Nordea Sustainability Report 2017 Contents 3 Contents

Sustainability Report 2017 The report in brief Nordea’s Sustainability Report 2017 has been prepared in accordance with GRI G4, core level. The report has been subject to third-party assurance by PwC. The assurance statement can be found on page 46. Norde a Sustainability Report 2017 is divided into two sections. In the ﬁ rst section, pages 4–33, we tell our sustainability story. In the second section, the sustainability notes on pages 34–45, supplementary information is provided regarding disclosures in the front section, all data as well as information regarding the fulﬁ lment of GRI G4 and the GRI Index. We also report here on limitations in scope and omission statements according to GRI, where relevant.

If you have any questions about the Sustainability Report, you are welcome to address them to [email protected]

4 Nordea’s CEO on sustainability 6 This is Nordea 8 Nordea and sustainability 16 Our business 18 Personal Banking 20 Commercial and Business Banking 22 Wholesale Banking 24 Wealth Management 26 Governance 28 Risk and Compliance 30 People

34 Sustainability notes 42 GRI Index 45 Glossary 46 Independent Auditor’s Limited Assurance Report on Nordea’s Sustainability Report

Nordea Sustainability Report 2017 Statement from the CEO 4 Nordea’s CEO on sustainability

Sustainability on the Board’s Agenda

Over the last couple of years, we have implemented a new compliance governance structure at Nordea. The reforms have included a complete overhaul of compliance management and supervision, including a new committee on the Board of Directors, dedicated to ensuring and oversee- ing best-in-class performance in conduct, compliance, sustainability, operations/systems, and related frameworks and processes. I am con- fident that Nordea has now created a solid foundation that also enables further development and integration of sustainability into our business processes, both to manage risks and to create opportunities. Nordea’s President and Group CEO, Casper von Koskull (CvK), Björn Wahlroos and Nordea’s Head of Group Sustainability, Erik Feldt (EF), Chairman of the Board met to discuss sustainability one afternoon in November.

EF: In recent years, sustainability has sustainability – something that lasts over be relevant for society which includes climbed the agenda of most companies, time. And, on the topic of resilience; what being safe and trusted. Nordea included. What does sustainabili- are the most important macro trends you EF: You mentioned two macro trends. I ty mean to you? see aff ecting Nordea in the short and long guess the second is regulation? CvK: To me, it means acting and behaving term? CvK: You are right, the second one is reg- responsibly. Sustainability is multi-dimen- CvK: We face two macro trends in partic- ulation, and rightly so. Regulation pro- sional and is part of everything we do at ular. The fi rst is the fourth industrial revo- vides a safe and trusted fi nancial system Nordea. It is about mitigating risks, lution which is not only digitalisation, but to ensure that all participants move in the improving resilience and creating oppor- consists of computing power, the internet right direction. We have to have rules, tunities. It is, quite simply, the right thing of things and mobility. It will fundamen- laws and regulations in place to show the to do. Nordea is a major player in the tally change banking as such, even if the way, but I don’t think that is enough. That tenth largest economy in the world. underlying customer needs that we satis- sets the outer boundary within which the We touch every part of society and need fy might be the same. That is the major company has to work, but a company to take responsibility for our actions and overriding trend as I see it. also must adhere to societal norms. behaviour. EF: In your view, how will customers ben- EF: That is a really good point. Once we EF: I agree. To me it is also about Nordea efi t from that change? are completely sustainable in everything being a long-term entity on the fi nancial CvK: We will have to focus even more on we do, that is the end of regulation. market. We make commitments to our our customer vision. Customers want to CvK: Exactly. I have said several times in customers that are 30–40 years out in have a bank that is easy to deal with, that the past that if we were to operate fully in time and, in order to be able to deliver on is relevant, competent and available any- line with our purpose and values, that is these commitments, we have to make where and anytime. Our customers also all that would be needed. That said, a sure that Nordea is still on the market at form part of society, and for us to be per- great achievement this year is that we that time. To me, that is the essence of ceived as relevant for them, we need to have embarked on our cultural transfor-

Nordea Sustainability Report 2017 Statement from the CEO 5

mation journey, of which our new pur- this case, working hard and learning step on the way to making the system pose and values form a part. We are tak- and then saying afterwards that this sustainable, fairer, sounder and more ing a major step to ensure that the bank was their best day at school ever resilient. It is about protecting our cus- we want to be in the future is not only – that is a really great feeling. tomers, our society and the global econo- about our business model, but also about EF: I can imagine that. Now we have talk- my as a whole. Preventing tax evasion is our culture. There is no business transfor- ed about our achievements in 2017, what another aspect of this. The fi nancial sec- mation without a cultural and human have been – and what are – our tor has come a long way, but work is still transformation. challenges? in progress. Also during the year, we have CvK: The transformation, the change we EF: Our Business Ethics and Values Com- strengthened our sustainability gover- are going through, is not only an opportu- mittee (BEVC) is a way of ensuring that nance and taken a position to combat nity and an achievement but also a chal- we not only fulfi l our legal obligations but climate change by issuing a position lenge. Digitalisation comes with new also that we act ethically. It was initiated statement, and we issued our fi rst own ways of working; while this is exciting, it by you before the “Panama Papers” and green bond. The latter shows to our also means that we will need fewer peo- was a strong statement of your conviction customers that sustainability is not only ple to do the job. Having to drive a of the importance of sustainability. the right thing to do; it also mitigates change in which we reduce our work- CvK: Yes. It is a result of the major shift risk and is fi nancially smart. We have force is painful. We must ensure we do it within the fi nancial sector. Going from also approved our new community in a responsible, human and ethical way “can we do this?” to “should we do this?” engagement strategy and volunteering and take care of those aff ected. We are and asking ourselves if what we do, in policy, making the strategy more trying our best to help them fi nd new order to help solve an issue for a custom- focused on our areas of expertise, positions within or outside the bank er, is the right thing to do. I see this shift fi nancial literacy and entrepreneurship, through our job mobility process. taking place now, but we are not fully where we can make most diff erence. EF: Another issue that is discussed from there yet. BEVC is our guiding beacon EF: Talking about the community time to time and that all customer-facing when it comes to what the answer should engagement strategy, we had a case staff spend a lot of time on is be in situations that are not always black competition about sustainability earlier “know-your-customer” – a procedure in or white. The committee has been estab- this year in which students had calculated place to prevent fi nancial crime by know- lished to provide guidance and to set a that our volunteering policy potentially ing who we are doing business with. Why framework for the organisation. releases close to 500,000 hours of volun- is this so important? EF: Stakeholders not only expect Nordea tary work for Nordea’s employees per CvK: The banks are basically the only to behave ethically; they also expect the year. It’s a fantastic force that we can entities that can take an active role when fi nancial sector to take the lead when it release. Our challenge now is to fi nd ini- it comes to preventing fi nancial crime and comes to helping fulfi l the UN’s Sustain- tiatives that we can contribute to. making the fi nancial system safer and able Development Goals (SDG). How CvK: I myself have been volunteering in securer, and ensuring it is not used for should we do that? one of the initiatives we support – Me & terrorist fi nancing, human traffi cking, CvK: We embrace the SDGs and take a MyCity in Finland. It was a great experi- distribution of drugs, and so on. Our holistic view to them. Being the company ence. Seeing the kids, sixth-graders in “know-your-customer” procedure is a we are – a fi nancial institution – there are of course areas to which we can contribute more than others. One is taking climate action by sustainable fi nancing, investment and advice. We have already taken the lead in responsible investment, even though the numbers are still small in relation to the total. Now, we need to take action on lending and advice. We have a possibility through dialogue to support and encourage our customers to build more robust and resilient business models. We need to do that to fulfi l our customer vision to be relevant. Our customers expect us to be here in the future and we can only do so by continuing to support the ten principles of the UN Global Compact, embracing the SDGs, and ensuring we integrate sustainability into everything we do.

Casper von Koskull President and Group CEO

Erik Feldt Head of Group Sustainability

Nordea Sustainability Report 2017 This is Nordea 6 This is Nordea

Banks help businesses and economies grow on local, national and cross-bor- der level, hence driving economic and social development forward. Without a functioning fi nancial system, society would grind to a halt. Everyone – individuals, large and small companies, and local and national government, depend on a functioning fi nancial system. A well-functioning bank contributes to the development of communities and employment and is fundamental to the ability for enterprises to start up and grow. It also provides products and services to households to enable them to save and borrow at all stages of life. As a bank, Nordea has three main tasks; to convert savings into fi nancing, to manage credit and other fi nancial risks and to enable payments and other fi nancial transactions effi ciently and securely. Trust in the fi nancial sector and in the fi nancial system is crucial to fi nancial stability. This trust is mainly based on laws and regulations. Ensuring fi nancial stability forms part of Nordea’s social responsibility.

Nordea is the largest fi nancial services group in the Nordic region and one of the biggest banks in Europe. We want to make a real diff erence – for our customers and for the communities in which we operate – by sharing our extensive expertise based on 200 years in the banking business. As a fi nancial EUR 9,469m EUR 548,296m entity, we strive to fi nd the fi nancial Total operating income Total liabilities solutions that best suit our customers’ needs so they can achieve their goals and realise their dreams. When our cus- EUR 581,612m EUR 33,316m tomers succeed, so do we. Total assets Total equity Nordea Bank AB (publ) is legally registered in Sweden, with its headquarters in Stockholm. In 2017 the Board of Directors decided to re-domicile the headquarters to Finland. The fi nal decision will be made by the shareholders at the Annual Employees headcount: General Meeting in March 2018. We are present in 20 countries, including our four Nordic home markets 33,170 – Denmark, Finland, Norway and Sweden – together forming the tenth largest economy in the world. Our main business Breakdown of Nordea’s employees by country of operation areas, Personal Banking, Commercial and Business Banking, Wholesale Banking Sweden 24.6% Poland 7.6% and Wealth Management, are designed to support the relationship strategy for Denmark 30.0% Russia 1.6% each specifi c customer segment. Norway 10.0% International The Nordea share is listed on the Finland 23.1% offi ces 2.6% NASDAQ stock exchanges in Stockholm, Estonia 0.5% Helsinki and Copenhagen.

Nordea Sustainability Report 2017 This is Nordea 7

As at 31 December 2017 Main countries of operation Other locations where Nordea is present

Household customers: Corporates & Institutions: ~9.6 million 580,000

SWEDEN DENMARK FINLAND NORWAY 4.2 million 1.7 million 2.8 million 900,000 Household customers Household customers Household customers Household customers 200,000 65,000 243,000 70,000 Corporates & Corporates & Corporates & Corporates & Institutions Institutions Institutions Institutions

Nordea Sustainability Report 2017 Nordea and sustainability 8 Nordea and sustainability

At Nordea, we are committed to acting sustainably in our everyday business. In our view, sustainability presents an opportunity to use our skills, expertise and relationships to make a positive diff erence to individuals, society and the environment. Building trust by being open, approachable, transparent and acting with integrity is vital to achieving this objective.

We have set a number of sustainability documents apply to all employees and map taking mega trends such as cli- commitments across the entire busi- everybody working on behalf of Nordea, mate change and digitalisation as well ness, which will anchor sustainability and are supported by specifi c and con- as the UN’s Sustainable Development more deeply into our operations, focus crete policies to ensure compliance in Goals (SDG) into account. management’s attention and help us everyday business. Examples are work We will create sustainable business by boost performance over time. This environment-related, the anti-corruption integrating sustainability into all our prod- approach aims to foster a culture and policies, and several investment and ucts and off erings. So far, we have inte- encourage behaviour that is aligned credit policies. Employees are trained in grated environmental, social and gover- with society’s expectations of us, help- these policies on a yearly basis to obtain nance issues (ESG) into our investment ing to ensure the continuing success of their “licence to work”. decisions and are on our way regarding our business. fi nancing, but lots of work remains to be In support of our commitment to con- Focusing on material aspects done. We see the SDGs as the future tributing to sustainable development, we The materiality analysis we conducted direction and will link sustainability at follow the UN’s Universal Declaration of in 2016 shows that our greatest contri- Nordea to our selected SDGs. Human Rights, ILO Conventions and the bution to sustainable development will Based on our roadmap, we will renew OECD Guidelines for Multinational Enter- be embedded in the services we pro- our materiality analysis in 2018. This will prises in our operations and business. vide to our customers. We have to take ensure that we continue to focus on the We have signed several voluntary inter- environmental issues, employee and sustainability aspects most relevant to our national agreements, such as UN Global social matters, human rights, anti-cor- business, from an impact perspective as Compact (UNGC), UN Guiding Principles ruption and corporate governance into well as from a value creation perspective. on Business and Human Rights (UNGP), consideration when making business We will set long-term goals aimed at tak- UN Environmental Programme Finance decisions, whether they concern fi nancing us several steps further towards being Initiative (UNEP FI) and UN Principles ing, investment or advice. However, we the leading sustainable entity on the for Responsible Investment (UN PRI) cannot neglect that our direct opera- fi nancial market. which, together, provide a solid base for tions have a negative impact on the ethical business practices at Nordea. environment and that the key to con- Working to fulfi l short-term Regarding employee-related matters, we tinuing success as a fi nancial institution sustainability goals follow local legislation and regulations consists of a diversifi ed, competent and In 2016 we set nine short-term sustain- and have a number of health and safety satisfi ed workforce that acts in accor- ability goals, all to be addressed in 2017. policies and practices in place, e.g. poli- dance with ethical standards. We must The goals are to be seen as activities cies for occupational healthcare, alcohol also take our responsibility as buyers of needed for us to reach a certain level of and drugs, work environment, work-re- products and services, and ensure that preparedness to meet the sustainability lated stress, discrimination, and sexual our suppliers adhere to the same sus- challenges ahead. By the end of 2017 we harassment. tainability standards as we do. had reached six of our nine goals. The For more information about external For details regarding our materiality others are yet to be fulfi lled and will be charters and intiatives to which Nordea analysis, see note S1. on page 35-36. transferred to 2018. In the work to set adheres, please see note S10. on page 40. our sustainability roadmap, we also Setting the strategic identifi ed three other short-term goals Policies leading the way direction for the future that need to be addressed promptly for Nordea’s Code of Conduct describes the Like many other organisations, we have us to stand prepared to take on long- high-level ethical principles that guide realised that, in order to future-proof term goals. This means that for 2018, we our business, how we treat our custom- our business, we need to plan for and have in total six short-term sustainability ers, and the conduct we expect from our address the potential impact of global goals to focus on. employees. It includes aspects such as megatrends. To name a few, these care for the environment, labour rights, include technological breakthroughs Engaging in stakeholder dialogues how we treat our customers, commit- and climate change and resource scar- Strong stakeholder relations are import- ment to human rights, the right to priva- city. We need to look beyond our own ant for moving towards being a sustain- cy, and anti-bribery and corruption. The challenges, both direct and indirect, and able entity in society. We regularly con- Nordea Sustainability Policy sets forth consider the broader influences that are duct stakeholder analysis with the pur- the Group’s values and commitments to fundamentally changing the way the pose of defi ning and identifying which ethical business, and was updated in world works. In 2017, we upgraded our groups of stakeholders are key to 2017 with sections on sustainable sustainability approach and started to Nordea. fi nancing, investment and advice. Both develop a long-term sustainability road-

Nordea Sustainability Report 2017 Nordea and sustainability 9

Fulﬁ lled

In progress New Short-term sustainability goals

Goal Description Comment Status

Anchor minimum sustainability goals Presented by CEO at the Annual General Meeting in April 2017. with GEM and Board of Directors (prerequisite for successful achievement of following goals).

Map and assess sustainability Mapping and assessment presented to the Sustainability Committee in regulations’, international conventions’ November 2017. Identiﬁ ed gaps and suggested actions will be included in and standards’ relevance to and impact our sustainability roadmap. on Nordea.

Clarify sustainability governance model A dedicated board committee established. Revised charter and membership and decide on internal processes. structure for the Sustainability Committee. Sustainability working groups covering seven diff erent areas established.

Systemise data collection and verifi cation Reporting responsibility per business area and group function has been process. clarifi ed and all indicators to be reported have been assigned to a specifi c unit.

Launch position paper on climate change Position statement launched in November 2017. Science-based targets and establish science-based targets. calculated for Nordea’s direct operations’ emissions. Targets for indirect impact not possible to establish at present due to insuffi cient data.

Align diversity policy for the Board of Group directive and standard operating procedure for composition of subsidiary Directors and implement as applicable, boards aligned with diversity policy for the Board of Directors have been according to the legislation. approved. Implementation of these will take place gradually as subsidiary board members are replaced.

Enhance the ESG screening tools to Principles for sustainable ﬁ nancing, investment and advice included in the improve the consolidation capabilities for Sustainability Policy. Implementation of the principles has started and will responsible investment, responsible continue in 2018. ﬁ nancing and responsible procurement.

Launch a risk management framework in First draft of “Instructions on management of Sustainability risks” was order to identify key risks in value chain presented in BEVC in December 2017. The instructions will be aligned with (focus on human rights, labour rights, Nordea’s overall risk framework implemented in 2018. anti-corruption measures and environment).

Establish a KPI frame work with Benchmark analysis to establish best practice has been conducted. KPI individual KPIs. framework will be based on the renewed materiality analysis and included in scorecards where relevant and appropriate.

Continue implementation of the updated Sustainability Policy and the principles for sustainable ﬁ nancing, investment and advice.

Establish baseline for climate change and human rights-related risks throughout the value chain.

Launch position statement and guidelines within relevant areas, e.g. defence and shipping.

