BANK HAPOALIM SUSTAINABILITY REPORT 2016 Economic, Social & Environmental Responsibility SOCIAL RESPONSIBILITY IT's in OUR HANDS BANK HAPOALIM Contents

BANK HAPOALIM SUSTAINABILITY REPORT 2016 Economic, Social & Environmental Responsibility SOCIAL RESPONSIBILITY IT'S IN OUR HANDS BANK HAPOALIM Contents

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Introduction The best interests Society and the Quality of life Living with the 156 Corporate Governance 04 Messages from the Chairman of of the client community and well-being environment 160 Ethics the Board and CEO Customers, products, and Creating value for society and for the well being and caring for Logistical resources and the 162 Compliance 07 The Bank’s Vision services economy employees environment 164 The Doing Good Model 12 Social Responsibility and Sustainability at the Bank 166 GRI & Global Compact Index

18 Presenting the Material Issues for Reporting

22 (Multi-year) Summary of Corporate Responsibility Performance

25 Adopting Responsible Initiatives

32 Activity Directions and Main Objectives for 2016 among households, segments and in this sector, reflecting the strength and - of which more than 50% are women population groups, such as new seniors professionalism of Bank Hapoalim. In - is an outstanding figure in the Israeli (people in or near retirement age), young recent years, the bank doubled the number economy, attesting to the uniqueness target audiences and through various of branches in Arab communities and, of the bank's work environment. This initiatives in the public sphere. Thus, for during the past year, two new branches year, as part of its human resources example, the bank took an active part in the have been opened in Arab communities. development efforts, the bank continued Financial Awareness Week project - during As part of our effort to strengthen ties with to train employees and managers through which bank customers and the public in Arab society in Israel, we are promoting courses at Poalim Campus, online training Israel were offered to participate in a series various initiatives for this sector on the and digital empowerment at the branches. of conferences in various bank branches, community level as well. with the aim of increasing awareness of In 2016 the bank continued to lead the informed financial conduct and proper In 2016, the bank continued to lead entire banking system in its efforts for the management of banking activity. financing in the Israeli economy, even as community. The bank focused on projects some of our customers are undergoing in the area of education, with special In 2016, the Bank continued its strategic a complex and challenging period, while emphasis on education towards prudent activity in the small business segment, leading the financing of projects promoting financial conduct as a key for promoting with the understanding that this segment environmental sustainability. As in recent financial freedom. In addition, thousands Message from Bank Hapoalim Chairman, is one of the pillars and growth engines years, the bank continued to serve as the of the bank’s employees volunteered in of the Israeli economy. The bank’s deep leading financing entity in Israel for activities 2016 in social organizations across Israel, Mr. Oded Eran and the CEO, Mr. Arik Pinto commitment and ongoing activity in this and infrastructure in areas such as: power throughout the year. area is reflected in enhancing the value generation from renewable energies; power proposition, creating innovative products, plants to generate energy from natural gas; Following a decade of corporate We are proud to present the annual retail and business customers; innovation by a significant enhancement of our digital and providing ongoing financing and facilities for the proper treatment of waste; responsibility, we are being recognized sustainability and corporate social in financial products and services; focused value proposition to customers, along with consulting to this customer segment. green building, etc. In this manner, we help by local and global entities and ratings, responsibility report of Bank Hapoalim development of global operations; and strengthening of personal and human The bank continues to serve as a leading create a more environmentally-friendly and are proud to be in line with leading for 2016. This is the tenth CSR report continued operational excellence as a relations. Innovation is part and parcel of credit provider for this segment, along with infrastructure for Israel’s future. banks across the world. As part of this published by the bank, evidence of the way of life. We understand that - within the bank's corporate culture, aiming to service that is tailored to small businesses, commitment, the bank continues to be bank's ongoing commitment to this area these channels of activity, which promote offer services to the public in a personal, and by providing assistance in dealing with The bank continued to promote and committed to the ten principles of the and to its various stakeholders: to the the bank’s business sustainability and humane and technological manner. In the the unique challenges facing them. develop the quality of its largest and United Nations Development Program shareholders; customers; employees excellence, we are committed - both past year, the bank has established the most important resource: the employees (UNGC), which promotes economic and suppliers across Israel; and to the managers and employees - to promote Innovation Division to initiate and leverage The bank continues its activity to promote and managers, while maintaining labor development in a manner that is beneficial community and Israeli society within which corporate responsibility as an integral part innovative solutions and new growth growth in the Arab sector. Economic relations, which has been a strategic asset to the community and to future generations. the Bank operates. This activity realizes of our activity. As part of this commitment, engines - both digital and technological - development of this sector has social for the bank for years. The Employees' This is a milestone, but as part of the part of the bank's vision and leadership the bank has established, over the past and to accelerate the pace of change and implications, which have a positive impact Association is a full partner in leading challenges we face, we will strive for in the field of sustainability and social year, the Stakeholders' Division, in order to execution of initiatives. on the economy and society. The bank's the bank to impressive achievements, significant achievements in this field in the responsibility in Israel. conduct a dialogue with the stakeholders, momentum among the Arab population in serving as a role model for the entire coming years. with the aim of creating common value. In 2016, we continued to enhance financial Israel has altered the competitive conditions industry. The bank's managerial backbone In 2016, the bank began implementing freedom - a key value in the bank’s vision - its strategic plan for 2016-2018. Entitled In 2016, we continued to serve our large for our customers and the general public. “Personal, Human and Technological”, the customer base through the branches Our role at the bank is to serve as our plan focuses on a number of key areas: and various technological channels. This customers’ financial facilitators, assisting creating an optimal and flexible infrastructure year was characterized by targeting and them through products and tools that for topics such as: capital management; customizing services and products to support behavior change to promote human resource development; building various types of customers according to adequate financial conduct. As part of an innovative technological infrastructure the special and varied financial needs of this effort, we continued to promote tools Oded Eran Arik Pinto as a platform for advanced services for each group. The past year was marked to assist prudent financial management Chairman of the board of directors CEO

INTRODUCTION 4-5 Corporate Responsibility at Bank Hapoalim: About the Report Assimilating the Bank Hapoalim vision This is the tenth report to be published by new managers filled the positions of secondly - auditing the adequacy of the Bank Hapoalim for its stakeholders. Each Chairman of the Board and CEO (assumed reporting; thirdly - the completeness of report surveys a full year of activity within office at the beginning of 2017). This the reporting on our carbon footprint; The Bank Hapoalim Vision our overall sustainability and corporate report has been prepared in accordance and fourthly - compliance with the social responsibility plan. The annual with the GRI Standards: Comprehensive reporting guidelines on material aspects To be a leading global financial institution, headquartered reports, published since 2007, reflect option. Most of the data in the report were in accordance with the requirements of the varied, thorough, systemic, and methodical generated by the information systems at GRI, which examined the bank’s process in Israel, focused on its customers and working activity. The sustainability and CSR reports the bank, in accordance with GRI reporting for identifying issues for reporting and reflect the bank’s journey - from the requirements. Information was collected found it to be in compliance with the new towards their financial freedom. To create value for inception of the plan to the present day regularly and routinely throughout the reporting standard’s provisions. our stakeholders while upholding the principles of - to instill corporate social responsibility. year. However, some of the data were Each report focuses on different highlights, collected at the end of the reporting The readers of this report, our economical, social, and environmental sustainability. according to the key areas of activity in period. The information is organized in a stakeholders, will use it to critique and the preceding year. comprehensive database encompassing judge our performance and the extent to To cultivate human capital and encourage excellence data on the reported period as well as which we have met their expectations. In 2016, as part of the bank’s strategy, we multi-year data. All of the information We are committed to making use of the and innovation. To base our actions on the core values of continued to identify and realize business in the report is presented using the comments and feedback we receive from opportunities in this area, while promoting various indices. Data are presented our stakeholders in order to learn from compassion, integrity, openness, and accountability. social and environmental benefits; improve using comparative analyses referring to them and continue to examine ourselves service and fair, ethical conduct; form the reported period and to long-term in this context. A new mini-site is going partnerships with stakeholders in society trends. A small part of the data involves to be launched dedicated to the Bank's and in the community; and improve the use of estimates and evaluations. corporate responsibility activities. We will environmental and social risk management. Wherever used, estimates and evaluations also publish a booklet presenting social Over the last years, an ongoing process challenges of the future. Values chosen which each person acts responsibly The key initiatives and metrics for the activity were diligently checked and validated, and environmental challenges in Israel has been underway to assimilate the for inclusion in the Bank Hapoalim Vision and contributes to the success of all; of the bank in 2016, described in detail in this and are clearly noted in the report. The and how the Bank is involved in solving Bank Hapoalim vision, with the aim of are intended to create an impact on the 3. In it for the long haul – The drive towards report, are presented in the following pages. report does not address CSR impacts these challenges in the vast activity of expressing the future projected for the following three levels: financial freedom for our customers, in of Isracard Ltd1. Isracard publishes an shared value. This year's Sustainability bank at its best. The Bank Hapoalim Vision 1. Proud to belong – Our focus on our congruence with the principles of independent corporate responsibility and CSR Report is available in Hebrew is a clear, powerful, meaningful description customers and our financial leadership sustainability and in encouragement Methodology for the report in accordance with the directives and English on the bank's website, of our future as it can and should be. It are a source of pride and foster a sense of excellence and innovation, reflects a of the Supervisor of Banks. along with an accessible version for also provides a structured framework of belonging for our employees; long-term commitment to improvement Preparation of this people with disabilities, for convenient for charting our future course; declares 2. Committed together – The endeavor and empowerment. Report: Measurement, We recognize the importance of auditing and environment-friendly distribution our commitment to our employees, our to create value for our stakeholders and and external assurance of our work and of and reading. customers, and all of our stakeholders; our commitment to the cultivation of The concept underlying the integration Evaluation, and Control the accuracy of the data accumulated as the imparts meaning and a connection with human capital on a path of compassion, of these three dimensions and the This sustainability and CSR report refers plan moves forward. Accordingly, we have We would like to thank all of the employees our values to the objectives and initiatives integrity, openness, and accountability fundamental motif of the Bank Hapoalim to the 2016 calendar year. During the decided to continue to maintain external and managers involved in every level of led by the bank; and empowers the bank are aimed at nurturing a personal Vision is: Leading Growth Together. reported period, there were no significant auditing of the adequacy of our reporting, the bank’s work, who contribute to these in its leadership on the shared path to the commitment to our shared journey, in changes in the type of ownership, on four levels: Firstly - the corporate social activities each day, and who helped create structure, or size of the bank. However, responsibility implementation process; this report.

Yael Almog Hagit Bechor Orit Braverman Deputy CEO Director of the Shared Value Center Director of Corporate Social Responsibility Stakeholders division Stakeholders division [email protected]

1. 102-45 INTRODUCTION 6-7 ■ The Bank Hapoalim Vision comprises Sustainability principles - These processes that encourage employees Working to Promote Financial Freedom ten elements: represent and reflect environmentally to raise ideas and to think creatively and ■ Global, centered in Israel - We are, and conscious business conduct aimed innovatively, throughout the bank. This for the Stakeholders will remain, a leading Israeli bank. Yet at preserving and enhancing existing effort is aimed at improving processes resources and achieving economic, and systems, developing new products in today's world, under conditions of a As a business leader, Bank Hapoalim has for more extensive financial knowledge. The consulting services and unique initiatives to social, and environmental balance for and services, and promoting business globalized economy, a large top-tier bank the responsibility to promote equal economic bank recognizes that financial knowledge help and support customers who experience our own sake and for the sake of future initiatives. must engage in international activities opportunities in Israeli society and economic and the use of financial tools are essential difficulties. On this foundation, customers' generations. The bank believes that the ■ and offer its customers globe-spanning Developing human capital - The bank sustainability among its customers, in order to create financial freedom and relationships with financial institutions adoption of these principles supports services. Our international operations believes that the human capital of any employees and the general public. The strike a balance between financial needs become more balanced and aligned with its objectives and increases its value for are an important growth driver for the business organization is one of its most bank welcomes this responsibility, and and abilities, for each customer. The bank their expectations, and are able to make the long term. long term. valuable assets. The bank considers its believes in its mission to contribute to therefore endeavors to provide information better economic decisions for each stage ■ ■ Leadership of the bank is mainly Creating value for stakeholders - The employees to be partners, maintains a the empowerment of the society from regarding the financial possibilities available of their lives. measured by its market capitalization, essential mission of a business enterprise relationship with them based on mutual which it draws its strength. Each person to its customers at high resolution and is to maximize its value in a way that trust and respect, and strives to enable profitability, and return on equity, but also has different economic needs, according transparency, with maximum availability, As part of the dialogue conducted by the serves all of its stakeholders: employees, them to succeed and to provide them by its operating efficiency, brand strength, to the milestones in his or her life, and adapted to different life stages A wide range bank with additional organizations and customers, investors, suppliers, the with tools for professional and personal CSR activities, upholding of sustainability different financial resources available to of tools, products, services, knowledge, and groups for the promotion of this cause, community, and the general public. The development. principles, contribution to the community, meet those needs. In order to cope with guidance by the bank are offered in order to the bank initiated the launch of the Israel creation of value is based on four pillars: ■ and professional ethics. The bank is Fundamental principles: humanity, such needs appropriately in the short and ensure that customers are familiar with the Financial Freedom Forum. The forum the stability of the bank, which ensures its strong on all of these parameters, and is integrity, transparency, and long term, it is necessary to obtain a solid full picture and with all of the alternatives brings together many participants from ability to meet its obligations at any given These values embody working to improve and advance further. responsibility - understanding of the full range of financial open to them, in order to reach informed, the government, community, and business moment and to support the development the ethical and moral standards and ■ Focused on the customer - We needs and possibilities, become familiar independent decisions. sectors seeking a shared platform for of the economy; sustainable profitability, principles that are the cornerstones of are dedicated to responding to the with the tools and products offered in this The bank promotes financial freedom for discussion, identification of opportunities, balancing risk and returns; promotion and our organizational culture, reflecting the changing needs and aspirations of our area, and achieve optimized matching in various stakeholders: by raising awareness and initiation of ventures to promote financial cultivation of sustainability principles, and bank's way of life and rules of appropriate customers, during each stage of their order to eventually attain good control and and providing information, promoting education in Israel. The forum enables a philosophy of genuine partnership with conduct. We will uphold these values in lives, while creating economic value for balance between needs and possibilities. financial knowledge, as well as tools and various stakeholders to join forces in order to employees and customers. our work relationships with each other, the bank and tailoring services to different Proper identification of needs, full information financial services to help and support consult, discuss, and think about solutions ■ An organizational and and in our connections with customers, sectors: households, private banking, Excellence - regarding financial possibilities, tools, and behaviour change. This is done by promoting in this area. small businesses, commercial, and personal stance leading to success, suppliers, and the community. supporting products, use of advice, and the growth of various segments and groups corporate. We believe that our focus on and expressing the desire, responsibility, appropriate prioritization make it possible in Israel (such as small businesses, the The bank promotes financial freedom on our customers is the key to our success and commitment to be better, through to reach good decisions for each time frame Arab-Israeli sector, the Haredi sector, and several levels, adapted to various target over any period of time. resolute and effective efforts. Excellence and maximize financial potential. the new seniors); through customer clubs audiences, through diverse channels (for ■ is the ambition to make the most of our for various target groups at the bank; Financial freedom - This concept more information on the concept of financial inherent potential, to make optimal use through multi-channel banking services (via represents the freedom and will of our Bank Hapoalim acts strategically to promote freedom, please see the Customers section of available resources, and to set a high telephone, Internet, mobile phones, tablet customers and employees to make prudent financial conduct among its and the Community section). standard for performance. good choices, based on their personal customers and in the Israeli public. This computers, etc.), offering customers tools ■ preferences, while taking responsibility Innovation - Finding and promoting new effort is congruent with the trends identified and products for prudent financial conduct; for and understanding the financial initiatives that generate business value by the bank in recent years in customers' and through enhanced physical and virtual capabilities and possibilities open to them. and competitive advantage, through needs and wishes, indicating a greater need access to banking services, customized

INTRODUCTION 8-9 Promoting Financial Freedom Households / New Small families seniors businesses

Children and teenagers Public Soldiers and sphere Awareness Awareness Awareness students - The Growing Family - The Growing Family - The Growing Family - Training of employees, in various forums, - Training of employees, in various forums, - Training of employees, in on a volunteer basis on a volunteer basis various forums, on a volunteer - Financial Awareness Week basis Knowledge Knowledge - The Growing Family Knowledge - The Growing Family - Bankopaedia - database and tips for - Center for financial assistance - Bankopaedia - database and tips for life’s life’s various milestones in collaboration with the College Awareness various milestones - YouTube videos of Management and the - Dan the Saver content - YouTube videos - Training of employees, in various forums, Shekhel Foundation - Dan the Saver summer camps - Training of employees, in various forums, on a volunteer basis - Guidance to starting a business - Training of employees on a on a volunteer basis - Financial Awareness Week - Training of employees on a Awareness volunteer basis Awareness - Financial Awareness Week - For bank employees: study hour, training volunteer basis - Financial Freedom Forum - Training of employees within - Training of employees on a - For bank employees: study hour, training days, campaigns, newsletter - Training as part of customer the framework of a "Enriching volunteer basis days, campaigns, newsletter - Training as part of customer conferences conferences Knowledge parent" for elementary students - Training as part of customer conferences - Partnerships with NGOs Knowledge Products and services Products and services Knowledge - Bankopaedia Products and services - Financial and pension planning - Small Businesses Day - Dan the Saver games - YouTube videos - Financial and pension planning - Gold club - App for businesses - Enriching Parents project for - Training of employees on a - Credit and savings consulting - Digital tools for budget management, - Easy Start - small business elementary school children volunteer basis - A cash-back club for smart consumption encouraging savings and increasing benefits program - Poalim Young - Digital tools for budget management, control and flexibility - Variety of credit funds - A study program for middle and Products and services encouraging savings and increasing - My online store high schools in cooperation - Digital tools for budget control and flexibility Support for - Poalim Business Club with ORT management, encouraging behavioral change - Training of employees on a savings and increasing control Support for - Financial and pension planning Support for volunteer basis and flexibility behavioral change - Digital tools for budget management, behavioral change - Poalim for Recovery encouraging savings and increasing - Opportunity for Growth Products and services - Opportunity for Growth - to accompany control and flexibility for small businesses along - Dan the Saver - and assist customers following crisis the route of the Tel Aviv savings plans and benefits, - Financial planning course for employees Light Railway website, account, ATM

INTRODUCTION 10-11 ‏EMPOWERING THE SOCIETY AND COMMUNITY Corporate Social Responsibility IS IN OUR HANDS ‏CREATING VALUE FOR THE and Sustainability at Bank Hapoalim ECONOMY AND SOCIETY ‏Value creation in distant circles of Corporate social responsibility and pattern, simple to communicate and Structure and authority – The sustainability influence THE CLIENT'S WELLBEING • Suppliers sustainability are a strategic and social absorb, organized, and consistent. The and CSR plan is managed based on IS IN OUR HANDS • Community philosophy for managing a business model presents CSR by organizing the matrix management approach. In • Local economy while creating economic, social, and parameters and indicators from the accordance with this approach, the head ‏CLIENTS, PRODUCTS AND SERVICES ‏Value creation for customers: environmental value. This section presents different content areas and condensing of CSR is the strategic leader for this area, ‏LIVING WITH THE the bank's CSR and sustainability them into a short, simple series in four in coordination and cooperation with the • ‏Answering the client's needs throughout the life cycle • ‏Providing accessibility to a variety of services - ‏VALUE ENVIRONMENT IS perception, its organizing model for central categories: customers, community, various unit heads. Each unit is responsible regardless of time and place CREATION TIER IN OUR HANDS management in this area, and the employees, and environment, which for implementing certain aspects under its • ‏Service, complaint management and customer satisfaction ‏RESOURCE ‏RESPONSIBLE ENVIRONMENTAL implementation of these values in its activity. constitute the four petals of the flower. authority, using its resources. Activities of the • ‏Green products and services MANAGEMENTTIER These represent the areas in which the CSR officer include integration of all actions • ‏Credit based on environmental considerations BEHAVIOUR ‏Managing logistical resources while considering Bank Hapoalim was one of the first business bank's CSR and sustainability activities related to CSR; overseeing methodology, • ‏Designated service for special populations • ‏Enriching the financial knowledge the environment: Energy efficiency, paper institutions in Israel to decide to apply this and impact are focused. Each category tools, and professional support; controls of the customers consumption, recycling and waste management, approach as a strategic element of its (petal) of the model contains various and reporting; change management and water, green building, transportation, working operations. The bank views this area as a activities. Each of the four categories is communications in this area; and building ‏EMPLOYEES' WELLBEING environment, ergonomics etc. source of business opportunities, which divided into two tiers: an up-to-date knowledge base. IS IN OUR HANDS also promote social and environmental ■ Value creation tier – Focused on benefits, and as a foundation for innovation Processes, metrics, and information – ‏RESPONSIBILITY TOWARDS THE activity with the external stakeholders EMPLOYEES and competitive advantages, improvement Measurement is a fundamental element of the bank; creation of shared business • Dialogue, sharing and transparency of service, fair and ethical conduct, of management, allowing goals to be value for the bank and its stakeholders, • An arena for personal and professional management of environmental and social set, progress to be monitored, and combined with social and environmental development risks, and partnership with stakeholders in performance to be compared. Improvement • Solidarity and friendship values, emphasizing: the community, which position the bank as of the measurement infrastructure allows • Wellbeing of the employees and their family 1. The best interests of the customer; a leading economic and social organization. enhanced controls to be applied to • Equal opportunity The bank works to achieve in-depth 2. Empowering Society and the the various activities, and is aimed at implementation of these values based on Community. promoting efficient, effective management the highest international standards, using of the sustainability and CSR plan. The a wide range of methods and tools to cope ■ Resource management tier – Focused sustainability and CSR plan is implemented with the challenges posed by this approach. on the intra-organizational activity of the at the bank based on a fundamental CSR management and implementation bank, with an emphasis on management infrastructure including: help to achieve results in the business, of human resources as strategic partners ■ Processes that gradually transform new number of projects are being developed undertaken within the plan, a logo was as sustainability, healthy lifestyles, safe social, and environmental spheres that and on the bank's environmental conduct: initiatives in this area into routine activities in order to realize various objectives designed for the organizing model of the driving, and more. contribute to the bank's success and to 3. Employees' quality of life and at the relevant units; of the plan. Each new activity is first plan – the CSR Flower – accompanied by the expansion of its positive impact on wellbeing; ■ Clear metrics allowing standardization carried out as a pilot project. Following the slogan, “Social responsibility – it’s in our The annual sustainability and CSR report is all of its stakeholders, both internal and 4. Living with the environment. of the plan and analysis of performance the pilot and the process of drawing the hands”. In the spirit of this logo and slogan, available and accessible to all stakeholders external to the organization. over time; necessary conclusions, the many projects each initiative launched as part of the plan in the Israeli and international economy: ■ Extensive information collected in existing are absorbed into routine work processes was branded and widely communicated to businesses, government agencies, non- Implementing and organizational systems or produced and procedures, with the aim of achieving the various levels of managers and workers. profit organizations, academia, analysts, Organizing Model: directly for the purposes of the plan. ongoing management comparable to other This effort includes the CSR zone of the etc. All of the bank's sustainability and Assimilating CSR business processes of the organization. organizational portal, which presents the CSR reports are available for download, The CSR Flower Values in All Levels Broad implementation – The various CSR bank's worldview in this area and serves as in Hebrew and English, in an accessible, The bank's CSR and sustainability initiatives and projects at the bank are Branding, communication, and the central location for CSR issues. As part user-friendly format on the bank's website. perception has been formulated into of Activity implemented and administered broadly, in development of awareness – In of the communication and implementation an organizing model: the CSR Flower. This perception is implemented through a a top-down process, with the participation order to support change management of CSR, a series of training sessions and Dialogue and collaboration with The model maps the entire CSR and sustainability and CSR plan based on five of many units and encouragement for units and differentiate the various initiatives talks was developed, covering topics such stakeholders2 – Over the last few years, sustainability field into a unified cognitive main organizational aspects: to develop bottom-up initiatives. A large

2. 102-42 INTRODUCTION 12-13 ■ Bank Hapoalim has developed a range in the areas of the economy, society, and ideas and solutions, as well as opportunities The Social Networks Unit - The of channels for dialogue with various the environment. for cooperation between leading market Stakeholder Division promotes groups of stakeholders, with the aim of players, who can join forces to promote open dialogue with the bank's identifying needs and providing an optimal The bank runs several forums within the common causes. Virtual meetings are held stakeholders, and has therefore Creating response to sustainability challenges in the effort to promote social values in the through a website designed for that purpose, established a dedicated unit to bank's dynamic, complex environment. In public sphere, rooted in the bank's vision, and direct dialogue is also promoted via manage stakeholder relations on Business this context, a comprehensive mapping including the Financial Freedom Forum e-mail communications. The uniqueness social networks, with the purpose value process of all potentially relevant and the Small Business Forum. The forums of the forums lies in the partnership among of creating an additional platform for stakeholders for dialogue and collaboration are designed to serve as a platform for the different spheres – public, social, and listening to interested parties while was performed. Since then, a wide-ranging dialogue among partners, identifying joint business – coming together to form a single promoting humane, personal dialogue network of collaborations and connections opportunities, finding barriers and ways entity acting in unison. and providing swift professional Creating has been created and continues to form, to resolve them, pooling resources, and Shared solutions. Value with clients, employees, government and promoting ideas and initiatives through The CSR zone of the bank's website, municipal agencies, environmental and shared abilities. The forums bring together at www.bankhapoalim.co.il/csr, is the In addition - as part of promoting the value Creating Use of the core social experts, non-profit organizations, stakeholders from a range of public, social, main window for the public to the bank's of financial freedom to our customers and Social capabilities of entrepreneurs and businesses, academia, and business organizations to lead the sustainability and CSR activities. The to the general public, out of the concept value the organization and more. This web of connections has various initiatives, and to work together to website presents an appropriate level of of shared value - a training center will be enabled the bank to expand and extend promote change, in quarterly meetings. transparency for stakeholders with regard established for the bank’s customers and its strategic and business activities and its Issues on the agenda are discussed at to events at the bank and delivers the the general public, which will focus on sphere of influence, and to strengthen the each meeting, and roundtables are held maximum possible amount of information, providing knowledge and tools to promote nationwide network involved in this field, to enable thinking groups to come up with which is essential to dialogue and feedback. proper financial conduct according to life’s milestones. Stakeholders Division The Stakeholders Division was established During 2016, the Stakeholder Relations implementation of this vision, new units with the aim of leading an advanced Division developed its vision and values, as were also formed: business concept based on creating well as a divisional roadmap and strategic LOOKING AHEAD ■ Shared Value Center - established shared value (economic, social and plans that reflect the division's vision and to create a significant and sustainable In 2017, the Shared Value Center will focus on two main areas of activity: environmental value) for the bank and its focal points. The Division’s vision is as impact through initiatives that create stakeholders in order to create sustainable follows: “Conducting dialogue, creating a common value for the bank and its Development of projects and initiatives to promote shared value for the bank and its stakeholders, including the development business success based on social, humane shared value with our stakeholders and various stakeholders. Shared value is of a methodology and tools to promote this area of activity; and environmental values. The Division’s leading sustainable banking, which has an advanced business concept, which guiding principle is creating common a positive impact on the society and includes the creation of business value Managing relations with stakeholders on a regular basis, including the development of an operating model, tools and work value - making positive impact! With community in which we operate". The and of social value, using the enterprise’s plans for implementation. The initiatives will be based on control and measurement processes of social impact, alongside the emphasis on action that will produce Division operates on two levels: core capabilities. business and operational impact, as well as internal and external collaboration in the public sphere as a whole. significant impact on the environment and ■ It helps the bank take into account society, with the objective of making positive In banking, shared value focuses on three the impact of the various moves on all impact. The Division was established in main areas: stakeholders; early 2016. The bank thus joins leading Financial freedom - focusing on a person ■ It leads and initiates moves and actions organizations worldwide in adopting and his/her family; of shared value for the benefit of all advanced business models, which examine Local growth - focusing on small stakeholders. and measure multidimensional aspects businesses and local communities; beyond the bottom line, adding indicators The Division includes units such as Poalim Global issues - focusing on society, the that reflect the enterprise’s impact on all for the Community, Poalim Volunteers and environment and sustainability. its stakeholders. the "Poalim Campus". To promote the

INTRODUCTION 14-15 The following are selected examples of key stakeholder groups and the ways in which the bank promoted dialogue and collaborated with them during 2016 (out of hundreds of channels and the bank’s various stakeholders): Stakeholder Selected dialogue channels in 20163 Stakeholder Selected dialogue channels in 20163 Customers ■ Promoting financial freedom and enhancing relations - All branches hold customer seminars on various subjects Employees ■ CSR zone of the organizational portal – Employees are invited to suggest ideas and tips, ask questions, and several times a year, developing training content and practical tools for budget management, financial planning request help from various content experts. Some of the ideas and tips are posted in the content sections, with and investments, and making them accessible through the website and in meetings with customers. In 2016, credit given to the employees who suggested them. The ideas are considered, and some are even implemented. the bank took an active part in the Financial Awareness Week project - during which bank’s customers and the ■ Dialogue with new employees of the bank – Welcome meetings; orientation days; course opening, midterm, and general public in Israel were offered a series of conferences in various bank branches, which were held during a closing sessions for introductions, mutual coordination of expectations, feedback, etc.; single week in September 2016. The project was accompanied by a campaign and a website to sign up for the Suppliers ■ Conferences for the bank's suppliers, attended by hundreds of suppliers from various fields (consulting, conferences, which were held at about 100 branches of the various banks across Israel; transportation, construction, printing, sales promotion, office supplies, food, and more). Professional content ■ A significant customer conference array which provides customers with added value. Each of the branches is imparted, with an emphasis on purchasing, as well as content with added value for suppliers in the areas of holds several customer conferences during the year; an annual regional conference is held for small businesses. banking, marketing, and sales promotion; Professional lectures are given at the conferences, on subjects such as pensions, mortgages, and family budgets, ■ Communication of the bank's CSR values to the general population of suppliers of the bank through periodic as well as external enrichment sessions. About 840 customer conferences were held at the branches; approximately letters and the ethical code for suppliers. 1,500 customers participated in four regional conferences for business customers; over 1,000 customers enjoyed a variety of digital experiences as part of the Personal. Humane. Technological. Conferences held across Israel. Regulator, ■ Meetings and lectures for the exchange of knowledge and insights with representatives of government and municipal agencies. Joint projects aimed at addressing environmental and social issues are promoted in this context. ■ Small businesses – Bank officials meet with representatives of organizations and groups that promote small government businesses in the Israeli economy; branch managers and bankers strengthen relationships with small businesses ministries ■ Meetings and lectures for the exchange of knowledge and insights with representatives of government and municipal through meetings at the business, unique products, professional conferences, and more; and local agencies. In this context, joint projects aimed at addressing environmental and social issues are promoted; authorities ■ Encouraging growth in the Arab-Israeli sector – Throughout the year, the bank conducts dialogue with business ■ Cooperation with the Bank of Israel and Association of Banks in the preparation of the Financial Awareness Week and social organizations in this community, and leads various initiatives for meetings in Arabic-speaking towns. - during which bank’s customers and the general public in Israel were offered a series of conferences in various In 2016, the bank held workshops to manage the family budget, activities on holidays and youth activities; bank branches, which were held during a single week in September 2016. ■ Management visits to branches – Division managers from the head office visit branches, or other points of contact Community ■ Relationships with non-profit organizations in the field of CSR, in order to obtain feedback, exchange knowledge, with customers, in order to experience the "factory floor" and raise questions and issues based on interactions and and offer mutual assistance; with customers; environmental ■ Dialogue and cooperation with associations promoting the field of financial freedom - including "Pa'amonim", ■ Deeper relationships with selected customers – Management staff at the branches follow defined routines for organizations "Chasdei Lev" and "Hayim Pluss"; meetings and telephone calls with customers at various points and at customers' life events; ■ Promotion of green businesses – such as the Renewable Energy Association of Israel, Ecommunity, Tashtiot, and ■ Client surveys – Customers at the branches and in the various channels are continuously sampled, on a daily others operating in various sectors such as recycling, transition to natural gas, energy efficiency, solar energy, basis, uniformly across channels, lines, and branches; water, etc., through knowledge sharing, assistance, and examination of opportunities for cooperation; ■ Focus groups – Of customers, designed to obtain clarity regarding customers' needs and examine solutions on ■ Non-profit organizations active in the area of diverse human capital and employment of population groups various matters connected to customer relations. underrepresented in the job market, such as The Israeli Forum for Diversity Hiring, Kav Mashve – Employers' Coalition for Equality for Arab University Graduates, Tevet – Joint Israel, Olim Beyahad – Leadership and Employment Employees ■ Feedback sessions with all employees of the bank, and midterm objectives tracking sessions with employees – Excellence for Ethiopian-Israeli University Graduates, and more, for the promotion of diversity in Israel in general were held in 2016 as every year; and at the bank in particular, through knowledge sharing and action. ■ Beshutaf (“in collaboration”) - a new internal business network launched gradually from the beginning of 2016, ■ Management and professors at universities and colleges, including Tel Aviv University, the College of Management, to encourage intra-organizational communication and promote business through knowledge sharing and giving Academia the Academic College of Tel Aviv Yaffo, and Bar Ilan University; back to the community. The network enables employees and managers to receive updates, share information, work in professional teams and promote projects quickly and easily; ■ Project for the deployment of recycling means and instilling environmentally-conscious practices at the College of Management campus and at Bar-Ilan University (see the community chapter); ■ Employee union – The union's work with management and employees is characterized by continual dialogue (updates, feedback, and consultation) and partnership in all key initiatives and everyday processes; CSR ■ Contact and professional dialogue with Israel's leading business organizations and CSR managers; ■ Mobility and transfer processes – The process includes preparation, support, and personal consultation until community ■ Ma’ala – Shared discussion and mutual assistance in facing professional problems and challenges; staffing and full absorption at the new unit are complete, through ongoing contact; ■ Lectures on CSR at relevant venues (courses, conferences, etc.). ■ Dialogue with managers – Regarding manpower needs, organizational changes, annual processes (ranking, bonuses, etc.), and more;

3. 102-44, 102-43, 102-40

INTRODUCTION 16-17 Defining Material Aspects – GRI-SRS Since 2008, the bank has reported on material to its activity, in accordance with GRI reporting guidelines, in 2014 the Feedback on the bank's report, its activities and impact in the area of its strategic approach, while addressing the bank conducted a comprehensive drive sustainability and CSR in compliance with expectations of its various stakeholders. to identify and analyze material topics dialogue with stakeholders, the recognized GRI international reporting Material topics are defined as areas of determined in an integrated internal and and update of the material aspects standard. All of the bank's sustainability activity in which the bank has a significant external process, with guidance from reports were prepared according to the impact on its various stakeholders in the BDO Ziv Haft Sustainability and CSR As part of the bank's dialogue with external which data or focal issues were included highest transparency grade, in compliance the area of CSR and sustainability, and Group. A summary of this process5 is stakeholders throughout the year, the bank in this year’s report (without material with the various standards. This report has in which stakeholders influence the presented in the diagram below. For further receives feedback on its sustainability change). In 2017, the bank is expected been prepared in accordance with the bank, within and outside the bank. This details, see the bank's 2014 reports. and CSR reporting from various parties. to begin an in-depth process to re-map GRI Standards: Comprehensive option4. requirement allowed the bank to examine Following the publication of its previous its stakeholders and instill an integrative, and update the topics reported in its report, and in preparation for the current broad-based dialogue with them, which The reporting guidelines require the bank sustainability and CSR report. Accordingly, one, the bank focused on feedback from will be reflected in the bank's next CSR to focus its report on the topics most in order to prepare to comply with the global and local analyst firms and rating reports (for more information on the agencies (dialogue with analysts who process, please see p. 32). are in contact with the bank), following Process of Defining Material Aspects for the Bank Hapoalim Sustainability and CSR Report As part of the bank's dialogue with external stakeholders Bank Hapoalim Stakeholders throughout the year, the bank receives feedback on its sustainability and CSR reporting from various parties. Following the publication of its previous report, and in Sustainability and CSR International perception Review of CSR reports in Local preparation for the current one, the bank focused on • the bank’s peer group and BDO survey of New aspects and at leading foreign banks stakeholders’ feedback from global and local analyst firms and rating expansion of existing • expectations of Aspects raised in dialogue aspects implemented at the reports in the agencies. In 2017, the bank is expected to begin an in- with international ESG + banking sector bank over the years analysis organizations • • depth process to re-map its stakeholders and instill an • Key aspects based International study Focus on activity of the on the Maala rating various units relevant to by GRI on stakeholders’ integrative, broad-based dialogue with them expectations of reports each aspect in this sector

List of material List of material aspect aspects re ecting representing stakeholders’ strategic focus areas combined expectations of and the depth of sustainability reports in the implementation banking industry

Material aspects overlapping between stakeholders’ expectations and prioritization based on the considerations of the bank

4. 102-49 5. 102-46 INTRODUCTION 18-19 List of Material Topics for Sustainability Reporting at Bank Hapoalim6 Presentation of material Economic topics for the report in terms In accordance with the CSR Flower model, the material topics represent four content areas (the best interests of the customer, of social, economic, and empowerment of the community, employees' quality of life and well-being, and living with the environment), which describe environmental impacts uence (Value cre impacts on all of the bank's stakeholders. Material topics for the sustainability and CSR report (not in hierarchical order): inﬂ atio al n ern tie The diagram presents all of xt 9 r) E 8 the material topics reported 1. Promotion of customers' financial freedom -Providing 12. Investment in the community – Presentation of by Bank Hapoalim, based on information, products and tools, individually adapted Poalim for the Community activities, including 7 109 two aspects: service and advice, education, and financial literacy for support for social causes and donations, as well 67 3 in 3 ernal ﬂuen the various customer segments. as Poalim Volunteers, the volunteering activity of Int ce 5 4 e managem 4 ■ The zone of impact – 18 urc en 1 2. Customer diversity and promotion of specific sectors the bank. 18 o t t 1 es ie R r) 2121 internal or external – does of the economy - Inclusion of the Arab-Israeli and 13. Promotion of a culture of dialogue and ( 15 22 78 this topic affect external Ultra-Orthodox (Haredi) sectors; promotion of small openness with employees – Presentation of intra- 1313 2020 stakeholders, internal and mid-sized businesses; and promotion of the peri- organizational channels for dialogue and sharing 1717 1616 1414 56 stakeholders, or both retirement ("new seniors") population. with employees at the bank. (the external circle versus 3. Leading financial freedom in a multi-channel world - 14. Promotion of diversity, equal opportunities, 1919 the internal circle in the Banking services via Internet, mobile, and telephone, and transparency – Promotion of gender and Environmental 12 diagram). offering customers better access and increased control sector equality, prevention of discrimination, and ■ The zone of impact over financial management. promotion of diverse employment. – economic, social, 4. Service for a wide variety of customers – Perceiving, 15. Individual development and training – environmental – does this Social instilling, and measuring excellence in service for the Presentation of the area of individual training and 1011 topic create economic, various customer segments. development at the bank. social, environmental, or 5. Information security and privacy – Presentation of 16. Promotion of an appropriate work environment - combined value. the area of information security at the bank and the Policies on human capital, remuneration and principles for protecting customers' privacy. benefits, and well-being and caring for employees 6. Accessibility - Making the buildings and branches of in various aspects of the work environment and of CUSTOMERS WORKERS the bank as well as banking services accessible to their lives. 1. Promotion of customers' financial 13. Promotion of a culture of dialogue and people with disabilities. 17. Management of electricity consumption and freedom openness with employees 7. Development of products and services for the energy efficiency – Presentation of activities aimed 2. Customer diversity and promotion of 14. Promotion of diversity, equal specific sectors of the economy opportunities, and transparency promotion of environmental sustainability - Financing at reducing energy consumption at the bank. 3. Leading financial freedom in a multi- 15. Individual development and training for projects that promote the protection of the 18. Management of paper resources – The bank's channel world 16. Promotion of an appropriate work environment. strategic effort to cut back paper consumption in 4. Service for a wide variety of environment 8. Examination of environmental risks in financing - its activity (resource consumption). customers 5. Information security and privacy Management of environmental risks when granting 19. Reduction of environmental impacts – 6. Accessibility ENVIRONMENT financing. Management of environmental protection at the 7. Development of products and services 17. Management of electricity 9. Business continuity - Preparation to maintain bank, and reduction of the bank's environmental for the promotion of environmental consumption and energy efficiency sustainability 18. Management of paper resources continuous business operations at the bank during impact and carbon footprint. 8. Examination of environmental risks 19. Reduction of environmental impacts emergencies. 20. Corporate governance and ethics – Presentation in financing 10. Responsible supply-chain management - Including of the structure and activity of the board of 9. Business continuity social responsibility and sustainability considerations in directors, and instilling ethics at the bank. ETHICS purchasing. 21. Prevention of corruption and money laundering - COMMUNITY 20. Corporate governance and ethics 11. Expansion of spheres of influence – Direct and indirect The bank's commitment to the prevention of 21. Prevention of corruption and money 10. Responsible supply-chain laundering influence on the economy and society of Israel and corruption; presentation of the activity of the management on various stakeholders, with the presentation of the bank's compliance unit. 11. Expansion of spheres of influence 12. Investment in the community bank's activity in the public sphere.

