KLP and society page 1

Together we generate values for the future: Sustainability report 2008 KLP and society page 3

Table of contents 4 Foreword by our CEO 6 Values and foundations 10 Municipal high-risk sport 12 Practicing what they preach How? 14 Leaping off the KLP list 16 Competition for the Blue Cross Our customers have entrusted more than 200 billion 18 Report 2008 ­Norwegian kroner to us. These funds represent future pensions 20 Customers 24 The environment and compensation payments for public sector employees. By 27 Society 32 The workplace incorporating strategies related to the climate, nature and society 36 Plan of Action 2009 in our management of these funds, we are making a major con- 38 GRI table 39 Organisation and management tribution to a safer and more predictable future. But we cannot achieve such ambitious goals alone. We rely on close cooperation with customers, owners, the companies in which we invest and numerous other partners to build the foundations for a sound and long-term process of value creation. page 4 KLP AND SOCIETY KLP and society page 5

However, there’s no A reliable point preaching to others­ if you can’t practice what you partner preach. In June 2008, KLP Skadeforsikring As every good sailor knows, a strong anchor can keep you was the first insurance­ safe when the storm comes. As a responsible administrator of company ever to ­customer funds in times of financial unrest, and as ashining ­ achieve Eco-Light- Eco-Lighthouse in the era of climate change, KLP reaps the house certification. benefits of its long-term dedication to value-based management and motivated employees.

KLP has an important role to play for society of NOK 1.9 billion to our customers’ premium we have also taken on active ownership in a insurance company ever to achieve Eco- our employees spent the summer helping out phone calls from our customers in the munic- in general. As administrator of pension fund. At KLP, we keep a steady course! number of companies, allowing us to force Lighthouse certification. We need to examine at the Blue Cross summer camps for children ipal sector, reporting difficulties in procuring funds for more than 550,000 Norwegians, through improvements in the areas men- our own procedures and policies so that and parents – a very rewarding experience. loans. As we previously mentioned, we have the company must sustain a long-term Our precautionary approach also helps us tioned above. We are in constant contact we can identify further potential for envi- applied a precautionary approach, setting up and universal perspective. After all, 40 or face a number of other challenges. Among with all excluded companies, attempting to ronmental protection. We need to measure KLP’s main goals are sustained growth and buffers for difficult times and are proud to 60 years down the line, we’ll still be here, these is our work with municipalities, health encourage them to change their ways. We our own environmental performance and profitability. The best way to achieve these confirm that, in the last year alone, we were watching the newly qualified nurses and companies and businesses, helping to reduce were delighted to see the result of such encourage and motivate our employees to goals is to remain in close contact with our able to grant an extra 5 billion kroner in loans nursery assistants of today enjoying their damage to property or personnel injuries, contact in 2008, when Sodexo amended its make environmentally-friendly choices. In the customers, and to develop services which will to Norwegian municipalities. 2009 is most well-deserved pensions. But who can say both in number and in scope. Our strategy practice to such a degree that we were able autumn of 2008, KLP began preparing the help them become even better employers probably going to be a tough year for a num- what our society will look like by then. The is to help others establish a good working to re-introduce the company to our portfolio rest of the group for environmental certifica- and service providers. Last year, we extended ber of municipalities, companies and financial only thing we can be sure of is that things environment. Our efforts are also required to after only one year of exclusion. tion. Our goal now is for the parent company, our business concept to cover our custom- institutions. But at KLP, we have the strength are going to change. face other global and long-term challenges KLP Kapitalforvaltning and KLP Bedriftspen- ers’ employees and to provide them with a required to face any challenge and we intend such as climate change, depletion of natural Our policy of active ownership has been sjon to join our general insurance business as number of new products. These included our to sustain our long-term efforts towards What better proof of how quickly change resources and unacceptable living and work- expanded to cover new areas in 2008. an Eco-Lighthouse by June 2009. general insurance service for the private mar- securing future pensions for our customers can happen than the current financial crisis? ing conditions. The project Sustainable Value Creation, has ket, launched in 2008 towards public sector and supplying reliable insurance products in a We have always adopted a precautionary submitted a survey to all the companies on Our employees at KLP put on an impres- employees as the main target group. On 29 socially responsible manner. approach, setting aside substantial amounts At KLP, we take our responsibility as an inves- the Oslo Stock Exchange Benchmark Index. sive performance during the TV appeal in January 2009, KLP was granted a banking to form solid buffers to tide us through tor very seriously indeed. We do not want This survey uncovered a major development 2008. As we have already mentioned, the licence. KLP has a long history of providing more difficult times. This strategy has proved to invest our customers’ funds in companies potential among Norwegian companies to money raised by the employees went to housing loans – but are now happy to provide extremely important for our customers with an unacceptable behaviour. The UN’s improve on their systems for safeguarding the Blue Cross (a partner of KLP for many customers with a bank deposit service also. and owners, and for us as an organisation. Global Compact organisation and principles environmental, social and ethical issues. KLP years) and their projects to help children and The new KLP Banken will play a central role If there’s one thing customers are look- for responsible investment are indispensable is the driving force behind this project, which young people suffering the affects of drug in our development of services for the private ing for when it comes to their pensions, it’s tools for KLP in choosing worthy candidates ­ receives the support of 12 of Norway’s larg- and alcohol abuse among adults. More than market. predictability. This means being able to rely for investment. Since 2002, we have ex- est investors. 100 KLP employees took part on a number on agreements and having no unpleasant cluded companies from our portfolio which of projects to raise funds for the appeal. Our social responsibility means offering sup- surprises in the form of unexpected bills or are guilty of breaching international norms However, there’s no point preaching to oth- Motivated employees are essential at KLP, and port when needed. As the full impact of the increased costs. KLP is proud to report profits for human rights, labour rights, environmental ers if you can’t practice what you preach. In we are always happy to help our employees financial crisis became apparent last autumn, CEO of NOK 374 million in 2008 and the transfer protection and business ethics. Since 2006, June 2008, KLP Skadeforsikring was the first take part in voluntary work. Last year, 10 of we received a number of concerned tele- Sverre Thornes page 6 KLP AND SOCIETY KLP and society Side 7

KLP’s principal goal is to generate value for the company’s customers and owners in a financially sound and socially and Values and environmentally responsible manner. foundations 1: 2: 3: 4: 5: 6: 7: 8: Vision and values Management system Global Compact Ethical guidelines Social responsibility Environmental policy Strategy for respon- The UN’s principles strategy sible investments for responsible invest- KLP’s vision is to be the best KLP employs commercial prin- Global Compact is a network The ethical guidelines are in- In 2007, KLP developed an partner for the days to come. Our ciples with growth and profit- initiated by the UN which mo- tended to encourage employees The corporate management has environmental policy. This is a Our investment strategy reflects ment (UN’s PRI) cooperation with customers and ability the main goals. However, bilises businesses and voluntary and, where suitable, members of adopted a social responsibility document which ratifies the our aim to support and respect The UN’s principles for respon- other interested parties shall be the manner in which these goals organisations towards a sustain- boards and controlling bod- strategy which, together with the company’s intention to establish human rights, workers’ rights, the sible investment are volun- signalised by KLP’s values: open, are achieved is far from immate- able world. KLP has been a ies when exercising their rights company’s values and ethical binding requirements on it’s environment and ethical busi- tary and inspiring. However, clear, responsible and committed. rial. The group’s market-related member of Global Compact since and duties on behalf of KLP, guidelines, substantiates the own environmental performance ness principles, in accordance by signing the principles, you Our value-based management and financial goals are subject 2002. Membership represents to conduct themselves in an company’s business targets and throughout the organisation. The with our participation in Global are committed to a “follow or model has strong foundations to a system of balanced goal a commitment to live up to the ethically responsible manner in strategies. document contains a target for Compact. explain” principle. The prin- within the group, and provides management. In 2008, the CEO 10 principles, related to human their daily work. The guidelines environmental certification of the ciples encompass responsible the basis upon which to exercise has been allocated an individual rights, working conditions, the comprise KLP’s business conduct, The social responsibility strategy entire group, pursuant to a rec- The following main tools can be ownership and investments by all our activities. score card for Social Respon- environment and corruption. KLP employees’ personal conduct has its foundation in Global ognised environmental standard utilised: integrating Environmental, Social sibility, which is part of KLP’s KLP bases its strategies for social and routines for whistle blowing. Compact, and the last audit was such as the Norwegian standard a) Exclusion of companies in and Corporate Governance (ESG) KLP’s principal goal is to generate balanced goal management. responsibility and responsible The guidelines were subject to carried out in 2008. The social “Miljøfyrtårn” (Eco-Lighthouse) breach of internationally issues in management. There are value for the company’s custom- investments on these principles. a comprehensive audit in 2008 responsibility strategy lays down or ISO 14001. ­accepted norms a total of 6 principles which, in ers and owners in a financially and were adopted in the spring the framework within which the b) Active ownership brief, comprise the following: sound and socially and environ- Audit of Social Global Compact’s 10 principles of 2009. company is to work, in terms of c) Investments in socially mentally responsible manner. Responsibility The Company shall ethics, the environment, respon- ­responsible businesses 1. We will incorporate ESG issues into investment analysis and decision- In 2008, KLP carried out an 1. Support and respect the protection sible investments and general d) Guidelines for non-financial of internationally proclaimed human making processes. internal audit on social responsi- rights social responsibility. investments 2. We will be active owners and bility. In the main, the report re- 2. Make sure that they are not incorporate ESG issues into our turned positive results, although ­complicit in human rights abuses Overall target: The above tools must be speci- ownership policies and practices. 3. We will seek appropriate disclosure 3. Uphold the freedom of association KLP shall exercise socially and environ- there was room for improvement fied for each asset class. Reports on ESG issues by the entities in and the effective recognition of the mentally responsible conduct in order to which we invest. in reporting systematics and the right to collective bargaining contribute towards a sustainable society. shall be submitted on an annual ability to realise ambitious goals. 4. Uphold the elimination of all forms 10 basis, which describe how the 4. We will promote acceptance and principles implementation of the Principles of forced and compulsory labour Socially responsible conduct implies that within the investment industry. 5. Uphold the effective abolition of all parts of KLP’s activities shall reflect a 5. We will work together to enhance child labour high standard in terms of human rights, our effectiveness in implementing 6. Uphold the elimination of discrimi- working conditions, the environment the Principles. nation in respect of employment and business ethics. and occupation 6. We will each report on our activities and progress towards implementing 7. Support a precautionary approach A sustainable society implies an impact the Principles. to environmental challenges on a local, a national and a global level. 8. Undertake initiatives to promote Specific targets and initiatives shall be greater environmental responsibility closely connected to KLP’s activities, and 9. Encourage the development and 6 are to be developed in close dialogue principles diffusion of environmentally friendly with interested parties. technologies 10. Work against corruption in all its forms, including extortion and bribery KLP and society page 9

Social ­responsibility Oh really?

