Sustainability report 2020 2 | Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Our owners’ view on sustainability: Content Management statement 3 at a glance 4 Business model 5 ’’Sustainability is a journey. Governance 6 Sustainability direction 7 We can’t wait for one big Principles and SDGs 8 solution, we have to take Materiality analysis 9 Healthy & sustainable living many small decisive steps.” Financial stability 11

Peter, Jonas and Mathias Kamprad Counteract corruption and money laundering 12 Responsible lending 13 Responsible investments 14 Circular & climate positive Environmentally beneficial financing solutions 16 Climate smart business 17 Sustainable purchases 19 Fair & inclusive Equality and diversity 21 Employee development, health and safety 22 Social responsibility 23

Overview 24 Please consider the environment before printing this report. The document is optimized for full-screen viewing. Auditor’s sign off 25 3 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

A long-term business perspective

Making Ikano Bank a truly What does the word We often say that sustainability sustainable company starts in sustainability mean to you? is in our DNA as a company. What do we mean by that? the management team. We met Jessica: For me it’s all about using our up with CEO Henrik Eklund and resources wisely and always have a long- Henrik: It dates all the way back to our chief commercial officer Jessi- term perspective on everything we do. founder Ingvar Kamprad. His philosophy Both on how we use our planet’s resources was truly sustainable, both in not being ca Svantesson in the Swedish and how we create a sustainable and wasteful with resources and relating to woods north of Malmö to talk long-term business. other people with kindness and respect. about long-term thinking, good Making the most of what we have is in our Henrik: I agree, and I think an important culture, whether it’s a piece of wood for business and a sustainable part is that what we do is sustainable furniture or fair financial services. Naming society. At a Covid-19 safe dis- and fair for all involved. Sustainability is a it sustainability is a later addition, even if it tance, of course. humane perspective as well as a matter of is an important word today. resources. Why is focus on sustainability What role does Ikano Bank play good for our business? in contributing to a sustainable society? Jessica: Again, it is about long-term Henrik: Trustworthy and stable banking is thinking and creating trust. Long and fair Lastly, what sustainable achievements fundamental to a sustainable and equal relationships make our customers happy, in 2020 are you most proud of? society. People trust their money with our employees happy, and our owners us, and that is a huge responsibility. To happy. Jessica: I think we have some really cool provide banking services on fair terms to projects in the area of financing sustaina- the many people is our most important Henrik: Sustainability is also an important ble solutions. Like Farming-as-a-Service contribution. part of the digital transformation the Bank with Swegreen, and our cooperation with is in. With our new platform we can launch Ikea on circular use of office furniture. Jessica: Yes, and in addition to our own products faster and lower our costs. Wast- work for sustainability we can help others ing less resources is sustainable and good Henrik: I am very proud of our co-work- to realise their ideas for a sustainable for business. ers. This has been a demanding year, future, by financing them. It is a part of our of working from home and thousands of responsibility to find and encourage such online meetings. But I actually feel this has initiatives. For example, our loans for solar brought us closer together at Ikano Bank panels. – and hopefully this has given us all in the world a new perspective on sustainability. 4 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social 1,008 employees in Ikano Bank at a glance 8 countries. Working together using common sense and simplicity, and daring to be different is how we conduct our business every day.

Furniture-as-a-Service (FaaS) launched for IKEA Business customers in . The concept will be rolled out in all Nordic countries during 2021.

We create possibilities for Ikano Pay 3,346 better living by offering simple, our new retail offer was fair and affordable services, put in production on the solar panel installations financed enabling a healthy economy for by Ikano Bank since 2018. UK market. the many people.

3 product awards won in . German Fairness Award and 2 BankingCheck Awards.

100 % SEK 60,968 m 7.1 tons of the energy used in our Swedish, reduction in internal paper German and Polish offices is from Ikano Bank selected top 100 business volume. consumption 2018–2020. renewable sources. Career company in . 5 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Our business model

Our business model can be as loans for private consumption, cards and savings accounts​ VISION: illustrated with a house. Our Create possibilities for better living values, people, history and Businesses. We offer leasing and factoring international outlook lays the services to companies through direct sales foundation for our three busi- as well as via partners. Our services give customers financial flexibility. Our solutions ness areas, and our vision and enable companies to free up capital and business idea is what guides finance their growth. In turn, our partners BUSINESS IDEA:

increase their sales. us every day. Together we are We create possibilities for better living by offering simple, fair and affordable services, building a long-term focused Sales finance. We offer sales supporting enabling a healthy economy for the many people bank with sustainability as a finance solutions, including loyalty pro- natural part of everything we do. grammes, loyalty cards and instalment payment solutions, to retail partners. Ikano Bank is part of Ikano Group, and is Our services enable our partners to owned by the Kamprad family. In addition increase loyalty and generate additional OUR OFFER TO THE MARKET: to finance Ikano Group also has business sales, as well as offer their end-custom- operations in real estate, production, an- ers increased financial flexibility.​ alytics, insurance and retail. Today Ikano Bank operates in Sweden, , Den- Our foundation Consumers Businesses Sales Finance mark Finland, The , Ger- Our retail heritage lays the foundation many, and , offering financ- for our purposeful, customer centric and ing services to consumers and businesses values driven culture. directly and indirectly via partners. Based on our values; working together, Our offer to the market common sense and simplicity, and daring OUR FOUNDATION: Our business is divided into three are- to be different we conduct our business as, with three different target groups. This every day. Guided by our promise; makes the Bank resilient to market changes On fair terms. This is the foundation for People, Values & Leadership and contributes to lower risk in our opera- how we grow our people and business, tions. ensuring efficient ways of working, clear governance, leadership skills, competenc- Retail Heritage EU Bank License Consumers. We offer private customers es and continuous development. simple and smart banking services such 6 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Sustainability governance