6. 102-47 INTRODUCTION 20-21 Bank Hapoalim CSR performance

Field Metric 2012 2013 2014 2015 2016 Field Metric 2012 2013 2014 2015 2016 General data Investment Community donations and investments (NIS M) 48 46 47 43 44 in the com- Bank pro- Total revenues (NIS M.) 13,637 13,664 14,022 14,362 14,721 Donations of computer systems (NIS M) 0.5 0.83 0.32 0.39 0.80 munity file Number of employees of the bank 10,124 9,745 9,283 8,898 8,701 Number of participants in activities of organizations sup- - At least At least At least At least ported by the bank in the area of education 360,000 160,000 185,000 183,000 Number of branches of the bank (Business and retail) 298 286 277 267 257 Number of participants in activities of organizations sup- - At least At least At least At least Best interests of the customer ported by the bank in the area of culture and the arts 35,000 40,000 25,000 64,000 Total credit for small businesses (NIS B.) 24.3 26.2 29.3 32.4 27.3 Number of recipients of treatment and assistance - At least At least At least At least Credit through the activities of organizations supported by the 420,000 410,000 268,000 255,000 granted for Additional credit earmarked for small businesses be- 2 2.15 3.5 3.5 3.2 bank in the area of health care and welfare promotion yond the ordinary course of business (NIS B.) of social/en- Employee Number of employees of the bank who volunteer 3,000 3,200 3,000 3,500 3,500 Cumulative credit for environmental projects and prod- - 8.15 6.66 6.63 6.53 volunteering Annual volunteering hours 110,000 125,000 124,000 148,700 152,200 vironmental ucts (NIS B.) causes Total credit promoting shared value - business and - - - - 2.04 Employees’ quality of life and well-being social (NIS B.) Employment Employees under a collective agreement (%) 93.2% 93.1% 91.7% 91.3% 90.5%7 Promoting Number of businesses in the CashBack Club 1,000 5,000 7,000 8,000 10,000 profile small busi- Diverse em- Percentage of w omen at the bank (%) 64.6% 65% 65% 64.6% 64.4% ness ployment Percentage of female executives at the bank (%) 50.7% 51.7% 51.5% 52.1% 52.4% Financial Number of users of budget management application 260,000 400,000 ~500,000 ~500,000 660,000 Percentage of women on the board of directors of the 33% 33% 33% 33% 18% freedom (cumulative) bank (%) Service in a Number of active online accounts 1,000,000 1,200,000 1,200,000 1,300,000 1,370,000 Percentage of minorities at the bank (%) 5.2% 5.3% 5.1% 5.4% 6% multi-chan- Number of users of mobile banking services 600,000 650,000 650,000 735,000 906,000 Percentage of hires from under-employed sectors, of 17% 20% 17% 20.5% 22% nel world Number of users of the bank’s applications - 500,000 610,000 total annual hiring Number of active accounts at the call center 700,000 750,000 700,000 1,000,000 1,000,000 Training and Percentage of academic degree holders at the bank (%) 57.6% 59.5% 62.4% 64.4% 65.8% develop- Number of learning days at the bank 68,000 56,200 61,400 49,600 49,776 Processing General percentage of justified queries – Bank of Israel 26.6% 27.3% 14.4% 9.2% Has not ment of hu- customer data (%) been man capital Average hours of learning per employee 54.1 46.1 43 38.1 42.5 queries received as of the Channels for Dialogue sessions for employees with the CEO and 45 44 43 28 not mea- date of dialogue for members of management of the bank sured preparing employees Percentage of employees who received feedback (%) 99% 99% 99% 99% 99% the report Percentage of justified queries concerning privacy and 13% 10% 0% 7% 3.7% Living with the environment banking confidentiality (%) Energy Total electricity consumption (kWh) 93,600,417 90,616,904 86,567,004 84,579,103 86,388,184 Accessibility Number of branches serving the Arab-Israeli sector 36 36 38 26 43 consump- Electricity consumption per m2 (kWh) 299.7 294.1 284.6 278.4 280.7 of service tion and Number of branches in towns with extensive religious 22 23 23 20 21 efficiency Percent annual change in electricity consumption (year -0.49% -3.2% -4.5% -2.3% 2% to a diverse and ultra-orthodox populations on year, %) range of customers Number of accessible branches 107 116 155 226 224* Diesel fuel consumption (L) 15,000 11,752 10,840 102,275 13,547 * Branches with an Accessibility Seal from the Access Gasoline consumption (L) 3,440,152 3,448,047 3,537,444 3,599,730 3,021,768 Israel organization Consump- Paper consumption (tons) 1,791 1,668 1,458 1,421 1,378 Number of ATMs accessible to blind users 65 316 316 316 536 tion of Annual savings in paper consumption (tons) 128 123 210 37 42 materials Percentage of branches outside central Israel (beyond 45% 45% 40% 35% 40% Consumption of ink and toner cartridges 28,003 21,700 21,370 17,035 16,643 the area from Gedera to Hadera; in %) Carton recycling (tons) 20 18 40 13 9.3 Empowerment of society and the community Paper recycling (tons) 1,380 987 1,352 700 783 Direct eco- Economic value distributed by the bank group to 9,310 9,800 10,231 10,226 12,062 Recycling of electronic waste at the bank (tons) 17 15.8 44 28.7 38 nomic value stakeholders (operational expenses, salaries and related for stake- expenses, donations and sponsorships, provision for Recycling of bottles and beverage containers (units) 150,000 110,000 108,000 101,843 104,690 taxes, dividends; in NIS M) holders Collection of construction waste (m3) 3,298 2,526 2,168 2,526 2,112 Promotion Percentage of purchasing from Israeli sources - 98% 98% 93% 92% Collection of batteries (kg) 800 960 280 240 765 of respon- Percentage of purchasing from small and micro-busi- - 30% 21% 15% 46% Collection of fluorescent bulbs (units) 14,000 18,560 6,740 2,680 2,340 sible pro- nesses Total emission of greenhouse gases (tons CO eq) 101,696 94,342 *70,623 61,511 61,082 curement Carbon 2 The percentage of small and micro suppliers (from total - 60% 70% 52% %81 footprint Percent annual change in greenhouse-gas emissions -4.6% -7.2% -25.1% -12.9% -0.7% annual number of suppliers) (year on year, %)

* It should be noted that the number of accessible bank branches has decreased since 2015 (224 versus 226), due to the reduction in the bank's total number of branches (including accessible branches). 7. 102-41 INTRODUCTION 22-23 Process Controls for Implementation Adoption of Responsible Initiatives, Promotion of the CSR Plan at Bank Hapoalim of Partnerships, and Transparent Reporting

An external assurance process allows responsibility. BDO consultants’ close work the Technical Working Group of the British The bank is committed to its partnership Voluntary reporting system on has received inquiries from international readers of this report to verify the bank's with the bank allows a professional opinion Government. The data were adapted to with organizations working towards analysts regarding its performance in these self-report based on an independent to be provided based on an examination Israel based on the Israel Greenhouse Gas sustainability and CSR, and has adopted greenhouse-gas emissions in Israel areas. The bank accords high importance opinion from a professional observer. of the processes performed by the bank Emission Recording System – Operating international standards of responsible In 2010, Bank Hapoalim was one of the to this dialogue, for two main reasons: The expanded assurance process with throughout 2015 and up to the end of the Rules and Reporting Guidelines, issued conduct: first organizations to join the voluntary regard to the adequacy of the report on first quarter of 2016. by the Samuel Neaman Institute and the system for recording greenhouse-gas 1. Dialogue with international analysts who sustainability and CSR and the involvement Ministry of Environmental Protection in Global Sullivan Principles of Social emissions. This system is a joint initiative are in routine contact with corporations of additional sources of assurance enable April 2016. Responsibility of the Ministry of Environmental Protection all over the world offers the bank valuable the bank to learn from the feedback The bank adopted these principles and the Manufacturers’ Association. The insights regarding current trends in the received from those conducting the as early as 2004, in the belief that the bank updates this data and reports to the global CSR field and material issues for Examination of the GRI: In process and provide verification of the implementation of the principles would ministry annually. the banking sector. Accordance with GRI Standards: reliability of the report for stakeholders. The help achieve greater tolerance and Due diligence examination of the Comprehensive current report underwent four assurance understanding among peoples and 2. An examination of the bank's scores report, in accordance with the GRI processes, each focusing on a different This sustainability and CSR report for the promote a culture of peace. on the various rating scales nourishes and Accountability guidelines Bank Hapoalim's aspect of the report (for extensive details year of 2016, was sent to the international a continuous process of gap analysis of the assurance process and methods The external assurance process for CSR organization GRI, which examined it and Maala Sustainability and in the management of CSR issues and the criteria examined, see p. 170). reports is conducted by a third party who found that the process of establishing Bank Hapoalim joined Maala in 2006 as CSR Performance and a discussion of ways of improving was not involved in the writing of the the topics to be reported by the bank a member of the organization’s business performance on the various parameters. report. The third party ascertains that complies with the directives in the reporting leadership. In ratings assigned by Maala - International the information presented in the report is standard. This report has been prepared for 2016, based on reported data for 2015, Analysts' Perspective The bank examines its performance from congruent with the three principles set forth in accordance with the GRI Standards: Bank Hapoalim was ranked at the top of a broad perspective, aligned with the in the AccountAbility quality assurance Comprehensive option. the Platinum Plus class, the highest rating Capital-market analysts, both internationally standards defined in this field for the global standard AA1000APS and with the GRI category; it therefore topped the Maala and in Israel, have been including financial sector, in order to understand due diligence guidelines. charts. The bank also appears on Maala's sustainability and CSR components its position relative to banks worldwide. Routine Process Control stock-market index, which consists of all in their evaluation of business firms’ Towards that end, reviews of the bank by and Examination of the CSR of the public companies rated by Maala and organizations' performance. These analysts and based on key international Implementation Process at the Bank Examination of the Quality of and traded on the TASE. components are presented to investors metrics are compared. Reporting on the Bank's Carbon The CSR and Sustainability Group at the around the world. Over the last two Footprint BDO accounting firm has guided Bank UN Global Compact decades, the implementation of corporate The peer group used for comparison Hapoalim in the implementation of its This examination was performed by the During 2010, Bank Hapoalim joined this responsibility has expanded in the Israeli to the global banking industry consists sustainability and CSR program for the Sustainability and CSR Group at the UN initiative aimed at promoting economic and global financial sectors. Consequently, of the banks listed in The Banker last eight years. The group’s activities accounting firm BDO. The process of development that is beneficial for the information has accumulated that allows magazine. This list contains information focus on monitoring the process and examining the bank's carbon footprint is community and for future generations. financial corporations to be examined and about approximately 5,000 major banks progress of the program for sustainability based on prevalent principles for carbon Since then, the bank has ensured that the compared based on their performance around the world. A second comparison and social, economic, and environmental calculation and marking, developed by principles of the compact are implemented in this field. group is the group of banks that publish in its activities. The sustainability report orderly reports on corporate responsibility. also serves as a COP (Communication Since the inception of the Bank Hapoalim Approximately 680 financial institutions on Progress) for the Global Compact. sustainability and CSR plan, the bank and corporations worldwide published

INTRODUCTION 24-25 sustainability and CSR reports in recent standards of transparency and quality. The scores earned by Bank Hapoalim, years, on average (2013-2015, based on Approximately 70-300 such banking and its inclusion in all of the various rating the official GRI database). corporations are reviewed (EIRIS is the scales of the organizations noted above for The bank was ranked first in the Israeli only one of these organizations that sustainability and corporate responsibility, banking industry by Kaima Research The major analyst reviews and does not publicly release information indicate that it ranks with the 5% of banks international indices that include the about the number of banks included in at the apex of the international banking In 2016, a first CSR review of its kind - focusing on the local banking sector - was conducted by Kaima Research. In bank (Sustainalytics, FTES4Good, EIRIS, its review). The group comprises a total sector. the final analysis, Poalim was ranked first among Israel’s seven major banks. The purpose of the rating was to assess OEKOM, and MSCI) encompass a of approximately 1.5%-6% of all banking and quantify the risks and opportunities by examining Environmental, Social, Governance (ESG) aspects and the quality smaller set of banking corporations. It is corporations in the baseline group from of managing these risks by the banks. The review included five key areas: (1) Customers, society and community; (2) important to note that a prerequisite for The Banker magazine (the range of Employees; (3) Corporate governance; (4) The environment; (5) Sustainability management and innovation. The rating inclusion in this group of companies is percentages results from the different reflects the bank’s ability to manage two aspects of its sustainable activity: managing the CSR risks it faces and realizing a demonstrated threshold of corporate number of banks reviewed or rated in the potential in various opportunities in this field. responsibility performance, according to each case).

VOLUNTARY 2016 2011 REPORTING SYSTEM 2009 2007 2004 MSCI FTSE4GOOD ON GREENHOUSE-GAS GOOD ENERGY GLOBAL REPORTING GLOBAL SULLIVAN EMISSIONS IN ISRAEL INITIATIVE INITIATIVE PRINCIPLES

2014 EIRIS SUSTAINALYTICS 2010 2008 2006 OEKOM THE GLOBAL AA1000 LICENSED MAALA COMPACT ASSURANCE PROVIDER

INTRODUCTION 26-27 Bank Hapoalim CSR and Sustainability Performance 2016

The best interests of the customer Empowerment of society and the community

Making service accessible to Promoting financial freedom Supporting the people with disabilities for customers peri-retirement segment Volunteering by Economic value for the Community Over Tens of employees of the bank bank's stakeholders donations 224 660,000 thousands branches have been made customers use the budget of consulting sessions on pensions accessible, and dozens of NIS billion NIS billion management application and finances were held, addressing , 12 0.5 branches are in process 3500 the unique needs of new seniors employees volunteered given back to the state invested by the bank regularly nationwide and municipalities, and in various community to suppliers, employees, causes since 2004 investors, and the community

Promoting the small business segment Digital banking Credit in the amount of 906,000 1.37 customers use NIS billion 27.3 million Promoting equal opportunities in Embedding corporate responsibility was granted to small businesses customers the bank's mobile the community considerations in purchasing services and Over use the bank's website applications

183,000 NIS1.36 billion Poalim Recovery Encouraging growth in the Credit for environmental products adults, adolescents, and children The Bank purchased from Arab-Israeli sector in the sustainability sector participated in the activities organizations that mainly Over of educational organizations employ workers with 50,000 supported by the bank disabilities 43 NIS billion customers participated in the 6.5 branches for projects in solar energy, Poalim Recovery program for serve the Arabic-speaking desalination, natural gas, restructuring of their debts population, in the broadest and more through dialogue with the bank distribution of branches in Israel

INTRODUCTION 28-29 Bank Hapoalim CSR and Sustainability Performance 2016

Employees' quality of life and well-being Living with the environment

Promoting workplace College-educated employees Hiring new employees Paperless branch Paper recycling diversity

10 % 65.8 % 4,000 tons employees of the bank of the bank's employees external agency workers 196 783 million pages collected for come from under- hold academic degrees; the were hired as employees recycling employed population bank provides tuition aid of the bank in 2007-2016 were saved in 2016 due to activities aimed at segments for hundreds of employees cutting down on paper use. Since 2007 the bank's cumulative saving in preventing trees each year from being cut down for the paper industry is approximately 138,000 trees

Promoting women Training and development Carbon footprint Fuel efficiency Electronic waste recycling at the bank of human capital

43.1 % 16 % 38tons 52.4% 46,276 of carbon footprint from % decrease in annual fuel collected for of executives are days of study for employees 2010 to 2016; carbon consumption, based on recycling women of the bank (without footprint in 2016: 61,082 employees' mileage external employee's) tons CO2eq

INTRODUCTION 30-31 LOOKING AHEAD

■ Support for the small-business The Sustainability and Corporate of their lives; and to behave responsibly for prudent financial management plan, including adaptation of the academic studies; and support for sector - Responsibility program continues to be towards the environment. Key directions With emphasis on targeted in the early years of their financial buildings and branches of the bank employees' whole-person well-being. part of Bank Hapoalim's strategic core. The and activities to be pursued by the bank measures to reflect the bank's vision activity; for accessibility and accessible program is ongoing, and encompasses in the coming years: - “helping individuals, businesses ■ Innovation Division - In the service and development of banking Minimization of the bank's organizational infrastructures, information and communities thrive," working to coming years, the Innovation products to help promote accessibility environmental impact: ■ The Stakeholder Division - In 2017, and measurement systems, milestones, provide tools that will help in setting Division is expected to collaborate in Israel; ■ Decreasing paper consumption - the Stakeholder Relations Division and controls, constituting an element of up new businesses in communities, with technology, cyber, and ■ Social responsibility in purchasing Implementation of the multi-year will launch a broad process to map the bank's long-term vision. As extensively improve their chances of survival and fintech companies on designing - Continued implementation of the process of cutting back paper use its significant stakeholders, their illustrated in the CSR report, structured enrich the life of their communities, infrastructures necessary for the work plan for integration of CSR (the Paperless Branch project), perceptions and examine the material work plans and planned future activities as well as digital empowerment of improvement and planning of the considerations into purchasing including conversion of processes issues. In this framework, the Division have been formulated. At the same small businesses; future of banking, with emphasis processes of the bank and into its to digital formats in order to reduce will launch an in-depth research ■ time, within its emphasis on innovation New Seniors - Increased activity on creating new growth engines; interaction with suppliers; paper use. process with stakeholder groups and entrepreneurship, the bank works to with this population segment. This information- and analytics-based ■ Energy efficiency - Implementation (using the laddering approach) to identify original ideas in this field and to effort includes services, products, smart banking; developing AGILE- Investment in the community: of continuous processes aimed at validate the material aspect that were bring these concepts to fruition through and unique benefits for the peri- based processes to enhance ■ Activity in the public sphere to energy efficiency and reduction of previously identified and extract the pilot projects. The projects are designed retirement and retiree population, in efficiency, flexibility and speed; promote various social issues, the bank's carbon footprint. relevant areas and values for each to test the feasibility of the ideas in light response to their specific financial continued development of investment including the collaboration with stakeholder group. Accordingly, of societal, environmental, and economic needs, and the promotion of social advice and payments tools and various entities to promote various a measurement and monitoring considerations. Following the testing issues related to this segment in the development of new banking models; communities in Israel, with an tool (barometer) will be developed, period, ideas that prove successful on public sphere; improvement of customer experience emphasis on peripheral areas; which will examine how to respond these parameters are implemented broadly ■ Increased activity in the Arab-Israeli and tools on the digital and mobile ■ Investment in the community - As to needs under the bank’s material across all units. sector - implementation of the bank's channels, for a future based on part of Poalim in the Community, a aspects, following which, strategic plan, which includes addressing customer experience both in digital strategic process to assess the foci processes and ongoing initiatives The bank intends to continue to expand the specific needs, expanding physical media and face-to-face interactions. and implementation going forward will will be launched. In addition, a activities conducted within its sustainability and digital services, and integrating ■ Promotion of excellence in be conducted, including additional set of adjusted measures will be and CSR plan, in accordance with its employees from the Arab society, service - by instilling the bank's areas of activity and innovative work formulated on material aspects perception and with the material aspects, as part of the integration of this service approach, including the processes; for each stakeholder group, from while continually following global progress community with Israeli society. creation of standards for processes, which a strategic map will be in this field. This approach is given ■ Financial freedom - Expansion measurement and feedback surveys, In the bank's work environment: drawn, to serve as a guiding tool practical expression, first and foremost, of initiatives and channels for the absorption of structural changes, job ■ Diverse employment - Implementation for management. in the creation of value for customers and promotion of financial freedom: the definitions, process improvement, of the multi-year plan to promote the in advancement of society and of the For the benefit of the bank's bank will continue to lead a strategic and upgrades of technology; employment of population groups community, through business activities customers: initiative in the coming years aimed at ■ Identification of opportunities for underrepresented in the job market; and through identifying new opportunities The bank will continue to promote promoting the financial freedom of its financing of banking products in the ■ Cultivation and promotion of the for the promotion of economic value activity with the various sectors, in customers and of the general public; sustainability field. quality of human capital - with a alongside social and environmental values. strategic channels, with responses ■ Promotion of accessibility of focus on the employee. This includes Concurrently, the bank will continue to tailored to each sector's needs and ■ Poalim Young - Continued activity banking services for people the advancement of women in develop the quality of its human capital; the creation of shared value. This with the target group of young with disabilities - Continued general, and in management positions to care for its workers, in various aspects includes: customers, with an emphasis on tools implementation of the multi-year in particular; encouragement of

INTRODUCTION 32-33 THE BEST INTERESTS OF THE CLIENT Meeting Customer Needs

Bank Hapoalim recognizes This section describes the bank’s Bank, while contributing to the economy Personal, human, and time that are most suitable to them. In enable customers to become better relationships with its customers, the and society. ‎ As‎ a result of growing addition to the investment in infrastructure, that customers’ needs and technological – the acquainted with the bank's digital services and products offered to customers awareness of social and environmental bank’s strategic customers need a familiar face, human tools. The remaining bank branches aspirations change during by the bank, and the ways in which the issues, changes are emerging in customer contact and a personal relationship. Thus, will undergo a similar process next approach different life stages. The bank identifies opportunities and manages values and needs. ‎ ‎The bank's role is to bankers will continue to give customers year. At the same time, the bank will risks in the area of social responsibility, in offer a solution to them on the financial side added value and professional services in launch conferences and workshops bank therefore endeavors a changing business environment. The and to respond to emerging demands, ‎ In recent years, dramatic changes have material areas, such as pension advice, for the general public, designed to to provide customers bank strives to develop banking services ‎by offering financing solutions and various been taking place in the competitive financial consulting, business consulting, support and guide customers in the and products based on a philosophy of deposits and investment products that map, including entry of new competitors, and more. digital world. with all of the financial creating shared value for its customers encourage sustainable consumption and changing customer expectations and ■ Personal and human banking – information and services and its other stakeholders, such as the investment which takes into account the enhancement of banking technology. Bank To promote and strengthen this synergetic as a leading financial institution, the that can help them community, various participants in the environment and social issues. ‎ Hapoalim has vowed to offer banking that approach, the bank operates on two levels: bank understands that digital banking economy, the environment, and others, combines personal and human service does not provide a full response to understand, plan, and while simultaneously generating economic The bank works to create value for with technological innovation to provide a ■ Digital empowerment – to enable customers’ expectations, and that it carry out both long-term value for the bank. its customers in the following ways: high-quality banking experience, tailored customers to enjoy maximum should therefore provide them with and immediate financial to each and every customer’s needs. The convenience and access, the bank support when needed, offering them Bank Hapoalim recognizes that customers’ ■ Development of responsible products bank believes that the combination of trains and teaches customers uncompromising service which relies decisions. The bank’s needs and aspirations change during to foster economic and environmental Bank Hapoalim’s advanced technological about the advanced digital tools on deep familiarity, attentiveness, view of its customers is different life stages. The bank therefore sustainability, for our customers and for tools with professional and experienced developed in recent years, designed professionalism and commitment and endeavors to provide customers with all the economy as a whole; personnel at the branches, provides to improve their financial conduct on a long-term relationship based on derived from a philosophy of the financial information and services ■ Maintaining a multichannel network customers with the best possible service. and save them significant time. trust. To this end, the bank provides of sustainability, giving that can help them understand, plan, and for communication with customers at So far, dozens of branches have customers with a range of services carried rise to a relationship carry out both long-term and immediate any time and place, with appropriate As part of this concept, the bank focuses undergone a digital empowerment out face to face. financial decisions. The bank’s view of its accessibility; its efforts on the digital empowerment of its process, which includes guidance, designed to encompass customers is derived from a philosophy of ■ Providing optimal service to achieve customers, with the aim of closely assisting mentoring and training customers on a comprehensive sustainability, giving rise to a relationship customer satisfaction, and responding them in transitioning to the technological digital tools and ATMs, adding digital understanding of the designed to encompass a comprehensive to and learning from customer world, and thus allowing them the freedom elements to the branch, and changing understanding of the needs of customers communications; to manage their financial affairs in the place the branch environment so as to needs of customers and and their families over time. ■ Responsiveness to customers’ needs their families over time through all life stages; In addition to the above, the changes ■ Solutions tailored to the unique underway in the business and social characteristics of different customer environment – the rapid technological groups. changes and dynamically changing ■ An appropriate response to all the needs Bank Hapoalim has vowed to offer banking that combines personal and customer demands, the transition to that emerge as the result of the dramatic human service with technological innovation to provide a high-quality a low-carbon economy, shortage of developments in the digital area, social resources, water and soil conservation, networks and regulatory changes, ‎ ‎while banking experience, tailored to each and every customer’s needs. global warming, and the need to integrate cooperating with outside suppliers and The bank believes that the combination of Bank Hapoalim’s advanced and advance certain sectors of society stakeholders. ‎ technological tools with professional and experienced personnel at the – offer business opportunities for the branches, provides customers with the best possible service.

THE BEST INTERESTS 36-37 OF THE CLIENT The Bank’s Guiding Principles in the and training videos at the branches, with its products and services. As a result, a Working to Promote Financial Deployment of its Branch Network the objective of helping customers use multitude of channels is currently available On the basis of the bank management’s and carry out transactions on digital to customers at any place and time, so that Freedom for Customers growth strategy, the bank intends to channels: the app, bank website, ATMs, essentially all of their routine interactions continue the careful deployment of and the Poalim call center – are the array with the bank can be conducted without In line with the financial freedom philosophy transactions they have performed, and Enhancing branches and to enhance deployment in available to help customers, showing them visiting a branch. In 2016 continued presented in the introduction, the bank more. This information helps customers new locations, in line with the needs and the advantages and capabilities of the expansion of the use of computerized promotes its customers' financial freedom be aware of their financial condition and awareness of proper characteristics of its customers. In the digital tools and machines. In addition, the and online channels, such as the Poalim on several key levels: of the options available to them, serving financial conduct coming years, the bank will continue to employees are instructed to do everything by Telephone call center, the Hapoalim as a basis for control, consultation, and examine the opening of branches in new they can to help every customer struggling Online website, smartphone and tablet ■ Raising awareness of the importance of making informed life decisions in this area; ■ The Growing Family – In 2016, the areas, with a focus on strategic populations to adapt to the new reality and to make sure applications, the Mail Net service, proper financial conduct – To promote ■ Services, products and tools that project was held for the fifth consecutive with growth potential, such as the Arab that they have a suitable solution, especially and more. This trend minimizes the financial freedom among its customers support behavior change to promote year. It is initiated by the bank, with the society, the ultra-orthodox community, elderly and handicapped customers. environmental impact of banking products, and the general public, the bank initiates proper financial conduct according to Yedioth Ahronoth newspaper and the Ynet small businesses, and additional potential in that it often eliminates the need for the various channels to raise awareness life’s crossroads – in recent years the website, to mentor families facing various segments, both large and small. The Today, it is possible to carry out most customer to visit the branch in person and provide financial education tailored bank has developed a series of products financial challenges in order to help them bank is also considering the continued frequent banking transactions on digital (leading to pollution savings) and, obviously, to various target audiences (children, and tools that help its customers make learn how to improve their economic deployment of branches based on an channels and self-service stations. The saves paper. The use of bank branches adolescents, youths, households, and informed financial decisions. These tools conduct. The families are provided innovative digital concept, in line with teams at branches which have been also carries relatively low environmental the elderly) and in accordance with the enable customers to understand and with guidance by the bank's advisors in the development of customer needs, converted to cashless service branches will impact, due to the broad distribution of various stages of their lives; analyze information, and to obtain control various areas, such as personal financial demographic changes, changes in the assist customers to carry out transactions the branches of Bank Hapoalim and the ■ mparting information and financial and flexibility in managing accounts and conduct and financial growth, real estate competitive environment, and business on the various channels available to them. extensive network of ATMs, self-service knowledge – the bank makes available to family budgets and in creating long-term and mortgages, investments, pensions, potential. It is important to note that the At some branches, expert hosts will be stations, and self-service information the public a variety of channels to obtain savings. The tools are accessible through and more. The project serves as a competitive dynamics in the Israeli banking placed, to assist customers unfamiliar stations located adjacent to and outside of basic information on proper financial innovative digital channels, so that they platform demonstrating to the general market are intensifying daily, requiring the with the range of transactions on the branches. Customers can visit a branch or conduct through the bank’s marketing can be used at any time and place. Taking public, through the stories of five families, bank to be flexible and adapt quickly in digital channels or who struggle to carry use a self-service station conveniently, with website and training offered to the public. the drive to instill financial freedom to the how consumer habits, economic habits, accordance with market conditions. The them out. In addition to the bankers at the minimal travel and environmental impact. In addition, the bank offers its customers, next level, several initiatives of the bank and financial behavior in general can be network deployment policy is therefore branches, reinforced telephone support through every channel and at all times, encourage changes in behavior and in transformed. dynamic and flexible, based on meticulous centers (business/ technical) are also highly detailed and extensive information financial habits for its target audiences, research and monitoring of the changing available to customers, as well as online regarding their financial assets, liabilities, effectively promoting financial literacy. market conditions. and app support tools. In 2016, Bank Hapoalim was selected as “the Main branch mergers and services Optimal service offered at any place best bank in Israel” by adaptation and time, while helping to protect the In general, every adaptation of banking environment the "Global Finance" in recent years the bank has developed a series of products and tools that services to customer needs, such as The bank encourages extensive use of its for the fifth time the merging of branches or adapting the products through online means, thereby help its customers make informed financial decisions. These tools enable types of services they offer, is an important improving service quality while reducing customers to understand and analyze information, and to obtain control measure in the eyes of both the bank and environmental impact. In today's world and flexibility in managing accounts and family budgets and in creating the customer. Therefore, the step is carried of technological change, customers' out in an orderly process that includes expectations for innovative, advanced long-term savings. The tools are accessible through innovative digital an evaluation of customer needs and solutions in the services provided by channels, so that they can be used at any time and place adaptation of alternative suitable automated businesses have increased. The bank and other services. The bank believes in invests great effort in immediate adaptation placing strong emphasis on the training of to technological developments, and in bankers, both through specialized courses the integration of new applications with

THE BEST INTERESTS 38-39 OF THE CLIENT ■ Taking CTRL - a television project Providing financial tablet), bankers at the branches, and the למעלה מ- jointly initiated by Bank Hapoalim and information and bank's experts in each financial area. More than More than Reshet Television, which promotes proper financial conduct in the digital world. knowledge Professional training conferences are Four families undergo a financial conduct As part of the bank's effort to enhance offered to customers – the conferences workshop at the Bank’s Club and at a financial freedom, it provides its customers cover various financial content areas and 50,000 212,000 660,000 digital branch. The content corners on with extensive information in various are designed for various target audiences, Reshet’s website will show the changes financial areas, with the purpose of giving depending on the professional field and customersֿ customers customers the families underwent and were invited to customers a status snapshot that is content. The goal of these conferences use the UP Control service save in Dan the Saver plans ‎ use the budget enter the Taking CTRL section on Reshet as complete as possible, in order to is to enhance the financial knowledge Television, where tools and aids for proper enable them to balance their financial of various target groups. Dozens such management tool family financial conduct will be uploaded. needs and abilities in the short and long conferences are held each year at the ■ Poalim Young – a broad move to recruit term. The information includes details of bank’s branches. In 2016, a group of youths and draftees as customers, transactions executed by the customer, a volunteers from among the bank’s retirees including contacting their parents. As range of products and tools for financial was trained to give training and morning part of the project, a mini-site – Parents management, and current market data conferences to senior citizens, among Teach Children about Money – was and trends (e.g. with regard to pensions, others. In addition, the scope and range launched, including training videos for savings, the capital market, the housing of the presentations offered have been children and youths, offering tips and tools market, etc.). This information is accessible extended, and they now include training for parents to train children of different to customers through a variety of channels: for soldiers, students and senior citizens. 5 450 50 ages about handling their money properly. direct banking channels (the bank's Within this framework, dozens of training families families partners http://poalimparents.bankhapoalim.co.il website, call center, and smartphone and sessions are held across the country. families participated in the have participated to date in the in the Israel Financial Freedom fifth year of the Growing Growth Opportunities initiative Forum meet regularly Family initiative as well as around 40 lone Israeli soldiers without family support and Financial awareness week about 30 small businesses in the In 2016, the bank took an active part in the Financial Awareness Week project – during which bank light rail route customers and the public in Israel were offered a series of conferences in various bank branches, which were held during a single week in September 2016. The purpose was to increase awareness of informed financial conduct and proper management of banking activities, and to introduce practical tools to help improve financial conduct and reduce expenses. The first of its kind, the initiative was held nationwide, and was led by the Bank of Israel, with the participation of the banks and The Association of Banks in About למעלה מ- Israel, manifesting the power embodied in cooperation between all the banks in Israel. The banks jointly developed the training content, which was uniformly taught in all conferences, and offered a series of tips to manage the family budget, handle credit properly, encourage savings and even how to discuss money with children. The conferences focused on digital tools that support proper financial conduct in a simple, convenient and even cheaper manner. During the conferences, the bank offered hands-on experience of 1,000 digital tools. The project was accompanied by a campaign and a website to sign up for the conferences, 50,000 people which were held at about 100 branches of the various banks across Israel. customers took part in the Financial Awareness Week conferences participated in the Poalim for at the bank’s branches Recovery project

THE BEST INTERESTS 40-41 OF THE CLIENT Services, Products and Tools that Support Behavior Change to Promote Financial Freedom

Digital tools for the bank’s customers: more; the account balance is clearly ■ Tools to increase control and direct debits for electricity, water, and savings plans are aligned with each 1995, the bank provides its customers ■ The new website – the customer’s smart visible at the top of the homepage. An flexibility in the management of other payments. The service sends life stage of the child's life, until they who are party to consulting agreements, financial partner – the bank has launched overdrawn customer can immediately current accounts – Poalim UP the customer a text message when it reach financial independence. In 2016, investment advice tailored to each its new website, which includes a range of see the difference between his balance incorporates a range of products identifies increased charges compared a board game dedicated to promoting customer’s needs, based on familiarity digital tools for the smart management of and his overdraft limit; reminders and and services to help customers handle with previous months, enabling the financial education among children was with his/her personal needs, preferences accounts. The new website strengthens tasks – reminders of pending payments, their money day-to-day, with numerous customer to save time tracking the developed; the game was also distributed and objectives; the bank provides its the customer experience, providing checkbooks waiting to be picked up, the choices and high adaptability; bills and money in extra cost; to participants of the Dan the Saver private and business customers with a immediate access banking that helps status of loans, and so on appear on the ■ Up Active – a service that allows summer camps; wide range of consultants specializing customers manage their money quickly homepage. The customer can set tasks customers to optimize routine account ■ Applications with advanced banking ■ A Savings Account for Every Child in various fields (such as investment, and conveniently, through an advanced to be carried out at convenient dates. management in a range of areas by services – private and business - In 2016, the Knesset approved the credit and savings). The aim is to in user-friendly interface, simple and clear ■ The budget management tool - to setting up automatic transactions, customers can use the range of services Savings Account for Every Child program order to help them make more informed language, and a new and clear design educate customers about proper budget without monitoring their account status and information offered through the as a national project, which gives each decisions about various financial aspects that helps customers focus on what management, the bank developed a daily. Customers set up a series of bank's applications to manage many child an opportunity to embark on an of their lives; is most important to them. The new series of unique tools, with the objective actions in advance; the transactions financial aspects of their lives, at any place independent life with an initial amount in ■ Poalim for Recovery – the Poalim for website offers new tools for smart money of providing its customers with continuous are executed following approval by the and anytime, and to benefit from unique savings. According to the program, from Recovery program is designed to assist management and long-term planning: assistance in managing their finances. customer. Actions include withdrawal services – using the most advanced January 2017, the National Insurance struggling private customers, through ■ Income versus expenses: a dynamic As part of this effort, the bank developed from a daily interest deposit when the technological capabilities, which offer Institute will transfer NIS 50 per month to cooperation, with the aim of retaining comparison of the customer’s income online tools for building and managing account balance is negative, deposit an optimal customer experience and every child’s account until the age of 18, them as customers. The Poalim for and expenses over time, which allows a budget, which the bank customer into a savings plan when the balance maximum availability. in addition to the children allowance. This Recovery process is undertaken with them to know their situation in real time; can use to examine his/her financial is positive, sending an alert when a The applications add smart tools for amount is to be deposited in a special- emphasis on empowering the customer's ■ My Investments and My Loans: a conduct compared with a profile of checkbook is about to run out and proper financial conduct, such as the purpose savings account under the child’s financial freedom and providing a quality convenient display that concentrates the similar customers – and thereby behave ordering a new checkbook, and more; ability to see the account status and name, and the parent may add NIS 50 professional response to his/her needs investments in the account and clearly more smartly. ■ Up Card – an international card expected expenses through the end per month from the children allowance and preferences. The service and handling shows the monthly loan payments, The bank offers the "UP Budget charged with money from the of the month, without logging on to the to this savings account. Bank Hapoalim package is tailored to each and every so customers can efficiently plan their Management Tool", which provides customer's current account; it is account (the Quick Glance service). In believes in the importance of instilling customer, through focus on adapting expenditures; customers with a daily, up-to-date, transferrable to family members, since addition, as a bank that encourages proper saving habits from an early age, the process to each customer’s activity ■ Making ends meet: a tool, which will and detailed picture of their income vs. the account holder's name does not smart financial conduct, Bank Hapoalim and has therefore invested considerable characteristics and financial abilities; show the customer in real time his/ expenses in a simple, personalized, and appear on the card. The customer developed Save & Go, a special savings resources in its value proposition in the ■ Growth Opportunities – the project her, expected balance at the end of the accessible way. The tool also allows the can add and deduct money from the plan for smartphones. The service project in order serve as a significant provides tools for families coping with month, so they can prepare accordingly. setting of monthly targets. At the end card to the account at any time; makes savings accessible to as many partner in this endeavor. The bank has a financial crisis by financial education, If additional income or expenses are of each month, customers can obtain ■ Smart UP – Allows customers to make customers as possible, offering them an formulated offerings for savings plans at navigating a time of change, and growth expected, it will be possible to add them an up-to-date snapshot of whether or all current checking account charges enjoyable customer experience: saving attractive interest rates that will provide through crisis. The families receive to the calculation; not they met their targets. on a fixed date each month. small amounts in a digital piggy bank, certainty and confidence that the funds financial instruction and personal ■ My Objectives and Targets: the ■ Up On Time – a real-time text or email similar to the real piggy bank at home, in will be well-kept for the future of the guidance, aimed at preventing financial customer can set savings targets and One of the important applications of alert service from the bank, for updates order to achieve savings targets. children. deterioration and allowing a return see how close they are to meeting them. the budget management tool is "Poalim related to the customer’s account or ■ Personalized consulting service – to positive financial activity. The idea The new homepage also provides a Like Me", which allows customers to markets, at the customer’s choice; Focusing on population groups and among the key services offered by the was sparked by customers' letters to full picture of the account, allowing the compare their expenses with customers ■ Up Control – a service which assists crossroads in life: bank to its customers are investment the bank following their financial and customer to understand more, including: with similar financial and demographic customers in monitoring current ■ Dan the Saver – offers a series of advice services and personalized service. personal crises. During 2016, the project a snapshot of the account status – characteristics. charges on their credit cards and specialized savings products aimed Subject to the provisions of the Regulation continued in different geographic areas, with the latest transactions and credit at encouraging parents to save for of Investment Advice, Investment focusing on small businesses along the cards, deposits and savings, loans, and their children's future. The goals of the Marketing and Portfolio Management – light rail route in Tel Aviv, Ramat Gan

THE BEST INTERESTS 42-43 OF THE CLIENT and Bnei Brak, as well as on lone Israeli Serving a Diverse Clientele soldiers lacking family support; Examining Achievement of Objectives ■ Promoting financial freedom among Markets Served Credit to the public by segment of activity, 2016 2016 Objectives Status new senior citizens - the bank offers by the Bank pension advice to its customers of every 6.8% 0.5% Expansion of the Growth Opportunities Completed. age, with an emphasis on understanding The bank’s activity is managed through 5.6% Isracard initiative to small businesses, focusing on group the various aspects of pensions and with several operating segments. The division Global activity the intention of managing pension savings businesses located along the route of the into operating segments is based on for the long term; light rail in Tel Aviv, Ramat Gan and Bnei Brak; the types of products and services or ■ Promoting financial freedom in the on the types of customers. The bank’s Expansion of training presentations to Completed. small business sector – the bank strives management uses this division to make 14.9% promote proper financial conduct for to empower and promote the financial decisions and to analyze the group's Private additional target audiences such as senior costumers freedom of its customers in the small business results. Below is a division citizens, soldiers, students and others. business sector, through developing into segments according to the bank tools and knowledge in the financial field, management’s approach. In accordance 10.1% tailored to this sector’s unique needs. with the Supervisor of Banks’s directives, Small business 25.0% segment The bank's numerous initiatives in this a banking corporation whose operating Corporate area create business value in three key segments according to its management’s segment aspects: granting credit and providing LOOKING AHEAD approach are materially different that counseling and specialized, tailored the regulatory operating segments, service and creating a marketing platform shall also provide a disclosure of the 25.3% Establish a training center for customers and the general public that will offer for the businesses (for more information, operating segments in accordance with the Residential knowledge and tools to improve the financial conduct of various target audiences 11.8% (mortgage loans) please see below in this chapter). management’s approach. (For a definition using both physical and virtual sessions; Commerial of segments and more information, see segment Launch of a training website which will include hundreds of study items in various the Bank's 2016 Financial Statements). topics and subjects that involve finance. The goal is to reach the customer at the point where he/she needs to enhance their knowledge on a particular subject, using Segmentation of Borrowers advanced BI capabilities, in order to provide them with the greatest added value; In 2016, total credit to the public amounted to approximately 272 billion NIS, a 2.3% Promote additional initiatives in cooperation with other banks and the Association increase over 2015. (For more information of Banks in Israel, led by the Bank of Israel; on the development of balance-sheet balances of credit to the public by Provision of credit to promote shared value - Develop additional partnerships with media outlets to increase public awareness; operating segment in accordance with social and business the management’s approach, please see Continue promoting training sessions for customers using hundreds of volunteers pp. 214-217). The following segments have As part of the bank's core business of granting credit, a portion of the financing helps from the bank. been reclassified in the 2016 Financial promote social objectives in addition to business benefits for the entity / organization Statements. receiving the credit. In 2016, the bank granted credit in the framework of the funds to promote small businesses, micro-financing of micro businesses, financing to NGOs and social organizations and to a dedicated product that meets a social need for housing in the Arab community. The total credit in this field reached NIS 2.04 billion.

THE BEST INTERESTS 44-45 OF THE CLIENT Credit with shred value - business/social NIS Poalim for Financial Freedom for the New Senior Citizens

Senior citizens account for approximately retirement necessitate the creation of a ■ ‎Customers aged +55 – the primary 0.4% 11% of Israel’s population, and the number specialized set of services and products goal at this stage is to examine the pre- Housing loan with reduced collateral for of people aged 65+ is approximately designed for this population. ‎ retirement condition and reduce anxiety the Arab society 2.04 940,0008. By‎ 2035, this segment of the at retirement; to see whether they are 66.4% billion population is expected to double, and it is ‎As part of the objective of developing ready for the future, to optimize their State-guaranteed already a highly important force in the Israeli businesses with a social benefit retirement terms for their final years in Small Business Fund 0.5% The total credit in economy. ‎ ‎The rapid growth of the senior's component, and in response to the needs the labor market, and to provide a first Koret Fund - this field reached segment will have a major impact on the of senior citizens, the bank has launched a look at their post-employment future. ‎ microfinance economy, resulting in the development of broad strategic initiative for peri-retirement ■ ‎Ahead of retirement – planning to new markets and expansion of existing seniors, the first of its kind in Israel. ‎This‎ optimally prepare for retirement, with an 4.1% ones in areas such as leisure, culture, effort is one of the focal points for the emphasis on help in realizing pension Small business funds education, and healthcare. ‎ bank's activity in 2015 and coming years. money in its different forms (annuities, in cooperation with 9.7% It will encompass unique packages for capital considerations, taxes, etc.) and the Manufacturers' NGOs 18.9% Association and social ‎It is important to distinguish between two seniors, including pension and financial initial financial planning for retirement; ‎ organizations Hapoalim small besuniss credit fund in senior citizen segments: ‎ ‎the Third Age advice, specialized products, products ■ ‎Post retirement – sessions for long-term cooperation with "Clal" begins at retirement, in the 60s, and lasts and solutions for families (seniors as a financial planning, budget control and as long as a person is still physically and gateway and important lead to the rest of management, and target realization on cognitively functional, in good health and the family), a customer club, and benefits, the basis of the customers’ needs, assets, leading an independent life. ‎ ‎The fourth age which will give seniors the confidence to current and future cash flow sources when usually begins in the 70s, or even later, with talk about retirement, ask questions, and they no longer have earnings from work.‎ physical or cognitive deterioration. ‎ ‎In any obtain advice and direction, and adapt to Social Impact Bonds event, both segments are closely tied to the new reality. ‎ ‎These services are part of ‎As part of this strategic measure, the bank Social impact bonds are a tool which enables the provision years. There are approximately 500,000 diabetics in Israel, the family: ‎the‎ third age – as a supporter; Bank Hapoalim’s outlook that retirement has initiated and promoted a number of of credit to solve social issues with the expectation of at varying degrees of severity, and approximately 400,000 ‎ the‎ fourth age – as the supported. ‎ opens a new period in people’s lives, channels: ‎ returns as a function of the success of achieving the people at high risk of developing the disease. The direct enabling them to benefit from their years ■ ‎Poalim "Advisor" – people facing social objective (addressing a social problem that also cost of treating a diabetic is about NIS 10,000 per patient ‎This life stage is characterized by dramatic of hard work.‎ retirement often discover the scope has financial costs). The bonds are non-marketable and per annum. Social security benefits for each diabetic are changes: ‎retirement‎ leads to a drop in of their post-retirement savings and are used for raising financial resources for various social NIS 20,000 per year. The proposed plan for preventing income, expenses shift to align with new The Bank's activity in this area includes assets for the first time, and realize that initiatives. The bonds embody a commitment to transfer diabetes and reducing the risk of contracting the disease is needs, and financial routines are deeply partnerships, exchange of information and they are insufficient for the standard a known amount of money over a period of several years through a dietary change and physical activity. Numerous transformed. ‎Seniors need to attain a new management of ongoing relationships with of living they planned after retirement. to finance a defined social cause. Returns on investment studies have shown a link between excess weight and financial equilibrium.‎After retirement, many many stakeholders in the field, for example: ‎ ‎The bank has launched an innovative will be granted by the government or social organization physical inactivity and the development of diabetes. seek to live in the present: ‎‎to study, travel, The Joint Venture Company, community advice system, Poalim Advisor, ‎ ‎a special which gained economic value from the investment and its and have new experiences; ‎‎but they may centers, Club 50, "Hadarta", entrepreneurs simulation program that maps all the results, provided the social objective has been achieved Fundraising is conducted by SFI (Social Finance Israel), a also be concerned about the future and in the senior segment, connection assets, post-retirement cash flows, and (and, as a derivative, the positive economic effects resulting public benefit company. SFI is managed and operated by strive for control and security for their long- with academic institutions, various needs (including unexpected expenses), from achieving that objective). In fact, the bonds serve as senior, well-known professionals from the business sector term needs. At‎ the same time, seniors often associations, professionals specializing and analyzes income and expenditures. a business-social investment tool, which creates shared and philanthropic sector. These entities will pay for SFI, wish to support their families by helping in the field, professional bodies dealing ‎ ‎On the basis of the simulation, the bank value – return alongside advancing a solution to social and through SFI – the bank and investors, depending on their children and grandchildren, serving as with the financial aspects of the adult starts a dialogue with the customer, to problems. the success of the investment according to pre-defined the family's anchor. ‎ Thus,‎ post-retirement sector and more. enable him/her to handle their current criteria. The financial performance is measured by an seniors navigate a complex matrix of needs situation and plan for the future, including To promote such shared value, Bank Hapoalim has independent assessor, according to known criteria, and financial considerations, requiring ‎The program targets three periods towards the setting of appropriate financial targets invested in social impact bonds to promote the prevention which have been agreed on with the beneficiaries of the meticulous and comprehensive financial and after retirement, with an emphasis on and offering solutions to realize them; ‎ of diabetes. This disease is one of the major causes of investment, which will pay SFI according to the success planning. ‎ ‎The challenges faced after pension and financial advice:‎ death in Israel and its incidence is on the rise in recent of the investment.

