Corporate Responsibility 2018 UN Global Compact Communication on Progress About This Report

Corporate Responsibility 2018 UN Global Compact Communication on Progress About this report

This report constitutes The report covers the activities in Dan- Danske Bank Group’s ske Bank Group. In order to provide a balanced overview of corporate respon- Communication on Progress sibility matters related to our business, to the UN Global Compact we assess and report on material and covers the financial issues, see p. 15. year 1 January 2018 to To ensure data consistency, definitions 31 December 2018. and descriptions of data are provided in With this document, we fulfil our business procedures, and internal the requirements regarding control procedures have been established to ensure that data is reported the management’s report of according to the definitions outlined in section 135a and b of the our Corporate Responsibility Reporting Danish Executive Order on Principles, see p. 38. Danske Bank has engaged Deloitte to verify selected Financial Reports for Credit performance data according to the ISAE Institutions and Investment 3000 assurance standard, as outlined Companies, etc. in the independent assurance report, see p. 37.

Danske Bank Group’s annual reporting suite for 2018 includes the Annual Report 2018, Risk Management 2018 and this report. In addition to presenting detailed and segmented data on corporate responsibility issues in our Corporate Responsibility Fact Book 2018, we also issue a Statement on Modern Slavery Act 2018 and a State- ment on Carbon Neutrality 2018, all of which are available at danskebank.com/ societal-impact.

We always value feedback and strive to improve our reporting, so we welcome any comments or suggestions you may have regarding this report or our performance. Please contact Jeanette Fangel Løgstrup, Head of Societal Impact and Sustainability, at [email protected].

danskebank.com/societal-impact Contents

04 Foreword by Jesper Nielsen 06 The Estonia case

BUSINESS AND STRATEGY

08 Our business in brief 10 Taking stock of the 2015-18 strategy 12 Moving ahead with new 2025 strategy 14 A strong focus on compliance and sustainability governance

STRATEGIC THEMES

16 Building financial confidence in a cashless society 17 Accessible finance for everyone 18 Partnering up to support impact start-ups

CORE BUSINESS: CONTRIBUTING TO SOCIETY

20 Creating long-term value 22 Stakeholder dialogue 23 Employee volunteering and charity

CORE BUSINESS: RESPONSIBLE CUSTOMER RELATIONSHIPS

24 Customer engagement 26 Fighting financial crime 27 Protecting our customers against fraud 28 Sustainable finance

CORE BUSINESS: RESPONSIBLE EMPLOYER

30 People and culture

CORE BUSINESS: ENVIRONMENTAL FOOTPRINT

32 Environmental performance

CORE BUSINESS: RESPONSIBLE SUPPLIER RELATIONSHIPS

34 Responsible sourcing

36 Key performance indicators 37 Independent auditor’s assurance report 38 Reporting principles Foreword by Jesper Nielsen Corporate Responsibility 2018 5

Dear reader,

In many ways, 2018 has been a year This strategy builds on the achieve- of challenges and change for Danske ments of our Corporate Responsibility Bank. Strategy 2015-18, which is summari- sed in this report along with our 2018 The overriding issue has been the performance. suspicious transactions at our Estonian branch from 2007 to 2015 and the The strategy draws upon the UN’s major deficiencies that allowed these 2030 Agenda for Sustainable Develop- to take place. As the largest financial ment and the 17 Sustainable Develop- services provider in Denmark and one ment Goals, and we continue to support of the largest financial institutions in and align the way we conduct business the Nordic region, we have a particular with the 10 principles of the UN Global responsibility to conduct our business in Compact. Our goals for 2025 are to a sustainable and transparent manner. help people and businesses become The Estonia case clearly shows that we financially confident and secure in a digi- have failed to live up to this responsibi- tal age, help social entrepreneurs grow lity. their positive impact on society, and help society transition to a net-zero car- It is disappointing and unacceptable, bon economy through green financing. and we continue to offer our apologies. A first initiative was the launch of a new The case has led to intense self-scrutiny Nordic digital hub named +impact to and justified public scorn. Today, we help purpose-driven start-ups increa- are in a different place than when the se their impact on society. Another events in Estonia took place. Several 2018 example is our support for the anti-money laundering measures have recommendations of the Task Force on been implemented over the past years, Climate-related Financial Disclosures and we have decided to make substan- (TCFD). This cements our commitment tial investments in 2019 to further to integrate climate considerations into accelerate our ability to prevent financial our governance setup, strategies, risk crime and terrorist financing. We cannot management framework, metrics and guarantee that suspicious transacti- external reporting. ons will not take place, but to prevent something similar from ever happening Transparency and engagement with again, nourishing a strong compliance stakeholders is important to us, and we culture, improving our systems to fight invite you to engage in dialogue with us financial crime and working closely with on our role and responsibilities in the the authorities and others will remain of transition towards a sustainable the highest priority for us. future.

We know we have a huge task ahead Jesper Nielsen of us to regain our stakeholders’ trust, Interim Chief Executive and taking our corporate responsibility Officer of Danske Bank efforts to the next level is an important part of this journey.

Strenghtening our societal impact In May 2018, we launched our Nordic Integrator corporate strategy to help bring Danske Bank closer to our customers, colleagues and society. Key elements of the strategy centre upon ensuring sustainable core business processes as well as making a positive difference in the societies we are part of. We refer to this as our societal impact and have developed a separate Societal Impact and Sustainability Strategy to guide the way forward towards 2025. The Danish parliament’s Business, Growth and Export Committee hearing into the Danske Bank money laundering case

The Estonia case

The Estonia case has been a major again. In this process, we wish to be as quality and the efficiency of our con- focus point for Danske Bank and all our transparent as possible and we share all trols and to integrate the processes stakeholders in 2018. relevant findings with the authorities on into the customer journey as part an ongoing basis. of our ambition to offer the best The findings from the investigation of customer experience. the non-resident portfolio at the Esto- The case has led us to take a number of nian branch, published in September, actions: • Our governance and control sys- showed that a series of major deficien- tems have also been improved. cies in governance and control systems • Several members of management Danske Bank’s new Chief Com- in Danske Bank made it possible to use as well as staff connected with pliance Officer is a member of the Danske Bank’s branch in Estonia for the case have left Danske Bank, Executive Board and reports directly suspicious transactions. among these former CEO Thomas F. to the Board of Directors and day- Borgen. On the Board of Directors, to-day to the CEO. Furthermore, on The approximately 10,000 customers the Chairman of the Board and the top of basic and mandatory AML in the non-resident portfolio carried out Chairman of the Audit Committee training, our new AML Academy transactions for around EUR 200 billion were replaced in December. Another provides specialised training in in the period from 2007 to 2015, but two members will step down at the detecting and combating financial only a small part of these customers and upcoming Annual General Meeting. crime for relevant employees. transactions were reported as suspicious to the authorities at the time. The • As reported in September, eight • We have also taken several steps investigation includes additional custom- former employees of our Estonian to increase our financial strength. ers with non-resident characteristics. In branch have been reported to the We have increased our Pillar II September, it was reported that most of police, and a further 42 employees requirement by DKK 10 billion and the customers investigated by that time and agents have been reported to have cancelled our share buy-back (6,200 customers, starting with the cus- the Estonian Financial Intelligence programme, resulting in an addition- tomers hitting the most risk indicators) Unit (FIU). al DKK 3.1 billion of CET1 capital. should have been classified as suspi- Furthermore, we will not launch a cious and reported to authorities. • We have strengthened our anti- share buy-back programme in 2019. money laundering (AML) measures It is clear that we have not lived up to and financial crime compliance • The estimated gross income from our own standards, our responsibility efforts and continue to do so. We the non-resident portfolio in Estonia and the expectations of our stakehold- have also increased the number of in the period from 2007 to 2015 of ers in this case. We did too little too late people working to combat finan- DKK 1.5 billion has been set aside both in terms of closing the portfolio cial crime considerably. We are net of confiscation as a donation for down and realising the seriousness and using this experience to learn and measures to combat financial crime. scope of the problems. We failed to to improve our efforts in financial The donation will be transferred to grasp the magnitude of the case and to crime compliance in order to prevent an independent foundation, which adjust our response and communication something similar from happening will be set up to support initiatives accordingly. This is disappointing and at Danske Bank again. aimed at combating international unacceptable, and we offer our apolo- financial crime, including money gies to all of our stakeholders – not least • On the basis of learnings from the laundering. The foundation will be our customers, investors, employees, Estonia case and following a full set up independently from Danske regulators and society in general. We review at the end of the year of our Bank with an independent board. acknowledge that we have a big task efforts and ambitions within AML, ahead of us in regaining their trust. We we have decided to accelerate our • It has been very important to us are working hard to get to the bottom of AML improvement efforts over the to engage with our customers and the matter and to learn from it, so that next three years through earmarked address any concerns and ques- we can take all necessary steps to pre- investments of up to DKK 2 billion. tions that they may have. At the vent something similar from happening The purpose is to improve both the end of 2018, we had held around Corporate Responsibility 2018 7

150 town hall meetings at our ment of Justice (DoJ) in connection Nielsen. They replaced Ole Ander- branches all across Denmark. We with a criminal investigation relating sen and Jørn P. Jensen, who both also encourage our staff across the to our Estonian branch conducted stepped down. Karsten Dybvad organisation to use all customer- by the DoJ. We also remain under is now Chairman of the Board of facing opportunities to talk about the investigation by the Danish FSA and Directors. issue and the measures we have the Estonian FSA, as well as the taken to prevent something similar Danish State Prosecutor for Serious • On 9 January 2019, an action from happening again. Our customer Economic and International Crime was filed in New York by an alleged satisfaction scores have been ad- (SØIK) and the Estonian Office of the holder of Danske Bank’s American versely impacted, especially among Prosecutor General (the Estonian Depositary Receipts, representing Danish retail customers. We remain FIU). We cooperate fully with all its ordinary shares, against Danske committed to regaining the trust of authorities. Bank. The complaint seeks unspeci- our customers, but we acknowledge fied damages on behalf of a putative that this will not happen overnight. • On 4 October, the Danish FSA class of purchasers of Danske ordered us to reassess our solvency Bank’s American Depositary The investigation into the customers in need with a view to adding an abso- receipts between 9 January 2014 the terminated non-resident portfolio* lute minimum of DKK 10 billion to and 23 October 2018. Danske of the Estonian branch continues, and our Pillar II requirement. In addition Bank intends to defend itself against we keep the authorities informed of all to increasing our Pillar II require- the claims. The timing of completion progress on an ongoing basis. ment, we revised our CET1 capital of the lawsuit and the outcome is target from 14-15% to around 16% uncertain. The timing of the completion of the and our total capital target from investigations, the outcome and the above 19% to above 20%. At the • On 11 January, we announced that subsequent discussions with the au- same time, the share buy-back pro- we had received a letter from the thorities are subject to uncertainty. It is gramme for 2018 was discontinued. French Tribunal de Grande Instance not yet possible to reliably estimate the de Paris summoning Danske Bank timing or amount of any potential settle- • The Estonia case has also impacted to an interview to discuss matters ment or fines, which could be material. our ratings. Following the publication relating to the ongoing investigation of the findings of the investigations, into organised money laundering Below is a short summary of the key Moody’s downgraded Danske of tax evasion proceeds. The letter events related to the Estonia case in Bank’s issuer rating from A1 to states that the judge envisages 2018 and 2019: A2 and changed the outlook to placing Danske Bank under formal negative, while Fitch and S&P both investigation after having previous- • On 3 May, the Danish Financial Su- maintained their issuer ratings of ly changed Danske Bank’s status pervisory Authority (FSA) published Danske Bank but also changed the in the case to that of an assisted its assessment of the role of Danske outlook to negative. witness. Bank’s management and senior employees in relation to the Estonian • On 2 November, we published the • On 16 January, we issued USD case. Danske Bank received eight results of the EU-wide stress test 3 billion worth of new funding in orders and eight reprimands from conducted by the European Banking non-preferred senior format. The the FSA and immediately launched Authority. In the adverse scenario, transaction demonstrated that de- measures to comply with all require- Danske Bank had a CET1 capital spite the Estonia case, Danske Bank ments. buffer of almost DKK 10 billion. The retains good market access. We test took into account the capital acknowledge, however, that current • On 18 July, we announced that we need and assumed costs in relation spreads are significantly wider than do not wish to benefit financially to the Estonia case, within the scope those applying to our NPS issuance from suspicious transactions in of the Danish FSA decision of 4 in June 2018 and that this is due Estonia in the period from 2007 to October 2018. partly to the negative impact of the 2015. Consequently, we decided to Estonia case on our reputation. donate the estimated gross income • On 19 and 21 November, Interim from the non-resident portfolio CEO Jesper Nielsen participated in As is clear from the above, the Estonia in that period to an independent AML hearings at the Danish and case has had a substantial impact on foundation supporting initiatives to European parliaments, respectively. Danske Bank, and the case will prob- combat international financial crime. He answered questions from politi ably continue to impact us in 2019. cians regarding the Estonia case However, we remain dedicated to learn- • On 19 September, we published and our efforts to prevent something ing from this case in order to prevent the findings of the Estonia inves- similar from happening again. anything like this from happening again. tigations. We also announced Consequently, going forward we will the resignation of CEO Thomas F. • On 28 November, SØIK presented continue our efforts to get to the bottom Borgen, and on 1 October, he was Danske Bank with a preliminary of the case and will keep the authorities relieved of his duties. Jesper Nielsen charge. informed of all progress and findings. was appointed Interim CEO as of the same date. • On 7 December, an Extraordinary General Meeting was held to elect • On 4 October, it was announced two new members to the Board More insights that we had received requests for of Directors. These were Karsten Find more details about the Estonia case at information from the US Depart- Dybvad and Jan Thorsgaard danskebank.com/investigations.

