Creating value by using our financial expertise to do good

Stakeholder Engagement Report for the year ended 31 December 2018 INTRODUCTION ‘There is an interdependent relationship between the organisation and its stakeholders, and the organisation’s ability to create value for itself depends on its ability to create value for others.’ (King IV™: 2016)

Nedbank Group advocates an inclusive approach to in King IV™ have been implemented and how these stakeholder engagement in line with the King IV™ Report assisted in the realisation of the associated principles, on Corporate Governance (King IV™). In the execution of as well as to show how decisions based on these its duties Nedbank undertakes to ensure that the recommended practices were exercised. The board legitimate and reasonable needs, interests and remains committed to the application of all 17 principles expectations of all material stakeholders are considered. in order to achieve the King IV™ outcomes. Nedbank Nedbank shares the view that the quality of its Group has reviewed its current practices to ensure stakeholder relationships is the ultimate construct that alignment with the King IV™ recommended practices. should determine the overall sustainability of the The ‘apply and explain’ approach in King IV™ encourages enterprise. Accordingly, King IV™ has placed stakeholder organisations to perceive corporate governance not only relationship as the ultimate measure of impact and as a means of achieving compliance ratings, but also as charged company boards with the responsibility to something that will impact all stakeholders positively. measure the quality thereof. The positive impact will happen if corporate governance is approached deliberately taking into consideration the To ensure consistency and protect the Nedbank brand, needs and circumstances of all related stakeholders. stakeholder engagement is informed and governed by a comprehensive stakeholder policy and a supporting The following pages provide an overview of our primary engagement framework. The Group Operational stakeholders, the reasons we engage with them and the Committee monitors compliance with this policy and ways in which we do so. Insights into the main issues structure. Our Stakeholder Engagement Policy is arising from these relationships in 2018 and our available online at nedbank.co.za. responses are also offered. Disclosure on the application of King IV™ Nedbank Group is expected to explain, in the form of a narrative account, which of the recommended practices

Our relationships

Staff Industry bodies Clients

Media

Shareholders

Government Regulators

Suppliers Society Unions

Nedbank Stakeholder Management Report 2018 2 STAFF

We believe in fair treatment of all our staffmembers, which enhances their engagement levels and has a positive impact on productivity.

Nedbank staffmembers play an essential role in In 2015 Nedbank launched its People Strategy (People promoting the bank, regardless of the division in which 2020). The Group Executive Committee (Group Exco) is they work and the tasks they perform. Above all, driving and enabling new leadership mindsets and Nedbank staffmembers are central to our efforts to capabilities required to manage and thrive in an agile, increase awareness of and strengthen our brand, as well digital, fast-paced, client-centred and competitive as to ultimately grow our client base. environment. Furthermore, and in response to the changing context within which we operate, People 2020 We believe in fair treatment of all our staffmembers, was refreshed to ensure that our direction remains which enhances their engagement levels and has a relevant for SA and internationally (including the rest of positive impact on productivity. In this regard our Group Africa). Talent, Leadership and Culture remain core pillars Human Resources (HR) unit works in partnership with all of our strategy, and Employer Brand was added as a Nedbank clusters to create a transformed and equitable fourth pillar in 2018. work environment, thereby enhancing the performance of people to achieve Nedbank’s business objectives.

Why engage with staff Why our staff engage with us Types of engagement

zz To ensure we remain an employer To provide feedback and input that A robust combination of face-to- of choice by providing a safe can help Nedbank Group improve the face, written and broadcast working environment. working environment as well as the communications. These include zz To understand and respond to the performance of our business. culture and engagement surveys, needs and concerns of our roadshows, emails, intranet staffmembers. communications, datacasting, zz To provide all staffmembers with newsletters and relevant training. strategic direction and pertinent information regarding group activities.

2018 Highlights People 2020

We piloted new agile practices We refreshed our during new Ways of Work performance management We designed and developed a (nWoW), which will be scaled in approach. new strategic workforce planning 2019. More than practice and methodology, as well 1 500 staffmembers are working as tool sets. This is intended to according to this new approach document the skills needed and we aim to increase this at Nedbank and the range of skills We launched a number incrementally to development interventions that we new talent management support an optimal agile scaling use to address these needs. approach, with multiple framework over 2019. strategic objectives.

