporate social investment
Corporate social investment
(CSI) is an integral part of the Nedcor Groups business
as it strives to strengthen the economy and better the lives
of disadvantaged communities
through projects that lead to job creation, infrastructural
development, enhanced human health, improved quality of life
and ecosystem health. As discussed in the previous section,
BEE guidelines have also been taken into account in the development
of Nedcors CSI policy.
During 2004 the Nedcor Foundation funded more than 450
projects (an increase of almost 100 on the previous year)
and invested over R39 million in the fields of welfare, community
development and sustainable development, including skills
training and job creation. Nedcor was also proud to sponsor
the South African Paralympic Team and pledged a total of
R920 000 towards the centrally coordinated SA Relief Fund
for Tsunami Victims.
In Trialogues annual reputational survey non-profit
organisations (NPOs) rated Nedcor third among 70 corporates
in the category of Good Corporate Grantmaker and third among
48 corporates in the category Most Widely Recognised Corporate
Grantmakers. Nedcor is rated by NPOs as having the third-biggest
CSI budget out of 39 identified corporates. This is the first
time Nedcor has been rated in the top three in this category
since 1999, despite the actual reduction in Nedcor CSI spend
channelled through the Nedcor Foundation.
Nedcor has a long history of promoting
environmental responsibility, is committed to managing environmental
issues and aims at
continuous improvement in environmental management and performance.
As part of this process the groups environmental policy
has been revised to take further account of its lending and
financing activities, and forms the first layer in the integrated
Environmental, Health and Safety Programme.
Nedcor is proud of the products it has developed (such
as its Pay per K car insurance) that highlight the clear
linkages between environmental responsibility and economic
prosperity and will continue
to research new and innovative ways of illustrating its commitment
to environmental issues.
During 2004 Nedcor expanded its partnership with the World
Wildlife Foundation SA (WWF-SA) to form the first formal
conservation partnership in South Africa and Nedcor also
became a patron member of the Wildlife and Environment Society
of South Africa. Nedcor was the first South African bank
to join the United Nations Environment Programme Finance
Initiatives (UNEP FI) in February 2004 as part of its commitment
to sustainable development and environmental responsibility.
A total of R5,24 million was channelled through the Nedcor
Foundation,The Green Trust programmes and the Corporate Governance
Division into environmental initiatives. To date Nedcor has
donated over R63,3 million to The Green Trust, over R18 million
to The Sports Trust (aside from Olympic and Paralympic sponsorships)
and contributed significantly to the over R9 million disbursed
by the Arts & Culture Trust.
Sustainability in our African operations
contributing to the development of the South African economy
and society, the Nedcor Group is also committed
to sustainability and good governance in all its African
operations. To improve communications with our stakeholders
the Nedcor 2004 Sustainability Report includes a section
on the organisations African operations with a focus
on Lesotho, Swaziland and Namibia.