Nordea Sustainability Report 2017 Nordea and sustainability 10

Employees, management and the identifi ed a number of key areas in 2016 Board of Directors are identifi ed as our in which we believed Nordea would SDG 3 Good health primary internal stakeholders and cus- have the strongest impact. and well-being tomers, owners, suppliers, regulators, Given that we have been focusing It is important for us as employer NGOs and media as our key external our eff orts during the year to reach a to enhance the well-being of our stakeholders. In 2017 we continued to certain level of sustainability readiness, employees. engage with our various stakeholders in we have deepened our initial analysis of diff erent ways. The result from these which SDGs to focus on. We have taken SDG 8 Decent work and dialogues guides us strategically in a holistic approach to the SDGs, realis- economic growth adjusting our business practices and ing that they are all relevant to us if we A relevant goal for us as a major adopting a more long-term risk man- look at our impact – deploying capital bank. We can have a signifi cant agement approach, taking complex sus- into areas where improving standards impact on this through our tainability issues into consideration. of living and protecting the environ- operations. For more details on specifi c issues ment will drive economic growth. How- raised by the diff erent stakeholders in ever, we need to channel our resources SDG 13 Climate action 2017, see note S2. on page 36. into the SDGs where we have the great- This goal is undisputable in impor- est possibility of reducing negative tance due to the positive indirect Endorsing Sustainable impact and increasing positive impact. impact we can have in fi ghting cli- Development Goals In our SDG analysis the focus is on mate change through channelling In 2015 UN member states signed the materiality. We have gathered input investment and fi nancing to greener Sustainable Development Goals (SDG) from group functions and business alternatives. applicable to all entities in all countries areas as well as from external sources worldwide. The 17 goals are all crucial including the country-specifi c analysis SDG 16 Peace, justice and for sustainable development to occur, performed for Denmark, Finland, Nor- strong institutions and they come with a number of way and Sweden by their respective All companies need to play a part in cross-cutting eff ects. We acknowledge governments. The outcome of our anal- creating a fair environment for busi- that we have an important role in help- ysis is that there are four SDGs that we ness by complying with laws and ing the governments in the four Nordic shall focus on. regulations, improving transparency, countries in which we operate to We will not succeed in achieving protecting whistle-blowers and set- achieve the global goals. Based on these SDGs ourselves, so working in ting the highest standards of integ- input from our stakeholder dialogues partnerships, as specifi ed in SDG 17, is rity amongst their workforces. and global sustainability needs, we crucial for reaching the goals.

The Nordea SDG Flower It illustrates how we have prioritised between the SDGs.

Nordea Sustainability Report 2017 Nordea and sustainability 11

Respecting human rights We are committed to addressing and integrating respect for human rights across our value chain. By continually improving our approach to human rights, we are better prepared to con- CASE front new issues rising on the agenda and to manage risks. A company’s most prominent human rights issues are those rights that are at risk of the most severe negative impact Combating climate change through the company’s activities or business rela tionships. In 2018 we will with green bonds conduct a comprehensive analysis of our value chain to identify our salient If we are to achieve the stated goals of the Paris agreement, human rights issues. We are working to systematically massive amounts of green investments will have to be made embed human rights in all parts of the at all levels of society, from governments to corporates. organisation and to strengthen our due diligence processes. We have identifi ed our most critical areas to be within investing, fi nancing and sourcing. We At Nordea, we encourage the trans- bonds in two diff erent ways. Firstly, therefore focus on strengthening diff er- formation of companies towards we issue our own green bonds to ent areas and processes each year. low-carbon and more resilient busi- fi nance loans to customers that have It is important to raise awareness ness models, and are focused on help- environmental benefi ts and mitigate among our employees regarding human ing our customers fi nance such invest- climate change. In June 2017 we rights issues and it is therefore included ments. One way of doing this is to pro- issued our fi rst green bond – a EUR in our Code of Conduct training that is vide relevant products such as green 500m fi ve-year bond. Secondly, we mandatory for all employees as part of bonds. serve as the intermediary between our the Licence to Work training. Jacob Michaelsen is Head of customers as issuers and investors by Sustaina ble Bonds at Nordea. helping them to invest in or issue “Briefly, a green bond is like any green bonds via the capital markets. Task Force on Climate- other bond except that the money is “In addition to providing cost-effi - related Financial Disclosures earmarked for green purposes such as cient funding, green bonds are a natu- In 2015, the Financial Stability Board renewable energy, green buildings ral step in manifesting Nordea’s (FSB) highlighted climate change and clean transportation. The biggest increased ambition level in the sus- as a risk to the stability of the global diff erence to a regular, non-green tainability area. They constitute a tan- financial system and set up the Task bond is that an investment in green gible eff ort showing our commitment Force on Climate-related Finan- bonds also achieves a green impact to delivering on our sustainability cial Disclosures (TCFD). TCFD has and investors can be transparent agenda and working towards a great- brought together companies that about it,” says Jacob Michaelsen. er good in line with our purpose,” con- prepare financial data and users At Nordea, we work with green cludes Jacob Michaelsen. of that data (investors, lenders and insurers) to recommend how companies should disclose the financial risks of climate change. These recommendations focus on the disclosure of physical risks from extreme weather such as storms and droughts, and commercial risks related to the global transition to a lower carbon economy. The recommendations were submitted to the G20 in July 2017. As a result, pressure is growing on companies to improve disclosure of climate - related financial risk.

Combating climate change The global environment is under great pressure and catastrophes due to climate change and scarcity of natural resources are part of life. The state of the environment aff ects both individuals and companies and poses a serious threat to global prosperity. Financial institutions have a considerable role to play in the transformation towards a sustainable society in general and in

Nordea Sustainability Report 2017 Nordea and sustainability 12 combating climate change in particular. own activities, we must take steps to Investing responsibly Nordea is no exception. mitigate contribution to carbon emis- We believe companies that take envi- At Nordea we recognise that climate sions, and in our operations we have ronmental and social considerations change will pose risks as well as pres- committed to being a carbon-neutral seriously represent better long-term ent opportunities for our customers and company. This ambition is visible in investments. In our approach to asset our business, both directly three diff erent ways. First, we management, Nordea applies interna- through the operations strive to reduce emissions tionally recognised principles for we run and indirectly generated from our responsible investment and active own- through our stake- direct operations. ership and is a signatory to UN PRI. holder activities. Second, we Our Responsible Investment Policy We will work ensure that ener- commits us to screening our actively directly with our 10 gy used in our managed funds to ensure they do not stakeholders to buildings is include companies that have violated mitigate these years renewable. international norms on environmental risks and har- Third, for the protection, human rights, labour stan- ness the oppor- as a signatory remaining dards or business ethics. We review the tunities. In an unavoidable investments in our funds twice a year to increasingly car- to the UN PRI emissions, in 2017 ensure they continue to meet our crite- bon-constrained we continued with ria for inclusion. world, we will listen the off setting activi- We expect companies we invest in to to the needs of our ties we have carried observe internationally recognised stakeholders when provid- out since 2015. The combi- human rights principles and to prevent ing fi nancial services and oper- nation of measures ensures negative eff ects and manage their ating our facilities. We are in dialogue that Nordea has a programme for being impact on human rights. Poor manage- with the industry and authorities on CarbonNeutral® certifi ed in line with ment conflicts with the long-term inter- how to implement the recommenda- The CarbonNeutral Protocol. est in promoting a responsible and sus- tions from the TCFD. For details on our carbon emissions, tainable development and may impact We apply the precautionary principle see note S3. on page 36-37. companies’ licence to operate. Human in our operations and have included rights-related issues include complicity environmental aspects including cli- Sustainable fi nancing in human rights abuses, modern slavery mate change in our principles for We aim to make sustainable fi nancing and child labour, occupational safety responsible investment and in our sup- decisions, providing credit based on plier assessments. Taking a responsible sound banking practice. Our relation- approach to managing our environmen- ships with customers – households, cor- Nordea joins the banking tal impacts is the right thing to do. It porates and institutions – are founded initative for Responsible Ship builds trust with our customers, on our deep familiarity with their Recycling Standards (RSRS) employees and other stakeholders, business. while also protecting the future health Besides following all guidelines and In November 2017 Nordea joined of the business. principles applying to the industry, we the initiative for RSRS together In 2017 we developed a Position have devised our own tools and pro- with other leading ship-financing Statement on Climate Change in which cesses for promoting a holistic banks. The recycling, or scrapping, we recognise the importance of limiting approach in our credit decisions. Where of a ship at the end of its lifecycle the average global temperature rise to relevant we include environmental potentially poses substantial social below the 2 degrees Celsius target. Fur- issues, employee-related and social and environmental risks for the thermore, we commit to refraining from matters, human rights, anti-corruption shipping industry, especially if so- providing new fi nancing to energy pro- and corporate governance when we called beaching practices are used, duction or mining companies that are make the decisions. Nordea’s Code of whereby ships are driven directly primarily dependent on thermal coal. We Conduct is the key policy document for upon beaches and dismantled may continue to fi nance existing custom- our fi nancing together with the new under difficult working conditions ers and will encourage them to trans- principles on sustainable fi nancing, and with detrimental environmental form to less carbon-intensive production. investment and advice in our Sustain- consequences, as hazardous waste One of our short-term sustainability ability Policy that was approved by the is deposited directly into the sea. goals was to establish a science-based Board of Directors in June 2017. The RSRS are voluntary industry target that puts focus on climate action In addition, we have industry-specifi c principles that promote responsible in our entire value chain. In 2017 we guidelines and principles for fi nancing, ship recycling and aim to mini- therefore evaluated this possibility. with the purpose of establishing a com- mise the dangers associated with However, there is a lack of established mon strategy for the distribution of our hazardous materials on board. The methods to create science-based tar- credit portfolio and improving risk man- standards form guiding principles gets for fi nancial institutions that also agement. Industry-specifi c guidelines in the dialogue on responsible ship include scope 3 emissions, i.e. emis- are in place for the following sectors: recycling between the financial sions from downstream activities such Commercial real estate, Energy, Finan- sector and stakeholders in interna- as investments and fi nancing. Since cial institutions, Leveraged Buy-Out tional shipping. Nordea is joining this is where we have our greatest (LBO), and Shipping, Off shore and Oil the banks participating in the RSRS impact, we are trying to fi nd a way to Services. to increase awareness of the envi- include these in a science-based tar- As an example, in June, we issued ronmental and social risks associ- get, but have not yet succeeded. We our fi rst ever green bond. Since 2014 we ated with recycling of ships, and will continue with this task in 2018 to have also been active as an arranger of to promote the standards for the see where it might lead us. green bonds. sustainable recycling of ships. To reduce carbon footprint from our

Nordea Sustainability Report 2017 Nordea and sustainability 13 and health, the rights of indigenous same approach. They gain a complete exposure. One opportunity, on the other people and displacement of local com- picture of the company’s needs before hand, lies in the ability to emphasise to munities, freedom of association and working together to decide on the ser- suppliers that a sustainable business collective bargaining and international vices that will support that customer’s model is not only the right thing to do, humanitarian law. Furthermore in 2017 long-term business success. but also presents a business opportuni- Nordea was one of the founders of the We are committed to ensuring that ty, providing them with a competitive Corporate Human Rights Benchmark our customers have all the information advantage in their area. (CHRB) which aims to drive better they need to make decisions about their Nordea’s Supplier Sustainability Pol- human rights performance through the ﬁ nances. Whenever we develop a new icy is mandatory for all large contracted creation of a transparent, credible and product, we follow a stringent process suppliers, i.e. with a contracted value of publicly available benchmark. to ensure it is described fully and accu- EUR 250,000 or more. It requires the rately and sold responsibly. Before supplier to adhere to the ten principles Advising customers wisely launching any new product, the respon- in the UN Global Compact which covers Every customer is unique. We must fully sible unit and legal counsel closely human rights, labour standards, envi- understand our customers’ individual review external marketing materials ronment and anti-corruption. The policy needs and ambitions before off ering and communications for legal is an integral part of Nordea’s contract them any service, advice or product. Our compliance. templates. Even if the contract with the advisors begin by sitting down with supplier is not signed on a Nordea con- customers to discuss their current ﬁ nan- Engaging with suppliers tract template, the policy is still manda- cial situation and future plans. This Sustainable procurement is increasingly tory and needs to be part of the agree- allows us to off er the best possible on the agenda and this awareness pres- ment. This applies irrespective of the advice and services, tailored to every ents both risks and opportunities. One products we are buying. Hence, interac- customer’s particular circumstances. We risk is that Nordea is linked to suppliers tion with large suppliers regarding sus- have a dedicated customer team for our with questionable business models, tainability is mandatory before contract corporate customers, who follow the potentially generating negative media signing, and when renegotiating.

Nordea’s supply chain

Percentage of annual spend 1,200 contracted suppliers

Sweden, 38% Finland, 23% 19,000 Denmark, 20% suppliers in total Norway, 7% United Kingdom, 3% Poland, 2% United States, 2% Ireland, 1% Switzerland, 1% Other, 3%

90% of new contracted suppliers were screened on environmental EUR protection, labour practices, human rights, and anti-corruption criteria 2,986m paid to suppliers 15 Total number 0 Number of suppliers of suppliers subject terminated due to breaches to sustainability of the Nordea Supplier engagements Sustainability Policy

Nordea Sustainability Report 2017 Nordea and sustainability 14

If, after the contract has been signed, tainability into our sustainable procure- duct, Tax Policy on Customer Advice we learn that the supplier is in potential ment practices. and Sustainability Policy when advising breach of our Supplier Sustainability For details on scope for supplier-re- customers about the tax implications of Policy, initiatives are taken to clarify the lated data, see note S4. on page 37. diff erent products. We also take care to issue, potentially preparing a corrective comply with external regulations action plan or ultimately terminating Paying tax responsibly regarding the provision of proper infor- the contract. No contracts were termi- At Nordea, we generate value for the mation and not mislead customers in nated in 2017 due to breach of our Sup- societies in which we operate both their decisions. plier Sustainability Policy. through the taxes we pay in relation to In 2017, we held dialogues with a few our business, and by withholding taxes Supporting inclusive societies suppliers regarding the signing of our on dividends and interest for customers Community engagement is a key func- Supplier Sustainability Policy. on behalf of the government. tion for building up and developing the The dialogues were con- We are committed to surrounding society and an integral part structive and relation- meeting the expecta- of our business. We focus on our core ships maintained. tions on transparen- expertise in terms of building fi nancial In 2017 we cy with respect to skills and supporting entrepreneurship engaged with 15 EUR our tax manage- in the communities in which we oper- of our suppliers ment. The trans- ate. We do this in own programmes and on the phone, in fer of the through partnerships and sponsorships, physical meet- 1,239m Nordea head- and we are gradually shifting to part- ings or as part of paid in corporate quarters to Fin- nerships that create a positive social a sustainability land will have impact. It is important to us not only to review. Five of the income taxes and bank no impact on off er fi nancial support for partnerships, 15 suppliers, e.g. levies in 2017 how we pay taxes but also to devote skills and time. This is an airline and a pro- or our commit- a way for us to work towards a sustain- vider of IT solutions ment to transparen- able society, in which citizens have the for portfolio manage- cy in how we manage skills they need to manage their person- ment, were subject to sus- taxes. al fi nances and build successful tainability reviews. As a result Nordea’s policy is to pay businesses. of these reviews, we developed mitigat- taxes in accordance with local regula- In 2017 we made extra eff orts to put ing action plans for three suppliers. Fur- tions in all countries in which we oper- our new direction into practice. To sup- thermore, eff orts relating to engaging ate and, in so doing, to make an appro- port change management, we built a with high-risk suppliers were ongoing priate contri bution to each society. We group-wide, cross-functional network throughout the year. manage tax costs and risks carefully, of community engagement profession- In 2017 we completed several initia- and by paying and reporting taxes in als. This enabled us to strengthen our tives to ensure a continuing focus on due time, we aim to maintain a good partnership portfolio in all countries. formalising our process and embedding local tax reputation. From 2016 we com- A major step forward was taken resilience into our supply chain. The ply with the Country by Country report- when we launched common guidelines qualifying questionnaire, to which large ing regulation and in addition, we will for employee volunteering in Septem- suppliers must respond before entering openly disclose our tax payments by ber 2017. To encourage engagement, we the procurement process, has been country in this report, see note S5. on give all employees the opportunity to updated to ensure early involvement, as page 38. volunteer two days a year during work- well as to capture hidden risks. This At Nordea we strive to deliver great ing hours. In 2017 1,569 employees updated questionnaire will be rolled out customer experience, and to build trust seized the opportunity. For example, our in 2018. We have implemented a specif- through acting with integrity. This employees teached essential fi nancial ic compliance catalyst tool with an includes upholding the ethical stan- skills to youths and children, and they extensive database to screen large sup- dards outlined in Nordea’s Code of Con- participated in several activities to suppliers before signing contracts. Furthermore, we have updated our strategic priorities and targets which have led to updated governance as well as mandate clarifi cation. Part of this has been transferring the Sustainable Sourc- ing Board into a working group to promote better agility. Standard certifi cation of two Sustainable Procurement Manag- ers has been completed and our engagement with industry peers is still developing, supporting the overall sustainable procurement focus. Next year, we will focus on developing our existing sustainable procurement framework, exploring the benefi ts of engaging more with industry peers, and communicating more – both internally by facilitating awareness sessions, and externally by updating our supplier pages regarding sustainability on our website, nordea.com. All of this has the overall aim of further integrating sus-

Nordea Sustainability Report 2017 Nordea and sustainability 15 port the younger generation’s entrepreneurial skills, and mentored entrepreneurs. We also helped the elderly to learn digital ﬁ nancial skills.