* Terminated portfolio as defined in the report by Bruun & Hjejle as of 19 September. BUSINESS AND STRATEGY

Our business in brief

Danske Bank Group is a Nordic universal bank with bridges to the rest of the world. Since our foundation in Denmark in 1871, we have been providing banking services for retail and commercial customers, and today our home market has expanded to cover the entire Nordic region.

In May 2018, we launched our corporate strategy, Nordic products, solutions and services, and we engage with our Integrator, designed to bring Danske Bank employees closer to customers at our branches and through a wide range of self- our customers, their colleagues and the societies in which we service and digital transaction solutions. operate. With our ambition to be a solid, balanced and predictable bank, The Nordic Integrator Strategy builds on the Essence of we are committed to delivering value to our key stakeholders Danske Bank, which sets out our vision, strategic core, and to making a positive societal impact in the societies we are customer promise and core values. The strategy serves as the part of. We can only create value if our key stakeholders trust foundation for all our business activities across all units and us to do so, and we earn this trust by working in an integrated countries. We combine financial expertise with innovative manner in alignment with our aspirations framework.

The Essence of Danske Bank

Vision Core values To be recognised as the most trusted financial partner We deliver expertise – make knowledge relevant

Strategic core We act with integrity – be responsible We are a modern bank for people and businesses across the Nordics with deep financial competence and leading, We create value – make a difference innovative solutions We progress through agility – embrace change and be responsive Customer promise We help customers be financially confident and achieve We believe in collaboration – engage, listen and act their ambitions by making daily banking and important financial decisions easy

No. 1 in customer Aspirations framework experience Our customers are at the front and centre in our overarching aspiration of becoming No. 1 in customer experience. Trust and strong position in society

More insights Employee Shareholder More details of our financial performance, market positions and corporate engagement value strategy can be found in our Annual Report 2018 and in our quarterly financial fact books. Corporate Responsibility 2018 9

A Nordic universal bank

With branches located across our core markets of Denmark, Norway, Sweden and Finland, as well as in Northern Ireland, Estonia, Latvia and Lithuania, we ope- Finland rate to service our Nordic-affiliated personal, business Norway and institutional customers. In addition, we also have offices in several other European countries, the US, China and Russia, as well as support functions in India. Sweden Our offices outside the Nordic markets offer gateways to the rest of world for Nordic customers and points of Denmark entry to our region for international customers whose activities are anchored in the Nordic countries.

DANSKE BANK IN NUMBERS SERVING OUR CUSTOMERS THROUGH FIVE BUSINESS UNITS

Banking DK serves retail and commercial customers in Denmark. The unit offers 16 personal customers advice tailored to their financial needs and is a leading countries provider of daily banking, home financing, investment and retirement planning solutions. For business customers, the unit provides targeted advice and 237 solutions based on the size and situation of the customers’ business. branches 1,700,000 3,341 DKK 7.3 billion customers employees profit before tax 3.3 million Banking Nordic serves retail and commercial customers in Sweden, Norway and Customers, end-2018* Finland, providing customer offerings similar to those of Banking DK. In addition, the unit includes the Group’s global asset finance activities, such as lease activities. 20,683 1,135,000 2,442 DKK 5.6 billion full-time employees customers employees profit before tax

Corporates & Institutions is the wholesale banking division of the Group, serving DKK 1,769 billion the largest corporate and institutional customers. We offer our expertise in debt loans issued and equity raising, corporate finance advisory services, risk facilitation, daily banking, trade finance and investment services. DKK 1,575 billion 1,815 1,858 DKK 4.3 billion assets under management customers employees profit before tax

Wealth Management serves the Group’s entire customer base through a range DKK 44.4 billion of products and services within wealth and asset management, investments, total income pension savings and insurance. This unit consists of Danica Pension, Danske Invest, Asset Management and Private Banking. 64,000 2,201 DKK 3.2 billion DKK 19.7 billion customers employees profit before tax profit before tax Northern Ireland is one of the leading financial institutions in its market serving personal and business customers through leading digital channels and a network DKK 4.7 billion of branches and business centres. tax on profit 437,000 1,322 DKK 0,7 billion customers employees profit before tax 9,8% return on equity The current business unit structure was implemented during 2018. In addition to these business units, Danske Bank Group offers mortgage financing through * Customers in Banking DK, Banking Realkredit Danmark, real estate brokerage through home, and leasing through Nordic, Corporates & Institutions, Nordania Leasing. Wealth Management (Private Banking customers only), and Northern Ireland. BUSINESS AND STRATEGY

Taking stock of the 2015-18 strategy

2018 has been a year of strategic transition and was the final year of our four-year Corporate Responsibility Strategy. A key strategic focus has been to build the foundation for integrating corporate responsibility into our core business.

Since 2015, we have worked in accord- Integrating corporate responsibility an increased focus on specific areas, ance with our Corporate Responsibility into our core business has been a key as has been the case with the area of Strategy. With its two strategic themes element in building the foundations that combatting financial crime. Another key and five focus areas, the strategy exist today. Our five focus areas have objective of the strategy has been the aimed to integrate corporate respon- been: contributing to society, fostering alignment of our strategic themes with sibility into our core business. The two responsible customer relationships, be- the UN Sustainable Development Goals strategic themes, Fostering financial ing a responsible employer, reducing our (SDGs), where we have focused on confidence and Accessible finance for environmental footprint, and ensuring quality education (SDG 4) and on decent everyone, every day, not only defined responsible supplier relationships. work and economic growth (SDG 8). A our programme and initiatives for status for our contribution towards the building financial confidence in the next Corporate responsibility is an ever- SDGs can be found on p. 16 and 18. generations, in start-ups and in growth changing field where new sustainability companies, but they also supported our issues continue to arise and mature. Building on our achievements from the commitment to a responsible transition As well as being able to adapt to new strategy period, we are now ready to to future financial services. developments, our Corporate Respon- move ahead and take our corporate sibility Strategy also accommodated responsibility efforts to the next level.

Corporate Responsibility Strategy 2015–18

The Essence of Danske Bank FOUNDATION Our vision, strategic core, customer promise and core values

OUR ROLE Contributing to financial stability and economic growth

STRATEGIC Fostering Accessible finance THEMES financial confidence for everyone, every day

CORPORATE Responsible Responsible RESPONSIBILITY Contributing customer Responsible Environmental supplier IN CORE to society relationships employer footprint relationships BUSINESS

Corporate responsibility governance, policies and reporting Corporate Responsibility 2018 11

Key achievements

During the strategy period, we steadily increased our efforts to embed corporate responsibility in our core business processes, and we launched programmes and initiatives within our strategic themes. Across the Group, we focussed on strengthening our shared governance setup, policies and reporting. Below we highlight our areas of focus and key achievements 2015-18 – some of these achievements can be attributed to our new Societal Impact and Sustainability Strategy, see p. 12.

Strategic themes Key achievements 2015-18

Fostering financial confidence • Educational programmes, tools and free online universes for children, Building financial confidence in the teachers and parents next generations as well as in growth • Pocket Money app for children companies • Digital hubs and accelerator programmes for Nordic start-ups and social entrepreneurs

Accessible finance for everyone, • Customised solutions for people with special requirements, including seniors every day and the visually impaired Ensuring a responsible transition to • MobilePay partnership for Nordic banks future financial services • Digital solution for homeless people in partnership with the Hus Forbi organisation

Core business area Key achievements 2015-18

Contributing to society • Tax policy to increase transparency and seek a proactive, open and cooperative Enhancing transparency, creating relationship with the tax authorities long-term value and local community • Stakeholder engagement principles to guide our engagement with various engagement stakeholder groups • Public debates and knowledge sharing on responsible growth and financial confidence • Partnership with ISOBRO on fundraising for charities via MobilePay • Employee volunteering in local communities

Responsible customer relationships • Significant strengthening of sustainable investment and lending strategies, Providing sustainable finance integrating environmental, social and governance (ESG) into core processes solutions and strengthening our • Topic- and sector-specific position statements for investment, lending and compliance practices procurement • European Corporate Sustainable Bonds fund and impact investment funds on climate and water

• Disclosure on active ownership as well as CO2 footprint of selected funds • Supported the recommendations of the Task Force on Climate-related Financial Disclosures

• Established centre of anti-money laundering (AML) expertise to further enhance AML service quality and efficiency across the Group • Annual mandatory Code of Conduct e-learning for employees • Data security platform, Keep it safe, for customers and employees • Extensive collaboration within and outside the financial sector on combatting fraud

Responsible employer • Human rights risk assessment in accordance with the UN Guiding Principles on Fostering an inclusive and diverse Business and Human Rights (UNGPs) culture and providing a healthy and • Diversity and inclusion initiatives, including focus on gender composition safe working environment • Core values integration in peoples practices • Human rights guideline and statement on sexual harassment

Environmental footprint • 100% renewable electricity supply and signatory of RE100

Reducing our own carbon footprint • CO2 offsets to uphold carbon neutrality • Danske Bank funds invested in green bonds

Responsible supplier relationships • Supplier Code of Conduct aligned with UNGPs Developing and implementing an • Environmental requirements for selected products and services improved responsible sourcing • Assessment of high-risk suppliers as part of responsible sourcing process process • Audit programme for suppliers

BUSINESS AND STRATEGY

Moving ahead with new 2025 strategy

Our new Societal Impact and Sustainability Strategy is an integral part of our corporate strategy and was launched in May 2018. Towards 2025, we will accelerate the integration of societal impact into our business model.

We want to improve our customers’ ensure that we live up to market expec- tion & entrepreneurship, where we can lives and make societies more prospe- tations and international principles. The generate significant societal impact by rous and to do so in a sustainable way. four factors are: accelerating our work helping entrepreneurs to drive employ- Our new Societal Impact & Sustaina- on sustainable finance, continuing to ment and economic growth, thereby bility strategy is firmly embedded in run a sustainable operation, fostering contributing to SDG 8. The third theme Danske Bank’s corporate strategy and a sustainable workplace & culture and is Financial confidence & security, defines our 2025 ambition of driving partnering with local communities to where we can leverage our stronghold sustainable progress and positive create value. in financial confidence, IT security and impact in the societies that we are part fraud prevention to educate our custo- of. We see the integration of societal im- In addition, we will apply our skills and mers, thereby contributing to SDG 4. pact and sustainability into our business expertise within three strategic themes model as part of our license to operate where we aim for a measurable impact To enable us to accelerate the integrati- and as a source of value creation. on sustainable development and can on of societal impact into our business contribute to the UN Sustainable Devel- model, we have during 2018 doubled The Societal Impact and Sustainability opment Goals (SDGs). The first theme is the number of full-time employees wor- Strategy outlines how we will further Climate & environment, where we see king with sustainability at both Group embed corporate responsibility into our a significant impact potential by offering and business unit level. A continuous core business. The strategy includes green financing and encouraging cus strengthening of our governance setup, four foundational factors that address tomers and portfolio companies to take ongoing stakeholder dialouge and trans- sustainable core business processes climate action, thereby contributing to parent reporting will further support our and products and which are essential to SDG 13. The second theme is Innova- ambition to raise our standards.

