Social Report 2013

3 Corporate Responsibility Report 2013 Retail Customers - Household Greetings from the 5 67 Segment Chairman Customers of the Small A Corporate Responsibility 81 7 Business Segment Report - What is it? Challenges and 83 Private Banking Customers 8 Opportunities in the field Service to Corporate of Social Responsibility 86 Customers Discount's Third Corporate Customers of Middle Market 9 Responsibility Report 89 Banking Segment 11 Assurance 90 Additional Services Bank’s Profile, Vision and Social networks - The 18 95 Values Discount Group The Discount Group - General 95 Financial education 19 Overview and Structure of the Group 97 Accessibility Issues Regarding Corporate Proper Disclosure - 26 Governance 99 Information Regarding Products and Services 42 Principal Control Functions Communication with 44 The Discount Code of Ethics 101 Customers - Improvement of Corporate Governance Code Service 45 for the Discount Group 108 Appendix: Suppliers 46 Ethical Aspects 110 The Discounters 54 Vision and Values 111 Human Resources Policy Financial and Economic 56 Profile Employment Terms and 118 Remuneration Membership of 60 Organizational and External Initiatives Labor Relations of the 180 Arts 129 Principal Subsidiaries 183 Sponsorships Promoting the Employment of 130 Ultra Orthodox Jewish Women Involvement in and Contribution to the 131 Retirement and Dismissal 188 Community by the Principal Legislative and Regulatory Subsidiaries 134 Restrictions and their Social Responsibility Arrangement 189 Ratings Characteristics of Bank 135 Green Discount - for the Employees 190 Environment 138 Employee Turnover 191 Policy 140 Vacation and Absence Data 193 Paperless Bank Human Resources Planning and 143 Development 194 Use of Recycled Materials Intra-Organizational 195 The Consumption of Resources 150 Communications Recycling and Waste Employee Welfare - The Gain 196 Treatment 152 is all Ours 198 Emission of Greenhouse Gas Safety in the Work Place and 156 Work Environment 201 Additional Activities 158 Preventing Sexual Harassment Management of Environmental 202 Risks “Lema’an” - Discounters for 160 Credit Policy Regarding the community 203 Environmental Risks 161 Community Activity Policies 206 Summary 168 Voluntary Activities 207 Thank you's! 172 Various Projects 207 Reaction to the Report "Herzelilinblum" - Banking 176 and Tel Aviv Nostalgia Museum 5 Corporate Responsibility Report 2013 GREETINGS FROM THE CHAIRMAN AND THE PRESIDENT & CEO We are honored to present the Corporate Responsibility Report of Discount Bank for the years 2012-2013. The publication of the Corporate Responsibility Report reflects Discount Bank's deep commitment to the subject of social and environmental responsibility, including in matters of corporate governance. Over the years of its existence, Discount Bank has been a leader in social action. This is the third Corporate Responsibility Report published by Discount Bank. Discount Bank was the first bank in Israel to publish a Corporate Responsibility Report (in 2005). The previous report had been prepared on a "B" level basis prescribed by the GRI (Global Reporting Initiative) principles. The Bank decided to prepare the present report on an "A" level basis, being the highest transparency level. In 2010, the Bank joined the United Nations Global Compact initiative. This report constitutes also an annual update of this initiative in respect of 2013. In this respect we reiterate the Bank's commitment to the Global Compact initiative and to its ten principles. Publication of the Social Responsibility Report was made alongside additional reporting frameworks: to the Maala Organization, to the CDP initiative, to the EIRIS research body and to the reporting and recording center of the Israel Ministry of Environmental Protection. This reporting structure reflects the Bank's commitment for transparency and for extending its activity in social responsibility areas. The Corporate Responsibility Report presented below is not only a report or summary of activities, but is also, and mainly, a promise to continue the activities of the Bank and its employees in servicing its customers, continuing to work opposite those involved with the Bank and for the community alongside we work. Within the scope of its social involvement and commitment, the Bank will continue to take action to advance weak populations and encourage its employees to participate in activities for the community, thereby strengthening its social contribution as an organization and as individuals. Israel Discount Bank 6 Furthermore, the Bank has and will take action to integrate environmental considerations as part of its business strategy and credit policy. On behalf of ourselves and the members of the Board of Directors and Management, we support all the Discount