8. CBS- September 2016 - data on senior citizens in Israel.

THE BEST INTERESTS 46-47 OF THE CLIENT ■ Pension and financial advisor of a wish to encourage businesses NIS training – in order to provide a suitable and entrepreneurs to enter this high- Examining Achievement Working to Promote Financial advisory response to senior citizens, a potential market. of Objectives comprehensive training program has Freedom for Small Businesses been instituted for hundreds of advisors, In addition to the advantages mentioned 2016 Objectives Status The small-business sector, which Granting credit ‎ who underwent specialized training and above, and as part of the program, Bank contributes about- 45% of Israel's gross 27.3 personal mentoring sessions built by the Hapoalim decided to help advance the domestic product9 and provides jobs for ‎The bank grants credit to small businesses, In 2016, tens of Completed. bank for this purpose, in order to adapt social challenges that Israel’s seniors about 69% of the Israeli job market , is as part of its routine activity, both within its billion thousands of professional and behavioral content to face, in recognition of their importance one of the pillars of the Israeli economy credit portfolio – the largest in the Israeli additional pension In 2016, the bank senior citizens, with an emphasis on and centrality to families and society, ‎‎by and one of its key growth drivers. In banking system, and through funds that and financial long-term financial planning. During2016 , consolidating entrepreneurship in the public recent years, in accordance with the specialize in credit for small businesses. ‎ granted a total of NIS advice sessions are consultants underwent ongoing training; space through joint activity with various values embodied by the Bank Hapoalim ‎The bank creates collaborations through planned.‎ 27.3 billion in credit ■ Poalim Gold Club – benefits for the entities (non-profit organizations, social vision, the bank has worked diligently to dialogue in the public sphere:‎ to the small business bank’s “new senior customers”. The organizations, and business organizations) enhance and promote its small-business customers’ club offers discounts and in the sector and to promote selected customers' financial freedom, through ■ Establishing dedicated business sector. sales in retail, leisure, recreation, and subjects for the new seniors. ‎See‎ the the development of financial tools and support funds – which includes several entertainment. The bank has also Community Chapter for further information services and the provision of personalized, funds- In May 2016, the bank and Clal created special insurance for club about the bank’s response to the social professional service close to every business Insurance launched Poalim Fund for members – travel insurance without challenges faced by Israel’s seniors.‎ LOOKING in Israel. Within this effort, Bank Hapoalim Businesses, a new NIS 8 billion credit The recognition of the medical underwriting in most cases and is committed to supporting and promoting fund for small businesses. The Fund’s importance of small a cancellation option, as well as personal Throughout the year, ongoing training AHEAD small businesses, as a foundation for goal is to encourage the activity of small accident insurance. sessions for hundreds of consultants growth of the Israeli economy as a whole. and medium businesses which struggle businesses has led to the ■ Customers also benefit from special (approximately 800 participants) were In 2017, the bank is expected to to obtain credit in the ordinary course of creation of special programs, launch an Up Card for caregivers of monthly events and permanent benefits trained during the year for pension and The recognition of the importance of business. In this manner, the bank helps over the last three years, throughout the year. The club, which financial consulting services for clients elderly family members – the card is small businesses has led to the creation more small businesses in Israel to grow, automatically includes hundreds of before and after retirement. chargeable, reducing the use of cash of special programs, over the last three develop and create new jobs; continue to aimed at responding to a wide thousands of bank customers over by the caregivers of elderly family years, aimed at responding to a wide promote the bank’s and the Manufacturers' range of these businesses' the age of 65, will be developed into members – thus alleviating family range of these businesses' needs. This Association’s joint fund, as well as continue a marketplace where suppliers and In 2016, tens of thousands of members’ fears that the caregiver extensive activity is aimed at enabling to promote the Koret Fund, which enables needs. This extensive entrepreneurs can offer specialized pension and financial advice might misuse their elderly relative’s businesses to grow and expand, while the granting of micro loans, under special activity is aimed at enabling funds and giving them control over the services for senior citizens; sessions were conducted, coping with challenges, across all life terms, to small businesses; businesses to grow and ■ Pension advice centers – during the use of the cards and providing greater stages of the business, and to provide ■ The Instant Credit for Businesses year, the bank completed the deployment free of charge convenience when paying; equal opportunities to all population groups service – unique credit solutions for expand, while coping with of the centers for the new senior citizens in both the central and the peripheral small businesses. This quick and simple challenges, across all life population in all its geographic areas of The deployment of 3 pension During 2017, the bank is expected regions of Israel. The knowledge and service is available to customers at any activity; to launch a user-friendly retirement services offered in this area are based time on the bank's website, via mobile, or stages of the business, and to ■ Specialized customer conferences for and financial advice centers kit which includes information for on the bank's core capabilities and on at branches, without additional collateral provide equal opportunities to the "new senior citizens" population, was completed in 2016 retirees (such as proper handling of organization-wide processes. This activity or bureaucratic procedures. Credit is all population groups in both including lectures on planning financials compensation, various tax aspects, consists of several key elements: approved in real time, cutting down the upon retirement; regulation, etc.). Using the kit will time needed for credit applications and the central and the peripheral Hundreds of advisers were ■ Entrepreneurship training for seniors – increase the customers’ awareness of approvals to just minutes and offering an regions of Israel in an effort to assist retirees in achieving trained to provide pension and proper financial conduct on retirement, immediate response for businesses, to their ambitions to establish new ventures financial advice for people and will contribute to maximizing address challenges or to finance routine as self-employed individuals; economic benefits and prudent operations. To date, the bank has granted nearing retirement age and ■ Encouraging start-ups to develop financial planning for retiring customers. NIS 1.9 billion through this service. products and services for seniors out retirees

9. The State of Israel's Small and Medium Businesses Periodic Report - January 2016, Ministry of Economy and Industry.

THE BEST INTERESTS 48-49 OF THE CLIENT NIS Total credit to small bussinesses ■ Launch of the Guide to Starting a ■ ‎Small Business Day – ‎ tens‎ of thousands purchases from thousands of businesses. 32.4 Business – to help small new businesses, of businesses and hundreds of thousands ‎10,000 small and mid-size businesses 450 the bank launched the Guide to Starting of customers participated in the fourth participate in the program that the club 29.3 a Business in August 2016. The Guide to Small Business Day in early 2016;‎ offers, ‎enabling them to benefit from a 27.3 million Starting a Business is a business owner’s ■ Poalim CashBack Club – in 2012, the broad marketing platform reaching a 26.2 manual which provides all the information bank launched the largest customers' large number of customers, ‎ through‎ Poalim for Business Fund - and tools needed by business owners club in Israel, providing all customers a range of media channels, within and From the Fund’s establishment from the very first step. The guide is digital who use the bank's credit cards with outside the bank; ‎ and accessible online by customers of cash rebates to their current accounts on to the date of this report’s all banks. This move reflects the bank's preparation, the Bank granted strategy to support businesses’ growth at all stages of their lives, from the very 2013 2014 2015 2016 NIS 450 million in credit first steps to the growth stage; Examining Achievement of Objectives ■ Current-account benefits for small businesses in the setup phase – in 2016 Objectives Status order to assist small businesses across ■ Innovative‎ channels for business an efficient procedure without superfluous all life stages and enhance the survivability In May 2016, the bank and Clal Insurance Completed. The fund Personalized account management – the bank bureaucracy‎;‎ of new small businesses in Israel, for the launched Poalim Fund for Businesses, a new was launched may 2016 Consulting and has developed a range of innovative ■ Establishment of the Center for fifth year, Bank Hapoalim has offered the NIS 8 billion credit fund for small businesses. ‎ Service ‎ services for the management of business Business Accompaniment – in May Easy Start Package to small businesses ‎The new fund will help small businesses grow operations, at any time and place. ‎ 2016, the Bank launched, in an extensive, in their first two years of existence.‎ ‎The by granting credit at special terms, including ‎In line with the needs of small businesses, ‎Hapoalim Online Business is an area of first of its kind, move – the Center for package provides an exemption from a faster underwriting processes and just 25% the bank has initiated a variety of customized the bank's website tailored to business Business Accompaniment. The center current-account fees for businesses in in collateral.‎ services and information to enhance the needs, which offers a range of financial – launched in collaboration with the the setup phase and offers new business financial freedom of this sector. The activities that can be carried out simply College of Management, the Lahav owners assistance with their first steps;‎ bank has deployed specialized business and quickly. The bank's proprietary organization and Sachal Fund – operates ■ ‎Poalim Business Club – a club for small branches and trained bankers to provide mobile and tablet apps for business nationwide with the aim of providing and mid-sized businesses, which lowers services to small businesses at these customers offer a steadily growing range small businesses across the country with the business management costs by branches. ‎‎The bank has also developed of transactions and information, allowing knowledge and tools for managing and thousands of shekels a year, and offers LOOKING AHEAD innovative business management services owners to manage various financial growing their businesses. The Center for special benefits to business owners. through direct channels and digital aspects of their businesses and respond Business Accompaniment provides small During the year, the bank will launch targeted measures to reflect the bank's vision platforms, and its experts offer information in real time;‎ businesses with professional courses, – “helping individuals, businesses and communities thrive," working to provide about different aspects in a business’s life;‎ ■ Professional‎ banking solutions workshops on various business topics ‎Marketing Platform tools that will help in setting up new businesses in communities, improve their chances of survival and enrich the life of their communities, while positioning the and special benefits – experienced and one counseling session with an and Promoting the ■ ‎Broad deployment of specialized expert advisors assist businesses with expert consultant; branches as a key value factors in the community and contributors to its prosperity; business services – in addition to the information based on financial and ■ My Online Store – in order to provide Public Space ‎ The bank will strive to digitally empower small businesses that are customers deployment of specialized business economic research in Israel tailored banking services to small businesses that ‎The bank assists small businesses to of the bank, and will launch new, advanced technological tools that will help branches, the bank has classified 80 to the needs of the business, in areas will help them increase their turnover and deal with the challenge of publicity and business owners manage their business accounts and all of their business’s anchor branches at the Retail Banking such as: ‎‎investment advice and foreign expand their customer base, the bank advertising, faced by every small business. financial aspects simply and conveniently, in one place, either directly from their Division, which provide a solution to an trade; a desk specializing in mid-sized launched an exclusive joint initiative with ‎ The‎ bank has initiated and established mobile devices or desktop computers; especially wide range of small businesses, businesses operates in the bank’s dealing Isracard, in My Online Store. As part of several marketing structures and channels and has designated expert business room. The‎ bank has also expanded the project, small businesses which are to help promote the exposure of small The Bank will launch a platform for value creation in small local businesses to bankers at 227 branches, who work branch managers' authority to grant the bank’s customers enjoy an exclusive businesses across the country – Small improve their chances of economic survival. specifically for small businesses – the credit to these businesses. ‎ ‎This process %50 discount on the basic package for Business Day, the CashBack Club, widest deployment in Israel;‎ helps business customers receive rapid a period of six months, when setting up Business Fairs, and more. ‎ response to credit applications, through an online store;

THE BEST INTERESTS 50-51 OF THE CLIENT Working with the Ultra-Orthodox and Arab-Israeli Sectors

Bank Hapoalim accords high importance ■ Small Business Day – was held, as held to encourage youths to join the ■ Read & Succeed activity – to encourage bsd. The website serves ultra-Orthodox convenience, through cooperation with the to cultivating a stronger relationship every year, in the Arab community, and Poalim Young club, which offers benefits reading among children in Arab society – and observant customers and is adapted Behadrei Haredim portal, as well as through with its customers in the Haredi (ultra- included translation and adaptation of to youths. In addition, hundreds of took place in 26 communities. It included to these audiences’ norms. Customers can tailor-made tutorials for the ultra-Orthodox Orthodox) and Arab-Israeli sector, in the all the materials into Arabic. On this computers were donated to schools, an artistic event, in which books were sold use the website to access their accounts, population at the branches, as part of the view that these communities are catalysts day, several senior bank executives scholarships were awarded, and Dan at subsidized prices. In addition, the bank receive routine banking information, and digital empowerment process, and through for growth of the Israeli economy. Based visited Arab communities. The bank’s the Saver summer camps were held in held a unique project – the Young Writer execute various transactions. During the tablet computer stations placed at the on this perspective, and as part of Bank management visited Majar and Nazareth; nine communities; Competition to encourage writing, in which year, the bank made several moves aimed Bnei Brak and Mea Shearim branches. Hapoalim's vision and strategy, the bank ■ Plan to expand the counseling array ■ Sponsorship of conferences held for 100 children took part. A professional at exposing the public to the existence In 2016, the Read & Succeed program for continually endeavors to create value – during 2016, investment advisors from various audiences – such as business committee selected 10 winning stories, of the website, that has been adapted the haredi sector operated successfully for offers and develop services tailored to the the Arab community were hired and women, architects, driving instructors, that were published as a book. To allow to their values and to its ease of use and the seventh consecutive year. specific needs of these customers. Over took a preparatory course on the Poalim an Arab-Jewish women’s conference visually-impaired children to enjoy the the last few years the bank has achieved Campus towards obtaining a license to on social change, and a conference on book, an audio version of it was produced a leap forward in marketing to customer provide investment advice. The process leadership and management; on CD and attached to the book. Examining Achievement of Objectives segments within the retail banking area, included a six-month training course at ■ Donations to NGOs – including NGOs 2016 Objectives Status and it continues to expand its community the Campus, followed by an internship supporting people with disabilities; The ultra-orthodox and business activities in these sectors. period of several months. The process ■ Volunteering – volunteer work by ‎The bank will continue to work with the Arab-Israeli community, Completed. did not end in 2016. At the end of the bank employees in homes of elderly sector ‎ sponsoring professional conferences, activity to promote small training period, the bank will reconsider persons, institutions for children with The bank has 21 branches in towns businesses, activity adapted for youth, and expand investment the deployment of the investment advisors disabilities, etc.; with large religious and ultra-orthodox Financial Freedom advice and digital empowerment for the sector; ‎ at Arab community branches; (haredi) populations. The bank offers and Encouraging ■ A unique solution for housing credit a specialized package of services and In the ultra-orthodox community, the bank is planning Completed – in 2016, the bank continued to offer products to ultra-orthodox customers. Growth in the Arab- digital empowerment activity and the promotion of special the solution in response to the barriers ‎ ‎Branches of the bank operating in the added-value products and services; ‎ Israeli Sector to obtaining mortgages in the Arab- 10,000 ultra-orthodox sector have been adapted The Arab-Israeli sector is growing, and Israeli community. This solution enables to these customers' needs, respecting their In 2016, the Read & Succeed program and the adapted Completed Bank Hapoalim attaches great strategic members of the Arab community to obtain million way of life. The branches’ appearance, website for the ultra-orthodox community will move forward.‎ importance to its business activity in the a mortgage loan secured by placing a the videos displayed on screens at the coming years. The bank is committed partial pledge on the property, in order to In 2016, 10,000 new private branches, and marketing material have to the sector’s continued development meet the existing barriers in Arab society, customers and approximately been adapted to the customers.‎ and growth. The bank’s expansion that do not allow to place a full pledge 730 new business customers LOOKING AHEAD of its deployment in, and offering of on properties; joined the bank, which opened The bank's activity in the ultra-orthodox ■ products and services to, the sector Activities to further strengthen and two new branches: in Kfar sector in recent years has resulted in Poalim for Your Own Business – The bank is expected to launch a unique training is based on recognition of the national deepen relations with the community initiatives, development, and adaptation Manda and Iksal program to encourage women in the Arab community to turn their talents into importance of integrating the country's – workshops on family budget of products and services designed to small businesses in cooperation with the Economic Empowerment for Women diverse communities in the job market management were held. The workshops complement and respect the ultra- NGO. The six-month long program will provide participants with tools and and economy, and the development of the were conducted for employee groups, orthodox way of life: ‎ ‎a range of loans knowledge through group meetings and individual sessions with leading lecturers periphery. The bank’s customers have an such as employees of municipalities, suited to customers' needs, matching our and mentors from various fields; Arabic language website, which provides teachers, etc.; observant customers' life stages, ‎ including‎ changing information about the bank’s ■ Holiday activity – holiday meals were 28 loans for yeshiva students, engagement Youths in Arab society – the bank is working to create an incubator for youths in current and new products and services. organized for customers from the Druze, loans, wedding loans, home purchasing Arab society, in cooperation with ARAB TEENK, in order to become more familiar www.bankhapoalim.co.il/arabic Muslim and Christian communities, branches loans, loans for children's weddings, and and better understand the uniqueness and needs of teenagers in Arab society; attended by senior executives from the The bank has 28 branches holiday loans. In 2016, the bank launched several special bank. Flowers and greeting cards were in Arab-Israeli towns and an In late 2017, the bank plans to hold a unique, extensive economic conference for added-value initiatives, products, and distributed in the Arab community for additional 15 branches are This year, the bank updated its website the Arab society, in cooperation with Calcalist, with the participation of leading services for the sector, accompanied by Mother's Day; located in mixed towns or adapted to the ultra-Orthodox community: recognized speakers from both the general sector and Arab society. the message Always with You, including: ■ special activity was which operates at www.bankhapoalim.co.il/ Youth activity – adjacent to Arab towns

THE BEST INTERESTS 52-53 OF THE CLIENT Promoting accessibility As part of its service philosophy and relevant stakeholders and professionals, • ‎Every accessible station has an inductive corporate social responsibility values, and with the guidance of the Access Israel loopset; every branch has several the bank sees accessibility for disabled foundation. The bank routinely reviews accessible stations. ‎ persons as an essential issue and relevant legislation and advanced options • ‎Call Hear / Step Hear system at the Precentage of Accessible Branches by Geographic Area business obligation, and endeavors to available for accessibilization, and strives branch entrance. fulfill every disabled customer's basic for improvement and adaptation. • Accessible‎‎ toilets. ‎ 97% right to receive the full range of its services • ‎An elevator, escalator, or lift platform 81% as independently as possible, or with at every branch where they need to 75% support, while maintaining their dignity. Accessibility at be installed.‎ 75% 71% Disabilities may involve mobility, vision, 68% 66% 61% 59% hearing, cognition, or the weakening of Bank Hapoalim Below are descriptions of the various various functions, as a result of old age or Accessibilization of branches facilities at branches to help people with 42% a permanent or temporary incapacitation. and buildings disabilities: ‎ The bank has the duty to adapt and create The effort includes a thorough examination ■ ‎Step Hear - a voice-activated navigation specialized solutions for various types of of all obstacles and barriers that customers system to provide voice direction for the needs and disabilities, and to customize with disabilities face when entering the visually impaired, helping them find the services to ensure that customers with branch from the street and inside the branch entrance door and accessible disabilities are served in an optimal manner, branch, and finding solutions for smooth, ATMs; ‎ consistent with the service offered to the continuous movement and accessible ■ ‎Call Hear - a device to alert the designated general public. This duty is grounded service. This begins with wide reserved banker at the branch’s accessible station both in regulations and in the standards parking spaces, and continues with that a visually impaired or limited mobility Northern Haifa The Tel Aviv Central Southern The Jerusalem The Head the bank has set beyond its regulatory ramps to bridge height differences, wide customer is at the branch entrance; ‎ Area Sharon Area Area Negev Business Office obligation it applies to both physical and entrances to the branch, sufficient space for ■ ‎Induction loop set – a device to improve Area Area virtual service channels. movement inside the branch, appropriate the dialogue with an auditory impaired signage, a wheelchair-accessible service customer, enabling him to hear through Further to the ongoing activity of the Bank station, comfortable access to a desk, his hearing aid hear only the banker in the field of accessibility, an orderly comfortable waiting seats with armrests providing him service, through his hearing plan is being applied for the gradual and restrooms adapted for disabled aid, without background noise.‎ Accessible branches: as of the date this report was implementation of the new accessibility persons, and more. An accessible regulations in accordance with the service station is available at each of ‎As of the date this report was written, there written, there are 224 branches under the new accessibility timetables defined in the regulations, the accessibilized branches, offering are Step Hear and Call Hear devices at all standard from NGO Access Israel. These branches feature among others, in the Bank's buildings, comprehensive service. These stations accessible bank branches. ‎ The‎ devices Step Hear, Call Hear, inductive loop sets, and other aids. A facilities and in the accessibility of its are staffed by employees who can provide will be standard equipment for all branches total of 82% of the bank’s branches are accessible. It should website. This plan is scheduled to be service to customers in the full range of the that qualify for the new accessibility seal, ‎as‎ be noted that the number of accessible bank branches has completed until 1.11.2017. bank's products and services. well as at all branches that are renovated. ‎ Inductive‎ Loopsets are installed at all 82% decreased since 2015 (224 versus 226), due to the reduction Over the years, the bank has continually All accessible branches have: ‎ accessible stations at the branches;‎ of the bank’s in the bank's total number of branches (including accessible and consistently worked on a systemic, • ‎Accessible service stations pursuant ■ ‎Accessible ATMs for visually impaired branches). The percentage of accessible branches, integrated accessibilization process, to service accessibility regulations (an customers – a solution that integrates an branches are however, remained similar and, in any case – exceeded including physical accessibilization of its accessible station for all banking). ‎ earpiece connected to a socket on the buildings and branches, to customers • ‎Accessible parking or a letter sent by ATM, voice commands to activate the accessible regulatory requirements as well as employees; technological and registered mail to the municipality to keyboard in accordance with the functions virtual accessibilization; and adaptation prepare accessible parking. ‎ wanted by the customer. ‎ Instructions‎ of its service philosophy to customers • ‎Accessible and convenient entry (about are provided in four languages: ‎ ‎Hebrew, with disabilities. This process has been 70% of branches are accessible). ‎ English, Russian, and Arabic.‎ conducted based on dialogue with the • Suitable‎ signs as required by law. ‎

THE BEST INTERESTS 54-55 OF THE CLIENT Virtual channels and interfaces at the bank's buildings, as well as Encouraging Over time, the bank has worked to integrate basic guidelines for serving people Consumer Club and enhance technological innovations in with disabilities, information regarding business accessibility its service offering, to enable customers accessibility on the bank's website, and for People with to receive the full range of its services an explanation on ways of serving people Granting credit to promote Disabilities and products, at any place and time: with various disabilities, such as visual, accessibility through the call centers, online via desktop hearing, or cognitive impairments, during As part of the Bank's efforts to promote At the end of 2016, the bank announced % computer, on smartphones of every routine operations. ‎News‎ and procedures accessibility, the bank began to grant the launch of a new consumer club, the 99 kind, on tablets, etc., using convenient, related to the accessibility of buildings credit to small businesses committed to "Adif Club", which will grant benefits to Accessible ATMs advanced interfaces. Beyond the benefits and of service were communicated to complying with the Accessibility Law. The people with disabilities. The club, which to customers and to the environment due to employees during 2016. ‎‎Employees have loan is granted by the bank with low and is expected to be launched in 2017, is a as of the writing of this report, there are approximately savings on travel, time, paper consumption, undergone personal and computerized beneficial interest rates, for an unusually joint venture with Isracard and the 2B 536 accessible ATMs and 285 combined machines, this approach represents a leap forward training on providing service to people long period (up to five years with the option Community, a social investment fund. deployed in hundreds of Poalim branches, in total – in allowing customers with disabilities to with disabilities. ‎‎The bank has prepared a of postponing principal repayments by up The bank attaches great importance in 99% of the branches use banking services in the way they find tutorial to help better understand customer to three months). This initiative continues to this club for Israeli society, and the most convenient. needs and provide them with suitable the bank's activity in this area. Following low integration of people with disabilities and adequate services. ‎‎The tutorial is demand in previous years, now, after the in society results in a two-pronged The variety of channels and technologies mandatory for all bank employees. ‎ Law has come into force and enforcement advantage: both on the value side and makes it possible to overcome limitations by the authorities is expected to increase, in terms of the economic potential. Examining Achievement of Objectives on mobility, hearing, or vision, making ‎The bank makes available to customers the bank expects a significant rise in the The club was established thanks all of the bank's products and services the option of accessing information in number of new small businesses making to a cooperation between several 2016 Objectives Status accessible to disabled persons. However, accordance with their requests and needs: ‎ their services accessible to people with stakeholders, who see both the social accessibilization of service interfaces in ■ Reading aloud of forms – at the disabilities. This product will be offered value and business potential. There will be approximately 270 accessible Completed. A these channels for some customers still customer’s request, a branch banker to tens of thousands of small businesses branches in 2016, 83% of all of the bank’s total of 82% of the presents a challenge, such as in the case will read aloud the relevant forms. ‎‎Audio in Israel, including as part of the bank’s To join the club, persons with disabilities branches (including headquarters and bank’s branches are of cognitive, visual, or auditory impairments files of long forms, such as the form for Business Club. need to present a certificate indicating business centers). currently accessible. (e.g. in a call to a call center representative), opening an account, have been uploaded 20% disability as a minimum; this difficulties using the mouse, keyboard, onto the bank’s website;‎ population is estimated at 830,000 or touch screen and clearly identifying ■ ‎Email accessibility – if a customer As part of the Bank's efforts consumers in Israel. Club members information on the screens. cannot read an email sent by the bank, to promote accessibility, will be given a Isracard credit card (as he/she can contact the branch which the bank began to grant a non-bank card). The club will offer its The bank’s marketing site is accessible manages his account or a banker at credit to small businesses members benefits and discounts in a to users with disabilities. ‎The‎ website Poalim by Telephone, and ask them to variety of areas: insurance, financial LOOKING AHEAD meets the Level II accessibility standard, read the email out loud; ‎ committed to complying with products, consumer products, cultural In 2017, the bank will continue to implement its accessibility plan, in accordance complying with all requirements ■ Translation into sign language – it is the Accessibility Law. These services, leisure and recreation, and with the multi-year plan and regulatory directives, thereby rendering all of its (approximately 99% of the pages within possible to schedule a meeting at the automotive solutions, as well as activates are held within the branches accessible; the website are Level II accessible). ‎ The‎ branch with a translator into sign language framework of cooperation information, support and assistance. bank plans to make accessible all its for complex financial matters that require Club members who wish to manage The bank will work to increase businesses’ awareness of their accessibility websites and apps that are available to lengthy discussion. ‎ with organizations working their bank accounts at the bank are requirements, while providing tools and credit assistance to implement the customers, pursuant to the accessibility ■ ‎Accessible printing – at the customer’s with small businesses and at guaranteed benefits, including loans requirements of the law; standards.‎ request, forms will be provided in designated conferences under preferential terms and digital accessible print or Braille, in coordination financial tools. As of the end of 2016, The Bank will promote collaborations and conferences to raise awareness of the ‎A page on the bank's portal aggregates with the branch that manages his/her about 50 organizations of the disabled significance of accessibility as well as make knowledge on this topic available to all of the information on accessibility account. ‎ persons in Israel have joined the club. as wide an audience as possible.

THE BEST INTERESTS 56-57 OF THE CLIENT Committed to Customer Satisfaction ■ Making the digital tools accessible, Customer satisfaction Customer service approach at Bank wide implementation, and creation of and issues arising from interaction with adapting the applications to various surveys at the branches: Tens Hapoalim is an expression of our work routines and remuneration methods; customers, and suggest places where audiences; organizational commitment to customer ■ Division partnership level - Divisions small improvements can result in major ■ Training of managers and employees of thousands of customers satisfaction. This approach refers to internal of the bank not in direct contact with changes; at the branches – a learning and who received service at ■ 840 customers as well as end users. The customers provide support for business Be Acceflexible – as part of an technological development process; the bank's branches were approach is broad-based and integrative, activities and back up the activity organization-wide campaign, the ■ Days of guidance at the branches, and covers the breadth of the bank's conducted at the points of contact with “Acceflexibility" value was launched which focused, among other things, on sampled in 2016 Poalim Host operations. customers. Service is perceived as a key (availability + flexibility) at the bank. The customers’ waiting experience at the value-added customer pillar of the promotion of an organizational various units were asked to choose branches; Customer surveys on the conferences – conferences which Service is a value exemplified across culture supportive of and focused on processes in their areas of responsibility, ■ Service workshops were held at selected the entire organization and through all better business performance. Activities to suggest how they could be improved branches; direct channels: Thousands provide customers with added processes, beyond direct, immediate in the area of service are therefore a key so that they would be more “acceflexible” ■ Training sessions were held at the of customers who use the value: about 840 customer interaction with customers. The direct route to organizational success; and practical. In addition, the new value branches to provide effective tools for direct channels offered by conferences were held at the encounter with both internal and external ■ Client area level - The service philosophy was embedded in existing mechanisms. recruiting customers; the bank are sampled branches; approximately 1,500 customers is the initial stage in the service is an essential aspect of the promotion of ■ Support for the various divisions – ■ Positive Feedback Patrol: Recognition cycle, based on the information that is customer satisfaction and enhancement according to the strengths and weaknesses of bankers’ excellence in service by a each year customers participated in 4 collected and processed. The analysis of customers' relationship with the bank. mapped in the internal service survey, quarterly visit of the Retail Division's regional conferences for business of this information makes it possible to each bank division receives close support management at branches and listening Customer surveys at Mishkan customers; over 1,000 customers draw conclusions, learn, and improve, The Service Philosophy to improve the service it offers internal and to direct feedback from customers. contributing to the development of work Instilling intra-organizational service, external customers. In 2016, the divisions Meetings were held at 112 branches, in (Hapoalim Mortgages): enjoyed a variety of digital processes that improve the level of service. as part of the divisions’ annual work underwent restructuring, changes on the which certificates of appreciation were Thousands of customers who experiences conferences held This service cycle enriches the value plans, is carried out through three main internal customer side, and the resulting awarded to 1,250 bankers; contact Mishkan are sampled across Israel. Personal Human. offer for various customers, creates a axes: organizational culture – including adaptations required. ■ Outstanding service providers at flexible organizational framework open the change in values, approach, and the branches and headquarters are each year Technological to feedback, and expresses the bank's organizational identity; processes and In addition, the ongoing processes periodically rewarded, organizational commitment to customer measurement – surveys, incorporation continued throughout the year, including satisfaction. of structural changes, job descriptions, an internal service review, various process improvement, adaptation of measurement processes, and the internal Customer Satisfaction Survey Service from an metrics, and technology upgrades; and service campaign. the business perspective – which includes 9.18 9.34 9.33 Organization-Wide 8.72 9.15 integrating service into core activities, Measures taken during 2016: 8.25 8.71 8.55 8.61 8.59 8.26 Perspective continually improving the quality of services ■ The service experience is measured 8.09 The organizational commitment to service ranked low on the intra-organizational based on various parameters – customers and to increasing the number of satisfied service survey, initiating new services, at the branches and in the various customers is reflected in all levels of the and regularly examining the mission and service channels are sampled daily, on bank’s activity from upper management roles of each division as a direct function a regular basis, throughout the year, for 2016 to the lowest-level employees. Service of its contribution to the bank's customers a feedback study; processes pertaining to the organization as and leadership. Measures on all three axes ■ The sampling of customers by text 2015 a whole can be classified into three levels: were taken in 2016, including the following message surveys, shortly after their visit ■ Organization-wide culture level - A main processes: to a branch, was expanded; focus on organization-wide activities ■ Gemba: managers share closely – ■ Focus on managing customers at the designed to foster a culture of service. division managers from headquarters branches, while providing customers These activities include formulation visit branches and other points of contact with tools and daily guidance on how Managers Dedicating time Satisfaction Understanding Professional Banker civility of a service philosophy, improved with customers, in order to experience to perform transactions on the digital availability and attention for from the branch Customer Needs knowledge and politeness measurement capabilities, organization- “the production floor”, raise questions channels; at the branch customers atmosphere

THE BEST INTERESTS 58-59 OF THE CLIENT Handling Inquiries from customers through all channels: procedures and processes. When an Percentage of justified complaints: and Requests mail, Internet, fax, telephone, etc. All units inquiry is classified as systemic, the Of the total number of complaints of the bank devote focus to processing process and progress of resolution are The customer contact center operates complaints, with high alertness and monitored via a formal procedure. Event recorded at the bank, only 6% were in accordance with Proper Conduct of awareness to accurate and appropriate analyses of systemic inquiries appear in found to be justified; in these cases, 24,700 10.8% Banking Business Directive 308A of the response to complaints, promptly when the service zone on the organizational the bank apologized, performed the Inquiries by law-enforcement Customer inquiries: In 2016, Bank of Israel, which took effect on April 1, they arise. The service philosophy of the portal, in order to assimilate the use of 2015. The directive formalizes the obligation customer contact center is transmitted inquiries as a driver for learning at the necessary remedies, and compensated agencies: The customer the customer contact center of a banking corporation to address to the employees of the bank through branches. Service inquiries and events the customers if necessary. The contact center processed processed 7,372 inquiries, of customers' inquiries in a fair, reliable, the Poalim Campus, intra-organizational are analyzed in branch staff meetings percentage of justified complaints 22,995 inquiries by law- which approximately 5,303 were and efficient manner, and is designed to communication, and lessons learnt. from time to time; decreased this year, compared with enforcement agencies in 2016 complaints. The number of provide uniform rules for addressing and ■ Localized resolution - Localized reporting inquiries throughout the banking Processing of inquiries – inquiries without implications for the the preceding year (8.4%) complaints this year was down system. The directive establishes detailed from localized resolution to lateral activity of the bank are handled 10.8% from last year rules with regard to the existence of the organizational learning appropriately through a shared process unit, the ombudsman at its head, the ■ Organizational learning - The customer by the customer contact center and the ombudsman's authority, the procedure for contact center monitors complaints and source of the issue. For example, at the processing customer complaints (including inquiries with systemic implications, end of the process, a letter or report Information about Banking Products and Services timeframes), and detailed reporting to such as recurring events at various units summarizing the resolution is sent to both The bank is subject to laws that impose transparency and disclosure requirements the board of directors, management, the and problems with organization wide the customer who initiated the inquiry and concerning information to be delivered to customers on banking products and LOOKING public, and the Supervisor of Banks. procedures or work processes. These to the branch. The branch is also issued services. Bank Hapoalim strictly adheres to the directives, which apply to all inquiries are presented to the appropriate with recommendations for improvement products and services, through designated mechanisms subject to controls The customer contact center processes professionals at the bank for study and and instructions for action aimed at and audits. Fundamental principles underlying consumer-protection directives: AHEAD incoming contact (including complaints) potential improvement of the relevant avoiding similar incidents in the future. disclosure duty (transparency) towards customers; protection of customer rights Continued implementation of the bank’s to receive advice and service from the bank. philosophy of "human, personal and technological" for customers, while defining In this context, as a leading business organization in the Israeli economy, the bank Percentage of justified requests - Bank of Israel data* and adapting the language, philosophy and exercises caution in its advertising, marketing, and sales promotion, and applies measurement. several levels of rigorous screening and controls. All messages published by the 27.3% Bank Hapoalim 25.7% 26.1% 26.6% bank conform to the law - the first and most essential level. In addition, the bank Continues measurement of internal service, 25.3% Banks average consults with experts on the essence, content, and style of its advertisements, along with the integration of measurement 23% 22% according to the service or product and the target audience. The third level in the control mechanisms of the divisions 21.4% consists of internal controls applied by the bank's experts in this field, including and the assimilation of the improvement of further review of the preceding two stages. the service provided to each other as part 15.4% of a chain that leads to the end customer. 14.4% The bank drew up a statement of ethical principles in marketing and advertising, ‎ which‎ are in addition to and go beyond the legal and regulatory compliance 11% 9.2% and the adopting of accepted ethical rules (such as the ethical rules of the Second Television and Radio Authority). The statement of principles emphasizes cooperation with advertising agencies which are committed to the ethical rules mentioned above. ‎ ‎The statement includes ethical principles, such as ‎responsibility, fairness, transparency, customer confidentiality, accessibility, and customization to different clienteles and sectors. ‎‎The statement is available on the corporate responsibility section of the bank’s website. 2010 2011 2012 2013 2014 2015

The data are relative to the average of the five major banks in Israel (Hapoalim, Leumi, Discount, FIBI, and Mizrahi-Tefahot). As of the date of preparation of this report, * data for 2016 has not yet been released by the Bank of Israel.

THE BEST INTERESTS 60-61 OF THE CLIENT Privacy and are also referred to the audit department. The Bank Hapoalim became the first Poalim for Innovation Bank Hapoalim understands that the pace of Material incidents are reported to the organization in Israel to be certified Information Security board of management and the board of under the international cyber security Bank Hapoalim understands that the pace change in global banking and technology requires Bank Hapoalim accords high importance to directors. The bank routinely conducts standard ISO 27032, in a complex of change in global banking and technology a considerable investment in promoting innovation. information security, and invests extensive resilience tests and information-security certification process conducted by the requires a considerable investment in This investment enables the bank to continue technological and human resources to surveys of its systems, in order to ensure bank's information technology area. The promoting innovation. This investment maintain the confidentiality and privacy that information security is maintained at certification under the new information- enables the bank to continue to develop to develop and strengthen its status as Israel’s of customers' information and of banking all times and complies with the strict rules security standard is in addition to the older and strengthen its status as Israel’s leading leading bank. In early 2016, the bank announced information on the Internet, through the established in this area. certification under the leading information- bank. In early 2016, the bank announced the establishment of the Innovation Division, use of highly advanced security methods security standard ISO 27001. the establishment of the Innovation Division, and some of the strongest encryption The bank and its employees may not which will focus on the design and creation which will focus on the design and creation of systems available. Information security transfer information about the customer’s of tomorrow's Bank Hapoalim, with the tomorrow's Bank Hapoalim, with the assistance of complies with the directives of the Bank account, business, conduct, and other The Bank Hapoalim became assistance of all the bank’s units. For this all the bank’s units. For this purpose, the division of Israel and with the Protection of Privacy matters with respect to agreement between the first organization in Israel purpose, the division has developed a five- Law, 1981, and other laws, as relevant, in the bank and the customer. ‎ The‎ bank’s year strategic plan, which will position the has developed a five-year strategic plan, which to be certified under the order to protect the information-technology obligation to keeping banking confidentiality bank as a smart trusted financial advisor will position the bank as a smart trusted financial system and minimize information security is not limited to the period when ties or international cyber security (STFA) for its customers. risks. This area is managed at the bank legal relations exist between the bank advisor (STFA) for its customers by the information systems and cyber and the customer, but also apply to the standard ISO 27032, in Essentially, the strategy is based on three defense division, which reports to the head unlimited period following the closing of the a complex certification main pillars; of information technology. The information customer’s account or his/her decease. process conducted by ■ Smart banking, based on knowledge and security department ensures that its staff, ‎ Access‎ to information about the bank’s advanced analytics, which will enable STFA both internal and external employees, clients found on the bank’s computers is the bank's information the bank to better know the customer consists of the best professionals with permitted solely to bank employees and technology area. The and proactively offer customized value Smart Trusted Financial Advisor the knowledge, experience, and authority solely for the purpose of their work, and certification under the propositions; in the field of information security, and only by employees authorized for this ■ Creating an advanced customer Open banking: Close relations Smart bank: regularly conducts training, enrichment, purpose by the relevant parties at the new information-security experience that will allow every customer partnerships, with the customer: based on and awareness programs. bank. ‎The‎ bank uses orderly procedures to to feel like a VIP; standard is in addition to the fintech and Agile advanced customer knowledge and protect customer confidentiality pursuant to ■ Open banking, partnerships and Information security in the bank's the Protection of Privacy Law, which details older certification under the innovative processes (including Technological experience Human advanced analytics systems is maintained on several levels the conditions for keeping and protecting leading information-security Agile ones) that enable advanced and circuits, in order to ensure that the information and the transfer of information standard ISO 27001 development methods as well as the bank's systems are properly protected between public bodies. ‎ adoption of innovative technologies Technology Human Personal from penetration, unauthorized access, or developed outside the bank and their harm. Information-related projects at the implementation in the bank within fast Bank are accompanied from their inception Inquiries concerning privacy and flexible time frames. Open and connected Relationship with "The bank knows me" to the world, new the customer - every by an information-security team that and confidentiality Customized, in line with ensures strict compliance with information- markets customer will feel 2010 2011 2012 2013 2014 2015 2016 everyday life security rules, protection of the privacy of The bank as a like a VIP "Before I even thought information, and the restriction of access Number of requests 92 77 78 30 18 43 27 platform Accessible banker - to information to authorized personnel only. of buying" "On any channel of "the person behind the Security events in IT systems are referred in Number of justified 14 9 10 3 0 3 1 your choice" machine" (Human) real time to an expert center of information- requests security personnel, and addressed and Flexible, quick access Easy, simple, convenient, Percentage of justified 15% 12% 13% 10% 0% 7% 3.7% accessible, seamless documented from the initial stage of the requests to the market event to its completion. Relevant events

THE BEST INTERESTS 62-63 OF THE CLIENT The new Innovation division has recruited leaders from various fields, its areas of activity were approved and work interfaces inside In addition, the division is working to promote Promoting innovation in the public firms, technology companies and and outside the organization were developed. Emphasis is made on developing Agile (a methodology for implementing organizational additional joint projects with Google, Cornell sphere: entrepreneurs from Israel and abroad. processes) work capabilities in all units of the bank, process flexibility and feedback that enable to reduce waste and speed up University, etc. ■ "Inspiration for Innovation" - a series ■ Startup week- the event, which took the development of outcomes. This method of operation is based on work processes in Squads (collaborative teams) to establish of sessions held by Globes and Bank place in November 2016, brought cooperation between all of the bank’s units. Below are the Innovation Division’s fields: During 2016, the division promoted the Hapoalim for new entrepreneurs, hosted together entrepreneurs, VCs, developers following projects, among others: by Hagai Golan, Globes’ editor in chief, and senior executives from the bank and Services & Products to provide them with various tools to help from the local and global tech industry, ■ B-online – improvement of the visibility of them succeed. The sessions featured in order to expose the ecosystem to the Data and Business Technological Digital the application, which enables end-to-end seasoned leading Israeli entrepreneurs, needs of large financial firms, catch up on Customer analytics Digital development Innovation – Strategy and digital activity in the account, without the who shared their experience of technological innovations, network with Experience (Including Factory and fintech CTO Roadmap need to arrive at the branch; companies’ constant race to survive and fintech companies and provide a fruitful Big Data) ■ Updating the My Branch app – updating maintain their relevancy and profitability; basis for forging partnerships. of the account management application, ■ The Airborne Conference by Leverage collaboration Identify and “import” Develop a unified Leverage information Projects Unit Strategy, the bank’s with fintech companies technological and competitive from within and responsible for the roadmap, business so as to enhance the relationship between Calcalist – brought together financial and empower business innovation customer outside the bank for implementation of plans, budget for digital the customer and his/her personal development to create experience on all business decision- digital projects new sources of revenue channels making purposes banker; and enhance the bank's ■ Launch of the BIT app – a P2P payment capabilities app ts from any bank to any bank. The application allows you to transfer funds in LOOKING AHEAD an easy and simple language to contacts, As part of the division's activities in the field and improve the bank’s ability to comply blockchain, and more. The lab will from any bank to any bank, with the Establish new growth engines, smart banking in terms of data and analytics; of fintech (financial technology), the division with regulatory requirements. conduct research with the aim of solving charge made to the customer's credit examines both the local and global markets, various technological challenges for the card and the credit appearing directly in Develop Agile-based work processes to enhance efficiency, flexibility and speed; reviewing and integrating technologies In 2016, the division launched additional banking industry – such as advanced risk the beneficiary’s account; that meet the digital strategy promoted strategic collaborations, including: management and forecasting financial ■ Chat bot – an easy to use interactive Continue to develop tools for investment advice and payments; by the division. More than 12% of global ■ Collaboration with the London activity of private and business customers; application for making transactions and Develop new banking models and improve customer experience and tools for investments in technology companies are Stock Exchange and promotion of ■ Cooperation with Cisco Systems – to receiving information by chat, the first of the digital and mobile channels. dedicated to fintech companies. Therefore, the ELLITE program – to encourage promote joint ventures in the fields of its kind in the banking industry; the division cooperates with cybersecurity and empower high-tech and fintech fintech, smart economics and promote ■ Launch of products on the Capital Market and fintech start-up companies, providing companies as part of the bank’s financial education using smart systems website to empower the capital market, them with technological and business openness to the global ecosystem. in the Western Negev. The cooperation is such as showing the daily / monthly guidance. In addition, the division strives to The program offers exposure to mentors based on an agreement between Cisco investment portfolio history, setting up a introduce foreign and local companies, and and the use of direct channels to other and the Prime Minister's Office to support regular buy / sell order, and more. has promoted dozens of collaborations for banks and relevant financial institutions; the acceleration of Israel’s digitation the benefit of customers. The relationships ■ Establishment of an innovation lab process, while promoting a vision of and partnerships developed by the division with the Technion – a long-term research innovation in the fields of education, enable it to better understand the market cooperation agreement in the fields healthcare, cybersecurity, and more. dynamics, enhance the bank’s productivity of data analytics, Internet of Things,