Societal Impact and Sustainability Strategy 2025

The Essence of Danske Bank

AMBITION We want to drive sustainable progress and positive impact in the societies we are part of

Climate & environment Innovation & entrepreneurship Financial confidence & security STRATEGIC THEMES

GOALS Helping society transition to a net- Helping 1,000 social Helping 5 million people and FOR 2025 zero carbon economy through green entrepreneurs grow their positive businesses to become financially financing impact in society confident and secure in a digital age

FOUNDATIONAL Accelerate Run a sustainable Foster a sustainable Partner with FACTORS sustainable finance operation workplace & culture communities Corporate Responsibility 2018 13

Strategy development and 2019 outlook Continued commitment to international principles The Executive Board initiated the In our past and new strategy, and in associated policies, we recognise the strategy-development process in autumn importance of international commitments aimed at helping businesses to 2017, and the strategy was signed off operate responsibly. In our Societal Impact & Sustainability Policy (October, by the Board of Directors in May 2018. 2018), we state our support of the following: As well as customer surveys, workshops with employees and managers, and • 2030 Agenda and the UN Sustainable Development Goals market analysis and benchmarking, this • The UN Global Compact process also included an in-depth analy- • The OECD Guidelines for Multinational Enterprises sis of Danske Bank’s sustainable finance • The UN Guiding Principles on Business and Human Rights positions and processes. • The UN-supported Principles for Responsible Investment • The UN Environment Programme Finance Initiative We are in the process of conducting a • The Universal Declaration of Human Rights comprehensive analysis of performance • The ILO Declaration of Fundamental Principles of Rights at Work indicators (KPIs) so that we can select the right KPIs for tracking our impact in Additional industry-specific international principles and conventions that guide a reliable and measurable way. This is our lending, investment and procurement activities are detailed in our publicly part of our outlook for 2019. available position statements.

Strategic themes 2019 outlook

Climate & environment • Increase volume of green lending Developing financial products and • Issue Danske Bank green bonds services that support the transition to a • Continued facilitation of customers’ green bond issuance greener economy • Further implement the Task Force on Climate-related Financial Disclosures (TCFD) recommendations

Innovation & entrepreneurship • Further develop +impact hub with tailor-made tools and support for social Developing tools and services to enable entrepreneurs entrepreneurs to succeed • Continue to develop +impact Accelerator programme for social entrepreneurs • Further develop The Hub from start-up job board to talent management platform

Financial confidence & security • Develop financial confidence tools for children and parents Providing knowledge, education, prod- • Launch primary school programmes and activities ucts and services to help customers be- • Implement new tools and activities to increase data security and prevent fraud come financially and digitally confident

Foundational factors in core business 2019 outlook

Sustainable finance • Continued environmental, social and governance (ESG) education and training Integrating ESG factors into our programmes for portfolio managers investment and lending decisions • Strengthen our ESG integration through an improved ESG data platform and tools to decrease risk and leverage • Implement IT-supported ESG processes and training of frontline and credit staff opportunities

Sustainable operation • Maintain and continue to improve high standards for anti-money laundering, Incorporating ESG considerations into counter-terrorist financing and financial sanctions operational business practices includ- • Publish new policy on anti-corruption ing compliance, sourcing, customer • Strengthen partnerships on data security and fraud with national and international advice, products, tax, lobbying, accessi- law enforcement agencies and industry networks bility and IT security • Integrate ESG considerations in product approval process • Further strengthen ESG screening of suppliers

Sustainable workplace & culture • Increased focus on initiatives related to mental health Providing a good physical, structural • Continue focus on hiring a diverse workforce, equal pay and increasing the and cultural working environment for share of female leaders our employees and limiting our CO2 • Strengthen compliance awareness among all employees footprint • Continue to optimise energy consumption in building portfolio

Partner with communities • Launch employee volunteer programme Time to Give Ensuring presence and positive impact • Strengthen local community engagement and stakeholder dialogue in national and local communities • Activate local sponsorship strategy

BUSINESS AND STRATEGY

A strong focus on compliance and sustainability governance

Financial services are based on trust and there should be no doubt that complying with the law and adhering to international principles for responsible business conduct is fundamental to Danske Bank. Strengthening our compliance culture and our governance setup is – and will always be – an ongoing priority for us.

Our compliance culture is supported by market standards and internal rules are ensure proper protection of employees our core values, policies, procedures complied with across the Group, Danske who report wrongdoings. The Group and training. The Code of Conduct Bank’s Group Compliance function does not tolerate any form of reprisals Policy, to which all staff must adhere, also provides advice on how to mitigate against whistleblowers. provides employees with guidance on against compliance risks. the subject of prudent behaviour. We All employees are introduced to Danske ensure that awareness of the code Improved whistleblower system and Bank’s whistleblower system as part remains high at all times, which is sup- mandatory training of their annual mandatory e-learning ported by a mandatory annual e-learning A healthy feedback culture should be training. In 2018, the number of course for all employees. a mainstay of Danske Bank. However, whistleblower reports continued to rise when feedback and knowledge sharing in relation to past years. We believe that In 2018 we introduced an Escalation with colleagues and superiors are not this increase can be directly attributed Policy to set the requirements for enough, whistleblowing plays a vital role. to our strong focus on training and on appropriate and timely internal reporting Employees can report their concerns raising awareness. of potentially problematic cases across anonymously if they become aware of Danske Bank Group. This policy ensures incidents of non-compliance or wrong- Sustainability governance that such cases are reported to the doing, such as money laundering, fraud, The Board of Directors receives an Executive Board and reported onwards sexual harassment or other failure to update on our sustainability perfor- to the Board of Directors. comply with applicable regulation, laws mance on an annual basis. The Board or internal standards. approved the new Societal Impact and The anchoring of Group Compliance Sustainability Strategy and policy in May has been further strengthened with the Over the past few years, we have 2018 and October 2018 respectively. introduction of direct reporting lines to strengthened our whistleblower system The policy confirms our commitment to the CEO, and as of November 2018 the by transferring the responsibility for responsible business practices in accor Chief Compliance Officer is a permanent investigating submitted reports to Group dance with internationally recognised member of the Executive Board. This will Compliance. We have improved our pro- sustainability principles for environmen- reinforce the collaboration with the busi- cesses for handling reports, and Group tal protection, human and labour rights, ness and will integrate compliance even Compliance’s correspondence with business ethics and anti-corruption, see further into how we do business. In addi- supervisory authorities forms part of p. 13. tion to ensuring that all applicable laws, reporting to the Board of Directors. We

Business Integrity Committee

Board of Directors Decision-making

Executive Board

Business Integrity Committee Implementation

Business units and Group functions Corporate Responsibility 2018 15

Materiality assessment 2018

Financial stability & growth Governance

Very important Very Anti-money laundering Responsible tax IT security Anti-corruption Data protection ESG transparency

Importance to stakeholders to Importance Responsible products & fair advice Climate change preparedness ESG in investments Financial conﬁdence ESG in lending Customer Access to ﬁnancial services fraud prevention

Diversity & inclusion Supporting SMEs, entrepreneurs and start-ups

Training & development of employees Community support Responsible procurement Employee health and well-being

Executive remuneration

Reducing own environmental footprint Important Importance to business

Important Very important

Since 2014, our Business Integrity ety, we annually assess the materiality Committee has developed and overseen of environmental, social and govern- the implementation of our strategies ance (ESG) related topics. This report and policies related to sustainability. Our provides details of our performance and Interim CEO, Jesper Nielsen, chairs the mitigation of identified risks. The mate- Business Integrity Committee, which riality assessment is based on infor- consists of the Executive Board, the mation gathered from our most recent CEO of Danica and the Head of Societal customer and employee surveys, from Impact and Sustainability. The Board workshops with key internal stakehold- convened five times in 2018 to discuss, ers, as well as from ESG rating agency among other things, strategic KPIs, sec- surveys, which we use as a proxy for tor exclusions as part of our sustainable investor importance. finance activities, as well as the annual materiality assessment. When we conducted the assessment Relevant policies in October 2018, climate change Group policies of specific relevance In addition to coordinating the imple- preparedness was introduced as a new to our corporate responsibility mentation of decisions made by the topic. The assessment also showed include: Business Integrity Committee, our Soci- that topics such as AML and ESG in etal Impact and Sustainability function investments and lending activities have • Anti-Money Laundering (AML), also tracks progress on the strategy and increased in perceived importance – for Counter-Terrorist Financing (CTF) is responsible for our annual corporate us and for our stakeholders. Many of the and Sanctions Policy responsibility reporting. topics have a human-rights dimension, • Code of Conduct Policy and all topics in the matrix are reflected • Compliance Policy Assessing material ESG topics in this report. • Conflict of Interest Policy Our Societal Impact and Sustainability • Credit Policy Strategy and associated policies and In 2019, we will develop our materiality • Diversity and Inclusion Policy procedures address key sustainability assessment by aligning the classifica- • Escalation Policy risks and impacts across our business. tions further with our risk framework, • Remuneration Policy To guide our reporting and help identify and we will engage with additional inter- • Security Policy issues that represent significant risks or nal and external stakeholders to help us • Societal Impact & Sustainability opportunities for our business and soci- better understand their expectations. Policy • Stakeholder Policy • Supplier Code of Conduct More insights • Sustainable Investment Policy Further information on executive renumeration and how we govern our business and manage risks can • Tax Policy be found in our Corporate Governance Report 2018 and in our Risk Management Report 2018. • Whistleblower Policy STRATEGIC THEMES

Building financial confidence in a cashless society

Children’s understanding of the value of money has changed fundamentally with the digitalisation of the financial infrastructure. This poses a societal challenge, and we consider it as part of our role to help enhance the next generation’s financial confidence and ability to navigate in a cashless society.

Since 2007, we have been focussing on talisation of the financial infrastructure, bility Strategy, and this work is part of the core of financial literacy by bringing children are exposed to a world where our strategic focus on UN Sustainable financial teaching into schools and by they engage with money not as cash or Development Goal (SDG) 4 concerning creating new platforms where children coins, but as swipes and taps. Money quality education. can learn about finances. With the digi- has become seamless and intangible, and a Danske Bank survey from June Our on-line universes 2018 confirms that 70% of Danish In 2018, we closed some of our finan- parents believe digital money makes it cial literacy online universes. The former harder for children to grasp how much Control your money website will be money they spend. replaced by a free learning universe to be launched in 2019. The new universe We believe that developing financial will be an educational website that confidence will help children to develop teachers can use to teach pupils aged a sense of financial rights and wrongs to 10 to 15 about personal finances, the guide them through a challenging world sharing economy and digital security. of money. We will continue to develop Our popular Moneyville game, which tools and educational programmes that since its launch in 2008 has had help both parents and teachers build approximately 8 million users, is being financial confidence and good financial updated. In Moneyville, children aged behaviour in the next generation. This 5 to 9 can play their way to a better ambition is in line with our new strategic understanding of how money is earned, theme Financial confidence & security how to prioritise spending, and the Digital pocket money in our Societal Impact and Sustaina- importance of saving. Parents can use our Pocket Money solution as a starting point for conversations about money with their children. Pocket Money consists of an app, a pocket money card for children aged 8 to 14, and a fea- Our educational programmes for schools ture in our Mobile Banking app for parents. The solution, which has had 24,650 users SMART Money in Denmark since its launch in 2017, is available in Our programme where pupils aged 13 to 15 can receive a visit from a Danske Bank financial Denmark, Norway, Sweden and Finland. adviser to discuss financial assets and pitfalls and learn how to protect themselves against Our national websites also offer inspiration cybercrime. and advice on pocket money. Launch: 2015 Partners: Danish Association of Teachers of Mathematics Outreach: 2,943 pupils participated in 2018

Money Week in Denmark A programme where pupils aged 13 to 15 can attend a guest lecture at their school about digital security, budgeting and personal finances given by a financial adviser from Danske Bank or another Danish financial institution. Launch: 2014 Partners: Finance Denmark and the Danish Association of Teachers of Mathematics SDG 4 is about ensuring inclusive and Outreach: 327 classes and 7,728 pupils participated in 2018 equitable quality education and promoting lifelong learning opportunities for all. We measure our contribution to SDG SMART in Northern Ireland 4 by the number of children and young peo- Our programme delivered in the classroom by Danske Bank Youth Ambassadors. Post-primary ple in our markets we have helped improve school pupils learn about budgeting and saving, credit and debit, buying and renting property, their financial skills. and entrepreneurship. Primary school children are introduced to money through interactive In 2018, more than 16,269 children activities. and young people participated in our Launch: 2015 educational programmes – a figure that Outreach: In 2018, 40 schools and 5,455 pupils participated exceeds our 2018 target of 12,500. Corporate Responsibility 2018 17

Accessible finance for everyone

A cashless society with digitalised financial services increases the risk of excluding vulnerable groups from making financial transactions. It is part of our responsibility to ensure that our services are accessible and easy to use for all customer groups.