Sustainable development is an Transformation office important and integral part of The Transformation office has the opera- List of relevant policies tional responsibility by mandate from the for sustainability governance the pursuit of value creation for CEO to drive the sustainability agenda customers, employees, and the across the Bank. The Transformation Office IKANO GROUP POLICIES society. We are making sustain- coordinates the overall agenda, ensuring (adapted by the Bank) correlation between strategic initiatives ability an integral part of the for sustainability and reporting on the • Charity overall business strategy. progress. It is also responsible for the • Code of conduct Board overall prioritisation of initiatives to ensure • Partnership of directors We believe that having a clear under- alignment with the business strategy. • Whistle-blower standing of the importance of sustainabil- ity in everything we do, with focus on the Global functions and business units IKANO BANK POLICIES impact we have both in our operations Our ambition is to have sustainability as CEO and how we can support our custom- a natural part of how our global functions • Anti-money laundering ers, and thus increase business value is and business units operate every day. and counter terrorism financing increasingly important. They are responsible for implementing • Compensation benefit sustainability policies, secure sustainable • Compliance Transformation During 2020 the governance structure was products and services in our customer • Conflicts of interest, anti-bribery office clarified to ensure we deliver on our ambi- offerings. and corruption tion to make sustainability a natural part of • Credit Risk everything we do. Sustainability work groups • Finance Global functions If needed, sustainability work groups will • Governance, risk & business units Board be formed to drive specific sustainability Management and control The Board of directors has overall respon- tasks related to policies and strategy. A • Operational risk sibility for strategy and policies. The Board steering committee will be formed around • Personal data protection will address and consider strategic and the work groups according to need. The • Risk and capital tactical issues related to the sustainability work groups will consist of representatives • Risk control area. from markets and functions relevant to the assigned task. CEO The chief executive officer is responsible for the execution of the sustainability di- rection and implementation of the govern- ance structure set by the Board. 7 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Our sustainability direction

We have a responsibility in the way we do business, through the choices way we do business to contrib- we make and the services we offer, we must at the very least ensure that our own ute and be a good partner in impact on people and the planet is made society. We recognize that trust responsibly. in banks increasingly relies on Three sustainability objectives how they make money. Trust In our sustainability direction for the years 2020–2024 we have identified three main FINANCIAL: ENVIRONMENTAL: SOCIAL: plays a key role in customer Healthy & sustainable living Circular & climate positive Fair & inclusive choice and is an essential in- objectives and goals where we will focus our efforts. The ambition provides a long- gredient for our future growth. term direction and is intended to motivate Goals 2020–2024 continuous improvement and make sus- The expectations from society and the tainability a natural part of our everyday local community towards banks are that business. banks need to become sustainable. Our By 2021, the foundation By 2023, credit By 2023 all new cards will for a fully digital customer applications being direction for sustainability is an important be e-cards with physical Financial sustainability experience (B2C) in place assessed using new part of our business strategy. card as an option We will contribute to the stability of the data sources (B2C) financial services infrastructure with a We use our ambition; To be recognised as well-governed resilient bank, promoting a a trusted and sustainable bank, making us Healthy & sustainable living for the many By 2022, new green By 2024 all physical cards By 2023, digital tools to the natural choice for the many people as people. services funded by green will be made of renewable improve financial inspiration and to keep us on track. bonds in place material well-being are offered Environmental sustainability Our business idea; We create possibilities We will reduce the environmental impact for better living by offering simple, fair and caused by our own operations, as well as affordable services, enabling a healthy By 2024, all offices sus- finance solutions for a Circular & cli- tainability certified or hav- economy for the many people places mate-positive economy. ing certifiable standard sustainability at the heart of our business. We believe people with a healthy economy Social sustainability contribute positively to the wider economy, We will act as a Fair & inclusive company, By 2024, paper removed help drive social progress and are more providing development, safety and equal able to make better environmental choices. from all customer treatment for all co-workers. And we will applications and every- make a positive contribution to the com- day servicing Our culture and values create a powerful munity around us. desire to do the right thing. Through the 8 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Guiding our way to sustainability

