Transparency. Made in Germany. Sustainability Report 2014.

Transcription

1 With 2014 Consolidated Environmental Statement. Mohs scale (for measuring the hardness of diamonds and other minerals) Inventor: Carl Friedrich Christian Mohs Germany, 1812 Transparency. Made in Germany. Sustainability Report Landesbank Baden-Württemberg

2 SUSTAINABILITY REPORT 2014 Growing Responsibly. Economic conditions continue to be difficult. We can be satisfied with our Bank s performance in this challenging environment. Today, we are purely a customer-driven bank, and our business model is yielding positive results. We believe sustainability is a necessary condition for LBBW s fitness for the future and an integral part of our corporate strategy and policies.

3 2014 Sustainability Report with 2014 Consolidated Environmental Statement. About This Report 4 Strategy and Management 5 Foreword by Hans-Jörg Vetter 6 The Company 9 Sustainability Strategy and Management 11 Stakeholder Communication 34 Sustainability Ratings, Awards, and Memberships 38 Binding Standards 43 Responsibility and Commitment 53 Customers 54 Employees 69 Society 91 Environment 97 GRI G3 Index, including Financial Services Sector Supplement 118 Audit Opinion 122 Contacts/Publishing Information 125 The sections and sub-sections designated ES in this Report are part of LBBW s Updated 2014 Environmental Statement. The Company 9 Sustainability Policy 11 Sustainability Goals and Operational Guidelines 13 Sustainability Activities 21 Sustainability Program 26 Stakeholder Communication 34 Sustainability Ratings, Awards, and Memberships 38 Scope of Applicability and EMAS Certification 43 Supplier Management 44 Sustainable Products, Sustainable Action 56 LBBW Improvement Process 88 Environment 97

4 ABOUT THIS REPORT About This Report. Reporting Period The LBBW Sustainability Report 2014 describes the period from 1 September 2013 to 31 August The time series for environmental data generally covers the calendar years from 2009 to LBBW s previous Sustainability Report was published on 25 October LBBW plans to continue publishing the Sustainability Report annually. Report Content The topics covered by this Report are in line with the G3 guidelines, including the Sector Supplements of the Global Reporting Initiative (GRI). In GRI-based reports, the report authors must self-declare the level at which they have applied the GRI reporting framework. C is the lowest level, and A is the highest level. Our Sustainability Report complies with GRI Application Level B+. Scope of Reporting Our sustainability management system is applicable to LBBW (Bank) (including BW Bank, Rheinland-Pfalz Bank, and Sachsen Bank) and the wholly owned subsidiaries GastroEvent GmbH, LBBW Immobilien Management GmbH (including BW Immobilien GmbH), and LBBW Asset Management Investmentgesellschaft mbh. The Sustainability Report therefore covers this part of the LBBW Group. Editorial Notes All of the information in this Report was compiled with the utmost care. To the best of our knowledge, this information and data are correct. Nonetheless, no liability can be assumed for the correctness or completeness of the information provided. We would like to thank the numerous colleagues who participated in preparating this Report for their support. 4

5 Strategy and Management. Consistent Management. As a Landesbank, we are responsible for the future of our region. We aim to work toward the stability of companies and the economy here, while at the same time actively contributing to the well-being of both society and the environment. Our sustainability goals guide us along this path, and we measure our performance by how systematically we can achieve them.

6 STRATEGY AND MANAGEMENT Concrete guidelines provide mandatory guidance for responsible, sustainable action by each and every LBBW employee. HANS-JÖRG VETTER Hans-Jörg Vetter, Chairman of the Board of Managing Directors of Landesbank Baden- Württemberg. 6

7 STRATEGY AND MANAGEMENT Dear Customers, Dear Business Partners of the LBBW Group, Dear Readers, Conditions in the banking industry continue to be difficult. For the foreseeable future, we live in a world of low interest rates: Due to weak economic performance in the eurozone, the ECB has not wavered from its expansive monetary policy to date. Regulations are continually being tightened too. In April of this year, uniform rules were approved in Europe for restructuring and winding down banks, and in November 2014, the ECB will begin to supervise credit institutions directly, including our Bank. We can be satisfied with our Bank s performance in this challenging environment; our business model is yielding positive results. The work has been done, and the enormous effort put forth in recent years is paying off. Profitability has been stable, our risk position is significantly improved, and our capital resources are solid, meaning rating agencies again see us in a more positive light. We are making good progress and will continue to follow the path we have taken. And, it goes without saying, we draw the same conclusion about sustainability. Very early on, we committed to sustainability with our focus squarely on the needs and benefits of our customers - both in terms of strategy and our everyday business. Concrete guidelines for investing and lending, as well as human resources policy and business operations in general, provide mandatory guidance for responsible, sustainable action by each and every LBBW employee. We are pleased that this foundation allows sustainability to be actively pursued and implemented at LBBW. For instance, sustainability criteria are built into purchasing decisions when choosing suppliers and when electing to use more energy-efficient IT equipment. And sustainability is playing an increasingly vital role in our business with customers. In this case, providing specific information and developing tailormade services is important - and something we do by working closely and in direct dialog with our customers. An example of this in recent months is the BW ZukunftsSparbrief pilot project. This savings bond enables our retail customers to help provide financing for sustainable projects in the Stuttgart region as well as Baden-Württemberg as a whole. These include investments in energy-efficient construction and renovation, environmental technologies, and green mobility, among other projects. The pilot has been very successful in the Stuttgart market. We consider this a great accomplishment and an indication that we correctly identified the current trend. Of course, we also offer our other customer segments a number of different products and services that meet sustainability standards. Please read on for more information. Our risk and earnings situation is not our only positive quality in the eyes of rating agencies. Firms specializing in sustainability have also given us excellent reviews. We were therefore very pleased with the current rating we received from Munich-based oekom research AG: LBBW ranked first out of 76 banks analyzed inter- 7