According to the European Commis- Cash payment in Denmark – share of total expenditure 2009-2018 sion’s 2018 digital index, the Nordic countries are the best-performing % countries when it comes to digitisation. 30 This is a trend that is reflected in our customers’ adoption of mobile and digi- 25 tal banking solutions as their main point 20 of contact with us. From 2015 to 2018, we saw an increase in the number of 15 self-service eBanking transactions from 17.7 million to 50 million, and self-ser- 10 vice mobile and tablet banking transactions rose from 10.8 million to 51 5 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 million. In the same period, the number of ATM transactions decreased from 1824 2534 3564 65+ 43 million to 32 million. However, some customer groups are less comforta- The number of cash payments is in decline, and we are seeing significant decreases in both the amount of ble with digitalisation or have special cash withdrawn and the frequency of withdrawals. This is due to the increase in card payments and the use requirements, so we offer customised of services such as MobilePay, which makes it easy to make person-to-person payments without using cash. Today, cash payment represents only 8% of total expenditure in Denmark compared to 2009 where the share solutions to accommodate the needs of was 15%. The most dramatic drop in cash payment is seen among young people under the age of 25, although these customers. the use of cash by seniors has also decreased and is today in line with other age groups.

Our financial services for people with special requirements

Cash card Ordinary mail and mail payment MobilePay for the homeless The Danske Bank cash card is aimed at Customers who have difficulties with Homeless vendors of the Hus Forbi customers in Denmark who are unable digital communication can choose cor- magazine on the streets of Denmark to visit branches or ATMs, have difficul- respondence by post at no extra cost. can receive payments via MobilePay ty remembering a PIN, or need some- For a minor fee, these customers can and have this money transferred to a one to make payments on their behalf. also send us their invoices and we will cash card that is not linked to a personal The card, which can be used at ATMs take care of payment. bank account. In 2018, MobilePay was and shops that accept Mastercard, has used by 396 vendors. an easy-to-memorise PIN, a maximum balance of DKK 7,500 and no overdraft facility. Cash deposits Cash can be deposited at selected Braille services ATMs in Denmark, Norway, Finland and To help visually impaired customers, Northern Ireland. In 2018, we estab- many ATMs in Denmark, Sweden and Easy Banking lished 31 new deposit ATMs, bringing Northern Ireland have braille keyboards In Denmark, customers who do not the total to 327. and synthetic speech. In Denmark, we feel confident using digital banking can also offer monthly account statements use our Easy Banking solution, which in braille and home deliveries of cash is a simplified version of our eBanking once a month. solution. The system has only three Step-by-step meetings functions: account overview, bill pay- At Step-by-step meetings held at our ment and transfers – including transfers local branches, senior customers in to a cash card. Denmark can acquire basic knowledge about our digital services and can develop the skills they need to use these services. STRATEGIC THEMES

Partnering up to support impact start-ups

Helping companies scale their business lies at the core of our business. Using our experience to enable purpose-driven start-ups increase their impact on society is a natural extension of our ambition to support the UN Sustainable Development Goals.

Since 2015, we have been engaging The +impact hub is the first step in a Development Goals (SDGs) and that with partners in a collaborative effort wider initiative seeking to help pur- have the potential to scale and acceler- to help start-ups grow their businesses. pose-driven start-ups increase their ate sustainability – also from a business Experience from our digital platform, impact on society in line with our new perspective. The Hub, show that focusing on the strategic theme Innovation & Entre- ecosystem for entrepreneurs is worth- preneurship in our Societal Impact and The Nordic impact start-up scene is while, and in May 2018, we launched Sustainability Strategy. The +impact hub growing fast and many companies are a new Nordic digital hub named focuses on companies that address already making a difference. Our hope +impact. one or more of the UN Sustainable is that the Nordic countries can be-

Key challenges for impact start-ups Our experiences with The Hub points to Access to recruitment and access emerging markets to capital and best practice tools as the main 35% scalability challenges for growth companies. Hard to ﬁnd However, we have business model Need for funding identified a number of 92% key challenges specific 70% Speciﬁc to purpose-driven start- business- ups. Besides funding, related these start-ups not only issues need access to mentors and experts, but they also need an ecosystem of interacting busi- Need for awareness Access to mentors nesses. Motivated by SDG 8 is about promoting sustained, & ecosystem & experts the ambitions to solve inclusive and sustainable economic growth, 87% 87% a problem in society full and productive employment and decent rather than by purely work for all. commercial goals, some We measure our contribution to SDG 8 by Lack of also struggle to find the the number of jobs posted on The Hub and business skills right way of turning their the number of applications. 57% ideas into a sustainable With 171,379 applications for 13,194 business. jobs posted, we exceeded our 2018 targets of 80,000 applications for 9,000 jobs. Corporate Responsibility 2018 19

come a centre for entrepreneurs who Our initiatives to help start-ups to scale drive sustainable development, and together with likeminded partners, we The Hub can help facilitate that development. Our free, digital community platform tailored to the needs of growth start-ups. As well as Our work to support start-ups grow receiving assistance with their recruitment of talent and connecting with investors, these their business and contribute to start-ups also gain access to best-practice tools such as employment contract and pitch deck. sustainable development in the Nordic Launch: Denmark in 2015, Norway, Sweden and Finland in 2016, and the UK in 2018 countries and beyond is part of our stra- Partners: Rainmaking in Denmark, Nordic Impact in Norway, SingularityU in Sweden, tegic focus on SDG 8 on decent work Maria 0-1 in Finland and Catalyst Inch in UK and economic growth. Outreach: 5,000+ start-ups, 12,000+ jobs, 120,000+ job applications since 2015

+impact accelerator programme Building on the +impact hub, we Danske Bank Growth Our Centre of Excellence for start-ups and growth companies with advisers specialised in launched a 10-week free-of-charge understanding the start-ups and their business models and in guiding the young growth accelerator pilot programme in October companies on their journey. 2018 together with the Norwegian Launch: September 2016 company Katapult. Nine early-stage Partners: Accountants, lawyers, co-working spaces and investors Nordic start-ups whose products are Outreach: 50+ advisers across our business and market areas designed to help solve environmental or social issues were handpicked for the programme. All nine start-ups were +impact offered a temporary base at SingularityU Our free, cross-Nordic digital platform, where purpose-driven start-ups can share their chal- in Copenhagen, and through mentoring, lenges with and receive advice from expert volunteers from organisations such as Boston Consulting Group, Implement, E&Y, PA Consulting, IBM and Danske Bank. training and networking, the programme Launch: May 2018 helped them fine-tune their business Partners: Strategic partnership with Rainmaking in Denmark models and prepare them for the Outreach: 40+ Nordic start-ups in 2018 stakeholders at the next stages of growth. In 2019, we will evaluate the pilot and decide how best to build upon what we learned from the programme.

Supporting female entrepreneurship In 2018, we continued a number of In Norway, about 1,000 women partici- China. More than 100 women attended activities to support female entrepre- pated at two SHE FUTURE Conferences, the conference. neurship. Although the Nordic societies where the focus was on diversity, tech are focusing on gender equality, we still and female potential. We sponsored In collaboration with nHack, we also have a long way to go when it comes to and co-organised both conferences and gave presentations and moderated unleashing the hidden potential and to held a pitching contest, sourced through investor panels in Shanghai where the providing the same opportunities to all. The Hub, and awarded a Danske Bank focus was on diversity, tech and female Sillicon Valley Prize. potential. In Sweden, we sponsored and co-organised the Femtech Hackathon in partner- In Denmark, we arranged and hosted a Lastly, we hosted three informal Female ship with Startup Weekend SingularityU similar conference, Unleash Female Po- Founder breakfast events in Denmark, and Norrsken. A total of 50 women tential event, in partnership with DIF and at which women who have founded their participated and had the opportunity to PwC. Here, the winner of the pitching own companies shared their stories network, team up and create business contest received a Danske China and with the 80 participants. ideas. nHack prize that included a study trip to

To articulate our focus, profile our activities and receive feedback, we have been active at a number of events for start-ups across the Nordic countries throughout 2018. These events included: in Norway, KatapultFuture Fest, SHE conference and Oslo Innovation Week; in Denmark, TechBBQ, Tech Festival and Global Entreprenuership Week; in Sweden, SingularityUNordic Summit; and in Finland, Slush and GreenTechChallenge Day. CORE BUSINESS: CONTRIBUTING TO SOCIETY

Creating long-term value

Dialogue with our key stakeholders to enhance transparency, long-term value creation and local community engagement has been a main focus over the course of the strategy period 2015-18. As a natural consequence of the Estonia case, we focused much of our stakeholder dialogue in 2018 on explaining how this could happen and on communicating what we are doing to combat financial crime.

Banks play an important role in society Danske Bank is Denmark’s largest to support financial stability by being a as providers of the financial infrastruc- financial services provider, one of the solid, balanced and predictable bank. ture, and they have a large impact on largest financial institutions in the society through the way capital is de- Nordic region and one of Denmark’s Overall, Danske Bank’s financial value ployed by lending money to private indi- systemically important financial institu- creation since 2015 has been quite viduals and businesses and by investing tions. We fully recognise the responsi- stable. The main variations have been capital on behalf of customers. bilities this entails, and it is our ambition seen in asset management and shareholder distribution, where there have been some significant increases over Value creation the period.

In 2017, we exceeded our target of achieving at least 12.5% return on shareholders’ equity (ROE) by 2018 at

Banking customers Shareholders DKK 1,769 billion DKK 1,609 billion (2015) DKK 17.1 billion DKK 10.5 billion (2015) Loans issued to banking customers in 2018. Distributed in 2018 to our Employees approx. 270,000 shareholders, Loans to Banking DK including share buy-backs totalling customers represent 43% of all DKK 7.8 billion. 51% of our DKK 14.3 billion loans, and loans to Banking Nordic shareholders are based in Denmark, DKK 13.9 billion (2015) customers account for 29%. 12% in the UK, 15% in the rest of Europe, 17% in the US and Canada Salaries, bonuses and social and 5% in the rest of the world. security costs paid in 2018 to our 20,683 full-time employees.

At the end of 2018, gender representation among our Asset management employees was split evenly with 50% women and 50% men. DKK 1,575 billion Suppliers DKK 714 billion (2015) Assets under management consists DKK 8.9 billion of our conventional life insurance DKK 8.8 billion (2015) business, asset management and Tax authorities assets under advice (the investment Payments for products and decision is taken by the customer) services delivered by our from personal and business 11,095 suppliers in 2018. DKK 4.7 billion customers. DKK 4.6 billion (2015) Most of our suppliers are in the premises and facilities management, Tax on profit for 2018. IT, and professional services fields. Corporate Responsibility 2018 21

the latest. A new target based on rela- Economic value in society is also creat- cooperative relationship with the tax tive performance has been introduced. ed through our payment of salaries and authorities. It also details our commit- Our long-term ambition is to rank among social security costs to our employees, ment to disclosing our tax payments in the top three of our major Nordic peers as well as through procurement and tax accordance with national and interna- in terms of ROE. In 2018, we reached a payments. According to a ranking list tional requirements and in line with good ROE of 9,8%, and we are awaiting the presented by the Danish tax agency in practice among our peers. If it comes to performance of our peers to evaluate December 2018, Danske Bank was the our attention that any of our customers our 2018 ranking. second largest payer of corporate tax or business partners are engaging in tax among all Danish companies in 2017. fraud or tax evasion, we will cooperate The decrease in ROE and net profit from with the relevant authorities in accord- 2017 was driven mainly by difficult con- Tax transparency ance with applicable rules and regula- ditions on the financial markets, which Tax compliance and the risk of tax fraud tions. had a negative impact on trading as well and tax evasion are critical issues, and as fee income. The results also reflect our stance on these issues is clearly To be able to identify risk indicators the donation of the estimated gross stated in our Tax Policy. of tax evasion, the main principles of income from the non-resident portfolio the policy and an understanding of the in Estonia from 2007-2015 of DKK 1.5 Published in 2017, the policy sets out global tax framework are included in our billion. our commitment to being transparent mandatory employee training related to and to seeking a proactive, open and anti-money laundering (AML).