Nedbank Stakeholder Management Report 2018 3 Managing our employee relations Code of Conduct e-zine Disciplinary and grievance procedures The appropriate management of change in the bank, especially We revised our employee relations policy and disciplinary code due to the increased focus on digitisation and automation, during 2018 in line with industry developments. ensured our continued evolution during 2018. Interventions included the launch of the first Code of Conduct e-zine, which Our disciplinary chairpersons have been upskilled through a has enabled us to create a dynamic new platform for range of training programmes, resulting in a steady staffmembers to learn, share and discuss our dynamic culture. improvement in the quality of disciplinary findings and The e-zine offers new ideas and topics around workplace outcomes. culture, from how to be more respectful in an open-plan office to ideas on how to conduct mindful office meetings. We continue to build capability among HR business partners Staffmembers are also encouraged to send in their ideas and and line managers to manage and resolve complaints before thoughts to ensure we create an inclusive and relevant e-zine in they are escalated. every quarter. Disciplinary action Staff benefits In 2018 the bank addressed 4 764 incidents of misconduct Revised staff banking benefits came into effect on 1 January through informal disciplinary discussions and formal 2018. Nedbank has updated the schedule to ensure the terms disciplinary inquiries. Our policies promote corrective discipline and conditions associated with accessing these benefits are as a way of remedying non-conforming behaviour. The goal is more explicit. We have also developed a staff benefits brochure to reduce the number of incidents that escalate to formal to make it easier for staffmembers to review the full range of disciplinary inquiries and/or CCMA disputes. banking benefits available and how these translate into real Incapacity or underperformance cost savings for them and their families – every single month. As part of our commitment to creating a high-performance The benefits include preferential lending rates for culture, we revised our performance management processes in staffmembers. In the case of home loans this extends also to 2018. These processes will be further embedded during 2019. joint bonds. There were 793 incidents of incapacity or underperformance addressed during 2018, a drop from 1372 in 2017. Of these, 30 resulted in formal performance corrective plans, which are tracked regularly to ensure sustained improvement in performance.

Nedbank Stakeholder Management Report 2018 4 UNIONS

Nedbank recognises the right of staffmembers to freedom of association and the importance of unions representing the interests of their members.

Unions At Nedbank we have ensured a stable relationship with agreement was entered with SASBO to formalise and regulate the unions. These include SASBO (the finance union), the the relationship between the parties. Swaziland Union of Financial Institutions and Allied Workers, the National Union of Commerce, the Catering At Nedbank we comply with the requirements stipulated in the and Allied Workers of Lesotho and the Namibia Financial Labour Relations Act (LRA) and are guided by rules that are Institution Union. specified in the different group policies to help guide our business conduct with all our stakeholders, including the unions. Nedbank recognises the right of staffmembers to freedom of association and the importance of unions We measure our relations with the unions by, among other representing the interests of their members, including the things, the number of grievances and disputes involving staff, right to organise, represent, consult and/or negotiate on as well as any negative impact on work due to union work behalf of union members or specific constituents within a stoppages. Our Disciplinary Policy and Procedure and Code of defined bargaining unit, in accordance with the law and Business Ethics Policy set out the rules for ethical and fair any collective agreement. To this end a recognition business conduct expected from every employee.

Why we engage with unions Why unions engage with us Frequency of engagements

zz To promote fair and equitable zz To represent their members on zz Annually for salary negotiations.

employee-relations practices, issues of mutual interest. zz Formal monthly engagements on governance and a sound working zz To serve the interest of union issues that relate to changes relationship. members who are Nedbank impacting staffmembers in the zz To ensure that all matters having members of the bargaining unit. bargaining unit.

an impact on basic conditions of zz To consult on salary negotiations zz Ongoing consultations and meetings employment are adequately and engage on any changes required by unions or as a result of addressed through collective impacting staffmembers in the business changes or projects. bargaining. bargaining unit through a consultative forum and collective bargaining forum.

2018 Highlights Collective bargaining

Several collective bargaining matters were covered during the year, including consultations about organisational restructures in the bank. Negotiations started early in December 2018 and we settled with SASBO on the 2019 annual pay review for our staffmembers in the bargaining unit. The bank and the union agreed on average wage increases of 7% for bargaining unit staffmembers effective 1 April 2019, to be distributed based on a matrix that takes into account the individual’s performance outcome and position in the earnings range. Blended average staff salaries increased by 5.8%, ahead of inflation. Our approach as a responsible employer has been to ensure pay outcomes are fair for our staffmembers and sustainable for the company. As result, among other interventions, we agreed on lower increases for our executives.

Nedbank Stakeholder Management Report 2018 5 SUPPLIERS

We have continued to focus on our reputational risk management in 2018, mainly because of the allegations of state capture extending into certain private sector suppliers.

Nedbank is committed to the highest ethical standards in communities and investors) can expect from us, and what we conducting its business. These ethical standards reflect expect from them. our belief that business should be conducted with integrity. To this end the following actions were taken in 2018: zz Ethics training was provided to more than We have continued to improve our reputational risk 1 900 staffmembers, with 98% of all employees having management in 2018, mainly because of the allegations acknowledged the code. of state capture extending into certain private sector suppliers. Nedbank Group Executive Committee (Group zz Independent assurance was performed on 10 high-risk or Exco)'s Group Reputational Risk Committee (GRRC) high-value tenders. functions effectively at group level and high-risk zz More than 80 individual suppliers on ethics management committees at business cluster level, with appropriate were assessed board-level involvement. zz We increased our robust risk assessment of suppliers and We have also updated our Supplier Code of Conduct took appropriate actions where our risk thresholds were after extensive consultation with stakeholders and breached; and as a result several suppliers were terminated. approval by Group Exco and the Group Transformation, zz Provided awareness training to more than 100 prospective Social and Ethics Committee. suppliers. The updated Code of Ethics and Conduct is designed to zz We have closed over 4 000 client accounts and over 13 000 ensure that ethical standards underpin every feature of suspicious transactions were reported to the Financial our endeavours at both the corporate and individual Intelligence Centre. levels. The code sets out the standards of conduct that our stakeholders (eg fellow staff members, clients, The code, together with any business-specific policies in all suppliers, national and international authorities, areas of work, obliges any director, manager or employee who witnesses any conduct that compromises or will compromise the Nedbank values to speak out.