Digitalisation as a driver CASE for sustainability Digitalisation is developing rapidly as the most important enabler for a more effi cient and better society for all. With digitalisation as a basis, we can face Community engagement to many of the sustainability challenges that lie ahead. benefi t future generations Nordea has the ambition to be at the forefront of digitalisation within bank- A prominent feature of Nordic society is sharing a mindset ing. Rapidly changing customer behaviour, new fi nancial services, devel- of creative entrepreneurship. This entrepreneurial spirit has opment of new technologies together been a force behind some of the world’s best music, games, with increasing regulatory demands designs, businesses and innovations. create business opportunities and require us to have a clear strategic digital vision with strong execution capabilities. The intention of these measures is to make fi nancial services accessible at aff ordable costs to all individuals and businesses, irrespective of net worth and size. This is what we call fi nancial inclusion. In this context, digitalisation off ers a method to pursue and develop our business as effi ciently as possible with a clear focus on sustainability, inclusion and responsibility. We will continue to drive this proactive approach forward with the intention of leading by example. We believe that modern technology and digitalisation form a key component in our ability to push for a rapid and eff ective sustainable transition, for society and for all. This requires a lot from people who work for a bank, and a great deal from customers. The challenges we face in this respect are aff ordability and the fact that At Nordea we consider it our privilege In October 2017, Me & MyCity for not everyone has the right equipment to to ensure everyone has the fi nancial ninth-graders was opened at the embrace digital services. We have skills they need to be successful. We offi ce s of Norde a Vallila head quarters. attempted to address these challenges want to share our core expertise in The learning environment will host as to some extent by installing “digital cor- fi nance and entrepreneurship, and to many as 5,000 annual visits for ners” at a number of branches in 2017. fully support a positive impact on the ninth-graders. It will make it easy for communities in which we operate. over 3,000 Nordea employees working Me & MyCity is a learning concept in the campus area to volunteer and aimed at sixth- and ninth-graders, cov- engage with the next generation. ering diff erent aspects of society, The importance to society of the Sustainability working life and entrepreneurship. It concept is remarkable. Each year, the Ambassadors Network teaches vital skills for being a respon- Me & MyCity learning concept reaches sible citizen. The Me & MyCity learning 70% of all sixth- and ninth-graders in At the beginning of the summer environment simulates real-life situa- Finland. The pragmatic learning of 2017, Nordea established the tions tailored to fi t the learning capa- approach has been scientifi cally prov- Sustainability Ambassadors Forum. bilities of sixth- or ninth-graders. en to be a successful method in teach- It is a forum for Nordea employees Anna Kosonen is Community ing fi nancial skills to children at a across the organisation. The ambas- Engagement Manager at Nordea. young age, generating long-term sadors are about 50 employees from “Being a partner to the Finnish edu- benefi ts. nine countries working in various cation innovation initiative Me & MyCity “The learning concept is fantastic, positions across Nordea with a pas- embodies Nordea’s strategy for com- but more importantly, pupils say it’s sion for sustainability. The forum is munity engagement. Employee volun- the most amazing day they’ve ever an important part of integrating sus- teering is a key function in Nordea’s had at school. This makes me believe tainability across the organisation. collaboration with Me & MyCity. I am that our community engagement actu- It is a way of making sustainability proud that hundreds of Nordea ally is of benefi t for future genera- relevant in the business and for our employees seized the opportunity to tions,” concludes Anna Kosonen. customers. volunteer at the learning environment days in 2017,” says Anna Kosonen.

Nordea Sustainability Report 2017 Our business 16 Our business

As a ﬁ nancial institution, our business model is to create value for our customers, employees, shareholders and society in general. For a sustainable business model to succeed, value cannot only include monetary means, but must encompass environmental concern, social responsibility, employee-related matters, respect for human rights and anti-corruption. Responsible business is a means for remaining successful in a changing global environment.

We build trusted relationships through in society and sustainable development not just in terms of results, but of impact our strong engagement with both cus- by making it easier for people to realise we can also show how we create human, tomers and society and through our their dreams. We work for something social, environmental and intellectual broad expertise across the wide range greater than the bank and our customers, value alongside ﬁ nancial value. of products, services and solutions we employees and shareholders – we work Our four main business areas are provide within banking, asset manage- for a greater good, delivering value and designed to support the relationship ment and insurance. generating positive impact on society. By strategy for each speciﬁ c customer seg- As a bank, we contribute to progress measuring the output of our resources, ment. Having a single operating model

For details on assumptions, calculations, estimations and limitations for Value Creation this value creation model, see note S6. on page 38.

Purpose Financial Nordea is the leading bank Together we lead the in the Nordic countries and total liabilities way, enabling dreams EUR 548,296m a major European bank. and everyday For a sustainable business EUR 33,316m total equity aspirations for a Values greater good. model to succeed, value Collaboration cannot only include Passion monetary means, but must Courage consider ESG factors. Human Ownership 33,170 employees 47% men, 53% women

Social and Relationship ~10 million customers 9.6 million household customers 580,000 Corporates & Institutions Stakeholders, suppliers, NGOs, other banks and Personal Banking Commercial and Wholesale Banking Wealth Business Banking Management decision-makers. Our brand and reputation.

Our four business areas are designed to support the relationship strategy for each speciﬁ c customer segment. Having one operating model and an end-to-end value chain ensures suitable and optimal delivery, enabling maximising the time spent with our customers. Intellectual • Integration of • Purpose and values sustainability within • IT systems and Our sustainable operations our core business processes • Risk and compliance • Know Your Customer (KYC) • ESG screening of customers • Sanctions screening and suppliers • ESG analysis • IT development Natural • Responsible investment • Business development and • Energy • Green bonds transformation • Paper • Water

Resources Our business

Nordea Sustainability Report 2017 Our business 17 and an end-to-end value chain ensures Every corp o rate customer is unique. green bonds, which enable customers appropriate and optimal delivery in We must fully understand their current to demonstrate their climate change- terms of increasing time spent with fi nancial situation and future plans mitigating actions and sustainability customers. before off ering them any service, advice approach in fi nancing. or product in order to support, in turn, Personal Banking serves Nordea’s their customers’ long-term business and Wealth Management provides invest- household customers with everyday their possibility to be a sustainable con- ment, savings, life insurance and risk banking services as well as products tributor to society. management products. Customers are suited to customers’ needs and circum- served through various channels includ- stances, through approximately 600 Wholesale Banking provides services ing a pan-Nordic Private Banking plat- branches and our 24/7 online and and fi nancial solutions to Nordea’s larg- form. The business area manages cus- remote banking service. est corporate and institutional custom- tomers’ assets and provides fi nancial In the digital era, we engage in edu- ers. Customers are served through a advice to aff luent and high net worth cating our customers, not only in con- pan-Nordic platform supplemented by individuals as well as institutional ducting their banking business on their selected international branches. investors. smartphones or tablets, but in knowing The business area provides its cus- While we screen our actively man- how to use them for other purposes, tomers with products and services in aged investments to ensure that the hence promoting inclusion in the digital corporate banking, cash management companies in which we invest act society. and trade fi nance services, investment responsibly, customers wishing to go banking and capital markets products. further can also choose funds with a Commercial and Business Banking We share knowledge on the rele- higher level of responsible investment in serves Nordea’s small and medium- vance to transform towards low-carbon their portfolio management, including sized corporate customers with services and more resilient business models, and proprietary ESG analysis. such as fi nancial advisory and trans- strive to provide relevant products to action banking services. our customers. One such product is

As a bank, we contribute to the development of communities and employment and play a fundamental Total value contribution role for enterprises to start up and grow. We also EUR 22,603m provide products and services to households to enable them to save and borrow at all stages of life. We create wealth through our stakleholders by creating and distributing economic value. • Total operating income • Interest paid to bond holders EUR 9,469m EUR 2,583m • Interest paid to customers • Salaries and pensions EUR 3,212m EUR 367m • Payment to suppliers EUR 2,986m • Dividend to shareholders • Tax contribution EUR 1,239m Financing EUR 2,747m home buyers: Financing of 69,753 ﬁ rst-time home buyers

We want to have a creative and inspiring environment for our employees with continued learning and further development.

• Internal hires 4,891 • 465,811 training hours • External hires 4,718 • 44% female graduate hires Saving for the future: Investing in our Emerging Stars fund reduces CO2 We are committed to combining ﬁ nancial performance with emissions equal to 8,312 environmental and social responsibility as well as sound round trips Stockholm- governance practices. Madrid by • Engaging 1,569 employees in • More than 70% of Nordea’s airplane community engagement risk exposure for our largest • Emissions from Global Climate corporate customers covered and Environment Fund: by ESG evaluation

254.88 tonnes CO2/per million USD in sales

Total emission 22,738 CO e Creating jobs: 2 Financing 1,300 • From energy consumption • From air travel new start-ups 3,238 tonnes 19,500 tonnes

Results Impact

Nordea Sustainability Report 2017 Business area 18 Personal Banking

Our goal is for Personal Banking to be the market leader in delivering sustainable customer solutions. In 2017 we therefore continued to integrate sustainability into our core operations with the aim of making sustainability an inherent part of everything we do.

To improve our sustainability perfor- for households to ensure their fi nances areas such as budgeting, making fi nan- mance we have identifi ed four main could cope with higher interest rates, cial decisions and saving so as to give focus areas; Sustainable Products & and we also perform credit checks to young people a good knowledge base Advice, Financial Skills, Digitalisation ensure our customers have amortisation in personal fi nances. and Diversity & Inclusion. For each area, capacity and don’t assume excessive Money Week is an event arranged we will set specifi c goals from 2018 and debt, while at the same time minimising across Europe with the purpose of beyond. the risk for the bank. improving young people’s fi nancial A great deal of choice in responsible capabilities. Focus this year was on digi- Sustainable products and advice investment is available to our custom- tal security and how to behave online, Nordea aspires to take relevant ESG ers. Our Personal Banking advisors are with respect to shopping online, per- aspects into consideration in terms of trained and can access e-learning mod- sonal data, etc. In Denmark, Money business opportunities related to sav- ules on how we invest in general, and in Week is initiated by FinanceDenmark ings, fi nancing and advice. We proac- our Stars funds in particular, so that and more than 900 schools and 31,000 tively raise the level of knowledge of they may off er relevant advice on our pupils participated in March 2017, mark- our advisors and customers through products. ing an increase of 50% on 2016. Nordea training and communication. We are played a major part by holding over a also legally obliged to present manda- Financial skills third of the guest presentations. More tory information to our customers, to As a fi nancial services company, Nordea than 270 of the 750 guest lectures were ensure that we retain our licence and is highly knowledgeable and skilled in held by a Nordea employee. credibility. In terms of lending and promoting fi nancial literacy. We cooper- In Norway, we arranged our own granting mortgages, we use certain ate with non-profi t organisations in the event in September – Nordea in school. tools to make sustainable calculations Nordics and share our knowledge in 70 volunteers participated and were out

Nordea Sustainability Report 2017 Business area Personal Banking 19 visiting secondary schools, teaching Diversity and inclusion Working to improve students fi nancial skills and discussing Diversity and inclusion is a part of our customer satisfaction possible career choices. In Finland heritage in the Nordics. We want to Customer satisfaction is a top priority at Nordea is one of more than 15 compa- reflect the society in which we operate. Nordea. Surveys for Personal Banking nies represented in the coordinated At the same time, several studies have show an unsatisfactory customer satis- event Me & MyCity. In Sweden one of shown that companies with a diverse faction development in Sweden, where- our initiatives regarding fi nancial workforce perform better. In Per- as we see a positive development in skills is Ekonomipejl – sonal Banking, we have a Finland. Scores in Denmark and Norway “Finances in Focus”. We particular challenge in are at the same levels as 2016. visit students around terms of the gender Improving customer satisfaction both the country to teach balance. Among in absolute terms and versus competi- them about their non-managerial tion will be a key priority in 2018. Focus personal fi nanc- 50,000 employees, there on the customer is vital, and listening es. Volunteers is a substantial more carefully to our customers is now visit schools and overbalance of the baseline for new initiatives. some have also coin bags women. A few #wecare and #wefi x are two well-struc- been to young accepted from customers steps up the tured processes that work towards con- off ender prisons hierarchy it’s stant improvement based on customer to share their as part of the banknotes rather equal, but feedback. knowledge. and coin change over in at the top of the Customer complaints are considered Sweden in 2017 pyramid, there is to be the most important source of Digitalisation instead a signifi cant information for increasing customer Digitalisation has been overbalance of men. We satisfaction in all areas, technical func- a driver of sustainability for would also like to integrate tionality, enhanced effi ciency and not some time. It continues to play minority groups into Nordea to a least in terms of being easy to deal an important role, both in terms of greater extent, enabling us to build col- with. Complaints are also used for reducing the carbon footprint and lective strength through better commu- learning purposes in coaching employ- increasing fi nancial inclusion and nity engagement, and internal and ees and training and feedback ses- accessibility to fi nancial services. In external projects. sions. 97% of complaints are solved Personal Banking we have continued to In 2017 we improved our engage- immediately for the customer in their extend our online branches, aff ording ment in diversity and inclusion by run- fi rst contact with the bank. us flexibility and giving our customers ning a pilot scheme in Sweden with a the opportunity to engage with us focus on building competence, and through remote meetings, anywhere specifi cally on awareness surrounding Lowering the entry barrier and anytime. The most digitally exclud- these issues. Several workshops were ed people are often those who are also held with the heads of branch regions, to the fi nancial market the most socially and economically at which detailed discussions on diver- At Nordea, we are dedicated to en- excluded, who could benefi t a lot from sity and inclusion took place. Tools for suring access to the financial market making the online transition. As a bank recruitment, communication and work for everyone. We have customer with a signifi cant digital agenda, we environment were devised with the aim programmes tailored to different want to ensure that we bring digitalisa- of making us more inclusive in our daily customer segments and needs. tion into everyone’s lives. work by building an inclusive culture Young customers and students Embracing digitalisation can some- and incorporating it into our transfor- are two groups on which we are times require a helping hand and mation journey. focusing in terms of providing a someone there to provide guidance. tailored customer programme This year, the branch in Nyköping Swe- Accessibility for vulnerable groups whereby young customers and den initiated recurring events, inviting Banks are often criticised for their lack students receive discounts on our people to digital workshops to help of services for vulnerable groups, such products and services as a social them enter the digital world. In Finland as the elderly, people with disabilities benefit helping them to establish similar initiatives have been carried and others with low access to digital themselves on the financial market. out. Digital mornings have been intro- services. We serve 10 million private In Denmark our Check-in and duced at which customers are invited customers and it’s important to us that Ung+ savings accounts amount to to the branch before opening hours to our services are available to everyone. EUR 297m (3% of our total savings get an introduction to digital services In Norway we are legally obliged to accounts). as well as face-to-face meetings after- make ATMs and ADMs accessible to Our Check-in savings account in wards, with time set aside for practice everyone, especially the visually and Finland amounts to EUR 481m (5% and questions. In Denmark 60 employ- physically impaired. Our ATM business of total savings accounts). ees from various functions in the bank in Finland and Sweden is outsourced In Norway we have specific now volunteer to serve as digital – to Automatia in Finland and Ban- student savings account amounting ambassadors. Their main task is to komat in Sweden. In 2017 our vendor to EUR 194m (3% of total savings assist and inspire colleagues in cus- Automatia launched 50 new “Talking accounts). tomer-facing functions to become fully ATMs” to help visually impaired peo- In Sweden our Check-in and familiar with the wide range of digital ple use them. 200 of the new-genera- Student savings account amounts solutions on off er, so colleagues can go tion ATMs in Finland are models com- to EUR 602m (4% of total savings to the digital ambassadors if they need patible with the needs of physically accounts). suggestions and advice. The digital disabled people. Also, in 2017 our ambassadors also serve as a sounding mobile app was developed with a board with respect to the development focus on creating a better voiceover of our digital solutions. function to assist the visually impaired.

Nordea Sustainability Report 2017 Business area 20 Commercial and Business Banking

Commercial and Business Banking is embracing Nordea’s new purpose and values. By understanding our customers’ needs, being a proactive business partner and making engagement count – while at the same time ensuring that everything we do is for a greater good – we aim to build the preferred relationship bank for the future.