Voluntary work and commitment are essential driving forces behind the healthy growth of our society. However, progress is is not an impossible unless everyone lends a hand. What’s more, if we all accept our social responsibility, we will all benefit from less risk and the potential to develop new services. So, whether an obligation or not, social responsibility is an essential and natural ­obligation. part of KLP’s business, providing for long-term value creation! KLP and society page 11

Facts: The annual cost of managing the operation and maintenance of municipal and county adminis­ trational buildings is estimated at NOK 20 billion. On top of this, the total cost of the current main­ tenance backlog is thought to be in the region of NOK 100 to 200 million.

A mere 1 percent of this figure would most prob­ ably have been sufficient to prevent deterioration Municipal and consequential damages.

Does your municipality have the answers? n What buildings do we own and how are they utilised? high-risk sport n What risks are involved in the buildings? n How are new buildings and improvements to existing buildings planned? n Do we have a satisfactory strategy for KLP believes: ­prevention and maintenance? n Do we have a sufficient plan for rescue and Every year, accidents occur in municipal buildings. emergency preparedness? People are injured and damage has to be repaired. The owners need KLP offers: There’s one main problem here – our local govern- a wake-up call Free courses in systematic safety management, A great number of accidents in municipal including guides and a free software tool which ment politicians are neglecting their responsibility buildings could have been prevented. “The main can be downloaded from the Internet. These problem is that people pay too little attention courses are recommended for chief municipal ex­ and are unaware of the risks involved. to risk, particularly those who own and use ecutives, property managers and other resource these buildings,” explains Risk Manager Geir personnel. They are not technical in character, Grønsholt­ in KLP Skadeforsikring. more courses where participants can discuss how safety efforts can benefit municipalities. KLP, the Norwegian Fire Protection Associa- systems for all municipalities. We have wit- According to Grønsholt, systematic safety manage- tion and the Directorate for Civil Protection hout a doubt gained an increased awareness ment should be a natural part of the job of a and Emergency Planning have therefore of risk and all the municipal buildings in headmaster or chief municipal executive – equal to joined forces to develop a software tool Tønsberg are safer now as a result,” confirms other managerial tasks. “KLP has become involved in this issue in order to raise awareness of the targeting local government politicians that Espenes. He goes on to explain that, in most causes of damage and accidents in municipal build- simply and visually raises awareness of risk. cases, the simplest of measures are all that’s ings. Let’s take one example: It doesn’t cost any- Colour coding is used to display the level of required to greatly reduce the risk of undesi- thing to remove wedges stuck under fire doors to risk for individual incidents, and information red incidents. keep them open in a school. But if you do this, you is provided on whether immediate imple- have to be aware of the consequences if there was mentation of measures isrequired or not. “Sometimes, all that’s needed is to lock or a fire,” explains Grønsholt. KLP Skadeforsikring is at the forefront of the control group for systematic move containers nearby school buildings safety management in municipal buildings. And KLP “Those in charge of the management of or replace the smoke detectors in leased has financed the development of the software tool, municipal buildings are very aware of their properties. It really is simply a question of created to simplify safety work for municipalities. responsibility and role when it comes to creating a system for safety work.” safety. But the local politicians, who are the “Those in charge of the management of munici- actual owners of these buildings, are more KLP has therefore also developed a number pal buildings claim they have a communication removed from thinking about risk. And they of guides for systematic safety management problem with owners and users. This software tool makes communication so much easier. All you tend to forget that they are property owners. within municipal buildings. The software tool have to do is take a quick look at the report to The tool is a simplified way of getting our is a supplement to these guides, allowing see what has to be done, in what order and who point across to the politicians in charge. It the municipalities to introduce systematic is responsible,” explains Grønsholt. Together with is extremely useful,” confirms Tor Espnes, charting and risk analyses. Municipalities can the Norwegian Fire Protection Association and the Managing Director of Tønsberg kommunale download and make use of the software tool Directorate for Civil Protection and Emergency eiendom KF. Tønsberg municipality was completely free of charge. Planning, KLP has also developed guides and offers free courses in systematic safety management for ­chosen as the guinea pig for the develop- municipalities. ment of the software tool, and has used it to “Our goal is to help those responsible for gain a clearer picture of safety conditions in these buildings gain a greater understanding “Our courses are very popular. It’s not as if local leased property owned by the municipality. of the risks involved. When we’re driving government is maliciously ignoring risk. It’s merely our cars, we constantly think about risk and a question of lack of knowledge.” “The software tool is visual and very simple act accordingly. All our local politicians have n Colourful cooperation: Tor Espnes in Tønsberg to use. It should definitely be incorporated in to do is keep thinking risk once they get to municipality and Geir Grønsholt in KLP Skade­ the management, operating and maintenance work,” concludes Espenes. forsikring have together come up with a risk assessment system based on colour coding. KLP and society page 13

The Green Building: Located in Trondheim, its maximum require­ ment for power supply will be a mere 94 kWh per square metre per year. By comparison, buildings erected between 1994 and 2004 Practicing what have an energy requirement three times as high. Below are some of the measures utilised to reduce energy consumption: n Visible concrete is utilised to store both heat and cooling. This allows for high utilisation of solar power and reduces the requirement for cooling in warm weather. n None of the windows can be opened but they preach the indoors climate is always comfortable. The main facades face east and west and all facades facing the sun have automated KLP believes: external sunscreens. n All facades are practically airtight, with low thermal bridge values. When the environmental organisation Enova moves n The windowpanes are made from glass, which reduces solar heating and has high into its new premises, the environmental expertise will The Green Building will insulation against heat loss. n The entire building has an automated system already be embedded in the walls. In a process where create a new standard for ventilation and lighting according to need. Sensors to register movement are the baton has been handed back and forth between fitted throughout the building, in common “KLP has gained invaluable experience from the areas and offices. CO2 sensors and tempera­ KLP and Enova The Green Building has emerged. Green Building and our cooperation with Enova. ture control ventilation in the auditoriums. All future building projects will focus on the n Energy is recycled. One example is the environment. For all future projects, our level of recycling of excess heat from refrigerating machines and computer rooms. ambition will have to be at least as high – if not higher than for Trondheim,” confirms Steinar n The entire building is linked to the district- When KLP Eiendom in 2005 started to plan if new environmental benefits are identified heating network and has water-borne heating. Manengen, Managing Director of KLP Eiendom. a new commercial building in the “Techno- at a later­ date. There are parking areas both city” of Trondheim, they applied to Enova indoors and outdoors for cycles and changing One example of the above is KLP Eiendom’s major for funding of environmental measures to areas where you can have a shower after development project in Vaterland, Oslo, where reduce energy consumption in the new cycling to work. There will also be a pool of KLP is planning a new building covering a total of building. Enova is a governmental enterprise electric cars for use in the “Techno-city”. 70,000 m2 and which will tower just as high as whose purpose is to promote environmental the Oslo Plaza. This high-rise building will have a particularly strong environmental profile. improvements related to energy consumpti- Nakstad firmly believes that the move to the on and production in Norway. The application new building, will represent a new era for “In order to remain at the forefront in this work, was granted. Two years later, Enova decided Enova as an organisation. we have established a separate function to focus to practice what they preach. In September on solutions which increase energy efficiency. 2009, they will be moving into the Green “We are moving into a futuristic workplace Environmentally friendly measures require major Building as lessee. and will be surrounded by environmental investments and result in a slightly higher lease energy systems. Our workplace is bound to price per square metre. In return, lessees are able to make savings on energy costs. Not all lessees “It’s very exciting to be moving into a new inspire and motivate us, hopefully helping are fully aware of this advantage as yet, but aware- building which is designed according to a create a good working environment. Enova ness is on the increase. And the Green Building in standard we have helped define. We intend is a knowledge-based organisation which Trondheim will help. We are building for the future to make good use of the building and to be relies on happy employees to achieve top and expect the rest of the world to follow suit,” the best lessee. We can practically use the performance.” confirms Manengen. building as a kind of laboratory, testing to KLP Eiendom is one of Norway’s largest property see whether we can live up to our recom- As future lessee, Enova has worked very management companies with over 1,300,000 mendations for other businesses when it closely with KLP Eiendom throughout the square metres including office and commercial comes to energy-efficient principles and construction process. premises, shopping centres, hotels, residential behaviour,” explains Nils Kristian Nakstad, properties and leased land. Managing Director of Enova. “Both KLP and Enova have set themselves ambitious goals for the Green Building. “The process of increasing energy efficiency in all our properties presents a much greater challenge The outer walls, windows and roof retain as We keep coming up with better solutions than building new environmental property, but the n Laboratory: Steinar Manengen much heat as possible and the entire building together. We’re very happy with the progress potential is vast. In total, we have the opportunity in KLP Eiendom intends to build has a system of ventilation and lighting which made so far. And we can’t wait to test out to save just as much energy as with the new envi- nothing but “green buildings” in operates according to need. What’s more, our designs and gain even more experience,” ronmental buildings planned,” says Manengen. the future. Nils Kristian Nakstad the building is flexible and can be changed concludes Nils Kristian Nakstad. in Enova can’t wait to start using the “environmental laboratory”. KLP and society page 15

The KLP List KLP has ownership interests in close to 2000 companies throughout the world. These companies are required to live up to minimum standards agreed upon by the international community. Any companies that do not meet these requirements are placed under observation. And if they prove Leaping off unwilling to improve, they are excluded from KLP’s investment universe.