Driving our sustainability 6 principles for change UN Sustainable Development Goals UN Global Compact agenda in the Bank is part of We have developed 6 principles to guide The 2030 Agenda for Sustainable Devel- We are committed to and continue our our work in the years to come. These will opment, adopted by all United Nations work to continuously strengthen our the bigger picture. The global guide us in our daily work, as well as in the Member States in 2015, provides a shared initiatives and actions contributing to the development goals defined in long-term development of our business. blueprint for peace and prosperity for 10 principles of United Nations Global the UN 2030 Agenda and the people and the planet, now and into the Compact. 1 Sustainability is the responsibility future. At its heart are the 17 Sustainable principles of UN Global Com- of everyone Development Goals (SDGs). This ambi- We have incorporated the principles of pact provide a framework to tious agenda will demand the participa- Human Rights and Labor in our Code of guide our long-term goals. We 2 Improve access to digital services tion of all actors in society and that all Conduct, Ikano Group Partnership Policy and products three elements of sustainable develop- and the Modern Slavery Act. have also developed 6 prin- ment are balanced: economic growth, ciples for change to support 3 Our business will actively seek social inclusion and environmental protec- Anti-corruption is well secured through our daily work with sustainable to improve people’s lives, society tion. our values, business ethics and how we development. and the environment conduct business. We have chosen these 7 SDGs to guide 4 Creating value by developing services our work for sustainability, in areas where Environment is a never-ending job for us, and products based on insight into the we can make the biggest positive impact. we continuously identify new opportuni- needs and behaviours of people and ties how we can support both behavioral businesses changes in society by setting a good example first. We are well on the way to 5 Invest in new technologies improving reduce our carbon footprint in our own our services and products and our own operations and are focusing on enlarging operations our green lending where we support envi- ronmentally friendly solutions. 6 Actively engage in changes affecting our industry for the benefit of people, society and environment 9 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Materiality analysis High importance As part of our sustainability The results show that the economic areas 1 2 direction we have conducted are generally deemed most impor- tant, with the exception of responsible 3 a materiality analysis during investments. Social sustainability is 8 2020. This helps us to identify deemed least important of the selected 9 the most important sustainabil- areas. Employee development, health 5 4 and safety is the area with most variety 6 ity areas for us and our stake- in stakeholder scoring, while counteract SCORING STAKEHOLDER 7 holders. corruption and money laundering is the 10 area with least variety in stakeholder The materiality analysis was conducted scoring. It is important to note that all during 2020. To form the basis of the areas assessed are deemed important analysis 10 relevant sustainability areas to the stakeholders. Less importance were chosen, in accordance with the Less impact IKANO BANK IMPACT High impact Ikano Bank sustainability direction. The second step of the analysis is an assessment of the level of impact Ikano In the first step the areas was evalu- Bank has on each sustainability area. ated by letting key stakeholders score The scale is 1–7, where 1 = relatively low the areas according to how important impact and 7 = very high impact. 1 Counteract corruption and money laundering they consider it that Ikano Bank works 2 Financial stability with the respective area, in interviews The two parts of the analysis were then and surveys. A selection of the following combined to form the materiality analysis 3 Responsible lending stakeholders were included: matrix and will form the basis and guide the focus for the continued sustainability 4 Responsible investments • Private customers work in the Bank. • Partners 5 Sustainable purchases • Employees • Board 6 Climate-smart business and value chain • Investors 7 Environmentally beneficial financing solutions

8 Equality and diversity Financial areas

9 Employee development Environmental areas

10 Social responsibility Social areas 10 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Healthy & sustainable living

We contribute to the all aspects of our daily business stability of society’s financial We will secure long- we will build trust among our infrastructure by maintaining a term growth and ongoing customers, partners, suppliers well-governed, resilient, and competitiveness, for us and our and co-workers. profitable bank. We have a customers, by investing in new responsibility to contribute to a technology, offering products financially healthy society, and and services with real value for we enable a healthy economy our customers. And by applying for the many people. our values and ethical culture in 11 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

A financially stable bank

To be able to play our part in This means that long-term financial stabil- contributing to a sustainable ity for the Bank is about ensuring that we meet capital requirements, commitments society we need to have a and provide returns to owners. In order to strong financial position with grow the business and add value to our good margins in terms of liquid- customers and other stakeholders it is a prerequisite to run a profitable business ity and capital. It is a matter of and invest in the development and future trust for our stakeholders and growth of the business. a matter of long-term survival Creating financial stability in 2020 and growth for us. The Covid-19 pandemic does not only have consequences for our personal lives, Financial services on fair terms but also for the economy and our custom- Our business idea is to create possibilities ers’ financial situations. During the year we for better living by offering simple, fair and have supported our customers, experienc- affordable services, enabling a healthy ing liquidity problems due to Covid-19, by economy for the many people. To achieve e g giving temporary payment holidays. that we need to build a stable bank with a long-term perspective, and with a bal- The Credit Risk organisation and Treasury anced level of risk. In addition we need to are on a higher alert level and are closely satisfy all stakeholders, such as our own- monitoring the situation to secure that we ers, employees, lenders, authorities, etc. have control of our credit portfolios and That is why we need to manage the busi- financial position needed to continue to ness in terms of margins, risk, costs, etc, to support our customers and have a long- ensure that we can meet the demand for term business perspective. our products in the future and to be able to build trust from our stakeholders.