8 STRATEGY AND MANAGEMENT nationally in the Financials/Public & Regional Banks industry study (as of May 2014). Successes like these give us the motivation to stay the course. Next year, we intend to emphasize the issue of sustainability even more at the customer level. Enjoy reading our Sustainability Report, and thank you in advance for sending your questions and suggestions to Sincerely, HANS-JÖRG VETTER Chairman of the Board of Managing Directors of Landesbank Baden-Württemberg 8

9 STRATEGY AND MANAGEMENT The Company. Landesbank Baden-Württemberg (LBBW) is a full-service commercial bank combining the services of a major credit institution with regional proximity to customers. With total assets of EUR 292bn and approximately 11,300 employees (as of 30 June 2014), LBBW is one of the largest banks in Germany and the most important by a wide margin in its core market of Baden-Württemberg. LBBW provides all of the products and services typical of a modern full-service bank in around 200 branches and offices across Germany. In its core regions of Baden-Württemberg, Rhineland- Palatinate, and Saxony as well as the neighboring economic areas, LBBW is represented by its own brands: Baden-Württembergische Bank (BW Bank) operates the retail and corporate customer businesses in the core market of Baden-Württemberg. BW Bank functions as a Stadtsparkasse (municipal savings bank) in the state capital Stuttgart. Landesbank Baden-Württemberg (LBBW) has consolidated its middle-market corporate customer and private client businesses in Saxony and adjacent regions in Sachsen Bank. The focus of Rheinland-Pfalz Bank is on the middlemarket business in Rhineland-Palatinate and neighboring areas. LBBW itself does business with nationwide and international institutional customers, handles commercial real estate financing, provides customer-driven capital market services, and functions as a central bank to the savings banks in Baden-Württemberg, Rhineland-Palatinate, and Saxony. LBBW also assists its corporate clients and savings bank business customers with their international activities. Branches and representative offices worldwide provide support in the form of country expertise, market intelligence, and financial solutions. Moreover, LBBW operates German Centres in Beijing, Singapore, Mexico City, Delhi, Gurgaon, and Moscow that consult with German corporate clients on market entry, and provide offices and networks in-country. Subsidiaries specializing in businesses such as leasing, factoring, real estate, and asset management round out the LBBW Group s own range of services. Landesbank Baden-Württemberg s owners are: Sparkassenverband Baden-Württemberg (the Savings Bank Association of Baden-Württemberg), the state capital Stuttgart, Landesbeteiligungen Baden-Württemberg GmbH, and Landeskreditbank Baden-Württemberg - Förderbank (L-Bank). 9

10 STRATEGY AND MANAGEMENT An extensive overview of the company is provided at This site also contains information including our ownership structure and legal form as well as our activities, business areas, and the states in which we do business. Current Developments. Last year, LBBW successfully completed the restructuring process begun in 2009 in all material respects. We have made the transition into a purely customeroriented bank and have largely withdrawn from the non-core banking business, while focusing on stepping up customer-related activities. Our key performance indicators underscore this development: In 2013, LBBW s pre-tax profit was EUR 471m. In the first half of 2014, this figure amounted to EUR 259m. Risk assets were further reduced to EUR 89.8bn currently. The Bank s credit substitute business, which had amounted to EUR 95bn in 2008, has been almost entirely. In August 2014, LBBW took advantage of the comparatively favorable market situation to sell the remainder of LBBW s securitization portfolio, which had been secured by an owner guarantee. The Bank also paid back silent partners contributions to the owners in the amount of EUR 1bn in the first six months of In November 2014, the European Central Bank (ECB) will become the regulator of LBBW as well as 120 other major European banks. Against this backdrop, LBBW has been very busy in recent months with the banking supervision requirements in connection with the balance sheet assessment and the subsequent stress test. With a core Tier 1 capital ratio of 14.4% as of 30 June 2014, Landesbank Baden-Württemberg is optimally prepared for the stress test. Due to the variety of applicable regulatory measures and the strained competitive and interest-rate environment, conditions in the financial industry remain challenging. Nonetheless, LBBW looks to the future with quite a bit of optimism. The fact that the European Commission has retracted its original requirement for a change in legal form in view of the corporate governance structures put into place is seen by the Bank as further confirmation of the seriousness of its restructuring effort. The far-reaching changes implemented have put Landesbank Baden-Württemberg in an excellent competitive position as a bank following a model clearly focused on customer-driven business and centering on long-term relationships, solid products, and high-quality customer service and financial advising. LBBW aims to consistently and permanently reinforce and expand this position. 10