2018 Highlights Prompt payment of suppliers Nedbank proudly supports the initiative by the National Small Business Chamber (NSBC) aimed at championing the importance of big business and government paying small and medium enterprises (SME) suppliers within 30 days. SMEs as defined in the Codes of Good Practice are entities with an annual turnover of R50m or less. Nedbank supports timeous payment for services rendered by SMEs. We have also implemented a practice whereby exempt microenterprises and qualifying small enterprises are paid within seven days and 30 days respectively of submitting a valid, accurate and compliant invoice. Transformation of the Bank Nedbank achieved a level 1 BBBEE contributor status for FY2018 under the Amended Financial Sector Code (FSC), having retained level 2 BBBEE contributor status for 10 consecutive years. Market Access Preferential procurement practice at Nedbank has remained a key strategy for enabling transformation, job creation and community upliftment. Nedbank’s policies are designed to maximise its contribution to broad-based business and societal empowerment. In terms of this policy purchases of goods and services can be made only from registered suppliers and within clear ethical guidelines, which include the key considerations of total cost of ownership; fit‑for‑purpose; top-quality products or services; ease of access and availability.

Nedbank Stakeholder Management Report 2018 6 CLIENTS

Nedbank Group provides a wide range of wholesale and retail banking services, and a growing insurance, asset management and wealth management offering.

Clients are Nedbank’s largest source of deposits, which Our presence enable us to fund our lending activities. Gaining more zz Nedbank Group’s primary market is SA. However, we clients results in greater revenue growth, while continue to expand into the rest of Africa. sustainable banking practices and worldclass risk zz We have a presence in six countries in the Southern African management mitigate against bad debts. Development Community (SADC) and East Africa region, Through our frontline clusters – Nedbank Corporate and where we own subsidiaries and banks in Namibia, eSwatini, Investment Banking, Nedbank Retail and Business Malawi, Mozambique, Lesotho, Zimbabwe, and have representative offices in Angola and Kenya. Banking, Nedbank Wealth and Rest of Africa – Nedbank Group provides a wide range of wholesale and retail zz In West and Central Africa we followed a partnership approach and concluded the acquisition of an approximate banking services, and a growing insurance, asset 20% shareholding in Ecobank Transnational Incorporated management and wealth management offering. (ETI) in 2014, offering a unique one-bank experience to our clients across the most extensive banking network in Africa, comprising more than 2 000 branches in 39 countries. 2018 Highlights Nedbank scoops the top award for Best Innovation in Retail Banking SA

Each year International Banker recognises leading banking zz Karri, our mobile payment app that allows users to make cash- institutions and individuals in financial services in the Middle East free payments for school activities quickly, safely and hassle-free, and Africa that: has been rolled out to more than 200 schools across the country.

zz drive global economic commerce; zz As far as our integrated channels are concerned, we have to date

zz create capital and opportunities for economic growth in their converted 60% of our outlets to new image digital branches, and regions; our investment in distribution channels over the next three years (until 2021) will result in 79% of our retail clients being exposed to zz set the benchmarks for technological advancement and the new digitally focused branch formats and self-service client service; and offerings. zz maintain high levels of regulatory compliance and corporate zz We extended the use of chatbots and robo-advisors to enhance governance. client experiences through our contact centre and web-servicing In 2018 Nedbank received two top International Banker awards: capabilities and will continue to do so. In 2018 Nedgroup the award for Best CEO in Africa went to Nedbank CEO Mike Investments won The Financial Times’ The Banker magazine Brown, and Ciko Thomas received the Best Innovation in Retail Technology Project award in the global Artificial Intelligence and Banking SA award. The accolades were made possible because Robotics category for our robo-advice solution.

of Nedbank’s strong client focus, innovative technologies, good zz For our wholesale clients we partnered with Aerobotics, a fintech, governance and nation-building efforts. that uses satellites and drones to capture multispectral images of orchards to help farmers optimise yields and manage costs. This Below are a few examples of innovative solutions we introduced innovative solution received The Banker‘s global award for a to make banking more convenient and meet the needs of our fintech partnership. clients: zz In the rest of Africa we continue to launch various new products zz The Nedbank Private Wealth app was further enhanced and CVPs on the back of our core banking implementation. through our DFL capability and was ranked second best zz System uptime continues to be above our acceptable level of globally by Cutter Associates International Research, an tolerance (> 99,1%), notwithstanding significant changes to improvement from seventh in 2017. IT systems and new digital applications. zz The Nedbank Money app™, our retail app that makes zz We recorded a significant improvement in our NPS score from banking more convenient for our clients, has seen more than 26% to 37%, the largest increase among all banks in 2018. 1,6 million downloads and is rated well above peer banks on Similarly, we have seen our brand value increase, moving us up one the iOS and Android platforms. position higher to ninth in SA, and from fifth to fourth among SA With new market-leading innovative services that underpin these banking peers. ratings, clients can scan to pay (first in market), freeze and zz unfreeze cards (first in market) and stop unauthorised debit CIB received The Banker Africa’s award for Best Corporate Bank orders. in SA, was placed first in the Bloomberg Fixed Income league table rankings: SA bonds (excluding self-led deals) and was zz We launched Unlocked.Me, our first platform play solution to number one in the primary dealer rankings as measured by the enhance our youth and middle-market propositions, offering SARB.