To achieve our goals, many initiatives of the working group is to perform a ates, and the countries to which it is have been running in parallel through- gap assessment and develop plans for exposed. It is planned that specifi c cus- out the year. These include our lending how to implement the new principles. tomers identifi ed as being in a higher to the SME segment, ongoing hiring of Findings and recommendations are risk area will be engaged in a dialogue graduates, and staff training. They also currently being developed. in order to mitigate identifi ed risks. include the introduction of new applica- A project that has already started, A pilot including a number of high-risk tions such as “Visual Agenda” – aimed aims to integrate ESG evaluations into customers was initiated in the autumn both at teaching fi nancial skills and the regular KYC process. This will of 2017 to test and evaluate the process. ensuring greater customer satisfaction, enable CBB to identify and mitigate The fi nal development and implemen- and “Remote Meetings” – allowing our ESG risks among its high-risk custom- tation of the ESG evaluation process is customers more time to focus on their ers. New customers will be targeted as expected in 2018. businesses while helping to reduce part of on-boarding, while existing cus- travel times. tomers will be assessed during the reg- Green fi nancing ular due diligence processes. The pro- Demand for green bonds from the inves- Implementing ESG criteria cess will consider all CBB customers tor community has steadily increased. In In June 2017 the Board of Directors according to their risk impact (i.e. cus- June 2017 Nordea issued its fi rst ever approved the new sustainable fi nancing tomer size), and all customers with a green bond and, as part of the launch, principles included in our Sustainability relevant risk impact will be further CBB was a key participant in identifying Policy. A sustainable fi nancing imple- assessed based on their risk level. The and pooling assets backing the bond mentation group was subsequently risk level is in turn determined based on issuance. Out of a total EUR 500m issued, established, which includes Commercial multiple factors, including the industry CBB customers made up EUR 130m of and Business Banking (CBB). The task segment in which the customer oper- the green assets. The distribution per

Nordea Sustainability Report 2017 Business area Commercial and Business Banking 21 sector was ‘green buildings’ (36%), tors to help the entrepreneurs realise prises, helping decide the winners in the ‘renewable energy’ (44%) and ‘water their full potential. Best Enterprise category, and also and waste water treatment’ (20%). selecting the Nordea Award winners for At the same time we have witnessed The Norrsken foundation the best business plan. These are select- an increase in demand from our corpo- Norrsken is run by a private foundation ed out of hundreds of business plans, rate customers to diversify their funding and focuses on supporting social-im- fi rstly by fi nding regional winners and, base to include green fi nancing. In pact tech entrepreneurs and start-ups in the second stage, by electing overall order to support their sustainability as well as their surrounding ecosystem. winners at the national championships. approach, CBB launched an initiative in In their activities, they support and By engaging in Young Entrepreneur- September 2017 aiming at developing a invest in both for-profi t businesses and ship, we get a unique opportunity to green purpose-based loan product. By non-profi t organisations. Currently meet with hundreds of young entrepre- directly stimulating and promoting based in Sweden, Norrsken has plans to neurs and students to discuss creativity green purpose-based fi nancing prod- expand internationally over the coming and banking. ucts, we sincerely believe that both our years. Nordea will have access to the customers and society will benefi t. Norrsken House for events and gather- Customer satisfaction ings, and will also off er the entrepre- – a top priority neurs at Norrsken House fi nancial Our customer surveys show improved Criteria for eligible expertise, knowledge and suitable ser- customer satisfaction scores for our assets for green loans vices. The parties will jointly strive for Commercial and Business Banking cus- • Meet the social, environmental Norrsken House entrepreneurs to have tomers, bringing us back to levels com- and life cycle criteria assigned to the opportunity to work together with parable with 2015. We see a positive each category, i.e. aim to increase Nordea employees through board customer satisfaction trend in Denmark, the positive, or reduce the nega- appointments and similar undertakings. Finland and Sweden. Scores in Norway tive, impact on the environment. In our view this will benefi t all remain at stable levels, comparable • Provide reports/documentation concerned. with 2016 and 2015. in order to evaluate the sustain- We are on a journey to improve cus- ability-related performance of the Young Entrepreneurship tomer satisfaction both in absolute assets. Nordea is a key partner to the Norwe- terms and versus competition, and this • Be consistent with the Green Bond gian association Young Entrepreneur- will remain a top priority for us. Many Principles and the verifier’s criteria. ship (“Ungt Entreprenørskap”) and, for initiatives are being launched to several years, has been playing a direct improve customer satisfaction, one role in motivating young entrepreneurs being a new enhanced process for sys- Encouraging entrepreneurship and sharing valuable knowledge sur- tematically capturing and acting on cus- Community engagement is an essential rounding the role of banking – for tomer feedback. It will support us in part of Nordea’s sustainable business example, when starting a company. focusing on the right aspects – those strategy and illustrates the important In 2017, CBB employees served on the that really matter to our customers. role we play in society as a bank. Build- juries of both youth and student enter- The process will be rolled out in 2018. ing fi nancial skills and enhancing entrepreneurship make up the core of our group-wide community engagement programme. CBB engages with entre- Eligble areas for green loans preneurs in many diff erent ways, from The table below provides an overview of the areas eligible for green loans and mentoring and networking to start-up how the positive impact of the initiatives may be measured and communicated. programmes and fi nancial skills training, helping them achieve their goals Green Bond and realise their visions. By encourag- Principles category Nordea subcategory Impact measurement indicators 1) ing entrepreneurship, we also help pro- Renewable Energy Wind, Hydro and Installed Estimation of mote economic growth. Specifi c exam- Solar renewable energy avoided CO2e ples of initiatives in this area include: production emissions compared capacity (MW) to baseline

Start-up & Growth units Energy Effi ciency Smart grids, Energy Amount of energy Estimation of storage, District saved (MW) avoided CO2e Growth companies and new start-ups heating emissions need support from the very beginning. Green Buildings Certiﬁ ed buildings Amount of energy Estimation of In order to generate greater attention to saved (MW) avoided CO2e this segment, Nordea has launched emissions dedicated Start-up & Growth Units. Pollution Prevention Pollution Prevention Water Number of people These are currently in place in Finland and Control and Control withdrawals or impacted and Denmark. Plans for setting it up in Water and waste treatment the other Nordic countries are well water management capacity (m3/day) under way. In these units, CBB focuses Waste to energy Production solely on supporting the mobilisation of capacity (MW) entrepreneurship in the Nordics and Clean Transportation Public No. of passengers funding entrepreneurial ideas, thus con- transportation/Rail or amount of tributing to the development of start-up transportation freight and scale-up environments. CBB’s role Sustainable Sustainable Forestry Land area is to deliver sustainable services and Management of and Agriculture certiﬁ ed products by sharing expertise in sus- Living Natural tainable investments, risk management Resources and business models, and even match- 1) Note these are examples of impact measurement indicators making between start-ups and inves-

Nordea Sustainability Report 2017 Business area 22 Wholesale Banking

The way to approach sustainability in Wholesale Banking is to embed it into everything we do. We build understanding of the risks and opportunities presented by our customers’ business, and support them with advice, relevant products and research, while managing our own business sustainably.

Sustainability aspects are included in eration seen during the latter part of the into tangible action continues. Green our business decisions, product off ering, year. The topics range from the rele- loans provide a broad group of custom- risk management initiatives and cus- vance of sustainability in equity mar- ers with an opportunity to demonstrate tomer dialogue. Sustainable conduct kets, to product-specifi c guidance for their green credentials in fi nancing. In a and training are also essential for each customer. This development has way similar to green bonds, green loans attracting motivated and competent been supported by a monthly Nordea fi nance specifi c investments that have professionals to our teams. In 2017 we green bond letter and green bond environmental benefi ts. The Green loan took major steps in integrating sustain- investor and customer surveys. The sur- categories framework at Nordea is ability into our product off ering and risk veys clearly point to increased interest described on page 21. It is essentially management. Attention to sustainability in how to make sustainability operation- the same as that used in the Nordea in the customer dialogue and general al in fi nance and the CFO functions of green bond described below. The cate- awareness-building among stakehold- various corporates. This is particularly gory criteria are being developed and ers were intensifi ed. interesting for many Nordic companies updated together with an independent that have placed sustainability at the external verifi er. The fi rst green custom- Green product off erings core of their corporate strategies. er loans have been signed and we will Green fi nancing forms part of the dis- Nordea’s position as the leading bank look into expanding green fi nancing cussions about future fi nancing oppor- in the Nordics has enabled increased further to loan products next year. tunities with our corporate and institu- awareness of sustainability aspects We also provide advice on the topic tional customers. The number of bilater- among Nordic business leaders and of fi nancing in a green or social format al meetings and events at which green European investors looking at the Nor- with sustainable bonds. Focus is on fi nancing has a central role has clearly dic markets. Parallel work to support engaging with Nordea’s full range of increased from last year with an accel- our customers in translating awareness customers, including investors, in dis-

Nordea Sustainability Report 2017 Business area Wholesale Banking 23 cussing sustainability in the context of ed into one of the fi ve ESG risk region and many of them follow the fi nance. Throughout 2017, our invest- categories. Nordic or highest EU/international stan- ments paid off . In 2017 Nordea, was an About 2–3% of the evaluated expo- dards also in their foreign operations. arranger for 20 green bonds to a total sures fall into the highest risk category. Furthermore, managing compliance risk deal value of almost USD 4bn – more In these cases, long-term fi nancing is is a key element in ensuring that risks than doubling the amount from previ- typically off ered only for specifi c pur- are under control. We ask our custom- ous years put together – including the poses on specifi c terms. Corporates ers to share their fi nancial crime/sanc- inaugural EUR 500m Nordea Green assigned a high ESG risk will be tions policies if available. Bond. We have moved from number escalated to a group-level nine in the Nordic league tables to a credit committee which Understanding lead position. will in turn consult the digitalisation BEVC in subjects Digitalisation is concerning our reshaping Cracking the ESG code values, ethics and all banking activi- One way of advancing sustainability reputational risk. ties. We will inte- is research that provides hard facts Clearly over * grate the in empirical data. Nordea Markets 70% of the eval- No 1 ESG-related data has invested in building up dedicat- uated exposure and analysis into ed ESG research and published the belongs to one bank for large corporates in the the information Nordics in the Prospera survey inaugural ESG report “Cracking the of the three low- in November 2017 platforms avail- ESG code”, which has become by far est risk categories, able to the cus- the most downloaded publication which is in line with *shared position tomer executives in on nordeamarkets.com. expectations for a the early part of 2018. The study highlights the correla- predominantly Nordic It is also about under- tion between operational excellence portfolio. standing how digitalisation and ESG performance (measured In accordance with our strate- and generally new technologies with MSCI ratings) and finds solid gy, the overall risk level and exposure in aff ect their business, their needs and evidence that ESG matters, both to Russia have been taken down. Expo- their expectations for fi nancial services. operational and share price perfor- sure in Russia is currently EUR 3bn, and New business ecosystems are being mance. is evaluated using the same principles shaped in basically all industries, The relative performance of the and process as the rest of the portfolio. replacing the traditional value chain top versus bottom ESG performers mentality. We still off er products and was as much as 40% in 2012–2015. Measuring customer satisfaction services in the traditional way but a Relationships are at the core of our greater emphasis is being put on co- strategy and customer satisfaction is development, not only with a given cus- Focusing on ESG evaluation measured annually by external parties. tomer, but with several customers at a The commitment to including ESG eval- In terms of customer satisfaction time involved in the same ecosystem. uation in Wholesale Banking’s internal Wholesale Banking reached the shared As a fi nancial service provider, we will decision-making operationalises the number one position in the Nordic thus become more integrated into the Code of Conduct and the updated ranking with a notable improvement in industrial and business processes of our Sustain ability Policy. Integrating ESG three countries. The capital markets customers, and their sustainability- risk evaluation into our credit decision - league tables confi rm the leading num- related issues will also become our own making not only mitigates risks, but also ber one position in all relevant Nordic to an even greater extent. emphasises to our customers the capital markets areas. importance of good ESG management and transparent reporting. ESG under- Knowing our customers Nordea Sustainable standing gives us further insight into Financial crime, anti-money laundering, Finance Conference the risks and opportunities our custom- sanctions screening and other up-to- ers face in their businesses. As part of date KYC processes cover all Wholesale In September 2017 the Nordea the climate change position statement, Banking units, and the latest legislation, Sustainable Finance conference we identifi ed the handful of customers such as the fourth Anti-Money Laun- in Stockholm gathered together that we will follow on their transforma- dering (AML) Directive, is incorporated. 170 decision-makers from our core tion away from coal. The evaluation work is supported by customers. We have advanced in ESG risk evalu- new digital assistance with robots that It became clear that sustainability ation according to plan but still have scan various information sources and is high on the strategic agenda in some way to go to realising our high capture relevant input so that the the Nordic region, and that corpo- ambition level. A dedicated centralised experts can focus on analysing the rates and investors are starting to expert team evaluates the ESG risk of data. Wholesale Banking’s governance realise that sustainability is crucial the large corporate customer groups in structure supports insight into fi nancial for long-term operating and finan- all countries including Russia. The work crime issues by introducing non-fi nancial success. is structured by a specifi c ESG evalua- cial risk forums for each division and tion tool that has industry-specifi c also KYC Evaluation Boards that han- questions, and also captures controver- dle, for example, high-risk customers sies. The ESG risk category is now in relevant units. included in credit memorandums. We expect the customers, and not Over 70% of Wholesale Banking only ourselves as their bank, to follow exposure at risk, excluding fi nancial all relevant laws and regulations and institutions and most of shipping that obtain the relevant permits for their will be addressed in 2018, was evaluat- operations. The majority of our custom- ed in 2017 and customers were allocat- ers are headquartered in the Nordic

Nordea Sustainability Report 2017 Business area 24 Wealth Management

Our vision is to be the leading Nordic wealth manager, and to create sustainable returns for our customers, constantly advancing progress in terms of the environment and society. That means integrating sustainability across Wealth Management’s core areas; investment and advisory.

By advising our customers and acting together from offi ces in Stockholm and on their behalf, we can make important Copenhagen. Our Responsible Invest- Awarded ESG process contributions to sustainable economic ment policy in Asset Management is In 2017, Norde a Asset Management growth and prosperity, through capital based on the UN PRI, which commits us received the Capital Finance Inter- allocation, interaction with companies to integrating ESG factors into our national (CFI)’s award for Best ESG and building partnerships. This is not investment analysis, decision-making process in Europe for the fourth only an opportunity, but also part of our processes and ownership policies and year in a row. fi duciary responsibility which, in turn, practices. We have continued to devel- contributes to a greater good. op our Responsible Investment policy in Asset Management to include a stricter screening identifi es the most environ- Sustainable investment and advice position on coal companies and clarifi - mentally and socially responsible com- Integrating relevant and material ESG cation on how we manage companies panies to invest in. As part of the con- issues into the entire scope of Wealth in conflict areas. Also, a number of cept for the Stars funds, we engage Management’s products and advice actions have been taken to increase actively with companies on ESG risks was an important focus area in 2017. customer value. For example, we and opportunities, where meeting with The Nordea Group has developed a launched two new Stars funds – companies and also fi eld trips are key in new infrastructure in which sustainable Swedish Bond Stars and European the assessment of how these risks and advice and investment are managed in Stars. Stars funds have a higher level opportunities are managed. The propri- working groups covering all aspects of responsible investing in their portfo- etary analysis model used in the Stars within Wealth Management. lio management, including proprietary funds was further developed in 2017 The dedicated Responsible Invest- ESG analysis that informs of investment and our involvement in the Sustainable ment team of nine people works selection and decisions. This positive Accounting Standards Board consulta-

Nordea Sustainability Report 2017 Business area Wealth Management 25 tion has been important in further dards within the area. To further encouraging companies to report on enhance the value delivered to our Female leaders in the lead material ESG metrics. customers, we have transformed our In 2017, Nordea Asset Management At Nordea Life & Pension (NLP), we wealth advice to off er a “One-Stop- analysed nearly 11,000 companies launched a responsible investment poli- Shop” with comprehensive legal advice traded publicly across the globe cy with a focus on integration of ESG and inheritance planning across over the last eight years. The results factors and impact invest- markets. showed that, on average, companies ments to reach the target with a female chief executive officer of increasing the over- Active ownership or a female chair of the board of all sustainability We worked actively directors have had a 25% annual- level. Developing throughout the year ised return since 2009, more than ESG rating and EUR with corporate double the 11% delivered by the carbon footprint engagement and MSCI World Index. measures is an stewardship, essential ele- focusing on ment of the 762m issues such as strategy. NLP in the Global Climate climate change, place to systematise their approach to has also pub- corruption, human rights and serious allegations. lished a Stable and Environment human rights and Nordea’s Group Sustainable Finance Pension Sustain- Fund water. During the was elected as the Social Issues Repre- ability declaration year we continued sentative of the Banking Committee in together with a our work with CDP and UNEP FI. We are further increasing responsible investment the Water Europe report transparency by enhancing the report- report. on the pharmaceutical indus- ing on company engagements and vot- We have started to examine our try’s eff ect on water in India. We also ing records. This information will be savings off erings to identify how we can established a new engagement with available at nordea.com. help customers make more sustainable European Financial Roundtable, in choices in the future. As a part of this, which we have a representative in the Digitalisation to create value all our private banking advisors in Swe- core group together with Aviva, HSBC, In Wealth Management we have put den have undergone training on the the EFR Secretary General and the EU digitalisation at the heart of our strate- merits of responsible investment. aff airs manager. In March, Nordea was gy to fundamentally improve our value one of the founders of the Corporate proposition. Initiatives such as robo-ad- Satisfying our customers Human Rights Benchmark. It provides vice and e-branches off er new and Wealth Management customers are in an annual comparative snapshot of the exciting ways to interact with custom- general very satisfi ed with our services, world's largest companies looking at ers, reaching a new generation and pre- as they have been previous years. How- policies, processes and practices in viously untapped segments by off ering ever, as our customers’ satisfaction is a low-fee automated fi nancial advice. top priority for us we would still like to In December 2017, we released our improve further. Successful Stars new robo-advice solution NORA in In general, we are aiming to move The Stars funds had another Sweden. It will be rolled out in other closer to the customer by fully imple- successful year, exhibiting strong countries in the fi rst half of 2018. Anoth- menting initiatives such as e-branches growth as total assets under man- er focus area is robotics, which is revo- which off er around-the-clock service agement (AuM) in the Stars funds lutionising processes by enhancing effi - and allow for flexibility. In Private Bank- grew by 61% in 2017. Swedish Stars ciency in areas such as KYC and product ing, the strategy has been fundamental- was the best performing Swedish development. In our view, digitalisation ly realigned to make the organisation equity fund in 2017 in the market off ers a signifi cant opportunity to pro- more customer-centric. It is doing so by and Emerging Stars is a five-star vide our customers with modern solu- nurturing a culture around service fund according to Morningstar. tions with a clear focus on sustainability, excellence and developing high stan- inclusion and responsibility.