11 STRATEGY AND MANAGEMENT Sustainability Strategy and Management. We have anchored our commitment to sustainability firmly in our strategy, as well as in our business operations. The Group s sustainability goals, the climate strategy, and concrete guidelines for the investment and lending business, human resources policy, and business operations provide mandatory guidance for responsible action by each individual, thus creating the foundation for consistently sustainable corporate governance in all areas of the business. LBBW Mission Statement. LBBW has adopted a Bank-wide Mission Statement as a set of rules governing our collective work and actions. Our commitment to sustainability is documented in our Mission Statement: As a company with regional roots, we are committed to fulfilling our responsibilities. We do business in an environmentally friendly manner and advocate social issues. Sustainability Policy. The Sustainability Policy consolidates LBBW s Guiding Principles on Sustainable Development in the areas of corporate governance, business operations, human resources, communication, and LBBW s commitment to community. It stipulates the framework for all sustainability activities at LBBW and is the foundation for integrating economic, environmental, and social issues into our business activities as a whole. 11

12 STRATEGY AND MANAGEMENT Corporate Governance Landesbank Baden-Württemberg acts in the longterm best interests of the Bank, its customers, and other stakeholders. Our activities aim to consistently contribute to sustainable and balanced economic, environmental, and social development. The key conditions required for business activities geared to sustainability issues have been put into place thanks to the Guidelines for Sustainability. They provide our executive staff and employees with concrete guidance for the operational implementation of LBBW s sustainability goals, which are contained in the Guidelines. We endeavor to use our sustainability management system to put into practice sustainable thought and action throughout the Bank, in all specialized divisions, subsidiaries, and branches, and therefore to continually improve LBBW s sustainability balance sheet. We consider our commitment to sustainable development to be an integral part of our mission to serve the common good, which we believe strongly is our responsibility as a public-sector institution. It goes without saying that we will comply with all applicable legal regulations, as well as uphold the human rights defined by the United Nations. Core Business/Banking Products We are well aware of the importance of banks as financing partners for innovative, climate-friendly technologies and industries. LBBW is therefore in favor of actively orienting lending and investment activities toward sustainable projects, products, and customers. Human Resources We sustainably promote and develop our staff resources so that we can be well prepared for future challenges with a team of motivated, qualified, and healthy employees. We include all LBBW employees in implementing sustainability concepts. Executives are ultimately responsible and act as role models in this process. Communication LBBW reports regularly about progress made in fulfilling its sustainability commitment. We see ourselves as a partner to our customers. This vision includes our desire to increasingly share our knowledge of sustainable corporate governance. In this way, we support our customers in strengthening their commitment to sustainable development and reducing environmental pollution. Business Operations In terms of our stewardship of resources, we consider ourselves responsible for future generations and therefore work hard to continuously minimize our use of non-renewable resources. We give preference to sustainable products and sustainability-focused suppliers and service providers in our purchasing and procurement processes wherever this is an economically viable option. Social Commitment We take our responsibility to society seriously. LBBW operates three foundations that promote projects and initiatives in the fields of nature/the environment, education, and art and culture. As a donor and sponsor, LBBW supports projects with substantial value-added for the public in many ways. 12

13 STRATEGY AND MANAGEMENT Sustainability Goals and Operational Guidelines. In order to put the sustainability policy in concrete terms, LBBW has defined the following umbrella goals: 1. We want to gradually implement sustainability as an integral component of our business policy. For this reason, we are expressly committed to also increasingly addressing ecological, social, and societal issues in investment decision-making processes going forward. 2. We will offer sustainable investment products to all customer groups and in all asset classes to the greatest extent possible. The goal is to increase the share of sustainable investments in all business areas - including in our own investment portfolio. 3. In credit advising and credit decision-making, we will take into account sustainability risks and earning potential for customers and the Bank. 4. We strive for an active focus on projects, products, and customers with a positive impact on the sustainability balance sheet of the Bank. Thus, we promote environmentally friendly technologies and contribute to the reduction of CO 2 emissions. 5. LBBW is a reliable partner to its employees. Our goal in the future is to be an even more attractive employer than today. To this end, we are continuously working toward improving our work organization and working conditions with a view to the health and work-life balance of our employees. We intend to maintain and further raise the high education and training level in our Bank. 6. We will further optimize the use of resources within our organization. We will focus on exploiting any potential for reducing CO 2 emissions, especially in energy and paper usage and business travel. 7. We apply uniform criteria in selecting products and services when procuring materials and awarding contracts which ensure that the relevant sustainability issues are included in the decision-making process. The projects agreed for the purpose of achieving sustainability goals are listed in the Sustainability Program (see p. 26 ff.). The concrete orientation framework for the implementation of LBBW s sustainability goals is provided by the Guidelines for Sustainability. These mark out the corridor within which LBBW will pursue its sustainability goals in the investment and lending business, in human resources policy, and in stewardship of resources, and therefore form the foundation for sustainable development. 13