banking and lifestyle solutions and delivering curated zz Nedgroup Investments was named offshore management experiences. company of the year for the fourth consecutive year at the Raging Bull Awards.

Nedbank Stakeholder Management Report 2018 7 OUR SHAREHOLDERS

'The unbundling has led to a far more diverse emerging-market shareholding profile for Nedbank and a much larger free float including higher levels of shares available to trade. These bode well for both existing and new shareholders.' Vassi Naidoo, Chairman

Nedbank Group ended 2018 with a total of 50 240 Specific engagements in 2018 ordinary and 6 565 preference shareholders and We proactively communicated our strategy and activities to bondholders. We delivered to our shareholders in shareholders through an active investor relations programme. Our multiple ways. The Nedbank share price was up 7,3% in management meets regularly with the investment community for 2018 (the best-performing large SA bank share for the topical discussions. The following are some of the key year). We provided shareholders with the opportunity engagements in 2018: to engage with our Chairman and Lead Independent zz The reporting of our annual and interim results. Director on governance matters during our zz Over 400 meetings with investment analysts, investors and the Governance roadshow and other engagements. There media during non-closed periods. were more than 400 investor meetings in 2018, in which we discussed a range of topics. zz More than 20 broker-hosted conferences and non-deal roadshows.

Our shareholders and other related stakeholders zz A governance and remuneration roadshow, including additional include the following: governance meetings. zz Retail investors, asset managers and retirement zz A Nedbank Annual General Meeting (AGM) held in May and a funds in SA – and increasingly in international general meeting held in November 2018 to approve the odd-lot markets – that invest in Nedbank equity and offer. preference shares as well as funding instruments. zz Biannual engagements with our credit rating agencies. zz 13 sell-side analysts. zz Sharing relevant information on our website at zz Two credit rating agencies: Moody’s and Standard nedbankgroup.co.za. & Poor’s. zz Regular engagement with Old Mutual plc and Old Mutual Limited, particularly during the managed-separation process.

Why we engage with our shareholders and the Why our shareholders and the investment community engage investment community with us

zz To provide current and future shareholders with zz To derive value through share price appreciation and an relevant and timeous information to ensure that attractive and sustainable dividend stream.

Nedbank shares are appropriately valued. zz To receive relevant timeous information on our prospects zz To manage shareholder expectations and and financial and non-financial performance, so that they reputational risk. can value our performance and assign appropriate credit

zz To maintain healthy relationships, keep abreast of ratings. market developments and inform our shareholder zz To understand our financial performance.

targeting strategy. zz To gain insight into our strategy and management. zz To ensure good governance and deepen the trust placed in our brand and us.

zz To get feedback that informs our strategy, business operations and how we govern.

Nedbank Stakeholder Management Report 2018 8 2018 Highlights Our response and action

Old Mutual managed separation Guidance on the impact, progress and The managed separation had no impact on Nedbank’s operations, timelines for the managed separation and staffmembers, clients or strategy. We continue to collaborate with addressing concerns around a potential Old Mutual Limited in line with the new relationship agreement share overhang. signed in 2018. Managed separation was successfully concluded with limited impact as the Nedbank share ended the year as the best-performing bank share, up 7,3%. Index classified shareholding increased meaningfully as Nedbank’s weighting in the MSCI Emerging Market and JSE Satrix indices increased significantly. A key benefit for shareholders is improved free float, increasing the daily number of shares traded per day from about 1,1 million before unbundling to almost 2 million. In 2018 Nedbank also concluded an odd-lot offer to reduce the complexity and cost burden of managing a broad shareholder base. This received strong shareholder support and resulted in qualifying shareholders receiving cash at a 5% premium to a volume-weighted average price (VWAP) and the benefit of no trading fees. The impact of political and economic changes The excitement around an SA political and The political and economic scenarios for SA provide for more economic turnaround in the first quarter positive outcomes (‘Ramareality’ and ‘Ramaphoria’), with Nedbank of 2018 was short-lived as the realities of well positioned to weather an adverse ’Ramaphobia‘ scenario as state capture prompted investors to discussed in the Nedbank Group Integrated Report. question the impact and timing of better An economic recovery should see Nedbank benefit from our economic outcomes. wholesale banking strength and bias (> 60% wholesale advances), while Retail and Business Banking (RBB) continues to gain clients and focus on initiatives to lower its cost-to-income ratio. New and increased competition The impact of new banks launching in We welcome competition as it drives continued focus on innovation, 2019 and some peers being more client satisfaction and competitive pricing. Nedbank is well aggressive around their lending practices. positioned to compete given the significant progress made in IT investments and the launch of various innovations (see the Nedbank Group Integrated Report for more details). Sustainability of the ETI turnaround While investors increasingly acknowledge ETI has delivered seven consecutive quarters of profits to that ETI has turned the corner, there is 30 September 2018, underpinned by improved governance, delivery still ongoing concerns around the on its transactional banking strategy and an improvement in credit sustainability of profit growth and quality. exposure to tough economic conditions such as these in Nigeria. Nedbank’s long-term financial outlook Drivers of higher ROEs and lower cost-to- We reiterate our 2020 target of return on equity (ROE) (excluding income ratios for SA banks and Nedbank goodwill) of ≥ 18% and cost-to-income ratio of ≤ 53%, although we are critical features of an attractive highlight that the cost-to-income target has become more difficult investment. to achieve. These will be driven by ongoing economic recovery, the gaining of a share of incoming revenues, and delivering on our cost- to-serve and cost optimisation initiatives. Our financial guidance is included in the Nedbank Group Integrated Report.