Since 2002, KLP has published its exclusion list to the general public. Exclusion is based on documentation of severe or systematic breaches of internationally recognised norms related to basic human rights, labour rights, environmental protecobacco­ the KLP list tion, anti-corruption or weapon production. T manufacturers are automatically excluded. KLP believes: In 2008, three companies cleaned up their act andThe ­ were re-included in KLP’s investment portfolio. In June 2007, the global corporation Sodexo se were Sodexo (excluded in 2007), BHP Billiton WB (excluded in 2006). (excluded in 2004) and A earned itself a place on KLP’s exclusion list. But Openness – a path to

Companies aiming to get off the exclusion list dialogue must meet the following requirements: by December 2008, the company had learnt its KLP is responsible for over 200 billion Norwe- 1. Discontinue reported incident. ­lesson, due to close dialogue with KLP and the will gian kroner, and over a half million Norwegians 2. The company deals with the incident and its have pension rights with the company. The way consequences in a responsible manner. to change, and was happy to see its name removed in which these funds are managed is of great 3. The company has systems and procedures in place to prevent reoccurrence. from the list. importance for both KLP and these customers. 4. Items 1-3 verified by a third party. “Companies which are in breach of certain mini- mum standards are excluded from KLP’s invest- ment portfolio. In reality, we want our exclusion list The reason for Sodexo’s exclusion was the January 2008, that there were improvements to be as short as possible, so we maintain an open conditions at the largest refugee processing in all the critical areas. KLP carried out a dialogue on matters such as responsible opera- centre in England, run by Sodexo’s subsi- new assessment and consequently removed tions to help companies avoid exclusion and to diary, Kalyx. After an inspection of the centre Sodexo from its exclusion list in June 2008. get excluded companies back on the list,” explains in 2006, Kalyx received harsh criticism from This was most definitely a record for speedy Jeanett Bergan, Manager for Responsible Invest- the British authorities for inhuman condi- recovery from exclusion. ments in KLP. tions for the refugees. She leaves no doubt as to the different roles “Throughout the entire process, we have played by KLP and the companies in question. In Norway, Sodexo faced a number of ques- been in close contact with KLP. Our goal has “We are very clear in our criticism and requests for tions, not least from their own employees, as been to aid the process to the best of our improvements, but it’s up to the companies them- to why they were on KLP’s exclusion list. The ability and to keep KLP up to date of status,” selves to clean up their act. And the companies do Norwegian subsidiary has 720 employees explains Furu. KLP has also taken part in benefit by doing so and getting off the list,” points out Bergan. throughout the country, supplying services meetings with Sodexo representatives at the related to cleaning, canteens, office support head office in Paris. As opposed to the majority of other portfolio and property. managers, KLP makes use of an officially published “As a global enterprise, we have a respon- list of excluded companies. “The company’s exclusion was due to con- sibility to comply with basic values, ethical ditions outside of Norway, but we cannot principles and human rights. In 2003, “We demand that all potential investment objects accept being part of a system which is criti- Sodexo signed on to the UN’s Global Com- have open communications, and make the same requirement on ourselves. We always state very cised for issues related to human rights. We pact project, committing to follow the 10 clearly why companies have been excluded,” not only had constant contact with our head principles for issues such as human rights. confirms Bergan. office in Paris, we put a lot of direct pressure We were extremely concerned about the on the British company to make the changes fact that we were on an exclusion list, but Having your name on KLP’s exclusion list attracts needed,” explains Lars H. Furu, Managing are also very proud that we managed to a lot of negative attention from the world at Director of Sodexo in Norway and Denmark. rectify the situation so quickly. What’s more, large. We therefore have to comply with stringent documentation requirements before we exclude a we have introduced on our own initiative a company. To achieve this, KLP primarily relies on By the spring of 2007, Kalyx had initiated project focusing on our social, financial and n Leaping off the list: Lars H. Furu from the analysis agency GES Investment Services, and Sodexo explains how the company got a number of improvements such that the environmental commitments in Norway,” the ethical council of the Government Pension off KLP’s exclusion list at record speed British authorities could report, as early as confirms Lars H. Furu. Fund – Global. – partly due to close dialogue with Jeanett Bergan and KLP. KLP and society page 17

Fund-raising for the Blue Cross V When the Blue Cross was allocated a T appeal in 2008, KLP started up an internal competition to raise funds. KLP’s employees were divided into teams and were all given one day free to take part in the competition. Investing in The teams were not only competing to see who could raise the most money, it was also a question of creativity. The teams’ activities ranged from performing a dance they cho­ reographed themselves at a lawyer’s office to holding a jumble sale. At the end of the com­ petition, the employees had managed to raise just over NOK 305,000 which KLP doubled the children so they could hand over NOK 611,000 to the TV appeal. KLP believes: However, the employees did not stop their efforts for the Blue Cross after the competi­ Marketing Director at the Blue Cross, Vidar Solsvik, tion was over. The jumble sale, named From children to children, will now become an an­ is well aware of KLP’s vision – to be the best partner­ Mutually beneficial nual event. KLP employees will also be taking part in the Blue Cross summer camps, held in for the days to come. He believes that this vision “It is becoming increasingly evident how impor- several parts of Norway. The purpose of these tant ethics are for society at large in the people camps is to provide positive inspiration for could just as easily apply to the Blue Cross, and states applying to work for KLP. Of course, ­salary children and adults living in homes affected by and career opportunities remain important, drug and alcohol abuse. that shared values are essential for cooperation. but there is a much greater growth in the level of ­interest for social responsibility,” confirms Kjersti Jørgensen, HR Director at KLP.

In 2002, KLP launched a policy for ethical invest- ment which comprises environmental, social and “At Blue Cross, our ambition is to improve the “During these meetings, we realised that commercial factors. The company has its own set of ethical guidelines for its employees. KLP has also quality of life for adults suffering from drug KLP can not only challenge us, they chal- built up considerable HSE expertise and willingly and alcohol addiction, and their children. lenge each other. They started an in-house provides assistance to municipalities, health com- KLP has a very conscious attitude towards competition for the Blue Cross, encouraging panies and other companies who want to make its social responsibility and this can help employees to create activities to help the TV improvements in this area. improve the quality of life for many people. appeal. It was fantastic to see how creative This means that they can and do challenge the employees could be! We now know “Our culture is based on values and we are very aware of our social responsibility. We need to us, a quality we seek in all our partners,” that KLP’s commitment to the Blue Cross is cultivate this culture, making it stronger day by day. explains Solsvik. not just at management level, it’s the entire The best way to achieve this is through activities organisation,” explains Solsvik. that generate commitment among our employees. The cooperation between KLP and Blue Cross This was one of the reasons why KLP entered into Norway started in 2004, when KLP provided In total, the TV appeal raised NOK 192 mil- a partnership with the Blue Cross five years ago,” financial support for the program Parent lion, which will be spent over a number of explains Jørgensen. awareness – a good start. This partnership years to help children and young people suf- When the Blue Cross was awarded the TV appeal has grown with the years and KLP employees fering from adult abuse of drugs and alcohol. for 2008, KLP saw this as an opportunity to set up now help out at Blue Cross summer camps. activities that really got the employees involved. KLP allows its staff to do voluntary work of “Because of the attention gained by the TV this nature within working hours. appeal, our employees at the Blue Cross felt “Naturally, everyone thinks that helping people in even prouder to be working for us. But the need is a worthy cause, but our involvement in the When Blue Cross was allocated the TV appeal real job starts now. And that’s when it’s good Blue Cross appeal is just as beneficial for us. The TV appeal helped cement our in-house relation- for 2008, KLP saw this as a golden oppor- to know that we have a partnership with ships. The employees had a lot of fun together and tunity to increase the level of involvement KLP, not just for the TV appeal but for the those who made a special effort were put in the among employees. The aim of the TV appeal long term and based on a successful past,” limelight. This motivated everyone at KLP to help was to raise funds to help children suffering concludes Solsvik. the Blue Cross in the future.” from the drug and alcohol abuse of adults, and KLP held lunch meetings where the Blue Cross explained what the employees could n Investing in quality of life: do to help this group. Vidar Solsvik in Blue Cross and Kjersti Jørgensen in KLP agree on a common value base. Side 18 RAPPORT 2008 Side 19 RAPPORT 2008

It’s all in the money… ... isn't it?

Any company with ambitions to provide a long-lasting service to its customers has to view its activities against a greater context. By judging our own achievements in areas conducive to long-term sustainability, for both our environment and society, we achieve and retain an essential totality. We believe that all our interested parties, primarily our customers and owners, expect KLP to take our social responsibility seriously and live up to our own values – Open, Clear, Responsible and Commited. page 20 REPORT 2008 page 21 REPORT 2008

Customers KLP is a major financial player in Norway, supplying pensions, financial and insurance services to Pension products Information on KLP Skadeforsikring