2.2% 86% 5,309 of total assets have of total assets have companies in the portfolio been subject to positive been subject to negative environ mental and/ environ mental and/ We have interacted on or social screening or social screening environmental and social issues with 134 companies = Positive screening Negative screening Analysis aimed at identifying companies with Analysis aimed at identifying companies well-managed ESG risks and opportunities. involved in controversial activities and/or The ambition is to create shareholder value sectors and/or involved in the violation of 2.5% through identifying companies that have international norms. strong capabilities for integrating ESG metrics into business decisions.

Nordea Sustainability Report 2017 Governance 26 Governance

In the last two years, we have implemented a new sustainability governance structure providing a solid foundation that enables developing and anchoring our sustainability strategy and agenda.

The Board of Directors decides on Each business area and group func- responsible for the strategic agenda Nordea’s Code of Conduct and Sustaina- tion is represented in the Sustainability and execution of the sustainability strat- bility Policy and approves the Statutory Committee. The committee prepares egy. Focus is on issues related to our Sustainability Report that is published in sustainability issues related to policies, direct sustaina bility impact, such as the Board of Directors’ Report in the guidelines and strategy, which are sub- how we treat our employees and sup- Annual Report in accordance with the mitted to BEVC for approval. Business pliers, our own emissions, etc. Swedish Annual Accounts Act of 2017. A areas and group functions are responsi- Group Sustainable Finance supports dedicated Board Committee assists the ble for implementing sustainability poli- the business areas in implementing pol- Board of Directors in fulfi lling its over- cies, products and risk management icies and processes in the business, i.e. sight responsibilities in terms of conduct, processes in the business. how to integrate sustaina bility into sustainability, compliance and opera- To enhance progress in certain stra- products and off erings in fi nancing, tions/systems, as well as related frame- tegic sustainability areas, we have investment and advice. works and processes. seven working groups focusing on one From February 2018 the two func- CEO in Group Executive Manage- specifi c sustainability issue each such as tions were merged into one Group Sus- ment decides on the sustainability strat- procurement, community engagement, tainable Finance team. egy including plans, targets and perfor- diversity & inclusion, digitalisation, In 2017 we increased our resources mance indicators. The decision-making fi nancing, investment and advice committed to working with sustainabili- body for sustainability- related matters including tax. The working groups ty, both at group level and in the busi- is the Business Ethics and Values Com- report to the Sustainability Committee. ness areas. For Nordea’s whole gover- mittee (BEVC), chaired by the CEO. We have established two group func- nance structure, please see the Corpo- BEVC decides on Nordea’s values and tions responsible for sustainability – rate Governance Report in the Nordea ethical aspects to be considered in busi- Group Sustainability and Group Sustain- Annual Report 2017. ness decisions and sustainability issues. able Finance. Group Sustainability is

Nordea’s Sustainability Governance

Board of Directors Decides on Code of Conduct and Sustainability Policy and approves Statutory Sustainability Report

Board Committee Assists the board in its oversight concerning sustainability

Group Executive Management CEO decides on sustainability strategy including plans, targets and performance indicators

Business Ethics and Values Committee Decides on Nordea’s values and ethical aspects to be considered in business decisions and sustainability issues that do not require board approval

Sustainability Committee Business Areas and Group Functions Operational sub-committee to BEVC which prepares Responsible for implementing sustainability policies, sustainability issues related to policies and strategy products and related risk management processes

Group Sustainability and Group Sustainable Finance Develops and executes sustainability policies and strategy and supports business areas and group functions in implementation

Nordea Sustainability Report 2017 Governance 27

Managing sustainability-related risks Sustainability can be included as an aspect in any of our risk categories such as credit risk, market risk, operational risk and compliance risk, and managed CASE as part of these risk streams. The Board of Directors bears ultimate responsibility for limiting and monitoring our risk exposures. The key principle for our management of risks is the three lines Supporting Nordic of defence (LoD), with the business areas constituting the fi rst LoD, Group entrepreneurs with dedicated Compliance and Group Risk Manage- ment & Control the second LoD, and Start-up & Growth units Group Internal Audit the third LoD. Failure to meet stakeholders’ expectations on how we are to behave as a sus- Growth companies and new start-ups need fi nancial tainable entity on the fi nancial market services, support and advice from day one. Through close and as a responsible corporate citizen poses a sustainability-related risk. It’s not collaboration and mentoring, Nordea helps these companies just about complying with prevailing to grow and create important networking contacts with laws and regulations, but about acting ethically, which may extend beyond the relevant service providers, equity investors, business angels, law; otherwise, we run the risk of a neg- accelerators and start-up hubs around the world. ative eff ect on our brand. Failure to comply with laws, regulations and ethical standards that regulate Nordea’s opera- Nordea has developed a very flexible both the business angels and the tions in a country, and which could result loan model for start-ups in Finland, start-ups in NordicBAN. in signifi cant fi nancial loss, bad reputa- which includes the active role of pri- After a period of gradually increas- tion, remarks or penalties from authori- vate investors. We combine and tailor ing our activities in the Nordic start-up ties, constitutes a compliance risk. traditional loan products so that they ecosystem, Nordea Finland was fi rst Our stakeholders have identifi ed rep- fi t high-growth situations. Typically, out with launching a dedicated Start- utational risk, risks related to corruption, we combine our partners’ guarantee up & Growth unit with a nationwide climate change and insuffi cient ESG due solutions with junior loan solutions off ering last year in Finland. The unit is diligence processes, amongst others, as and other suitable instruments and specialised in fast-growing companies sustainability-related risks. We agree on create a package that fi ts the custom- as well as in cooperating with private their conclusion and realise that these er's needs and situation. equity investors, large corporates and risks require further analysis and Therefore, our role in cooperating accelerators. Many of Nordea’s large attention. with private investors has become corporate customers have asked the To ensure that we identify our key very important for the ecosystem. Via Nordea Start-up & Growth team to sustainability-related risks in the value our new cooperation with NordicBAN, search for potential acquisitions and chain and also manage them in the Nordic Business Angel Network, the investment opportunities from among most effi cient way, one of our short- mission is to actively connect and the start-up and growth companies that term sustainability goals was to launch introduce business angels on the Nor- suit their growth or innovation needs. a risk assessment framework. This task dic level and match syndication-ready Vesa Riihimäki is Head of Start-up was more comprehensive than we start-ups with an active lead investor. & Growth in Finland. anticipated and the work is still in prog- The Nordic region has tremendous “Our relatively long experience in ress and will continue during 2018. potential in building a tight co-invest- the start-up fi eld and the fact that we ment ecosystem, and Nordea brings currently have 1,300 start-ups with a value via leveraging fi nance solutions loan solution in use solely in Finland, Nordea ranked as one and providing a strong network for give us a strong base to recommend of the world’s most great companies that we strongly sustainable corporations believe in, for venture capital funds, business angels and large corporates.” Nordea Bank AB has ranked among With the success in Finland the Corporate Knights’ 2018 Global other Nordic countries are following 100 Most Sustainable Corporations with similar units being established in in the World. The ranking was Sweden, Denmark and Norway. presented at the World Economic “I am happy to announce that Forum in Davos in January 2018. Nordea’s start-up and growth activi- Global 100 companies represent ties are now ramping up in all the Nor- the top 2% in the world on sustain- dic countries. Our start-up deal flow ability performance. will be highly valuable for Nordic To determine the ranking, investors and our door-opening role to Corporate Knights analyzed 7,425 large Nordic investors will also be companies against global industry valuable for start-ups in all the four peers on a suite of 17 quantitative Nordic countries going forward,” con- key performance indicators. cludes Vesa Riihimäki.

Nordea Sustainability Report 2017 Risk and Compliance 28 Risk and Compliance

Good risk management is a key success factor in the ﬁ nancial services industry. To create value for Nordea’s shareholders and customers, it is important that our risks are under control. Compliance with laws and regulations is essential for Nordea; we want to be a good corporate citizen, ensuring fair treatment of our customers and aiding society in preventing the banking system from being used for illegal activity.

Focusing on controls set by the European Central Bank (ECB) A lesson learned from the “Panama It is fundamental that banks have Banking Supervision (SSM). Eff orts are Papers” was the need to strengthen strong internal controls in place. History ongoing to fully prepare for SSM super- oversight of subsidiaries. Our indepen- has shown multiple examples of the vision in both risk and compliance areas. dent risk function has established clear damaging consequences of weak inter- governance for the oversight of branch- nal controls – ranging from severe loss- Strengthening our internal es and subsidiaries as well as regular es to bankruptcy. control framework and timely reporting by these to Nordea’s independent risk and com- The independent risk function has Nordea’s Chief Risk Offi cer. Similar pliance functions share the important taken signiﬁ cant steps to ensure strong changes have been implemented by purpose to control risks to protect control of risks including notably the independent compliance function. shareholders, customers, employees, strengthening the risk models organisa- Our independent compliance func- taxpayers, etc., from unwanted surpris- tion and governance. Risk modelling tion has implemented a strong operat- es, hence ensuring we run a sustainable activities have been centralised to ing model and we have established a business. These functions have been achieve a consistent and coherent compliance risk policy, covering all substantially strengthened over the last approach to model governance across Nordea staff . The policy outlines princi- couple of years to ensure that we not risk types, creating a centre of expertise ples as well as roles and responsibilities only have the right number of people for modelling and working in close col- in relation to compliance risk. Core com- working with internal controls, but also laboration with key stakeholders and pliance processes have been identiﬁ ed, a high level of expertise. business partners. Risk models are fun- established and documented. Compli- Risk and compliance are top priorities damental to our ability to identify and ance risk groups have also been estab- for Nordea. As a result of the decision to measure risk, and hence to price our lished and address our key compliance relocate the headquarters to Finland, we products. Precise models entail accurate risks across the line organisation and will be moving into another regulatory prices for customers and eff ective man- processes. An example of a core process regime with high standards, in this case agement and control of risk. is our risk assessment process.

Nordea Sustainability Report 2017 Risk and Compliance 29

Assessing risks and controls ture. Rules and regulations provide the actions so that similar events can be A risk and control self-assessment cov- overall framework for how we operate prevented in future. ering both compliance and operational as a bank, and failure to comply there- We have one legal action pending risk is conducted annually and covers with may lead to the authorities impos- during the reporting period regarding the whole Nordea Group. Self-assessing sanctions on us. Our internal anti-competitive behaviour or violations ment data is collected from each busi- group-level directives (including our of antitrust and monopoly legislation. In ness area and group function. Based on Code of Conduct) are reviewed and 2015, the EFTA Surveillance Authority the self-assessment, operational risk updated at least annually and approved (ESA) received a complaint from the offi cers independently monitor and either at the CEO or group board level. Swedish company Trustly, a provider of challenge the identifi ed risks and man- To ensure a consistent approach to e-payment solutions, regarding the agement thereof. In parallel with the risk and compliance training and com- alleged blocking of its ability to provide self-assessment, compliance offi cers munication, a joint risk and compliance its service in Norway. In October 2016, it perform their own independent risk training and culture team has been was announced that ESA has opened assessments based on a set of identifi ed formed. We have also established a gov- proceedings against DNB, Nordea, key regulatory risks. For each identifi ed ernance body to defi ne the training Finance Norway and BankID for sus- risk, the signifi cance of the risk is esti- needed both in the on-boarding of staff pected breaches of the competition mated and controls in place to mitigate as well as in the continuous training of rules in the EEA Agreement. the risk are assessed. If additional miti- each employee to renew their licences to gating actions are required, these are work. Examples of training activities Emphasising personal identifi ed and implemented. include team discussions, e-learning accountability modules and classroom training. Fur- We emphasise personal accountability Combating fi nancial crime risk thermore, as part of strengthening the and if behaviour is observed that is not An example of a key risk is fi nancial independent compliance function, a con- in line with Code of Conduct or corpo- crime, which is a serious threat to the duct risk unit has been established. This rate values, this is addressed and action security and integrity of the global unit is responsible for various conduct is taken. fi nancial system, including Nordea. We and investor protection initiatives and for As an example, the independent risk are committed to preventing Nordea implementing our Code of Conduct. and compliance functions, together with from being used for any illegal activity. Internal Audit, have established a Conse- We have established group-wide fi nan- Licence to Work quence Management Committee. The cial crime policies in order to achieve The Nordea Code of Conduct, anti-brib- committee discusses, evaluates and robust and consistent standards of com- ery and corruption as well as risk and takes actions on inappropriate behaviour pliance. These policies support the compliance awareness are part of or poor risk and compliance perfor- broader customer strategy, values and Nordea’s mandatory training Licence to mance in terms of adjustments to remu- vision, and provide a uniform set of Work. This training is assigned to all neration. Nordea has also a channel fi nancial crime risk management princi- new employees. In 2017, 97% (88%) of through which employees can raise any ples and mandatory standards for all new employees completed the train- concerns they may have anonymously. fi nancial crime prevention throughout ing. All Nordea employees have to the Nordea Group. renew this mandatory training on a reg- Raise Your Concern To control the risk, it is essential that ular basis. In 2016, 93% of all staff com- Nordea’s whistleblowing function Raise we know our customers well. We there- pleted the training. The training was Your Concern was established in 2012. fore perform due diligence both when launched again in late 2017 with dead- It encourages employees to speak up if we on-board new customers, and on an line in February 2018. they have concerns about any miscon- ongoing basis. Furthermore, for custom- Details in scope regarding the above duct or irregularities. This includes any ers assessed as high-risk, enhanced due data is found in note S8. on page 39. action that constitutes a violation of diligence is performed. On the basis of laws or regulations, or of Nordea’s inter- knowing our customers well, we are Learning from past mistakes nal policies, instructions or guidelines. able to perform effi cient screening and It is part of our culture to take owner- Raise Your Concern aims to ensure monitoring activities to detect suspi- ship and learn from past mistakes. our compliance with global and nation- cions of criminal behaviour, which is In 2017, sanctions issued by Financial al legislation and guidelines. It also reported to the police for further Supervisory Authorities (FSA) aff ected includes actions that could cause harm investigation. three companies in the Nordea Group. to Nordea’s business or reputation, or to The Board of Directors is regularly Nordea Bank AB (publ), Finnish Branch the health and security of our employ- updated on risk and compliance mat- received a penalty payment of EUR 1m ees and customers. ters. Monthly risk reports as well as and a public warning from the Finnish In 2017 the possibility to report, both quarterly risk appetite and compliance FSA due to non-compliance with the internally as well as externally, on mis- risk reports are presented to the Group provisions of the Investment Services conduct and irregularities was strength- board. These reports cover the whole Act and the regulations issued by the ened by implementing an electronic Nordea Group and track key risks, con- authority. Nordea Funds Oy was issued reporting channel called WhistleB. trols and recommendations. with an administrative fee of SEK 0.45m The total number of reported cases from the Swedish FSA for late notifi ca- for 2017 is 221. All of these concern Upholding a risk and tion of changes in major shareholdings. employees. Actions, being verbal warn- compliance culture The Luxembourg Financial Supervisory ing, written warning or dismissal, were Nordea’s Code of Conduct and corpo- Authority announced that it had carried out in 48 of the cases. Six of the rate values guide individual behaviour imposed fi nes in the aggregate amount cases were sustainability-related; three at Nordea, and all staff are regularly of EUR 2m on nine supervised entities, concerned fraud and three concerned trained on this topic. Compliance with including Nordea Bank S.A., for breach- AML. No cases regarding corruption or applicable laws and regulations, market es of Luxembourg laws and regulations. bribery were reported during the year. standards and business ethics is a fun- We take these incidents very seriously damental aspect of our corporate cul- indeed and implement corrective

Nordea Sustainability Report 2017 People 30 People

We believe that there will be no business transformation without a human transformation. To fully succeed, we are changing not only our structure and governance as well as our strategy and direction, but also our culture and leadership and our performance and reward strategy.