THE BEST INTERESTS 64-65 OF THE CLIENT Personal, human, technological – on digital new site is the customers’ smart financial funds to beneficiaries). In addition, ■ Managing direct debit orders in The activity in the various channels is derived from the bank’s vision, launched this year under partner: it offers them personal assistance, customers can now update their contact mutual funds through the website – the "personal, human and technological” strategy, with the aim of offering banking services comprehensive information about their information (such as phone, email and bank customers can now set up, update which combine personal and human service with technological innovation, while examining account, interactive tools, insights, and address) in the bank’s database through and cancel direct debit orders in mutual customized solutions that enable them the bank’s website and application. The funds through their online accounts; and responding to the customers’ ever-changing needs, with emphasis on a state-of-the-art to maximize their money, while digitally update will be performed across all of ■ Service of ordering foreign currency customer experience empowering them. the bank’s systems; at the airport for customers of all ■ Managing authorizations to carry banks – as of 2016, customers of As part of the new website, the following out payments – a service that allows all banks can order foreign currency Bank Hapoalim is committed to helping order to provide customers with complete ■ Full transparency regarding the terms, features were introduced in 2016: customers to manage the authorizations in advance through the Forex at the its customers with all financial aspects of and informed control over their banking prices, and properties of products and ■ Opening an account through the to carry out online payments on an Terminal service, and receive it on the their lives. Out of this commitment, the activities. The website offers the diverse services; website and mobile app – Bank ongoing basis – without filling in signup day of their flight at the bank’s counters bank offers its customers full availability services through a unified, easy-to-use, ■ Thinking from the customer’s perspective Hapoalim allows private customers to forms or arriving at the branch; at Ben Gurion Airport; and access to banking information and convenient and user-friendly interface and offering solutions tailored to unique open an account either through the ■ Email correspondence with a ■ Producing an account verification financial services in a variety of service (www.bankhapoalim.co.il). This year, the customer needs; bank’s website or through the mobile banker – bank customers wishing to form online – the bank’s customers interfaces: an extensive network of bank placed a major emphasis on digital ■ Granting customers full and easy control app – easily, conveniently and without ask a question related to managing their can now produce a document verifying branches and a diverse mix of direct empowerment processes for customers, in managing their financial activity on the the need to physically arrive at the accounts can now email a banker from their account ownership, including a list channels available anywhere, anytime. with the aim of providing them with a bank’s website. branch. Opening an account is an the website or app – easily, conveniently of the account’s beneficiaries and/or The activity in the various channels is variety of tools and solutions to operate easy process, in which the customer is and exactly as if they were using their signatories (if any); derived from the bank’s vision, launched their accounts online in an independent, Accessible Website required to fill in personal information, own mailbox; ■ A new identification method for the this year under the "personal, human simple, and intuitive manner. The bank’s marketing site is accessible provide a copy of relevant documents ■ Ordering checkbooks to the business website – logging in using a and technological” strategy, with the to users with disabilities. The website and e-meet with a banker using a video customer’s home – a service that mobile code or voice message – as of aim of offering banking services which To serve a wide range of customers in a meets the Level II accessibility standard, calling application. At the end of the allows the bank’s customers to order 2016, business customers can log into combine personal and human service with variety of languages, the bank offers its complying with all requirements. The goal e-meeting, an online account is opened, checkbooks online and through the app their online accounts without a physical technological innovation, while examining customers several sub-websites tailored is to enable people with motor disabilities which allows customers to perform and have them delivered to their home. identification means and without having and responding to the customers’ ever- to meet their specific needs: a website affecting their hands, impaired vision, or banking transactions and enjoy a range The checkbooks are delivered free of to download a dedicated software to changing needs, with emphasis on a for individual customers; a website for cognitive disabilities, as well as people who of services and applications offered by charge, and the customer is notified that their computers. The service allows to state-of-the-art customer experience. In retail business customers and customers experience difficulty in using computers the bank (subject to restrictions set by the delivery has been made through a access the account from any computer addition to the advantage of convenience of the Business Division; an English- and the Internet, to access the website the Bank of Israel); text message; (in Israel or abroad) with the user ID, in saving time for customers, less travel language website for business customers; conveniently and spare the difficulties ■ Updating authorizations to carry ■ Greater availability of pension password and or a code sent by a text and fuel consumption also mean less a mortgage website; an international and inconvenience of going to a branch. out transactions in the account and information on the website – in message or voice message to the user’s environmental pollution. In 2016, the website in English for nonresidents; a global updating administrative information 2016, the pension information on the mobile device when logging in. bank continued to lead the Israeli banking BHI private banking website in English, New features on the bank’s website through e-banking – A service that bank’s website was expanded, so industry in providing world-class services Spanish, Russian and French; a marketing New website allows the bank’s customers to that customers selected according to and direct channels. website for residents of Israel in Russian In 2016, the new website for all private update their authorizations to carry their activity characteristics can receive and Arabic; and a dedicated website for customers was launched, bringing a new out transactions (through the website the following data from the pension the ultra-Orthodox community. level of customer experience, depth of and mobile app) directly from the bank’s clearing house: a breakdown of their The Website information, and a range of tools for proper website or app, without arriving at pension fund coverage and insurance; Bank Hapoalim’s online activity is based financial conduct. Using an advanced the branch. For example, customers statement of deposits in provident The bank's website offers a comprehensive on customer advocacy principles. These user-friendly interface, simple and clear who only have access to e-banking funds, pension funds, insurance and set of services to its customers. The principles are part of a contemporary language, and new and clear design, information can begin to carry out continuing education funds; information concept of "personal, human and philosophy that puts the customer's needs the new website enhances the customer transactions in their accounts as on the continuing education funds’ technological" serves as the basis for the and financial freedom at the forefront and experience, providing immediate access well as transfer funds (if they choose liquidity; accrual forecast for retirement, website’s mix: extensive information and is based on the following elements: banking that helps customers manage to update the authorizations so as and more; an option for self-service transactions in their money quickly and conveniently. The to allow the occasional transfer of

THE BEST INTERESTS 66-67 OF THE CLIENT Apps the online space, featuring the name ■ The Bit application – the Bit app Poalim by Telephone The service is available to all customers, interfaces with customers independently In the dynamic competitive environment and image of the banker working at (available to the general public free of Poalim by Telephone is a multi- including people with disabilities who and allows customers to call for service shaping customers’ expectations, Bank the branch, a dynamic indication that charge), is a breakthrough in money channel banking center that provides have difficulty accessing a branch; using email, chat, phone or text message Hapoalim is committed to providing is turned on when the branch is open, transfers. It allows people to transfer comprehensive banking services. The ■ Poalim Connect - a unique and directly to one’s personal banker. its customers with the most advanced an interface for personal alerts regarding money to each other no matter in which center allows customers to perform a dedicated call center that manages all banking services, regardless of the the account, tips on proper financial bank their accounts are held or which variety of transactions in their accounts, platform or channel of his/her choice. The conduct, etc.; credit card they have. To transfer money, obtain service for an existing mortgage bank wishes to serve as the customer’s ■ Deposit of checks from other Israeli all you need to know is the recipient's loan and set up a meeting to apply for a Poalim by telephone – smart financial partner, providing added banks using the account management phone number. Bit helps users in a new one; technical support for the bank’s number of active customers value in a wide range of consumer financial app – the service that allows the deposit variety of everyday situations, in which website and mobile apps and opening a 1,000,000 areas. The bank attaches great importance of check copies – which was launched they need to transfer money: when bank account using video chat without of the products that serve the customer at 3 years ago and allowed the deposit paying a babysitter or a tradesperson, leaving home The service is convenient any given moment, of which he/she can of Bank Hapoalim checks alone – was paying back a friend, collecting money and accessible, and allows all customers ‎No. of annual conversations – make use anytime and anywhere. expanded this year to allow the deposit for a gift, and more. Money transfers – including people with disabilities – to Poalim by telephone of checks drawn on the following banks: are made in just three clicks, using a receive professional service without visiting 21,000,000 Bank Hapoalim is at the forefront of digital Bank Leumi, Israel Discount Bank, smartphone, with no need for a wallet, a branch. A voice response system is innovation and offers the most up-to-date Mizrahi Tefahot Bank, First International checkbook or cash. available 24 hours a day for information digital tools available in Israel for managing Bank, Mercantile Bank, Bank Otsar ■ The Poalim Start App – a unique app and various transactions. Services offered No. of active customers using an online account. The Bank offers its HaHayal, and Bank Massad; designed for customers making their through the voice response system include: the bank’s website customers the greatest variety of mobile ■ Receiving mail from the bank in a mobile banking debut, allowing them ■ Poalim Voice - An innovative service, 1,370,000 applications available, to make their lives variety of ways – either by email or to receive account status updates and the first of its kind in the Israeli banking easier, such as: an account management through the app. Customers can now carry out basic transactions, such as: system, allowing Poalim by Telephone app that was the first banking app in Israel view all their correspondence from the viewing their current account balance callers to identify themselves and No. of customers using the bank’s to cross the 1 million download threshold bank through the app as well (in addition and credit card statements, transferring manage their accounts using voice mobile services and apps this year; a quick securities trading app for to their online account). They can also funds, making deposits and withdrawals only, without the need to memorize a 906,000 smartphones and tablets; a digital wallet receive correspondence from the bank from daily deposits, ordering checkbooks password or key in digits. Customers that saves valuable time; an application directly to their personal mailbox; and applying for loans; can conduct a simple, convenient, for smart financial conduct in Israel and ■ Upgrade of account identification ■ A new interface for the Poalim Young intuitive conversation with the bank, to abroad; as well as specialized applications options – as part of expanding its app – chat bot – a new interface and receive extensive information or carry out LOOKING AHEAD for youths and senior citizens. value proposition in terms of quick design for the young audience, which account transactions, all through speech; and easy identification when signing allows users – for the first in Israel – to ■ Callback - This service makes it possible SwitchingLOOKING and upgrading voiceAHEAD response - In 2017 a new and faster system In 2016, emphasis was placed on improving into the account, the bank launched manage an account through online to hold the customer's place in line is expected to enable the operation of telephone operations in a clearer and the customer experience for mobile several improvements and services: chat (a chat bot), to obtain information, for the call center. Customers hear simpler way. In addition, new voice mail services are expected to be added to the services while focusing on the “personal, identification through the app using voice perform actions in deposits, make money a recording offering the possibility of service without the need to wait and hold for the banker. Such as transactions human, technological” experience. In only; identification on the website using transfers and cash withdrawals from disconnecting the call while the system to a third party and a variety of other products; this context, several new features were a single password; and expansion of the ATMs. The app’s new version is only keeps their place. It is also possible to introduced in the application this year: option for identification using a fingerprint available to iPhone users. request a callback, scheduled according Receiving full service in a single call - in 2017 the continues improvement ■ My branch application – as part of the in popular Android devices as well. to the customer’s request; service process will continue, so that customers can receive the highest service bank's vision to create a banking service ■ Voice response in Arabic and Russian in the first call, without the need for further treatment and waiting for the solution. that combines personal and human A variety of special apps - The Arabic-language and Russian- Objective – finishing the service treatment within the first call at 90% of the calls; service with technological innovation, a Bank Hapoalim continues to develop a language voice system provides new zone in the account management range of new applications for a broad extensive account information to Providing preferential service to customers aged 75 and up at Poalim by app was dedicated to the customer's range of customers, with an emphasis customers; phone - In 2017 an emphasis will be placed on a service that includes: receiving an answer from a banker with only several keystrokes, giving priority to standby branch. The new zone expands the on streamlining and on an easy and ■ UP Mail service – a service that allows possible meeting points between a convenient customer experience. Several customers to contact and communicate time - about 10 seconds standby time, and the option to schedule an appointment branch’s customers and bankers to new applications were launched this year: with the bank in writing through e-mail. at the branch.

THE BEST INTERESTS 68-69 OF THE CLIENT Poalim through Under its “personal, human and branches focuses on personal service technological” strategy, the bank instills the customized to client needs, full availability Branches use of digital services among its customers including opening hours suited to The branch channel offers customers of and employees. Customer representatives business clients, professional service Distribution of the branches of the bank* the bank 235 (retail) branches – the most at the branches assist customers in using by experts, and updates and initiatives broadly deployed nationwide network of the digital channels, providing hands-on for clients. The service package was 5 the Israeli banking system. Bank Hapoalim guidance and support. At the same time, constructed based on a comprehensive 22 6 has branches throughout Israel, from city the bank continues to focus on the needs of process of learning from customers 6 centers to remote regions. The bank is the elderly population, providing them with about their needs and expectations. The 15 22 22 6 6 working to improve the location of existing human response in addition to assistance branch network sets a new standard for 15 22 branches, with the aim of further improving and guidance in using digital channels. innovative, excellent, proactive service, 17 14 22 the accessibility of branches to customers. responsive to each business client's The bank branch serves as an anchor for Specialized branches: unique needs, and for the connection managing relations with customers and ■ Pension advice centers – in 2016, the of all systems serving the client. Another a point of service for customers seeking bank opened 3 pension advice centers significant change was carried out face-to-face service along with a variety of nationwide providing pension advice, at the business branches in 2014, in advanced tools for carrying out self-service as part of the effort to strengthen its which branch managers were granted 244 249 241 245 235 transactions, such as further developing customers' financial future. The purpose credit authority, so that customers can the website, advanced applications and of the centers is to offer professional be referred to them from the business Central back offices further deployment of self-service stations. pension advice; centers to receive service. The branches Business branches ■ High-tech units – in 2016, the bank will handle all aspects of credit for the Boutique branches Network deployment opened 2 additional units specializing business clients assigned to them. During 2016, the Bank continued the in high-tech, to expand the services Hapoalim Express branches calculated deployment of its branch offered to start-ups and established Traditional branches network, while adjusting each branch’s technology companies; format to the particular needs and ■ Foreign resident centers – service for 2012 2013 2014 2015 2016 characteristics of its target audience, foreign residents has been concentrated consistently and continuously working to at eight expert centers to improve develop advanced banking solutions and the service offered them and the services and make them accessible. In professionalism of the employees in The branch channel offers customers of the bank 235 (retail) 2015, the bank launched Poalim Digital – this field; branches – the most broadly deployed nationwide network of the a network of advanced digital branches ■ Business branches – Specialized which combine innovative tools, products branches have been established Israeli banking system. Bank Hapoalim has branches throughout and services to produce a state-of-the-art exclusively for mid-sized and large Israel, from city centers to remote regions. The bank is working to banking experience for customers, with business clients, as part of the Bank professional bankers. In addition, the bank Hapoalim branch network, forming improve the location of existing branches, with the aim of further is working to expand the services provided another element of the service package improving the accessibility of branches to customers in its branches, such as the continued provided by the bank's Corporate nation-wide deployment of pension advice Banking Area. These branches provide centers and foreign resident centers. a skilled, high-quality service experience As part of its ongoing efforts, the bank across all aspects of routine banking continues to examine the opening of activity, offering professional solutions branches in new areas, with a focus on and improving response time and *As part of the process of expansion of the services offered to customers, Express Branches were converted into traditional branches during 2013; these branches therefore appear in the traditional branches category and are not listed separately. strategic populations with growth potential, availability to customers. The service This information is correct also for the 'boutique' branches as from 2015. such as the Arab society. offering created by the bank at these

THE BEST INTERESTS 70-71 OF THE CLIENT Self-service transactions as a Developing products and services to percentage of total transactions 94% promote environmental sustainability

Mankind is at a critical crossroads due sustainability. In addition to its internal up a financing package for additional 78% 77% 628 to the ever-expanding gap between environmental efforts, the bank has set wind farms. ATM distribution supply and demand. Most environmental a strategic objective of being a leader in ■ ‎Natural gas power stations – Bank resources are being used faster than they offering financing solutions to its clients Hapoalim is the largest credit aggregator The bank has the most can be renewed in nature, and meanwhile for projects that promote environmental for the Dorad independent natural gas extensive distribution of 2016 increased consumption of nonrenewable concerns: renewable energy (solar power station, built south of Ashkelon, ATMs in the Israeli banking resources (such as fossil fuels, metals, thermal energy, photovoltaic energy, ‎ which delivers -840megawatt power 2015 and more) is causing severe shortages. In geothermal energy, pumped energy to Israel Electric Corporation. The bank system, with 628 ATMs – 540 2014 societal terms, the world's population is storage, cogeneration stations, wind is also financing the -140megawatt at the bank's branches and growing and developing, adopting wasteful turbines, transition to natural gas etc.), combined cycle cogeneration natural 2013 consumption patterns, and creating energy efficiency, water, and more. Activity gas and diesel power station, next to 88 in Customer Courts; an even greater strain on the existing in these areas is conducted alongside the Soreq desalination plant, and the 2012 resources. These and other trends call traditional banking activity. The new activity -120megawatt natural gas Nesharim Cash deposites Check deposites Cash withdrawls for a worldwide systemic change, based follows the accumulation of the necessary power station at the Nesher cement Hapoalim Self Service on several strategic activities: professional knowledge and an in-depth factory in Ramla; ‎‎ examination of goals and consequences. ■ Biogas power stations - Bank‎ The self-service stations (ATMs), available Development and implementation of Hapoalim is involved in the financing throughout Israel, operate independently of resource-efficient business processes, ■ Promoting Israel’s solar energy of two biogas power stations at Beer branch opening hours and allow customers including in the areas of reuse and industry – Bank Hapoalim has joined Tuvia and the Hadera Paper factory. ‎‎ to execute a wide range of transactions at Distribution of self-service devices recycling; Emphasis on highly efficient forces to promote the new solar energy Biogas is produced from digestion or their convenience. Self-service stations save product manufacturing processes; industry by taking an entrepreneurial anaerobic (oxygen free) fermentation time, hassle, and resources, and enable Incentivization and acceleration of approach and becoming an active of organic materials, such as ‎‎kitchen the bank to provide better, more advanced groundbreaking technological innovation in partner in giving the industry a push. waste, animal waste, municipal waste, service. Customers are increasingly using 211 the energy industry; Creation of sustainable The bank continues to provide financing pruned tree waste, agricultural residuals, 140 87 the self-service channels to perform 72 consumption patterns and consumer solutions for the solar energy industry and sewage. ‎‎ Biogas mainly consists of 118 transactions previously conducted through behavior in line with sustainability values; for all customer segments on the basis methane and carbon dioxide. Methane‎‎ bankers. Starting in 2010, funds can be 603 Water: management, transport, recovery, of the arrangements published by the is a natural colorless and odorless deposited for third parties and into savings 614 635 606 purification, and desalination; Rising o the Public Utilities Authority – Electricity. flammable organic compound that is a plans through these stations. 605 challenging of producing and supplying Construction of the 3.15 -million sq.m. major component of natural gas. Biogas‎‎ food to a growing population while reducing Ashalim solar power station in the Negev power stations are small, usually between 88 Adaptation of Self-Service Stations 108 87 wastage in the process, and more. began in 2015, As of 2016, about %85 600 kilowatts and 5 megawatts. ‎‎ 87 ■ for Additional Uses 86 Adcan machines of the project was completed; Pursuant to the biogas power stations ATMs offer cash withdrawals, balance Bank Hapoalim recognizes the strategic ■ Wind Energy – The bank financed arrangements of the Public Utilities Check deposite inquiries, cash and check deposits, 486 482 474 497 540 inevitability of the necessary change, Israel’s first wind energy project – a 21 Authority – Electricity, Israel Electric payments into certain deposits, and more, ATMs in Customer Courts and the resulting opportunities. Action is -megawatt farm at Ramat Sirin and Corporation is committed to purchasing and are widely and extensively distributed ATMs in bank courts therefore being taken on all levels of the Ma’aleh Gilboa. The bank was also the entire output of the power station throughout Israel. The bank's relative 2012 2013 2014 2015 2016 activity, both internally and externally. In appointed to lead the financing of the -24hours a day for 20 years from the share of total ATMs in Israel is greater its outward-oriented activities, the bank -99megawatt Emek Habacha wind start of operations and obtaining a than its market share in the Israeli banking is working to impart knowledge to its farm project; the financing closing of permanent license. ‎‎ sector. The addition of user interfaces in customers and offer tools for responsible the project is expected in Q2017/1. ■ Desalination – Bank Hapoalim is the four languages - Hebrew, Arabic, English, financial planning and management, in In addition, talks are being held with lead financing institution for desalination and Russian - to the self service network order to promote its customers' economic top developers in the industry to draw plants, financing approximately %80 continued during 2014.

THE BEST INTERESTS 72-73 OF THE CLIENT 0.1% Pumped-storage hydroelectricity Biogas fueled power station 0.1% Breakdown of credit for Energy Cogeneration stations of Israel’s desalination industry. ‎The that operate responsible waste treatment day. ‎‎ To maximize recycling, advanced efficiency environmental products bank led the financing for ‎‎the Derech facilities (sorting, separation, and separation technology will be used to Waste treatment facilities Hayam Desalination plant at Palmachim recycling). ‎A sorting and separation separate organic waste from dry and 0.3% and its expansion and the Ashdod and refuse derived fuel (RDF) production commercial waste;‎‎ Gas distribution 0.5% Desalination plant, ‎‎ and was a partner facility was built at the Hiriya landfill ■ Water purification –Bank Hapoalim is 0.8% in the syndicate financing the Hadera outside Tel Aviv. RDF is sold fuel made financing several companies wastewater Energy production 2.5% and Soreq desalination plants; from waste, which is used as fuel in purification facilities. Most of the treated using wind turbines ■ ‎Green construction – Bank Hapoalim is cement production at Nesher Cement wastewater is used for agriculture; ‎ 2.6% financing numerous green construction Enterprises. ‎‎The facility will treat around ■ ‎Energy efficiency – Bank Hapoalim projects nationwide; ‎ 1,500 tons of household a day, about is a partner in the financing of several 26.7% ■ Waste treatment plants – Bank half the waste dumped at Hiriya, ‎‎which energy efficiency companies. 3.9% Green building Hapoalim is financing several companies is converted into 500 tons of RDF a Water purification

‎Financing affordable irrigation in Ethiopia 10.9% In 2016, the bank led a financing deal for the Ethiopian Sugar Corporation, as part of an innovative irrigation project Thermosolar undertaken by Netafim, in the amount of $200 million – the Israeli irrigation company's largest transaction ever. The deal is power stations insured by the Ashra state insurance company and a consortium of international insurers, and the bank's co-financers are Israel's Discount Bank and Mizrahi Tefahot Bank. Bank Hapoalim's Corporate Division led the giant financing transaction, for the irrigation of cane sugar fields over an area of 7,000 hectares. 18.8% As part of the project, Netafim will provide an exclusive end-to-end solution – from engineering design, to the supply Power stations of water pumping and transmission infrastructure, advanced irrigation systems and command and control systems, to 14.8% fueled by gas agronomic and engineering consulting, which will be provided by the company's experts from Israel and around the Solar energy world. Sugar cane fields will be watered using advanced drip irrigation technology (subsurface drip systems), which has proven to significantly increase yield, while saving a considerable amount of water and other resources. 17.8% Desalination

Multi-year credit for environmental products

8.1 LOOKING 6.6 6.6 6.5 AHEAD The bank intends to continue to examine financing solutions in the areas described above, including the transition of the Israeli economy to the use of natural gas and financing for Israeli institutions and operators in this industry. NIS 6.63billion As of the end of 2016, the Bank has granted credit 2013 2014 2015 2016 in a cumulative amount of 6.53 billion NIS for environmental projects and products

THE BEST INTERESTS 74-75 OF THE CLIENT Examining environmental risks in financing Environmental Risk Segmentation by Customers in Granting Credit - 2016*

Pursuant to the directives of the Supervision Risk Management Method of the model for the classification of the risks, Level of Division's Environmental Risk of Banks regarding exposure to and Bank Group including control thresholds; procedures High Moderate Low Total management of environmental risks, Bank Risk management at the bank is performed for transaction approval processes; and Hapoalim established a working committee based on a global view of its activity in control systems. The bank has approved a No. of Total No. of Total No. of Total No. of Total to formulate recommendations regarding Israel and of its branches abroad, with model for environmental risk management customers obligo customers obligo customers obligo customers obligo environmental risk management policies due attention to the activity of banking in financing. The model links the various (in NIS (in NIS (in NIS (in NIS and methodologies. The committee subsidiaries. Risks are managed separately environmental risks, as defined by the billions) billions) billions) billions) enlisted the assistance of external advisors by each banking subsidiary in the group, Supervisor of Banks, to the business Business 23 19 108 58 88 63 219 140 and examined existing methodologies at according to policy formulated by each sectors to which the bank's clients belong. division banks elsewhere in the world. company’s board of directors and The model, which is based on equalization Commercial 0 - 33 9 6 2 39 12 presented to the board of directors. principles, categorizes different sectors division Methodology for Management of Some risks are hedged during risk of economic activity by risk level (high, Special 2 1 13 7 8 2 23 10 Environmental Risks in Financing management. Financial and operational intermediate, low). The bank is assisted by The objective of the environmental risk risk assessment and control are performed an environmental consultant, as necessary, Credit management system is to identify, specify, based on a uniform methodology at the to analyze environmental risks in specific Division and manage environmental risks in its level of the group, with guidance from credit applications. Total 25 19 154 74 102 68 281 161 key areas of activity, based on a uniform, the risk management area, taking into approved methodology, in accordance consideration the unique characteristics All of the relevant personnel of the bank * As of 31.12.2016 with the following principles: of each subsidiary's activities. were given training in this area (100 senior- level employees, including customer ■ Management of environmental risks from Even before a general policy had been relationship managers). The bank's system Business continuity the perspective of the overall exposure formulated, the bank began to apply for the management of environmental risks of the bank to each specific risk; environmental risk management processes in financing is applied to all infrastructure In order to protect the bank's business conforming with the requirements of the with all of the requirements of the various ■ Management of credit risks through when financing major infrastructure projects. projects and real-estate projects over continuity and survivability in the event of international standard ISO 2230, making regulators with regard to emergencies in assessment and management of the A prerequisite for specific financing of such NIS 50 million, and to credit above NIS a disaster or malfunction, in accordance it the first bank in Israel to obtain this Israel during Operation Protective Edge, exposure to environmental risk in the projects is an examination of the project’s 200 million. with the Bank of Israel's Directive 355, certification. The certification followed and provided its full range of services. corporate credit portfolio, assessment of impact on the environment. Clients are Business Continuity, and Directive 357, comprehensive tests conducted by the The bank continually works to improve environmental risk and its effect on credit required to prepare an environmental Information Technology Management, the Israel Standards Institute at the business its emergency preparedness system, in risk in new credit applications that meet survey, which is examined for the bank bank maintains continual preparedness continuity management unit, with the order to address deficiencies, including predefined criteria, and management and by an external consultant. The consultant based on detailed action plans, working full participation of all areas of the bank. physical flaws and issues with information monitoring of exposure to environmental ensures that the project complies with all procedures, and periodic drills, as specified Concurrently with the improvement and systems and human resources, resulting risk at the level of the overall credit of the requirements set forth in the permits in the system of emergency procedures. upgrade of its emergency preparedness from various scenarios. portfolio and at the individual level; granted by government agencies. in Israel, the business continuity plans of ■ Management of market risks - managing The bank's business continuity the bank's subsidiaries in and outside exposure to environmental risks in The bank's system of environmental risk management system was approved by Israel and of its overseas branches have direct investments by the bank (in the management in financing encompasses the Israel Standards Institute, in 2014, as also been adapted. The bank complied proprietary portfolio and in general); the organizational components necessary ■ Management of operational risks for efficient and effective management in - adapting operational systems to this area, including a policy formulated regulatory changes on environmental and approved at the level of the board matters. of directors; organizational structure; a

THE BEST INTERESTS 76-77 OF THE CLIENT POALIM FOR THE COMMUNITY The following table describes the financial added value of Influencing the State and Society of Israel the bank, which includes gross wages (including related billion $ As Israel’s leading bank, Bank Hapoalim primarily aimed at its shareholders and ■ A range of community activities, based items), taxes, earnings, and more (in millions of NIS). This is a powerful economic institution with investors; it also takes the form of taxes, on dialogue and collaborations with value reflects the bank’s contribution to the Israeli economy, The total economic value that a strong influence on Israel’s economy local procurement, and employment. In organizations in every sector of society; as a large organization in economic interaction with many and society. This section of the report addition to its routine business, the bank ■ Continual volunteering by employees stakeholders (employees, suppliers, the community, was restored to the various reviews the broad economic impact of considers itself an integral part of the of the bank; government agencies, etc.) Bank Hapoalim pays state stakeholders of the bank, Bank Hapoalim, and describes its added community, and is committed to advancing ■ Donations and sponsorships. and municipal taxes, and receives no financial assistance value and its extensive efforts devoted to and empowering the community. The or support from the state. stood at $12 billion promoting Israeli society and communities. practical expression of this philosophy is Through all of these activities, the bank The economic impact of the bank reaches the bank’s community investments, on a expands its sphere of influence and 12 beyond its direct positive value, which is number of dimensions: promotes social and environmental values in society and in the community. Breakdown 2012 2013 2014 2015 2016 Economic value created by the Total income (including 13,637 13,664 14,022 14,362 14,721 group extraordinary income) The economic impact The following table presents key data regarding the bank’s financial Economic value distributed to Operating and other 8,174 8,350 8,502 8,129 8,839 performance and the added value it generates (based on the bank’s stakeholders by the expenses (including of the bank reaches consolidated financial statements, in millions of NIS): group (operating and municipal tax; excluding beyond its direct other expenses plus depreciation) 2012 2013 2014 2015 2016 positive value, which provisions for taxes and Wages and related ex- 5,130 5,434 5,300 4,934 4,783 Profit from financing activities 8,415 8,423 8,684 8,929 9,345 dividends) penses (within operating is primarily aimed at and other expenses) Total income (financing profit + 13,637 13,664 14,022 14,362 14,721 its shareholders and Donations and sponsor- 48 46 47 43 44 operating income) investors; it also takes ships the form of taxes, Operating costs 8,886 9,024 9,140 8,790 9,490 (within operating and other expenses) Wages and related expenses 5,130 5,434 5,300 4,934 4,783 local procurement, Provision for taxes (tax 1,230 1,271 1,729 2,097 2,358 and employment. Donations and investments in the 48 46 47 43 44 benefit) In addition to its community Dividends declared - 276 448 569 685 Total1 9,404 9,621 10,231 10,795 12,062 routine business, Shareholders’ equity 26,561 28,834 31,361 33,032 34,047 the bank considers Economic value Difference between the 4,233 4,043 3,791 3,567 2,659 Dividends paid to shareholders of - 276 448 569 685 retained group’s income and its itself an integral part the bank operating and other of the community, Interest to debt or bond holders 1,925 2,065 1,361 1,058 1,061 expenses, provisions for and is committed taxes, and dividends Provision for taxes (tax benefit) on 1,230 1,271 1,729 2,097 2,358 to advancing and operating profit * Of expenses, in the component of salary expenses, the bank paid the state a total of NIS 732.5 million in taxes on wages and employer contributions in 2016. In addition, the component paid by employees to the state out of their wages totaled NIS 791.6 million (income tax on employees' wages and deductions empowering the from employees' wages). This component contributes to the economy through the direct payment of income tax as well as through employees' demand Provision for doubtful debts 987 874 425 475 269 community and expenses. The sum of both amounts is NIS 1.52 billion. This is in addition to corporation tax paid by the bank in 2015, in the amount of NIS 2.35 billion.

EMPOWERING SOCIETY AND 80-81 THE COMMUNITY Responsible Supply Chain Management A Nationwide Employer Profile of the Bank's Supply Chain

A Nationwide Employer Bank Hapoalim maintains A Nationwide Employer Bank Hapoalim The operational activity of Bank Hapoalim, 1. Construction, real estate, and maintenance the bank’s supply chain. The complete a network of 235 branches (as of the end of as a banking organization, is based on a of buildings and properties; procurement process consists of 2016), distributed throughout Israel. About 30% maintains a network of 235 branches (as supply chain that consists of a pool of 2. Projects, acquisition, and maintenance the following stages: specification of of the branches are located in National Priority of the end of 2016), distributed throughout suppliers of goods and services, comprising of technological and telecommunication requirements, publication of a call for Areas, and approximately 40% of the branches thousands of companies in the areas infrastructures; bids, examination of bids and selection are outside the Gedera-to-Hadera central region. Israel. About 30% of the branches are of logistics, technology, and consulting. 3. Human resources, professional services, of winners, execution of the contractual Branch employees and managers usually reside in located in National Priority Areas, and Contractual engagements were executed and consulting; engagement, and payment of suppliers. the vicinity of the branch. Recruitment procedures with approximately 3,000 suppliers 4. Transportation, shipping, and secure The process is defined, uniform, and are identical for all branches. Consequently, the approximately 40% of the branches are from this pool during 2016. The bank's deliveries; orderly; clear parameters are established to bank employs an equal proportion of residents of outside the Gedera-to-Hadera supplier pool contains suppliers of varying 5. Office necessities, printing, and mailing. examine the quality of the purchased items; peripheral and central regions. sizes (large, mid-sized, small, and micro separation of authority is practiced in the businesses), operating throughout Israel In addition to these five categories, additional critical stages of the procurement process and in additional countries. Approximately purchasing groups are aggregated (such as establishing demand, selecting 92% of procurement at Bank Hapoalim is under the category "others," such as suppliers, and payment); authorizations are from suppliers who are located in Israel advertising and sales promotion, information set up on the bank’s information systems; Bank Employees and employ workers here. services, professional literature, and more. and information and decisions in each (Segmentation by area of residence) Procurement in each of the additional stage of the process are documented on The five main categories in the bank's groups does not exceed 4% of the total these systems, which based on advanced 31.9% supply chain, which in aggregate account procurement volume. Procurement at Bank technology (ERP). All of these practices are for 86% of its total annual procurement, are: Hapoalim is managed by the corporate aimed at improving the efficiency and quality 21.4% procurement unit, which serves as the of procurement management, allowing integrative administrator of all procurement control and conclusions, and preventing activities and manages interfaces with conflicts of interest. 16.9% 16.0% 9.0% Approximately Breakdown of Bank Hapoalim procurment in 2016 (financial expenditure) 4.8%

27% 25% Construction South Jerusalem Tel-Aviv Center Hasharon North Technology and real estate, communications and maintenance % of buildings 92 and properties Bank Hapoalim operates two call centers and a central back office, which provide approximately 1,500 jobs. One of the call centers of procurement is located in central Israel, at the industrial zone in the Azor Regional Council, and the other, for reasons including social responsibility considerations, is in the northern town of Nesher. The central back office (Matab) is located outside Tel Aviv, in the Beit Dagan area. at Bank Hapoalim is 25% Human The central back office in Beit Dagan also operates through regional offices throughout Israel, located in Beer Sheba, Nesher, Givat 14% resources, from suppliers who are Other Olga, Hatzor Haglilit, and Jerusalem. professional services, located in Israel and and consulting employ workers here 6%

Transportation, shipping,and 3% secure delivery Office supplies, prindng,and mailing

EMPOWERING SOCIETY AND 82-83 THE COMMUNITY Responsible Procurement Basic Rules for Suppliers' Embedding CSR Principles in Promoting Small Businesses in Conduct Supplier Agreements the Supply Chain As part of a comprehensive philosophy of corporate As part of a comprehensive philosophy In 2013, the bank formulated basic rules Following the formulation of a list of Bank Hapoalim recognizes the importance responsibility, the bank is in advanced stages of the of corporate responsibility, the for the conduct of suppliers in contractual general requirements applicable to all of small businesses to the progress of implementation of a formalized plan for embedding corporate bank is in advanced stages of the engagements with the bank. The rules are suppliers (also presented in the CSR the Israeli economy, and promotes these responsibility within purchasing operations. The goal of this based on the values in the bank's vision section of the bank's website) and a list of businesses in its procurement processes. plan is to expand the approach to third-party risk management implementation of a formalized plan and on norms detailed in the bank's ethical specific requirements applicable to certain The bank engages small suppliers when in allocating the bank's resources, and to act according for embedding corporate responsibility code of conduct. The basic rules are suppliers, according to area of activity, a possible, in view of its size and nationwide to norms for responsible conduct in the areas of fair and within purchasing operations. The goal designed to clearly and simply elucidate process was planned and infrastructures reach. The Purchasing Division helps the equitable employment, fair business practices, protection the bank's expectations with regard to the were set up for the inclusion of a corporate bank connect small suppliers, who may of the environment, and promotion of opportunities in the of this plan is to expand the approach conduct of the suppliers with which it has responsibility appendix when beginning not be clients or suppliers of the bank, area of green purchasing. The bank communicates this to third-party risk management in working relationships. The basic rules of a relationship with a new supplier. In with other suppliers, due to its extensive purchasing approach to its suppliers, and encourages them allocating the bank's resources, conduct were distributed to 1,700 suppliers addition, a process was initiated to apply purchasing activities. to adopt the same norms. The plan is based on an in-depth and to act according to norms for of the bank during 2014, as part of the corporate responsibility performance analysis of the purchasing patterns and characteristics of distribution of the terms of contractual criteria to relevant suppliers bidding in an suppliers of the bank, and is being implemented according responsible conduct in the areas of engagements. Further, beginning in 2014, RFQ process. to the responsible purchasing policy. fair and equitable employment, fair the rules have been enclosed with every business practices, protection of contract of the bank and are proactively distributed to the entire group of suppliers The implementation of the policy was adapted to the the environment, and promotion of from time to time. customary practice at the bank in contractual engagements opportunities in the area of green and to the nature of the different suppliers: purchasing

In practice, approximately 46% of the bank's purchasing in 2016 was from small and micro-businesses; they constitute approximately 81% of all of the suppliers engaged by the bank in 2016.

Breakdown of Expenditure rate- extent of Procurement extent procurement Promotion Transparency Mitigation and Fairness and Nurturing Partnership Dialogue and of small and prevention of protection of long-term and creation of (by size of business) (by size of business) peripherally environmental human rights relationships reciprocity shared value located damage businesses

19% This policy establishes the following principles and guidelines for the management of supplier relationships: Large 46% Responsible procurement policy Small 54% 81% Mandatory Voluntary

Mandatory criteria adapted Mandatory criteria for all Preference criteria (additional quality to the unique nature of each suppliers (required norms of parameters) used to evaluate bids in procurement category responsible conduct) significant contracts

EMPOWERING SOCIETY AND 84-85 THE COMMUNITY In 2016, as part of its assistance to small Green Procurement and more. When possible, the bank also Protecting the Rights of Contractor Employees Processing requests businesses, the bank’s Procurement In 2016, as in previous years, the bank grants precedence to socially conscious from external contractor Department continued to support small continued to examine alternatives for suppliers in procurement gift baskets Working on the Premises of the Bank and micro-suppliers along the Tel Aviv environmental procurement of prod- and flower bouquets for its employees employees Light Rail route. As part of the Small ucts such as envelopes, wood-free and clients. The database is updated To supply its needs, the bank enters into Enforcement of Labor Laws, 2011, based Business Project - and in collaboration paper, double-sided printers, recycled continuously based on the SME suppliers agreements with various contractors for on the existing processes at the bank, 73 with CEO’s office, Retail Banking toner cartridges made in Israel, LED and other social aspects. the provision of security, cleaning, and the infrastructure was adjusted to the Division, Procurement Department, lights, etc. cafeteria services, through employees of provisions of the law, which took effect in and employees' committee – thousands Promotion of Professional the contractor who are assigned to the June 2012. This move included updates 64 of small business including businesses Empowerment of Socially Knowledge for Suppliers bank. In order to ensure the protection of the bank's procurement contracts, the that are not the bank's customers, which Conscious Suppliers of the Bank of these workers’ rights, the agreements establishment of a system for inquiries by are located along the Light Rail route, During 2014, the bank built up a pool of In the course of their routine work with between the bank and the contractors contractor employees at the bank's human were mapped. The bank contacted suppliers who organize activity days to suppliers, the bank's purchasing staff stipulate the obligation of the contractors resources division, and the appointment 21 these businesses on its own initiative, in promote team spirit, for various units of imparts professional knowledge to to provide the following to their employees, of a supervisor responsible for ensuring an effort to promote procurement from the bank. This list mainly consists of small the suppliers in areas such as internal among other matters: minimum wage, the protection of the employees' rights these suppliers, by offering discounts in businesses from central and northern Israel improvements in efficiency, cost savings, and all other rights granted to workers in and response to their inquiries during 14 these businesses to bank employees. whose activity embodies social values and more. Purchasing staff members also Israel under the labor laws; social benefits; their employment on bank premises. The businesses participating in this and content, such as employment of at- give talks on responsible purchasing for prevention of harmful employee turnover, As part of its efforts in this area, the bank project included apparel, photography, risk youth, assistance to people in need, various stakeholders (suppliers, non-profit and due disclosure to their rights. This collaborates with Hilan, which monitors advertising, production businesses and integration of people with disabilities, organizations, etc.). infrastructure was created in order to the terms of payment by suppliers to their restaurants, etc. prevent harmful employment, and has employees. During 2016, controls were been in place at the bank for years as applied by Hilan at all of the employment 2013 2014 2015 2016 part of its CSR approach. In 2012, with the contractor companies engaged by the implementation of the Law for Increased bank (ten suppliers).

Ethical Code for External NIS Contractor Employees Examining Achievement Within the process of instilling social of Objectives In 2016, procurement from "social” responsibility, the bank formulated an ethical code adapted for external contractor 14 2016 Objectives Status employees who work on its premises in In 2016, the bank will add Completed suppliers (organizations that mainly the areas of security, cafeteria services, enquiries a corporate responsibility and cleaning. The content of the code is of external contractor appendix to the process employ workers with disabilities) communicated to all contractor employees 1.36 of setting up a relationship employed at the bank's facilities. These employees were with a new supplier. million reached NIS 1.36 million employees receive and read the code, processed using the and sign the code document. The bank receives a report of the completion of this Human Resources process from the company employing the Division system workers, signed by the general manager of the company. The content of the code is during 2016 distributed in Hebrew, Russian, Arabic, and Amharic. As of 2011, all new and existing suppliers are required to communicate the content of the new code, annually, to every employee they assign to the bank.