Volunteers, and all stakeholders in the social activities and projects led by the Bank. Dr. Yossi Bachar Lilach Asher-Topilsky Chairman of the Board of Directors President & CEO July 31, 2014 7 Corporate Responsibility Report 2013 A CORPORATE RESPONSIBILITY REPORT - WHAT IS IT? Corporate responsibility reporting rests on the approach that a corporation must be accountable to the society and the environment in which it operates, and not only to its shareholders. The adoption of this approach leads to a broadening of the scope of reporting, while addressing a wide variety of subjects, aspiring to deal with the full range of social, environmental and economic issues that occupy all the stakeholders of the reporting corporation. A "stakeholder" is anyone that the corporation influences or is influenced by: customers, employers, suppliers, shareholders, the community and the environment (it should be noted that as a financial corporation, in its main field of activity - financial brokerage - the Bank's vendors are essentially its customers, which their activity as depositors serves the Bank in providing financial resources. Another significant party is contracted workers, who are discussed in the chapter dealing with employees). The dialogue with the stakeholders is being conducted in various channels and is detailed in the different chapters below. The Corporate Responsibility Report complements the corporation's financial statements. Whereas one presents the corporation's financial performance, the second presents the manner in which things are done, the degree of importance that the corporation attributes to the aspirations of its stakeholders, and its efforts to promote areas requiring improvement. The Corporate Responsibility Report is not just a reporting framework, but a platform for ongoing dialogue between the corporation and its stakeholders. The Bank was the first banking corporation to issue a Corporate Responsibility Report in Israel in 2005 (for the years 2003-2004). The second Social Responsibility Report was published in 2009 (for the years 2007-2008). Publication of the Bank's Third Social Responsibility Report (for the years 2012-2013) forms an expression of the Bank's commitment for social responsibility issues and for their importance as part of the Bank's organizational culture. Israel Discount Bank 8 CORPORATE RESPONSIBILITY REPORT - DIRECTIVES OF THE SUPERVISOR OF BANKS IN ISRAEL On the background of developments regarding the issue of corporate responsibility reporting, and in view of the importance that the Supervisor of Banks attributes to the activity of banking corporations in this respect, the Supervisor of Banks issued on October 3, 2011, a circular, according to which banking corporations heading the banking groups will be required to publish reports for a period of up to two years concerning corporate responsibility. In accordance with the instructions, the corporate responsibility report may refer to matters such as commitment for involvement in the community, environmental topics, cultivating the staff and work environment, fairness to customers and business ethics. The instructions does not determine the reporting contents, though it is recommended to include therein disclosure regarding relevant quantitative indices as well as relevant standards according to which the banking corporation operates in this field. Accordingly, it is the Bank's intention to publish a social responsibility report at least once every two years. This report is the first report presented in accordance with the new instructions. CHALLENGES AND OPPORTUNITIES IN THE FIELD OF SOCIAL RESPONSIBILITY Social responsibility and sustainability is an approach that provides the Bank with a methodological opportunity to make an operative connection between various topics and challenges. Discount Bank has been connected with the community since its establishment. Throughout the years, the Bank has seen itself as a bank that operates within the community, as a bank that operates in the best interests of the customer and his family and as a bank that acts responsibly toward all the stakeholders who influence, or are influenced by, its activities. The Bank is focusing on the challenges facing it in the social responsibility field, on two main levels: the organization’s activity and the banking products that it offers its customers. 9 Corporate Responsibility Report 2013 - Responsible activity of the organization Responsible corporate conduct, while implementing high standards in the field of corporate governance and ethics, in all units of the organization and with stakeholders. The most significant challenge will be to gradually expand managing this area to the Group level – for the subsidiaries. - Creating a

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