municipalities, the health sector and companies – and their employees. In 2008, KLP Skadefor- Public sector occupational pension schemes Accident Damage to property Liability are extremely beneficial for employees. With Market share municipal sector 49.8% 44.9% 36.4% sikring launched a new product portfolio for the private market. KLP Kapitalforvaltning (capital full contribution time, the employee receives management) was prepared for the onset of the financial crisis, and was able to provide increased at least 66% of terminal pay as pension. The Premium payments MNOK 204.4 MNOK 325.5 MNOK 45.3 pension schemes include retirement pension, Compensation payments MNOK 90.4 MNOK 185.5 MNOK 17.3 loans to both municipalities and private individuals rehabilitation/disability pension and depen­ dents’ pension. The pensions are regulated on an annual basis in line with the national insurance base amount. Property KLP Eiendom is one of the largest property management companies in Norway, with over 1,350,000 square KLP also provides two types of occupational metres of property, comprising office and commercial premises, shopping centres, hotels, residential properties pensions for companies not tied to the mu­ nicipal main wage agreement. and leased land. The company’s properties are mainly located in Oslo and the surrounding area in addition to Trondheim, but KLP Eiendom also owns properties in Copenhagen and Stockholm. Defined contribution pension schemes are a product whereby the employer pays a specific Customers and owners in KLP the customers’ employees. What was once doctors and nurses. At year-end 2008, more contribution as a form of savings for the em­ Total lease income for KLP Eiendom by sector NOK 1000 KLP is a mutual company, where the pension a limited lending business has now been than half a million Norwegians had pension ployees’ retirement pension. The employees’ Offices 789 929 customers are also the owners. The Norwe- expanded into an aggressive strategy for rights in KLP. KLP’s social responsibility origi- retirement pension depends upon the total Shopping centres, shops 149 434 payment of contribution and the yield on the Education 71 018 gian government owns almost 30% of KLP lending and general insurance products for nates in the company’s responsibility towards saved pension funds. via its health companies, while the municipal people working in the public sector. In 2009, it customers. Residential 44 018 and county administrational sector owns KLP will launch its new banking service, Company pensions are a performance-based Hotels 175 886 occupational pension which secures employ­ around 55% and the corporate segment providing a range of new customer services A range of financial instruments is utilised Parking, warehouses, leased land etc. 76 715 ees a specific payment of retirement pension owns just a little less than 15%. In 2008, a to this group of customers. to manage our customers’ funds. A share of as a net supplement to the national insurance Total lease income 1 307 000 profit of NOK 1,903 million was transferred the funds is invested in property or utilised payments. The employer pays the required to the customer’s premium fund and NOK KLP’s products and services for lending while the remainder is managed premium to secure this retirement pension for employees. This product is less predictable 397 million was transferred to equity. KLP is a supplier of financial services and on the money market, in bonds and shares. for employers in terms of costs and premium HSE measures implemented by KLP’s 2008 is Nes municipality in Akershus for its aims to generate financial security and reli- The financial crisis has had an impact on the payments, but is more predictable than a customers project to Reduce noise in nurseries! and the Our activities have an impact on the ability for employers, employees and local municipal sector and many municipalities contribution-based pension product for the If we are to keep our premiums as low as Innlandet HF hospital, Tynset Division, for its economy on a number of levels, both within communities. The most important criteria for encountered difficulties in procuring loans employees in terms of the size of the retire­ possible, we need to help our customers Project for pregnant employees. There were ment pension. individual customer groups and through our KLP’s success include products which target in the autumn of 2008. During the second achieve reductions in their utilisation of dis- no applicants for the working environment pension beneficiaries. Our social respon- customer requirements, good consultation, half of 2008, KLP has provided extra loans to Various types of risk coverage can be linked to ability and early retirement pensions. Good award from the corporate segment in 2008. sibility requires us to fully understand the efficient operations and low costs. municipalities totalling NOK 5 billion. At year- both the defined contribution schemes and the HSE initiatives are a tool that also improves company pensions, such as disability pension consequences of our financial influence. end, the so-called employer loans granted by and dependents’ pension. KLP provides advice the quality of life for individual employees Measures implemented by customers to The pension premiums collected from our Our customers who have taken out pub- KLP amounted to NOK 13 billion, an increase to customers on the differences between these and increased productivity for the employer. reduce risk customers are principally affected by salary, lic sector occupational pensions for their of 70% from 2008. Housing loans also saw two types of occupational pensions. KLP therefore has its very own HSE team, KLP’s risk prevention program, FØRE-VAR

degree of disability, retirement age and num- employees comprise 333 municipalities and an increase in 2008, by 17%. Wage agreements normally include group life which has plenty of experience in helping (which means PRECAUTIONARY APPROACH) ber of employees. county authorities, 30 of 32 governmental insurance. On the death of a policyholder, develop expertise and provide inspiration aims to help customers understand and health companies and approx. 2,500 com- KLP pays a lump sum to the surviving relative for a healthier working life for our pension reduce risk, making undesired incidents and The group has further enhanced its business panies and organisations. What’s more, KLP (spouse/cohabitant/partner/children or es­ customers. The main goal of our HSE team their consequences as predictable as possible. tate of the deceased). Premium payments for concept in 2008 and this now comprises manages pension agreements for hospital group life totalled NOK 170 million in 2008. is to prevent exclusion from working life, unnecessary sick leave and disability, and to Important aspects in this program are the General insurance contribute towards an inclusive working life. development of expertise related to risk In 2008, KLP helped 120 customers develop understanding and making sure that users Information on the pension products KLP Skadeforsikring is a major provider of a working environment that promoted health are able to develop good guides and tools insurance services for the public sector. and was fully inclusive. The company also free of charge. KLP is involved in a project These services include contractual insurance Information on the pension products Public sector occupational pensions 2008 Company pensions Defined contribution schemes schemes for employees related to occupa­ granted financial support to projects imple- established jointly by the Directorate for Civil Market share 60% n/a n/a tional injury and accident, and the insurance mented by a further 54 customers. Protection and Emergency Planning (DSB) Premium payments (NOK) 18.4 billion 18.4 million 5 million of public properties, vehicles and liability. In and the Norwegian Fire Protection Associa- 2008, KLP launched a brand new product Pension payments and other compensation (NOK) 7.3 billion 7.2 million portfolio for the private market. KLP aims to KLP also grants an annual working environ- tion. The project, Systematic safety manage- Number of agreements 2863 44 106 provide a general insurance service, primarily ment award, distributed between municipali- ment in municipal buildings has established Number of pensioners App. 150,000 App. 190 0 for employees in the public sector, which ties, health companies and the corporate goals related to both risk prevention and ensures good customer service, low costs and Pension rights App. 500,000 App. 2,400 App. 765 segment. The prize is NOK 100,000. The social responsibility. The following targets attractive products. Active members App. 300,000 App. 400 App. 730 winner of the working environment award in were achieved in 2008: page 22 REPORT 2008 page 23 REPORT 2008

Tobacco These companies have been excluded from KLP’s Monthly yield difference attributed to exclusions investment portfolio because KLP World vs MSCI World they manufacture tobacco: Customers n Altadis 0.4 % n Altria group obacco n British Americanobacco T n Imperial T 0.2 % obacco n Japan T 0.0 % n Lorillard n Phillip Morris -0.2 % n Reynolds American n Richemont -0.4 % n Swedish match n UST -0.6 % dec 02 dec 03 dec 04 dec 05 dec 06 dec 07 dec 08

Overview of customer dialogue, 2008

n Specific guides for owners and users When a company is excluded by KLP on ethi- ­occupational pension schemes with KLP are, Method Results distributed cal grounds, the risk profile for the portfolio at the same time, the company owners. They n Toolbox for management body completed is amended. KLP attempts to compensate for therefore represent an extremely important Customer satisfaction Housing loan customers: and distributed this by increasing ownership in other compa- group for KLP. The decision to exclude all The customer satisfaction survey (CSS) examines the n 85% of customers are satisfied with KLP as provider n Data tool tailor-made for daily operation nies within the same branch. One method for manufacturers of tobacco from the invest- level of satisfaction and loyalty among KLP’s own n Most satisfied with availability and response time and reporting identifying the impact of such exclusions is to ment portfolio was made as early as 2001, customers. The purpose of the survey is to detect n Least satisfied with the interest rate n Pilot course for owners completed, involv- compare the global index return prior to and after input from our major customer groups areas for improvement, both centrally and for local n Room for improvement: Better information on the products ing 9 municipalities, and with good results after exclusion. In 2008, the annual difference within the health sector. customer service centres. In 2008, 2 CSSs were held, n Course for management body completed identified was -0.82% in relation to the MSCI for housing loan customers and pensioners who had Pensioners: in 5 towns with 18 participants at each World reference index. The major share of Within the municipal sector, decision-making been granted a pension during the last 6 months. n 76% of the new retirement pensioners were satisfied with the way in which their pension had been course this difference (4/5) is attributed to the fact regarding occupational pensions takes place processed that two of the excluded companies – Exxon on a political sphere, while the ongoing dia- n In total, 74% of pensioners were satisfied Management of customer funds Mobile and Wal-Mart – reported significantly logue with customers is more administrative n Improvement priority is to provide information which is easier to understand. Pensioners need to feel KLP’s ability to manage customer funds and higher results than their competitors in 2008. in nature. Both these groups therefore have a sure that the amount paid is correct. the company’s own funds will naturally have It is not possible to provide an accurate central role. KLP also views society at large as an impact on future premium payments - calculation of the impact of the exclusion an interested party. With the establishment of and thereby our customers’ finances. KLP’s measured against KLP’s total management new business areas and products targeting the Reputation, knowledge, profile and preference The main conclusion is that KLP has a very strong relationship with our customers who are employers. management capital at year-end 2008 capital, but if one looks at KLP’s global share private market, KLP faces new requirements in Charting perceptions of KLP and competing companies. There is room for improvement when it comes to systemising dialogue with society in general and with totalled NOK 201.7 billion, representing a exposure throughout the year, one can esti- terms of profiling KLP as a brand among our employees in the public sector. growth of 3.5%, despite the current financial mate a reduced yield of 0.09% in 2008. customers’ employees and society in general. crisis. Towards the end of the year, the troubled financial markets significantly af- Communication with customers and other To this end, KLP carries out systematic Target groups, interviews, written surveys KLP has detailed discussions with our customers when preparing the launch of new products or business fected the financial return. Return recognised interested parties surveys of a number of groups of interested areas. In 2008, we have utilised target groups and a customer panel to discuss the following areas: for the customers’ pension fund was 1.1%. KLP is reliant on maintaining a close dialogue parties. Such surveys and ongoing dialogue KLP’s portfolios are managed according to with customers to allow us to adapt our require human and/or financial resources. n The pension reform specific mandates and guidelines that allow products and services to customer needs. KLP decides which surveys to carry out each n The financial crisis – impact on our buffers for very low management costs. Our customers who have public sector year based on a cost-benefit analysis. n 5-year investment choices n Our new bank? Should we target the private or corporate market?