EMPOWERING SOCIETY AND 86-87 THE COMMUNITY as its business capabilities. ‎‎The bank's rights, legislation, etc.); fear that retirees ■ The market for the elderly living in their Expansion of the Bank's Sphere activities are carried out in collaboration will "replace" the younger generation own homes (in the fourth age). ‎ with a variety of entities (associations, and a sense of obligation towards a of Influence in Israeli Society ‎ NGOs and businesses), which engage in generation whose career is still ahead; Below is an outline of the initiatives and a variety of issues, such as:‎ employers' expectation to pay retirees projects by target market: The bank conducts dialogue with stakeholders in order to significantly lower wages. ‎ ■ Third age employment and encouraging ■ On the supply side: ‎ ‎The desire for The household market understand their needs, provide accurate and appropriate entrepreneurship in this sector; ‎ flexible work in terms of hours and The Senior Venture ‎ ■ Promoting business initiatives for the workload; need for recognition and The project is designed to create a solutions, and optimize its activity, with the aim of influencing senior citizen market; ‎ a sense of community; difficulty in market environment which encourages a wide variety of population groups within Israeli society and ■ Raising awareness to the needs of coping with the experience of being (currently) latent demand for services "caregivers" (family members caring for screened when absorbed into the labor among households (services which require contributing to the public good. ‎‎Based on this dialogue, the the elderly) - the third age; ‎ market; dealing with prejudice by some such flexibility that they are unsuitable ■ Addressing the problem of loneliness employers. ‎ for regular service providers for whom bank has initiated a broad range of programs and projects, with in the adult sector. this is a main source of income) and to The bank's approach to addressing the match that demand with a database inter-sector collaboration, to promote various causes in Israeli The following are the key initiatives the challenges inherent in promoting senior of retirees qualified to provide services bank is promoting in this area: citizens' employment is innovative.‎ The‎ (after they have undergone a professional society and create shared value prevailing attitude of most professional screening process). The project is aimed Promoting entities in this field focuses on the supply at operating as a community model, with employment - the side (in an attempt to produce names of emphasis on fair wages, and at creating a retiree candidates for potential jobs in supportive environment for retirees and an senior citizen sector existing work places). ‎‎The bank examined understanding of their needs. The project In its efforts to promote sustainability and financial aspects of) social challenges.‎ ‎This ‎Retirement marks a milestone in one's the issue and found that there are few work was established as part of a dedicated CSR values, the bank works to expand its Activity for senior is part of the Bank's comprehensive view career.‎ When‎ reaching retirement age, places that are able to offer a significant incubator - Hub Tel Aviv - with a business sphere of influence to Israeli society and citizens in the public of its role in promoting solutions for this they are ousted from the employment number of jobs to retirees. ‎‎As a result, partner, at the bank's initiative and with its the public arena ‎by‎ implementing social domain ‎ population through various initiatives in the market.‎ ‎Many are ousted involuntarily, and the projects promoted by the bank (in support and collaboration. and environmental values in ever-widening public sphere designed to promote senior a significant portion would like to continue collaboration with its partners) attempt circles. The‎‎ bank is guided by two essential ‎As part of a Bank Hapoalim's strategic citizens' quality of life and their bond with working. ‎‎For retirees, employment is much to address the employment of retirees principles: ‎ ‎dialogue, and the creation move to promote the senior citizen their families. It also stems out of a desire more than a place of work (an extra source by creating a relevant market:‎ ‎Creating of shared value. ‎The bank conducts population in Israel, the bank launched a to address newly created social issues of income, a sense of belonging, meaning new demand, exposing latent demand dialogue with stakeholders in order to package of unique services and products which pose a challenge on the national and self-determination, involvement in and needs.‎ These‎ new markets will understand their needs, provide accurate in line with the challenges facing this level as well. ‎ the community, creating social circles).‎ serve for specialized employment for and appropriate solutions, and optimize population.‎ Based‎ on the bank's perception ‎Beyond the personal benefit for retirees, retirees. ‎As‎ part of this approach, emphasis its activity, with the aim of influencing a of its role as supporting customers in ‎The initiatives promoted by the bank their work also contributes to the economy is placed on a community model of wide variety of population groups within various financial life milestones, and in line in the public sphere are designed to as a whole - they become productive and, employment and activities, on fair pay, on Israeli society and contributing to the with changes that occur upon retirement raise awareness and provide practical at the same time, can create demand in a supportive environment for retirees and public good. Based‎‎ on this dialogue, (reduced revenues, change in expenses solutions to social challenges faced by various markets.‎ on understanding their specialized needs, the bank has initiated a broad range of that vary according to the needs, the need this population.‎ The‎ bank's anchors for as compared with standard businesses or programs and projects, with inter-sector to live an active life alongside concern for consolidating its initiatives in the public ‎The challenges regarding retirees' service providers.‎ collaboration, to promote various causes the long term and support of the family - sphere are derived from serving as a employment are varied: ‎ in Israeli society and create shared value all result in a new set of considerations).‎ major junction in the economy, its large ‎The bank supports projects which focus for the bank and for stakeholders in the ‎Beyond the financial aspects it promotes market share in the senior citizen sector, ■ On the demand side: ‎ ‎Employers on creating demand in three key markets: ‎ social, environmental, and economical for this population (listed in detail in the its business activity with this population who do not believe in the abilities of spheres. ‎‎Selected initiatives of the bank "Customers" chapter of this report), the and its relationships with a variety of pensioners to be "relevant"; fear of ■ The household market; ‎ in 2016 are described below. ‎ bank helps senior citizens meet their (non- businesses and stakeholders, as well employing senior citizens (issues of ■ The small business Market; ‎

EMPOWERING SOCIETY AND 88-89 THE COMMUNITY Creating self-employment into this situation without prior experience, etc.) results in a barrier to use. The bank, in ■ The social program of the 8200 Alumni Solar Trees Project The Social-Environmental- resources - encouraging micro- preparation and knowledge (as to all collaboration with entrepreneurs, supports Association - is Israel’s first acceleration Within the drive to expand its environmental Economic Project for Collection enterprise at retirement age aspects of the problem from which the development of a digital platform program for early stage social technology and social impact to the general public in and Recycling of Electronic This is a special-purpose initiative designed the elderly family member is suffering). where the younger generation in an elderly ventures. The program targets all social- Israel, the bank is conducting a joint effort Waste, with Employment of to promote capabilities and skills of senior According to market analysis carried person's family will be able to assist them technology entrepreneurs and is not with a range of academic institutions to Persons with Disabilities citizens and help them offer products and out by the bank, it seems that there is by streaming digital content to devices limited to 8200 alumni. The program is promote activities that generate shared Bank Hapoalim initiated a pioneering social services to market and sell them as self- significant information on the subject, but accessible to them (smartphone, tablet five months long, and includes lectures, environmental and social value. This program for systemic treatment of the employed or as small businesses. The the latter is not readily accessible to the computer). The proposed solution includes mentoring, and counseling. It also initiative is based on the principle of collection and recycling of electronic waste, goals of the program are as follows: public - it is cumbersome, and does not connecting a device to the elderly person's offers ties with investors and with dialogue with stakeholders, in which the metals, and appliances, in collaboration support the natural process of searching preferred device, which would allow their 8200’s exclusive network of alumni. bank maintains ongoing relationships with with municipalities throughout Israel. The ■ To address the needs of people for information. Thus, caregivers have no family members to stream content from The program promotes projects aiming various academic institutions in the areas of program includes design and development aged 60 and up who are interested in clear and focused real time information as the Internet (according to the elderly to resolve social problems by using corporate responsibility and sustainability. of collection receptacles made in Israel and entrepreneurship; to the individual problem they face. person's preferences) directly to the family's various technological means: people supplied by the bank to the municipalities; ■ To convey an innovative message, Facebook group. The interface will be user with disabilities, the elderly, promoting Solar Trees are solar-powered stations placement of the receptacles in city centers; whereby people in this age can be active The bank, in cooperation with NGO friendly, thus allowing to connect the elderly gender equality, education, good on academic campuses that allow twelve organization of collection and recycling and vital to the economy; Caregivers, is initiating a proactive solution person to content and to the life around parenting, and more. The program, mobile phones and tablets of various kinds processes; and communication of the ■ To further their contribution to the in the form of an online database containing them, reducing the technological divide which was established in 2013, is to be charged simultaneously, using energy program to residents of the towns. Collection economy - offering retirees to become information on all aspects relevant to barrier and leveraging it to strengthen currently underway with the third generated by solar panels. The initiative was from the receptacles and disassembly of productive and active consumers in the relative-caregivers. The difference intergenerational family relationships. “class”. The program is non-profit, and created by students at the Novus innovation the waste are performed by Community, market - inter alia by creating legitimacy compared to existing information is that During 2016, the development of the is sponsored by six leading partners - center, in the College of Management's which employs disabled workers. The bank for significant activity even at this age; it will be sorted by focused problems and application continued. Bank Hapoalim, ICL, law firm Naschitz School of Business Administration. As thereby creates shared value and responds offer a workflow for solving them. For each Brandes Amir, Amdocs, KPMG, and part of the ongoing collaboration with the to both an environmental need and a social To this end, a dedicated program was subject, the various stages of handling the NGO Nefesh BeNefesh; college's Corporate Responsibility Center need. The program is available to a total of created for retirees, since entrepreneurs problem will be outlined, with a focus on Promoting technological ■ The HYBRID track - targets the Arab for the promotion of an environmental and 800,000 residents, through 120 receptacles at this age need a different professional a simple and up-to-date user experience. social initiatives community and offers - in addition to social agenda, the project was developed in their towns. Dozens of tons of waste have environment, for various reasons: Their Starting in 2015, the bank undertook, along The Bank has been accompanying the the training program, guidance and jointly with the bank's CSR Division. been collected for responsible recycling dilemmas and risk management are with its partners to the project, to map out 8200 alumni association for several mentoring - office space in Tel Aviv, within this project since 2012. different; their pace, objectives and way the knowledge according to content areas years, thus helping to promote social Nazareth, Jerusalem, Beer Sheva The bank began to install the Solar Trees of measuring success is different; and and a comprehensive content database and business entrepreneurship in Israel. and other cities. This track is also five in 2014. Benches were set up next to the their considerations and the core needs was built. The Bank also hosts meetings when months long, and features about 20 charging stations, which are located in fulfilled by their small businesses - may the entrepreneurs are presenting their leading mentors as well as a network central areas where students congregate LOOKING differ as well. In 2016, the bank developed an online projects to potential investors. The 8200 of contacts, and more; during the day. The stations provide a interface, which presented the various Alumni Association promotes the vision to ■ The EISP Track - strives to promote and response to the familiar need to charge AHEAD In 2016, the program was expanded in content areas, including processes preserve the elite unit’s heritage, support empower technological entrepreneurs in the batteries of mobile devices, offering a cooperation with the Israel Association of focusing on family members, useful its alumni in their lives as civilians and various fields in their early stages, offering service to students while also promoting Launch new initiatives to Community Centers and a new course on information, forms and FAQs. The website leverage the network for the benefit of access to the 8200 alumni program and an environmental message (use of the solar promote the senior citizens the basics of entrepreneurship for retirees is expected to launch in 2017. society and the general public. As part ongoing support. To date, the bank panel), as well as a technological message, segment while launching the was launched. The course is designed for of its activities, the association offers has sponsored the program, which and creating a place for students to meet. caregiver's website; 15 entrepreneurs, with five to graduate to Alleviating loneliness among three accelerator tracks for early-stage has trained 120 graduates; about 100 Solar Trees were installed at a variety of the incubator level. senior citizens technology ventures in Israel: The Social startups were able to receive funding of academic institutions throughout Israel Continue to support the Many older people experience isolation Track, the Hybrid Track and the EISP approximately $400 million and currently during 2016, as well as in public spaces. platforms driving technological- Promoting solutions for caregivers from the world around them, reflected in Track. Bank Hapoalim has been a sponsor employ about 450 people. The program As of the date of preparation of this report, social initiatives; There are about one million caregivers extensive time alone at home. In addition, of this program’s various tracks for several is highly successful and, to date, has a total of 19 stations have been set up. Continue to install additional in Israel taking care of elderly family the lack of knowledge required to use years, and hosts sessions presenting achieved four exits. members. The challenge is due to the available digital technologies (mobile projects to potential investors. “solar trees” in academic fact that caregivers are usually thrown phones, the Internet, tablet computers, institutions and urban centers.

EMPOWERING SOCIETY AND 90-91 THE COMMUNITY strive to realize the underlying philosophy supported by the bank is delivered through Cumulative donation of half a billion NIS Poalim for the of the principles of socio-community the Poalim for the Community Forum Cumulative Donation (2004-2016) development. The distinction between aid (there is no donations of other units at Annual Donation community and socio-community development is an the bank). The Forum, which consists of 543 important one; such development is based senior executives of the bank, manages 499 Committed on the following principles: all of the bank's donations according to 456 through Our criteria established in the policy of the 409 ■ 363 Strategyand Vision Focus on a core issue closely related Poalim for the Community Foundation 315 to the bank's essence and crucial (Registered Non-Profit Organization). As 268 As part of the Bank Hapoalim Group’s to Israeli society; in previous years, the foundation made 224 vision, strategy, and corporate values, the ■ Long-term projects, rather than contributions in many different areas in bank is committed to an active, leading role temporary action; 2016, including education in general, and 47 48 46 47 in the community, alongside its business ■ measuring the project according financial education in particular; culture 44 43 44 leadership and economic initiatives. This to effectiveness in attaining its and the arts; welfare and health care; and involvement is implemented through Poalim objectives, with conclusions drawn other social causes. The bank does not for the Community (Registered Non-Profit and implemented throughout the donate money or equivalents to political Organization), as part of an advanced course of the project; parties, politicians, or political institutions. 2002-2009 2010 2011 2012 2013 2014 2015 2016 managerial approach. The bank holds that ■ Strategic partnerships with additional an organization that operates within the parts of the community, including Bank Hapoalim exercises Breakdown of Bank Hapoalim donations budget community - and draws both its employees professional partners, rather than its community involvement and customers from within it - should take stand-alone projects. (2016) a leading role in the advancement and through nationwide projects, including projects targeted to improvement of conditions for all members The bank maintains strategic partnerships Education and Financial Education of the community, especially those who are with a range of leading community geographic, economic, and underprivileged. In the spirit of this business organizations. These include collaborations social peripheries, with expert Culture and Arts 18% philosophy, the bank conducts a varied and with the ORT network of science and assistance in the understanding extensive range of community-oriented technology schools, Insights Education Health Care, of community needs. These Food and Welfare activities in the form of social involvement, Association, museums and the National 6% projects strive to realize the Employees Volunteering 39% monetary donations, and large-scale Parks Authority during Passover project, underlying philosophy of the volunteer activities with the participation the Batsheva Dance Company, the Israel Contribution to Various of both management and employees. Philharmonic Orchestra, and the Israel AIDS principles of socio-community Social Fields Community activity is an important factor in Task Force. The bank also collaborates with development. 19% developing employee pride and cohesion. a large number of non-profit organizations As noted, the bank’s community-oriented on unique projects in their respective fields. 18% activity is organized within the Poalim for Notable organizations include the College the Community foundation. Ms. Shelly Amir, of Economic Growth, Hayim, Etgarim NIS head of community relations at the bank, (Challenge), Paamonim, Latet - Israeli is responsible for this activity. Humanitarian Aid, Beit Issie Shapiro, ELEM Donations of Computers - Youth in Distress in Israel, Beterem - Safe 44 Recognizing the great importance of technological investment for Donations of Computer systems (NIS thousands) Creating Strategic Partnerships Kids Israel, The Council for a Beautiful the education and advancement of children and youth, the bank 2008-10 2011 2012 2013 2014 2015 2016 Bank Hapoalim exercises its community Israel, and Be-Atzmi – Employment for million donates computers and related equipment each year. Donations involvement through nationwide projects, Youth at Risk. Bank Hapoalim’s of computers are managed by the technological procurement 2,554 921 500 831 361 393 393 including projects targeted to geographic, investment in center. In 2016, the bank donated approximately 893 computer economic, and social peripheries, with Monetary and Equivalent the community systems and auxiliary equipment, at a value of NIS 801 thousand. expert assistance in the understanding Community Investments amounted to NIS 44 The monetary value of the donations of computer systems by the of community needs. These projects Assistance to the numerous organizations million in 2016. bank in 2007-2016 is approximately NIS 7.5 million.

EMPOWERING SOCIETY AND 92-93 THE COMMUNITY Results of Community Investments in 2016 Promoting Education and Financial As part of its investment in the community, (A) Educational activity – Organizations that organizations in this group primarily as in the last couple of years, the bank active in this field help participants measure outcomes, which serve as the Education in the Community has continued the process of examining maximize their individual potential and key metric for examining the results of The key focus of the community activities A Password for Every Student Read & Succeed the activity of the non-profit organizations leverage their abilities for a better future, their activities. of the bank is education. The bank invests As part of its support for the integration Starting in 2004, the Poalim for the that receive its support. This included an through education and learning. The review in several long-term projects, as well of technology into education, in 2011 Community Forum has led a focused examination of the organizations' areas of found that all of the organizations operating ■ Approximately 80% of the foundations as a variety of other projects aimed the bank joined the educational initiative initiative aimed at changing the reading activity and goals, their target populations, in this area measure their outputs (the surveyed earmarked the bank's at supporting learning in educational "A Password for Every Student," which habits of Israeli children and youth. This their methods, and the results of their number of participants and the volume contribution for specific projects or institutions, academic institutions, and combines education and today's project continued in 2016. The Read activities (outcomes and effectiveness). The of activity), and the large majority also programs within their activities; informal education organizations. technology as a way of acquiring learning & Succeed project includes a public goal of the process is to obtain a status measure the effectiveness of their activities ■ Of the activities and projects surveyed, and developing abilities. Within its support informational campaign, distribution of snapshot of the current field of ongoing (e.g. improvement in students’ scores, approximately 75% are targeted Promoting for this project, the bank has adopted ten books, funding of story hours throughout influence of the bank on Israel's society and dropout prevention, students who continue specifically to participants in geographical Education Initiatives schools in communities needing special Israel, activities during National Book community. The process was performed to college, etc.). and social peripheries (foundations in reinforcement, for several years. The goals Week, and collaboration with the Children’s through a survey and through dialogue which 50% or more of activity is targeted and Projects of the project are to create a technological Channel and other media. As in recent with the major foundations, which account (B) Organizations in the fields of to peripheral regions). In about 55% Main examples of the bank’s investment infrastructure allowing all users to work years, the bank continued the Read & for about 65% of the bank's total annual health care, welfare, culture, and the of the foundations surveyed, 70% of in education are described below: and learn using a central portal, from Succeed project in the Arab-speaking community investment. Main conclusions arts – This group consists of two types activity is targeted to peripheral regions. any location; to implement a view of the sector and in the Haredi (ultra-orthodox) of the review: of organizations: organizations engaged in The other foundations target various school as a computerized organization; sector as well, in formats adapted remedying essential welfare or health-care population groups, according to the and to create a computerized educational specifically for these communities. Read ■ The decisive majority of the organizations problems (such as assistance to distressed type of activity, encompassing all parts environment in the school. & Succeed also includes mobile libraries, present their area of activity, goals, and disadvantaged population groups), of Israel, including the peripheral regions. operated in cooperation with the Key Books methods, and participating population which contribute to society by offering Foundation. This project consists of mobile in an orderly manner; a venue for appropriate treatment of the 183,000 lending libraries housed in trucks that travel ■ In the context of measuring the outcomes problems they have chosen to address; throughout Israel, allowing children and of the organizations supported by the and organizations that promote culture people 79,655 youth to enjoy a wealth of children’s theater, bank, the organizations can be divided and the arts, and would find it difficult to In 2016, the bank invested Students creative writing workshops, lectures, story into two groups: exist without support. The survey found hours, and enrichment classes. in dozens of non-profit In 2016, 79,655 students and organizations and community teachers participated in the groups active in the area of program in 2016, at 222 schools; 5,060 As part of its investment in the community, as in the last couple of education, which helped more than 183,000 people (of which participants years, the bank has continued the process of examining the activity of approximately two-thirds In 2016, 5,060 participants the non-profit organizations that receive its support. This included an were students, children, and registered for the 9 mobile libraries 7,760 operating throughout Israel. examination of the organizations' areas of activity and goals, their target adolescents) in hundreds of institutions, in dozens of Students populations, their methods, and the results of their activities (outcomes communities throughout The direct support of the bank and effectiveness). The goal of the process is to obtain a status Israel. The bank's contribution helped the program reach 7,760 helped approximately students at 19 schools. snapshot of the current field of ongoing influence of the bank on Israel's 85,000 adults, children, and society and community. adolescents directly.

EMPOWERING SOCIETY AND 94-95 THE COMMUNITY Insight in Education Promoting Financial Education in Society The bank’s effort to The bank is involved in the initiative Insights in Education, founded with the aim of and in the Community promote education supporting school principals and enabling 13,912 2,000 The bank’s effort to promote education and its financial freedom perception have given and its financial them to effect an educational and social Students Students rise to several projects, some unique, designed to advance financial education in the freedom perception transformation in their educational institutions. community, as described below. The number of students The direct support of the The initiative focuses on public schools in have given rise to participating in the various bank aided the operation of urban peripheries and in geographical activities, including students programs for more than 2,000 Financial Education in Secondary Dan the Saver – Teaching Savings several projects, peripheries of Israel, in recognition of their Within the drive for financial education for who received emotional students at a range of schools Schools at the ORT Network importance. The project helps principals therapy, reached 13,912 in 2016. in peripheral region. Bank Hapoalim, in collaboration with the the bank’s customers and for the next some unique, develop a perspective of social leadership ORT Israel Development Center, offers a generation, aimed at making a better designed to advance and entrepreneurship, in order to provide program of study for secondary-school economic future possible for them, based a comprehensive response to students' students designed to provide personal on the awareness that childhood habits financial education in academic, social, and emotional needs, financial education, teach skills that become the habits of a lifetime, the bank is the community. building up the schools as a central anchor students will need as independent adults, leading a financial education effort targeted The average percentage of students who earned a full in the lives of students and the surrounding and impart the tools and knowledge to children and parents. This project is matriculation certificate in participating high schools reached communities and as a source of inspiration. 74% in 2016, an increase of more than 10% compared to 2012 necessary to make sound personal designed to reinforce and promote the Action committees have been formed for (before the launch of the initiative). financial decisions. The program consists of value of savings for parents and children. bank maintained and enhanced the Dan this project, and collaborations have been fifteen hours of instruction, with a blend of Activities aimed at parent's focus on the Saver brand during 2016 through an established with the Ministry of Education, face-to-face teaching and virtual learning, encouraging savings, by evoking positive experience-based online children’s club, municipal authorities, industrial companies, in ten self-contained modules covering nostalgic memories, while maintaining Dan the Saver World, which includes the defense industry, the third sector, subjects such as investment, savings, innovation and a value offer to benefit games and educational activities for academia, and a large number of volunteers. income, smart consumerism, money the client. Activities for children focus on children (at www.danpoalim.co.il), and and means of payment, personal budget creating a positive experience at their first through Dan the Saver summer day camps management, bank accounts, and the encounter with a bank, and building a held in more than 35 towns throughout capital market. beneficial, empowering relationship. The Israel for children from various sectors. Unistream Unistream was established in 2001 in view of the deepening socio-economic gaps in Israel. The NGO’s purpose is to change 1,000 4,000 the face of Israeli society by giving youths Students Students from the periphery - who are not part of In 2016, about 1,000 youths from Approximately 4,000 students Over 8,000 children participated the environment of success in central Israel across Israel participated in participated in the program in 2016, in dozens of Dan the Saver day - the opportunity to succeed and realize Unistream’s program . 500 in 183 groups, at 42 schools; camps, in over 35 towns, during their potential. Unistream aims to develop scholarships the 2016 summer vacation. business and social leadership, which will bring about social change and narrow The bank provided gaps in Israel, creating a cycle of success, assistance in funding tolerance and self-fulfillment. For the past approximately 500 15 years, Unistream has been operating 3,250 an innovative educational program in an scholarships for 20 75,900 Students effort to reduce gaps by giving opportunity college students annual hours children to youths from the periphery to establish During the year, about 3,250 Approximately 75,900 children have startup companies and become part of the high school students underwent from various sectors Each participating class received training as part of the youth 20 annual hours of instruction on participated in Dan the Saver day camps business sector, in addition to significant entrepreneurship groups. of Israel in 2016. financial education over the last five years. community activity.

EMPOWERING SOCIETY AND 96-97 THE COMMUNITY Enriching Parents OVER Bank Hapoalim has undertaken a goal of money, savings, and more. It is therefore regarding basic concepts for prudent Promoting Culture and Arts working to promote financial education for important to provide them with the tools financial conduct, as part of the Enriching The perception of Poalim for the 2016 Israeli Art Exhibition young children, preteens, and adolescents. for future management of their economic Parents project, in which parents teach Community places special emphasis on The interior of the headquarters’ building Young children in preschool and elementary lives. The bank created a presentation classes at their children’s schools. culture and the arts. The bank provides resembles a museum with open galleries 64,000 people school are acquiring their first concepts of and a lesson plan for children aged 5-8 assistance to outstanding cultural across all floors. For several years, the In 2016, over 64,000 people attended institutions dedicated to leadership and bank has held exhibitions in this building, excellence, focusing on institutions that with their proceeds donated to social cultural and artistic events supported have initiated community efforts to bring causes. The exhibitions are organized by the bank. The bank's contribution 60% of families that received Paamonim Foundation culture and the arts to a wide range of in a professional manner, so that the directly aided the participation of individual financial guidance over The foundation promotes balanced, different audiences. The bank also works building becomes a museum of sorts for approximately 21,000 people the last few years attained financial responsible financial lifestyles for families, 16,000 to make cultural events accessible to the duration of the exhibition. The bank balance within three years. More than and works to strengthen the personal underprivileged children and adolescents. also uses its social-business network to people 10,000 families in Israel have reached Israel Philharmonic Orchestra financial responsibility of families and engage its stakeholders and donors in The orchestra runs the Mafteach In 2016, the foundation helped financial balance over the last few individuals and to boost their ability to approximately 16,000 people years, with the help of Paamonim Several examples of the bank’s investment these exhibitions. (Key) program, in which children and conduct a stable, balanced economic life, through workshops and lectures, guidance and workshops. in culture and the arts (of the dozens of adolescents gain exposure to classical thereby helping to reinforce Israel's social and provided individual counseling initiatives and projects in which the bank The exhibition, which was one of the music through in-person meetings with and economic resilience. sessions to 7,080 families. is involved, are described below): first to support the fight against HIV, orchestra musicians and in concerts, in was held at the bank’s headquarters for various locations in Israel. the seventeenth consecutive year. The Over Chasdei Lev Poalim for Culture and Nature exhibition featured works of hundreds of The Chasdei Lev organization has set in Israel artists, all of whom contributed their work. the goal of creating a better financial and Since 2005, Poalim for the Community All proceeds of the works sold during the personal present and future for families 200 students 60% of families has conducted a special project each event were donated to the Israel AIDS 20,000 in the Galilee region, through stronger In 2016 the number of students who 60% of families participating Passover, in which all Israelis are invited Task Force. children economic resilience. As a social and participated in the program "Shekel" in the organization's to visit a variety of sites throughout Israel Over 20,000 children, adolescents, and professional organization, Chasdei Lev was approximately 200 students. programs will increase their free of charge during the holiday week. people of all ages, with an emphasis on promotes the construction of economic income by approximately Bank Hapoalim believes that closeness peripheral communities, participated in this program in 2016. resilience for Israeli households, through 30% within one year. to our heritage and culture is of the NIS 1.9 million three key programs, each designed for utmost importance, and has therefore NIS 1.9 million were collected in the The bank's contribution supported a different target group: Positive Family resolved to make it possible for parents exhibition initiated by the bank and the participation of 1,800 children and – an economic empowerment program and children throughout Israel to travel donated to the Israel AIDS Task Force; 80% of families that completed adolescents in the program for families caught in a cycle of poverty during the holidays and enjoy a variety of the program in 2016 will reduce and financial distress; Economic Growth sites all over the country at no cost, while the gap between their income and College – for employed and self-employed promoting culture and the arts. expenses by approximately NIS Cameri Theater people who earn wages that do not allow 2,000 within one year. The bank’s aid to the theater includes them to support themselves with dignity, tickets donated to various population and in many cases may lead to economic 18,100 groups throughout Israel that are usually collapse; and Shekel – a financial education teenagers unable to attend performances, thereby program supporting education on values, 430,000 helping to make culture and the arts people The Israel AIDS Task Force held about understanding, and clear thinking on these 90 informational workshops for around accessible to all segments of Israeli society. 430,000 people visited dozens subjects, aimed at raising a new generation 18,100 teenagers. with an awareness of the significance and museums and other sites free of As it has done each year, the theater value of prudent economy. charge, sponsored by the bank at donated 1,000 tickets, inviting people its initiative, during the Passover who are not able to attend theater holiday in 2016. performances routinely, according to target groups selected by the bank.

EMPOWERING SOCIETY AND 98-99 99- 99 THE COMMUNITY ■ Etgarim - In 2016, the Etgarim 327 in 2016. The Employment for aged 45+) achieved 71% success in job Promoting Welfare and Health foundation helped approximately 6,000 Empowerment program for financial placement and/or occupational training adolescents and adults with special guidance and workforce entry as means for its participants, who numbered Poalim for the Community is involved in At least needs, such as physical, sensory, of emerging from poverty, targeted to 333 in 2015. The Employment for a wide range of community activities and and mental disabilities, maximize their families referred by municipal social Empowerment program for financial invests in welfare programs and in aid to individual potential, expand their abilities, services, achieved 63% success in guidance and workforce entry as means health-care institutions. and participate in the community through placement in jobs and/or occupational of emerging from poverty, targeted to 255,000 people challenging activities in nature; training (approximately 3,300 families families referred by municipal social Ezra Lemarpeh In 2016, at least 255,000 people received treatment and in the last four years). for unemployed services, achieved 70% success in This non-profit organization, headed by Rabbi ■ Promoting employment - Olim women from diverse population placement in jobs and/or occupational assistance in the areas of health care and welfare in Israel Elimelech Firer, has a wide range of activities Behayad – A non-profit organization segments (Arab-Israelis and Jewish training (approximately 2,900 families in and services for patients, aimed at enabling through organizations supported by the bank. The bank's working to reduce unemployment among Israelis, single parents, and women the last four years). both patients and their families to resume contribution directly helped approximately 152,000 people Ethiopian-Israeli college graduates by their lives and return to work. In addition to offering job opportunities suited to their medical advice and rehabilitation services, Latet skills. 100 people participated in this at least the organization runs activities for children An Israeli non-profit humanitarian aid program in 2016. 88% of the program’s who are sick and for their families, including organization, founded to help reduce graduates are currently employed in medical, educational, and emotional support poverty for the creation of a better and 60,000 suitable positions; for children and families; the Elder Brother more just society, by assisting population families program, which offers home visits and help groups in distress, encouraging ■ Promoting employment -Be-Atzmi - The The foundation serves as with schoolwork; birthday celebrations; mutual accountability and giving in civil Mifne-Massar program for unemployed people an umbrella organization, making wishes come true; and more. society, and spearheading a change women from diverse population 76,000 collaborating with 150 local non- in national priorities. Programs run by segments (Arab-Israelis and Jewish In 2016, at least 76,000 people participated in profits and organizations, which the organization include a nutritional helped approximately 60,000 Israelis, single parents, and women programs and projects related to various community security initiative; aid with food and families throughout Israel during aged 45+) achieved 64% success in job causes in Israel, initiated by the non-profit 150,000 medications for Holocaust survivors; 2016. Approximately 7,800 placement and/or occupational training people Latet Youth, developing leadership and families received assistance for its participants, who numbered organizations supported by the bank social initiative in adolescents; Latet from the foundation as a result In 2016, the organization helped Future, for the development of micro- of the bank's donation. 150,000 people receive advice, enterprises among populations living on treatment, and medical support. Examining Achievement of Objectives The bank's contribution helped the borderline of poverty; Hunger Free approximately 3,000 people. City; and efforts to raise social awareness LOOKING AHEAD and change policies. 2016 Objectives Status Poalim for the Community will continue to focus on education, with special Poalim for the Community Completed. emphasis on financial education and teaching smart financial behavior, in Promoting Additional will continue to focus addition to the continued promotion of the bank’s strategic projects, such Key examples of the bank's investment in additional social causes: on education, with an as Read & Succeed, the Passover project, the NGOs’ exhibition, and more; Social Causes emphasis on financial ■ Non-Profits Exhibition – For the stakeholders and the general public, and education and education Poalim for the Community also invests tenth year, the bank invited the Israeli as a model that can serve other business As part of "Poalim in the Community", a strategic process to assess the foci for prudent financial in a range of additional areas, fostering public to buy holiday gifts sold by organizations seeking to promote and implementation going forward will be conducted, including additional behavior, while also various social and environmental values non-profit organizations that offer community causes. All income from areas of activity and innovative work processes. continuing to promote – such as support for organizations products handmade by children, the sale of these products is dedicated strategic projects of the bank such as Read & that promote equal opportunities, adolescents, and adults with disabilities to the activity of the foundations. The A new strategic focal point for "Poalim in the Community" is empowering the Succeed, the Passover organizations promoting employment or special needs. The exhibition is exhibition was held at the Poalim Third Sector and providing NGOs and social organizations with business and project, the Non-Profits managerial tools. As part of this activity, the bank has initiated a program in underemployed population sectors, used to develop resources for the Campus in Shefayim, with 30 non- Exhibition, and more. named Value to Go, for training business development managers and environmental groups, organizations for organizations, as a platform for exposure profits participating; the proceeds were fundraising for NGOs; the program will be introduced in May 2017. the empowerment of women, and more. of the organizations’ activity to various transferred to the organizations in full;

EMPOWERING SOCIETY AND 100-101 THE COMMUNITY Volunteering The bank has established a nationwide Volunteer work is performed through Volunteering in 2016 ■ Promotion of entrepreneurship – and shaming, and their impact on youth Approximately network of volunteers, encompassing integrative management and an orderly the bank’s employees give lectures and their supportive environment, with thousands of its employees from various organizational structure, consisting of the Volunteering to Promote on writing business plans, with special the aim of reducing the phenomena and parts of the country. The frequency and following functions: Financial Education emphases for teenager entrepreneurs educating youth on informed and safe type of volunteer work vary widely among The bank's volunteering efforts emphasize in schools, as part of the Premium online conduct. The activity began at the units, including weekly, monthly, or ■ Senior manager – Appointed within financial education, in alignment with Entrepreneurship and Ta’asiyeda Poalim Campus (in which the teenagers quarterly activities, activities held on the bank to hold overall responsibility its core activity. Within this effort, bank programs. In addition, 25 of the were trained on volunteering, learned about 3,500 holidays, and activities on Good Deeds for management of this area; employees volunteered in several areas bank’s managers were trained to the value of Financial Freedom and how Day. The bank's broad geographical in 2016: serve as mentors for NGO managers, to manage their Poalim Young accounts) employees ■ deployment makes it possible to respond Steering committee – Provides in cooperation with the Matan NGO; and ended with hands-on volunteer work. Volunteered on a regular, to the needs of local communities and strategic support for the new structure ■ Lectures on financial education mentors were also trained from among The employees’ children were praised and volunteer for a wide range of activities, so through the exposure and selection and family budget management – the bank's employees to serve as life recognized by the NGOs and community ongoing basis in 2015. that the local branch becomes a center for of models and of potential strategic Given for various target audiences by mentors for discharged soldiers whose partners, which applauded the bank’s Overall, 39% of the bank's social improvement and aid during times partners in the community; formulates employees of the bank. In addition, families live abroad. management proactive activity and the of distress. Employees and executives policies for recognition and appreciation within the activity of the non-profit sense of partnership and values shown by employees volunteered on volunteer in their spare time, some privately of volunteers, marketing of the activities organization Shiur Acher ("A Different Summer Youth the employees’ children. Many teenagers a regular basis and independently, and some with the in the organization, and recruitment of Lesson"), hundreds of employees of As part of promoting the values of Doing and expressed their satisfaction with the activity leadership of the bank, in collaboration volunteers; the bank taught classes at schools Giving, approximately 1,400 employees’ and their desire to continue volunteering with the various foundations. Volunteer throughout Israel on financial and other children aged 18-15 were employed during later on. Many teenagers volunteered activities are varied, with numerous ■ Core social leaders – 46 leaders subjects; parents and retirees gave the summer vacation (under the Youth throughout the year with their friends at community partners; employees can selected by division/region heads, lectures to children in the Enriching Employment Law of 1953), in a variety the same places in which they volunteered choose a continuous activity throughout responsible for promotion of the Poalim Parent program; of community activities, in a wide range during the summer program. the year, or specific events where they Volunteers program and its goals and of areas. Summer Youth is an initiative of can contribute according to their abilities. objectives in their division/region, ■ The Children's Bank – "Children Poalim Volunteers program, in collaboration Volunteer Activity Among other efforts, employees of the development and management of Bank's" were established in 5 villages with the employees’ committee, the Management System bank volunteer with children and adults partnerships and volunteering programs and boarding schools for young children Human Resources Department and Poalim A specialized computer system was with special needs; work with Holocaust on the regional and local level with at risk, which serves hundreds of Campus. It is funded by the bank. The set up in 2013 to manage the bank's survivors; mentor soldiers with no family in community partners, motivation of children. Children who receive an project allows for employees' children to volunteer system. This system enables Israel; mentor women who are victims of employees, and management and allowance can deposit it at the children's learn about the value of Giving and instill it employees who volunteer to enter violence; provide assistance and training guidance of the network of social leaders; bank, check their balance at any time, through various activities to assist different information regarding their activity, making for the promotion of employment; adopt buy products at the village store, and populations in Israeli society. The teenagers it possible to measure the aggregate centers for children and for the elderly; ■ Social leaders network – 410 leaders pay with a magnetic card issued to become acquainted with the weak links in volume of employee volunteering. The assist at group homes for children at selected by department and branch them. The bank provides the children Israeli society and do volunteer work during system also serves as a platform helping risk and at foster homes; package and heads, serving as a direct liaison to all with their first banking and financial a single week. The project included six employees who wish to volunteer near distribute food to people in need; and employees and leading the volunteering experience; cycles, of six days each, during the summer their homes find an appropriate venue, give talks throughout Israel on sensible drive at the level of the units and branches. vacation. Each “class” began by becoming through a user-friendly search interface. financial behavior for adolescents, families, acquainted with various issues in Israeli Registration of employees on this system students, soldiers, and seniors. society and an enrichment experience (in continued in 2016. collaboration with the Academic College of Tel Aviv-Jaffa) to raise awareness to online phenomena such as cyberbullying

EMPOWERING SOCIETY AND 102-103 THE COMMUNITY More than Regular volunteers, of total Number of regular 1,500 120,000 bank employees volunteers students 100 gift packages 3,500 3,500 Within the Shiur Acher program, lectures Thousands of employees 60 courses on financial and other More than 100 lectures participated in volunteer activities 40% 3,200 subjects were taught at 44 schools, on financial education during the holidays, in areas such 39% to 1,500 students, by more than and household budget as childcare centers, elder care, 3,000 400 bank employee volunteers;400 management were given by hospitals, and more, and distributed bank employee volunteers volunteers from the bank; 120,000 gift packages; 33% 32%

Approximately Prior to the Passover holiday, the Bank purchased thousands of food packages "Kamcha de pascha" for Israeli families 152,000 6,000 who are in need. employees hours of volunteered in a wide range of community activities on Good Deeds Day, 2013 2014 2015 2016 2013 2014 2015 2016 volunteer work held for the tenth time in 2016; The bank and its employees performed approximately 152,700 hours of community volunteer work in 2016 (this Volunteering Hours* Examining Achievement of Objectives LOOKING includes approximately 45,000 152,000 2016 Objectives Status hours devoted to community 148,700 activity by employees' In 2016, the bank will begin measuring the Completed. AHEAD children in the summer effectiveness of volunteer activities, both for employees In 2017, the Poalim Volunteers program will program). More than 6,000 125,000 who volunteer and for community partners. focus on expanding the volunteer circles, to 124,000 include family members and beneficiaries employees were involved, Talks on sensible financial behavior for seniors, Completed. in the various volunteering frameworks; including in one-time activities. adolescents, and students will be given at the request of non-profit organizations, community centers, Approximately 25% of the hours In 2017, the bank will hold a training companies, and branches of the bank. volunteered by employees program for its social leaders. were paid for by the bank

*Volunteer hours include employees' children's activities. Summer Youth - 45,000 hours of 2013 2014 2015 2016 activity annually.

EMPOWERING SOCIETY AND 104-105 THE COMMUNITY HUMAN CAPITAL APPROACH Human Capital Approach Presenting Information on Employees The bank applies long-term considerations and managerial training and personal Ranked as one of the best of sustainability and social responsibility development, encouraging, and sharing companies to work for: to the management of its human capital. the cost of, academic studies for its 10 For the bank, its employees are key employees; In a survey conducted by stakeholders; its relationship with them ■ Operational excellence – The bank BDI Code in 2016 to rank is conducted on a firm foundation of aims to link the interests of its employees the “100 Best Companies 8,701 44.8 18.2 true growth and partnership. The bank with its own, while maintaining fair to Work For in Israel”, Bank The number of employees of The average age The average duration of promotes a responsible work environment employment as well as encouraging the bank in 2016 was 8,701 of employees of service of employees of while ensuring compliance with the law excellence and a culture of operational Hapoalim placed eighth. regarding the terms of employment of excellence. The compensation plans The bank has maintained its the bank is 44.8 the bank is 18.2 years its employees and other workers on its are a significant means for tightening standing as one of the top premises. Furthermore, the Bank respects labor relations and the employees’ ten best workplaces in Israel and acts in light of universal norms of sense of partnership. The employees’ over recent years. This securing employment rights listed in the compensation package combines fixed UN Convention (UNGC, UN International and variable components designed accomplishment reflects Bill of rights, UN International Covenant on to incentivize employees to produce the bank's commitment % % % Economic, Social and Cultural Rights and outstanding results over the long 90.5 93.6 96 to its employees and its UN Guiding Principles on Business and term. The bank holds recognition Collective agreement Internal and external employees Full-time and part-time achievements in the area of Human rights) and the conventions of the events to express its appreciation The bank recognizes its employees' 93.6% of employee positions employees: 96% of the social responsibility International Labour Organization (ILO), for the achievements of outstanding right to unionize and conduct were of the bank, while 6.4% bank`s employees are inter alia issues of freedom of association employees; and collective bargaining, prevention of ■ Concern for the wellbeing of collective negotiations. The were of Supervised employed full time while 4 discrimination and inequality and more. employees and their families – collective agreement applies to % are employed in part-time the bank’s employees enjoy welfare the decisive majority of employees positions Bank Hapoalim is one of Israel’s largest services, which provide proper of the bank (90.5%), excluding those employers, with approximately 8,700 response to employees’ preferences employed under personal contracts employees as of the end of 2016. and the widest range of needs: leisure, The work culture at the bank is healthy lifestyle, enrichment activities 65.8%% characterized by: for employees and their families, The percentage of employees who ■ Equal opportunities and the professional assistance during personal hold academic degrees prevention of discrimination– as or family crises, and more; rose from 64.4% to 65.8% in 2016. part of its recruitment policy, the bank ■ An excellent working relationship, Approximately 38.6% of the bank's encourages recruitment and integration dialogue and partnership maintained degree-holding employees have 474 336 of population groups that are under- between management and the Maternity leave Absorbing external employees represented in the job market. The employee union; master's degrees or higher. This group bank also has partnerships with NGOs ■ Workplace-home flexibility – the constitutes 26% of all employees of 474 employees took maternity leave in In 2016, the bank hired 336 external workers as specializing in empowerment and bank cut down its employees’ weekly the bank. This year more than 300 2016, while 396 returned to work following regular employees, accounting for 66% of all integration of such populations in the working hours, which are now less employees were enrolled in academic maternity leave. Employees returning employees hired by the bank during the year. job market; than the number prescribed in Israel’s degree programs, with tuition financed ■ A wide range of opportunities for labor laws. In addition, the bank does from maternity leave usually resume their Overall, the bank hired over 4,000 external personal and professional growth not encourage overtime and ensures its by the bank through a joint fund of previous positions. Any position change if workers in 2008-2016. The percentage of and development–generating shared employees do not exceed the overtime the board of management and the made, done in coordination with employee external workers decreased from 18.8% to 6.4% value for employees and for the bank; allocated to them under law. employee union. between 2007 - 2016 ■ Continuous learning–the bank invests considerable resources in professional

10. The number of employees is excluding employees who are on maternity leave and bed rest during pregnancy, external employees and Employees of subsidiaries.

EMPLOYEES - QUALITY OF 108-109 LIFE AND WELL-BEING Distribution of employees by type of employment agreement Ratio of bank`s employees to Supervised Temporary bank employees employees at the bank Permanent Temporary Senior employees Total Temporary Men Woman employees employees employees Collective contract 80.5% 10.0% - 90.5% 6.4% 6.4% 2016 Personal contract 0.1% 8.2% 1.2% 9.5% Personal 486 347 9.5% 8.7% 7.6% 13.4% 12.6% 12.4% 9.9% contract Collective contract 81.8% 9.5% - 91.3% 2015 Collective 258 609 Personal contract 0.13% 7.2% 1.3% 8.7% contract Collective contract 80.93% 10.82% 91.75% 92.4% 93.6% 93.6% 2014 90.5% 91.3% Personal contract - 6.98% 1.26% 8.25% (2016) Total employees of the Bank 86.6% 87.4% 87.6% 90.1% by age and gender Age Men Women Total Rate Supervised employees Under 30 217 658 875 10% Bank employees 31-50 1,739 3,407 5,146 59% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Over 51 1,137 1,543 2,680 31% Total 3,093 5,608 8,701 100%

Segmentation by Area of Residence Employee turnover, 2014-2016 (employee departures and hiring's)

Year Age Departure Hiring Temporary employees Bank employees Female Male Total Rate Female Male Total Rate 2016 Up to 30 152 46 198 28% 237 132 369 72% 31-50 106 73 179 25% 53 82 135 27% 8.8% 9.0% South 4.8% 7.7% South Jerusalem 50+ 222 116 338 47% 1 4 5 1% Jerusalem 16.0% Total 480 235 715 100% 291 218 509 100% North Up to 30 195 57 252 36% 165 69 234 71% 29.1% 2015 North 31-50 107 70 177 25% 45 49 94 28% 16.9% Hasharon 50+ 163 110 273 39% 2 1 3 1% 20.3% 31.9% Tel-Aviv Total 465 237 708 100% 212 119 331 100% Tel-Aviv Up to 30 55 208 263 29% 238 79 317 71% 16.5% 2014 Hasharon 17.6% 21.4% 31-50 71 102 173 19% 60 69 129 28% Center Center 50+ 300 156 456 51% 3 6 9 1% Total 426 466 892 100% 301 154 455 100%

In recent years there is a trend of a reduction in the bank's overall headcount, In view of the restructuring processes carried out by the bank

EMPLOYEES - QUALITY OF 110-111 LIFE AND WELL-BEING Education and Age The following table presents a breakdown of the 8,898 employees of the bank in 2016, Promoting a Culture of Dialogue and Openness by age and level of education: Bank Hapoalim considers its employees wisdom of the crowd" and a culture of was constructed for leadership of to be full partners who contribute to all social dialogue by providing a comment this process by managers and its Education No academic degree Academic degree Total Age group business and organizational processes. section for news items posted on the application to the bank as a whole, Age distribution B.A. M.A. Ph.D. Employees become partners in promoting organizational portal, as well as through from senior management to each and the bank's endeavors through organization- surveys, webinars, forums, etc. every employee. Following the official 18-21 37 1 38 0% wide communication on all levels: dialogue organization-wide launch of the vision in 22-30 350 417 70 837 58.2% between managers and employees, and 2011, the process of instilling the vision direct communication between the various Strengthening continued in 2016, through various 31-40 456 1,193 729 2 2380 80.8% units. Direct dialogue between managers aspects of the bank's activity: instilling and employees enables employees Relationship with the vision at bank’s divisions, integrating 41-50 724 1,078 955 9 2766 73.8% to feel connected with organizational Employees at Bank the values of the vision into learning and 51-60 991 563 383 5 1942 49.0% objectives. Lateral dialogue between units training materials, and communication helps organization-wide processes move Hapoalim of the bank's vision to employees and 60+ 416 216 105 1 738 43.6% forward with flexibility and efficiency. The ■ Employees instill the vision of the managers. Implementation of the Doing Total 2,974 3,468 2,242 17 8,701 65.8% range of methods applied at the bank to bank – The project of instilling the bank's Good Model of the Arison Group at the achieve these aims includes face-to-face vision, initiated in 2009, represents bank began during 2015, in a small-scale Education distribution 34.2% 39.9% 25.8% 0.2% 100% meetings, use of the organizational portal, a process of renewal and growth as pilot project. In 2016, the model was promotion of a culture of sharing and well as a declaration of the bank's implemented throughout the bank (for The table shows that the percentage of employees who hold academic degrees (segmented by age) is very high in the 22-50 age group, in accordance with the innovation, and processes of feedback, commitment to universal social values, more information see page number 164). upward trend in higher education in Israel, beginning in the 1990s and through the following decades, in contrast to the percentage for employees over the age of 50. The percentage is lower for employees aged 22-30 than for those aged 30-50, due to the fact that some of the younger employees are still in the process assessment, and drawing conclusions. towards its business environment of completing their academic degrees, or have not yet begun their planned studies. The bank also works to encourage "the and its community. A detailed plan

Upward trend in percentage of degree-holding employees at the bank Bank Hapoalim considers its employees to be full partners who contribute to all business and organizational processes. Employees 64.4% 65.8% 59.5% 62.4% become partners in promoting the bank's endeavors through 56.6% 57.6% 54.4% organization-wide communication on all levels: dialogue between 48.0% 49.0% 49.0% 50.7% managers and employees, and direct communication between the various units. Direct dialogue between managers and employees enables employees to feel connected with organizational objectives. Lateral dialogue between units helps organization-wide processes move forward with flexibility and efficiency

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

The upward trend in the percentage of degree-holding employees continued at a greater pace in 2016. This achievement reflects an ongoing long-term positive trend of rising proportions of degree holders at the bank, due to factors including the bank's encouragement of employees to study towards undergraduate and graduate degrees, through tuition aid and added vacation days for examinations. Overall, from 1997 to the end of 2016, the percentage of degree-holding employees at Bank Hapoalim rose from about 26% to 65.8%.