Nedbank Stakeholder Management Report 2018 9 2018 Highlights Our response and action

Mandatory audit firm rotation Concerns around the appointment of KPMG, Nedbank and Old Mutual Limited’s common auditor was KPMG for the 2018 audit and adoption of retained, along with Deloitte, to complete the 2018 audit. Given the mandatory audit form rotation. strategy of managed separation it would not have been in the interest of stakeholders to change auditors in the middle of this process. Shareholders approved KPMG as auditors for 2018 at Nedbank Group’s 51st AGM with a 98,4% vote of approval. Following a comprehensive tender process, Deloitte and EY has been appointed as Nedbank and Nedbank Group’s new joint external auditors alongside Deloitte effective 7 and 10 May 2019 respectively. These appointments are subject to shareholders’ approval at the companies’ AGMs and are expected to commence from the financial year ending 31 December 2019. Remuneration Ongoing enhancements to the Nedbank On the back of continued engagements with our shareholders, both remuneration scheme. at our January 2018 remuneration roadshow and April 2017/18 governance roadshows, we made numerous enhancements to our remuneration policy, which received 99,5% approval at the 51st Nedbank Group AGM.

Nedbank Stakeholder Management Report 2018 10 REGULATORS

In line with international and local trends Nedbank observed an increase in regulatory scrutiny and inspections. Regulatory reviews were attended to with significant attention to detail, professionalism and prompt reaction to matters raised.

SA has a number of agencies that regulate and oversee In addition to the above, we employ a combined assurance financial markets and companies. The South African model to assess and assure various aspects of the business Reserve Bank (SARB) is the central bank of SA and the operations, including elements of external reporting. These primary regulator for Nedbank Group through the assurances are provided by management and the board, Prudential Authority. internal audit and independent external service providers, including KPMG and Deloitte & Touche (Deloitte), our external ‘The primary purpose of the SARB is to achieve auditors and providers of limited assurance on selected and maintain price stability in the interest of sustainability information, and Mosela and balanced and sustainable economic growth in SizweNtsalubaGobodo Rating Agency, providers of limited South Africa.’ (resbank.co.za) assurance on our application of the Amended FSC and the group’s BBBEE status. Together with other regulators, SARB plays a pivotal role in ensuring financial stability in SA. Other important All these institutions seek to regulate and protect those who regulators with whom Nedbank engages include: participate in the respective financial markets. Regular and open communication with regulators ensures that the Nedbank zz JSE Limited (JSE). Group is always compliant and seen as transparent in its zz Financial Sector Conduct Authority (FSCA). dealings. zz Financial Intelligence Centre (FIC). zz National Credit Regulator (NCR). SARS zz Consumer Protection Regulator (CPA). At Nedbank our view is that the tax we pay is imperative for the zz Financial Surveillance Department. economic and social development of the countries in which we operate. Our compliance with SARS ensures that Nedbank zz Regulators in the countries in which our subsidiaries operate. continues to contribute meaningfully to government budgets through our tax contributions and taxes collected on behalf of zz South African Revenue Services (SARS). SARS and foreign revenue authorities. zz Various government departments and Chapter 9-institutions, including the Department of Trade and Industry (dti), and the Department of Labour.

2018 Highlights VBS client rescue

Before VBS Mutual Bank was placed under curatorship, SARB gave Nedbank the mandate to facilitate payments to qualifying VBS Mutual Bank clients, which included individual accountholders, stokvels, burial societies and club accountholders. These clients had R100 000 or less in their VBS accounts (forming 97% of the total VBS retail depositor client base).

Engagements with state-sanctioned commissions Nedbank CEO, Mike Brown, testified before the Zondo Commission of inquiry. We clarified why Nedbank terminated the banking facilities of Gupta-linked companies in 2016 and described the events that led to the decision, as well as those that followed the closure of the bank accounts.

zz Nedbank decided in April 2016 to close the accounts independently, without consultation with other banks.

zz Nedbank cited ‘material business risk and significant reputational risk’ as reasons for discontinuing the banking relationship with the companies. Local and international legislative frameworks bind banks regarding anti-money-laundering, anti‑bribery and anti‑corruption measures.