User assessment of KLP’s website n Impression of KLP: 76 of 100 points Financial products n Impression of website: 73 of 100 points Management total (NOK billion) n Would recommend the website to others: 88 %. Financial products For KLP External customers Total Discretionary management 128.3 - 128.3 Of those who have visited the insurance section of our website: Saving funds 19.4 7.6 27.0 n Utilised the price calculator for general insurance: 72 % Employer loans - 13.0 13.0 n Impression of the price calculator: 73 of 100 points. Private loans - 8.1 8.1 page 24 REPORT 2008 page 25 REPORT 2008

The environment Companies primarily classified as administrative (office work) are now also showing an increasing Energy consumption 2008 (not temperature-corrected):

awareness of the environment and our climate. KLP has measures to reduce our environmental Parameter Selection Result 2006 Result 2007 Result 2008 impact on a number of levels. In 2008, we compiled the first edition of our Plan of Action for Energy consumption, Oslo KLP Eiendom’s meters 104 kWh/m2 107 kWh/m2 104 kWh/m2 Green IT. In the same year, our general insurance company, KLP Skadeforsikring, was granted District heating, Oslo KLP Eiendom’s meters - - 100 kWh/m2 Energy consumption, Trondheim KLP Eiendom’s meters 235 kWh/m2 247 kWh/m2 130 kWh/m2 Eco-Lighthouse certification. District heating, Trondheim KLP Eiendom’s meters 94 kWh/m2 District heating quota, Oslo KLP Eiendom Oslo 45 % 45 % 51 % Energy consumption Paleet (excl. common areas) KLP’s own meters Paleet (non-comparable figures) (non-comparable figures) 89 kWh/m2 District heating, Paleet KLP Eiendom’s meters 3 614 000 4 971 786 4 241 000 * Incl. district heating

Environmental management will receive priority in 2009: Replacing print- Material consumption and recycling not have figures for KLP’s share of the waste reduced by approx. 3.7%, with the highest ing it difficult to present accurate figures for KLP is in the process of applying for environ- ers, recycling scheme for old IT equipment, KLP as an administrative company does not volumes specified. The method for calcula- reduction – 15% – achieved in district heat- KLP’s reduction of consumption. mental certification for the entire group. On purchasing of ICT equipment, operation of yet have a comprehensive overview of mate- tion has changed somewhat since 2007, ing. Previous reports have not distinguished 5 June 2008, KLP Skadeforsikring received its control systems, energy-saving initiatives for rial consumption. KLP Eiendom has set itself and the figures for 2008 have therefore between power supply and district heating. Transport Eco-Lighthouse certificate at the Oslo town client equipment and centralised print-out of a target to report all utilisation of concrete, been re-calculated in relation to the previous Temperature-corrected power consumption­ KLP has a strategy that requires proximity hall. There can be no doubt that this certifi- customer letters. glass and steel. In 2008, KLP launched the year’s report. in Oslo has been reduced by 14%, from to customers. However, with the geographi- cate has had a decisive impact for the com- Paper-free KLP project, aiming to reduce 123 kWh/m2 in 2007 to 106 kWh/m2 in cal spread of KLP’s activities, this involves a pany when entering tender competitions, and To date, KLP has made no systematic require- the company’s paper consumption by 15% Discarded PC equipment and printers were 2008. The significant difference between certain amount of travel. At the same time, this became evident in the autumn of 2008. ments regarding environmental marking of by ­introducing a new electronic archiving sent to Alternativ Data again in 2008. This Oslo and Trondheim can be explained in that KLP has a target to reduce travel and to Our goal is to now achieve Eco-Lighthouse products or activities in the supplier chain. system and new procedures for document company upgrades discarded equipment and Trondheim distributes all power supply over make use of more environmentally friendly certification for the parent company and KLP We are however in the process of compiling control. KLP only makes use of paper with sends it on to Norwegian schools. In 2009, the lease, while power supply in Oslo only means of transport. It appears that KLP has Kapitalforvaltning by June 2009. KLP Eiendom a new purchasing policy and this will include the Swan label. Recycled paper is not utilised KLP has chosen FAIR Recycling as their part- comprises common areas and operation of managed to reduce the number of flights is working separately towards certification such requirements. KLP has carried out certain due to quality requirements for archiving. ner for re-use and recycling of ICT materials. shared facilities such as lifts and ventilation. taken by employees. However, the method according to the ISO 14001 environmental environmental surveys related to specific of calculating transport has been improved certification standard. We will decide at a later purchasing, such as supplies of natural stone In 2008, KLP has also sustained its initia- Energy consumption – electricity and heating As an administrative company, KLP is able to and the figures are therefore difficult to date whether to adapt KLP Eiendom to the from China for use in the new Enova building tives regarding recycling paper and other KLP Eiendom manages KLP’s own office amend our energy consumption and, in part, compare. If, however, we estimate that the Eco-Lighthouse certification requirements. in Trondheim. recyclable materials. All paper, cardboard, premises in Oslo and a number of other the district heating system used to heat our total number of journeys made in 2007 electric waste and other special waste, glass ­office buildings, shopping centres and hotels. premises. District heating for the premises is 3,941 and compare this with the actual We compiled our Action Plan for Green IT OSU, the builder for KLP’s new head office and plastic from KLP’s offices is separated The company has invested significant efforts in the Paleet centre saw a dramatic increase number of journeys made in 2008, the result in 2008. This focuses on energy consump- currently being built in Bjørvika, has prepared at source and sent for recycling. Any other in 2008 to reduce energy consumption. The in 2007, but has been reduced in 2008. is a reduction in the number of journeys per tion, purchasing and disposal requirements, an Environmental Monitoring program. To waste is burnt, contributing to Oslo’s district EOS energy monitoring system has been The measurement of district heating is not employee from 6.1 to 4. reductions in travel and paper utilisation. The date, there have been no significant non-con- heating supply. The table below displays the implemented in 26 buildings, or 69% of the temperature corrected however, and also time frame for execution of the measures in formities from the Environmental Monitoring total volumes of waste from Paleet centre in company’s total property. Temperature-cor- includes ventilation and heating of premises KLP will continue to make use of green the action plan is 3 years. The following areas program. Oslo, where KLP’s has its head office. We do rected energy consumption in Trondheim was for other lessees in the Paleet centre – mak- courier services between our head office in

Recycling of waste from Paleet Separation at source

Fraction 2007 (tons) 2008 (tons) Amendment (%) Selection Separation at source 2007 2008 Residual waste in compactor 262.99 253.81 -9 % Shopping centres, Oslo % of total waste 48.9 % 50.7 % Cardboard/paper in compactor 132.39 132.66 0 % Office properties, Oslo % of total waste 45 % 42.7 % Plastic film in bags* n/a n/a n/a Metal in 660 litre 2.83 1.13 -2 % Wood, loose 1.87 1.32 -1 % Glass packaging in 2x140 litre 3.27 2.89 0 % Food waste in 3(6)x140 litre 26.52 79.51 53 %

* New disposal method in 2008, but no figures available at time of reporting. page 26 REPORT 2008 page 27 REPORT 2008

The environment These companies have been excluded from KLP’s investment portfolio because they severely damage the environment:

n Chevron The environment n DRDGold Society n Duke Energy n Freeport Morgan We have learnt from our customer surveys that the most important quality required from an n Grupo Ferrovial n Monsanto insurance company is a predictable, reliable, highly ethical and moral service, provided by expert n Petrochina n Rio Tinto and knowledgeable people. KLP already has a high score for such qualities, but we must remain n Vedanta Resources constantly aware of these and further develop our capacity related to ethics and our profession in order to sustain our current position.

Flights in 2009

Flights No. journeys Distance (miles) CO2 emissions (kg) Social responsibility in investments analysis service, which provides the grounds Domestic 2 117 989 009 189 830 KLP administers funds of over NOK 200 bil- for exclusion, is purchased from the Swedish Scandinavia 223 135 025 21 528 lion on behalf of our customers and owners. company, Global Ethical Services (GES). By Europe 160 256 475 41 028 A responsible investment policy is therefore outsourcing this service, KLP gains access to Intercontinental 18 174 968 30 703 one of the most essential elements of our an extremely wide range of expertise and Total 2 518 1 555 477 283 089 principal social responsibility strategy. resources, and to GES’ customer network, allowing for cooperation on a number of KLP distinguishes between “responsible projects and activities. central Oslo (Karl Johansgate) and the sub- international standard, Green House Gas certified CO2 quotas. These are quotas that investments” and “sustainable investments”. sidiaries located in Holbergs plass in Oslo. All Protocol. The company’s emissions for 2007 will be deleted from the international quota Responsible investments involve the re- Active ownership dispatches between the different locations have also been re-calculated, to allow for register once KLP has completed the trade, so sponsibility allocated to KLP as investor and Throughout the year, KLP has also made in Oslo are carried by cycle. Other courier comparison. KLP’s CO2 emissions in 2008 that there will be fewer quotas available for owner. We exercise this responsibility with efforts to achieve closer dialogue with services in Oslo are by “cycle in the centre” have been calculated as 1,413 tons compared those industries obliged to purchase emission our policies of exclusion and active owner- companies which have been excluded or are and other means of transport are only used to 1,438 tons in 2007. This is a reduction of quotas. Moreover, the quotas will ensure the ship. The foundations for these policies are at risk of exclusion. The main intention with Human rights on exception. In 2008, 91% of the total cou- 1.7%, primarily attributed to the slight reduc- financing of a project for recyclable energy compliance with international norms and such dialogue is to influence such companies These companies have been excluded from KLP’s investment rier deliveries were made by cycle, compared tion in district heating and in the number of for the third world, which may otherwise not standards and ethics. Sustainable invest- towards changing their behaviour or making portfolio because they are in with 89.7% the year before. flights made by employees. The company’s have been possible. ments, however, are investments in com- positive developments. KLP was therefore­ breach of human rights: emissions represent 2.06 tons per employee, panies with a green or socially responsible very happy to be able to re-include 3 com- n AES Climate accounts compared with 2.22 tons per employee in profile, made on the basis of a financial panies in 2008. One of these companies, n Alstom KLP has prepared a set of climate accounts 2007. In 2008, KLP also aims to compensate evaluation in order to reduce risk or promote Sodexo, gained a place on KLP’s investment n Chevron for 2008. These accounts are based on the for its CO2 emissions by purchasing UN- return on investment. portfolio as a result of close dialogue with KLP. n China Mengniu Dairy n L-3 Communicaton n Vedanta Resources Exclusions Sustainable investments n Wesfarmers Climate accounts We apply a filter to all KLP’s own funds for In 2008, KLP started work on a process of n Yahoo! Estimated tons of CO2 emissions per category administration. We may exclude a company charting the indices utilised by the company from our investment portfolio if we find that for investments, with a view to environmen- 2007 it has links to serious or systematic breaches tal impact and CO2 footprint. KLP believes Own vehicles, heating oil 2008 of international norms related to human that the costs of pollution will be subject to rights, labour rights, the environment or cor- increasing scrutiny, affecting the administra- Electricity, district heating ruption – as specified in Global Compact’s 10 tion of funds. Once these indices have been principles. At year-end 2008, 26 companies charted, KLP will move on to chart its portfo- had been excluded by KLP on these grounds. lios and to analyse any potential for reducing Employee travel, waste Moreover, KLP chooses not to invest in the environmental impact of the portfolios tobacco manufacturers and manufacturers without affecting financial risk. Total of nuclear arms, cluster bombs and anti- personnel mines. In total, KLP has excluded Moreover, we now have access to so-called Tons CO 2 55 companies as of 31 December 2008. The extra-financial information on companies 0 300 600 900 1200 1500 page 28 REPORT 2008 page 29 REPORT 2008