EMPLOYEES - QUALITY OF 112-113 LIFE AND WELL-BEING ■ Beshutaf (“in collaboration”) – a new employees, and genuine dialogue "Beshutaf"– a new internal Feedback and evaluation: 99% of the internal business network launched through the range of tools available on business network launched bank's employees participated in an LOOKING AHEAD gradually from the beginning of 2016, the portal. The bank's organizational evaluation process in 2016, based on their to encourage intra-organizational portal has earned recognition in Israel gradually from the beginning performance in 2016. Mid-year follow-up Portal home page – launch of a new home page on the organizational portal, communication and promote business as "best practice" in the areas of of 2016, to encourage intra- with emphasis on user experience; through knowledge sharing and giving knowledge management and intra- organizational communication talks to check progress on objectives and back to the community. The network organizational communications; and promote business choose directions for development were Internal pages on the organizational and banking portals – gradually improve enables employees and managers to ■ Management-employee meetings through knowledge sharing held with 65% of employees the user experience, including the use of new and existing views, re-write the receive updates, share information, – a series of meetings held between content to bring it up to date with the language currently used on the Internet; work in professional teams and promote the bank's management and and giving back to the projects quickly and easily. Similarly, to employees, with the aim of enhancing community. The network In the “I Care” initiative, introduced Portal To Go App – improve the user experience and the application launch business-social networks outside the management's knowledge of what is enables employees and as part of the innovation drive, any experience, as well as the user experience for new audiences: retirees and bank, the intra-organizational network taking place "on the ground"; employees on unpaid leave, interface with some of the bank’s systems and to ■ managers to receive updates, employee in any position who identifies allows employees to create blogs Innovation processes - during the bank’s internal phonebook; and communities, tag according to 2016, the bank continued its internal share information, work an activity that can be streamlined is professional content topics, etc. Using innovation processes, which have in professional teams and invited to formulate a proposal, which is "Beshutaf" – an internal business network – full implementation across the the network will enhance a culture of been held in recent years in an effort promote projects quickly entire organization. Use the network as a new internal communications platform collaboration, professionalism and to encourage a dialogue with the submitted and processed in an organized and easily. Similarly, to and to promote projects in the organization; personal empowerment in the bank; employees and involving them in procedure. A total of 2,100 proposals were ■ The organizational portal – The portal streamlining processes and innovative business-social networks submitted by 980 employees in 2016. "Poalim for Good" – continued implementation of the Poalim for Good model is a venue for everyday realization of thinking; outside the bank, the intra- From the launch of this program in 2009 for the second year. dialogue, transparency, and sharing. ■ Feedback and evaluation processes organizational network Since the launch of the portal in June – Each year, managers provide feedback allows employees to create to the end of 21,000 ,2016 proposals were 2006, it has become a key arena for to employees on their individual blogs and communities, tag submitted by 5,000 employees, of which intra-organizational communication and performance at their positions. The 2016 Objectives Status for conveying messages within the bank. performance evaluation process takes according to professional approximately 7% are being implemented The portal provides the ability to manage the form of a dialogue between the content topics, etc. Using Continued development and more Completed. Planned to and access organizational knowledge manager and the employee, and the network will enhance extensive use of the Portal on the Go continue in 2017. (work processes, rights and obligations, supports a number of goals, including – addition of content; development of information about the employee union, employee development, coordination a culture of collaboration, screens and sub-applications for specific etc.) and professional knowledge of expectations, and improvement professionalism and personal population groups; expansion of usage to (processes, data, and supporting of performance. The process helps empowerment in the bank all employees of the bank. information); a professional desktop – a empower and nurture employees, and 4 Renewal of the organizational portal, A page characterization gateway to business activities through promotes excellence. The performance million including redesign of the home page has been done. The launch which employees can reach all of the evaluation process consists of an and portal UI and UX to improve the user of the new displays is organization's systems and applications; examination of the employee's Number of pages interface, and reorganization of the content planned for 2017. and an infrastructure for organizational performance over the last year and viewed monthly and navigation tree on the main portal. sharing and dialogue among employees formulation of the main objectives for through forums, surveys, comments, the coming year, including professional and participatory activities. As a result, as well as personal objectives. Midyear the bank has achieved improvement talks to track progress on the objectives in employees' professional skills, and development are held about six increased synergy between the head months after the feedback sessions. 150,000 500 4,000 office and the units on the ground, These processes continued to be Employee queries Content expert employees Knowledge items posted stronger organizational identity among performed routinely in 2016. via the portal who manage sites within on the portal daily the portal

EMPLOYEES - QUALITY OF 114-115 LIFE AND WELL-BEING Promoting Diversity, Equal Opportunities, and Transparency Non-Discrimination according to a role book. The role book, for communication with her, as well as Promoting Workplace ■ Training – The Poalim Campus thinks from this community to staff a range From the Bank Hapoalim ethical code: which is available on the organizational the bank's regulations on this matter, are ahead about adaptations and emphases of positions at the branches, creating "The bank treats its employees fairly and portal, contains information regarding the posted on a topic page in the organizational Diversity needed in various professional courses, an opportunity for promotions to without discrimination. The policy of the terms of employment and entitlements portal. This topic is refreshed annually using Encouragement of Employment in cooperation with the head of Arab- management positions, such as branch bank is to employ, promote, and make granted to employees at each rank and a specialized tutorial. of Male and Female Employees Israeli outreach at the bank and external manager and division heads. The decisions regarding employees based position. The publication of the role book from the Arab-Israeli Community experts who consult on this subject as new branches opened in Arab-Israeli on pertinent considerations, such as contributes to transparency in wages and Working to Include Population Within the promotion of diversity at the necessary. A course coordinator from communities have been staffed in full, qualifications and performance, with no allows control over the terms of the wages. Groups Underrepresented in the bank, a systemic effort has been devoted to the Arab-Israeli community who is in accordance with the requirements, discrimination due to religion, race, sex, Job Market encouraging the employment of employees thoroughly familiar with the challenges such as an academic degree and the age, political views, sexual orientation, Equal Wages for Men and Women The bank is leading a diversity initiative, from the Arab-Israeli community, facing these employees provides skills necessary for each position. disabilities, etc. The bank does everything Basic wages and related terms are based on an understanding of the encompassing various processes in the continual support according to needs in its power to implement this policy." Any established at the bank according to advantages of d iversity on the level of the employment life cycle: that emerge. A targeted plan was claims of discrimination brought before employees' position and rank, based on business, its values, and the organization. created to gain familiarity with the unique Targeted Mentoring Program for the responsible parties are addressed the role book, regardless of gender. This Within the vision of the bank, it is committed ■ Recruitment – Available positions characteristics of the course participants the Development of Young Arab- by the bank immediately, in order to method is used to construct the wage to the inclusion of a range of different are advertised in Arabic on the bank's and of their potential customers, with Israeli Employees investigate the allegation. No complaints system and calculation charts. The bank population groups in congruence with their Arabic-language website. Positions the aim of optimizing future business In 2015, a targeted mentoring program of discrimination found to be justified were performed a review of remuneration at all representation in society. This is justified specifically designated for Arabic results. The bankers' training includes was developed, in collaboration with filed at the bank in 2016. levels of the organization, and found that both in business terms and in terms of the speakers are also advertised on the workshops on behavior skills adapted Tevet – Joint Israel, for young Arab-Israeli wages were equal for men and women, bank's commitment to the society of Israel. careers page of the bank's website to Arab-Israeli society, given by an academics employed at the bank with Transparency from Step One at all positions and ranks. Obviously, there The bank encourages recruitment and (in Hebrew), and on online job boards. external consultant from this community. the potential for future development. The relationship built between an employee are certain differences in total wages paid absorption of employees from population Relevant non-profits and organizations A Hebrew-Arabic dictionary of banking The program's mission is to support and the bank during his or her first days to employees in specific positions, due to groups underrepresented in the job market in the area of employment, such as Rian terms is available to course participants empowerment and personal growth, with with the organization forms the foundation individual characteristics such as seniority, (The Arab sector, the ultra-Orthodox Centers, Kav Mashve, and others, are and to all employees of the bank. an emphasis on the adoption of effective for their work at the bank over the years to added benefits for parents of children, sector, Ethiopian Israelis and people with also contacted. A significant element Meetings are held with Arab-Israeli practices at the bank for the maximization come. The bank accords high importance to overtime, etc. disabilities) , as part of its hiring policy; more of the recruitment process is the opinion leaders and with business of individual abilities. Mentors are branch employee satisfaction during the orientation than 90011 employees from these sectors involvement of bank employees from firms that employ large numbers of managers motivated to volunteer for the period, and emphasizes respectful individual Equal Opportunities - are currently employed at the bank. As part the Arab-Israeli sector, who help through Arab-Israeli workers, in order to obtain program and willing to guide an employee attention and full explanation and information Gender and Sector of the long-term work plan formulated by contact with potential employees and deeper understanding of their needs through a significant development process about rights and obligations, as well as a Data on the employment of women at the bank, several processes are being with community leaders. and respond appropriately. and serve as a stable, inviting source of personal gift for the employee's home and the bank indicate that the percentage of promoted in this area, including focus ■ Screening – Evaluation centers targeted ■ Guidance – The Human Resources advice. When the program opened, two a detailed orientation package. The bank female managers at the bank as a whole and adjustments in the recruitment and to the Arab-Israeli community were held Division provides guidance and conducts training sessions were held for the mentors, provides new employees with information is on an upward trend. The pool of female absorption process, as necessary: activities in Northern Israel and in Haifa during the meetings with the employees during to impart practical coaching skills. The regarding terms and processes related to employees with management potential designed to instill a diversity approach in year, for easier access to candidates. their training period (at the beginning, program was launched in early 2016 and their work, as well as useful information on (at the first tier of management) is large, the bank's management culture as part of The evaluation sessions were led by middle, and end of the course), and continued throughout the year. all matters connected with the beginning and has a positive effect on the growth its leadership philosophy; and structuring Arab-Israeli psychologists; branch is available for any questions after of their employment. New employees of talented female managers and on of work processes and collaborations with managers from this sector and human- training is completed. The division also are invited to initiation conventions and the rising proportion of women in senior non-profits specializing in empowerment resources representatives participated. monitors the development of bankers orientation days, to receive an explanation management. The bank strives to promote and integration of underrepresented Candidates had the option of taking skills in the Management Training Track over of their designated position and of what it workplace diversity and hires employees population groups in the job market. tests in Arabic. Human-resources staff their early years at the bank, including means to work at the bank, and to gain from a variety of sectors and population who conducted individual interviews for meeting with them at the end of their familiarity with the bank's organizational groups, as part of its human-resources candidates, as well as all participants in first year of work. 6% culture and expectations. management policy. the screening process, were trained in ■ Promotion – As the bank opened Minority employees multicultural interviewing. The screening branches serving the Arab-Israeli constitute 6% of the Equality in Wages and Terms An officer responsible for the prevention of process also includes an interview with community, a need emerged for highly bank's manpower In general, salaries and terms of employment sexual harassment in the workplace has an Arab-Israeli branch manager. qualified and experienced employees for bank employees are determined been appointed at the bank. Channels

11. During 2016, the bank carried out a re-measurement of the employees who are included in the Bank's sub-employment populations. EMPLOYEES - QUALITY OF 116-117 LIFE AND WELL-BEING Encouraging Employment of ■ Proper representation of employees with ■ When recruiting employees from Workers with Disabilities Comparison of men and women at each rank Workers with Disabilities the bank made an initial mapping of its disabilities, as a percentage of the total: outside the bank, the hiring coordinator Female Male Total Rate Over the years, the bank has invested the at least 3% of the company's employees. will contact at least three different workers with disabilities, in line with the necessary resources and carried out any ■ Appointment of an officer responsible organizations specializing in the criteria in the New Extension Order, and is Board of directors* 2 9 11 - adjustments that are called for in the work for the employment of people with placement of people with disabilities. currently preparing a plan to promote the environment when new employees with disabilities. employment of workers with disabilities Senior executives 29 62 87 1.0% physical disabilities are hired, or in the event The bank currently employs hundreds of changes in employees' health. Thus, the The Minister of the Economy signed an of employees with disabilities, most Middle management 994 788 1,782 20.5% Hiring population groups that are bank provides disabled employees with an expansion order in September 2014, caused by illness, traffic accidents, or First tier management 347 270 617 7.1% appropriate work environment that enables applying these directives to the Israeli hostile acts. Extensive efforts are also under-represented in the job market them to function to their full potential. In economy as a whole. In 2016, the bank’s devoted to hiring people with disabilities in 2016, the bank recruited 90 employees some cases, the bank assigns employees Human Resources Committee approved the through relationships with the Rehabilitation (Arabs, Ultra-Orthodox Jews (Haredim), Employees 4,315 1,896 6,211 71.4% to a position in which their disability is not appointment of the hiring coordinator as the Division of the National Insurance Institute; Jews of Ethiopian descent, and people with Total employees 5,608 3,093 8,701 100% an obstacle, in order to enable them to function responsible for the employment of the Ministries of Welfare, Health, and disabilities), representing approximately 22% continue to work at full capacity. people with disabilities. In addition, a human- Defense; employer support centers at of the newly-hired employees * Members of the board of directors are not employees of the bank. resources policy has been approved by the the Center for Integration of People with An agreement concerning the employment Human Resources Committee and updated Disabilities in the Ministry of the Economy; of people with disabilities was signed by on the portal. According to the policy: the Rehabilitation Division; numerous the Histadrut labor federation and by ■ Employment or promotion of people placement organizations that specialize in employers in June 2014. The agreement with disabilities who are qualified for the employees with disabilities; the Service for establishes two obligations for employers: position and who have similar skills to the Blind; the Accessible Work portal; the Segmentation of Minority Employees those of other candidates will be granted Employment Service; Beit Ekstein; Elwyn; precedence. Migdal Or; and more.

5% Senior Women-men wages: executives During 2015, a greater examination was conducted comparing men's wage to women's wage of at all levels in the 12% bank. There was no difference found: % Middle the average women's wage rate of 52.4 management employees of the bank stands at 99.91 % of executives at the bank are female, of men's wage versus 34% in the labor market

64.4% 2% 20% 83% Percentage of female Segmentation of hiring of Bank employees from the Employees employees at the bank Ultra-Orthodox sector employees from under-employed 64.4% of the employees of population groups - constitute approximately In 2016, approximately 16% of total the bank are women, versus 2% of the bank's total employees hired were Arab-Israeli, 3% approximately 56.9% in the were Ultra-Orthodox, about 2.5% were of 12 employees (estimated) labor market in Israel Ethiopian descent, and around 1% were people with disabilities

12. Labor Force Survey (CBS), January 2017. EMPLOYEES - QUALITY OF 118-119 LIFE AND WELL-BEING Personal Development and Training Proportion of Women in Management Positions 2016-2011 The bank cultivates a culture of learning and systemic projects. The assessments with the range of activities performed at 56% 60% invests in professional and management are conducted using questionnaires the centers and impart basic knowledge. 53% training to empower its employees and administered at the midpoint and end of the Advanced training for experienced 44% managers. Most of the bank's professional course, aimed at measuring and evaluating employees is designed to create and management training is conducted the effectiveness of learning processes. specialization in specific knowledge 40% through the Poalim Campus. The Campus Several key performance indicators (KPIs) areas. In addition, brief professional serves as the central arena for change- are established within this process, such training sessions are conducted each generating learning, leading to personal, as attainment of objectives, feasibility, year for all employees, to refresh 20% organizational, and professional growth, satisfaction, personal/professional professional content and teach skills 14% with the goal of ensuring professional development, and connection. The average needed to work with new software; and managerial excellence for the bank's KPI score serves as an index of the general ■ Poalim by Telephone – in 2016, call employees and managers. The Campus effectiveness of the course. Another center team managers who underwent 0% contains the Banking School, the Personal measurement is performed sometime designated training, conducted Members of the board of Senior executives Middle management First tier management and Managerial Leadership Center, after the course, to evaluate absorption mentoring and teaching. management the Learning Solutions Development and implementation of the knowledge and Poalim Campus 2016 Unit, the Banking Portal and Intra- skills learned in training, and the extent 2011 2012 2013 2014 2015 2016 organizational Communications Unit, of change in the employee's behavior The activities held at the Campus in 2016 and the Organizational Development Unit. following participation in the program. included the following: This post-completion evaluation makes it ■ Digital Empowerment – th e The Campus serves the combined goals possible to assess the extent of support Retail Division, in collaboration with of fulfilling employees' desire to learn received by the employee in implementing Poalim Campus and the Poalim for Examining Achievement of Objectives and develop and the bank’s need for the skills, tools, and processes learned Organizational Excellence unit, initiated LOOKING AHEAD high-quality workers, and promotes an during training, and the main barriers to a digital empowerment drive for branch 2016 Objectives Status organization-wide culture of ongoing such implementation and absorption. This workers. The drive included a behavioral Plan to encourage the hiring of people with learning. This learning-oriented approach feedback enables the Campus to improve workshop with the aim of dispelling Integration of the diversity philosophy Completed. disabilities – the bank will continue to hire people emphasizes the ambition to decentralize the quality and precision of its training employees’ fears of the digital domain, with the Shari Arison Doing Good Model with disabilities, continuing its cooperation with the learning to the regional administrations, programs. The Campus also works to map emphasis on the role and value provided – A drive to communicate and instill various entities related to this issue (as mentioned and further, to the branches and to each employees' knowledge gaps, with the aim by bankers to customers in an era in diversity is planned for June 2016, within above); In 2017, awareness to this issue will be employee's workstation. The Campus of identifying the main areas of missing which many transactions are performed the value "We Are All One," using videos, further emphasized and communicated through is a key partner in a range of strategic professional knowledge and designing digitally. The main aim was to teach a quiz game, and more, aimed at creating executive conferences and information uploaded processes at the bank, from the initial focused training programs to close the and train all employees to perform closeness, tolerance, and a more fair and to the organizational portal. stage of examining needs, through the gaps. An ongoing process of mapping transactions on the website and app. balanced society. development of training methods, team knowledge gaps is conducted at the bank. The employees’ familiarity with the direct Candidates from population groups under- development, and implementation of channels is a means to provide guidance Encouragement of employment of people completed- represented in the job market – as part of its changes, to testing their effectiveness In addition to the activity of the Poalim to customers arriving at the branches with disabilities – Development of a development of employees’ diversification policy, the bank set an after implementation. During process Campus, several of the bank's units on how to perform transactions digitally program to embed this goal, including implementation internal recruitment target of at least 10% of the development, the Campus uses all of the conduct on-the-job training processes and understand the value of using the writing an internal procedure, publishing plan, internal newly hired employees; tools at its disposal, integrating a range of and other internal training activities digital domain to save time and money information on the portal, holding procedure. methods, such as online learning, use of designed to impart specific professional to customers; conferences for executives, public In process Continued implementation of Shari Arison’s Doing videos and simulations, use of the portal, knowledge relevant to the unit and improve ■ MOOC (massive open online course) relations, experience-based learning, and - executive Good Model – I n August 2017, the bank is scheduled and frontal instruction. employees' capability and performance. – during 2016, 278 employees and additional means of raising organizational conferences, to launch a communication and implementation drive These training activities are conducted at managers of the Bank studied online awareness, in cooperation with Access published on diversity, under the value All One (a video, quiz, etc.), The Campus routinely assesses the the following units: courses at prestigious universities Israel and the Center for Integration of information in the with an emphasis on coming closer together, tolerance effectiveness of its courses and ■ Central back offices – The central abroad - MOOC, the most advanced People with Disabilities in the Ministry of portal. and creating a fairer and more balanced society. development programs, field training back offices conduct basic training for digital courses in the world. The subjects the Economy. programs, and training sessions within all new employees, to familiarize them that were taught are future professions.

EMPLOYEES - QUALITY OF 120-121 LIFE AND WELL-BEING on retirement planning, with the aim (personal, private, business, Mishkan individuals, development, and leveraging of reviewing the customers’ financial and headquarters); team capabilities. 235 92% 90% resources; ■ Team leadership – Implementation of this ■ Afternoon Campus – in 2016, new ■ Course evaluations – Participant satisfaction – 92% Achievement of KPIs (effectiveness Senior executives’ courses – as program at the units of the bank continued enrichment courses were launched: part of the professional development during 2016. 44 executives participated coaching, photography, website Performed in 235 course of participants rated their evaluation) – 90% of participants of employees, seven courses were in the program, with emphasis on team development and NLP. All courses sessions, with 4,200 satisfaction with the training rated achievement of these held in 2016 in various banking fields management, the empowerment of provide certificates. employees participating as high or very high objectives as high or very high 127 1,200 7,000 Annual training activities - 2016 127 computer-based learning As part of the Digital 7,000 employees participated in 590 modules were given during 2016 Empowerment project, more than professional training seminars Number of course to 17 types of professionals at 1,200 employees participated in as part of Campus in the Field – 49,776 sessions at the Campus Total days of learning (including subsidiaries the bank’s divisions; day-long training seminars on learning kits and workshops in digital culture (getting started, various fields, taught in a regional and external personnel) finding information on Google, classroom and/or at a branch, digital culture and online learning) by an expert in the field or a field 72% and over 1,400 employees instructor. Percentage of position-specific training participated in training programs programs* / professional training** at the branches. 46,276 ■ Poalim for Recovery – after having professional skills. A total number of extensive digital learning. Most of the Days of learning (bank employees only) implemented Poalim for Recovery in 100,000 teaching hours – computerized training was conducted via tablet, like 28% the private departments during 2015, and frontal – were provided; the work at the branch. In addition Percentage of managerial/ ■ training programs were developed High-Tech bankers – This year as well, to extensive banking knowledge, the behavioral training programs*** in 2016 to continue the move in the Poalim Campus developed new courses bankers also received instruction on business and private departments. – in collaboration with the Retail Banking financial education, enabling them to The program focuses on the financial Division – aimed at offering different, hold dialogue with greater added value recovery of customers using a variety of innovative service to high-tech customers; with their customers; advanced processes and tools; ■ Digital branches – At these branches, ■ Investment advisors – in 2016, several ■ Campus in the Field – 2016 was customers are expected to perform executive courses were held, training 37% 63% characterized by the continued all actions available in digital form employees to serve as investment 42.5 men / women**** transitioning to learning at the units, with independently; bankers, on the other advisors, in two cycles – a practical Average hours of learning per employee Training programs by gender full support from the Poalim Campus in hand, are expected to provide added advisors’ course and preparation for the

the development of learning materials. value at significant milestones in the Securities Authority’s exams. A pension * Including infrastructure courses and senior executives' courses. Computer-based learning on the learning customer's financial life. Bankers advisors’ course for retirement planning ** Including training sessions such as banking coaching days, courses on information systems, and professional banking courses that do not constitute job training. system continues to serve as the key carefully selected for the digital branches was held, in which pension advisors *** Including coaching days, executive development programs, and afternoon Campus courses. component in maintaining employees' completed an innovative course involving were trained to conduct conversations **** The segmentation of training by gender indicates almost full correlation between these data and the general proportions of women and men at the bank.

EMPLOYEES - QUALITY OF 122-123 LIFE AND WELL-BEING Poalim Campus Activity - Promoting Appropriate Work Environments Average Number of learning Hours Per Employee Insurance Policies, Funds, and moving to a new home, buying a vehicle, (if given) based on the bank’s cost of Benefits for Employees children's weddings, and more. capital, and also based on personal, Bank Hapoalim pays wages to its measurable, quantitative and qualitative employees in accordance with personal performance targets, as well as on long- 42.8 40.8 Performance Rewards 40 or collective employment contracts signed The bank’s remuneration policy is consistent term plans and objectives; 33.6 with each employee. In addition to wages, with the directives of Amendment 20 to the ■ To promote a remuneration structure employees enjoy a wide range of benefits, Companies Law, 1999 (the "Companies that prevents damage to labor relations under agreements with the employee Law") and with Proper Conduct of Banking at the bank; union and pursuant to their personal Business Directive 301A, Compensation ■ To adjust remuneration to the nature 20 contracts, as relevant. Employees receive Policy at Banking Corporations ("Banking of activity, responsibilities, and skills of 13.5 comprehensive insurance coverage, Corporation Compensation Directives"). employees and managers, such that including pension insurance (starting on The remuneration policy reflects the bank's remuneration is determined following the first day of employment at the bank), ambition to compensate its employees consideration of the employee's disability insurance, life insurance, personal and managers for their work and for their education, skills, expertise, professional 0 accident insurance, health insurance, contribution to the bank, and to retain experience, and achievements, as Senior executives Branch/Department First tier management Employees and dental insurance. In addition to the them over the long term, with appropriate well as the employee's position, insurance coverage described above, incentives and linkage of their best interests areas of responsibility, and previous additional safety nets are available to with those of the bank and its stakeholders, wage agreements. Remuneration for employees during times of crisis: in congruence with the bank's long-term functions of the organization involved in 2012 2013 2014 2015 2016 ■ The Malki Foundation – A voluntary goals, work plans, and policies. The supervision and control is determined fund, administered as a non-profit remuneration policy is consistent with the based on standards which take the foundation financed by employee bank's vision, strategy, work plans, and importance and sensitivity of these roles donations, which provides financial risk appetite and its aim is to maximize the into consideration. coverage for employees in the event of bank's value, while emphasizing stability serious illness or similar occurrences; and the interchange between achieving ■ The Mutual Assistance Foundation returns and taking risks. – This foundation is financed by management's budget, and is designed Objectives of Employees' and The bank is committed LOOKING AHEAD to assist employees who encounter Executives' Remuneration Policy to providing a setting financial difficulties and family or ■ To motivate officers and senior executives conducive to its Training center for customers and the public – as part of organizational changes decided on by the bank’s management financial crises; to work to create long-term economic ■ employees’ personal and during 2016, a new division was established – a stakeholder relations division, with the campus serving as part of it. Based Management and employees' joint value for the bank and its stakeholders, in professional development; on the new strategy of 'shared value' – it was decided to establish a training center for educating customers and the public, fund – The bank manages the joint fund a manner that strengthens the correlation as part of the Poalim Campus. The purpose of the new center is to provide tools to customers and the public for financially for management and employees, with between remuneration and the creation the HCDC serves this beneficial conduct in significant milestones of life and as a matter of routine. The value propositions will be provided on a the employee union. Employees' and of value for the bank’s stakeholders. In purpose by creating a management's resources are used accordance with this objective, wages variety of platforms – frontal and digital. The new activity is a significant element in establishing the value of Financial Freedom, point of contact between a key value in the bank's vision. to finance activities related to well- for officers, executives, and employees being and assistance for employees are derived from a scale of ranks, which the organization’s Instilling values and the concept of Shared Value among the bank’s employees and executives through innovative executive and retirees. offers the possibility of promotion and needs and employees’ management programs, incorporating the topic in Poalim Campus courses and in designated day-long training seminars; reflects the authority and responsibility of professional ambitions Employees are entitled to discounts on each level in the organizational hierarchy. Development of the Branch Managers’ Community Leaders’ program" – mapping the community in each branch’s bank-account fees, subsidized loans, Part of the remuneration will be paid in vicinity, to create shared-value initiatives. spreading of debts into installments, and share-based instruments, which will be loans tailored to personal milestones: blocked long-term. An annual bonus

EMPLOYEES - QUALITY OF 124-125 LIFE AND WELL-BEING Excellence in Service to (for data on queries by contractor workers, were used to hire employees, such as units undergo change, but employees are Employees see the "Supply Chain" subsection in the upgrading recruitment resources, video also reassigned to different positions. In The Mashab Personal Service Center "Community" chapter). interviews, computerized tests within these situations, the appropriate training serves as the centralized destination Four workshops on financial knowledge the organization, shortened recruitment and instruction are provided in order to for employees' and managers' queries for employees and their spouses were process, advertising on social networks, 45,000 prepare the employees for their new roles, on various matters related to human held free of charge again in 2016. Options compensation for referrals, sending a Mashab queries and support is offered through all stages resources, aimed at improving satisfaction for self-service online applications were digital onboarding brochure, improving 45,000 queries to Mashab were documented in 2016, from 9,800 of the transition and absorption. Under and strengthening connections. Mashab expanded in various areas of human the onboarding of bank tellers, bonuses employees. During the year, Mashab complied with an SLA of the bank's labor constitution, in all cases was established with the aim of bringing resources (such as supplements for for bankers, improving remuneration more. responding to 91% of contacts by the end of the following business of transfer of employees to a different human-resource services to the next level, work hours missed due to pregnancy, day. Since the establishment of Mashab in 2010, over 318,000 position, the employee must be given at and provides service to all employees and job-related travel reports, and more). In addition, a continued emphasis was least one month’s advance notice. Caring queries have been made by 16,000 employees and retirees; managers of the bank. Mashab consists placed on diversifying human capital and, for employees involves ensuring that the of three functions: Creating an Organizational so far, about 60 employees from diverse conditions of their employment are not ■ A service center for online and Map at the Human Capital population groups were hired for banking An Ergonomic Work Environment Logistics Division and the Employee Union impaired as a result of the change. telephone queries from employees Development Center positions at the branches and call center, as One of the many facets of caring for – aimed at promoting healthy lifestyles for and business partners on matters The bank is committed to providing well as positions at headquarters. As part employees is to ensure a healthy, appropriate employees – is an additional significant step Employee Union related to human resources, including a setting conducive to its employees’ of the hiring process, welcome conferences, work environment. This is achieved through towards expansion of the range of activities The Employee Union is first and foremost an operational system to support work personal and professional development; satisfaction surveys and orientation days ergonomics. Information on ergonomics at the bank among the employees and a strategic partner and a key stakeholder. processes derived from queries on the HCDC serves this purpose by creating a were held for new employees, to strengthen is accessible to employees on a page their families. This activity continued in The work of the management with the matters related to human resources, point of contact between the organization’s their connection with the organization. In dedicated to this subject in the CSR section 2016. Activities during the year included: Employee Union follows a pattern of in areas such as attendance, maternity needs and employees’ professional the area of employee retention, professional of the organizational portal. The page ■ TRX workshops for employees across ongoing dialogue (updates, feedback, and leave, unpaid leave, employee loans, ambitions. To realize this philosophy and conferences were held for specific target contains professional information and rules the country – more than 450 people consultations) and partnership in all key monitoring of missing data on employees, foster employee growth, development, groups: employees receiving tenure at the for working correctly in an office environment, took part; actions and processes in the day-to-day employment certifications, visas, eligibility and empowerment, the HCDC provides a bank, a conference for graduates of the such as how to sit, how to adjust chairs, how ■ Subsidies for sporting events – running of the bank. The roles fulfilled by for mobile phones, cafeteria points, daily comprehensive, current operational status management training program with one to use accessories, etc., as well as instruction participation of employees in subsidized the Employee Union include protecting expense allowances, and more; snapshot of capabilities and skills, while year's experience, and a conference for on exercises during work, answers to sporting events: walks, marathons, every employee's rights and obligations; ■ Social support center for employees advancing employees through individual employees working for ten years at the bank. frequently asked questions, and more. cycling events, the Wheels of Hope race; developing cultural, instructional, and in crisis – assistance, care, and advice; instruction and occupation changes. ■ Good nutrition – a ten-session social activities; and organizing mutual information, mediation, and help Hundreds of employee's experience A new service launched for employee Promoting Healthy Lifestyles workshop on good nutrition was held assistance among employees. The exercising rights within the bank or in the mobility each year at Bank Hapoalim, development and empowerment: Career The bank allocates resources to activities for employees in the Campus; numerous activities of the union for the community, for personal or family issues as they are assigned to new positions or Tip enables employees to consult that promote healthy lifestyles, such as ■ Poalim Health on the international wellbeing of employees include summer such as care for elderly parents, care for promoted. Employee mobility takes place with senior executives at the bank on subsidized medical testing; lectures on portal – the Poalim Health zone was day camps for employees’ children across children with special needs, parenting within a supportive, values-driven work development and career questions. healthy lifestyles, good nutrition, and launched on the organizational portal Israel, reduced-price or subsidized tickets guidance, health problems, bereavement environment that encourages workers to Employees experiencing transitions to exercise; organizing and coaching a wide for overseas branches and subsidiaries, to cultural and entertainment events, and coping with grief, communicating enrich their knowledge and experience, in different units and positions within the bank variety of sports teams for employees, with relevant content in English, including discounts on hotels and vacations, holiday with occupational doctors, work-related congruence with the business needs of the were given individual guidance by a staffing and participation in sports competitions tips, articles, and recommendations. gifts and gifts for personal occasions, crises, preparation for retirement, coping bank. In addition to mobility processes, coordinator at the HCDC, including face- for workplaces; workshops on quitting various types of insurance for employees with emergencies, and more. the Human Capital Development Center to-face meetings, individual preparation smoking; and more. The bank also offers Caring for Employees during and their families, medical examinations, ■ loans for employee– The Elah (Bank (HCDC) handles hiring of new employees, for professional interviews, interview employees and their families assistance Organizational Changes aid funds, assistance for families in Employees' Credit) system, available to through a range of different hiring tracks. tracking, support, and advice, until the with the cost of membership at sports As a dynamic business organization in mourning, assistance during crises, employees in recent years, offers loans staffing process was complete, with full and fitness clubs, comprehensive health a competitive environment, the bank and more. The national union heads to eligible employees of the bank through Several processes took place at the Human absorption at the new unit. Departing insurance, organized walks, and more. carries out organizational changes and the pyramid of local unions, which are a quick, simple, user-friendly procedure Capital Development Center (HCDC) employees met face-to-face with a human- adjustments that sometimes take several organized into regional unions. Branch on the bank's website. The hotline for during 2016, in the spirit of organizational resources representative and received an Poalim Health months. Such changes are communicated managers in each region have a regional contractor workers employed on the innovation. In the area of recruitment, aid package including career advice and This joint effort by the Stakeholders’ to and coordinated with the various union as well as representation in the premises of the bank operated routinely innovative screening and diagnostic tools job-search guidance. Division, COO, Human Resources and stakeholders. In some cases, not only do national union.

EMPLOYEES - QUALITY OF 126-127 LIFE AND WELL-BEING Caring for Employees’ Whole-Person Wellbeing The national union consists of representatives Outstanding employees Wellbeing Services as a reflection of the value of humanity Life Cycle Workshops of the regions (including branches and the head The selection of outstanding employees expresses Employees of the bank benefit from an and as a practical expression of the The bank is committed to being a office), with representation proportional to the extensive array of wellbeing services in bank's vision. The bank's two wellbeing family-friendly employer, and therefore size of the region. The national union operates management's appreciation for these employees' contribution many different areas. These services officers assist employees coping with offers employees support in their family on the basis of association articles, accessible to the accomplishments of the bank. Outstanding employees provide appropriate solutions for a distress, crisis, or change in their personal, roles and duties as parents of children, to all employees in a dedicated section of the are chosen for their skills and for a combination of qualities broad range of employee needs, from family, or occupational life, and help them children of aging parents, spouses, and organization's web portal. leisure activities and healthy lifestyles resume their routines, in situations such more. In this context, the bank offers based on a range of criteria, such as striving for excellence, to enrichment for employees and their as prolonged illness, disability, financial life-cycle workshops, such as a parental colleague relationships, teamwork, and more. families, professional assistance in times distress, or bereavement. Intervention and authority workshop, defensive driving of personal or family crisis, and more. assistance are also offered, as necessary, classes, couples' workshops, language Wellbeing services complement the to employees' family members or to the courses, coaching workshops, mediation wages and various benefits given to surviving family of deceased employees. workshops, Adler method classes for employees. Services are offered on Any employee can request assistance parents of adolescents, and more. two levels. Individuals receive improved directly; the service is confidential. benefits, guidance and support, and a Promotion of Financial Freedom Examining Achievement of Objectives range of available activities to improve Work-Life Balance for Employees LOOKING wellbeing, strengthen their sense of The bank's management and employee The drive to instill the bank's financial 2016 Objectives Status belonging, and position the bank as a union accord great importance to freedom philosophy among its stakeholders The expansion of the Elah system In process. AHEAD leading organization and employer. The employees' quality of life and to the and the concern for employees across the to additional types of loans bank as a whole conducts organization- balance of work life with family and leisure life cycle encompasses the promotion of available to eligible employees will During 2017, the bank will complete wide activities, and mobilizes for employees life, along with employees' enrichment, financial freedom for employees of the bank continue during 2016; the computing process of further loans and the community at special events. empowerment, and growth. Most of as well. This endeavor includes: to be made available to employees of the bank's employees are entitled to an ■ Coaching days on sensible financial A program for caring for employees who are Completed. the bank; A page in the wellbeing services section annual vacation day quota higher than the behavior for employees of the bank – sick will be implemented during 2016, and the of the organizational portal, set up in amount required by law. The bank also The bank has held dozens of coaching well-being program will be expanded; In the next two years, a center of collaboration with the employee union, grants additional paid leave on holidays days for employees, with the aim of Medical examinations for employees over Completed. financial counseling will be founded offers employees of the bank a wide and personal occasions, including Purim, raising awareness of this issue and of the age of 30 are planned to continue during for employees experiencing financial range of special offers and discounts. Tisha Be'Av, May 1st, weddings, weddings its importance, providing knowledge 2016; difficulties; Employees are also offered discounts of sons and daughters, birth of a child, and tools to improve financial conduct, and subsidies on leisure activities, mourning and memorial days, days off and expanding the circle of employees Workshops on quitting smoking and Ergonomics During 2017, the HCDC will launch a such as fitness clubs, swimming pools, to study for examinations, and more. The who participate in activities aimed ergonomic consultations will continue in 2016; consultation has new system titled Metro – designed to fill subscriptions to cultural institutions, bank practices a shortened work week of at promoting financial freedom at been provided. The vacancies in the bank's staff. The project performances, theater, and more. 40.5 hours. In many positions, workday the bank. The coaching sessions Smoking cessation will benefit the employees, managers beginning and end times are flexible. Work focus on misguided financial habits, workshops were and the organization as a whole, Another component of wellbeing services at the branches ends in the early afternoon procrastination, responsible family postponed to 2017. providing employees opportunities for is a range of benefits offered through three days a week. communication, budget management, transitioning within the organization Continued encouragement of physical Over 400 employee's a joint fund of management and the and the development of personal and for professional development, thus exercise – TRX exercise groups for employees had participated . employee union: gifts for holidays and Bank employees are offered a wide responsibility and engagement. In 2016, increasing their satisfaction; will open throughout Israel; special occasions, insurance plans, range of social, cultural, and leisure more than 100 employees participated financial aid, and tuition aid for employees activities at attractive subsidized prices, in such coaching days; Yoga classes at the branches – in and their children. including sports-center memberships, ■ Financial planning workshops – Lectures on various health-related subjects Completed. 2017, yoga classes will be held at the fitness clubs, swimming pools, hikes and Financial planning workshops are offered will be offered to employees during the year; branches for employees who choose to Occupational Wellbeing walks, subscriptions to cultural institutions to employees of the bank, consisting articles and tips on health will be added to the participate. The classes will be given by The bank supports employees in times of throughout Israel, theater performances in of3 sessions, including two individual dedicated page of the portal. professional and experienced teachers. need, and offers assistance in response Tel Aviv, the Good Movie Club, and short guidance sessions and instructional to personal, financial, and health needs, vacations. meetings, as well as a lecture on

EMPLOYEES - QUALITY OF 128-129 LIFE AND WELL-BEING pensions by the bank's pension advisors. supported by a targeted content area on additional courses in the area of personal Ergonomics training Caring for aging parents The goal of the workshops is to spark the portal, where learning experiences banking is being considered. to preserve the employees’ health Caring for aging parents: The CSR Division of the bank behavioral and financial changes while can be shared. imparting knowledge and tools for better ■ Proper financial conduct toolkit – a kit Poalim Service Center during their daily work, the bank hired and the Occupational Well-Being Unit offer employees financial management. The workshops that includes a presentation and video The Poalim Service Center offers a unique an ergonomic consultant who guides comprehensive information to assist with the complex cover content including examination offers employees ways to improve their package of services to bank employees employees on sitting properly at the responsibilities involved in caring for aging parents. This of the existing financial situation and financial conduct, using digital tools and their families, 24 hours a day. Among issues to resolve, budget and expense and websites, and smart consumerism other matters, the center helps employees computer and improving the work information is presented in a dedicated zone of the portal, to management, identifying and addressing applications, offered to employees contact the police in cases of home environment, thereby reducing neck, help employees gain a better understanding of the subject financial threats with the potential to through the enterprise portal; burglaries, tows cars after accidents, and back, elbow, head and eyes pain and suggest practical tools for making the right decisions, disrupt the process, and more. Over 300 ■ Communication of activities to provides initial assistance and references saving time and resources, and most importantly, to aid them employees of the bank have participated employees – The Financial Freedom to the appropriate professionals for in the workshops. Participants' feedback Newsletter has been distributed on malfunctions of household systems. in providing their parents with the best possible care indicates high levels of satisfaction a quarterly basis since the beginning with the content, the coaches, and the of 2014, in two versions: one for Preparing for Retirement and behavioral changes achieved; the members of the bank's internal Keeping in Touch with Retirees Absence data 2016 (Days of absence) ■ Financial Freedom Week campaign Financial Freedom Forum and the senior The bank’s obligations in respect of on the organizational portal – The management tier of the bank, and a retirement plans, compensation, and Type *Sick days **Vacation Reserve duty Sum Marketing Administration, in collaboration corresponding slightly abridged format pensions are fully covered by pension plan with the Poalim Campus, held a week- for stakeholders in the public, social, and assets. The bank cares for employees Days of absence 116,849 209,167 2,802.5 328,818.5 long campaign to encourage financial business arenas involved in the bank's and employees' spouses approaching freedom in February 2016, during which efforts to promote financial literacy in retirement age by offering preparatory extensive information was provided, Israel. The newsletter provides a venue courses and workshops regarding * Includes reported sick days and illness of a family members. daily tips were posted, a behavioral to communicate the extensive activities retirement, and maintains continuous ** Does not include unpaid leave and maternity leave. survey was conducted, an organizational conducted by the bank's partners contact with retirees. This includes support, game – including a 3D Dan The Saver and to transmit important information financing, and cooperation with the game for the employees was held, regarding developments in this field in retiree union, which organizes trips and special activities were conducted, tools Israel and worldwide. leisure activities and arranges monetary for improving financial conduct were In addition, pay slips attachments are assistance in times of need. promoted, and training was provided distributed, and a dedicated content area As part of a multi-year plan (for 2017- Examining Achievement by volunteers from among the bank's in the bank portal is updated periodically. 2020), preparations are being made for of Objectives LOOKING employees, and more. The campaign In addition, in the past two years, the bank the voluntary retirement of about 1,500 focused on awareness needed to has been distributing to its employees, as employees. As part of the implementation 2016 Objectives Status AHEAD change behavior on the path towards attachment to their pay slips, messages of this plan, the bank's management and Continue distributing the attachments to the employees’ financial freedom, budget management, and tips for proper financial conduct. board of directors – in coordination with A campaign to promote Completed. pay slips containing tips and targets for each month; financial conduct in families and with ■ Employee guidance and mentoring the workers’ committee – developed and financial freedom will be held children, smart consumerism, savings, Approximately 30 bank employee approved an early retirement plan – if for employees in February 2016, – Launch a new and experience-based training kit and pensions. Employees were invited volunteers were trained during 2016 to agreed on by both the employee and the including special activities at the for elementary school children for the employees’ to participate actively by suggesting tips mentor employees who are experiencing bank – which provides an opportunity for Poalim Campus, training sessions, “enriching parent” activity; and responding to the surveys. The level difficulties in managing their household retirement under exceptionally good terms, and events. of response to the campaign was high. budgets, over a six-month period. including the possibility of retiring three A 3D Dan the Saver game for Completed. A campaign to promote financial freedom will be held ■ ■ years earlier than the scheduled retirement Learning Hour for employees of the Individual training passed on to employees will be launched and for employees in 2017, including special activities at the The Poalim Campus produced The Poalim Campus added time, an option that is relevant to employees bank – customers – installed at central locations in Poalim Campus, training sessions, and tips on proper a one-hour learning kit on financial a financial education learning module currently aged 53 to 56. The bank provides bank buildings, to encourage financial conduct; freedom for bank employees. The to the digital branch banker course, professional consulting services to help smart consumerism and to raise Learning Hour presents a series of aimed at providing these bankers with the employees make a decision that best awareness. In 2017, the early retirement plan will continue. everyday events that raise questions for the capability to conduct a high-quality suits them and their families. Pensions are discussion and shared thinking about session with added value for their paid on completion of the work at the bank optimal financial conduct. This activity is customers. Inclusion of this module in until the legal retirement age.