CONTRIBUTING TO SOCIETY

Policy commitment “We conduct our business in a responsible and transparent We engage with all our stakeholders through collaboration and manner and support financial stability by being solid, balanced dialogue and we make our expertise available for the benefit and predictable. We are driven by an ambition to create of the societies we are part of. We engage employees in local value for all our stakeholders and use our expertise to drive volunteering activities and events, and we are involved in sustainable progress and make a positive impact in the solving relevant societal challenges at a national level.” societies we are a part of. Societal Impact & Sustainability Policy, October 2018

Ambitions and strategy 2015-18 • Create value for all our stakeholders • Contribute to financial stability • Contribute to economic growth • Transparent tax payments • Transparency, contributing to communities and stakeholder engagement

Key actions 2018 • Continued to contribute to economic growth and financial stability through our services and innovation of the financial infrastructure • Trained all employees in identifying risk indicators of tax evasion as part of mandatory e-learning in AML • Held customer and investor meetings where we explained and discussed the conclusions of the Estonia investigations • Published a new study on Danes’ financial confidence, including a Nordic outlook • Launched set of guidelines for employee voluntary work to be rolled out in 2019

More insights More details on our financial performance, tax payments and value distribution can be found in our Annual Report 2018. CORE BUSINESS: CONTRIBUTING TO SOCIETY

Stakeholder dialogue

At Danske Bank, we welcome dialogue Danish and European parliaments. At political festivals that take place across with all our stakeholders – no mat- the hearings, he answered questions the Nordic countries: Folkemødet in ter what their views. In recent years, regarding suspicious transactions at our Denmark, Almedalsveckan in Sweden, we have increased our stakeholder Estonian branch. These hearings were Suomi Areena in Finland, and Aren- engagement, the general principles and not part of any legal process. dalsuka in Norway. Danske Bank hosted guidelines for which are outlined in our events and engaged in debates with pol- publicly available Stakeholder Policy. We fully understand that politicians iticians, opinion makers and customers in both Denmark and at EU level are on the topic of corporate responsibility. In 2018, the overriding issue has natu- critical of Danske Bank in connection Naturally, the Estonia case was high on rally been the Estonia case. In addition with the Estonia case, and it is only the agenda, especially in Denmark. to having close talks and meetings natural that the topic of money laun- about the case with many personal dering in general should attract their Seminars on growth and financing and business customers, we have also attention. We are determined to be as In 2018, we continued to hold quar- been engaged in an ongoing dialogue open as possible and will continue make terly seminars to support and facilitate with various authorities, politicians and ourselves available for questions and important debates on growth and finan other stakeholders. Our website has a dialogue concerning the case. cing. To ensure a broad input of perspec- specific section where we publish the tives, a wide range of stakeholders most recent developments relating to Dialogue with customers and were invited to attend these seminars, the investigations into Danske Bank’s investors including politicians, experts, interest Estonian branch. After the publication of the results from organisations and think tanks. the Estonia investigation, we invited We have a huge task ahead of us in retail, commercial and institutional cust- The first of these four seminars focused restoring the trust of our customers and omers to town hall meetings. At these on the issues that had attracted the society at large, and we will continue to meetings, of which more than 150 were greatest interest at the 2017 semi- maintain an open dialogue with all of our held in our branches across Denmark, nars, namely how to prevent promising stakeholders in the months and years we explained and discussed the conclu- Danish growth companies from being to come. Below are some notable exam- sions of the Estonia investigations and sold to foreign investors with the con- ples of how we engaged with stakehold- answered questions about the case and sequence that jobs, innovation and tax ers in 2018. about the work we are doing to combat revenue disappear abroad. The second money laundering. We will encourage seminar focused on the UN Sustainable Public hearings into the Estonia case further intensive dialogue over the Development Goals and the challenges In November 2018, Danske Bank’s coming months, and we will continue to facing impact start-ups; also addressed Interim CEO, Jesper Nielsen, attended meet with customers in all our markets here were the questions of how these two public hearings about financial to discuss the Estonia case as long as challenges can be solved and what role crime and money laundering in the the need exists. the Nordic countries should play. The third seminar addressed alternative As a consequence of the Estonian case, investment, and the fourth seminar interest from investors and sharehold- focused on sustainable finance, green ers on issues related to our governance bonds and responsible investments. and anti-money laundering measures has increased, leading to several Annual report on financial confidence meetings and calls with our compliance In order to put financial confidence on department and/or Executive Board the public agenda and share our knowl- members. The extraordinary general edge of how people actually feel about Our engagement principles meeting held on 7 December 2018, their personal finances and financial • We want to share our knowledge where a new chairman and a member prospects, we publish a yearly report on and expertise with our stakehold- of the Board of Directors were elected, the financial confidence of citizens living ers was convened at the request of our in Denmark. The 2018 report included • We act and operate with trans- main shareholder A.P. Møller Holding a survey on the financial confidence parency and integrity A/S. across the Nordic countries and showed • We want to create value for all that the Nordic citizens in general have our stakeholders and to form Attending political festivals a high degree of financial confidence long-term partnerships of mutual As part of our common engagement due to factors such as high incomes and value practices, we attended the annual low unemployment. • We make ourselves available for dialogue and respond to input and feedback in a timely and agile manner • We believe in collaboration and More insights base our engagement on genuine Visit danskebank.dk/tryghed to learn more about our study on financial confidence dialogue – we engage, listen and among citizens resident in Denmark (in Danish). act Find more details about the Estonia case at danskebank.com/investigations. Corporate Responsibility 2018 23

Employee volunteering and charity

For many years, we have encouraged sation Mitt Livs Chans, which helps underprivileged children and orphans in our employees to volunteer and share individuals with a foreign background to India. The programme provides housing, their time and expertise for the benefit enter the Swedish labour market. medical attention and special training of local communities. We partner with Danske Bank employees have volun- to cover any educational gaps, and the a number of organisations to provide teered as mentors for academics who children stay in the programme until volunteering opportunities in the coun- have recently arrived in the country. they complete their secondary educa- tries where we operate. tion. In 2018, 32 boys and 29 girls Debt counselling in Denmark were enrolled in the programme, and Guidelines for employee volunteering In 2018, four financial advisers provided 51 employees spent a total of 237 Building on our existing activities, we debt counselling at debt counselling hours teaching the children English, have in 2018 developed new guide- centres established across the country. Maths and Hindi. lines for employee volunteering. The These centres were established by guidelines, which will be fully rolled out Finance Denmark in cooperation with Supporting students in Latvia in 2019, are aligned with the three stra- other organisations such as the Danish In Latvia, we support gifted and under- tegic themes in our privileged students by new Societal Impact granting university study and Sustainability scholarships in collabora- Strategy and include tion with the Vītols Fund. a Group-wide Time In the academic year to Give programme 2017/18, we supported allowing all employees 13 students, who each to participate in volun- received a monthly contri- teer activities for one bution of EUR 150. day per year paid by the Group. Below, you Vilnius Marathon can read about some In 2018, we were of our local activities again the main sponsor from 2018. of the Danske Bank Vilnius Marathon. The Time to Give in event, which is the Northern Ireland largest sporting event in In 2018, 305 em- Lithuania, attracts more ployees in Northern than 17,000 runners Ireland volunteered from over 50 countries 2,100 hours through A total of DKK 408,420 was donated in our annually recurring Christmas and promotes a healthy their local Danske Donation in Denmark, Finland, Norway Sweden and Northern Ireland. In lifestyle for locals. Our Time to Give pro- Denmark, the donation was given to Danske Hospitalsklovne. employees prepared gramme. The employ- for the marathon in the ees participated in community activities YMCA’s Social Work. The advisers offer Endomondo challenge, tracking their through the organisations Action Mental impartial, confidential and free advice to sports activity with the app. In total, Health, Business in the Community, enable citizens to manage their personal 4 million calories were burned and Keep Northern Ireland Beautiful, Ulster finances and thereby improve their converted into 67,000 food portions, Wildlife, and Young Enterprise. Together quality of life. which were donated to vulnerable social with our customers, we also raised over groups through the Maisto Bankas £60,000 to fund Healthy Me, an Action Charity work in Norway project. Mental Health programme for 8 to 11 About 200 employees participated year olds. in our Norwegian initiative, Danske Christmas donations Charity, in which employees are given a The Christmas Donation is an annually Helping youngsters in Finland paid day off to do corporate volunteering recurring charity in Denmark, Finland, manage finances work at an NGO. The majority participat- Norway, Sweden and Northern Ireland. In Finland, 43 employees volunteered ed in activities at the Church Mission In 2018, DKK 408,420 was donated to for the Financial knowledge and skills and Blue Cross, which help people the Danske Hospitalsklovne, the Finnish programme aimed at helping young harmed by alcohol and drugs, as well Hyvä Joulumieli campaign, the Norwe- people who are not in employment, as at the Sunnaas Foundation, which is gian Blue Cross Barnas Stasjon, the education or training to manage their a hospital for spinal cord injury that we Swedish Musikhjälpen Sveriges radio, personal finances. The programme is a also support financially. and the Air Ambulance, Almost Home collaboration between the three largest Animal Rescue and the Children’s banks in Finland and the Finnish Minis- Little Hearts Foundation in India Hospice in Northern Ireland. In addition, try of Education and Culture. In collaboration with the NGO Need the Danske Bank Fund made 26 dona- Base India, we founded the Danske tions totalling DKK 1,289,000 million. Mentoring immigrants in Sweden Little Hearts Foundation in 2016 to sup- We cooperate with the Swedish organi port the rehabilitation and education of CORE BUSINESS: RESPONSIBLE CUSTOMER RELATIONSHIPS

Customer engagement

Building long-term relationships with our customers is fundamental for us. Since 2015 we have been working to provide sustainable finance solutions and strengthen our compliance practices. In 2018, we continued to develop our defences against financial crime and fraud to safeguard our customers and Danske Bank.