Society Weapons These companies have been excluded from KLP’s investment portfolio because they manufac- ture or sale weapons which violate basic humanitarian principles: Active ownership and dialouge echSystems n Alliant T n BAE Systems n Boeing n EADS Strategy for dialogue Description Voting: General Meetings n Finmeccanica n Gencorp Dialogue with companies which have been n Who: Companies which have been excluded from KLP’s investment universe or which are being 80 % n General Dynamics 2008 excluded or are at risk of exclusion. ­observed and may be excluded. n Hanwha Corporation n n What: In 2008, KLP has been in dialogue with 8 excluded companies and 6 companies under 60 % 2007 Honeywell n L-3 Communication ­observation. The total number of companies contacted for this project is 140. n Lockheed Martin 40 % n How: KLP cooperates with GES and Nordic Engagement Cooperation, a cooperation between KLP, n Northrop Grumman Folksam and Ilmarinen. n Poongsan 20 % n Raytheon n Safran 0 n Serco Group echnologies Enginering Sustainable Value Creation n Who: All companies on the Oslo Stock Exchange Benchmark Index. Voting Against Voting Against n Singapore T n What: The aim is to influence Norwegian companies towards a sustainable development and long-term internationally management in Norway management n Textron proposals proposals n Thales added value. KLP plans to expand this project internationally. echnologies n United T n How: KLP has initiated a cooperation between 12 of Norway’s largest institutional investors. The companies were questioned as to their guidelines for central elements of a responsible and sustainable business, e.g. human rights, labour rights, environment and corruption. They were also questioned about who the guidelines apply to and how they are implanted and implemented. The survey also covers reporting and control procedures for these areas, and the accountability of the Board of Directors. via our involvement in The Sustainable Value human rights. KLP operates only in the Nor- Creation project and the Carbon Disclosure dic countries, with a major share of activities Project. On both these projects, we are in Norway. The main source of problems Carbon Disclosure Project n Who: The 500 largest companies in the world and the 45 largest companies in Norway. working hard to ensure that all data is made related to human rights is therefore found in n What: Initiatives to encourage companies to disclose their climate strategies and greenhouse emissions. available on the Bloomberg market database, the supplier chain or investment activities. n How: Survey backed by 385 international investors, representing a total of USD 57 trillion in funds further empowering our portfolio managers for administration. KLP is the Norwegian partner for the Carbon Disclosure Project and is specifically to make efficient use of the information on Human rights problems in the ­responsible for profiling the project in Norway among Norwegian companies. The survey was submitted the social and environmental sustainability of supplier chain to 45 companies in Norway. Only 38% of the companies invited replied to the survey – the lowest companies. This area is currently under development. figure in all the Nordic countries. KLP carried out a number of random checks To date, there is no clear indication that of suppliers in 2008. In the future, re- investments in the companies who score quirements regarding human rights will be Controversial countries n Who: Companies involved in high-risk countries. Dialogue has been established with the largest and highest for social responsibility have sys- specified and systemised within the new most important companies, including Total and Chevron. tematically yielded a higher return. The work purchasing regulations being compiled. Areas n What: The project aims to reduce the risk of breaches of international norms by actively influencing on this project is obstructed by a number such as IT, construction materials and textiles companies operating in controversial countries. The project currently has its main focus on Burma. of ­difficulties, such as outdated analyses and profile products represent critical sup- The number of companies contacted as part of this project is 8. and lack of data quality assurance. KLP also plier chains. n How: An investor cooperation between several of GES’ customers. Survey based on OECD’s standard for believes that these types of analyses should international companies operating in high-risk countries. be combined with traditional analyses of se- In 2008, KLP Eiendom implemented Global curities in order to produce a comprehensive Compact’s 10 principles as a part of its and accurate presentation. management system. This means that human Voting at General Meetings n Who: 2008: 1539 international. This corresponds to approx. 70% of the companies in which KLP had a rights, the environment and anti-corruption shareholding. 29 Norwegian companies (28% of shareholding). Human rights initiatives are now an integral part of the n What: Votes at ordinary and extraordinary General Meetings in accordance with the guidelines established Global Compact requires companies to sup- decision-making processes when launching by KLP. port internationally recognised human rights new building projects and for the manage- n How: KLP utilises so-called proxy voting for General Meetings abroad via the company Risk Metrics. within their areas of activity, and to take all ment of the company’s properties. Important Voting at General Meetings on the domestic market requires a more thorough review and decision- measures necessary to prevent breaches of focus areas for KLP Eiendom will be forced making process internally within KLP and KLP Fondsforvaltning. Consequently, it will take more time for us to reach a similar level for voting in Norway as for our international voting rights. page 30 REPORT 2008 page 31 REPORT 2008

Society Corruption These companies have been excluded from KLP’s investment portfolio because they are in breach of international guidelines related to corruption:

n Exxon Mobil n Hess n Marathon Oil n Thales

labour or other breaches of human rights New guidelines were adopted in the spring of number of organisations. One of the most general insurance, in the savings bank sector fer Agreement, functions as intended. This related to foreign labour. The very first 2009 and are now available at www.klp.no. important contributions we make is the and the financial legislation in general. scheme was established in 2004 to meet site inspections of a selection of buildings annual sum of NOK 500,000 to the Blue the promise made by the Government and projects were carried out in the summer of KLP is not aware of any instances involv- Cross. These funds are administered via a The Norwegian Government faces signifi- parliament that all accumulated municipal 2008, all with positive results. ing corruption or extortion linked to the long-term partnership. KLP’s employees cant challenges related to the execution of pension rights would be ensured full regula- company which violate Norwegian legislation displayed impressive creativity and spirit its pension reform when it comes to the tion, even if the company with which these Human rights problems in the or the company’s own regulations. However, with the Competition for Blue Cross, which adaptation of the public sector occupational rights were earned, was to close. investment portfolio this area demands a high degree of vigilance. raised NOK 305,987 during this year’s TV pensions. KLP has made several, diverse With the administration of its global invest- The company therefore launched a dilemma appeal. KLP then doubled this figure so that contributions to this area and has compiled In 2008, KLP has participated on a number ment portfolio, KLP has been aware for training program in 2008 to ensure that all the total donation to the appeal was NOK a number of possible models. The purpose of working groups within the European Asso- some time of problems related to breaches employees are well-equipped when making 611,973. In addition, the Blue Cross was of these models is to illustrate to wage ciation of Public Sector Pension Institutions of human rights within certain branches decisions in difficult situations. The very first awarded this year’s Customer Christmas Gift agreement parties and the authorities the (EAPSPI). These groups have been involved and countries with particular exposure. The dilemma training program will be carried out of NOK 100,000, contributed by 5 different impact the reform will have on the rights and in the development of regulations and right to live and be healthy is perhaps the in 2009. customer service centres. The recipient of finances of employers. changes in general terms for the business, most basic of human rights, and forms the the Employees’ Christmas Gift is decided by principally the EU Commission’s work on a backdrop for KLP’s decision to exclude both KLP passing on its knowledge vote, and a donation of NOK 250,000 was KLP has also played a central role in ensuring new framework directive for the insurance tobacco manufacturers and manufacturers KLP possesses a unique knowledge of public made to the Church City Mission in 2008. that the Security Scheme, part of the Trans- industry. of certain types of weapons. Other high-risk sector pension systems and how these influ- branches include the metal and mining in- ence individuals, employers and society at Business policy dustry and the oil and gas industry. We have, large. The company now aims to make this One of KLP’s main ambitions is to contribute however, also identified breaches of human knowledge available to other interested par- towards the development of appropriate and rights in service providers, such as Internet ties, outside our immediate customer base. high-quality general terms for our busi- providers and telecommunication operators. To do so, we will compile analyses, provide ness, our customers and rightful owners. consultation and measures to develop To achieve this, we maintain close dialogue Ethics competencies, pave the way for exchange with parties to wage agreements, business KLP operates within an ethical framework of information and take part in the public organisations, a range of professional groups Recipients of financial support in 2008 intended to govern the way in which the exchange of opinion. In 2008, KLP took part and authorities. company performs in relation to the world at in a review of public sector pension systems Recipient Amount large. This framework has been revised dur- with politicians from 50 different municipal KLP participates on the Norwegian Financial Blue Cross Partnership* 905 987 ing the autumn of 2008 in order to ensure councils. The company has a target to carry Services Association’s professional committee Humanitarian organisations 469 750 that the company has remained in line with out this review with 80-90 municipalities, and Board of Directors. KLP has also played Health sector 51 250 universal expectations and the develop- improving the data upon which future pen- a role in the compilation of a shared policy Culture 90 000 ments in standards for good performance. sion issues are decided. for social responsibility implemented for the Sports 6 750 The purpose of these ethical guidelines is financial industry. In 2008, KLP became in- Professional organisations 220 000 both to regulate the company’s commercial Sponsorship and financial support volved in a number of working groups related Other 257 227 performance and the personal behaviour of KLP has set aside approx. NOK 2 million to the Banking Law Commission. The work Total 2 000 964 employees when representing the company. for sponsorship and financial support for a involved the development of regulations for * Does not include funds raised by the employees page 32 REPORT 2008 page 33 REPORT 2008

The workplace Employee statistics Employee statistics 2007 2008 KLP is a company in growth and relies on expert and motivated employees. The group’s No. permanent employees 647 685 No. temporary employees - 15 ­management is value-based and takes its starting point in the behavioural values Open, Clear, Turnover 6.9 % 6.8 % Responsible and Commited. Ratio of part-time positions, women - 3 % Ratio of part-time positions, men - 1 % Ratio of female employees, total 50 % 48 % Average age 40 years 41.5 years