14 STRATEGY AND MANAGEMENT Guidelines for Sustainable Investment In the future, LBBW will strive to more strongly emphasize environmental, social, and ethical issues in its investment business. The objective is to offer our customers sustainable investments in all asset classes, if possible. We apply the United Nations Principles for Responsible Investment ( in making investment decisions. Text of LBBW s Guidelines for Sustainability Investment Business sustainable investments in all business areas - including in our own investment portfolio. We will support businesses and corporations in which we invest as active shareholders. We will urge them to provide transparent information about all ESG factors. If we identify any violation of our basic values, we will enter into an intensive dialog with the companies concerned. The principles that guide our Bank should also serve as a compass for the entire industry. We will therefore work toward greater acceptance and implementation of the PRI (Principles for Responsible Investment) in the investment industry. Going forward, we will take more and more ESG (environmental, social, and corporate governance) factors into account in our investment decisions. By doing so, we act in the best and long-term interest of our clients and stakeholders. When implementing our sustainability targets, the Principles for Responsible Investment (PRI) of the United Nations serve as a benchmark. Guidelines for Sustainable Financing Identifying, avoiding, and managing risks that could arise from financing transactions are key elements in making lending decisions. Analyzing non-monetary risks, such as reputation risks, through an environmental or social lens is becoming increasingly important. We therefore commit to the following, as far as this is compatible with our responsibility vis-à-vis the customer: We will integrate ESG-related topics in the analytical and decision-making processes in investment banking and will actively promote sustainable investments. In our business with customers we will offer sustainable investment products for all customer groups and in all asset classes, provided that investment opportunities are available that meet the criteria for other products and services offered to customers. The goal is to increase the share of We make a concerted effort to finance projects that support sustainable development as well as hold business opportunities for LBBW. Moreover, financing for investments in water treatment and supply and in energy infrastructure, e.g. electrical grids and storage, will become increasingly important. 14

15 STRATEGY AND MANAGEMENT Text of LBBW s Guidelines for Sustainability Financing Addressing sustainability concerns also plays a major role in financing decisions. For instance, questionable environmental and social conditions harbor serious risks that could endanger our reputation and standing. For the lending business, this means: We will reinforce our advisory competence with the aim of identifying risks early on in conjunction with the client in order to take countermeasures. This open relationship between the advisor and client promotes sustainable business development, the business relationship, and the systematic identification of earning potential for the Bank. We actively focus on transactions, projects, products, and customer groups with a positive impact on the Bank s sustainability balance sheet. This enables us to spur the development and the dissemination of environmentally friendly technologies. In turn, we help reduce carbon dioxide emissions, for example. At the same time, we are able to build a future-proof customer portfolio (asset allocation) by specifically leveraging the strong market growth in these segments in our favor. All in all, these measures will make our Bank more sustainable. We implement tools for identifying, avoiding, and managing sustainability risks in certain industries and countries in the analytical and decisionmaking process. This applies in particular to environmental protection, human rights and working conditions. The sustainability evaluation which forms an integral part of the analytical and decision-making process provides us with a holistic view of risk. Guidelines for Sustainable Human Resources Policy LBBW considers it a permanent mission to be an attractive employer and reliable partner to its employees. Knowing that capable and committed employees are the most important factor for the success of any company, we invest in the health of our employees, build their skills with specialized personnel development measures, and offer a number of programs aimed at attaining a positive work-life balance. We aim to attract outstanding talent and retain staff for the long term. Providing professional training to young people in particular is something we consider an important sociopolitical and company mission - one which LBBW gladly undertakes. 15

16 STRATEGY AND MANAGEMENT Text of LBBW s Guidelines for Sustainability Human Resources Management The 12 HPI value drivers defined by the Federal Ministry of Labour and Social Affairs in the Human Potential Index ( HPI ) determine the Guidelines for Sustainable Human Resources Management within the LBBW Group. In the following, these HPI value drivers are ranked according to their effectiveness for corporate performance and formulated explicitly for the LBBW Group as prerequisites for sustainable human resources management policy: 1. Compensation & Benefits We provide an up-to-date, complete remuneration system in which salary components can be structured flexibly. Attractive social benefits effectively express our appreciation for our employees. 2. Change-Management We strive to continuously improve working conditions and organization, thus enhancing our attractiveness as an employer. Employee codetermination is respected and supported. 3. Work-Life Balance We exercise our duty of care as an employer and voluntarily commit to offering our employees a sustainable work-life balance. 4. Communication and Information Our employees can only work successfully for the Bank based on good communication and information exchange. This is the condition required for the Bank to operate profitably and responsibly in the long run. 5. Leadership In return for their efforts, employees receive appreciation and respect from their managers. They can be proud of their Bank, its products, its services, and its leadership culture. 6. Personnel Development We strive to maintain our training and continuing education measures at a high level in terms of quality. 7. Human Resources Planning and Selection Our human resources planning is aimed at retaining employees for the long term. Avoiding business-related layoffs is a primary objective. 8. Employee Retention Once an employee is on board, we stand by him/her. 9. Demographic Developments Our organizational structure is tailored to the age breakdown of our employees and demographic developments. 10. Promoting Health Professional in-house healthcare management allows us to keep our employees healthy, motivated, and productive for the long term. 11. Human Resources Management It goes without saying that we ensure confidentiality and data protection, including with regard to performance reviews. 12. Equal Opportunity and Diversity We aim to increase the percentage of women in executive positions. We see diversity as an opportunity and have therefore signed the Diversity Charter for companies in Germany. 16