Nedbank Stakeholder Management Report 2018 11 SOCIETY

We aim to increase focus on working with key stakeholders and industry bodies to deliver better outcomes for society.

Society refers to citizens of the countries in which we operate, including individual members of society, Non- Governmental Organisations (NGOs) and suppliers, as well as the environment on which those citizens depend for their wellbeing. Why we engage with society Why society engages with us Frequency of engagement

zz To create partnerships that serve zz To get advice and guidance on how Ongoing, as partnerships to facilitate our integrated to achieve desired outcomes for and stakeholder needs sustainability activities. individuals, their families, their dictate. zz To obtain input from environmental businesses and their communities. experts, communities and NGOs zz To partner on common social and regarding crucial focus areas. environmental issues.

zz To create awareness of our integrated zz To collaborate in a way that sustainability commitment and furthers social, environmental and initiatives. other common agendas for the greater good.

There have been indepth engagements with a range of NGOs, including meetings with sustainability-focused NGOs. Primary stakeholders include education NGOs, schools, tertiary institutions, WWF-SA including the WWF Nedbank Green Trust and the Endangered Wildlife Trust.

2018 Highlights Water security Fighting climate change Nedbank continues to engage with stakeholders in the private and public sector to assist with advisory services Nedbank is an active member of the United and finance in order to address the water challenges Nations Environment Programme Finance Initiative facing individuals, businesses and the country. These (UNEP FI)’s Positive Impact Initiative and Working challenges relate to water infrastructure, access, Group. The Positive Impact Initiative is a efficiency, quality and quantity, as well as non-revenue collaborative movement that was started in 2015 water and wastewater, all of which have been exacerbated by UNEP FI member banks and investors who by continuing poor water governance in many parts of the believed in the need to transition to an impact- country. Through our partnerships with NGOs such as based business and financing paradigm to achieve WWF-SA, we continued to invest in national water a sustainable world as defined by the SDGs. stewardship and conservation projects. We also Mitigating climate change is a crucial part of this implemented water-saving technology such as air-flush work. The most significant action taken by the toilets, similar to those used in aeroplanes, in our offices bank in 2018 was its undertaking not to provide and encouraged changes in staff water usage behaviours, project financing or other forms of asset-specific achieving average water savings of 16,5% across our financing where the proceeds would be used to operations. develop new coal-fired power plants, regardless of country or technology. This commitment now Youth unemployment includes round 1 of SA’s coal baseload procurement President Cyril Ramaphosa launched the Youth programme. Nedbank will pilot the implementation Employment Service (YES) initiative as a joint initiative of recommendations and methodologies for how between government, business, labour and civil society in banks should report climate change risks that were March 2018. It aims to reduce the youth unemployment developed by the UNEP FI Taskforce on Climate- rate in the country by creating employment opportunities related Financial Disclosures. for one million young work-seekers over the next three years.

Nedbank Stakeholder Management Report 2018 12 In 2018 Nedbank increased its learnership participation Intended outcomes after the three-year term through 22 learnership programmes, to 1 376 learners – a significant increase from 765 learners in 2017, with black This intervention addresses specific constraints that developing representation standing at 92% for both years. farmers face regarding capital formation, financial literacy, economies of scale, management, mechanisation and markets. Our various Nedbank graduate programmes provide Enabling new and emerging farmers to establish themselves in candidates with work experience and a platform to apply viable farming businesses through practical skills training theoretical knowledge to real business problems. Highlights for promotes sustainable economic development. This deliberate 2018 include the employment by Nedbank of 61 graduates from approach will ensure that these businesses can fully participate four graduate programmes, ie the Nedbank Graduate in the food value chain and contribute to local employment and Development Programme, CIB Graduate Programme, CA general local economic development. The aim is to develop Programme and Quants Programme. 10 farming startup businesses into more significant business The appointment rate is as follows: ventures. zz Nedbank Graduate Development Programme – 58%, with The selected area is tropical, with good soil for vegetable two graduate appointments pending at the time of production. Vuwani was selected because many Buhle alumni publication. are located within a 30 km radius. zz CIB Graduate Programme – 100%, with graduates appointed permanently at the onset. The Maths and Science Leadership Academy zz CA Programme – 60%. (MSLA) zz Quants Programme – 35%. This initiative, in Kimberley in the Northern Cape, directly responds to SA’s maths and science educational challenges. Altogether 246 Udemy licences were issued in 2018, with a The Nedbank Foundation has been funding the MSLA 100% learner adoption and an average of 102 hours spent on since 2010. learning. In total 103 362 hours were spent viewing content in 444 courses. Most of the classes covered technical skills Achievements so far: focusing on methodologies such as Scrum, design thinking, zz In 2016 Nedbank funded the Maths and MSLA’s Maths Agile and coding. Pioneers Programme, which develops maths problem- solving skills and a passion for the subject in learners, and Entrepreneurship Development empowers teachers to improve their knowledge and As part of entrepreneurship development, Nedbank Foundation teaching methods. The funding has enabled the MSLA to has partnered with Buhle Farmers’ Academy to offer a three- grow its Maths Pioneers Programme to over 440 learners in grades 7 to 12 and 20 teachers from 38 Kimberley schools. year intervention that seeks to support emerging farming The matric results of participating learners have been businesses in Vuwani Village, in the Vhembe District outstanding, with the programme producing some of the Municipality in Limpopo. province’s top students in both maths and science.

zz Since 2013 over 60 students have gone on to study engineering at tertiary institutions around SA. Nedbank continues to track their progress at tertiary level.

