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

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

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

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

A long-term business perspective

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

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

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

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

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

Our business model

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

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

Sustainability governance

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

Our sustainability direction

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

Guiding our way to sustainability

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

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

8 Equality and diversity Financial areas

9 Employee development Environmental areas

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

Healthy & sustainable living

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

A financially stable bank

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

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

Counteract corruption and money laundering

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

Responsible lending

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

Responsible investments

Investing in economically, so- Green bond investments cially, and environmentally for a sustainable Malmö One example of our responsible invest- sustainable bonds is a vital part ments is in green bonds issued by the City of our ambitions for financial of Malmö. The Malmö green bond pro- sustainability. By investing a gram was initiated in 2017 and is aimed at funding projects and developments in share of our liquidity reserve in areas such as: green bonds we contribute to the funding of responsible and • Green buildings • Renewable energy climate-positive projects. • Sustainable transportations • Emission-reductions A green bond is a bond whose proceeds • Nature-preserving activities are used to fund environmentally friendly projects, such as renewable energy, ener- gy efficiency, clean water, clean transpor- HIGHLIGHT 2020: tation etc. We have improved our rate of Today, these bonds are increasing in investments in green bonds, and popularity among investors and is expect- are planning to issue green bonds ed to continue to climb, as awareness is ourselves. built, and more investors become con- cerned with climate changes and want to align their portfolios with the Paris Agree- ment and the UN´s sustainable develop- Treasury invests a portion of ment goals (SDGs). ” our liquidity reserve portfo- Since 2017 Ikano Bank has invested a por- lio in green bonds, knowing tion of the liquidity reserve in green bonds that our investment is being and our ambition is to grow the portion used in a responsible and of green investments in the coming years. The Bank is also looking into the possibility climate positive manner.” of issuing green bonds. Fredrik Sannemo, Head of Treasury, Ikano Bank 15 | Ikano Bank AB (publ) Sustainability report 2020 Financial Environmental Social

Circular & climate positive

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

Financing solutions that benefit the environment

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

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

Climate smart business

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

Climate smart business (continued)

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

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

Sustainable purchases

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

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

Fair & inclusive

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

Equality and diversity

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

Employee development, health and safety

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

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

Social responsibility

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

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

Healthy & sustainable living

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

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

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

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

Circular & climate positive

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

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

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

Fair & inclusive

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

Employee development, Ensuring employees can develop, feel secure Launched monthly digital employee surveys 22 safety and health and experience well-being at work.

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

Auditor’s sign off

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

Opinion

A statutory sustainability report has been prepared.

Stockholm 26 March 2021

Malin Lüning

Authorised Accountant

Deloitte AB