17 STRATEGY AND MANAGEMENT Guidelines for the Sustainable Use of Resources We have laid down binding criteria for the procurement of products and services that expressly include environmental and social factors. These criteria are taken into consideration when contracts are awarded (see Supplier Management, p. 44 ff.). Since the outsourcing of our IT activities as of 1 September 2013, new hardware and software (databases, operating systems, etc.) are purchased from FI-TS. In the course of negotiations with FI, key sustainability issues applicable at LBBW to date were incorporated into the contract. For instance, a sustainability clause for suppliers was agreed. Banking-specific software and off-the-shelf software (e.g. office products) continue to be procured by Group purchasing at LBBW. We will amend the Guidelines for Sustainability Business Operations accordingly to account for the outsourcing of IT and the resulting process changes. The standards that we apply to LBBW s own use of resources are similarly stringent. We plan to continue to steadily reduce carbon dioxide emissions, which can result from business travel, facility management, IT, and the use of materials. Text of LBBW s Guidelines for Sustainability Business Operations We aim to manage our consumption of resources to ensure that sufficient resources will be available to future generations. In our efforts, we focus predominantly on cutting carbon dioxide emissions and on our procurement policy. Reduction of our carbon dioxide emissions is the primary environmental objective in our business operations. By purchasing green electricity, we already reduced our absolute CO 2 emissions by 70% from 2006 to The next target is to further cut our absolute CO 2 emissions by 25% by 2020, based on 2009 figures and the current framework conditions. We aim to reduce our energy consumption by optimizing our building systems and our IT hardware in the data centers and the workplace. This requires the development of appropriate technical and organizational measures for the following: 1. long-term investment approach (leasing and construction), including energy consumption of buildings; 2. electricity usage by facility management in kwh/employee; 3. heating energy consumption in kwh/m 2 ; 4. electricity consumption of the data centers in terms of productivity of mainframes and server farms (IT PEW = IT productivity* per embedded watt); * The productivity parameter we use here is storage volume and number of CPUs (Central Processing Units). 5. workstation IT in relation to one standard workstation (regular measuring in defined, spatially confined areas) in kwh/workstation and year. We strive for optimization of the choice of transportation in compliance with the guidelines contained in the travel policy. We want to maintain the high percentage of recycled paper. 17

18 STRATEGY AND MANAGEMENT We have defined standardized criteria for selecting products and services: When placing any order, we consider sustainability criteria (e.g. environment, regional economy/ customer relationship), as stipulated by our procurement standards. Environment, regional economy/customer relationship as well as fair compensation are key factors for us when reviewing services and products/materials. We strive to assign a weighting of 10% to these sustainability factors against other decision-making criteria (quality, price-performance ratio, reliability, service, acceptance, framework agreements). To ensure compliance with the sustainability criteria, we require our suppliers to answer questions with regard to product origin, the manufacturing process, materials used, etc. Furthermore, we reserve a right to extraordinary termination in the event of non-compliance with our social standards, which all suppliers are required to accept. We meet our electricity needs with electricity from renewable sources while keeping in mind economic decision-making criteria. 18

19 STRATEGY AND MANAGEMENT Climate Strategy. We aim to contribute actively to climate protection and to promote low-emissions economic activity. For this reason, LBBW has formulated its own climate strategy. Text of LBBW s Climate Strategy Climate change is one of the greatest global challenges of the 21st century. Low-emissions and energyefficient technologies are already well-established business areas for many industrial companies. They are considered key growth drivers and leading industries of the future in Germany. In our core markets in particular, they offer substantial economic potential. In addition, we are committed to operating our business in a manner that is climate friendly, and we therefore set ambitious climate protection goals. By purchasing green electricity, we already reduced our absolute CO 2 emissions by 70% from 2006 to The next target is to further cut our absolute CO 2 emissions by 25% by 2020, based on 2009 figures and the current framework conditions. We have already anchored key strategic principles regarding climate change in our Guidelines on Sustainability, both in our core business with customers as well as our internal business operations. LBBW contributes actively to the transition from a greenhouse-gas-intensive to a low-emissions way of doing business. We built expertise at an early stage in the future markets relevant to us, such as renewable energies, especially wind power, and energy efficiency, and offer related products and services with growing market potential to our customers. Since the decision was made to implement a climate strategy in 2011, we have completed numerous projects to this end (see the sections Customers, p. 57 and 63, and Environment, p. 105 and 109). From 2009 to 2013, CO 2 emissions were reduced by around 38% by optimizing technologies and our organization, among other measures (see p. 103). 19