Profitability as a vehicle for stability As a bank we are governed by strict legal requirements to keep a certain amount of equity, at any given time. Thus, running a financially strong business is a central component to be able to serve more cus- tomers and create the possibility for growth. 12 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Counteract corruption and money laundering

As part of the financial system, customers. Ikano Bank works to develop Conflicts of Interest Ikano Bank is exposed to the and maintain its capability to prevent, Conflicts of interest may have a negative detect and respond to fraud, and wher- impact on customers and is an area of HIGHLIGHT 2020: risk of being misused for money ever possible seeks to minimise exposure importance to secure the confidence in the laundering and/or terrorism to risk. financial market and the companies acting During 2020 Ikano Bank has invest- financing, as well as exposed to on it. Ikano Bank seeks to avoid all conflicts ed in a new software system for Bribery and anti-corruption of interest, wherever they arise. If avoid- detecting fraud. The system will be fraud and corruption. Counter- It is the policy of the Bank to use only ance of a conflict of interest is not possible, used in all products based on the acting this is a highly prioritised ethical business practices while conduct- Ikano Bank will take measures to manage Banks’ new lending platform. This area for the Bank. ing business activities and to comply with and mitigate the effect of such conflict of will make the process faster and all applicable laws, rules, and regulations interest. improve the customer experience. governing anti-bribery and corruption During 2020 additional resources and in all the countries where we operate. Communication and training competencies has been assigned to coun- Ikano Bank has a zero tolerance approach An Anti-Money Laundering (AML) e-train- teract corruption, fraud and money-laun- towards acts of bribery and corruption, ing is part of the annual mandatory train- dering, both at our central Financial Crime by co-workers or anyone acting on our ing for all co-workers. The purpose of the We want to adhere to all Team and at our local offices. behalf. Ikano Bank has policies and proce- AML training is to give all of our co-work- ” laws and regulations in the dures in place to detect and avoid bribery ers an introduction and understanding of Money laundering and financing of terrorism and corruption, including training of staff. money laundering and terrorism financing, area, and at the same time An AML (Anti Money Laundering) policy and our role in the detection and preven- make the customer experi- and guidelines define the overall frame- Market conduct tion of Ikano Bank being misused for these ence as good as possible. work of the AML-measures taken in the We follow all relevant laws, ordinances purposes. Bank. A central Money Laundering Officer and internal regulations as well as gen- And we strive to be as and local Money Laundering Reporting erally accepted practices or standards transparent as we can, to Officers in each of the countries where regarding its licensed operations in order build confidence with our Ikano Bank operates, ensures compliance to have a sound governance and control with the local requirements in the area. culture within the Bank. The core of these customers.” efforts is to prevent non-compliance with Fraud external or internal regulations, which Dan Hedgate, In the broadest of terms, fraud is a legal could increase operational risks, risks of Chief Operations Officer, Ikano Bank and social concept that generally refers legal sanctions, supervisory risks, econom- to an intentional act committed using ic losses and damage to reputation. Ikano deception to secure an unfair or unlawful Bank will at all times aim to follow proper gain. It poses a risk of significant financial standards of market conduct. loss, reputational damage and adverse impacts to not only Ikano Bank but also our 13 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Responsible lending

We see “A healthy economy for Responsible lending in business Bank collaborates with several external the many people” as an inte- Lending to businesses is conducted in parties to closely monitor new threats and a sustainable manner. We fulfill this by weaknesses. gral part of what we want to always safeguarding the sustainability of achieve as a company. Lend- the credit process. If the risk is of such a Integrity and confidentiality of data ing money to individuals and nature that the Bank considers the trans- Ensuring the integrity and confidentiality action incompatible with the Bank’s ethical of customer, partner and co-worker data, companies in a responsible and values, that the transaction may damage Ikano Bank has policies and guidelines sustainable way is an impor- the Bank’s reputation or otherwise dam- in place for Information Security as well tant way to achieve that and age the Bank’s brand, the credit will not be as Personal Data Protection. The Bank approved. This applies even if the Bank is subject to national and EU regulatory to remain relevant for future were to assess that the environmental risk requirements as well as regulations and generations. For us it is a huge is manageable from a business perspec- guidelines from the Swedish Financial opportunity and responsibility tive. Supervisory Authority (SFSA) and the to contribute to a financially European Banking Authority (EBA). We have not actively limited our business healthy society. to certain sectors, but no funding is ap- Everybody’s responsibility proved regarding the financing of weap- It is the responsibility of all co-workers to We strive for “a healthy risk culture” at ons or machines for producing weapons. ensure that the policies and guidelines Ikano Bank. That means we manage our In addition, we have no engagement in oil are followed. The work with information lending activities conscious within set risk or gas exploitation, in business credits or and IT security is continuously addressed appetite, and act responsibly towards own investments. with preventive measures and we apply our customers and clients by applying a a process where regular operational risk sustainable lending practice. We maintain Risk reporting assessments are conducted. Manda- sufficient capital and liquidity levels to Regular risk reporting to the management tory compliance training is provided to sustain during downturn in the economic of the Bank ensures that the Banks risk all co-workers annually, using an online environment, as well as to support invest- exposure is within set risk appetite. The platform. The training consists of a number ments and growth in the business. reporting includes but is not limited to of areas ensuring compliance and risk incidents related to fraud, integrity and mitigation. Responsible lending in private loans information security as well as customer We offer simple banking products (savings, complaints and key risk indicators. The • Code of conduct cards, loans) on fair terms. We are open and landscape for information security is • Fraud awareness transparent about what applies and have constantly changing hence Ikano Bank • General Data Protection (GDPR) no hidden fees in our agreements and make continuously monitor and assess the • Information Security Essential sure we assess our customers’ ability to repay threats in this area. Cooperation with • Operational Risk Management Essential their loans as a responsible lender should. external forums is a necessity and Ikano • Anti-Money Laundering 14 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Responsible investments