This huge transformation means a sig- more agile and less hierarchical means We are rethinking our ways of work- nifi cant shift in workforce. Our priority is that we want everyone to step into ing by moving into a more net- on supporting our people and people leadership; leading ourselves, our peers, work-based structure. Inspired by the leaders on this journey, creating a and the work we are responsible for. agile principles, we want to have a sim- high-performance culture, building a Leadership is about unlocking poten- pler and flatter organisation with less future-fi t organisation and equipping tial in ourselves, our teams, Nordea hierarchy, faster decision-making pro- our people with the competences need- and society – guided by new leader- cesses and better communication. And ed for the future. In 2017, we announced ship principles: We Lead From Within, we will provide people with great that we will be signifi cantly fewer peo- We Enable Others, We Serve the opportunities to learn from each other ple in the years to come. We will do our Whole, We Create Sustainable Impact and continuously develop in their roles. utmost to support those who will need and Everything is Learning. To bring to fi nd a new path outside Nordea. We these principles to life, they will be The continuous learning mindset have therefore established a job mobili- embedded in how we recruit, assess, We are transforming the way we per- ty team, dedicated to supporting the develop, reward and promote leaders ceive and engage in learning to rapidly next steps for the people who will leave at Nordea. and effi ciently build the competence Nordea in the years to come. needed for today and tomorrow. In 2017, Partnering for performance we took the fi rst steps towards becom- Leading from heart, purpose and learning ing a continuously learning organisa- and values We want our people to feel tion. A new Learning function headed Our culture invites us to safe, enabled and sup- by a new a Chief Learning Offi cer was laboration fo ol r th lead from the heart, C e c ported to feel owner- created. om m purpose and values o ship of their own We want learning to be integrated as e n g m o – the heart signify- h o contribution, part of our day-to-day roles through it d

w ing the invitation growth and enjoy- coaching and feedback as well as social

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a launched our new pur- r their team individually quarterly team-based performance and pose and values in May and collectively to con- learning dialogues helping teams gain 2017, and more than 7,000 tinuously learn. a deeper understanding of the diff erent people engaged in the develop- In 2017, we also reviewed our dynamics at play in their team. It will ment process. We conducted a value reward strategy. The aim of the reward also help us monitor the progress of our survey, workshops, interviews and strategy is to support Nordea’s ability to transformational journey. It will allow stakeholder focus groups and the col- transform while performing, and real- for more frequent feedback in more lected data was used to form our new ise our group-wide strategic objectives. flexible settings and expand the feed- purpose and four values. Since May, Its aim is to deliver fair, equal and mar- back culture from between people lead- more than 31,000 Nordea people have ket-aligned total remuneration for our er and team member to include the engaged in sessions to discuss and people based on their roles and contri- whole team. adopt the new purpose and values. By bution. Attracting and retaining the living our values of passion, collabora- most capable people globally is central tion, ownership and courage, we can to our reward strategy. Aknowledged gender build an adaptive and resilient culture equality eff orts with a customer-ﬁ rst mindset, which Rethinking our ways of working In 2017, Nordea became one of will put us ahead of our competitors To implement our transformation, we 50 members of the Bloomberg and help us build an adaptive and resil- want to create a simpler structure and Financial Services Gender Equality ient organisation. the future will build on common plat- Index, which recognises companies forms for the entire bank and centres demonstrating dedication to disclo- Empowering our people to of excellence to ensure alignment, sure and best-in-class social policies contribute, grow and enjoy improve quality and speed and facili- and practices in the fields of gender Transforming Nordea requires also tate compliance. Processes will be balance and equality. transforming how we lead – becoming the same for all.

Nordea Sustainability Report 2017 People 31

Focus on equal pay roles, whereby we take job function, All-time-high evaluation In 2017, we launched a working group seniority and geography into of equal opportunities to understand market best practices, consideration. Since 2003 we have asked our people conduct country-specifi c investigations We will therefore initiate a pay how they perceive equal opportunities and take various actions to narrow our benchmarking project across Nordea at Nordea. In 2017 the score reached the gender pay gap. This included review- that will allow us to identify specifi c highest level in 15 years. Both female ing remuneration in our recruitments areas in which we have an equal pay and male employees evaluate equal as well as creating an equality pay pool concern for comparable roles, thereby opportunities higher than in 2016. and participating in the industry-wide enabling us to take appropriate remedi- However, male employees score equal equal pay project “Lika Lön” in Sweden. al action. The pay benchmarking project opportunities signifi cantly higher than We also performed a more in-depth will allow us to disclose more relevant female employees – index 88 vs. 75. analysis to better understand the metrics reflecting gender diff erences in We have succeeded in broadening underlying reasons for the gender pay pay in the 2018 Sustainability Report. the defi nition of diversity, beyond gen- gap. To address the fact that we have der, in our daily practices. People from an uneven representation of women Broadening the defi nition of many parts of the organisation together and men at diff erent levels and areas of diversity and inclusion created practical tools for inclusiveness the bank, we have launched several tal- Setting clear requirements and creating in everyday situations, such as recruit- ent and succession planning initiatives transparency are key factors in our diver- ment, meetings and communication. to promote more women to senior man- sity and inclusion strategy. We track our We initiated employee resource groups agerial positions, which typically qualify progress so that we can focus our eff orts. with a focus on various diversity perfor higher pay. We did not succeed as well as in the spectives, and our people became the While these initiatives have had a previous year with our objective that advisory board to guide us with practi- positive impact on our gender pay gap both genders should always be repre- cal needs within the area of diversity. fi gure, we have chosen not to disclose sented among the fi nal three candi- In 2017, we also continued embed- the fi gure in this year’s report, as it dates when recruiting to managerial ding diversity and inclusion into our reflects a structural imbalance and does positions. We reached 68% in 2017, organisational practices and processes, not present the key aspects of diff erenc- compared to 76% in 2016. However, for example in our training for recruit- es in pay between men and women. We concerning our target for the graduate ers. In 2017, we launched a new Well- believe that, to truly get to the heart of seats, we made progress and reached being at Work survey. It shows that 78% the issue, we need to undertake a more the goal. This year, 44% of our gradu- of our people experience an inclusive meaningful comparison of people’s ates were women and 56% men. climate where everyone, regardless of

Nordea Sustainability Report 2017 People 32

create new and agile methods of imple- Securing employability Engaging in Pride events menting and measuring the progress. for our people The most visible Diversity & Inclu- As we are now accelerating our trans- sion action in 2017 was attending Strengthened support formation, we are in the midst of organ- and sponsoring Pride Stockholm. for speaking up isational changes in terms of creating a We stand up for our belief in We condemn harassment, sexual simpler structure based on shared equality, and attending and spon- harassment, bullying and similar viola- approaches serving the whole of soring the largest Pride festival in tions at Nordea. All our people have the Nordea, transferring parts of our tasks the Nordics is an excellent forum right to be treated with respect, without to Poland, developing robotics solutions for communicating these beliefs. fear of any type of victimisation. for taking over many of the operational Nordea was the only bank that par- In 2017, we strengthened our focus tasks to stay competitive and serving ticipated through several seminars on this area even more, and created our customers digitally, and we are and activities during the week, and new guidelines and support for our working in new ways across the bank. of course by joining the parade. managers. Our reporting structure was This means a shift in how we organ- Nordea also sponsored Copen- improved and additional options to ise and lead the bank and which kind of hagen Pride Week, again showing escalate incidents were created. Our people and competences we are look- that we are an open, tolerant and systems allow any employee to report ing for now and in the future. It also inclusive bank where it’s okay to be incidents openly or anonymously. Fur- means that many of us will need to who you are. Also Nordea’s ATMs thermore, we have reviewed our pro- build new competences and adapt to along the parade route were dec- cesses to search deeper for potential new roles. We will continue to invest in orated and renamed “gAyTMs” for risks of discrimination of any kind, and building the capabilities we need in the the day’s event. will continue to keep doing so. future, and we will do our utmost to We welcome the #metoo movement support those who will need to ﬁ nd a and have used the increased focus to new path outside Nordea for sustain- gender, age, tenure and education, can create more awareness around our own able employment. contribute to our development. How- systems and processes. We believe that In 2017, we built a common approach ever, our leaders rate the inclusive this focus can give us added value and to job mobility to take good care of the approach at a higher level than our opportunities to improve our working people aff ected by our transformation. employees. climate and our performance, and we We established a job mobility team to Going forward, we will continue to encourage our people to speak up if off er as much choice and support as further increase our commitment to they notice situations that are unaccept- possible in developing new competenc- diversity and inclusion as an important able in the workplace. Our Code of Con- es to improve the probability of ﬁ nding part of our cultural transformation, and duct and our values fully support this. another job within or outside of Nordea.

Employee training 2017 2016 Number of hours 465,811 404,366 79.4% Average number of hours/ Share of employees covered by employee 14.0 11.6 collective bargaining agreements

Number of employees as at 31 December 2017

Men Women Total

Nordea Group 15,630 17,540 33,170 Development of employee perception that Nordea gives Permanent contract 14,756 16,532 31,288 equal opportunities to female -full-time 14,336 14,944 29,280 and male employees, Index -part-time 420 1,588 2,008 Temporary contract 874 1,008 1,882 81

Composition of governance bodies as at 31 December 2017, %

Men Wo men Age <30 Age 30–50 Age >50 Board of Directors 5 4 2 7 Group Executive 82 64 68 Managers

People leaders 2,233 1,514 113 2,459 1175 2003 2005 2007 2009 2011 2013 2015 2017 Employees 13,389 16,024 6,297 14,396 8720

People leaders refers to managers.

Nordea Sustainability Report 2017 People 33

We also ensure that we recruit responsibly, so we do not let anyone go if we have a role that fi ts. This phase of our transformation also marks a shift in how we collaborate with our union partners at Nordea. We CASE have embraced a more collaborative and transparent approach whereby we involve our union partners earlier to be able to co-create sustainable solutions for people and society. Empowering customers A healthy working environment in digital corners A sustainable work-life balance is a prerequisite for great performance. And as In an increasingly digitalised world, many of us use a responsible employer, it is important for us to provide an inclusive and smartphones and tablets for conducting banking business, healthy working environment that will shopping online, obtaining medical advice, etc. For some provide the best conditions for each individual. people, however, it’s diffi cult to make the digital transition, We believe that when our people feel impeding customers’ use of our digital solutions that enable good at work, we can best create a culture in which our people can flourish better convenience and access to the bank. and thrive, and we have full focus on continuously improving the physical, To assist such customers, Nordea has show that customers have been able to social and organisational work environ- launched “digital corners” at branches conduct 89% of their banking errands ment that promotes work-life balance in all markets. The concept was fi rst when visiting the branch and the digi- and health. Our sickness rate (3.38%) piloted at six branches in Denmark. tal corners. Our surveys also show that has remained similar to that of 2016 Now, six more branches – in Sweden, four out of fi ve customers who have (3.65%). Norway and Finland – have intro- visited the digital corner are comfort- The new Well-being at Work survey, duced digital corners and more will able with using digital solutions on gives us valuable information about our come. By the end of 2018, we expect their own going forward. peoples’ perceived work situation. The to have installed digital corners in Morten Olsen is Head of Branch survey will help us take a fi rm grip on approximately 15% of our branch Network and ATM/Cash development measuring violence and threats, bully- locations. at Nordea. ing, discrimination, harassment and A digital corner is a dedicated area “Many customers say that their sexual harassment with regards to sex, in the branch that is equipped with dig- experience was very good, and that gender identity or expression, sexual ital devices and wifi that customers can they learned of new possibilities. In our orientation, ethnicity, religion, abili- use, either by themselves or guided by view, digital corners are a good way of ty-variations, age, or other grounds. a staff member. The purpose of digital creating value for our customers. They According to the results of the fi rst sur- corners is to promote our digital solu- are learning and becoming more vey, 4% of those who answered (69% tions and to show our customers how knowledgeable, making them more of our people) have experienced some to use them, thus enhancing accessibil- comfortable with capitalising on the kind of discrimination. 82% of them ity to the bank. digital opportunities off ered by both have occurred internally and 18% are Customers’ perception of digital cor- Nordea and society in general. It helps customer-related. Gender and age are ners and the assistance of our front- prepare them to meet the new digital perceived as the characteristics that are end staff is very positive. Our surveys era,” says Morten Olsen. most exposed to such actions. For details regarding disclosure of data related to our employees, see note S9. on page 39.

Nordea Sustainability Report 2017 Sustainability notes 34 Sustainability notes

35 About this report 35 S1. Materiality analysis 36 S2. Stakeholder engagement 36 S3. Climate 37 S4. Suppliers 38 S5. Tax 38 S6. Value creation 38 S7. Responsible business 39 S8. Compliance 39 S9. People 40 S10. Other disclosures

Nordea Sustainability Report 2017 Sustainability notes 35

About this report The transaction closed on 1 October 2017 when both banks combined their business operations. Due to the change in organisational structure, data regarding operations now part Nordea’s Sustainability Report 2017 has been prepared in of Luminor is not included in this Sustainability Report. accordance with GRI G4, core level and in accordance with relevant parts of GRI G4 Financial Services Sector Disclosures. Similar to the fi nancial statements, this report covers Nordea Bank AB and all its subsidiaries unless otherwise stated. S1. Materiality analysis We report our sustainability performance on an annual basis. The Sustainability Report 2017 refers to the period 1 January to To eff ectively identify and prioritise key sustainable aspects, 31 December 2017, i.e. Nordea’s fi nancial year. The previous we regularly conduct a materiality analysis based on internal report covered our fi nancial year 2016 and was published in and external dialogues. February 2017. When performing the materiality analysis, we strive to The report has been subject to third-party assurance by PwC. engage as many stakeholders as possible, identifi ed based on The assurance statement can be found on page 46. their relation to Nordea, as well as the fi nancial sector at large. Nordea’s Sustainability Report 2017 is our Communication on Our most recent materiality analysis was conducted in 2016. Progress (COP) submission to the UN Global Compact, of which In 2017, we upgraded our sustainability approach and started Nordea has been a participant since 2004. It also partly fulfi ls to develop a long-term sustainability roadmap. Based on our the reporting requirements of the Equator Principles (EP), which roadmap, we will renew our materiality analysis in 2018. This Nordea endorsed in 2007. For full EP reporting, see Nordea will ensure that we continue to focus on the sustainability Equator Principles Reporting at nordea.com. aspects most relevant to our business, from an impact per- Data in the report has been gathered from all business areas spective as well as from a value creation perspective. and group functions in all countries, with some exceptions due In 2016 we conducted stakeholder dialogues with eight key to availability of reliable data due to insuffi cient reporting sys- stakeholder groups. The input provided by the identifi ed key tems. This is indicated in conjunction with presented data where stakeholders was either direct or indirect. Direct input means we also present restatements. a dialogue held through forums, surveys and interviews and The Sustainability Report is divided into two sections. In the indirect input refers to a desktop analysis of reports, publica- fi rst section, pages 4–33, we tell our sustainability story. In the second section, the sustainability notes on pages 34–45, supple- tions, articles, other published content and meetings. To iden- mentary information is provided regarding disclosures in the tify the material aspects, the dialogues focused on Nordea’s front section, as well as all data and information regarding the sustainability performance, risks, opportunities, communica- fulfi lment of GRI G4 and the GRI Index. We also report here on tion and governance. In total 176 stakeholders participated in limitations in scope and omission statements according to GRI, the dialogue and shared their perspective on which sustain- where relevant. ability aspects they deem important and what they as stake- In August 2016, Nordea Bank AB (publ) and DNB Bank holders expect of Nordea. The result from the dialogues and ASA entered into an agreement to combine their operations the desktop analysis were coupled with internal factors such in Estonia, Latvia and Lithuania in order to create a leading as Nordea’s strategy, targets and performance. This broad independent fi nancial entity in the Baltics – Luminor. mapping enabled Nordea to determine which aspects are

Results from materiality analysis shown in pyramid form

Trust and credibility-building Trust aspects. 1. Commitment from the Board and GEM on sustanability 2. Transparent and credible communication externally & internally 3. Consequent responsible investment practices

Business-critical areas that Signiﬁ cant 4. Climate change knowledge and preparedness are prerequisites for trust and 5. KPI follow-up on targets & actions credibility-building aspects. 6. Systemised ESG screening 7. Clear governance of sustainability & aligned compliance process 8. Implement responsible lending practices

Issues that must be Base 9. Training and competence development addressed to reach 10. Common set of ethical values elementary level. 11. Transparent tax management 12. Responsible value chain (suppliers, partners & associates) 13. Increase employee diversity 14. Digitalisation 15. Proactive anti-corruption management 16. Anti-money laundering practices 17. Ethical & responsible advisory 18. Community involvement

Nordea Sustainability Report 2017 Sustainability notes 36 material for the organisation and to set our short-term sustainability goals that were to be addressed during 2017. S2. Stakeholder engagement The result of the materiality analysis was illustrated in a position pyramid, see previous page. As shown, commitment In 2017 we revised the stakeholder analysis performed in 2016 from the Board and GEM on sustainability, transparency and and excluded social media as a stakeholder group based on communication, and responsible investment were the most that social media is a channel through which we engage with valued material aspects, closely followed by aspects such as our stakeholders, not a stakeholder itself. We added suppliers climate change and governance. Another important outcome as a key stakeholder group given the signifi cant size of our of the materiality analysis is our renewed and strengthened annual spend. understanding of sustainability risks that are relevant to In 2017, we engaged in dialogues in diff erent ways with all Nordea. The stakeholders have identifi ed reputational risk, our key stakeholders. We believe stakeholder dialogues are a risks related to corruption, climate change and insuffi cient good way of collecting valuable input for our sustainability ESG due diligence processes, amongst others, as risks requir- agenda. Issues raised in these dialogues, as shown in the ing further analysis and attention and the driver for us to table below, have been taken into consideration when writing launch a risk assessment framework. this report. One overarching conclusion of the materiality analysis is that both internal and external stakeholders are very interest- Stakeholder Type of dialogue/channel Main aspects ed in sustainability, and eager to contribute to Nordea’s sus- Employees Well-being at work survey Health and well-being tainability work. Our employees want to learn more about Culture carpet conversations Culture transformation sustainability and consistently work to strengthen Nordea as Manage- GEM Sustainability Policy a sustainable fi nancial entity. All identifi ed material aspects ment BEVC Sustainability roadmap are relevant for Nordea’s internal operations under the limita- SC Climate position statement tions of contracts, agreements and/or employment. The Continous dialogues Sustainability risks Short-term goals material aspects identifi ed are controlled by Nordea, and thus Sustainability Report no aspect is relevant solely from an external perspective. Board of Meetings Sustainability Policy In 2017, we revised the materiality analysis performed in Directors Sustainability risks 2016 with internal stakeholders and with input from our con- Short-term goals tinuous stakeholder dialogues. No changes have been made Sustainability Report to our 18 material aspects but we have made some changes Customers Customer satisfaction Decreasing customer to which indicators to report on in order to properly cover the surveys satisfaction material aspects. We have added 13 indicators and at the Net Promotor Score Sustainable business same time deleted three indicators. Individual customer solutions, e.g. green bonds meetings Change of domicile • To meet the increased demands globally on transparency Customer contact centre Sustainability reporting regarding tax, we have decided to revert to reporting tax in Round table discussions the same way as we did for 2015 and 2014. We will disclose Owners Annual General Meeting Well-being (sick leave) taxes paid by country and per tax type. This disclosure will Meeting with international Climate-related issues not be added as a GRI Indicator but as a data point. investors Investor questionnaires • Energy intensity (EN5) has been added since we work to improve the energy effi ciency of our buildings which we Suppliers Qualifying questionnaire Content of Nordea Supplier think is best shown as a ratio. Supplier audits Sustainability Policy Individual dialogues Adherence to UN Global • Four indicators regarding supplier assessment (EN33, Compact HR11, SO9, SO10) have been added in order to cover all Regulators Peer group meetings with Climate-related risks in aspects of our Supplier Code of Conduct which is based on FSA and the Swedish lending portfolios (TCFD) UN Global Compact’s ten principles (environment, labour, government human rights and anti-corruption) and to disclose our sus- NGOs CEO Round table Increased transparency tainable procurement process in a more consistent and Individual NGO meetings regarding impact on transparent way. companies • Seven indicators referring to our Code of Conduct (EN29, Proactivity EN34, LA16, HR3, HR12, SO5 and SO7) have been included Media Interviews Responsible investment to enhance transparency for the report. Press releases Supply chain management • Coverage of benefi t plan obligations was only partly Change of domicile reported in the Sustainability Report 2016. Retirement benefi t obligations are reported in the Annual Report in accordance with legal requirements, and we have therefore chosen not to disclose coverage of benefi t plan obligation in S3. Climate the Sustainability Report in accordance with GRI. Hence EC3 is not reported this year. To reduce the carbon footprint from our own activities, we • Financial assistance received from government was only must take steps to mitigate contribution to carbon emissions, partly reported last year and was a way of disclosing our and in our operations we have committed to being a car- tax contributions which will be covered by our tax report- bon-neutral company. This ambition is visible in three diff ering this year. Hence, EC4 is not reported this year. ent ways. • The indicator regarding operations assessed for corruption First, we strive to reduce emissions generated from our risks (SO3) was only partly reported last year and data direct operations. New travel guidelines, printing policy, reported from the reporting BAs (two out of four) was not waste reduction, digital subscriptions and a reduction in possible to compare. Instead, we disclose our work with paper documentation sent to customers are examples of risk assessments on a more general level on pages 28–29. ongoing activities to reduce emissions.