20 STRATEGY AND MANAGEMENT Sustainable Corporate Governance. LBBW ensures compliance with the Sustainability Policy through consistent application of a sustainability management system, which covers all divisions and is being implemented in a multi-stage process throughout LBBW. The Chairman of the Board of Managing Directors of LBBW is responsible for the implementation. Once a year, environmental management at LBBW is evaluated by top-level management (management review in accordance with ISO 14001). Key issues relating to sustainability are presented to the Board of Managing Directors for information or decision-making purposes. The Board of Managing Directors in turn provides the Supervisory Board with regular, timely, and comprehensive information about key developments at the Bank and the Group. Leadership of our sustainability management efforts rests with the head of the Corporate Sustainability and Health department, who is also responsible for the environmental management system at LBBW. The Group s numerous sustainability activities are consolidated in the Sustainability Program (see p. 26 ff.). Independent environmental audits ensure that the requirements for a certified environmental management system are met. Committees and Departments The Sustainability Committee is the communications bridge between the Board of Managing Directors and the specialized divisions. This body consolidates and drives the shaping of opinions LBBW Board of Managing Directors LBBW Board of Managing Directors Sustainability Committee at the 2nd level (division heads) and managing directors of key subsidiaries Chairman: Chairman of the Board of Managing Directors of LBBW Sustainability Group: Concept, Coordination, Management, Project Management Sustainability Working Group Working Groups Spec. Div. 1 Spec. Div. 2 Spec. Div. 3 Spec. Div. 4 Spec. Div. 5 Spec. Div. 6 Spec. Div. 7 20

21 STRATEGY AND MANAGEMENT Sustainability Activities. within the Bank concerning strategic sustainability issues and prepares information to enable the Board of Managing Directors to make decisions. The head of the Sustainability Committee is the Chairman of the Board of Managing Directors. The members of the Committee are division heads (2nd management level) with responsibility for sustainability issues and the managing directors of key subsidiaries. The Sustainability Working Group is made up of the representatives of all of the relevant specialized divisions. They work at the operations level and coordinate all sustainability activities in the divisions. Furthermore, they supervise the implementation of agreed projects. The potential effects of our business activities on our sustainability balance sheet are classified as minimal, average, or significant, depending on the materiality of the individual issues to LBBW s sustainability performance. The relevant focus areas are geared toward our Sustainability Policy and the requirements of our stakeholders. This classification allows us to determine priorities for further sustainability activities. Sustainability measures can be identified primarily in the content areas in which they have a substantial effect on our sustainability balance sheet. The Sustainability Group in the Corporate Sustainability and Health department coordinates and manages all sustainability activities at LBBW, collects the relevant data, prepares statements for rating inquiries, prepares sustainability reporting, and initiates the further development of LBBW s Sustainability Policy and management. New members of the Sustainability Committee and the Sustainability Working Group are informed about LBBW s sustainability management system in an orientation meeting. 21

22 STRATEGY AND MANAGEMENT Analysis of Sustainability Issues in Our Business Activities. LBBW Sustainability Policy LBBW Focus Areas LBBW Focus Issues Effect on Our Sustainability Balance Sheet Corporate Management Corporate governance Transparency in business activities, management structure, tax transparency, creation of incentive systems for implementing environmental issues, social issues, and responsible corporate governance. Compliance Internal and external fraud-prevention efforts, embargoes and financial sanctions, anti-corruption measures, data protection, corporate ethics. Business Operations Resource use and CO 2 emissions Responsible use of resources (paper, water, energy), facility management, hazardous materials, waste, vehicle fleet management, sustainable business travel, responsible construction of own buildings. Core Business/Banking Products Sustainable procurement Sustainability standards in the financing business (environment, social issues, corporate governance) Sustainability standards in the investment business (environment, social issues, corporate governance) Integration of sustainability criteria in supplier selection/evaluation and product procurement, long-term cooperation with suppliers based on trust. Financing taking into account environmental protection, human rights, working conditions, definition of exclusion criteria. Management of reputation risks in business with customers and in proprietary investments, definition of exclusion criteria. Average Average Average Minimal Significant Significant Sustainable investment products Offering sustainable investments (e.g. investment funds, structured products, sustainable asset management). Significant Financing with a sustainable focus Promotion of climate-friendly projects and technologies (e.g. renewable energies, building renovation to improve energy efficiency). Significant Payments, cards, accounts Financial inclusion/access to financial services for disadvantaged groups in society, cards or accounts with sustainability themes. Average 22