Nedbank Stakeholder Management Report 2018 13 GOVERNMENT

Consistent with our ‘corporate citizen’ approach, Nedbank participates in various national and local government platforms.

In 2018, Nedbank primarily engaged with government convene a diverse range of private and government through various national and provincial government stakeholders. departments. These departments included Education, Home Affairs, Water Affairs and Sanitation, We also participated in the Nedbank and Old Mutual Environmental Affairs, Social Development, Human National Budget Competition and the budget votes of Settlements and Economic Development. Following the Departments of Trade and Industry, Human government’s call for the public to participate in the Settlements and Home Affairs, as well as the Gauteng, review of section 25 of the Constitution, often called the Eastern Cape and Mpumalanga Offices of the Premiers. ‘property clause’, Nedbank made oral and written We will continue to support business and government submissions to the Parliamentary Constitutional Review initiatives, such as the SME Fund, and educational Committee. Also, there were several responses, programmes, such as the YES Initiative, and in so doing sometimes directly to relevant departments, on bills or help build Nedbank’s brand, communities and our related amendments, including robust interactions with country. Government, business, labour and civil society all National Treasury on a range of issues. understand the imperative to address weak economic Nedbank also engages with the governments of other conditions and high levels of unemployment and the need countries in which we operate. Engagement with to increase levels of inclusive growth to ensure a better governments across the continent is achieved through life for all. Working together towards a common goal will the Nedbank/NEPAD Business Foundation (N/NBF), as assist the SA economy in reaching its full potential and well as targeted engagements with ambassadors and reducing inequality and poverty. diplomats. . The collaboration between Nedbank and the NBF is underpinned by good corporate citizenship. In this way Nedbank has utilised its capacity to collaborate and

Why the government engages Why we engage with government with us Frequency of engagement

zz To cement our social licence to operate As one of the major corporates in Once every quarter or as within society, with government being one SA, Nedbank Group is a critical deemed necessary by either of the key stakeholders. roleplayer in the economic, social party zz To build and strengthen relationships with and environmental government, both as a partner in the transformation of the country. development of the country and as a client.

zz To provide input into legislative development processes that will affect the economy and our activities and operations.

zz To reaffirm our commitment to public- sector business development.

zz To participate visibly in and be a partner to the transformation of SA and the financial sector.

zz To contribute to increasing economic growth and reducing inequality and unemployment.

Nedbank Stakeholder Management Report 2018 14 Nedbank/NEPAD Business Forum ‘Nedbank and the NEPAD Business Foundation (NBF) constitute the Nedbank/NEPAD Business Forum. Together, we engage in collective planning and development of a shared vision to guide the business forum and its outputs’ – Convener, Thabang Chiloane, Nedbank Group Strategic Relations and Public Affairs

Why we engage with the NBF Why the NBF engages with us Frequency of engagement

zz To build and strengthen relationships with As one of the major corporates in Once every quarter or as deemed government, both as a partner in the SA, Nedbank Group is a critical necessary by either party. development of the country and as a client. roleplayer in the economic, social zz To provide input into legislative development and environmental processes that will affect the economy and transformation of the country. our activities and operations.

2018 Highlights Sustainable mine closure in SA Regional gas infrastructure The N/NBF joined the world in celebrating World The first 2018 N/NBF was held in response to the Environment Day on 5 June 2018. On this day, the N/NBF, directive of the 37th Summit of the SADC Heads of in partnership with the Mine Water Coordinating Body State and Government, ‘that a regional natural gas (MWCB) hosted the second forum for the year, themed committee (NGC) be constituted to promote the ‘Sustainable mine closure in SA. inclusion of gas in the regional energy mix for industrial One of the outcomes of the second N/NBF was the development’. official launch of the MWCB a neutral public-private The dialogue considered measures necessary to collaborative platform to address environmental, social encourage both the public and private sectors to and economic challenges that arise from mine closure, participate and realise the enormous potential and including long-term mine water management and opportunities in the regional gas sector. A call was made regional mine closures. for information and data that is necessary to ensure N/NBF supports the promotion of proactive and inclusive that individual and public-sector entities actively platforms that seek transparent, accountable and participate and support the process of setting-up the equitable mine water management; in particular NGC; and identification of stakeholders. The N/NBF institutions that seek to foster a secondary economy in contributed to recommendations regarding practical post-mining environments. The latter is critical for the solutions to challenges that arise from mine closures, survival of communities long after mines have ceased to including long-term mine water management. exist. A new regional natural gas committee (RNGS) has been launched following discussions regarding how the RNGS may be constituted and what institutional arrangements are required to drive the process.