Delivering a good customer experience satisfaction for personal and business and advice, our customer advisers do and providing sound solutions to our customers especially in Denmark, but not have sales-related targets. Commu- more than three million customers has also in Norway and Sweden. For Private nications, regardless of the channel and never been more important. Negative Wealth Management, we have seen the customer, should be open, truthful sentiments aroused by the Estonia a drop in satisfaction across markets, and unambiguous. If customers are not case have resulted in some custom- and in our business unit Corporates & satisfied with our services, they can ers choosing to leave Danske Bank, Institutions (C&I) the satisfaction results use our customer complaints functions particularly in Denmark. This is a matter have been mixed. C&I still ranks number and we use the feedback to improve the that we take very seriously, and we have one in customer satisfaction across the customer experience. engaged with our customers about the Nordic region, while perception of the circumstances and will continue to do Danske Bank brand has declined across Anti-corruption and bribery so, see p. 22. all markets among corporate clients. We express our zero-tolerance stance on corruption and bribery in our Code Customer satisfaction We recognise the impact the Estonia of Conduct Policy. In practice we are The Estonia case has had a negative ef- case has had on customer loyalty and working to mitigate the risk of bribery fect on our image, which also affects our satisfaction, and we acknowledge that and corruption through our compliance customer satisfaction. In the second half there is no quick fix to the situation. Our infrastructure, which includes controls, of 2018, we saw a decline in customer customer satisfaction target of being centralisation of processes, training and ranked among the top two in all our core escalation procedures. markets will remain one of our param- eters for measuring progress over the We operate according to three princi- coming years. Delivering the best cus- ples: not to accept or solicit bribes in any Conduct standards tomer experience at all points of contact form; not to make or accept facilitation Our Code of Conduct Policy will continue to be a key priority for us. payments; and not to give or receive communicates the behaviour and gifts above a token value, except for gifts conduct expected by our emplo- Know your customer given or received in specific situations. yees in their daily activities and we Central to our customer relationships We keep a register of gifts and hospi have a mandatory annual e-learning and our anti-money laundering efforts tality, and the principles are described Code of Conduct course covering are the regulatory Know Your Custom- in more detail in directives. To avoid the following areas: er (KYC) measures. In practice, KYC conflicts of interest or accusations means that our customers must verify of bribery and corruption, employees • Conduct in customer interactions their identity and that we may have to should consult their manager or Group • Customer complaints ask them to answer detailed questions Compliance if they are in doubt. Group • Personal conduct about certain transactions. This is to Compliance also operates as a sound- • Anti-money laundering, ensure that we know who they are and ing board for employees if employees counter-terrorist financing and how they expect to use our products have any question relating to gifts and financial sanctions and services. In 2018, we initiated a hospitality. • Anti-corruption and bribery common Nordic KYC utility with other • Gifts and hospitality Nordic banks to establish best practice, In 2018, we initiated work on develop- • Handling conflicts of interest see p. 26. We will ensure continuous fo- ing criteria for sponsorship agreements. • Inheritance from customers cus on our risk and compliance culture These will be implemented in 2019, • Data protection and confiden to embed it deeper into our way of doing when we also will publish a new sepa- tiality business. rate policy on anti-corruption. • Insider information and market manipulation Customer advising Data protection • Whistleblowing To ensure that our customer advisers The EU General Data Protection Regu • Remuneration act in the best interests of our custom- lation (GDPR) requirements entered • Human rights ers and offer the most suitable products into force in May 2018, and we made Corporate Responsibility 2018 25

substantial investments to prepare tomers, and we will continue to assist an example, we created a new area in the Group and our IT systems for the a smooth implementation of the data our Mobile Bank app called MyProfile introduction. We appreciate that many protection principles. giving customers easy access to their of the processes and solutions launched own data. to protect data and individual privacy are Transparency should be at the core of still new to our employees and cus- a good GDPR customer experience. As

RESPONSIBLE CUSTOMER RELATIONSHIPS

Policy commitment and long-term performance. We integrate ESG matters into “We act with integrity to ensure the trust of our customers the investment process as factors alongside financial factors, by ensuring compliance across all business activities, by and we are active owners who influence companies directly preventing financial crime and by eliminating all forms through dialogue, voting and collaboration with peers.” of corruption. We build long-term responsible customer relationships by providing responsible and sustainable advice “We ensure that loans and credit facilities are granted on the across customer segments and through easy and secure basis of a professional credit assessment, which includes access to financial products and services. We ensure that ensuring that our customers understand the implications of customer data is kept safe and secure with respect to data taking out loans. We do not conduct business with customers privacy.” whom we believe disregard or deliberately violate UN-based principles on environmental protection, human rights, labour “When our customers entrust us with their assets and rights and anti-corruption.” savings, it is our duty to serve their interests by providing Societal Impact & Sustainability Policy, October 2018 investment solutions with the goal of delivering competitive

Ambitions and strategy 2015-18 • Provide responsible customer advice • Prevent financial exclusion by offering access to financial products and services • Improve the customer experience • Offer responsible investment opportunities for customers • Integrate responsible lending principles into credit practices • Build customer trust through reliable IT security

Customer satisfaction target Performance 2018 Corporate & Institutions: Ranked among the top two in all Banking DK: • Number 1 overall in the Nordics. our core markets • Personal customers: Below target On target in 3 of 4 countries • Business customers: Below target Wealth Management: Banking Nordic: • Private Wealth Management: • Personal customers: Below target in all countries On target in 2 of 3 countries Asset Management: • Corporate business: Number 1 overall in the Nordics. On target in 2 of 3 countries On target in 2 out of 4 countries

Key actions 2018 • Approved a new sustainable investment strategy that promotes the integration of environmental, social and governance (ESG) into our investment process • Updated our sustainable lending strategy that further integrates ESG into our KYC and lending processes • New position statement on Human Rights and exclusions on coal, tar sands and certain forms of nuclear weapons • Launched impact investment funds on climate and water • Supported the recommendations of the Task Force on Climate-related Financial Disclosures

• Strengthened governance for our whistleblower system, including launch of a new Escalation Policy • Continued consolidation of anti-money laundering services into one centre of expertise, including new IT systems and automation • Initiated common Nordic KYC utility together with other Nordic banks • Dedicated additional resources to the collaboration within and outside the financial sector to combat fraud, including the Nordic Financial CERT • Substantial investment to ensure that our organisation and IT systems are GDPR compliant

More insights More information on our customer satisfaction target and performance can be found in our Annual Report 2018. CORE BUSINESS: RESPONSIBLE CUSTOMER RELATIONSHIPS

Fighting financial crime

Money laundering and other financial professionals in areas such as ongoing crime have major adverse implications due diligence, transaction screening for societies across the world. Being a and customer screening. Handling member of the global financial commu- repetitive AML execution activities and nity, Danske Bank conducts business in minimising the possibility of human several jurisdictions around the world, errors, the robots allow AML profes- and regardless of jurisdiction, we are sionals to focus more on investigative committed to developing and main- work where more analysis and decision taining high standards with regard to making is needed to ensure regulatory anti-money laundering (AML), coun- compliance. ter-terrorist financing (CTF) and financial sanctions. Mandatory AML training Our compliance knowledge and culture KR Towards the end of 2018, we initiated continued to be strengthened through- a comprehensive review of our AML out 2018 by means of management programme in order to see what could focus and extensive annual mandatory be done to further improve our AML training for all employees. performance. In addition to uncovering AML 2018 figures opportunities to strengthen internal In 2017, we established an AML Train- • Resources: More than 1,200 governance and organisational per- ing Academy, and in 2018 we devel- full-time employees worked on formance, the programme review also oped a continuous AML/CTF training combating financial crime, includ- supported the acceleration of our IT methodology. The ongoing training ing 1,000 AML professionals in deliveries. Embedding this programme sessions focus on providing sufficient AML CSD. will be an ongoing process throughout AML/CTF knowledge to relevant em- the coming year. In many areas, we can ployees. These sessions train employ- • Training: Every employee under- still improve our ability and step up our ees to recognise activities that may be went mandatory AML training efforts, and we will never be in a position related to money laundering or terrorist – 63 different AML training cur- where there is nothing more that can be financing and ensure they are educated riculums were offered and total done. and aware of how to proceed in such of 46,000 hours were invested situations. The primary objective of the in training by employees across In 2018, a new head of Group Com- training is to protect Danske Bank from the Group. pliance joined the Executive Board, possible financial crime. and risk management and compliance • Customer screening: About 15 became an integral part of performance Dialogue and collaboration million customers (Danske Bank agreements for all members of the Exec- Criminals and criminal networks are Group, including Danica Pension utive Board and senior managers. continuously testing our controls, and and MobilePay) were screened their methods are becoming more and weekly against Politically Centre of AML expertise more sophisticated. Working closely Exposed Persons (PEPs) and In order to achieve better AML service with authorities and the financial sector sanctions lists. quality and efficiency across the Group, to establish the most effective possible the global AML Customer Service Deliv- defence against the criminal networks • Transaction screening: All Dan- ery (AML CSD) unit continued its work will remain a priority in years to come. ske Bank Group’s cross-border of consolidating AML services into one transactions, and some domestic centre of expertise throughout 2018. In view of the Estonia case, we have transactions including Finnish, In parallel, a competency development been highly engaged with our key stake- Estonian, Latvian and Lithuanian and training framework has been built to holders in a number of dialogues and transactions, were screened in support both the intake of new activities through public hearings in the Danish real time against sanctions lists. and the on-boarding of new employees. and European Parliaments, and shared Today, the AML CSD executes the information with the relevant authori- • Warnings: Around 1,35 million majority of AML-related activities across ties, see p. 22. sanction warnings together with Banking DK, Nordics, Wealth Manage- around 240,000 matches on ment, and Corporates & Institutions, In 2018, we initiated a common Nordic politically exposed persons were including our international units and the know your customer (KYC) programme reviewed manually. Baltics. with other Nordic banks to consolidate our KYC processes. This was estab- • Rejections: Around 1,050 trans- New IT systems and automation lished because collecting and validating actions were rejected due to New IT systems and increased automa- publicly available customer data has possible international sanctions tion of work routines, in general terms become a critical component in fighting breaches. as well as specifically in relation to AML financial crime. By pooling our financial controls, are important measures for and compliance resources, we can • Reports: Around 10,000 reports ensuring better surveillance of trans- establish best practice, increase quality, were sent to the authorities actions and customers. In 2018, we ensure efficient services and cooperate regarding suspicious matters. developed eight robots to support AML on preventing financial crime. Corporate Responsibility 2018 27

Protecting our customers against fraud

Online fraud continues to be a challenge to be the most common type of fraud In 2018, we also dedicated additional for individuals and businesses, and and the average retail customer loss resources to the Nordic Financial CERT, we are doing our best to provide our from card fraud was DKK 573 in 2018. where Nordic banks exchange informa- customers with a strong line of defence Payment fraud is on the rise with invest- tion and best practice with a view to against fraud. When fraud does occur, ment scams, romance scams, ID theft, reducing the risk of fraud. we try to secure the best possible CEO fraud and Beneficiary Acccount outcome for our customers, and we Change as the most common fraud In 2017, we contributed to the My Digi- offer guidance on how to report the types. In 2018, the average retail cus- tal Self-Defence app launched by Tænk, fraud to relevant authorities. In addi- tomer loss to payment fraud was DKK the Danish Consumer Council. This app tion to this, we assist law enforcement 9,980 and the average commercial offers specific advice on how to avoid agencies around the world in their work customer loss was DKK 330,172. fraud and what to do if you become a to bring perpetrators of fraud to justice. victim of fraud. The app continues to In 2018, the Danish Police and the Online fraud is particularly challenging attract new users and has approximate- Federal Bureau of Investigation (FBI) in because it is always changing. For this ly 26,000 active users a month. As of the US were among the authorities we reason, we continuously analyse individ- 31 December 2018, the app had been assisted. ual fraud cases and gather intelligence downloaded a total of 100,300 times. so that we can provide a rapid response. Our Keep it safe online platform, Highly advanced systems are needed to which we launched in 2017, helps our detect fraud in real-time, and to mitigate customers to stay safe when they are card fraud we expanded our fraud-de- online, and it also supports our employ- tection infrastructure in 2018 with ees in preventing internal IT issues. In a new real-time adaptive behavioural 2018, the platform had 44,324 unique analytics solution. visitors and was also launched in North- ern Ireland. This new system will be fully implemented in 2019, and we are working on find- Detecting card and payment fraud ing similar solutions to strengthen our Counter-fraud 2018 figures To analyse and detect fraudulent card payment-fraud-prevention infrastructure • Resources: More than 90 and payment transactions, we use further. employees worked to fight real-time fraud-prevention systems and against fraud. we proactively alert our customers to Joint efforts against fraud potential fraud. When possible, we halt Danske Bank is an active participant in • Payment screening: Every fraudulent transactions before funds private and public forums dedicated to month, more than 10 million are moved. During 2018, we continued combatting fraud. In addition to being a payments were screened, more to invest in both people and technolo- member of the steering committee for than 10,000 payments were gy, and the total number of customers the Danish Forum against Economic IT manually verified, and an average impacted by fraud decreased from the Crime, founded by the Danish police, we of 253 fraudulent payments 2017 level. also participate in Europol’s European occurred. Cybercrime Centre, where we are mem- In 2018, around 3,600 of our custom- ber of both the Advisory Group on Finan- • Disputed card transactions: ers were affected by card and payment cial Services and the European Payment Customers on average disputed fraud each month. Card fraud continues Council’s Card Fraud Prevention Forum. 17,417 card transactions every month.