Principal goals for equal opportunities and diversity: The group has an HR policy that substanti- potential for the implementation of a suc- Further education of employees is an impor- related to equal opportunities and diversity ates the following target areas: Attractive cessful needs assessment, execution and tant target area for KLP and the group makes are now integrated as a part of KLP’s HSE Goal Measure Deadline Workplace; Appropriate Expertise; Efficient follow-up. a central provision on the accounts for train- work. The work on diversity and equal n Our obligation to carry out activities is secured by in- 2009 Organisation; Culture and Change; and Ef- ing – presenting their employees with new opportunities for all discrimina- tegrating goals and follow-up in our HSE work and in ficient Personnel Management. The company On a more comprehensive sphere, the group internal challenges. The training provision In order to ensure success in this area, the tion issues must comply with performance appraisals and management assessments carried out a working environment survey in examines which areas of expertise are critical for 2008 was NOK 400,000. Practically all group places a considerable emphasis on current legislation n Our reporting obligation is met with the annual report 2008, called A Great Place to Work (GPtW). for business and which require extra focus applicants to the training scheme received raising awareness, systemisation, integration This indicated that a total of 87% of all em- and training among employees. This takes financial support in 2008, and the number and reporting. Part of this work includes a KLP’s goals, measures and policy n Offer training for all managers 2009 ployees agree that KLP, taking all factors into the form of an annual process for ensuring­ of applicants is on the increase. Moreover, new formulation for diversity to be used in document must be presented to n Updating procedures and templates consideration, is a great place to work. expertise. Employees are also offered a certain business areas have their own bud- all job advertisements. The group has also the entire organisation n Communication of KLP’s policy to all employees number of courses throughout the year, both gets for development of expertise. In total, compiled a specific set of goals for all the Development of expertise at corporate level and within local units – all the group spent approx. NOK 6 million on various discrimination issues. The table below Ensure good and fact-based n Ensure necessary extraction and reports 2009/10 KLP has systematic procedures for the devel- which have separate budgets for training and professional training, user training for IT and provides a brief summary of goals and mea- statistics and analysis material n Supplement the GPtW survey opment of expertise and training. These are development. The HR Department provides educational support. sures. More detailed information is available based on a number of outlooks, one of which assistance related to training measures and in KLP’s Annual Report 2008. is securing the necessary amount of training assessments. Health, safety and the environment (post-qualification) that allows the individual Every single employee has a part to play in Employee consultation and cooperation Ratio of women among management employee to fully master his or her work and KLP has a management development workplace health promotion and employee The relationship between KLP and our to develop in line with changing require- program, known as VEKST or GROWTH. The motivation. Common goals for all HSE work employees is governed by a comprehensive Management level No. managers Ratio of women ments. KLP recognises that the most efficient purpose of this program is to contribute in KLP are a good working environment with system of agreements. For the employees, Level 1 * 9 11 % form of training is experience-based learning towards the further development of KLP high levels of safety and preventive mea- there is currently only one labour union Level 2 Section Managers 38 18 % in the form of work experience and practice as a profitable and competitive company. sures which result in a positive development which has negotiating rights – the Finance Level 3 Departmental Managers 48 48 % together with colleagues. Research indicates The program shall also generate a specific, related to participation and working health. Sector Union of Norway. Approximately 50% Level 4 5 0 % that this form of learning represents 80% of future-oriented and unanimous practice of of KLP employees are union members. No Level 5 8 30 % the expertise required by the organisation. management, based on KLP’s values and Diversity and equal opportunities other labour unions have applied for negoti- Total average 108 31 % Training and learning are essential for a sense management requirements, and provides KLP revised its equal opportunities policy in ating rights. KLP is a member of the employ- * As of 1 April 2009, the ratio will be 22%. of achievement and motivation, and to make participants with the potential to achieve 2008, expanding it to also include diversity ers’ association for the financial industry. KLP an attractive place to work with high personal and professional growth and im- and changing the name to Equal opportuni- levels of job satisfaction. prove their management skills. At year-end ties for all. This policy now covers the same The Main Agreement, reached at a central Ratio of women among control bodies (31.12.08) 2008, approx. 100 managers in KLP had areas as discrimination legislation, i.e. gender, level between the employee organisation Individual development plans are compiled completed the program. Included in the ethnicity, nationality, descent, language, phi- and the employer organisation, governs the Company body Ratio of women to monitor training twice a year. In addition program are 6 gatherings that last 2 days. losophy, politics and membership of labour degree and format of cooperation, employee KLP’s Board of Directors 50 % to own learning, the company focuses on KLP has also implemented a program to unions, sexuality, age and disabilities. consultation and equal opportunities. Next KLP Kapitalforvaltning’s Board of Directors 57 % how new knowledge can be shared with intensify the effects of training measures. in line is the Central Agreement, which KLP Eiendom’s Board of Directors 40 % colleagues and utilised to achieve new, This program was named Practical Person- In order to ensure that the work involved for deals with working hours, social benefits KLP Fondforvaltning’s Board of Directors 33 % improved or amended practice, making nel Management and carries on several of this policy, its measurements and reports are and development of expertise. The Com- KLP Skadeforsikring’s Board of Directors 50 % sure all training measures are success- the subjects introduced in the GROWTH successfully integrated and sustained with pany Agreement covers local requirements. KLP Bedriftpensjon’s Board of Directors 67 % ful. Internal surveys indicate considerable program. the required level of awareness, all efforts In addition to issues dealt with in the Main KLP’s Supervisory Board 53 % page 34 REPORT 2008 page 35 REPORT 2008

Selected goals and measures from the Policy for equal opportunities and diversity Development in sick leave Labour rights These companies have been Area of law Goal Measure DL Status 6 excluded from KLP’s investment Gender Min. 40% of each sex at all Increase the ratio of women at top 2012 Fulfilled only at levels 3 and 4 portfolio because they are in 5 ­management levels management level breach of international standards 4 for labour rights: Eliminate any wage differentials Annual statistics of total wage levels Average wages for women were n related to sex at all levels for men and women per organisational 76% of average wages for men in 3 Bridgestone n Group 4 Securior level and per type of assignment with 2008. Mainly attributed to level similar level of responsibility. of position, service time and as- 2 n Toyota Motor Wage supplement for female employees signments. n Wal-Mart Stores 1 in local wage negotiations to eliminate 0 any wage differentials. 2001 2002 2003 2004 2005 2006 2007 2008 Eliminate categories of positions based on sex by recruiting an increased Short Long ­number of the under-represented sex.

Ethnicity, nationality KLP shall introduce active measures Detailed analysis of how representa- 2009 The GPtW survey indicated that 4% and descent to counteract direct and indirect tives of ethnic minorities perceive KLP of employees think of themselves Agreement and Central Agreement, this Policy regarding stage of life long-term sick leave. Short-term sick leave ­discrimination related to ethnicity, and how these differ from the average as ethnic minorities. This group is comprises performance appraisals, work on KLP intends to sustain its position as an was 1.8% while long-term sick leave totalled descent, skin colour or nationality perceptions. less satisfied with KLP as a place equal opportunities and diversity in KLP and attractive place of work for all employees, 2.9%. Long-term sick leave is defined as 2009 of work than others. This area will access to personal information. All employ- including employees aged 55+. We want this absence in excess of 16 consecutive days. Implement specific measures to prevent receive more focus in the future. ees, including those who are not members group of employees to feel that their exper- Total sick leave in KLP was 4.7%. The ratio any experienced discrimination. of the Finance Sector Union, are in the main tise, experience and skills are fully appreci- between self-certified sick leave and sick covered by the negotiated wage agreement ated within the company. KLP has a number leave with doctor’s certificate was 1:3.7. Language KLP shall introduce active measures Prevent inappropriately strict require- 2009/ No systematic assessment of and other agreements. of political tools for senior employees. During to counteract direct and indirect ments on linguistic ability which ­cannot 2010 linguistic requirements related to ­discrimination related to language be substantiated by position. the different positions. performance appraisals, all employees aged Employee benefits Employee representatives and employers 55 or more are encouraged to make propos- The majority of employee benefits are open Religion and philosophy KLP shall introduce active measures At all functions, alternative foods shall 2009 Have no previous guidelines for meet a total of 36 times a year on both als for new facilities, developments and to all employees, including part-time and to counteract direct and indirect be provided according to religious this area. central and local cooperation and working alternative careers which would allow this age temporary employees. Examples of employee ­discrimination related to the practice beliefs. environment committees. These committees group to remain at work as long as possible. benefits are employee loans with discounted of religion and philosophy discuss issues related to the working environ- All the employees in this target group are interest rate, group life insurance, access to Working hours shall be flexible to allow 2009 ment, such as the company health service, invited to an annual gathering. These events holiday homes or apartments, opportunity for necessary religious practices. A internal safety work, training and informa- have a relevant theme for the target group to become member of KLP’s sports program, separate multi-use room in the new tion on issues which have an impact on the and provide information on specific benefits discount in shops in the KLP shopping centre, KLP building will be available for use for working environment, future plans which may for senior employees in KLP. Once an employ- Paleet. All employees who work a minimum prayer and contemplation. have an impact on the working environment, ee has reached the age of 62, they receive 14-hour week are covered by KLP’s public Sexual orientation KLP shall introduce active measures There must be no form of discrimina- 2009 Have no previous guidelines for maintenance of the in-house HSE work and 3/4 of their monthly salary extra or have 15 sector occupational pension scheme and the to counteract direct and indirect tion related to living arrangements (and this area. arrangements for working hours. Moreover, extra days holiday per year. From the age of early retirement scheme, which has been ­discrimination related to sexual thereby indirect discrimination of sexual 2010 the committees discuss issues related to 65, they receive 1/1 of their monthly salary adapted to the former. KLP’s pension commit- orientation orientation) at any social events. cooperation which aim at promoting interest or 20 extra days holiday per year. And from ments in relation to own employees totalled among employees for KLP’s assignments, the age of 64, all full-time employees receive NOK 481 million as of 31 December 2008. Age KLP shall introduce active measures Further development of 55+ 2009 55+ has been launched finances, operating result and social impor- 1 hour free per day with full salary. to counteract direct and indirect Ensure age-distributed statistics in tance, recruitment and training policy, educa- ­discrimination related to age terms of recruitment, development of tion and welfare budget and any planned Sick leave expertise, leave of absence etc. major changes in the business and measures Absence related to illness saw an increase of Compile stage of life policy for other age groups/life situations. which involve employment and working con- 0.2% in 2008 when compared with 2007. ditions for large groups of employees. This increase relates to both short-term and Disabilities KLP shall introduce active measures The new building has been designed 2009 Qualified persons with disabilities to counteract direct and indirect according to requirements for ­universal compete for positions on an equal ­discrimination of persons with design. standing with others, but with no ­disabilities. When recruiting, accessibility must be 2010 special measures. ensured for candidates with ­disabilities. Serious HSE incidents No. 2008 In the event of qualified candidates Occupational injuries 0 with disabilities, at least one must be 2009 Occupational disorders 0 invited to an interview. Irregular absence 0 Occupational death 0 page 36 KLP AND SOCIETY KLP and society page 37