23 STRATEGY AND MANAGEMENT Influence on Our Commitment to Sustainability. Making Our Commitment Measurable. Macro Sustainability Issues and Influencing Laws GRI/VfU Indicators Selected More Detailed, Internal LBBW Parameters, Internal Standards, and Voluntary Commitments Signed Loss of confidence due to financial crisis, disclosure obligations Fraud, compliance with generally applicable laws and with laws concerning business, money laundering, German Banking Act (KWG), German Securities Trading Act (WpHG). SO1 SO8, PR9, Worldwide scarcity of raw materials and natural resources, destruction of nature reserves and forests essential to life, biodiversity and loss of species diversity, climate change. EN1 EN24, VfU Climate strategy, Guidelines for Sustainability in Business Operations, recording of environmental data using accounting software. Environmental violations and violations of human rights at suppliers, climate change, biodiversity and loss of species diversity, worldwide scarcity of raw materials and natural resources, destruction of nature reserves and forests essential to life. Environmental violations and violations of human rights in financing projects, climate change, biodiversity and loss of species diversity, worldwide scarcity of raw materials and natural resources, destruction of nature reserves and forests essential to life. Loss of confidence due to the financial crisis, environmental violations and violations of human rights in investment transactions, climate change, biodiversity and loss of species diversity, worldwide scarcity of raw materials and natural resources, destruction of nature reserves and forests essential to life. Disclosure of investment criteria and investment policies, worldwide scarcity of raw materials and resources, destruction of nature reserves and forests essential to life, biodiversity and loss of species diversity, climate change, sustainabilityrelated growth markets. Climate change, financing needs in innovative and promising sectors, projects and technologies, worldwide scarcity of raw materials and resources. Data protection, avoidance of social exclusion. EC6, HR12, FS5, HR2, HR6, HR7 FS1 FS3, FS5 FS8, 5.4.2, HR1, FS10 FS12, EC2 FS1 FS4, FS7 FS8, 5.4.2, HR1, FS10 FS12, EC2 5.5, FS1 FS2, FS5 FS8, EC2, 5.4.2, FS10-FS12 FS1 FS8, EC2, EN6 5.5, FS1 FS3, FS14, FS16, PR6 PR8 Supplier information questionnaire, Sustainability Agreement, product group strategies, Guidelines for Sustainability in Business Operations. Company exclusion list for anti-personnel mines, cluster munitions and delivery systems for cluster munitions, Kredit.net regulations, Guidelines for Sustainability in the Lending Business. Compliance with the Principles for Responsible Investment, Guidelines for Sustainability in the Investment Business, exclusion criteria for proprietary investments, company exclusion list for anti-personnel mines, cluster munitions and delivery systems for cluster munitions. Share of total volume accounted for by sustainable investment products, signing of the European SRI Transparency Code for the LBBW Nachhaltigkeit Aktien and LBBW Nachhaltigkeit Renten retail investment funds, compliance with the Principles for Responsible Investment and Guidelines for Sustainability in the Investment Business. Percentage of total project finance portfolio accounted for by credit facilities drawn for renewable energy projects, percentage of project financing accounted for by credit facilities drawn by energy type, climate strategy, Guidelines for Sustainability in the Lending Business. 23

24 STRATEGY AND MANAGEMENT LBBW Sustainability Policy LBBW Focus Areas LBBW Focus Issues Effect on Our Sustainability Balance Sheet Real estate Real estate financing, financing and consulting on building renovations to improve energy efficiency, sustainable construction standards for customer projects, municipal development, clean-ups of existing contamination, and return of sites to their natural state. Average Customers Product responsibility/ consumer protection Responsible sales practices, customerfocused advising, compliance with legal regulations pertaining to advertising, prevention of poverty among the elderly and excessive debt, fraud prevention for customers, personal finance education for youth, dealing with customers with payment problems. Significant Human resources Personnel management, hiring, and development Training and continuing education, management of employees. Average Work-life balance Flexible working time models, offering childcare options. Average Corporate culture Equal opportunities and cultural diversity, health management, fair compensation models, occupational safety, inclusion, co-determination by employees. Average Social commitment and communication Corporate citizenship Promoting foundations, corporate volunteering, promoting sports, social and environmental projects, art and culture. Minimal Stakeholder dialog Exchange of opinions with stakeholder groups in society. Significant 24