Investing in economically, so- Green bond investments cially, and environmentally for a sustainable Malmö One example of our responsible invest- sustainable bonds is a vital part ments is in green bonds issued by the City of our ambitions for financial of Malmö. The Malmö green bond pro- sustainability. By investing a gram was initiated in 2017 and is aimed at funding projects and developments in share of our liquidity reserve in areas such as: green bonds we contribute to the funding of responsible and • Green buildings • Renewable energy climate-positive projects. • Sustainable transportations • Emission-reductions A green bond is a bond whose proceeds • Nature-preserving activities are used to fund environmentally friendly projects, such as renewable energy, ener- gy efficiency, clean water, clean transpor- tation etc. HIGHLIGHT 2020:

We have improved our rate of invest- Today, these bonds are increasing in ments in green bonds, and are plan- popularity among investors and is expect- ning to issue green bonds ourselves. ed to continue to climb, as awareness is built, and more investors become con- cerned with climate changes and want to align their portfolios with the Paris Agree- Treasury invest a portion of ment and the UN´s sustainable develop- ” ment goals (SDGs). our liquidity reserve portfo- lio in green bonds, knowing Since 2017 Ikano Bank has invested a por- tion of the liquidity reserve in green bonds that our investment is being and our ambition is to grow the portion used in a responsible and of green investments in the coming years. climate positive manner.” The Bank is also looking into the possibility of issuing green bonds. Fredrik Sannemo, Head of Treasury, Ikano Bank 15 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Circular & climate positive

Climate change is a key chal- lenge facing communities world- We will contribute to a sustaina- wide with its direct impacts on ble use of the earth’s resources the daily lives of people and by reducing the harmful effects businesses. We all have a joint caused directly and indirectly by responsibility to use our planet’s our operations. And we will sup- resources wisely and do our port customers in making more utmost to secure the future for sustainable choices, through the upcoming generations. products and services we offer. 16 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Financing solutions that benefit the environment

We want our customers to be potential customers a unit for a test period Farming-as-a-Service with Swegreen able to live more sustainably. before ordering a solution, and in 2020 During 2020 Ikano Bank Sweden has start- Ikano Bank Norway agreed to finance a ed a cooperation with Swegreen, offering And we want to encourage leasing solution. Both parties hope and a financing solution for in-store farming of ideas and technologies that expect to attract even more new orders fresh greens. provide solutions for a sus- for new small-scale units in the future. Swegreen is a technology company in the tainable society. Therefore, we Loans for solar panels vertical farming industry, offering a digital- constantly work to deliver envi- Since 2018 Ikano Bank has offered financ- ly based cultivation solution, integrated in ronmentally beneficial financing ing of solar panels to IKEA customers in stores or restaurants, for hyper-local pro- Poland, and in 2019 Svea Solar and IKEA duction of lettuce, herbs or other vegeta- solutions. launched a cooperation for affordable so- bles. The solution is offered with a unique lar panels on the Swedish market, financed subscription service called Farming-as-a- IKEA Furniture-as-a-Service (FaaS) by Ikano Bank’s financing solution Ikano Service (FaaS). In 2020 IKEA launched a new scheme for Jordnära. In addition, Ikano Bank UK has renting out office furniture such as chairs offered loans to customers to be validat- and work desks, financed by Ikano Bank. ed in the Energy Performance Validation The aim of the subscription-based leasing Scheme certification. In 2020 Ikano Bank offer is to secure reuse as many times as financed a total of 1 114 installations, with possible before material and component an estimated production of 4 498 500 recycling at the product’s end of life. Dur- KWH. ing 2020 the concept was tested in Finland and will be rolled out in all Nordic coun- tries during 2021.

Acquiring FaaS instead of spending large sums of money to furnish an office will be particularly helpful for startups and small family-owned businesses. Our FaaS model means that every Financed solar panel installations 2018–2020 ”store and restaurant owner can Biowater technology A/S 2018 2019 2020 offer their customers hyper-locally – leasing of mobile cleaning unit grown, fresh and high-quality crops Installations 1,011 1,221 1,114 Biowater Technology is a Norwegian that have fantastic nutrition and company that develops and builds turnkey Estimated produced (KWH) 3 543 399 4 788 466 4 498 500 taste – at competitive prices.” solutions for cleaning public and industrial wastewater. The company wanted to offer Andreas Dahlin, CEO, Swegreen 17 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Climate smart business