Plan of action 2009 Environment Subject Measure and goal Environmental management KLP Group (excl. KLP Eiendom) to achieve Eco-Lighthouse certification The environment re. financial management Analyse CO2 footprint of KLP’s portfolios The environment and IT Execute Plan of Action for Green IT Plan of action Property management Reduce energy consumption in own-managed properties by n 5 kWh/m2 in Oslo n 6.25 kWh/m2 in Trondheim Complete the Environmental Building in Trondheim New head office Follow-up of OSU’s Environmental Monitoring Program The plan of action is a means to put KLP’s social responsibility Establish environmental requirements for all major purchases strategy into operation. The purpose of the plan is to contribute towards generating sustainable values for society and our inte- Society Subject Measure and goal rested parties. The table below includes a selection of goals and Responsible investments Exclusion strategy n Dialogue with minimum 10 excluded companies measures for 2009. Active ownership n Dialogue with minimum 5 companies under observation n Votes in 70% of the companies on both Norwegian and international markets n Contribute towards execution of Sustainable Value Creationin 2009 and for the international expansion of this project Reporting n Update SRI report twice yearly, communicate the goal and effect of the work UN’s principles for responsible investment n Disclose to UN KLP’s work to comply with the principles Policy og guidelines Sponsorship and financial support Further develop partnership with Blue Cross Set up jumble sale From children to children as annual event Subject Measure and goal Business policy Carry out analyses for parties to wage agreements in order to contribute towards a good and permanent public Principal company management All business areas shall disclose social responsibility on separate score cards sector occupational pension scheme for both holders of rights and employers, and simple transitional rules for the Ethical guidelines Implement ethical dilemma training throughout the group pension reform Purchasing Develop a purchasing policy which safeguards KLP’s social responsibility Monitor and detect proposals for changes to regulations, competition and structure which affect the group, Environmental policy Revise the environmental policy in accordance with the Eco-Lighthouse requirements customers and/or competitors

Customers Workplace Subject Measure and goal Subject Measure and goal Development of expertise Submit offer of presentation for politicians to all municipalities over the four-year period between each election. Diversity and equal opportunities Implement measures to realise Equal Opportunities for All Customers’ HSE Execute 60 HSE projects together with customers. Training and further education Introduce eLearning in KLP with educational portal and tool for development of own courses. Contribute 200 HSE activities targeting customers. Update guidelines for allocation of educational subsidies, and increase awareness of this system. Measures implemented by Carry out 25-day course in systematic safety management for municipalities Offer training activities where required. customers to reduce risk HSE system for waste water system in cooperation with Norwegian Water (Norsk Vann) Provide support to managers and units for good training measures, methods and evaluation. A safe route to school, in cooperation with the Norwegian Council for Road Safety (Trygg Trafikk) New head office Ensure that health, safety and the environment are safeguarded both during the process and in the end result. Course in economical driving for our customers Dialogue with interested parties The following surveys have been planned: n CSS for Life Insurance, General Insurance, Employer Loans and among our pensioners n Survey of reputation and two rounds of surveys of knowledge and preferences among population and public sector employees n Qualitative survey in connection with launch of banking service New strategy for comprehensive customer services (CRM) page 38 KLP AND SOCIETY

KLP supports the The Norwegian Code of Practice Organisation and management for Corporate About the report Governance. The Sustainability Report 2008 aims to demonstrate KLP’s efforts towards fulfilling our goal to run our operations in a responsible manner and, thereby, making a positive contribu- GRI table tion to society and the environment in general. The global reporting standard GRI (Global Reporting Initiative) GRI chapter GRI Indicators Chapter in KLP and Society Page GC principle* KLP’s organisational structure KLP’s organisational structure forms the starting point for our collection of data. KLP has Strategy and profile Kommunal Landspensjonskasse The parent company for the KLP group is Kommunal landspensjons- evaluated the GRI indicators in terms of relevance and ma- Gjensidig forsikringsselskap kasse, a mutual insurance company, owned by customers who have a teriality and has reached a decision to increase the scope of Strategy and analysis 1.1 Foreword by the CEO 4-5 Statement public sector pension agreement with KLP. The parent company has 7 the reports in certain areas, while other indicators have been 1.2 The report 20-35 wholly-owned subsidiaries. The head office for the parent company and eliminated. The company also prepares reports on issues from 4-5 all subsidiaries is located in Oslo. In addition, the parent company has one office in Bergen. KLP Eiendom, the group’s property management previous years which require monitoring, and on activities and KLP Bedriftspensjon AS KLP Skadeforsikring AS KLP Eiendom AS 1: company, has offices in Trondheim and subsidiaries in Copenhagen and measures in which we feel our readers will be interested. In Organisational profile 2.1, 2.3 – 2.6 Organisation and management 39 2.2, 2.7 Customers 20-22 Stockholm. the report, the term “social responsibility” is used as a general 2.8 Customers/The workplace 20, 33 KLP Kapitalforvaltning AS KLP Fondsforvaltning AS KLP Forsikringsservice AS KLP Alternative Investments plc (Irland) term including both environmental and social responsibility. 2.9 - 2.10 N/M

Information on the report 3.1 – 3.11, 3.13 About the report Innbrett It is unfortunately an impossible task to compare all the data 3.12 GRI table 38 for the entire group and for all areas. Our goal, however, is to cover the entire group of companies, including the subsidiar- KLP’s management structure Corporate governance, 4.1 - 4.4 Organisation and management 39 ies in Sweden and Denmark. The subsidiary in Ireland has not commitments to external 4.8, 4.12 Values and foundations 6-7 The General Meeting been included. If the report includes information which only initiatives and participation 4.9 About the report Innbrett Delegates to the General Meeting are elected in nomination meetings in covers parts of our activities, this will be specified. 4.11 Foreword by the CEO 4-5 General Meeting 23 constituencies, where all owners have a voting right based on their 4.15 – 4.17 Customers 22-23 contributions to the pension agreement. 4.5 – 4.7, 4.10, 4.13 – 4.14 N/A 164 delegates from 23 constistuencies We have made a number of amendments to the method of The Supervisory Board data collection and processing within several areas. Where Management approach 5 Values and foundations 6-7 The General Meeting elects 24 representatives. 6 representatives are possible, the figures from 2007 have been updated using the nominated by the employee organisations in proportion to the number same template so that we can ensure comparisons over time. Core indicators Nomination Committee Supervisory Board Control Committee of members with pension insurance in KLP. And where relevant, information is provided on the above. 3 members 45 members 5 members 15 representatives are elected by and among the employees of the Economy EC1, EC9 Customers 20-22 KLP group. EC2 The environment 26 2: The report is still some way behind fulfilling all the GRI Board of Directors EC3 The workplace 34 The Board of Directors requirements for report quality. We lack data in certain areas, EC4 – EC7 N/M 8 members 5 members with deputies are elected by the Supervisory Board and 2 it has proven difficult to compare data for certain indicators EC8 Society 30-31 members by and among KLP’s employees. 1 member is nominated by over time and the level of detail leaves room for improve- the employee organisation which has the highest number of members The environment EN1 - EN2, EN8 - EN15, EN19 – EN28 N/M CG-7-9 with pension insurance in KLP. The Board of Directors adopts the ment. For the reasons stated above, KLP has decided not to EN3 - EN7, EN16 - EN18, EN29 The environment 24-26 company’s ethical guidelines and considers the report section of the order an external audit or investigation of the report. Accord- EN30 N/A Social Responsibility Report. In 2008, no other subjects related to ing to our own assessment however, the report satisfies GRI social responsibility have been considered. level C with a good margin, but does not quite reach up to Labour practices and LA1 - LA7, LA9 – LA14 The workplace 32-35 CG4-6 level B. decent work LA8 N/M The Control Committee The Control Committee is elected by the General Meeting. The Control Human rights HR1 - HR2, HR5 - HR7 Society 28 CG1-3 Committee supervises the activities of the company. The report section has been presented to the Board of HR3 – HR4, HR8 – R9 N/M Directors, but the actual publication has been issued by the management of KLP. Product responsibility PR5 Customers 23 CEO Corporate operating organisation PR1 - PR4, PR6 - PR9 N/M Sverre Thornes n KLP’s corporate management comprises the managers of the different Publication: April 2009 n Society SO3 - SO6 Society 30-31 CG10 business areas and a CEO. The corporate management is jointly respon- Reporting period: 2008, with plan of action for 2009 Corporate Services Economy and Finance SO1 - SO2 N/A sible for the compilation of and compliance with the company’s social n Previous report: May 2008 SO7 - SO8 N/M Toril Ressem (from 1.4.2009) Aage Schaaning responsibility strategy. In 2008, the Marketing Department within the n Chief Editor: CSR Manager Cornelia Moseid largest business area, Life Assurance, has been appointed operating re- Supplementary indicators for the financial sector Information 3: sponsibility for the development of expertise, strategy development and and Public Relations IT consultation related to the environment, ethics and social responsibility. Product portfolio FS1 Values and foundations 6-7 With effect from 2009, this responsibility has been transferred to the FS2, FS5 – FS12 Society 27-29 Ole Jacob Frich Rune Mæland Corporate Services business area. The Asset Management business area FS3 - FS4 N/M has operating responsibility for responsible investments. Life Insurance General Insurance Asset Management Property *Global Compact principle N/M = Not material Ida Espolin Johnson Hans Martin Hovden Morten Hvistendahl (acting) Steinar Manengen N/A = Not available

KLP and society page 41

Karl Johans gate 41 b P.O. Box 1733 Vika NO-0121 Oslo Tel.: + 47 22 03 35 00 Fax: + 47 22 03 36 00 www.klp.no