Nordea Sustainability Report 2017 Sustainability notes 37

Second, we ensure that energy used in our buildings is years shall be made with caution. The reason for the change renewable. Since 2011, we have purchased 100% renewable of scope for 2017 is due to limitations in the data collection electricity through Guarantees of Origin equal to our electricity process. consumption in the Nordic region, extending the commitment Greenhouse gas emission intensity (EN18) is calculated as over the years to include our operations in Poland and Russia total CO2e emissions in relation to total operating income for too. CO2e emissions from electricity in the table below is our the Nordea Group. net emissions, i.e. after buying Guarantees of Origin. We do We recognise we still have certain challenges related to have a challenge in terms of achieving signifi cant energy reporting our climate impact. While collecting data from our reductions in our larger Nordic offi ces. They are built to state- larger offi ces is a fairly straightforward process, data from our of-the-art construction standards and based on stringent envi- branch network can be far more complex as we lease spaces ronmental requirements set by Nordea as long-term leasehold- within larger buildings and therefore our energy usage is ers. Many of our Nordic premises are already LEED certifi ed. often combined with that of other companies. This is a situa- Third, for the remaining unavoidable emissions in 2017 we tion we acknowledge but one which is diffi cult for us to fully continued with the off setting activities we have carried out remedy due to the nature of our branch network set-up. since 2015. The combination of measures ensures that Nordea has a programme for being CarbonNeutral® certifi ed in line with The CarbonNeutral Protocol. S4. Suppliers

Climate impact 2017 2016 Nordea has approximately 19,000 suppliers in total. 52% of Total energy consumption (MWh) 132,933 137,506 them are suppliers with which we interacted multiple times in 2017. 48% of them are suppliers we interacted with only once -electricity 95,434 97,929 in 2017. -heating 32,266 33,618 The number of contracted suppliers in our supply chain -district cooling 5,233 5,958 changed from 700 in 2016 to 1,200 for 2017. The explanation Energy intensity (MWh/EURm of total for this is that we worked to consolidate our contract data in operating income) 14.0 13.9 Nordea in 2017, providing us with a more comprehensive number of our contracts. Total CO2e emissions (tonnes) 22,738 17,033 The percentage of new contracted suppliers that were -diesel generators (scope 1) 51 48 screened for sustainability issues is calculated based on the 165 -electricity, heating, district cooling (scope 2) 3,187 3,409 new suppliers that were registered in our systems in 2017. -business travel (scope 3) 19,500 13,576 The indicators EN33, LA15, HR11 and SO10 are not reported as required by GRI G4. First, we don't disclose what type of CO2e emission intensity (tonnes/EURm of total operating income) 2.4 1.7 sustainability impact we have identifi ed in our supply chain. Second, we only report the total number, and not the percent- All electricity fi gures for 2016 in the climate impact table above age, of suppliers identifi ed as having signifi cant actual and have been restated due to the availability of more accurate potential negative sustainability impacts with which improve- electricity data directly from our electricity portfolio manager. ments were agreed upon as a result of assessment. We have also been able to include previously unavailable heat- Our third-party risk assessment system that was men- ing and cooling data for headquarter buildings in Sweden. We tioned in the 2016 Sustainability Report was not implemented estimate that the data covers approximately 90% of Nordea’s in 2017 but will be in 2018. total energy consumption and CO2e emissions. We are constantly working to develop our processes with We report energy consumption in MWh instead of in GJ regards to sustainable procurement and aim to be able to as required by GRI G4 regarding EN3. All electricity is renew- include more comprehensive data in the near future. able. Heating and district cooling is a mix of renewable and non-renewable. Energy consumption data covers Denmark, Finland, Nor- way, Sweden, Estonia, Latvia, Lithuania, Poland and Russia. The Baltic data only covers the fi rst and second quarters of 2017 as these were subsumed into Luminor Bank during the latter half of 2017. In 2016, data from international offi ces were included but we have not been able to compile that data this year. Energy intensity (EN5) is calculated as total energy consumption in relation to total operating income for the Nordea Group. We report scope 1–3 emissions according to GHG Protocol. Our scope 1 emissions stem from diesel generators for business continuity which must be tested on a regular basis to ensure they will function in the event of an emergency out- age. The conversion calculation is based on the latest DEFRA emissions factors. For 2017, CO2e emissions from business travel include air travel for our operations in Denmark, Finland, Norway and Sweden and rail travel for our operations in Sweden while the fi gure for 2016 included all countries of operation and air travel, rail travel and car travel. Hence, comparison between the

Nordea Sustainability Report 2017 Sustainability notes 38

S5. Tax The total carbon emissions saved for one person from switching from an index fund tracking MSCI Emerging Mar- We are a substantial corporate income tax payer in our main kets to Nordea Emerging Stars assuming a monthly savings countries of operation – Denmark, Finland, Norway and Swe- plan of SEK 2,000 per person per year for a period of 42 den – and we also pay social security contributions and bank years (average working life period) with a yearly average levies in the countries where we operate. Local corporate tax annual return of 9.30%, is 3,672.183 tonnes CO2. A round trip payments will not be impacted by the transfer of our head- Stockholm-Madrid by airplane emits 0.4418 tonnes CO2 per quarters to Finland. Statutory tax rates, contributions and lev- person according to ICAO Emission Calculator. This gives us ies vary in our countries of operation, as does the size of 3,672.183/0.4418=8,312 round trips. Nordea’s business operations in each country. The total In Finland we have 2,500 start-ups and growth compa- amount of tax paid in each country is determined by a combi- nies as our customers. Approximately half of them, i.e. nation of these variables. Corporate income tax includes cur- 1,300, have a loan solution in use today which are the ones rent taxes booked as an expense for the year and adjustments included in the model. The ﬁ gure is currently not possible to the previous year’s current taxes. to gather on a Nordic level.

Tax payments (EURm) 31 Dec 2017 31 Dec 2016 S7. Responsible business Total 1,728 1,588 The monetary value of products and services designed to By country deliver a specifi c social benefi t (FS7) covers Personal Bank- -Denmark 422 387 ing. The monetary value of products and services designed to -Finland 261 291 deliver a specifi c environmental benefi t (FS8) covers Whole- -Norway 284 328 sale Banking and Wealth Management. Commercial and Business Banking does not develop products itself but medi- -Sweden 585 405 ates products developed in other business areas. -Others 176 177 Data regarding companies held in Nordea’s portfolio with which we have interacted on social or environmental issues By tax type (FS10) are reported diff erently for the business areas for -Corporate income tax 1,017 1,015 which the indicator is relevant and not as a percentage as -Social security fees 489 429 prescribed by GRI G4. Personal Banking does not report on this indicator. Commercial and Business Banking has more than -Bank levy 222 144 300,000 unique customer advisor meetings per year and the content of those varies but includes sustainability issues if that is relevant for the customer. The ambition for 2018 is to focus S6. Value creation further on interacting with as many customers as possible regarding sustainability issues and to also use our digital chan- 2017 is the fi rst year for which we try to illustrate the value we nels to raise awareness about environmental and social issues. create in a model. The model is divided into four sections; Wholesale Banking discusses sustainability issues as an inte- Resources, Our business, Results and Impact, and will be gral part of the customer relationship and does not keep track developed further each year. The model is based on a number of it separately. The number of meetings focusing on green of assumptions, calculations, estimations and limitations fi nancing increased in 2017. Wealth Management reports the which are found below, divided into the four sections. Deci- number of companies in the portfolio with which Asset Man- sions based on the model should therefore be made with agement had interaction in the form of meetings, calls, fi eld considerable caution. visits, etc. regarding ESG matters in 2017 as an absolute number (134) and as a share (2.5%) of the total number of compa- • Resources: Figures can be found in Nordea’s Annual nies (5,309). The total number of companies consists of all Report 2017. Asset Management’s holdings in individual companies. • Results: Reported fi gures can be found in other sections The number of assets subject to positive and/or negative of this Sustainability Report and in Nordea’s Annual environmental and/or social screening (FS11) is only reported Report 2017. by Wealth Management. Total AuM for Asset Management Tax contribution consists of corporate income taxes (AM) within Wealth Management is EUR 224bn for 2017. and bank levies. Assets subject to positive screening covers 2.2% and is calcu- Data regarding carbon emissions from Global Climate lated as share of total AuM for AM. Assets subject to negative and Environment Fund provides a historical picture of how screening covers AuM in funds and discretionary mandates much CO2 the companies invested in released during the and is calculated as a share of total AuM for AM. The increase past twelve months. The measure reflects the emissions in in share of negative screened assets, from 71% to 86% relation to the revenue that corresponds to the fund’s own- between 2016 and 2017, is mainly due to the fact that this ership interest in the companies. The measure is reported year includes AuM in discretionary mandates where custom- as tonnes of CO2 per million in sales (USD) and is updated ers have chosen their portfolios to be subject to negative monthly. The fi gure was published in January 2018. The screening. calculations are not comprehensive and indirect emissions Personal Banking is the only business area that reports on are not covered. Therefore, it is important to see this as initiatives to improve access to fi nancial services for disad- indicative information about the impact of the Global Cli- vantaged people (FS14). The reason for this is that it is in this mate and Environment Fund. business area where the greatest impact of such initiatives is • Impact: The number of fi rst-time home buyers is calculat- found, and where tracking is possible. ed on all new household loans that were granted by Nordea in 2017. Criteria have been set whereby only customers below 35 years of age are included in the selection. All Nordic countries are included.

Nordea Sustainability Report 2017 Sustainability notes 39

S8. Compliance In 2017, 79.4% of our employees were covered by collective bargaining agreements. This fi gure is valid for the Nordic countries. In 2016 we disclosed the percentage of Nordea Data regarding the mandatory training Licence to Work is our employees covered by alternative agreements of equal or disclosure on indicator SO4 since that training includes our better standard than the collective bargaining agreements. anti-corruption policies and procedures. We report the num- This fi gure is not disclosed for 2017 due to new limitations in ber of employees who have completed their Licence to Work the data collection process. training as a percentage of the total workforce, which Our employee turnover rate for 2017 was 8.1%. We do not includes all employees regardless of region and employee report on LA1 according to the requirements in GRI G4. We category, hence not specifi ed in accordance with the require- report the employee turnover rate according to the following ments for SO4 in GRI G4. The training Licence to Work is only defi nition: Number of permanent FTEs who have left Nordea for employees, hence no business partners have been trained on own request divided by average number of FTEs within a in our anti-corruption policies and procedures. However, our chosen period. We do not report employee turnover in abso- large suppliers are covered by the Nordea Supplier Sustain- lute numbers, by gender or by age group. We do not report on ability Policy in which adherence to anti-corruption as stated new hires as we do not have that number for the entire Group. in UN Global Compact is a requirement. LA6 covers sick leave, as we deem that to be most relevant The number of grievances regarding environmental impact for Nordea to report on due to the nature of our business. We (EN34), labour rights impact (LA16) and human rights impact don’t report injury, injury rate, occupational diseases rate, lost (HR12) is related to the Nordea Code of Conduct. We monitor day rate, absentee rate and work-related fatalities in accor- breaches of our Code of Conduct and other irregularites via dance with requirements in GRI G4. We have changed the way our whistleblowing system. We have not yet been able to sys- we report on sick leave 2017 compared to 2016. In 2016 we tematically categorise the breaches to fully correlate with the reported it as total number of days employees were absent content of our Code of Conduct. This year we cannot there- from work. For 2017, we report it as the total number of sick- fore disclose the number of breaches in relation to the three leave days divided by total number of working days. We have indicators above, and we therefore cannot report the three restated the fi gure for 2016 to be comparable to 2017. aforementioned indicators as required by GRI G4. Our ambi- The number of training hours (LA9) covers all training tion is to be able to do so in the near future. (e-learning, classroom and online courses) initiated at Group During the year Nordea was not charged any signifi cant level, such as e.g. Licence to Work. All Nordea countries are fi nes or non-monetary sanctions for non-compliance with included. It is not possible to split data into employee catego- environmental laws and regulations (EN29). ry or gender as required by GRI G4. The number of hours for local training sessions, which are extensive in a large organisation like Nordea, is not registered centrally and is thus not S9. People possible to track and report. Disclosure on composition of governance bodies (LA12) has Employee-related data is disclosed as headcounts in this Sus- been changed to enhance readability and understanding of the tainability Report which is diff erent from the Nordea Annual reported fi gures and now only contains four categories in com- Report in which data is disclosed as FTE (full-time equiva- parison to eight categories in the Sustainability Report 2016. lents). However, employee turnover rate is based on FTE. This year we have chosen not to disclose the salary ratio women to men (LA13) as it reflects a structural imbalance Number of and does not reveal the key aspects of diff erences in pay employees between men and women. We believe that to truly get to the by country of ope ration 2017 2016 core of the issue, we need to undertake a more meaningful comparison of people’s roles where we take into consider- Men Women Total Men Women Total ation job function, seniority and geography. Nordea Group 15,630 17,540 33,170 15,888 18,946 34,834 Discrimination (HR3) is reported as a percentage of how Sweden 3,866 4,288 8,154 3,811 4,319 8,130 many of the respondents to the well-being survey experi- Denmark 5,413 4,542 9,955 5,290 4,491 9,781 enced any form av discrimination or harrassment at any point in time and not specifi cally in 2017, and is therefore not Norway 1,736 1,565 3,301 1,767 1,622 3,389 reported in accordance with GRI G4 requirements. Finland 2,642 5,013 7,655 2,567 5,342 7,909 Estonia 41 121 162 125 529 654