EMPLOYEES - QUALITY OF 130-131 LIFE AND WELL-BEING LIVING WITH THE ENVIRONMENT Setting Environmental Policy In recognition of the bank's social ■ The bank will continually measure From Consumption The bank involves its employees in this standard. In late 2015, the bank renewed its responsibility and the importance of its impact on the environment, and process through internal changes in documentation for the standard, so that it sustainable environmental policies, Bank will strive to understand ecological Management environmental practices, as well as through is now in effect until 2018. Bank Hapoalim Hapoalim has formulated a comprehensive, consequences and make decisions to Resource the attempt to maximize the impact of all of also takes responsibility for the indirect formalized policy in this area. The policy accordingly; its environmental efforts in the hope that its environmental impact of banking products. was delineated by professional bodies ■ The bank will collaborate with other Management employees, who with their families number The Clients chapter discusses these and constitutes an integral part of the companies and public entities to promote The bank views consumable materials in the tens of thousands, will become environmental effects, with an emphasis bank's strategy: environmental causes; as resources to be managed from an agents of change in their own communities. on services and products that promote ■ The bank will work to assimilate environmental and business perspective, Towards that end, the bank strives to sustainable development and generate ■ The bank views environmental protection environmental education among rather than as an inevitable but undesirable supply its employees and their families environmental value for the economy and as a social value, managed as an integral its employees, and will initiate and component of its routine expenses. with information and tools designed to the general public, while also maximizing component of its social responsibility; participate in community projects. Consequently, key environmental able more environment friendly behavior, in financial value for the bank's customers. ■ The bank recognizes that natural resources consumed by the bank are driving, recycling, saving energy, and more. resources are an asset belonging to The bank recognizes the added value managed according to the following This effort expands the bank's sphere of the public, the community, and future associated with the implementation parameters: influence, so that its environmental impact generations, in accordance with the of this environmental policy, on two ■ Creation of a measurement infrastructure expands from the internal environment The bank involves its employees principle of sustainable development; main levels: allowing monitoring of trends and of the bank to the external public arena. in this process through internal ■ The bank seeks to achieve the proper ■ The integration of environmental values identification of areas needing changes in environmental balance between economic development with the economic values of efficient improvement; This section extensively reviews the and environmental protection in its use of logistical resources, creates ■ Establishment of a multi-year compre- bank's material environmental impacts practices, as well as through the business decisions; shared value for the profit line of the hensive work plan; (energy consumption and paper use), attempt to maximize the impact ■ The bank complies with environmental bank’s financial statements and for the ■ Validation of forecasts from the planning as well as the reduction of its additional regulations and laws, and adheres to the environment; stage and analyses of variance in environmental impacts by various means. of all of its environmental efforts directives of environmental protection ■ A policy of environmental responsibility performance for learning purposes; This approach is implemented through in the hope that its employees, organizations; makes it possible to improve the work ■ Implementation of initiatives aimed at the bank's environmental management who with their families number in ■ The bank diligently endeavors to prevent environment, contributing to better increasing efficiency; system, which was certified under the environmental damage; quality of life for employees at work and ■ Partnership with employees, internal international management standard ISO the tens of thousands ■ The bank is committed to managing its higher workplace satisfaction. professional functions, and external 14001 during 2012. Bank Hapoalim is the environmental impact in a manner that stakeholders in the implementation first financial institution in Israel to attain ensures continual improvement, by setting The bank's environmental policy is of localized initiatives and formal work organization-wide certification under this measurable targets and monitoring the presented on its website. plans; achievement of its objectives; ■ Examination of environmental effects throughout the life cycle of the resource, taking all types of impact into consideration (pollution, global warming, resource scarcity, etc.).

LIVING WITH THE ENVIRONMENT 134-135 Power Consumption Management The bank maintains a power consumption database, which is routinely updated to reflect structural changes in the bank's properties as a result of addition, closure, and Energy Efficiency rental, or change in designation. The database enables the bank to examine Electrical power is a key resource used at consumed at Bank Hapoalim comes in the installations. The process of replacing the the monthly and annual consumption patterns of each property, compare it to the bank. The basic assumption is that in form of electricity (with the exception of air-conditioning systems (chillers) at the buildings of similar size and designation at the bank, and compare multi-year enterprises that operate in an office setting, fuel consumption) which supplied by the bank's head-office buildings and the VRF just as in industrial operations, electricity Israel Electric Corporation. There are no systems at the branches continued during trends in consumption per square meter and per employee should not be seen as an uncontrollable additional suppliers of energy for the bank 2016. Every year the bank is installing 15 expense or as a necessary evil. Electricity which produce energy renewable sources. new VRF systems Green IT headquarters units, and reduce toner properties as a result of addition, closure, should be managed as a resource, with The bank also works to achieve energy consumption. The installation will rental, or change in designation. The rigorous analysis of power consumption During 2014, the bank began to receive Pilot for the installation of saving and efficiency by thoroughly progress over the course of 2014-2015, database enables the bank to examine over the course of the day, week, and year, electricity from Dorad, a natural-gas-based sheets with a bio-thermal energy examining the possibilities for green and is expected to lead to annual savings the monthly and annual consumption and with comparisons among buildings. power supplier. Dorad supplies electricity storage solution information technologies at its branches of approximately 11 million pages (about patterns of each property, compare it to to the bank's head-office buildings and In 2015, as part of its efforts to increase and offices. Energy efficiency is one of the 40% of current consumption) as well as buildings of similar size and designation at The central principle in efficient large branches. Between the years efficiency, the bank examined an innovative parameters in the procurement tenders significant financial savings; the bank, and compare multi-year trends management of electricity consumption 2015-2016, the percentage of the bank's energy-saving solution by installing for IT equipment. Equipment with more ■ IP telephony - The bank is gradually in consumption per square meter and per by offices is coordinated timing of air power consumption sourced from Dorad energy-saving light-weight sheets on a efficient power usage earn added points transitioning its landline communications employee. The database also makes it conditioning and lighting systems and increased to over half of the annual total branch’s ceiling. The bio thermal sheets in IT tenders, motivating bidders to supply to an IPT system. The transition enhances possible to identify trends of improvement of computer operation, according to consumption. The transition to Dorad preserve room temperatures at the branch more advanced equipment. In addition, the landline communications management and increased efficiency, and to locate employee presence, to the extent possible. has lowered the bank's energy costs and and maintain the cool air-conditioning hardware and communications division by allowing digital management through properties with a risk of inefficiency or The collection and analysis of as much reduced the environmental impact of its temperature even when the front doors does not rely on manufacturers' information a centralized computer system. This malfunction. data as possible allows organizations to power consumption. open and close. Thus, savings of about only regarding the performance of the connection eliminates the need for identify excessive consumption and find the 20-30% in air-conditioning costs are various components, and running the local switchboards at each branch and The bank's total consumption data for optimal solution. Virtually all of the energy Energy Efficiency achieved. The pilot was conducted in necessary tests on server hardware allows internal calls between system 2016 shows a year-on-year increase of Command and Control Systems 2015 at the Rosh HaAyin branch. As of and software, printers, and peripheral users to be performed free of charge, approximately 2%. The total increase in The bank uses computerized command 2016 year-end, the sheets were installed equipment at a laboratory set up for that without using the Bezeq network. In consumption arises mainly from the power The central principle in and control systems to monitor and at six branches. The results of comparing purpose. The tests allow for products addition, the phones allow users to dial consumption by the Rotem site, where efficient management control all of its energy consumption; similar periods during the year in terms of to be examined in greater depth, and through their computers and to access the bank's backup facility is located. The these systems provide alerts of significant the air-conditioning consumption at the serve as a preliminary stage to pilots a directory of all telephone numbers in site began operating in 2015, and was of electricity problems, and controls consumption of same branches show savings of at least in the field to generate more reliable the organization. The transition to an partially active throughout the year; its consumption by offices air conditioning and lighting based on the 20% in electricity consumption. forecasts. In 2013, the bank completed IP switchboard improves the bank's annual consumption was 3.4 million kWh. In is coordinated timing presence of employees and customers the project of converting physical servers control over its communication system 2016, additional parts of the facility became in each building. The systems have been Switching to energy-efficient to servers based on virtual consolidation and saves power consumption due to operational and consumption increased of air conditioning and installed at all of the bank's facilities, and lighting technology. The servers allow savings on the elimination of local switchboards; significantly, reaching 6.3 million kWh and lighting systems and are operated based on a fixed regime As part of the ongoing multi-year process power consumption for cooling, optimal accounting for the bulk of the increase in according to work hours at each branch for installing energy-efficient lighting in utilization of server resources, reduced Additional savings on power consumption the bank's overall consumption. When of computer operation, or building. The systems were installed the bank's buildings, the lighting at the maintenance, and savings on physical in computer use are achieved at the bank excluding the Rotem site data, the bank’s according to employee at all new branches opened during 2015. six-story Rubinstein Building (the bank's space. Main activities carried out during through a system that turns off personal power consumption decreased from 2015 presence, to the extent headquarters building) was converted into 2016 in the area of green IT: computers at the end of the workday and to 2016 by 1.3%. In 2016, the average Installation of Efficient Air LED lighting. Each floor is 2,000 square ■ Transition to printing centers and through the use of a fax-to-mail / mail-to- consumption per square meter increased possible. The collection Conditioning Systems meters in size. The process is expected double-sided printers – The bank fax application. by 0.8% compared to the previous year. and analysis of as The bank is installing new chillers with a to continue in 2017. is gradually replacing desktop and Beyond the significance of the contribution higher COP (coefficient of performance), department printers, fax machines, Management and to the environment, to power consumption, much data as possible as well as VRF (variable refrigerant flow) scanners, and photocopiers with Measurement of there is economic significance, which is allows organizations air-conditioning systems, which will lead integrated devices, operated using an reflected in cost savings. Power Consumption to identify excessive to savings of about 38% on energy and employee card reader, with double- maintenance costs (20% of the savings sided printing capabilities. Printing The bank maintains a power consumption consumption and find are in power consumption), relative to centers lead to savings of about 40% database, which is routinely updated to the optimal solution other systems, for replacements and on paper consumption at the bank's reflect structural changes in the bank's

LIVING WITH THE ENVIRONMENT 136-137 Power consumption at Bank Hapoalim Bank Hapoalim is More Efficient in Power Consumption Comparing to the Banking Industry 110 2012 2013 2014 2015 2016 Change vs. 2015 The Banking Sector Bank Hapoalim Total (KwH) 93,600,417 90,616,904 86,567,004 84,579,103 86,388,184 2% 100 Total (GJ) 336,962 326,221 311,641 304,485 310,997 2%

Bank area in sq. m. 312,316 308,909 304,184 291,512 285,251 -2% 90 87.4 Consumption per 299.7 294.1 284.6 *278.4 *280.7 0.8% square meter (KwH) 81.4 80 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 * Power consumption per square meter was calculated based on total consumption of 81,165,743 KWh. This total does not include the bank's consumption at the Rotem site (approximately 6.4 million KWh), as this site is a unique backup facility with unique consumption patterns that are not characteristic of average power usage at the bank.

*Gadir Engineering Ltd. analyzes power consumption at business firms, among other activities. Starting in 2006, the company has issued an index of power consumption in the banking sector. The index presents the relative multi-year change in power consumption at Bank Hapoalim and at other banks; the reference point (%100) is the volume of consumption in 2006. As shown in the diagram, power consumption at the bank has grown more efficient over the last ten years. The index does not factor in changes in the area of the banks' properties or power consumption in buildings shared by the banks with other entities (branches located in shopping malls, or premises shared by banks and government agencies, other businesses, etc.).

Bank Hapoalim total power consumption Power consumption per square meter (KwH) (KwH)

300.7 Examining Achievement of Objectives 94,058 299.7 93,600 LOOKING 2016 Objectives Status 294.1 90,616 Fax2Mail - Expanding the deployment The number of users AHEAD 86,567

86,388 to approximately 650 new users, thus remained the same - 1,850 284.6 84,579 reaching 2,500 users across the bank. (due to the transfer of the The Bank intends to reduce its power 280.7 application from exiting consumption by at least 0.5% annually, 278.4 employees to new ones). reducing its power consumption in the next five years by approximately 3%;

In 2017, the replacement of existing lighting Pilot for the installation of sheets with a Sheets were installed at 6 with energy-efficient lighting at headquarters bio-thermal energy storage solution - in branches. (the Rubinstein Building) is expected to be 2016, the bank is expected to install the completed. sheets in additional branches. 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016

LIVING WITH THE ENVIRONMENT 138-139 Reduction of Energy Consumption in Transportation Paperless Branch saving hard copies, as was the case so Management The following is an overview of the main far. The process saves time in terms of The direct and indirect environmental ■ Encouraging employees to commute activities carried out during 2016, as part document filing, enables quick retrieval of impact of Bank Hapoalim in the area of by bicycle – The bank encourages of Paper of the project: documents and contributes to savings of transportation is primarily fuel consumption employees at the head office to ride ■ Digital signature and customer service 57.4 million pieces of paper per year (15 and emissions resulting from fuel burning, bicycles to work, by providing showers Resources using touch screens - in 2016, digital million in teller transactions, 34 million in derive from the bank's vehicle fleet and and bicycle parking spots. Paper is one of the main raw materials signatures were further implemented additional banking transactions, and 8.4 the internal system for transportation consumed during the routine operations in teller transactions at all of the bank's million in electronic emailing of a copy between branches and facilities of the In 2016, the bank’s fuel consumption of the bank; as such, this resource retail branches, to include most of the to the transaction to the customer). The bank. The bank is working to reduce its decreased by 16%. The main reason for is managed in an effort to cut back transactions carried out by bankers in quick retrieval capability will also enable fuel consumption, and consequently to the decrease in consumption was the % consumption and increase recycling. these branches, including transactions faster response times to customer cut back air pollution, by various means. bank’s use of energy-efficient vehicles (with In 2016,16 the bank’s fuel consumption The drive to reduce paper consumption in current accounts, administrative inquiries that require document searches. These include: turbocharged fuel stratified injection (TFSI) decreased by 16%. at the bank continued during 2016. transactions and credit activity. When As of the end of the year, the system that significantly improves fuel savings. Special attention has been devoted to fully receiving face-to-face service from a was deployed at about 100 of the 240 ■ Limiting the vehicles chosen for the As at the writing of this report, over 50% maximizing the potential for automation of banker, the customer will be presented retail branches. vehicle fleet to those with a pollution of the bank’s vehicle fleets are equipped formerly paper-consuming processes. This with the details of the transaction on a ■ Printing centers - the imaging array rating of 8 - most of the vehicles at the with such engines. important achievement has primarily been touch screen and will digitally sign the at headquarters was reorganized - bank, have lower pollution ratings; made possible by the Paperless Branch form. After the transaction has been printers, photocopiers, fax machines and strategic project. The project, which has completed, the customer will receive a scanners, switching from each employee ■ Conducting a dialogue with employees been led by the LEAN Unit at the Corporate printed approval that the transaction has having his own individual printer to through the organizational portal – Strategy Area since 2009, entails analysis been performed or a copy will be sent central printers in an effort to save publication of articles and recommendations of the bank's paper consumption and of to the customer’s bank email box (Doar- paper, electricity, maintenance costs and concerning safe, efficient, careful driving; the possibilities for reduction or elimination Net/Poalim by Email). At the same time, toners, through secure and controlled of forms and reports, both for internal the documents will be digitally saved printing. Savings of approximately 2.5 needs and in mail to customers. in the bank's computer, rather than million pieces of paper per year.

Bank Hapoalim vehicles Data In 2016, digital signatures were 2011 2012 2013 2014 2015 2016 further implemented in teller The various initiatives Number of vehicles in transactions at all of the bank's retail 1,329 1,288 1,238 1,188 1,106 1,155 within the framework leasing fleet branches, to include most of the of the Paperless Branch Annual fuel consumption 3,574,235 3,440,152 3,448,047 3,537,444 3,599,730 3,021,768 transactions carried out by bankers (in liters) unit result in savings in these branche. The process saves Mileage in kilometers 10.1 10.5 11 11.8 10 9.5 of about 196 million per liter (based on time in terms of document filing, pieces of paper, which manufacturer data) enables quick retrieval of documents 196million pages translate to NIS 41 Number of hybrid vehicles 23 27 22 19 22 18 and contributes to savings of 57.4 and NIS 41 million million annually in the fleet million pieces of paper per year

LIVING WITH THE ENVIRONMENT 140-141 Mail Net Examining Achievement of Objectives Bank Hapoalim aims to streamline and reduce mailings to customers. Under various regulatory consumer protection directives, the LOOKING bank is required to send mail to its customers, at specified times, containing the details specified by law. Within this requirement, the 2016 Objectives Status bank is working to reduce its paper consumption. This effort includes consolidation of messages, reduction of mailings where possible, and environmental mail initiatives such as Mail Net. The Mail Net service enables registered customers to receive account notifications Complete deployment of digital The service was expended AHEAD through the bank’s website, in a mailbox linked to their online account. Every customer registered for this service contributes to average signature in all new areas to approximately 90% of the Complete deployment of digital signatures at savings of 45 mailed pages annually. added during the year, in all of branches' activities all retail branches; the bank’s branches; Deployment was completed Expanding digital signatures into business in 100 out of 240 branches accounts that require a stamp; Implementation of Green Consider integrating the Increase in Rate of Mail Net Users and Active Users of the Bank's Website Accounts in the ATMs, which capability into advanced Automating borrowers' files - scanning and allow the customer to send devices and according to retrieving digital information about loans and collaterals for business customers; print-outs and receipts from customers' needs the transactions he carried out Reducing the amount of paper produced in the in the ATMs to his own email pension advice process. account/Doar-Net; 1,377,000 1,281,000 1,234,000 942,000 810,000 862,000 754,000 301,345 407,805 441,000 456,000 519,000 589,000 579,000 9.3 tons 2010 2011 2012 2013 2014 2015 2016 tons Cardboard recycling 42 9.3 tons were collected Mail Net users Active website users Paper consumption by the bank and The slight decrease (about %1.7) in the number of Doar Net users in 2016 was mainly due to the opening of an additional service channel for Consumption at the bank decreased transferred for recycling the bank's customers - email, which enables customers to read their mail using e-mail as well. by 42 tons in 2016 relative to 2015, in 2016 an annual decrease of 3%

thousand 138,000 customers 60% 579 Paper consumption for internal use Trees saved Mail Net: 579,000 customers use this at the bank was down by 60% in 2016 Cumulative savings in paper consumption, service. The number of users slightly as compared to 2007 (the baseline measured since 2007 (the baseline year), reached decreased by 1.7% in 2016, relative to year); paper consumption for mail to 9,017 tons. This figure is equivalent to preventing the end of 2015 customers decreased by 39% in the approximately 138,000 trees from being cut down same comparison for the paper industry

LIVING WITH THE ENVIRONMENT 142-143 Reducing Additional Environmental Impact

Production and service processes in Paper Consumption at the Bank (in tons) The bank manages environmental issues banking have a minor direct environmental systemically, based on the international Paper For Mail impact, as the bank's activity is essentially To Customers administrative and the service it provides standard ISO 14001. The system formalizes Paper For to its customers is digital by nature. organized work processes in the various Internal Use Nonetheless, Bank Hapoalim strives to 603 Blank A4 Paper minimize the additional environmental interfaces used at the bank for environmental 394 355 348 328 impact of its activity. The bank manages management, addressing all milestones and 445 359 environmental issues systemically, based 380 399 on the international standard ISO 14001. the completion of processes 368 The system formalizes organized work processes in the various interfaces used at the bank for environmental Promoting Green Turning Waste into 2,015 1,659 1,527 1,461 1,306 1,204 1,048 822 821 807 management, addressing all milestones Construction a Resource and and the completion of processes. Controls are applied to ensure compliance with the The bank has adjusted all of the purchasing Preventing Pollution requirements of the law as well as with specifications used for the construction of Environmental trends of recent years have 248 271 265 259 261 256 201 204 norms in this area. its office buildings and branches to align highlighted the fact that one person’s waste with green construction principles. It is is another’s resource. Population growth 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 The bank involves its employees in this important to note that a significant number creates pressure on ecological systems, process both through internal changes in of branches are located in shopping making it difficult to meet demands for environmental practices and through the malls and commercial centers not owned natural resources such as metals, wood, attempt to maximize the impact of its overall by the bank, where the bank cannot water, fossil fuels, and more. In addition, environmental activities, in the hope that its alter the infrastructures of the buildings. without proper treatment, waste pollutes employees will become agents for change However, the bank intends to bring as the environment and damages soil, water, Collection of Paper Recycling (in tons) in their own right. In accordance with this many as possible of the elements of green and the air, while contributing to global worldview, the bank aspires to rigorously construction to these sites, although warming. These and other insights highlight 2,017 manage its direct environmental impact, the properties involved may not meet the importance of a methodical approach with employee involvement whenever accepted green construction standards. to the future of the materials and products necessary, after the infrastructure for As part of this process, the bank has that we consume, after they have been appropriate environmental conduct has started to install environment-friendly used. Bank Hapoalim mapped the types 1,380 been established. The bank engages carpets in several buildings. The carpets of waste generated by its operations, 1,352 employees in these processes, based are manufactured in compliance with and subsequently examined the most 1,067 987 on the philosophy that their participation international environmental standards. environmentally beneficial methods of is essential for success. In addition, the The bank has made a decision to use treating such waste: 783 bank seeks to extend its influence on environment friendly carpets in all future ■ Reuse of a resource or of its components 700 environmental conduct to employees' installations at its properties. (either in its existing condition, or after communities; with their families, the improvement); bank's employees are a force for change Construction projects carried out by the ■ Recycling of the resource by external numbering in the tens of thousands. bank in 2016 used environment-friendly parties, who convert it into raw material Towards that end, the bank strives to elements such as efficient air-conditioning and then reinsert it into the production supply its employees and their families units, energy-efficient lighting, shading to process; with information and tools to enable them save energy used for air conditioning, and ■ Responsible disposal through collection 2010 2011 2012 2013 2014 2015 2016 to be greener, in driving, recycling, saving acoustic ceilings to prevent noise pollution. and transfer to a licensed site (prevention energy, and more. of environmental pollution).

LIVING WITH THE ENVIRONMENT 144-145 The bank promotes the collection and responsible disposal of waste through the Instilling the Habit of Ink and toner cartridges (units) Electronic waste recycling (tons) following activities, among others: Recycling at the Bank The bank has developed a series of ■ Collection of electronic waste – Bank ■ Responsible disposal of construction receptacles for waste collection and recycling 21,700 21,370 44 17,035 38 Hapoalim strictly maintains responsible, waste – The bank includes a contract at its buildings, with an emphasis on high 16,643 orderly disposal of disused computer clause in its agreements with quality and design. This effort is based on the 29 equipment. Computer equipment not construction and renovation contractors concept of turning waste into a resource, and 16 suitable for donation is transferred for working at its branches and buildings on the idea that design sells. The process is responsible recycling and disposal requiring the responsible removal of being conveyed to employees through intra- each year. All mobile devices no longer waste to a licensed facility. The aim organizational communication, in which the in use are returned to the supplier for is to fully prevent construction waste bank encourages its employees to collect 2013 2014 2015 2016 2013 2014 2015 2016 responsible disposal. All other disused originating with the organization from and recycle waste. The receptacles offer a electronic equipment is transferred reaching unlicensed sites or open fields; convenient, accessible destination for removal to Ecommunity, which specializes in ■ Collection of bottles and cans – of waste in the workplace, contributing to electronic waste recycling and employs Systematic recycling in collaboration with manufacturing and reuse processes, in workers with disabilities. Head-office the ELA recycling corporation. Refunded addition to the reduction of environmental employees can bring electronic waste deposits are transferred to the unit's damage. Recycling receptacles are available Recycling of bottles and beverage Battery collction (KG) from their homes to the collection center employee union and used to finance for paper, electronic waste, fluorescent bulbs, containers (units) at Rubinstein Towers in Tel Aviv; various social activities, donations, etc. bottles and cans, batteries, used clothes, and medication. The waste is collected and 960 treated by licensed operators. 110,000 108,000 101,843 104,690 765 2,112 2,340 16,643 280 240 Construction waste Fluorescent Ink and toner cartridges 2013 2014 2015 2016 2013 2014 2015 2016 2,112 cubic meters of waste were bulbs The bank's printers and fax removed from construction sites 2,340 bulbs were machines used 16,643 ink and collected toner cartridges

Construction waste collection (m3)

2,526 2,526 2,168 2,112 38tons 765 104tousend 21 Electronic waste Batteries bottles Medications 38 tons were collected and 765 kg were and cans sacks removed from the recycling collected and 104,690 bottles and 21 sacks of expired 2013 2014 2015 2016 receptacles at the bank removed from the cans were collected at medications were collected bank's buildings for the bank for recycling from the receptacles at the safe burial bank for proper disposal

LIVING WITH THE ENVIRONMENT 146-147 Measuring the Carbon Footprint

Bank Hapoalim recognizes the phenomenon of global Emission of Substances that climate change, and therefore monitors the key elements Damage the Ozone Layer that contribute to greenhouse-gas emissions. In 2010, Bank The bank uses five main types of air-conditioning systems: Hapoalim joined the voluntary greenhouse-gas reporting split air conditioners, central air conditioners, VRF systems, 43.1% system of the Ministry of Environmental Protection. Since cooling towers, and chillers. The older systems use Freon that time the bank has reported to the recording system in gas, which is permitted by law, but may be harmful to Multi-year reduction of carbon footprint: accordance with the established methodology. In addition the ozone layer. The bank is working to replace these to energy consumption (electricity and transportation), existing air conditioning systems with systems that use From 2010 to 2016, the bank reduced its the bank monitors indirect sources of emissions, such as only environment-friendly gases. The air-conditioning carbon footprint by 43.1% paper production, branch construction, waste treatment, systems of all of the bank's properties in aggregate contain air travel by employees, and more. For a control report on between 20-30 tons of coolant gas, of which more than annual carbon footprint data, see page 176. 85% is the environment friendly R-410a. During leak repairs and routine maintenance in 2016, the coolant gas in the air-conditioning systems was supplemented by approximately 35 kg.

The carbon footprint for 2016 Carbon Footprint Measurement Scopes

61,082( tons CO2eq) indicates Scope 3 - Indirect Emissions In The Supply Chain a significant decrease of 16,962 18,745 Scope 2 - Indirect Emissions 15,525 Scope 1 - Indirect Emissions approximately %35 over the 17,811 61,082 last two years (from 94,324 Total carbon footprint of tons CO2eq in 2013), mainly as a result of the transition 12,700 70,409 Bank Hapoalim in 2016 to Dorad electricity, which is 68,286 10,980 73,614 9,891 61,082 tons CO2eq (including all three produced from a cleaner fuel 63,668 mix, in environmental terms. aggregates), a decrease of 0.7% from 2015 48,424 41,733 44,051

19,386 19,562 12,557 12,863 9,510 8,798 7,140 2010 2011 2012 2013 2014 2015 2016

LIVING WITH THE ENVIRONMENT 148-149 Carbon Footprint and Relative Contribution of Elements to the Total Value Carbon Footprint Per Square Meter Bank Hapoalim Total Carbon Footprint (in tons CO2eq) (in tons CO2eq) 0.33 0.31 101,696 Vehicles 94,342 11.6% 0.23 Paper 6.6% 0.2 0.2 70,632 61,511 61,082 Construction 4.7% IT Deprection 2.7% Air Flights 1.8%

Power Consumption Other 0.51% 72.1% ˇWater Consumption 0.19% Ink Consumption 0.13% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Generators 0.07% Refrigeration Gases 0.06% Hotel Stays Oversea 0.06%

Examining Achievement of Objectives LOOKING T 2016 Objectives Status AHEAD Carbon footprint data (in tons of CO2eq) The bank strives to reduce the The bank reduced the intensity of greenhouse gas emissions intensity The bank strives to reduce the intensity Year 2011 2012 2013 2014 2015 2016 Change vs. 2015 emissions resulting from its activity relative to the number of its greenhouse gas emissions and has Total 106,593 101,696 94,362 70,632 61,511 61,082 -7.0% and has set an annual target of a 1% of employees. The set an annual target of a 1% reduction reduction in emissions intensity over intensity per square in emissions intensity over the next five Per employee 10.44 10.05 9.68 7.61 6.91 7.02 6.1% the next four years. Furthermore, meter remained the years for a total of 5%. Furthermore, the bank strives to maintain a 0% increase Per square meter 0.34 0.33 0.31 0.23 *0.20 *0.20 - the bank strives to maintain a same as last year. 0% increase in the intensity of in the intensity of greenhouse gas *The carbon footprint per square meter does not include the bank's consumption of electricity at the Rotem site, as this site is a unique backup facility with greenhouse gas emissions resulting emissions resulting from its activity. unique consumption patterns that are not characteristic of average power usage at the bank. from its activity.

LIVING WITH THE ENVIRONMENT 150-151 CORPORATE GOVERNANCE, ETHICS AND COMPLIANCE THE BANK`S PROFILE Chart of the Bank's main holdings*

The bank was founded in 1921 and operates through segments with industry mainly in the areas of credit cards and the The Bank constitutes a “banking corporation” with expertise; in the middle market segment, capital market. In the credit card sector, a “bank” license under the provisions of the Division operates through business the Bank Group - through a subsidiary (the the Banking Law. In 1983, as part of an centers across Israel and the bank's "Isracard Group") - issues, operates, and arrangement between the State of Israel branches, which provide operational markets credit cards, within and outside Banks Overseas Credit Cards Other Financial Services and the banks, the bank’s shares were services to the Division's customers. the Bank, for use in Israel and overseas, transferred to the control of the State. The Retail Division serves households, and clears transactions executed using its 100% Bank Hapoalim (Switzerland) 98.2% Isracard 100% Poalim Capital In 1997, the bank was privatized and its private customers, nonresidents and small credit cards as well as externally-issued 69.8% Bank Pozitif Turkey 100% Poalim Express control was transferred to the current businesses, among others, through 235 cards. The Bank Group's capital-market controlling shareholders and others. branches, including traditional branches activity includes providing services for and advanced digital ones - which provide the execution of trading transactions in Bank Hapoalim Group the full range of banking services, along securities (brokerage), securities custody with various direct channels: Internet, services, currency trading and derivatives The chart includes the principal companies held directly by the Bank or indirectly through private subsidiaries under the full ownership of the Bank. The wholly- Activity in Israel mobile, Poalim by phone and widely services, research and consulting, services owned subsidiaries through which the companies in the above chart are held do not appear In the chart. For the purposes of this chart, a principal company Is In Israel, the bank group is active in all areas deployed self-service machines. for financial asset managers, investment a company engaged in business operations which in the opinion of the Board of Management of the Bank is a principal company In the Group, and In which the of banking, through two main divisions: The portfolio management, investment Bank's investment is at least 1% of the shareholders' equity of the Bank, or the Bank's share of whose net operating profit (loss) attributed to shareholders of Business Division serves most business In addition to its banking business, the Bank banking and issuance underwriting and the Bank exceeds 5% of the net operating profit (or loss) attributed to shareholders of the Bank (similar to the criterion established in Public Reporting Directive No. 662 of the Supervisor of Banks regarding the statement of data on principal subsidiaries in financial statements of banking corporations). customers, while the Corporate Division Group also engages in related activities, management.

The bank group’s banking operations, in order to adapt Ownership format and Organizational Structure of the Bank them to recent changes in the business activity overseas and regulatory environment. As a result, legal form Chairman of the board In addition to its activity in Israel, the the bank decided to sell its international As of the date of the publication of the bank group operates overseas - in the private banking operations at the Miami financial statements, the bank’s controlling private and business segments - with branch and close its representative offices shareholder is Ms. Shari Arison. She offices across Israel, Europe and the in Latin America by the end of the first holds the bank through Arison Holdings CEO United States. In addition, the bank half of 2017. In addition, the bank has (1998), which holds, as of the date of the Chief internal Chief legal group is active in the commercial domain decided to close its subsidiary in Uruguay, publication of the financial statements, auditor advisor in Turkey. As part of its private banking Hapoalim Latin America S.A, which will approximately 20.01% of the bank's activity, the bank group provides its cease operation and is expected to close share capital, which constitute the bank’s Marketing & Advertising Spokesperson Secretary high net worth customers overseas by the end of 2017. Hapoalim Switzerland controlling core (as defined in the control with advanced professional services will continue its private banking activities, permit issued by the Governor of the and products, which include investment focusing on target markets in Israel and Bank of Israel). products and global asset management. the European Union. During the first half of Financial Corporate Retail Innovation Technology Chief Risk Stakeholders COO The bank’s foreign business segment 2017, Hapoalim-Switzerland’s activity with Markets Division Division Accountant Management Division Strategy, activity includes granting credit to local customers from Latin America and Russia Financial Banking Resources & and foreign borrowers, inter alia, by will be substantially reduced and the bank’s Unit Operations granting credit to its customers’ business Geneva branch will close. In addition, operations. For some time, the bank has Poalim Switzerland’s representative office been reviewing its international private in Moscow will close.

CORPORATE GOVERNANCE, 154-155 ETHICS AND COMPLIANCE The Functions of the Board of Directors and the Board Committees Governance the provisions of Israeli law, including the a notice on convening a general meeting The Board of who is in contact with all the relevant and implement corporate governance As a part of the banking system in Israel, Companies Law, the Banking Ordinance on whose agenda is the appointment of entities in the organization and reports to processes in the bank group. Bank Hapoalim operates in a broad and the Bank of Israel's Proper Conduct directors or termination of their term of Directors and its management and the Board of Directors. legislative environment including primary of Banking Business Directives, as well as office. The composition of the Board of committees Control over implementation of proper legislation, standards, and regulations with under the provisions of the bank's articles Directors is subject to the provisions of the The reports and discussions include status corporate governance practices at the bank which the bank is obligated to comply: the of association. Under law, the obligations Companies Law, the Proper Conduct of In 2016, the bank's Board of Directors reports on the bank's progress in this field, is discussed by the Corporate Governance Banking Ordinance, the Bank of Israel Law, of all types of directors are the same. The Banking Business Directive No. 301, the continued to direct the bank’s strategy, within the framework of the CSR programs, Committee and stakeholders in quarterly the banking laws concerning licensing basic obligation is to act for the benefit of Bank's Articles of Association, and the policy and main principles of activity in Israel as well as discussion and approval of meetings. The Committee discusses and and customer service, the rules of the the company. These obligations include, Board of Directors' work procedure. and abroad, while setting guidelines on future action plans in this field. In addition advises the Board on policies, procedures governor of the Bank of Israel, directives among other things: the duty of care, the various topics in accordance with legislative to discussions by the Board of Directors’ and guidelines for implementing corporate of the Supervisor of Banks, and more. fiduciary duty, the obligation to uphold The Board assesses the candidates’ revisions and the Bank of Israel’s Directive plenum, the members of the bank’s Board governance principles in the work of the These factors regulate the bank's activities corporate governance, the avoidance of financial expertise and professional 301. Within this framework, the Board of Directors are involved in CSR activities Board of Directors and its committees, as on various levels, including requirements conflicts of interests and other obligations competence, taking into account the directed the policy underlying the activity through the various committees. Each well as to ensure the bank's compliance with respect to its capital and ways of that apply to directors in accordance with candidate’s education, experience and of the bank’s subsidiaries in Israel and year, as part of the ICAAP process, the with the principles of proper corporate managing capital, exercise of internal and the law and the Bank of Israel’s directives. knowledge on topics and issues related abroad, created frameworks to address bank reviews and evaluates the quality of governance and their compatibility with external auditing, and the areas in which to the bank's activity, as detailed in the exposure to various types of risks, oversaw its risk management. In addition, as part the provisions of the law, including setting the bank is permitted to engage. According A director at Bank Hapoalim in accordance Companies (Conditions and Criteria for the issue of shares, implementation and of the ICAAP process, the bank continually the bank's policy and management’s to the Companies Act, shareholders can with the provisions of the law, the Proper Directors with Accounting and Financial disposal of fixed investments. The Board strives to implement and improve the risk supervision over the subsidiaries, as suggest discussion issues for the next Conduct of Banking Business Directives Expertise and Directors with Professional of Directors approved the quarterly and management process. Select corporate required by the Bank of Israel’s Proper general meeting. Employees are able of the Bank of Israel and with the approval Expertise) Regulations, 5766-2005. The annual financial statements, handled the responsibility measures form part of the Conduct of Banking Business directives. to appeal to the board according to the of the Bank of Israel, including: request to appoint a director is sent, distribution of dividends, determined the bank's risk management approach. This bank's procedures and legal requirements. along with the declaration of the director bank’s organizational structure, set policies is reflected in the inclusion of controls and The board usually meets twice a month. ■ The Companies Law (Section 57) in accordance with Proper Conduct of on human resources, salaries, retirement ongoing reporting, such as: BSC, SOX, Between these meetings, the board’s The Board provides that the appointment of external Banking Business Directive No. 301, to terms and remuneration of employees and and more. The Board’s Risk Management committees also meet, some - every week of Directors: directors be approved by the general the Supervisor of Banks for review, and the senior executives, and exercised oversight and Control Committee receives annual or two. Any urgent and/or significant issue meeting; appointment of the director is subject to and control over the ongoing business and quarterly reports for the purpose of may be discussed at any time. In addition, Composition, Activity, ■ Regulation 16 of the bank's Articles of prior approval by the Supervisor of Banks. activity by management and its compliance monitoring, controlling and estimating the members of the Board may also raise and Committees Association (approved by the bank’s with the bank’s policies. risks, as required in the Proper Conduct of issues for discussion with the approval of general meeting of shareholders The Board’s performance is evaluated in Banking Business Directives. Among the the Chairman of the Board. In particularly The bank’s Board of Directors follows (the “Bank's Articles of Association") accordance with Section 59 of Directive 301 The Board of Directors receives ongoing members of the Board of Directors are urgent cases, the Board of Directors the corporate governance provisions prescribes the process of appointing and the provisions of the Board of Directors' reports and discusses the bank’s plans, experts on risk management, including convenes to discuss an issue that had prescribed by law, including the Bank directors, according to which directors work procedure. The effectiveness of the results and reporting on sustainability and credit risk. On July 19, 2007, the bank’s been raised and, as the procedures of of Israel’s Proper Conduct of Banking shall be appointed pursuant to a general Board’s work is evaluated every two years, corporate responsibility, such as: bank Board of Directors decided to establish a the Board allow, the Board of Directors Business Directives, SOX, etc. In addition, meeting resolution; however, under the for the Board’s internal needs, in order to products that promote sustainability, board committee on risk management and holds, if necessary, an urgent meeting the bank implements all of the provisions conditions prescribed in this regulation examine the efficacy of Board of Directors’ customer service, responsible employment, control. The Committee has four members, using the means of communication set in legislation, standards, and regulations (Regulation 16.C of the Bank's Articles work. In the past, the Board appointed investment in the community and reduction who have undergone training and have necessary in order to discuss the issue with regard to the prevention of conflict of of Association), the Board of Directors an external attorney, who coordinated - of environmental impacts, including climate accumulated extensive experience in as soon as possible. In accordance with interests by the directors. As part of the may also appoint directors. Under the together with the bank's secretary - the change. The bank's Chairman of the the Committee. The members of the Sections 98-99 of the Companies Law, mandatory separation of duties between provisions of the Banking Ordinance, a process and analysis of the findings to Board serves as a director in charge of Board undergo occasional training on risk 5759-1999, members of the board may actual management and policy direction vote on the appointment of directors is assess the effectiveness of the Board of sustainability and corporate responsibility, management. In addition, the directors are demand that a specific issue be discussed and supervision, the Chairman of the held at the general meeting, separately Directors' work. The Board discussed the and is responsible for promoting the field, free to contact the executive in charge of by the board. In accordance with Section Board of Directors does not serve as a for each candidate. In addition, an evaluation’s findings. including all issues involved. At the strategic a certain field in order to enhance their 99 of the Companies Law, these issues member of management. The bank’s advance notice should be issued at level, the field is managed by the bank under knowledge in that field. At the same shall be included in the board’s agenda. directors are elected in accordance with least 21 days prior to the publication of a shared value center by a senior manager, time, the bank is working to improve In accordance with the provisions of the