25 STRATEGY AND MANAGEMENT Macro Sustainability Issues and Influencing Laws GRI/VfU Indicators Selected More Detailed, Internal LBBW Parameters, Internal Standards, and Voluntary Commitments Signed Worldwide scarcity of raw materials and natural resources, climate change, energy efficiency. 5.5, EN26, FS8, FS1 FS3 Standards for construction of new sustainable buildings. Loss of confidence due to the financial crisis, safeguarding customer interests, excessive debt, needs-based advising, transparency, protecting banking secrecy, data protection. 5.5, FS15, PR3, PR5, PR6, PR8 Voluntary commitments in advertising according to Deutscher Werberat (German Advertising Council) guidelines, work instruction on investor and property-specific advising. Social responsibility as an employer, demographic change. LA10 LA12, Personnel development measures per employee (KPI), employee review rate, Guidelines for Sustainability in Human Resources Management. Social responsibility as an employer, provisions of collective agreements, demographic change. Social responsibility as an employer, demographic change, equal opportunity, discrimination, co-determination rights, provisions of collective agreements No. of spots in LBBW-internal daycare facilities (KPI), Guidelines for Sustainability in Human Resources Management. LA1 LA14, HR4, HR5 HR7, 5.4.1, Percentage of women in leadership positions (KPI), Diversity Charter, Guidelines for Sustainability in Human Resources Management. Contribution to regional development of LBBW locations , SO1, EC1 Transparency in business activities, identifying societal expectations of LBBW

26 STRATEGY AND MANAGEMENT Implementation of the Sustainability Program The various departments play a significant role in the sustainability management system. It is not until environmental and social criteria are integrated into their business activities that sustainability can be actively pursued and implemented. In 2013, the Program comprised a total of 14 projects. Thirteen projects were completed in full, and one project was partially completed. The following tables provide an overview of the 2013 Program broken down by the six sustainability activities (see p. 22 ff.) along with each project s status. Corporate Management Measure Responsible Status Implementation Submission by LBBW of a Declaration of Conformity with the German Sustainability Code (GSC). Human Resources The decision to submit LBBW s Declaration of Conformity with the German Sustainability Code (GSC) was approved in early The Declaration of Conformity was published on the Internet on 20 March Business Operations Measure Responsible Status Implementation Reclamation of waste heat from the data center and resulting savings of approx. 4,000 MWh/year of electricity for cooling the Am Hauptbahnhof 2 building. Introduction of corrective measures if negative trends are observed in usage data. Purchase of 100% green electricity for the LBBW, BW Bank, Sachsen Bank, and Rheinland-Pfalz Bank buildings for Human Resources BW Immobilien GmbH Group Purchasing In 2013, we conserved nearly 4,000 MWh of electricity for cooling. Absolute consumption and the figures per employee and per square meter declined or remained at approximately the same level in There are no significant negative deviations, i.e. rising consumption figures. For this reason, corrective measures were not necessary (see p. 100 ff.). Green electricity was purchased again for completed partially completed not completed 26

27 STRATEGY AND MANAGEMENT Measure Responsible Status Implementation Application by Finanz Informatik (FI) of key LBBW IT standards in procurement and operations as part of IT outsourcing. Organization of a week of action on the issue of sustainable food choices as part of the NACHgefragt internal communication series. The goal is to raise awareness among and educate employees about the sources and quality of food products used. Human Resources LBBW GastroEvent Key standards are now applied by FI. For example, in addition to the purchase of green electricity and a sustainability clause for suppliers, reporting of the energy usage of the data center for LBBW s Environmental Performance Statement was also agreed. From 22 to 26 April 2013, 14 major LBBW suppliers showcased their products in the company cafeterias in Stuttgart. The products presented by the suppliers were highlighted on the menu for this week. Core Business/Banking Products Measure Responsible Status Implementation Performance of annual portfolio screening of the investments of unallocated equity to ensure compliance with exclusion criteria. Development and implementation of a tool to support the savings banks in processing small to large-volume loans for photovoltaic projects. Re-signing of the European SRI Transparency Code for the LBBW Nachhaltigkeit Aktien and LBBW Nachhaltigkeit Renten sustainable retail investment funds. Inclusion of sustainability as an additional criterion for selecting issuers and funds in the product review process. Sending of an investor letter to institutional clients to inform them about LBBW s sustainability commitment and sustainable investment products. Treasury Savings banks LBBW Asset Management Investmentgesellschaft mbh Retail Customers/Private Banking Stuttgart Region Institutional and International Sales The annual portfolio screening was conducted based on the securities portfolio as of December Compliance with the criteria was confirmed by oekom research in an audit report (see also PRI, p. 50 ff.). The introduction of the LBBW PVA Tool (Photovoltaic System Tool) in February 2013 helps savings banks process loans for photovoltaic systems. The tool can be accessed via the LBBW InfoPortal. It calculates the profitability of the system based on the feed-in tariff and reviews the technical quality of the photovoltaic system. In addition to the profitability of the system, the customer s creditworthiness is also an important consideration in lending. In May 2013, LBBW Asset Management Investmentgesellschaft mbh re-signed the European SRI Transparency Code for the LBBW Nachhaltigkeit Aktien and LBBW Nachhaltigkeit Renten sustainable retail investment funds. Both funds therefore continue to carry the European transparency logo for sustainable retail investment funds. As of June 2013, Sustainable Focus of the Issuer/Investment Firm was added as a criterion to the product review process for the Retail Customers/Private Banking segment. The analysis thus takes into account whether the issuer or the investment firm is a PRI (Principles for Responsible Investment) signatory. In February 2013, we wrote to around 400 institutional investors and informed them about LBBW s commitment to sustainability. completed partially completed not completed 27