Poland 1,284 1,250 2,534 884 974 1,858

Russia 165 371 536 272 610 882

International 483 390 873 1,172 1,059 2,231 offi ces

Nordea Sustainability Report 2017 Sustainability notes 40

S10. Other disclosures Memberships of associations Nordea is member of a number of associations, see examples in the table below. Besides holding a position as a board External charters and initiatives signed member, we also often particpate in working groups and As the largest fi nancial services group in the Nordic region, committees. we seek to encourage best practice through active participa- tion in international initiatives. See the table below for some Association/Forum Type of engagement examples. Swedish Bankers’ Association Board member Finance Denmark Board member External charters, principles and other initatives FFI - Federation of Finnish Board member CDP Financial Services Nordea is a signatory to the CDP, a project that aims to collect and share information on greenhouse gas emissions and climate change strategies. Finance Norway Board member The CDP is a cooperation arrangement between 655 institutional European Banking Federation Nordea is represented via the local investors with a combined asset holding of USD 78 trillion. We use the bankers’ associations who are database information in our ESG analysis. members. Equator Principles GFMA - Global Financial Board members Nordea was the fi rst Nordic bank to adopt the Equator Principles, Markets Association endorsing them in 2007. It is a set of guidelines on how to prevent, manage and mitigate environmental and social risks in project fi nancing. EFR - European Financial Member The Equator Principles apply globally to projects across all sectors, Roundtable where total project capital costs exceed USD 10m and the project is assessed to have a potential adverse social or environmental impact. EBG - European Banking Group Member However, the long-term trend to reduce project fi nance activities has AFME - Association for Financial Member continued and no new Equator Principles transactions were signed by Markets in Europe Nordea in 2017. Swedish Securities Dealers’ Board member Sustainable Investment Forums Association Nordea actively participates in local sustainable investment forums – the so-called SIFs – which are independent national forums that FEAM Forum for European Asset Member promote responsible investment. Nordea became a member of SWESIF Managers in 2008 and DANSIF in 2010. Furthermore, we were a founding member EFAMA - European Fund and Board member of FINSIF launched in June 2010 and NORSIF launched in February 2013. Asset Management Association The Montreal Carbon Pledge Nordea signed the Montreal Pledge in 2014 as one of the fi rst signatories. The Pledge commits us to disclose the carbon footprints of Product and service information requirements our equity funds. As a responsible bank, we are bound to guide our customers UNEP FI to sound economic choices. All our customers, both private Nordea signed the UN Environmental Programme Finance Initiative and corporate, should be accurately informed before doing (UNEP FI) in 1994. UNEP FI is a partnership between United Nations business. Environmental Programme and the global fi nancial sector created in the In Personal Banking our product approval process ensures wake of the 1992 Earth Summit with a mission to promote sustainable fi nance. More than 200 fi nancial institutions, including banks, insurers, and that relevant rules and regulations are followed and that we investors, work with UNEP FI to understand today’s environmental, social state the correct required product information in the terms and governance challenges, why they matter to fi nance, and how to and conditions. Our terms and conditions for existing prod- actively participate in addressing them. ucts are revised on a continuous basis. UNEP Statement of Commitment by Financial Institutions on Sustainable Development represents the backbone of the initiative. By signing up to Commercial and Business Banking follows the Markets in the statement, fi nancial institutions openly recognize the role of the Financial Instruments Directive (MiFID) & MiFID II, which cov- fi nancial services sector in making our economy and lifestyles sustainable ers 100% of customers trading in fi nancial instruments. and commit to the integration of environmental and social considerations Wholesale Banking follows national legislation, MiFID pro- into all aspects of their operations. cesses as well as Products and Risk Descriptions to inform UNGC customers of risks and characteristics of our products. This The United Nations Global Compact (UNGC) was initiated by the UN to applies to 100% of our signifi cant products. encourage businesses to align their strategies and operations with ten universal principles building on UN conventions in the fi elds of human In Wealth Management, we follow the Ethical Principles rights, labour standards, environment and anti-corruption. Nordea for Marketing of Funds, ensuring that we communicate trans- became a signatory to the UN Global Compact in 2002, fi rst through parently and accurately to our customers, done annually for Nordea Bank Finland. From December 2004 the coverage was extended all existing customers. to the whole Group as the signatory role was transferred to Nordea Bank AB (publ.). Customer satisfaction surveys UNGP For three of our business areas, Personal Banking, Commercial United Nations Guiding Principles on Business and Human Rights (UNGP) from 2011 is the fi rst global standard for preventing and and Business Banking and Wealth Management, we measure addressing the risk of adverse impacts on human rights linked to overall customer satisfaction in our Customer Proposition Sur- business activity, and continue to provide the internationally accepted vey every year. For Wealth Management, the result of custom- framework for enhancing standards and practice regarding business er surveys refers only to Private Banking customers. and human rights. In Wholesale Banking, customer satisfaction is measured UN PRI annually by external service providers with extensive ques- As one of the fi rst major banks in the Nordic countries, Nordea signed tionnaires and interviews. the United Nations Principles for Responsible Investment (UN PRI) in 2007. At the same time, we also launched our own policy for responsible investment. The policy shows how we adhere to these principles, report on our activities and progress in implementing the PRI. The report is public and available on the PRI website.

Nordea Sustainability Report 2017 Sustainability notes 41

Complaints regarding breaches of customer privacy and losses of customer data In 2017 there were 110,398 (141,619) complaints registered in the Nordic countries for the business areas Personal Banking and Commercial and Business Banking. The categorisation in the system does not allow us to identify which complaints that concerns breaches of customer privacy. In Wholesale Banking no general complaints or substantiated complaints regarding breaches of privacy were reported in 2017. In Wealth Management, no substantiated complaints concerning breaches of customer privacy were reported in 2017. In total six leaks, or possible leaks, of customer data were reported during the year.

Nordea Sustainability Report 2017 GRI Index 42 GRI Index

GRI Indicator Name Page UNGC Omission statement

General standard disclosures

Strategy and analysis G4–1 Statement from the CEO 4–5

Organisational proﬁ le G4-3 Name of the organisation 6 G4-4 Primary brands, products and services 6, 16-17 G4-5 Location of headquarters 6 G4-6 Number of countries and locations of operations 6-7 G4-7 Nature of ownership and legal form 6 G4-8 Markets served 6, 16-17 G4-9 Scale of the organisation 6 G4-10 Total workforce by employment type, contract, region and gender 6, 32, 39 Principle 6 G4-11 Employees covered by collective bargaining agreements 39 Principle 3 G4-12 Description of supply chain 13, 37 G4-13 Signiﬁ cant organisational changes during the reporting period 35 G4-14 Whether and how the precautionary approach or principle is addressed by the 12 Principle 7 organisation G4-15 External charters and initiatives signed 8, 40 G4-16 Membership of associations 40

Identifi ed material aspects and boundries G4-17 Entities included in the fi nancial statements 35 G4-18 Process for defi ning report content 8, 35-36 G4-19 Material aspects identifi ed in the process for defi ning report content 35 G4-20 Aspect boundaries within the organisation 35-36 G4-21 Aspect boundaries outside of the organisation 35-36 G4-22 Eff ect of restatements of information provided in previous reports 37, 39 G4-23 Signifi cant changes from previous reporting periods in the scope and aspect boundaries 36

Stakeholder engagement G4–24 List of stakeholder groups engaged by the organisation 36 G4–25 Basis for identiﬁ cation and selection of stakeholders 8, 10, 35–36 G4–26 Approaches to stakeholder engagement 36 G4–27 Key topics raised through stakeholder engagement 36

Report proﬁ le G4-28 Reporting period 35 G4-29 Date of most recent previous report 35 G4-30 Reporting cycle 35 G4-31 Contact point questions regarding the report Inside front cover G4-32 GRI Index and "in accordance option" 35, 42-45 G4-33 External assurance 46

Governance G4–34 Governance structure 26–27

Ethics and integrity G4-56 Values, principles, standards and norms of behaviour such as codes of conduct 8, 29 Principle 10 and codes of ethics

Nordea Sustainability Report 2017 GRI Index 43

GRI Indicator Name Page UNGC Omission statement

Speciﬁ c standard disclosures

ECONOMIC Responsible tax payer G4-DMA 14 Own indicator - Tax payments Tax payments per country and by tax type 14, 38

ENVIRONMENTAL

Energy G4-DMA 11-12, 36-37 Princple 7, 8 G4-EN3 Energy consumption within the organisation 37 Principle 7, 8 Note S3. G4-EN5 Energy intensity 37 Principle 8

Emissions G4-DMA 10-12, 36-37 Princple 7, 8 G4-EN15 Direct greenhouse gas (GHG) emissions (Scope 1) 37 Principle 7, 8 G4-EN16 Energy indirect greenhouse gas (GHG) emissions (Scope 2) 37 Principle 7, 8 G4-EN17 Other indirect greenhouse gas (GHG) emissions (Scope 3) 37 Principle 7, 8 G4-EN18 Greenhouse gas (GHG) emissions intensity 37 Principle 8

Compliance G4-DMA 8, 10, 28-29, 36 Princple 8 G4-EN29 Monetary value of signiﬁ cant ﬁ nes and total number of non-monetary sanctions for non- 38 Princple 8 compliance with environmental laws and regulations

Supplier Environmental Assessment G4-DMA 8, 13-14 Principle 8 G4-EN32 New suppliers screened using environmental criteria 13, 37 Principle 8 G4-EN33 Signiﬁ cant actual and potential negative environmental impacts in the supply chain and 13-14, 37 Principle 8 Note S4. actions taken

Environmental grievance mechanisms G4-DMA 8, 10, 29, 39 Principle 8 G4-EN34 Number of grievances about environmental impacts ﬁ led, addressed, and resolved 39 Principle 8 Note S8. through formal grievance mechanisms

SOCIAL Employment G4-DMA 6-8, 30-33 Principle 6 G4-LA1 Total number and rates of new employee hires and employee turnover by age group, 39 Principle 6 Note S9. gender, and region

Occupational Health and Safety G4-DMA 8, 10, 33, 39 G4-LA6 Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and 32, 39 Note S9. total number of workrelated fatalities, by region and by gender

Training and Education G4-DMA 8, 30, 32 Principle 6 G4-LA9 Average hours of training per year per employee by gender, and by employee category 32, 39 Principle 6 Note S9.

Nordea Sustainability Report 2017 GRI Index 44

GRI Indicator Name Page UNGC Omission statement Diversity and Equal Opportunity G4-DMA 8, 31-32 Principle 6 G4-LA12 Composition of governance bodies and breakdown of employees per employee category 32 Principle 6 according to gender, age group, minority group membership, and other indicators of diversity

Equal Remuneration for Women and Men G4-DMA 8, 31-32 Principle 6 G4-LA13 Ratio of basic salary and remuneration of women to men by employee category, by 31, 39 Principle 6 Note S9. signiﬁ cant locations of operation

Supplier Assessment for Labour Practices G4-DMA 8, 13-14 Principle 4, 5 G4-LA14 New suppliers screened using labour practices criteria 13, 37 Principle 4, 5 G4-LA15 Signiﬁ cant actual and potential negative impacts for labour practices in the 13-14, 37 Principle 4, 5 Note S4. supply chain and actions taken

Labor practices grievance mechanisms G4-DMA 8, 10, 29, 39 Principle 6 G4-LA16 Number of grievances about labour practices ﬁ led, addressed, and resolved through 39 Principle 6 Note S8. formal grievance mechanisms

Non-discrimination G4-DMA 8, 33 Principle 6 G4-HR3 Total number of incidents of discrimination and corrective actions taken 33, 39 Principle 6

Supplier Human Rights Assessment G4-DMA 8, 13-14 Principle 1, 2 G4-HR10 New suppliers screened using human rights criteria 13, 37 Principle 2 G4-HR11 Signiﬁ cant actual and potential negative human rights impacts in the 13-14, 37 Principle 2 Note S4. supply chain and actions taken

Human rights grievance mechanism G4-DMA 8, 10, 29, 38 Principle 1 G4-HR12 Number of grievances about human rights impacts ﬁ led, addressed, and resolved 39 Principle 1 Note S8. through formal grievance mechanisms

Anti-corruption G4-DMA 8, 11, 28-29, 36 Principle 10 G4-SO4 Communication and training on anti-corruption policies and procedures 29, 39 Principle 10 Note S8. G4-SO5 Conﬁ rmed incidents of corruption and actions taken 29. Principle 10

Anti-competitive behavior G4-DMA 8, 11, 29, 36 G4-SO7 Total number of legal actions for anti-competitive behaviour, anti-trust, and monopoly 29 practices and their outcomes

Compliance G4-DMA 8, 10, 28-29 G4-SO8 Monetary value of signiﬁ cant ﬁ nes and total number of non-monetary sanctions for non- 29 compliance with laws and regulations

Supplier assessment for impacts on society G4-DMA 8, 13-14 G4-SO9 New suppliers screened using criteria for impacts on society 13, 37 G4-SO10 Signiﬁ cant actual and potential negative impacts on society in the supply chain and 13-14, 37 Note S4. actions taken

Product and Service Labelling G4-DMA 13, 14, 18-25, 40 PR3 Type of product and service information required by the organisation’s procedures for 40 product and service information and labelling, and percentage of signiﬁ cant product and service categories subject to such information requirements PR5 Results of surveys measuring customer satisfaction 19, 21, 23, 25, 40

Nordea Sustainability Report 2017 GRI Index 45

GRI Indicator Name Page UNGC Omission statement Customer Privacy G4-DMA 41 PR8 Complaints regarding breaches of customer privacy and losses of customer data 41

SPECIFIC DISCLOSURES FOR THE FINANCIAL SERVICES SECTOR Product Portfolio G4-DMA 11-13, 19-25 Princple 1, 4, 5, 6 FS7 Monetary value of products and services designed to deliver a specifi c social benefi t 19 FS8 Monetary value of products and services designed to deliver a specifi c 21, 25 Principle 9 environmental benefi t

Active Ownership G4-DMA 12-13, 24-25 FS10 Percentage and number of companies held in the portfolio with which the organisation 25, 38 has interacted on environmental and/or social issues FS11 Percentage of assets subject to positive and negative environmental or social screening 25, 38

Local Communities G4-DMA 14-15, 18-19 FS14 Initiatives to improve access to ﬁ nancial services for disadvantaged people 19

Glossary

A AML – Nordea’s Anti-Money G Green Bond Principles – Green U UNEP FI – The United Nations Laundering work is based on Bond Principles of the International Environmental Programme Finance international regulations with the Capital Markets Association, are Initiative is a global partnership ultimate goal of ensuring that voluntary process guidelines that between UNEP and the fi nancial funds from illegal sources cannot recommend transparency and sector, working to understand the be laundered through the banking disclosure and promote integrity in impacts of environmental and system or used to fi nance terrorism the development of the Green Bond social considerations on fi nancial or illegal operations of any kind. The market by clarifying the approach performance. purpose of AML is to protect not for issuance of a Green Bond. only the fi nancial system and our UNGC – The United Nations customers, but also society at large. K KYC – Know Your Customer is Global Compact is a strategic Nordea’s practice to identify and policy initiative for businesses that C CDP – Carbon Disclosure Project, know the customer, the nature are committed to aligning their a project that aims to collect and of the customer’s business and operations and strategies with ten share information on greenhouse use of services or products, universally accepted principles in gas emissions and climate change volumes and origins of customers’ the areas of human rights, labour, strategies. funds, wealth and transactions. environment and anti-corruption. The KYC process is used to give COP – Communication on proper customer advisory and UNGP – The United Nations Progress is the report that minimise the risk of terrorist Guiding Principles on Business and all signatories to the UNGC fi nancing and money laundering. Human Rights is a global standard have to submit every year. for preventing and addressing the M MiFID – Markets in Financial risk of adverse impacts on human E ESG – This term refers to how Instruments Directive, is a rights linked to business activity. environmental, social, and regulation that increases governance issues can aff ect transparency across the UN PRI – The United Nations the performance of investment EU’s fi nancial markets. Principles for Responsible portfolios (to varying degrees Investment is an initiative in across companies, sectors, regions, partnership with UNEP FI and asset classes and over time). ESG UNGC consisting of six principles screenings are used in evaluations regarding ESG issues. of partners and suppliers.

Nordea Sustainability Report 2017 Independent Auditor’s Limited Assurance Report 46 Independent Auditor’s Limited Assurance Report on Nordea’s Sustainability Report

To Nordea AB (publ)

Introduction We conducted our limited assurance and applicable legal and regulatory We have been engaged by the Group engagement in accordance with ISAE requirements. Executive Management of Nordea AB 3000 Assurance Engagements Other Our procedures are based on the cri- (publ) (“Nordea”) to undertake a limit- than Audits or Reviews of Historical teria defi ned by the Board of Directors ed assurance engagement of Nordea’s Financial Information. A limited assur- and the Group Executive Management Sustainability Report for the year 2017. ance engagement consists of making as described above. We consider these inquiries, primarily of persons responsi- criteria suitable for the preparation of Responsibilities of the Board ble for the preparation of the Sustain- the Sustainability Report. and Management for the ability Report, and applying analytical We believe that the evidence we Sustainability Report and other limited assurance procedures. have obtained is suffi cient and appro- The Board of Directors and Group Exec- The procedures performed in a limited priate to provide a basis for our conclu- utive Management are responsible for assurance engagement vary in nature sion below. the preparation of the Sustainability from, and are less in extent than for, a Report in accordance with the applica- reasonable assurance engagement con- Conclusion ble criteria, as explained on page 35 of ducted in accordance with International Based on the limited assurance proce- the Sustainability Report and are the Standards on Auditing, ISA, and other dures we have performed, nothing has parts of the Sustainability Reporting generally accepted auditing standards come to our attention that causes us to Guidelines (published by The Global in Sweden. The procedures performed believe that the Sustainability Report is Reporting Initiative, GRI) which are consequently do not enable us to obtain not prepared, in all material respects, in applicable to the Sustainability Report, assurance that we would become accordance with the criteria defi ned by as well as the accounting and calcula- aware of all signifi cant matters that the Board of Directors and Group Exec- tion principles that Nordea has devel- might be identifi ed in a reasonable utive Management. oped. This responsibility includes the assurance engagement. Accordingly, we internal control relevant to the prepara- do not express a reasonable assurance tion of a Sustainability Report that is conclusion. free from material misstatements, The fi rm applies ISQC 1 (International whether due to fraud or error. Standard on Quality Control) and accordingly maintains a comprehensive Responsibilities of the Auditor system of quality control including doc- Our responsibility is to express a conclu- umented policies and procedures sion on the Sustainability Report based regarding compliance with ethical on the limited assurance procedures we requirements, professional standards have performed.

Stockholm February 9 2018 Öhrlings PricewaterhouseCoopers AB

Catarina Ericsson Eric Lindholm Authorised Public Accountant Expert Member of FAR

Nordea Sustainability Report 2017 47

The Nordea Sustainability Report 2017 has been produced by Nordea in collaboration with: Bold: design Chimney Group: layout and production

Nordea Sustainability Report 2017 For more information about sustainability Nordea Bank AB (publ) at Nordea please visit our website, Corporate registration no. 516406-0120 Smålandsgatan 17 | SE-105 71 Stockholm nordea.com/sustainability. Tel +46 10 157 10 00 | www.nordea.com For feedback, contact us at [email protected]