We work to reduce the climate today hosted externally in datacenters in Initiatives in our offices 2020 impact of our operations in Finland are run 100 % by electricity from renewable sources. Poland HIGHLIGHT 2020: many ways. In how we run our 100% renewable energy & BREEM certified offices, how we travel and con- Reuse and recycling of equipment During the year 74 bots have been duct meetings, in our partner- Since 2012 we have an agreement in place deployed in our customer processes for reuse and recycling of IT equipment. Replaced print/copy machines to more during 2020 (20 during 2019). This ships and how we communicate The purpose of the program is to return energy saving models. means saving almost 29,000 hours with our customers. redundant IT equipment from our offices in manual work.The bots have to our partners, for reuse (after cleaning, Finland improved customer journeys and Digital transformation checking, and data removal) or recycling Moved to handle B2B contracts electroni- lead times as well as closed compli- Ikano Bank is in the middle of a major of parts and material. During 2020 the cally which significantly reduced consump- ance gaps. transformation. A new digital platform has Swedish offices returned a total of 704 kg tion of paper and envelopes. been developed, enabling data-driven equipment, saving 34,737 kg CO2 equivalent. financial services, a better customer ex- Germany perience and faster development of new In Finland we donated a total of 30 old Commissioned a new air conditioning sys- products. During 2020 the first product on phones and chargers (company-owned tem and charging stations for 2021. the new platform, Ikano Pay, was put into and private) to financially disadvantaged From a sustainability per- production on the UK market, and in 2021 families. UK ” spective our digitalization more countries will follow. Paper reduction due to automating Green House Gas Assessment (GHG) processes and changing way of working. has several advantages. Lowering paper consumption We work continuously to lower the con- Consequence reducing paper by 75% Less use of paper and Our digital transformation enables us to sumption of electricity, heat, and water equaling less waste. plastic, the ability to sup- diminish the use of paper for loan appli- in our offices. Based on data from 2018 cations, statements, and other commu- (baseline), 2019, and 2020 we see a posi- port circular business nication with our customers. From 2018- tive trend in our consumption (even though models, and the right tools 2020 we have lowered our total paper some offices being closed or not used as to offer services on fair consumption with 38.6 %, from 18,472 kg in much during the pandemic 2020 make 2018 to 11, 349 kg in 2020 at our own offices. comparisons difficult). During 2021 we will terms to more of the many We are also working to reduce paper con- make a Green House Gas (GHG) Assess- people.” sumption together with external partners. ment for scope 1, 2 and 3, and set more detailed targets and initiatives to lower David Elvström, Sustainable data centers our climate impact. Chief Transformation Officer, Finding sustainable solutions for IT servic- Ikano Bank es and data storage is an important part of our digitalisation process. Our servers­ 18 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Climate smart business (continued)

Traveling Less travel, more online meetings Traveling by rail is always the first choice During 2020 the way we connect and for business trips. When public transport conduct our meetings have been largely Air travel 2018–2020 (bus, train etc.) is safe and efficient, it shall changed, due to Covid-19 travel restric- always be the first choice before taxi, pri- tions and working from home. Video 2018 2019 2020 vate or rental car. Car pooling should be conference tools have been rolled out to Segments 4,669 3,770 4 74 coordinated whenever possible. all co-workers, to be able to connect and Kilometers 3,184,775 2,752,104 342,971 meet both internally and externally. While We expect to see a different pattern for our total air travels have been massively CO2 /kg (GHGP) 311,720,976 273,015,471 32,954,782 traveling post Covid-19 and here we reduced compared to previous years, will do even more to encourage online we have held in average 12,000 online meetings before traveling, especially for meetings per month. A necessity in the shorter meetings less than 2 hours. circumstances, but also resulting in a 88 % decrease in our estimated flight emissions All of our offices are located within con- during 2020. venient distance to trains and/or buses. At some of our offices we also have bicycles to borrow. From 2023 all our benefit cars will be electrical.

Sustainable offices 100 % renewable energy offices BREEAM and LEED-certified 100 % eco-certified paper offices buildings Ikano Bank runs 8 offices in 7 countries, with a total of 1,008 employees. We work continuously to reduce the environmen- tal impact of our office operations, from 4 3 7 changing lights to minimizing waste. 19 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Sustainable purchases

Responsible sourcing is an turn secures a commercial advantage important lever for delivering for our business. sustainable development and Managaging our supplier base results. Our Sourcing Depart- Our aim is to enhance Ikano Bank´s ment has developed tools and business position by mitigating suppli- er-related risks, building trust among our processes to ensure that we stakeholders, strengthening our brand procure and source responsibly. and providing value when positioning ourselves in the marketplace as a trusted We work to ensure that business is partner. conducted responsibly across the whole chain. This includes understanding supplier Effective management of our supply base commitment to sustainability within their is a top priority and our suppliers are own organisation through our sourcing required to meet our minimum standards. processes, performing due diligence A critical part of the sustainable sourc- against our supplier base further before ing process is following up the results to on boarding and auditing our suppliers to ensure continuous improvement. ensure compliance with our partnership policy.