• Replaced cards: 3,242 cards More insights proactively replaced on average Visit danskebank.dk/erhverv/find-hjaelp/keep-it-safe-en to learn more. every month. CORE BUSINESS: RESPONSIBLE CUSTOMER RELATIONSHIPS

Sustainable finance

In a world facing growing challenges ernance, strategy, risk management, Due to the indiscriminate effects and from climate change and social inequal- metrics, as well as into our external disproportionate harm caused by weap- ity, the provision of sustainable finance reporting. An internal working group ons prohibited by international law or is of the utmost importance. This is has been set up and is in the process weapons deemed controversial, Danske underscored by the EU Commission’s of defining a governance structure and Bank has also decided not to grant new adoption of the action plan for sustain- developing an implementation plan. A loans or invest in companies directly in- able finance, which was launched in key element of this is to include TCFD volved in the research and development 2018 to promote a financial system disclosures in our future reporting. or production of such weapons. This that supports a sustainable economy. decision also extends to the production As society moves towards a low-car- of nuclear warheads, activities related Over the past years, we have become bon economy, having a comprehensive to core nuclear missile components increasingly transparent about how we understanding of climate-related risks and involvement in the upgrading or are working to integrate environmental, and opportunities is vital if we want to enhancement of nuclear weapons. social and governance (ESG) criteria continue to support the business needs into our financial services. As part of our of our customers. With this in mind, we Following the implementation of invest- new Societal Impact and Sustainability are engaging in dialogue with experts ment restrictions related to thermal Strategy, we will further scale our efforts and customers to exchange experience coal, tar sands and nuclear weapons, to finance the transition to a net-zero about TCFD tools, climate scenarios and we have published an annual list of com- carbon economy by providing green practical case examples. panies in which we do not invest. finance solutions. Sector position statements Green bonds on the rise Supporting TCFD recommendations Since 2016, we have published position Sustainable finance includes the issu- In September 2018, Danske Bank statements to serve as input to our ance of green bonds – an area that is signed up to supporting the recommen- credit and investment procedures for receiving increasing interest from Nor- dations of the Task Force on Climate-re- different sectors. The statements are dic companies. Green bonds are debt lated Financial Disclosures (TCFD). This also important for us when we engage instruments whose proceeds are most cements our commitment to integrating with our stakeholders on sustainability often separated from general corpo- climate considerations into our gov- issues, especially in relation to ESG rate purposes and used exclusively for ratings that are becoming increasingly projects that have a positive impact on important among our customers across the environment. Sweden has dominat- the Nordic countries. ed the green bond market since 2014, but since 2017 the Danish market has In 2018, we updated these statements picked up with more companies seeing and developed a position statement the potential that issuing green bonds on human rights to supplement our offers for attracting new investors. cross-sectors and sector-specific statements on agriculture, arms and defence, As a partner with the Climate Bond Ini- climate change, forestry, fossil fuels and tiative, not only did we continue to help mining and metals. In the review pro- companies issue green bonds in 2018, cess, the Executive Board decided that we also acted as a joint lead manager Sustainable investment insights Danske Bank should no longer invest for Ireland’s inaugural 12-year green • Voting: We voted at 313 general in or lend to companies with a revenue bond transaction. From our own balance meetings in 2018, and we pub- of 30% or more derived from thermal sheet we have developed a framework lish details of our voting records coal mining, thermal coal utilities or the for issuing green bonds, which we plan in an active ownership report extraction of oil from tar sands – activi- to launch in 2019, and we also plan semi-annually. ties that have a negative impact on the to offer green loans. Danske Bank has • Dialogue: We held more than environment. This reflects our endorse- been a signatory of the Green Bond 500 dialogues with over 300 ment of the Paris Pledge for Action to Principles since 2014, and we also companies in 2018, and we help limit global warming to a maximum invest part of our own funds in green publish details on our active of 2 degrees Celsius. bonds, see p. 32. ownership report semi-annually. • Carbon footprint: As signatory of the UN’s Montreal Carbon Pled- ge, we measure and publish the CO 2 footprint of a selected range More insights of our funds annually. Read more about our sustainable finance at danskebank.com/societal-impact/sustainable-business. Corporate Responsibility 2018 29

Sustainable investment Sustainable lending

Over the course of 2018, we devel- In support of our sustainable finance oped a new sustainable investment ambitions, we have approved a sus- strategy that promotes the integration tainable lending strategy. The imple- of ESG into the core of our investment mentation of this strategy, which will be processes. This strategy, which we call overseen by our Sustainable Lending ESG Inside, focusses on making bet- Committee, will begin in 2019. During ter-informed investment decisions and the course of 2018, we also updated addresses the issues of risk, problems our directives for sectors with elevated and dilemmas. It also employs active ESG risks and revised our ESG guide- dialogue to influence portfolio compa- lines based on in-depth ESG analyses of nies to contribute to a positive outcome. specific sectors. Our strategy supports our commitment to serve our customers and meet their Assessing and promoting ESG growing demand for investment solu- When we grant a loan, we begin a long- tions that can deliver competitive and term commitment with our customers. long-term performance whilst simul- To gain an understanding of a custom- taneously contributing to sustainable er’s financial situation, we always make development. a careful evaluation and consider the Impact investment funds: purpose for which our lending products Climate and water As stated in our updated Sustainable In- are to be used. We offer loans that are In 2018, we launched two impact vestment Policy, our approach is aligned appropriate to our customers’ needs investment funds committed to with the UN-supported Principles for and financial capacity, and we make creating returns and making a Responsible Investment and the Danish sure that customers understand their positive societal impact. The first Stewardship Code. The implementation financial obligations. is a climate fund, which invests in of our investment strategy is overseen companies that develop solutions by our own Sustainability & Impact As well as conducting our own assess- that support the transition to a Investment Committee. ment of possible ESG risks associated low-carbon society; the second with lending to our business customers, is a water fund, which invests in Active ownership through dialogue we also engage third party providers companies that develop solutions We are active owners who focus on to screen potential and current lending to ensure water supply security, making a difference by using our ability customers for ESG risks. Customers clean water and sanitation. This and power as an investor to influence flagged in the screening will have their initiative has been well received by companies through dialogue and voting. ESG risks assessed by us. We endeav- customers, who in 2018 invested Rather than divesting from companies our to reach an understanding with DKK 710 million in the funds. and hoping that others will solve the customers so that they will conduct issues, we contribute to a positive their business in accordance with development by addressing challenging international principles promoting and issues, risks, or problems. safeguarding the environment, human rights, labour rights and anti-corruption. Our dialogue with the companies we have invested in is driven by our port- In 2018, to assist our advisers in their folio managers. We believe that this dialogues with customers on ESG mat- approach is the most effective way to ters, we developed ESG materials and influence companies and contribute to sector factsheets. We take a risk-based a positive outcome. These managers approach and focus our dialogues on engage on a regular basis with portfolio customers for whom the risk of adverse companies on material ESG matters in impact is highest, with any dilemmas Responsible ship recycling order to understand these companies’ discussed at the Sustainable Lending In 2018, we adopted the Respon- risks and opportunities and to support Committee. In some cases, sustainable sible Ship Recycling Standards their growth and development. lending means that we must refrain (RSRS). Backed by a number of fi- from providing loans to customers. nancial institutions, this initiative is We seek to be transparent on our a step towards sustainable funding progress and results, and in 2018 for the shipping industry, and we we launched our first report on our will promote these standards when active ownership activities. We also dealing with our shipping-industry launched a digital platform disclosing customers. how we vote at the general meetings of companies whose shares are held in The initiative aims to minimise the actively managed funds and in which we environmental and social impact have significant holdings. Sustainable associated with ship scrapping, and investment is an important and ongoing the standards are leading principles journey for us, and we will continuously for the dialogue between banks update our customers and stakeholders that finance ships and representa- on our progress. tives of the international shipping industry. CORE BUSINESS: RESPONSIBLE EMPLOYER

People and culture

Fostering an inclusive and diverse culture and providing a healthy and safe working environment for our employees have been key priorities since 2015. In 2018 we started to implement MyTalk, our new performance-management initiative that focusses on core values behaviour – an element central to our ongoing cultural transformation.

In support of our new Danske Bank Redesigning recruitment education programme for young em- corporate strategy, which was launched At Danske Bank, we are more than ployees was piloted. A further example in May 2018, we have adjusted our 20,000 employees, and during 2018 is the introduction of diversity as a KPI Group structure and made changes to more than 3,000 new colleagues chose in the performance agreements for the our Executive Board. Further changes at to join us. Therefore, the first logical step management team in Corporates & executive-management level and on the in our work to enhance the employee Institutions. Board of Directors were implemented journey has been to focus on the joining following the September 2018 publi- journey. In 2018, we redesigned the Increasing the share of female leaders cation of the results from the Estonia entire joining journey process, starting is an area of particular focus for us be- investigations. These included a change when candidates first consider us as a cause we see this as a stepping-stone to of CEO and a new Chairman of the future employer, through the actual re- unlocking other facets of diversity such Board of Directors. cruitment process, and on to their final as education, nationality, age, ways of on-boarding and first 100 days with us. thinking, seniority and experience. Overall, 2018 has been a year of challenges and changes, and this has natu- We have established talent-acquisition In 2018, the Board of Directors revised rally had an impact on our employees. teams based in Denmark, Sweden, the targets for the share of female We highly appreciate their understand- Norway, Finland and Lithuania. Not only leaders on the Executive Board, bringing ing and loyalty. do these teams increase efficiency and our 2020 target to 25%. Our long-term quality of hiring, but they also provide ambition is 38-40%, which is in line Employee engagement in a changing better support to managers and ensure with our target for female leaders at all organisation the successful on-boarding of new management levels in Danske Bank. Our employee engagement score fell colleagues. The importance of cultural As a result of our systematic focus on over the course of the year, ending at fit and value-based alignment between diversity and best use of talents during an Engagement Index (three-month a candidate’s personal values and our the organisational changes carried average) of 84% against our long-term corporate core values is incorporated out in May 2018, we came close to ambition of 90% by 2020. It is our as- into test feedback and our on-boarding accomplishing the latter target with a sessment that this decrease can be at- processes. 37% share of women in management tributed to the reorganisation that took positions. The share of women on the place over the course of the year. We A diverse workforce Board of Directors elected at the annual take this very seriously and are focused To succeed with our corporate strate- general meeting (AGM) was 38%, on increasing our engagement over the gy, we need access to a diverse pool which meets our 2020 target. course of 2019. Our new corporate of candidates; consequently, the new strategy will be a strong driver behind talent-acquisition teams have a strong Equality and non-discrimination the rebuilding of our engagement. focus on diversity. This includes working Our Group Human Resources (HR) func- to reduce gender bias in recruitment tion not only defines employee-related To reconnect with our core values, our by, for example, providing recruitment policies but also continuously addresses new Performance Management initia- training for managers, screening job risks associated with our workforce. tive, MyTalk, will be rolled to all employ- ads for gender neutrality and ensuring a ees and leaders across the Group during gender-neutral use of recruitment chan- In 2018, we introduced new internal 2019. Key in securing engagement and nels. Another way we address gender guidelines on human rights to supple- supporting our cultural transformation equality is by monitoring equal pay and ment our existing policies. These guide- at all levels of the organisation, as well by reporting our numbers annually to lines clarify how Danske Bank promotes as addressing personal engagement, the Danish Employers’ Association for equal treatment and underlines the MyTalk promotes and rewards the right the Financial Sector. fact that we do not accept any kind of mind-set and behaviours based on our discrimination. We also issued a state- core values. We will reinforce our cultural With a view to promoting our diversity ment that clarifies our zero-tolerance transformation in 2019 by enlisting our mind-set, a number of initiatives have position on sexual harassment, and var- top 500 leaders who, after participating taken place during 2018. In Sweden, ious preventive measures are in place, in specifically designed camps, will begin for example, all new managers have supported by established protocols, in the transformation in their own teams received Danske Inclusion training, and the event breaches occur. Furthermore, and across the wider organisation. in Corporates & Institutions, a diversity employees can use our whistleblower Corporate Responsibility 2018 31

system for reporting gross HR-related the working-environment organisation. stress symptoms, they can also receive misconduct. Well-being, stress and failure to thrive qualified, unbiased and anonymous help are issues that we must talk about and through our stress hotline. Health and safety address, and with this in mind we have A combination of an active working-en- updated our tools and established a HR Our work in this area will continue vironment organisation, councils, and mental health expert team to support through 2019, and we plan to increase collaboration with unions, employee managers in their engagement with our focus on initiatives related to mental representatives and local manage- employees. If employees experience health and a healthy life style. ment enables Group HR to ensure our workplace is healthy and safe – both Employee-related performance 2015-2018 physically and mentally. Our TeamTalk tools engage managers and employees 2018 2017 2016 2015 in dialogue on a local team level, and our monthly PULSE survey provides Full-time employees (FTE) 20,683 19,768 19,303 19,049 valuable insights into overall employee Share of women in workforce (%) 50 49 50 51 engagement and well-being across the Group. Another indicator of our working Employee engagement* 84 85 66 - environment is the employees’ average days of absence due to illness which in Employee turnover (%) 13 12 11 11 2018 stands at 5.4. Absence due to illness (avg. days)** 5.4 5.4 5.3 6.0

In 2018, new work environment training * In Q3 2018, one of the PULSE survey questions included in the engagement index was changed. It is was introduced in Sweden and Fin- our assessment that this technical change has shifted engagement index levels positively. land, and across the Group, the mental ** In 2018, as a result of the implementation of a new HR system, we changed our reporting principle for Absence due to illness, see p. 38. Due to missing data for Finland in 2018, data only covers health of employees has been a priority Denmark, Sweden and Norway. Data for 2015-2017 remains unchanged. in our collaboration and dialogue with Find more details and KPIs on p. 36.