Nedbank Stakeholder Management Report 2018 15 MEDIA

As a purpose-led organisation that uses ‘our financial expertise to do good for individuals, families, businesses and society’, we have deliberately taken a more active stance on some key issues facing our country.

The Nedbank Group frequently interacts with media zz delivering Nedbank’s narrative of its purpose in across all platforms, including digital, print and TV. Our innovative and disruptive ways Group Communications strategy operates to enable and The above is achieved through ethical and values-based advise the Nedbank enterprise on issues relating to; engagements with all stakeholders; and in association with, among others, reputation trackers, index trust zz reputation management barometer, etc. zz building trust zz helping maintain our social licence to operate, and

Why we engage with the media Why media engages with us

zz To communicate our business and corporate zz To educate and inform their audiences on citizenship story with relevant stakeholders developments in the financial services sector and

zz To share information relating to our products and Nedbank specifically services zz To inquire about our contribution to the SA economy,

zz To protect and manage our corporate reputation our products, and services

2018 Highlights Ke Yona TV Presenter Search

As a purpose-led organisation that uses ‘our financial The competition aims to grow economic excellence in expertise to do good for individuals, families, South Africa by promoting the principles of sustainable businesses and society’, we have deliberately taken a economic development, developing future leaders in more active stance on some key issues facing our economics, making young South Africans excited about country. These events provide Nedbank with the economics as a subject and career path and lastly, by opportunity to engage the media and to communicate providing students with an opportunity to establish our strategic message. contact. Budget Speech competition gives budding economists the spotlight In 2018, economics students from universities across South Africa showcased their aptitude for engaging in national conversations at the 46th Nedbank and Old Mutual Budget Speech Competition.

Nedbank Stakeholder Management Report 2018 16 INDUSTRY BODIES

Nedbank actively participates in the CEO Initiative and contributes significantly to the SME Fund.

Nedbank regularly interacts with the industry and cross- The SME fund was established by members of the CEO sectoral organisations such as Business Unity South Initiative - a collaboration between government, labour Africa (BUSA), the Banking Association South Africa and business to address some of the most pressing (BASA), the CEO Initiative, the National Business challenges to the country’s economic growth – as an Initiative (NBI), Business Leadership South Africa (BLSA), avenue of support for the SME sector. the South African Banking Risk Information Centre Nedbank fully supports and participates in the activities (SABRIC) and the Payments Association of South Africa of PASA, in particular its mandate as a payment system (PASA), among others. management body in terms of the National Payment We comply with various codes and regulatory System Act, 78 of 1998. In 2018 Nedbank participated in requirements. As a member of BASA, we subscribe to the several PASA-organised events and campaigns dealing Code of Banking Practice, a voluntary code that governs with a range of aspects relating to regulation and reform all our relationships with authorities, clients, competitors, in financial services, payments and remittances, currency, employees, shareholders, local communities and primary lending domains and fraud awareness. Regarding the stakeholders. latter, Nedbank supports SABRIC’s mission of keeping us informed about the latest banking scams and fraudster Through the BLSA, Nedbank can lend its support for activities. increased engagements with and support for civil society around shared values. We have made a commitment to the YES Initiative to address youth unemployment. This follows the R20m we are investing in the CEO Initiative R1,5bn SME fund.

Why we engage with business and industry Why industry bodies bodies engage with us Frequency of engagements

zz To continue learning through interaction. To deliver mutually useful As required by association or

zz To use business associations as forums through learnings. membership agreements. which we can promote our viewpoints and collaborate on key industry issues.

zz To influence or promote common agendas.

2018 Highlights Adoption of the Sustainable Integration of sustainable development into Development Goals at an industry level strategy Nedbank is represented on BASA’s Positive Impact Nedbank has been a member of the Embedding Project Finance Working Group, which is focused on (previously Network for Business Sustainability – SA) facilitating the formal approval of the global for the past five years. The Embedding Project draws on Sustainable Development Goals (SDGs) to drive the research and practical experience to cocreate country’s financial sector contribution to the knowledge for companies that are endeavouring to sustainable development agenda. In 2018 this working integrate sustainable development considerations into group focused on collectively developing a their organisations operations. The latest resource to be methodology for SDG prioritisation for the SA made available in 2018 to guide on a content-based financial sector and on how such prioritisation can strategy. Participation in this network has helped inform collective action. Nedbank already uses the Nedbank in its sustainable development efforts and has SDGs to define and measure the ‘good’ in our purpose, seen Nedbank share its learnings with peers. and 2018 saw us prioritise which goals we were able to address through our core business.

Nedbank Stakeholder Management Report 2018 17 Fintech partnership of the year

Nedbank is proud to have won The Banker magazine’s 2018 fintech partnership award for our ‘Satellite and drone imagery analytics experimentation’. Together with Aerobotics (Pty) Ltd, a disruptive technology company that builds advanced analytics on top of aerial drone and satellite imagery, we deliver precision farming tools for our agricultural clients.

Nedbank Stakeholder Management Report 2018 18