Our partnership policy HIGHLIGHT 2020: The partnership policy covers a broad range of areas such as general com- During the year we have decided to pliance with applicable laws, respect make virtual visits, instead of phys- of labour and human rights, observance ical, when possible. This will make of health and safety in the workplace, the process more efficient as well as environmental protection and last but not saving travel costs and emissions. It least the expectation of retaining high also makes us more compliant from business morale in all partnerships. a supplier due diligence perspec- tive. We also proactively support suppliers to increase their awareness of responsible sourcing and their performance in relation to it. The result is risk mitigation for Ikano Bank, our suppliers and customers that in 20 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Fair & inclusive

By actively promoting human By encouraging personal and ing the society better through rights, fair working conditions, professional development we social initiatives and partner- diversity and equality we will will benefit from motivated and ships. make a difference to the lives of competent co-workers with people, the community and the experiences and viewpoints environment. drawn from a wide range of backgrounds, helping to drive creativity and new ideas. We will play an active role in mak- 21 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Equality and diversity

We work to ensure that em- Gender distribution ployees, customers and others HIGHLIGHT 2020: who interact with the Bank are We strive to have a 50/50 gender Male Female not treated differently due to split at all leadership levels and in Total employees 43 % 57 % gender, ethnicity or beliefs. And all positions. Already today the total Total managers 52 % 48 % we actively promote human manager gender split is male 52 % Bank management team 60 % 40 % / female 48 %. 71 % 29 % rights, fair working conditions, Board members diversity and gender equality. During 2020 the gender balance in our Bank management team We are proud of our culture and values. improved to 60 % men and 40 % Manager gender distribution per country Living by those values is our way to build women (70/30 % in 2019). a change-oriented, trustful and inclusive co-worker climate. 60 % 59 % 58 % 57 % 57 % 52 % 48 % 51 % 49 % 43 % 43 % 42 % 41 % 40 % Male Diversity is our strength Employee turnover One of our success factors is to work Female together and build on our diverse back­ 100 % grounds and unique strengths to have Denmark Finland Germany Norway Poland Sweden UK dynamic and high-performing teams. 80 % No co-worker should be discriminated because of age, gender, religion, sexual Employees by contract and gender Workforce by seniority orientation, marital or parental status, po- 60 % litical opinion or ethnicity. All co-workers 3 % with the same experience, performance Female Full time < 1 year 40 % and qualifications shall receive equal pay Female Part time 1–5 years 12 % for equal work. Male Full time 20 % 5–10 years > 10 years 20 % 40 % Male Part time We strive for gender equality, and recruit 46 % 21 % employees of all ages. In 2020 the aver- 47 % age age at Ikano Bank was 39 years. 0 % 11 % 9 % Male 12 % Female 22 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Employee development, health and safety

Being a fair and caring employ- Compliance training Emplyee Net Promotor Score er is an important part of our We use an online platform where co-work- To measure employee satisfaction, we regu- HIGHLIGHTS 2020: ers learn what is required from a compli- larly perform eNPS surveys. Our employee social responsibility. Attracting, ance perspective. Mandatory trainings Net Promoter Score (eNPS) in December LinkedIn Learning developing and retaining the are performed annually by all Ikano Bank 2020 was 6. The introduction of LinkedIn Learn- right people is a vital part of co-workers. Read about the mandatory ing for all employees continues the trainings on page 14. Whistleblowing driving our organisation for- digital journey of HR to make solu- At Ikano Bank we promote and develop tions and content accessible to our ward and enabling sustainable Our leadership programmes a culture of openness therefore we have people at any time from every- growth. The leadership programme “My Coun- a process in place where co-workers can where. This platform is offering a tious Leadership” (MCL), initiated in report any concerns or issues within the broad learning and training content 2019, continued throughout the year, Bank. For situations, where the co-worker to our employees via video learn- We want to create a learning culture that however it was adopted to a digital set- does not feel comfortable with reporting ings and e-learnings. Especially builds the competence and talent need- up. In 2020 we also initiated another pro- a concern through the regular channels, during Covid-19 times it was impor- ed today and in the future. A systematic gramme called ”Leading through change” we have a whistleblower process in place, tant to find opportunities online as approach to developing co-workers is an to support the Bank’s transformation. The where it is possible to report concerns traditional classroom trainings were important part of this. As well as listening programme includes four modules; Culture, anonymously. The guideline how to use the not available. to peoples’ views and ensure health and Values & Leadership. Psychological Safe- whistleblower system is available for all safety at work. ty, Trust, and Change Management. As a co-workers of Ikano Bank. New employee engagement survey first step it is rolled out to all Country- and During 2020 we have replaced the Ikano Bank People Function management teams. Health and safety annual engagement survey with In 2020 the first bank-wide HR information Occupational health and safety at Ikano monthly digital employee surveys system (HRIS), Ikano Bank People, including Engagement Dialogue Bank is an important and strategic is- across the Bank, as quick and short key integrations and a self-service por- Since 2016 we are using the Engage- sue. It is one of the factors that make our “Pulses”. This will give “live” informa- tal was launched. It provides more control ment Dialogue process which is meant to co-workers choose to work for us and also tion for managers and co-workers over employee personal data and support strengthen co-workers engagement and choose to stay with us. about their own team; what is work- leadership with digital, transparent and commitment and combine each person’s ing and what is not. All answers are automated processes for managing their needs and wishes with the needs of Our commitment is to create a physical- anonymous. teams. The system supports the positive Ikano Bank. The aim of the Engagement ly and psychosocially safe and healthy employee experience during onboarding, Dialogue is to evaluate what has been workplace for all our co-workers, where employment and offboarding. Addition- achieved in the previous year and estab- the risks of occupational injury and ally, it creates efficiency gains and secure lish and agree on next year’s objectives. work-related ill-health are prevented workforce data availability and consist- through pro-active and timely measures. ency.