CORPORATE GOVERNANCE, 156-157 ETHICS AND COMPLIANCE Governance

Companies Law, Proper Conduct of A director is also entitled, under special for the bank and its stakeholders, in a Banking Business Directive No. 301 and circumstances, to receive external manner that strengthens the correlation As at the end of 2016, 11 members the bank’s Articles of Association, the professional advice and/or external between remuneration and the creation of the Board have "accounting Board’s agenda shall include, inter alia, professional assistance, at the bank's of value for the bank’s stakeholders. and financial expertise" and two any issue a member of the board or the expense, if the board has approved the In accordance with this objective, CEO have asked the chairman to discuss. expense coverage. The board’s plenum employee wages shall be derived have "professional qualifications" Decisions made in an urgent meeting or appropriate board committee shall from a scale of ranks, which offers the according to their education, conducted by means of communication discuss and decide whether to contact an possibility of promotion and reflects the qualifications and experience, 13 52 shall be submitted for re-approval in the external consultant to obtain professional authority and responsibility of each level pursuant to the requirements of members of the board meetings of the board following Board of Directors meeting. assistance. In such discussions, reference in the organizational hierarchy. Part of the Companies Regulations. Four As of the end of 2016, Bank During 2016, 52 plenum meetings shall be made to whether the consulting the remuneration will be paid in share- The board of directors usually meets can be provided by internal entities at the based instruments, which will be blocked directors with "accounting and Hapoalim’s Board of Directors had of the Board of Directors and 273 twice per month. In addition, meetings of bank, the purpose of the consulting, the long-term. An annual bonus (if given) financial expertise" are members 13 members (As at the publication meetings of the Board of Directors’ the board’s committees are held. Urgent scope of the work and timetables. based on the bank’s cost of capital, and of the Board’s Audit Committee. At date of the report, there are 10 committees were held (for further issues are raised according to need and/ also based on personal, measurable, the end of 2016, there were 2 female members), including two external information on the Board of or requests by the Chairman of the Board / Officeholder quantitative and qualitative performance Board members / CEO, according to need targets, as well as on long-term plans members and 11 male members on directors, as defined in Section 240 Directors' activity and changes in and the importance of the issue. Important Remuneration and objectives; the Board of Directors (for further to the Companies Law, and four the committees’ structure - please and urgent issues are discussed regularly On March 28, 2016, the Law of ■ Adapting the remuneration to the bank's information about the members of external directors, as defined in see the Financial Statements, pp. in accordance with the provisions of the Officeholder Remuneration in Financial vision, to the general strategic plan of the Board - please see the Financial Proper Conduct of Banking Business 271-274) law and the Bank's procedures as stated, Corporations (Special Permit and Non Tax- the bank its sub-divisions and to the and there is no separate enumeration of Deductible Expenses Due to Exceptional work plans derived from them. Statements, p. 275) Directive No. 301 of the Bank of Israel these matters. Remuneration), 2016 was published ■ Adapting the overall remuneration to in the Official Gazette, (hereinafter: the the bank's risk appetite. The annual A director's right to receive information “Remuneration Limit Law”). On November and multi-year work plans are prepared, and consult with various parties as part of 8, 2016, the bank published its new inter alia, in line with the extent and On November 2, 2016, immediately a review on the bank's handling of the therefore decided to abort his term as his duties were determined in accordance remuneration policy for officers pursuant various types of risks the bank is willing following media reports on the matter, complaint. Subsequently, the Supervisor Chairman of the bank. On November 29, with the provisions of the law, including to the Remuneration Limit Law, the to undertake. Achieving the objectives the bank's Board of Directors authorized of Banks Department announced that in 2016, the Board of Directors accepted the Companies Law, Proper Conduct of Companies Law and the Remuneration of the work plan - including the capital the Corporate Governance Committee order not to jeopardize the procedure being Mr. Yair Seroussi resignation, effective Banking Business Regulations Directive Policy of a Banking Corporation Directive, in adequacy targets, as well as achieving and stakeholders to review issues related carried out by the Israel Police in aspects December 31, 2016. The Board discussed No. 301, and the Board of Directors' work its version dated September 29, 2016 (the excess return on the cost of capital - to the bank's handling of a complaint of under its jurisdiction, the Supervisor’s the proposal to appoint Mr. Oded Eran procedure, which was recently approved by "New Remuneration Policy"). On December set the threshold for the performance- sexual harassment by a person who had review would be completed only after the as Chairman of the Board and decided the bank's Board of Directors, on January 19, 2016, the new remuneration policy was related component of the annual bonus. previously served as the bank’s CEO. police procedure had been completed. On to appoint Mr. Oded Eran as the bank’s 10, 2017. This relates to any material involving adopted by the bank’s general meeting As part of its handling of the matter, the November 8, 2016 and November 10, 2016, Chairman of the Board, as of January the bank's activity, the bank's assets, and of shareholders. On November 29, 2016, In accordance with the bank's new Bank appointed the former President of two shareholders contacted the bank, 1, 2017. On December 22, 2016, the to all the bank's documents required for the the bank adopted a new comprehensive Remuneration Policy, as of the date of the National Labor Court, Retired Judge asking that it consider filing claims against Supervisor of Banks approved the Mr. purpose of fulfilling its obligations. remuneration policy for its senior executives adoption of its officeholder remuneration Steve Adler, as supervisor under the the bank’s former CEO, officeholders and Oded Eran’s appointment as Chairman (this policy shall be called below, along policy, the ratio between the CEO's Prevention of Sexual Harassment Law to said employee to recover the amounts paid of the Board of Directors. In accordance with the instructions with the remuneration policy, the "New total remuneration and the total median examine the complaint. On resuming his to that employee. included in Directive 301, the directors Remuneration Policy"), as well as a remuneration of all other bank employees review, President Adler determined that no do not have an executive function at the remuneration plan thereunder (the "2016 shall not exceed 11 (the calculation was sexual harassment had been committed. When handling the case, the bank’s Bank. These include participation in the Plan”), which was amended on December made according to the principles of the The Supervisor of Banks Department Chairman of the Board did not report the day-to-day management of the Bank and 22, 2016. The main objectives of the New remuneration policy, pursuant to the return also informed the bank it was conducting process to the Supervisor of Banks, who restrictions regarding their requests to Bank Remuneration Policy are as follows: on capital according to the 2016 work plan employees (on business matters outside ■ To motivate the officeholders to work and bank’s employee data for 2015). the Board of Directors and its committees). to create long-term economic value

CORPORATE GOVERNANCE, 158-159 ETHICS AND COMPLIANCE Instilling the ethical code of conduct In 2004, Bank Hapoalim adopted a code letters, or the anonymous channel on the the adjustment of existing mechanisms The following actions were taken in respect of these incidents: lessons were drawn by the audit array on three cases of embezzlement of ethics that comprises the entire range organizational portal, which is available and work processes. / suspected embezzlement; complaints were filed with the police in respect of three embezzlement / suspected embezzlement cases of values of responsibility, trust, integrity during all hours of activity. To ensure and a report was submitted to the Bank of Israel regarding four cases of embezzlement pursuant to the Proper Conduct of Banking and respect for human dignity. This code that employees who submit reports are The bank has been proactive in preventing Business Directive No. 351. of ethics defines the relationship between protected and do not suffer any harm corruption and bribery for many years, in a the employee and his environment - the as a result of the report, a process and variety of contexts. The bank has a system At the same time, disciplinary action was taken against 18 employees, including termination of employment - dismissal / voluntary bank, other employees, customers and procedure have been developed and comprising content, processes, controls, retirement / resignation (8 employees), dismissal from a managerial position (one employee), warning letter (4 employees) and clarification the community. The ethical guidelines approved by the board of directors in order and procedures designed to prevent meeting (2 cases). In addition, in some cases, lessons were drawn by the audited units / headquarters units. underscore the employee’s respectful to safeguard these employees and maintain corruption and bribery. Key sections on treatment of his environment, and the bank’s their anonymity. The employees may also this subject have been added to the bank's duty to treat him fairly and respectfully. contact their direct manager, indirect ethical code, reflecting its position on the Two learning clusters have been Employees' inquiries on ethical issues were addressed manager, Human Resources Department prohibition of corruption and bribery and developed on the code of ethics / and handled on an ongoing basis. In 2016, 11 inquiries were Over the years, the code has undergone or Audit Committee. In certain cases, the on receiving or giving gifts or benefits, with conflict of interest - one for the submitted by employees and managers, mainly on issues changes and adaptations to the changing Chairman of the Board’s Audit Committee the aim of making a clear and unequivocal % branch network and the other of receiving gifts and benefits. Two of the inquiries were needs of the banking industry, customers may also be contacted. statement to all of the bank's internal and 93 for management, due to the submitted anonymously and employees. external stakeholders regarding its policy In order to increase the effectiveness of in this area. (From the bank's policy on difference in the nature of the dilemmas. 93% of the The code is global and includes several the response to any ethical issues that corruption. For details on the prevention bank's employees completed the clusters; domains: arise during the course of the bank's of corruption at the bank, see section 3.6 In 2016, in accordance with the bank's procedures, 19 cases ■ My work at the bank - the chapter operations, a shared interface is routinely of the bank's ethical code, on the bank's Games and discussions on aspects of conflict of interest were handled in which there was a suspicion of harm to the defines the relationship between the operated during the year for audit staff, website. Also see further details about integrity of the bank. The cases were classified according bank and its employees; risk management staff, and the head of lines of defense at the bank later in this were incorporated into various banking courses ■ Customer relationships - the chapter the ethical code. The interface is aimed at section, under the heading "Compliance"). to the following breakdown: conflict of interests / potential for conflict of interests (11), embezzlement/ suspected defines the relationship with the bank’s learning and applying lessons learned, and As part of the ongoing updates for bank employees customers; optimizing the response to various issues, embezzlement (5), false reporting (2) and suspected on the organizational portal, special emphasis was ■ Relationships with external parties, the relevant procedures at the bank, and Bank Hapoalim recognizes assistance in money laundering (1) suppliers, and competitors – this the content of the code, and is maintained that corruption and bribery placed on rules of conduct when receiving gifts in the chapter defines the relationship between in addition to routine audit activities and workplace and points of contact to submit inquiries on are a harmful threat. The the bank and external parties, suppliers, the lines of defense at the bank. ethical issues and competitors; bank strongly rejects ■ Promoting the environment, society Anti-Bribery and Anti- corruption and bribery. and community in Israel - this chapter Corruption The bank is committed to Examining Achievement of Objectives deals with the bank's social involvement, LOOKING environmental responsibility, employee As a banking organization at the heart of implementing its policy in 2016 Objectives Status quality of life and welfare services and Israel's business and economic community its customers' wellbeing. and as a player in the international business this area, from the level of Developing a new ethics study designed for all Completed AHEAD arena, Bank Hapoalim is committed to an its board of directors and bank employees; Responsibility for this area was given to active role in the international fight against management to the level of Incorporate training on conflict of interests into Completed In 2017, the bank's code of ethics the chief risk officer of the bank, in order corruption. most banking courses; will be updated. to allow a single independent function to each individual employee, oversee all of the reports. So as to have Bank Hapoalim recognizes that corruption including the adjustment of Developing a "kit" ethics discussions by In a developing a single, independent party handling all and bribery are a harmful threat. The bank existing mechanisms and managers; process inquiries. Bank employees who suspect strongly rejects corruption and bribery. any violation of the bank's values and The bank is committed to implementing work processes norms by any other employee can use its policy in this area, from the level of its Update and refresh the Ethics page in the portal. Completed several methods to discuss and report board of directors and management to the their thoughts: telephone, e-mail, written level of each individual employee, including

CORPORATE GOVERNANCE, 160-161 ETHICS AND COMPLIANCE Compliance and Prevention of Money Laundering and Terrorist Activities

The responsibilities of Bank Hapoalim's areas in the group; progress on work customers and to the prohibition of money Compliance Training chief compliance officer are derived from plans and activities executed, including laundering and financing of terrorism; An internalized understanding of the need The following resources are available to ■ A call center for American clients and Proper Conduct of Banking Business controls, mapping of knowledge gaps, operation of a structured system of controls for fair business conduct and the need to employees who wish to consult or report foreign residents; Directive No. 308, the Prohibition of Money organizational learning, technological applied to compliance with securities law; identify any unusual activity by customers on relevant matters: ■ A regulatory issues support center; Laundering and Terrorism Financing Law, and other projects in this field, reports development of training and knowledge is critical to compliance risk; a range of ■ A system for queries and feedback on and Proper Conduct of Banking Business submitted to the Israel Money Laundering management systems on the organizational measures are therefore used to promote ■ The network of branch/regional/ the banking portal; Directive No. 411. The chief compliance Prohibition Authority, violations, and reports portal; infrastructure surveys; analysis of this awareness, including instructional divisional/area compliance officers; ■ Communication with the professional officer unit encompasses the anti-money of exceptional events. new products and services; and system content and tools integrated into bankers' ■ The Subjective Reporting System; units by E-mail or telephone; laundering department, the securities development. training and work processes. ■ The compliance site on the banking portal; ■ A system for anonymous queries. compliance and enforcement department, Upon the establishment of the Chief as well as three additional units. The first is Compliance Officer Unit, the bank's Board Monitoring and Control the international compliance unit, which is of Directors established a new group-level Processes responsible for ensuring compliance and compliance policy for the bank. The new The control system at the bank group the prohibition of money laundering at the policy sets forth rules regarding all of the consists of three lines of defense, some bank's offices outside Israel. Compliance component areas of the prohibition of of which encompass more than one staff at the bank's overseas branches money laundering and compliance with component of control, as detailed below: now report directly to this unit, on both consumer protection directives, including ■ The first line of defense consists of the the professional and the managerial level. the declared money policy for nonresidents. controls applied by the units themselves. The second unit is an administrative unit The policy emphasizes corporate control These controls are applied on two levels: (operations, coordination, and control), and the interaction with subsidiaries and A. Controls by business functions, which assists the chief compliance branches outside Israel, based on Proper according to the relevant issue and 97% officer with the execution of systemic Conduct of Banking Business Directive No. process. Other controls executed by managers and employees In 2016, the Chief Compliance Officer Unit conducted and operational assignments. The third 308, the Money Laundering Prohibition the units are controls of processes visits to 24 branches and relevant units at the bank. As part of the annual learning process of the tutorials handles the adoption of tax treaties to Law, the Terrorism Financing Prohibition related to existing customers and these During the visits, the chief compliance officer which the State of Israel is a party and Law, and Proper Conduct of Banking customers' activity, as well as internal on prohibition of money laundering, in accordance with reviewed activities relevant to these branches, under which the bank is required to Business Directive No. 411. This policy processes at the bank; the changes required under the legislation, 97% of the adopt and implement an identification and took effect at the end of December 2010, B. Controls by compliance officers which constitute compliance risks. In addition, these managers and employees completed the learning and test reporting policy. and was expanded recently, in January and enforcement trustees at the tours focused on teaching new material, exposing 2016, and adjusted to the requirements business units; knowledge gaps, legislative amendments, and The Chief Compliance Officer Unit's activity of the new directive. ■ The second line of defense consists presenting exceptional events is supervised through three channels: of controls applied by regional, No significant monetary sanctions were imposed ■ The Board of Directors’ committee on In order to comply with the directives of the divisional, and area compliance officers on the bank in 2016 for non-compliance with laws risk management and control; law and with the group-level compliance and enforcement trustees at the ■ The Board of Management committee policy, the Chief Compliance Officer Unit business areas; and regulations in the area of products and services on compliance, headed by the CEO; conducts activities including identification of ■ The third line of defense consists of (consumer directives). (For details on material legal ■ Quarterly and annual reports to the main exposures and risk areas; procedural, controls applied by the Chief Compliance proceedings to which the bank is a party - see Note bank's Board of Directors, the CEO, qualitative, and quantitative controls applied Officer and Securities Enforcement Unit, 26 C, p. 189, of the 2016 Financial Statements) and management. The reports include to compliance with directives that regulate and controls applied by the Control Unit updates on the main exposures and risk the relationship between the bank and its in the Advising Division.

CORPORATE GOVERNANCE, 162-163 ETHICS AND COMPLIANCE Poalim for Good: assimilating the Doing Good

Model for a company driven by vision and values

Bank Hapoalim operates according to its the competition, based on the perception growth. As part of its business activity, the For more information about the bank's Assimilating the the Model and its values, so as to allow vision’s values, which are in line with the that the bank is the customer's financial bank assists in promoting sustainability initiatives and activities to promote the Doing Good Model employees to become deeply familiar with Doing Good Model initiated by Shari Arison partner and its supporter throughout by financing projects that benefit the value of giving, please see the Empowering In 2016, a program to implement the Doing each of the Model’s values. Thousands of and the Arison Group, as part of its Doing life. As part of the implementation, the environment: renewable energy, energy Society and the Community chapter, p. 92. Good Model was launched, under the title bank employees took part in the various Good is Good Business philosophy. bank promotes a variety of services, efficiency, water purification, recycling Poalim for Good, in order to familiarize the monthly activities on the Model; as part of processes, initiatives and activities for facilities, and more. At the same time, the The Value of employees with the Model and its values, these activities, NIS 120,000 was donated, The Doing Good Model is a value-based various audiences (customers, employees, bank strives to reduce its environmental and specialized activities were carried according to the choice of 24 units at the model for positive doing in the world. It the community and the general public), impacts. In addition, the bank integrates Volunteering to instill and promote positive action on branches and headquarters, which won is a daily practical tool for instilling values in line with the various milestones in the social considerations into its business The bank has a national volunteer network each of the values in its designated month competitions that accompanied the drive. in the core of businesses, organizations, life of an individual and his family. This is activities, and assists in providing solutions that includes thousands of employees who during the year. The various activities The instilment activity and development of communities and people, featuring 13 based on the understanding that there is to the social challenges facing Israeli society. volunteer throughout the year, in a variety of were accompanied by online tutorials, projects to promote the values in the bank's basic human values for every activity, for a growing need among the public to have activities, both privately and independently, which were intended to help assimilate business activity will continue in 2017. the benefit of society, the economy and the financial knowledge and understanding For more information about the bank's or as part of projects led by the bank environment. Over the years, the Company and in order to enable each person to initiatives and activities to promote the and in cooperation with various NGOs. has been instilling these values among realize his full financial potential and value of sustainability, please see the Living Bank employees who volunteer assist The Doing Good Model its employees and promoting business become the customer’s partner in terms with the Environment chapter and the organizations in their efforts to resolve activities, which incorporate and advance of responding to the various financial customer’s benefit chapter, p. 72. various challenges and social issues faced these values. needs by: increasing awareness, providing by Israeli society. The system of volunteers knowledge and information, developing The Value of Giving is assisted by an organizational structure FULFILLMENT The model’s values tools, services and financial products to Bank Hapoalim regards itself as an integral that supports this domain within the bank. BEING in the bank’s activity form an overall informed view of his financial part of the community and is therefore On Good Deeds Day 2016, approximately PURITY ADDED The bank integrates the Doing Good Model world, changing his financial conduct and committed to promoting and empowering 6,000 employees of the bank participated VALUE FOR HUMANITY in its ongoing business activities, both by creating an economic balance in the short it by investing in diverse and extensive in a wide range of activities in around 450 moves that create environmental or social and long term. social community activities, including locations across Israel. value alongside the business value and in Israel’s geographic, economic and VITALITY WE ARE by instilling the model among managers For more information about the social periphery, through donations and For more information about the bank's V ALL ONE LIE ING BE and employees as well as integrating it implementation of the Financial Freedom sponsorships and volunteering by Bank initiatives and activities to promote the SOCIETY IZAT AN IO G N R ID A IV UA L O D

into special-purpose projects that form Value, see the introductory chapter p.9, employees over the years. The bank value of Volunteering, please see the IN L

an integral part of the bank’s operations. the customer’s benefit p.39, and the promotes diverse social activities in the Empowering Society and the Community D

LANGUAGE & G

COMMUNICATION N I I

The values of the model are integrated society and community empowerment public sphere, based on dialogue and chapter, p. 102. N

E SUSTAINABILITY G

according to bank’s vision, strategy and c h a pte r, p.97. numerous collaborations with entities sustainability policies. As a result, the from various sectors, which specialize in following values have been promoted in identifying the needs of the community. The Value of FINANCIAL recent years: The bank's main area of community FREEDOM ABUNDANCE Sustainability activity is education, with an emphasis on The Value of Financial The bank continuously integrates financial education. However, the bank also sustainability aspects into its activities supports and assists in additional areas: GIVING VOLUNTEERING Freedom while assisting in responding to social and cultural and artistic activities, support of INNER PEACE Financial Freedom is a leading value in the environmental challenges, based on the welfare programs and assistance to health bank's vision. This value is implemented perception that this combination creates institutions, and investment in various other through multi-year strategic in-depth long-term value for both the company and fields that promote a variety of social and processes that differentiate the bank from the environment, as well as for the bank’s environmental values.

CORPORATE GOVERNANCE, 164-165 ETHICS AND COMPLIANCE GRI- SRS Content Index GRI Disclosure Page UNGC-cop Standard number and Global Compact COP Report 102-1 Name of the organization 154-155 NR 102-2 Activities, brands, products, and services 154-155 UNGC13: 102-3 Location of headquarters 154 The UN Global Compact initiative anchors international and corporate partnerships, therefore promoting 102-4 Location of operations 154-155 102-5 Ownership and legal form 155 developing markets, commerce, technology and finance in a beneficiary way for economies, communities 102-6 Markets served 154-155 and future generations around the world. Joining the initiative is a statement of commitment to promote and 102-7 Scale of the organization 45;80-81, 110-111 implement the ten principles of the UN universal act on human rights, labor, environment and anti-corruption. 102-8 Information on employees and other workers 110-111 Below is a list of the 10 principles: 102-9 Supply chain 83-86 102-10 Significant changes to the organization and its supply chain 7 102-11 Precautionary Principle or approach 134-135 7 Human Rights 102-12 External initiatives 25-27 1-10 1. Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; 102-13 Membership of associations 25-27 1-10 2. Principle 2: make sure that they are not complicit in human rights abuses. 102-14 Statement from senior decision-maker 4-5 NR Presented in the CEO statement 102-15 Key impacts, risks, and opportunities 20-21 NR Labour 102-16 Values, principles, standards, and norms of behavior 7-8,160-161, 1-10 3. Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right 164-165 to collective bargaining; 102-17 Mechanisms for advice and concerns about ethics 160-163 NR 102-18 Governance structure 154 4. Principle 4: the elimination of all forms of forced and compulsory labour; GRI 102: General 102-19 Delegating authority 157 5. Principle 5: the effective abolition of child labour; and disclosure 102-20 Executive-level responsibility for economic, environmental, and social topics 157 6. Principle 6: the elimination of discrimination in respect of employment and occupation. 2016 102-21 Consulting stakeholders on economic, environmental, and social topics 157 102-22 Composition of the highest governance body and its committees 159

102-23 Chair of the highest governance body 159 Environment 102-24 Nominating and selecting the highest governance body 159 7. Principle 7: Businesses should support a precautionary approach to environmental challenges; 102-25 Conflicts of interest 156 102-26 Role of highest governance body in setting purpose, values, and strategy 157 8. Principle 8: undertake initiatives to promote greater environmental responsibility; and 102-27 Collective knowledge of highest governance body 157 9. Principle 9: encourage the development and diffusion of environmentally friendly technologies. 102-28 Evaluating the highest governance body’s performance 156 102-29 Identifying and managing economic, environmental, and social impacts 157 102-30 Effectiveness of risk management processes 156 Anti-Corruption 102-31 Review of economic, environmental, and social topics 157-158 10. Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery. 102-32 Highest governance body’s role in sustainability reporting 5 102-33 Communicating critical concerns 157-158 102-34 Nature and total number of critical concerns 158-159 An organization that joins the initiative, agrees to act in accordance to the above principles. So far, business 102-35 Remuneration policies 158 organizations from more than 130 countries around the world have joined the initiative. Participating companies 102-36 Process for determining remuneration 158 are required to report annually on the progress made in promoting the universal principles in its operations. 102-37 Stakeholders’ involvement in remuneration 158 102-38 Annual total compensation ratio 158 102-39 Percentage increase in annual total compensation ratio 158 102-40 List of stakeholder groups 16 102-41 Collective bargaining agreements 23 1,2,6 13. Link to the official UNGC site: http://www.unglobalcompact.org/ 102-42 Identifying and selecting stakeholders 13 NR

CORPORATE GOVERNANCE, 166-167 ETHICS AND COMPLIANCE GRI Disclosure Page UNGC-cop GRI Disclosure Page UNGC-cop Standard number Standard number 102-43 Approach to stakeholder engagement 16 103-1 Explanation of the material topic and its Boundary 136 7,8,9 102-44 Key topics and concerns raised 16 103-2 The management approach and its components 136 102-45 Entities included in the consolidated financial statements 6 103-3 Evaluation of the management approach 136 102-46 Defining report content and topic Boundaries 18 302-1 Energy consumption within the organization 138 302-2 Energy consumption outside of the organization Energy 102-47 List of material topics 20 GRI 302: 14 consumption 102-48 Restatements of information No changes Energy 14 outside is were made 2016 not material 102-49 Changes in reporting 18 302-3 Energy intensity 138 102-50 Reporting period 6 302-4 Reduction of energy consumption 138 GRI 102: 102-51 Date of most recent report Quarter 3, 302-5 Reductions in energy requirements of products and services 42-46,69,72, General 2016 145-146 disclosure 102-52 Reporting cycle Annual 2016 103-1 Explanation of the material topic and its Boundary 148 7,8 102-53 Contact point for questions regarding the report 6 103-2 The management approach and its components 148 7,8 102-54 Claims of reporting in accordance with the GRI Standards This report has been prepared 103-3 Evaluation of the management approach 148 7,8 in accordance with the GRI Standards: Comprehensive 305-1 Direct (Scope 1) GHG emissions 149 7,8 option 305-2 Energy indirect (Scope 2) GHG emissions 149 7,8 305-3 Other indirect (Scope 3) GHG emissions 149 7,8 102-55 GRI content index 167-170 GRI 305: 102-56 External assurance 174-175. The Board of Emissions 2016 305-4 GHG emissions intensity 150 7,8 directors and executive 305-5 Reduction of GHG emissions 150 7,8,9 managers are not 305-6 Emissions of ozone-depleting substances (ODS) 148 7,8 involved in this process 305-7 Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant air emissions Those 7,8 103-1 Explanation of the material topic and its Boundary 80 NR emissions 103-2 The management approach and its components 80 are not relevant GRI 201: 103-3 Evaluation of the management approach 80 Economic 103-1 Explanation of the material topic and its Boundary 108 1,2,6 201-1 Direct economic value generated and distributed 80 Performance 201-2 Financial implications and other risks and opportunities due to climate change 76-77 7 2016 103-2 The management approach and its components 108 201-3 Defined benefit plan obligations and other retirement plans 130 NR GRI 401: 103-3 Evaluation of the management approach 108 201-4 Financial assistance received from government 81 Employment 401-1 New employee hires and employee turnover 110 6 2016 103-1 Explanation of the material topic and its Boundary 81 NR 401-2 Benefits provided to full-time employees that are not provided to temporary or part- 121-123,125, NR GRI 203: 103-2 The management approach and its components 81 time employees 127,129-130 Indirect 103-3 Evaluation of the management approach 81 Economic 401-3 Parental leave 109 1,2,6 203-1 Infrastructure investments and services supported 49-51, Impacts GRI 402: 103-1 Explanation of the material topic and its Boundary 113-114,127 2,3 88-91,92-93 2016 Labor/ 203-2 Significant indirect economic impacts 46,49-50,81 Management 103-2 The management approach and its components 113-114,127 103-1 Explanation of the material topic and its Boundary 83 NR Relations 103-3 Evaluation of the management approach 113-114,127 GRI 204: 103-2 The management approach and its components 83 2016 402-1 Minimum notice periods regarding operational changes 127 Procurement 103-3 Evaluation of the management approach 83 Practices 103-1 Explanation of the material topic and its Boundary 121 6 2016 204-1 Proportion of spending on local suppliers 83 GRI 404: 103-2 The management approach and its components 121 103-1 Explanation of the material topic and its Boundary 160-163 10 Training and 103-3 Evaluation of the management approach 123 103-2 The management approach and its components 160-163 Education 404-1 Average hours of training per year per employee 123 GRI 205: 103-3 Evaluation of the management approach 160-163 2016 404-2 Programs for upgrading employee skills and transition assistance programs 121-123 Anti-corruption 205-1 Operations assessed for risks related to corruption 160-161 404-3 Percentage of employees receiving regular performance and career development 114-115 2016 205-2 Communication and training about anti-corruption policies and procedures 161,163 reviews 205-3 Confirmed incidents of corruption and actions taken 163 103-1 Explanation of the material topic and its Boundary 116 1,6 GRI 405: 103-1 Explanation of the material topic and its Boundary 134-135 7,8 Diversity 103-2 The management approach and its components 116 103-2 The management approach and its components 134-135 and Equal GRI 301: 103-3 Evaluation of the management approach 116 103-3 Evaluation of the management approach 134-135 Opportunity Materials 2016 405-1 Diversity of governance bodies and employees 111,116-120 2016 301-1 Materials used by weight or volume 140,143- 144,146-147 405-2 Ratio of basic salary and remuneration of women to men 116,118 301-2 Recycled input materials used 143-144 8,9

14. 102-48

CORPORATE GOVERNANCE, 168-169 ETHICS AND COMPLIANCE GRI Disclosure Page UNGC-cop Standard number Process Audit for GRI 406: 103-1 Explanation of the material topic and its Boundary 116 1,2,6 Non- 103-2 The management approach and its components 116 discrimination 103-3 Evaluation of the management approach 116 Implementation of the CSR 2016 406-1 Incidents of discrimination and corrective actions taken 116 GRI:407 103-1 Explanation of the material topic and its Boundary 127-128 1,2,3 Freedom of 103-2 The management approach and its components 127-128 Plan at Bank Hapoalim Association 103-3 Evaluation of the management approach 127-128 and Collective 407-1 Operations and suppliers in which the right to freedom of association and collective 127-128 An external assurance process allows readers of this report to verify the bank's Bargaining bargaining may be at risk 2016 self-reporting, based on independent opinions from professionals. The bank has 103-1 Explanation of the material topic and its Boundary 88,92,102 NR decided to expand the control process with regard to the fairness of the report on 103-2 The management approach and its components 88,92,102 sustainability and CSR. The expansion of these processes and the involvement of 103-3 Evaluation of the management approach 88,92,102 additional sources of assurance enable the bank to learn from the feedback received GRI 413: Local 413-1 Operations with local community engagement, impact assessments, and 88,92-93,102 from those conducting the process and provide validation of the reliability of the Communities development programs report for stakeholders. The current report underwent four assurance processes, 2016 413-2 Operations with significant actual and potential negative impacts on local 73 each focusing on a different aspect of the report: communities FS13 Access points in low – populated or economically disadvantaged areas by type 52,82 ■ The CSR and Sustainability Group at BDO Ziv Haft performed routine process FS14 Initiatives to improve access financial services for disadvantaged people 52-53 15 103-1 Explanation of the material topic and its Boundary 87 NR controls and examined the CSR implementation process at the bank ; GRI 414: 103-2 The management approach and its components 87 ■ Supplier Social The Quality Assurance Center for Corporate Responsibility Reports who operates 103-3 Evaluation of the management approach 87 Assessment within the Corporate Social Responsibility Institute at the Academic Center of Law 414-1 New suppliers that were screened using social criteria 87 1,2,6 2016 and Business, carried out a due diligence report on the reporting; 414-2 Negative social impacts in the supply chain and actions taken 87 103-1 Explanation of the material topic and its Boundary 10-11,14,46,61 8 ■ The quality of the reporting of the bank carbon footprint - an assurance was 103-2 The management approach and its components 10-11,14,46,61 carried out by the Corporate Social Responsibility and Sustainability Department 103-3 Evaluation of the management approach 10-11,14,46,61 GRI 417: of the BDO Ziv Haft Consulting and Management Group; 417-1 Requirements for product and service information and labeling 61 8 Marketing and ■ The report has been examined by the GRI and found to be in compliance with the Labeling 417-2 Incidents of non-compliance concerning product and service information and There were NR 2016 labeling no incidents requirements for presenting the GRI’s materiality process. The report was prepared in 2016. in accordance with the guidelines of the new GRI standard, the Sustainability 417-3 Incidents of non-compliance concerning marketing communications There were no Reporting Standards (SRS). incidents in 2016. 103-1 Explanation of the material topic and its Boundary 62 NR GRI 418: 103-2 The management approach and its components 62 Customer 103-3 Evaluation of the management approach 62 Privacy 2016 418-1 Substantiated complaints concerning breaches of customer privacy and losses of 62 customer data GRI 419: 103-1 Explanation of the material topic and its Boundary 162 1 Socioeconomic 103-2 The management approach and its components 162 Compliance 103-3 Evaluation of the management approach 162 2016 419-1 Non-compliance with laws and regulations in the social and economic area 163 1 103-1 Explanation of the material topic and its Boundary 10-11,12, 37, 38, NR 47, 49,66,73-75 103-2 The management approach and its components 10-11,12, 37, 38, 47, 49,66,73-75 Product profile 103-3 Evaluation of the management approach 10-11,12, 37, 38, (Sector 47, 49,66,73-75 supplement) FS6 Percentage of the portfolio for business lines by specific region, size (E.G. micro/ 45 2016 SME/large) and by sector FS7 Monetary value of products and services designed to deliver a specific social 46 15. Consultants in the group collected the data processed for this report. This opinion therefore benefit for each business line broken down by purpose focuses on the work process at the bank. In order to maintain independence, the examination for FS8 Monetary value of products and services designed to deliver a specific 75 the purposes of assurance of the report in compliance with GRI requirements was performed by environmental benefit for each business line broken down by purpose an independent third party, The Quality Assurance Center for Corporate Responsibility Reports.

CORPORATE GOVERNANCE, 170-171 ETHICS AND COMPLIANCE BDO Ziv Haft: Process Control for CSR Plan Implementation at Bank Hapoalim

This is the eleventh year in which the Corporate Social Responsibility and Sustainability Department Findings, Conclusion, and Recommendations of the BDO Consulting and Management Group has accompanied Bank Hapoalim in implementing its The assurance process encompassed an examination of the bank’s conduct in the implementation and sustainability and CSR program. The group’s activities focus on monitoring the process and progress of absorption of its sustainability and CSR plan. The process controls allow the bank to receive feedback and the program for sustainability and social, economic, and environmental responsibility. BDO consultants’ evaluation of its practices, and to delineate future objectives accordingly. The results measured in these close work with the bank allows a professional opinion to be provided based on an examination of the activities reflect this progress. However, we would suggest four areas for the bank to maintain and reinforce: processes performed by the bank throughout 2016 (and during 2017 up until publishing this report). During this period, the bank continued the implementation and absorption of sustainability and CSR values. ■ Strengthening dialogue with stakeholders – Following the founding of the Stakeholder Relations Unit, the bank launched activities and processes to create a stronger, systematic dialogue with Description of the Process its stakeholders. It is recommended that the bank implement this as a routine part of its work. At The group performed process controls with regard to the areas of activity of the bank, designed to the same time, the bank continued to hold regular forums with various stakeholders (corporations, ascertain that progress is being made in the implementation of the CSR and sustainability plan. As part NGOs, public entities) on various topics such as financial freedom, small businesses, accessibility, of these controls, the bank's progress in three strata of activity was examined, as the basis for feedback entrepreneurship that promotes social goals, etc.; on the implementation of the plan: ■ Achieving shared value – In 2016, the bank continued to integrate social or environmental aspects (A) Update and optimization of the information infrastructure and metrics for corporate social into banking products and services. Following the multi-year processes that the bank has driven responsibility management – Consultants in the department examined the CSR management system in recent years on various topics - such as financial freedom, advancing small businesses, driving at the bank, as an area in which integrative management is essential. We examined the feedback and growth in the Arab community, and extending its services to senior citizens, both prior to, and after, learning of the CSR Administration in connection with the activity of the various units, the summarization retirement, and financing the promotion of sustainable and environmentally-friendly products - the of results, collection of information, and process optimization. In addition, we reviewed the processes bank’s shared value center created a platform and developed new products to create shared value. of deriving information and processing the information into current metrics for the examination of the This is a positive trend that is expected to grow in the coming years, and its first manifestations are bank's performance in the various areas and in comparison to the goals and objectives set by the bank. expected to be implemented during 2017;

(B) Instilling CSR and sustainability values in core activities and in the various units – We examined ■ Corporate governance - due to the bank’s problematic corporate governance conduct in the 2016 the process of organizational change emerging as part of the implementation of CSR at the bank. In case, it is expected that the bank will inform its stakeholders of the processes to draw lessons, this context, we examined the relevance and added value of the various issues for the activity of the implement controls and corrective actions it has initiated following the case, in order to increase units. We also examined the manner in which these issues were being absorbed into the activity of trust and strengthen relations with its stakeholders; the units of the bank, and whether an ongoing learning process was occurring as a result. The control process also encompassed an examination of the method of development and implementation of new ■ Expanding and enhancing the objectives in the bank’s corporate responsibility reports - As issues arising from reports by the various units. a corporate governance leader in Israel, and following continuous annual reporting over the past ten years, it is recommended that the bank expand its reporting on targets and objectives in the (C) Examination of the results of implementation of the program (effectiveness of absorption) – field of corporate responsibility, in terms of longer-term objectives (mid-term) as well, in addition to In this stage, we examined the ways in which the bank had improved its performance on the various the annual objectives presented in the report. metrics, led new initiatives at the various units for activity in this area, developed new banking products, and created dialogue with stakeholders, while broadening its influence to the Israeli public. The above remarks contain a number of points that in our opinion should be preserved and enhanced The examination we conducted at this stage enables us to complete the circle of process controls, in in order to improve the program’s implementation and maintain the bank’s status as a leader in its field. that it examined the relevance of the information and metrics generated during the CSR program for each of the issues implemented at the units of the bank, and the effectiveness of the implementation relative to the goals set in advance. The Corporate Social Responsibility Department BDO Consulting Group May 2017

CORPORATE GOVERNANCE, 172-173 ETHICS AND COMPLIANCE Quality Assurance Declaration: Bank Hapoalim Sustainability Report 2016

Introduction The Corporate Social Responsibility Institute is an independent public entity promoting This report was found to be in line with these principles. It should be noted that the report is a corporate social responsibility among corporations. The Institute is part of the College of Law comprehensive, impressive, in-depth report that is on a par with the world's leading banks' reports. and Business, a private college for law, accounting and business management (accredited by the This report marks a decade of deep corporate commitment to the field and presents several National Council for Higher Education). The Institute holds professional meetings, writes reports, noteworthy developments. Some of these developments are reflected in comments and insights studies and market surveys, and localizes applicative methodologies from around the world, etc. that have emerged from the quality assurance processes conducted in previous years, which Corporations' transparency and accountability regarding their social and environmental impacts we welcome. First, the report’s publication date closely follows the date of publication of the is one of the issues at the heart of the Institute's activity. In June 2017, Bank Hapoalim asked the financial statements at the end of the first quarter of the calendar year. The closer we bring the Center to perform a quality assurance process on its 2016 corporate social responsibility report. publication date of these reports, the better. In addition, this report is the first to present the Stakeholder Relations Division as a body responsible for managing the entire activity, reflecting The quality assurance process is conducted by Mr. Liad Ortar, who is Director of the Institute. In the higher level of importance the Bank attributes to this issue. This is a strategic move that addition to this role, Mr. Ortar is a researcher who publishes papers on sustainability reporting, a incorporates the values of corporate responsibility into the bank’s core business, which is the lecturer at universities in Israel and around the world, and a major figure in the area of corporate very purpose of CSR. Finally, for the first time, we see a leading financial institution presenting its social responsibility and transparency in Israel. credit portfolio in terms of its borrowers’ environmental risk. Despite the limited details provided by the bank, it is clear that the latter has in place a complex system for identifying and managing It is hereby declared that the Institute receives payment to cover the time invested in this process. environmental risks. In addition, it is hereby noted that neither the Institute nor Mr. Liad Ortar (who performed the work) have business relationships with Bank Hapoalim and that the quality assurance process Main comments was independent. During the quality assurance process, a draft of the report was examined and As noted, this is Bank Hapoalim’s Group's tenth published CSR report. It is in line with the several work meetings were held to clarify various issues. Some have already been addressed entire local banking industry's adoption of CSR reporting, as required by the Supervisor of in this report, and some may be incorporated into future reports. Banks. The company has adopted the GRI Sustainability Reporting Standards, complying with the Comprehensive option. I hereby declare that the Bank Hapoalim does comply with the in accordance Comprehensive option. Methodology The aim of the quality assurance Here are the main recommendations for the continued improvement of the Bank Hapoalim's reporting: process for corporate responsibility • Further updating the materiality process - in recent years, Bank Hapoalim has presented reports is, first and foremost, to a complex and in-depth process of identifying material issues for reporting. Indeed, social improve the final reporting product changes do not occur overnight, but three years after presenting a certain materiality process, by providing professional feedback. For the avoidance of doubt, it is a process that is integral it is time to examine whether it is in line with the economic and social issues that are currently to the reporting process and aims at rapid and correct implementation, as far as possible, of the on Israeli society’s agenda in general, and on the agenda of the banking industry in particular. professional comments which are provided during the work process. The assurance process • Incorporating the UN’s Sustainable Development Goals (SDGs) - in this GRI report and its for this report was carried out in accordance with the principles of quality assurance standard commitment to the Global Compact goals, Bank Hapoalim is committed to the global agenda AA1000 of the AccountAbility organization. Liad Ortar is a certified assurance provider of this of sustainable development. One of the key documents approved by the United Nations in late organization. According to the standard, we examine whether the report is in line with three 2015 was the UN’s Sustainable Development Goals, also known as the SDGs. They include 17 key principles: global, social and environmental goals. It would be worthwhile if the Bank Hapoalim address 1. Inclusiveness - full coverage of the topics from the reporting process and reporting parties these key significant goals in its future reporting processes. and inclusion of a wide range of stakeholders in the report. 2. Materiality – coverage of the topics material to the company's activity. Sincerely yours, 3. Responsiveness – reporting on issues raised by stakeholders. Liad Ortar, Director Corporate Social Responsibility Institute College of Law and Business

CORPORATE GOVERNANCE, 174-175 ETHICS AND COMPLIANCE Carbon Footprint

Work Method Summary of Findings Components in the Calculation of the Carbon Footprint of the Bank Our work is based on accepted principles for calculating and The following are the most significant changes in the emissions ■ The bank monitors and calculates greenhouse-gas emissions caused by electricity marking carbon developed by the UK Government’s Technical composition: consumption, use of the vehicle fleet, consumption of paper and ink, emission of Working Group. The data was adjusted to Israel as part of a system ■ Power consumption: The bank's total consumption data for coolant gases, purchases of electronic equipment, new construction and renovations, for recording greenhouse gas emissions in Israel, Operating Rules 2016 shows a year-on-year increase of approximately 2%. The employee flights and hotel stays, and water consumption. and Reporting Guidelines, the Samuel Neaman Institute and the total increase in consumption arises mainly from the power ■ The bank monitors and measures the reduction of greenhouse-gas emissions at source Ministry of Environmental Protection, March 2016. The emission consumption by the Rotem site, where the bank's backup achieved by recycling paper, cardboard, ink, electronic waste, and soft-drink bottles. coefficients used for the calculation are the national emission facility is located. The site began operating in 2015, and was ■ The preceding reports of the bank presented the reduction of greenhouse-gas emissions coefficients published by professional entities, such as the Public partially active throughout the year; its annual consumption at source as a result of direct banking; however, a decision was made not to include Utilities Authority - Electricity, the Central Bureau of Statistics and was 3.4 million kWh. In 2016, additional parts of the facility this information in the presentation of the bank's carbon footprint in this report. This the Samuel Neaman Institute at the Technion. The consumption became operational and consumption increased significantly, component is difficult to quantify, due to the lack of thorough research on this subject data was provided by the bank and are its responsibility. As at reaching 6.3 million kWh and accounting for the bulk of the and the inability to measure and assess the true savings in paper consumption, the date of preparing the report, the Ministry of Environmental increase in the bank's overall consumption. When excluding transporting of paper through the entire supply chain to the online-banking customer, Protection has not published the emission coefficients for 2017, the Rotem site data, the bank’s power consumption decreased emissions resulting from customers’ use of the Internet, and in particular the reduced and therefore, the bank's carbon footprint calculation is based from 2015 to 2016 by 1.3%. number of visits to the bank using private vehicles. Furthermore, emission cutbacks on the emission coefficients for 2016. ■ Fuel consumption: In 2016, the bank’s fuel consumption are based on the principle of additionally – i.e., an addition relative to the business decreased by 16%. The main reason for the decrease in as usual scenario. Given that the use of electronic banking today is considered as Calculation and Reporting of the consumption was the bank’s use of energy-efficient vehicles "business as usual" scenario, this aspect is not considered as incremental datum. Carbon Footprint of Bank Hapoalim (with turbocharged fuel stratified injection (TFSI) that significantly ■ It should be noted that extensive activities with environmental and social significance In 2016, the bank continued the ongoing measurement of its improves fuel savings; described in this report are not reflected in quantitative terms in the calculation of carbon footprint, This follows the transition to characterizing ■ New construction: A 25% year-on-year decrease of emissions the reduction of the bank’s carbon footprint. The collection of fluorescent light bulbs, the carbon footprint in accordance with accepted international was the result of a decrease in the bank's construction work including mercury removal and safe disposal, as well as the separate collection and standards in 2008-2015 and reporting to the Israel Greenhouse compared to 2015; disposal of batteries, contribute to the reduction of various pollutants and toxins in Gas Registry that opened in 2010. In 2016, Bank Hapoalim’s ■ Paper consumption: there was an additional reduction (in employees’ environment, in waste-disposal facilities, and in the environment in general, total carbon footprint was 61,082 tons CO2eq. Greenhouse gas addition to the trend recorded in recent years) of approximately but do not reduce the emission of greenhouse gases. emissions from the bank's current activities derive mainly from 3% in the volume of emissions as a result of paper savings ■ The bank does not measure greenhouse-gas emissions from employees' travel in private power consumption by headquarters, the branches and other compared to 2015; vehicles, production of solid waste, advertising, travel by suppliers and customers, facilities (72.1%), the bank’s vehicle fleet (11.6%), paper consumption ■ Cooling gases: There was no significant change in the use of consumption of disposable plastic, gardening services, and cleaning services. (6.6%) and construction (4.7%). It should be noted that out of the air-conditioning gas in 2016 compared to 2015; ■ Beyond the activities within the bank, a noteworthy effort is the significant expansion total carbon footprint of the bank for 2016, 9,891 tons CO2eq are ■ Sewage: Emissions from the treatment of sewage generated of the project for separation of electronic waste, initiated and operated by the bank, included in Complex 3 (voluntary reporting). Excluding Complex by the bank's employees are now under the responsibility of to additional Israeli towns; there is no doubt that this worthwhile project contributed 3, the total footprint would have been 51,191 tons CO2eq. The purification facilities - according to the Emissions Reporting to higher public awareness and more accessible recycling in this area. bank’s reduced carbon footprint in 2016 compared with 2015, is System guidelines. minor - 430 tons CO2eq, which represents a 0.7% decrease. This annual reduction is mainly due to a 16% decrease in the bank's fuel consumption and a 25% reduction in its construction work. The Corporate Social Responsibility Department Notably, of the total carbon footprint data of the bank for 2015, BDO Consulting Group 10,980 tons CO2eq are classified as Scope 3 (voluntary reporting). May 2017 Excluding Scope 3, the carbon footprint would stand at 50,531 tons CO2eq.

CORPORATE GOVERNANCE, 176-177 ETHICS AND COMPLIANCE Graphic Design: Studio Merhav | Illustrations: Efrat (hasson) de Botton