23 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Social responsibility

We support initiatives that work Trial purchases used to for a positive development in support disadvantaged children HIGHLIGHT 2020: As part of our digital transformation, we society, for example through have developed a new digital financing To support vulnerable groups in society Bank we chose to support causes such donations, charity work, and concept, Ikano Pay. During the develop- during the Covid-19 pandemic the as #NottinghamNHSheroes in UK, cooperation with nonprofit or- ment Ikano Bank UK have utilised trial Ikano Group decided to reserve 1.5 Superselma in Norway, BRIS in Sweden, purchases (necessary to test the system) ganisations. Our charity policy MEUR for emergency relief donations Joannahuset in Denmark, and women’s to buy children’s bedroom furniture from during 2020, to be distributed across shelters in Germany, among others. mainly focuses on supporting IKEA, which we then donated to local all businesses and countries. At Ikano children and women’s opportu- charity “Operation Orphan” for their work with disadvantaged children. nities to learn and develop. Giving more power to women Through Ikano’s Charity Policy we donate The project “Kvinnokraft” (female power in to projects focused on supporting children Swedish) is a cooperation between Ikano and women and their opportunities for Bank Sweden and the charity organiza- learning and developing – this includes tion Individuell Människohjälp (IM). Since education, health issues, accessibility to 2018 a total of 36 women with migration clean water and solar energy. Most of our background, living in low-income areas in charitable partnerships are thus handled Malmö, has participated in the program. through our businesses. The aim is to help women to work or stud- ies, and to achieve higher self-esteem. Sponsoring young people through school in Wiesbaden Helping young people Ikano Bank Germany has been partici- to work or studies pating in the WiesPaten project in Wies- In Sweden there are nearly 28,000 young baden since 2015, currently with a total of people, 15–29 years, not in work or 5 employees involved. The engagement studies. Ikano Bank participates in a 12 involves sponsorship for a group of stu- week training and internship programme dents for 3 years until graduation, espe- run by Swedish Save the Children. We cially with migration background. Activities support the programme with mentorship involve field trips, training in job applica- and workplace training. During 2020 one tions, and banking education. of the participants in the programme was offered employment at Ikano Bank. 24 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Overview Read more Contributing Area Description Highlights 2020 on page to UN SDGs

Healthy & sustainable living

A strong financial position with good Financial stability – margins in terms of liquidity and capital. 11

Counteract corruption Prevent corrupt or inappropriate behaviour Invested in new software and money laundering and criminal exploitation of the financial system. for fraud detection 12

Taking consideration of the customer’s financial Responsible lending – situation and their ability to follow the payment plan. 13

Responsible investments Placing investments in economically, socially and Increased green investments 14 environmentally sustainable securities. and plan to issue green bonds

Circular & climate positive

Environmentally beneficial Providing financing solutions that make it Launched FaaS for IKEA financing solutions easier for the customer to live more sustainably. business customers in Finland 16

Climate-smart business Reduce climate impact in operations and in invest- 29,000 hours saved with bots and 17 and value chain ments, at the supplier level, and with our customers. automated customer processes

Purchasing products and services with Introduced virtual supplier audits Sustainable purchases regard to environmental and social aspects. 19

Fair & inclusive

Equality and diversity Ensuring employees, customers and others are not Gender balance in bank management treated differently due to gender, ethnicity and beliefs. team improved to 60/40 (men/women) 21

Employee development, Ensuring employees, customers and others are not Launched monthly digital employee safety and health treated differently due to gender, ethnicity and beliefs. surveys 22

Support initiatives that work for a positive Ikano Covid-19 emergency Social responsibility development in society. fund support 23 25 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Auditor’s sign off

Auditor´s report on the statutory sustaina- The scope of the audit bility report Our examination has been conducted in accordance with FAR’s auditing standard To the general meeting of the sharehold- RevR 12 The auditor´s opinion regarding ers in Ikano Bank AB (publ), corporate the statutory sustainability report. This identity number 516406-0922 means that our examination of the statu- tory sustainability report is substantially Engagement and responsibility different and less in scope than an audit It is the board of directors who is respon- conducted in accordance with Internation- sible for the statutory sustainability report al Standards on Auditing and generally for the year 2020 and that it has been accepted auditing standards in Sweden. prepared in accordance with the Annual We believe that the examination has Accounts Act for Credit Institutions and provided us with sufficient basis for our Securities Companies. opinion.

Opinion

A statutory sustainability report has been prepared.

Stockholm XX March 2021

Malin Lüning

Authorised Accountant

Deloitte AB