RESPONSIBLE EMPLOYER

Policy commitment an inclusive culture, ensure equal opportunity and eliminate “We promote a sustainable workplace and culture by focusing discriminatory treatment. We protect our employees’ right on the structural, cultural and physical working environment to freedom of association and collective bargaining, right to that we provide our employees. We are a responsible employer privacy and right to raising concerns without fear of retaliation.” and we base our actions on our core values. We provide Societal Impact & Sustainability Policy, October 2018 challenging and meaningful work, and give our employees the opportunity to develop and grow. We sustain a healthy and “The Danske Bank Group is committed to working towards safe working environment and a collaborative culture where increasing the share of the underrepresented gender (women) our employees feel engaged. We set clear expectations for our in executive and managerial positions. The goal is to increase leaders to role model our values, drive customer centricity, and the number of female managers at all levels.” inspire their employees to succeed. We promote diversity and Diversity and Inclusion Policy, October 2018

Ambitions and strategy 2015-18 Gender targets and performance • Integrate core values in people practices Performance Targets • Develop a culture of continual learning 2018 2020 • Broaden the diversity and inclusion agenda Share of AGM-elected Board of 38% 38% • Ensure a healthy and safe working environment Directors being women (%)* • Engage employees in corporate volunteering activities Share of women on the Executive 10% 25% Board (%) Share of women in management 37% 38-40% positions (%) * The total share of women on the Board of Directors, including the employee-elected members, is 50%.

Key actions 2018 • Established a specialist talent-acquisition team with a strong focus on hiring a diverse workforce • Ran early implementation of the new performance-management initiative MyTalk, ready for full roll out in 2019 • Introduced a guideline on human rights and a statement that clarifies our zero-tolerance position on sexual harassment • Initiated several initiatives throughout the Group related to mental health focusing on well-being and engagement at work

More insights Find more employee-related KPIs in our Corporate Responsibility Fact Book 2018. CORE BUSINESS: ENVIRONMENTAL FOOTPRINT

Environmental performance

Our main environmental focus since 2015 has been on reducing our own carbon footprint. Nevertheless, we have not been able to reach our ambitious 2018 energy reduction target. We see our carbon footprint as an important indicator of how effectively we are driving sustainability internally and will continue to limit our emissions.

Climate change is a global challenge. providing financial offerings that have a more than DKK 3 billion in green bonds It presents major risks to not only the positive impact on climate change and issued for large renewable energy pro- environment, but also to societies the environment. jects and climate protection in North- worldwide, and the Financial Stability ern Europe. Green bonds represent a Board (FSB) regards climate-related risk We seek transparency in all of our low-risk investment opportunity with as a potential driver of future financial operations, and since 2010 we have competitive returns, and we evaluate instability. Consequently, the financial been signatories to the Carbon Dis- new opportunities to invest in green sector plays a key role in facilitating the closure Project (CDP). Having signed bonds on an ongoing basis. societal transition to a net-zero carbon the Montreal Carbon Pledge in 2016, economy, and we are committed to Danske Bank is also obliged to disclose Energy efficiency in Danica Pension the carbon footprint of selected invest- By 2020, Danica Pension together ment funds, which has been done since with its business partners aim to have 2017. In September 2018, Danske invested more than DKK 100 million in Bank signed up to supporting the energy efficiency in 15 Danish shopping recommendations of the FSB’s Task centres. The target is to reduce the en- Carbon Disclosure Project Force on Climate-related Financial ergy consumption of the centres’ shared score 2018 Disclosures (TCFD). Read more about service installations by 40% relative to sustainable finance on p. 28. the 2015 level, and it will save more Danske Bank: C than 20 GWh heat and electricity and Sector average: B Carbon neutrality 10,000 tonnes of CO2. So far, DKK 54 Regional average: B Danske Bank’s operations have been million has been invested, resulting in a carbon neutral since 2009, and we 20% reduction in the energy consump- publish an annual Statement of Carbon tion of the shared service installations. A Neutrality. We have achieved this by One example from 2018 is the energy A purchasing renewable electricity and renovation of the shared service installa- B carbon credits. One hundred percent of tions in Lyngby Storcenter, which will B the electricity we purchase comes from result in annual energy savings of 40%. C C renewable sources certified by Guaran- tees of Origin and International Renew- Decreased CO emissions D 2 D able Energy Certificates. In addition, to Compared to other industries, Dan- underline our commitment and increase ske Bank has low carbon emissions. the demand for renewable energy, we Nevertheless, we see our own carbon We have been disclosing our annual joined RE100 in 2017. footprint as an important indicator of CDP score since 2015. In 2018, CDP how effectively we are driving sustaina- aligned its questionnaire with the TCFD To offset the emissions from transporta- bility internally. recommendations. With the revised CDP scoring categories and weighting, tion and consumption of heat and paper Danske Bank received an overall score that we cannot eliminate, we purchase Energy-saving initiatives in 2018 of C, which is lower than both the sector carbon credits. All carbon credits pur- included consolidating several sites average of B- and the Europe regional chased by Danske Bank are for projects into more energy-efficient facilities in average of B-. that guarantee a real reduction in CO2 Denmark, as well as upgrading light, emissions and they have been verified heating and ventilation systems in our As part of our commitment to the TCFD, according to international standards, building portfolio in general. Despite our we will further strengthen the integra- such as the Gold Standard. annual efforts, we have not been able tion of climate considerations into our to reach our ambitious 2018 energy governance, strategy, risk management, metrics, as well as into our external re- Investing in green bonds target of a 15% reduction in overall porting. This will be in line with the CDP We have allocated a total of DKK 4 energy consumption from the level in recommendations for the next steps to billion for investment in green bonds, 2014. In 2018, there has been a minor be taken in order to improve our score. and since 2015, we have invested decrease, which leaves us with an 8% Corporate Responsibility 2018 33

reduction in overall energy consumption fell by 31% in 2018, across the Group. resulted in less need for heating. Our in the strategy period. Our use of road transportation also de- efforts to reduce our CO2 emissions will creased by 7% in 2018, while air travel continue through 2019, and we will Environmental performance at our facil- remained at the same level as in 2017. further optimise the energy consump- ities is measured against the criteria in tion of our building portfolio. Similarly, the green building rating system LEED Altogether, these savings result in a more documents will be digitalised, and

(Leadership in Energy and Environ- decrease in our CO2 emission of 9% we will maintain our drive to encourage mental Design). In 2018, some of our from 2017 to 2018. This is mainly due employees to use trains and have online largest facilities in Denmark were LEED to a warm spring and summer, which meetings and video conferences. Gold certified. This certification not only guarantees that the buildings are energy efficient, but also guarantees that they save water, generate less waste and Environmental performance 2015-2018 support human health. Danske Bank’s future headquarters in Copenhagen, 2018 2017 2016 2015 the construction of which will begin in

2019, will also meet the criteria for CO2 emissions (tonnes) 16,396 18,089 18,664 18,836 LEED Gold. In 2018 we also relocated our Helsinki corporate office to a more Electricity consumption (MWh) 59,135 57,203 60,311 57,166 energy efficient facility. Heat consumption (MWh) 51,912 56,213 53,130 54,542

As part of our environmental manage- Paper consumption (tonnes) 603 870 1,161 1,598 ment, we also monitor and report on our Road transport (company vehicles and consumption of paper and on our use of 11,660 12,485 13,883 13,969 transportation. As a result of digitalisa- employees’ cars) (1,000 km) tion initiatives related to customer ser- Air transport (1,000 km) 73,013 72,003 67,570 61,392 vice and documents, we have continued to reduce our paper consumption, which Find more details and KPIs on p. 36.

ENVIRONMENTAL FOOTPRINT

Policy commitment emissions through energy and environmental management.” “We achieve a strong environmental performance by working systematically to limit the negative environmental impact “We integrate environmental considerations into the Group’s of our business operations. We strive to minimise the own portfolio management” environmental impact of our operations and reduce our CO2 Societal Impact & Sustainability Policy, October 2018

Ambitions and strategy 2015-18 • Revise the Climate Strategy • Continue to develop the environmental management system • Increase transparency and communication • Reduce energy consumption 15% from the 2014 level (MWh)

Energy target 2018 Performance 2018 15% reduction in overall energy consumption from 8% reduction in overall energy consumption from the the 2014 level 2014 level

Key actions 2018 • Optimised energy consumption by consolidating several sites into more energy-efficient facilities in Odense and Kolding, Denmark (LEED Gold certified) • Implemented a wide range of initiatives to reduce heating and electricity consumption (light upgrades, ventilation changed to efficient motors, district heating upgrades) • Reduced paper consumption throughout the Group by means of digitalisation initiatives related to customer service and ducuments

More insights Find more environmental KPIs in our Corporate Responsibility Fact Book 2018. Read the Statement of Carbon Neutrality 2018 at danskebank.com/societal-impact. CORE BUSINESS: RESPONSIBLE SUPPLIER RELATIONSHIPS

Responsible sourcing

Our main focus over the course of the strategy period 2015 to 2018 was on developing and implementing a new Supplier Code of Conduct and an improved responsible sourcing process. We will continue to optimise our screening and assessment of high-risk suppliers in close dialogue with our partners and suppliers.

Responsible sourcing and collabora- dering and implementing a negotiation Rights. In addition, we set specific en- tion with our suppliers is part of our strategy. The individual business units vironmental requirements for selected value-chain approach to embedding are accountable for the scope, budget, products and services such as office environmental, social and governance vendor selection and implementation supplies, paper, merchandise, furniture, (ESG) considerations throughout our of the contracts. Incorporating the EU hardware, cleaning and conferences. business. Supplier selection is based General Data Protection Regulation Both the Supplier Code of Conduct and on assessment of price, quality and (GDPR) compliance requirements the environmental requirements are sustainability performance. The price into relevant contracts for suppliers aligned with the commitments in our assessment takes into account the who handle personal data on behalf of Position Statements. total cost of ownership, which includes Danske Bank was an important and purchase price, quality, delivery, current resource-heavy task in 2018. Implementation efforts included training costs and disposal of the asset. of all employees in Group Procurement, Consolidation of our responsible and responsible sourcing is now part In 2018, we had a total spend of DKK sourcing process of the introduction and training of new 8.9 billion and 11,095 active suppliers. Our improved responsible sourcing employees in Group Procurement. Our Group Procurement unit collabo- process was launched in 2016. The In 2018, we managed to get 97% rated with branches, departments and sustainability requirements for suppliers of tenders in scope involving Group business units across the Group on are specified in our Supplier Code of Procurement through the responsible 1,033 new contracts. Group Procure- Conduct and are based on internation- sourcing process and thereby exceeded ment is responsible for setting a com- ally recognised standards, including the our target. petitive landscape, optimising business UN Global Compact and UN Guiding value through market analysis, ten- Principles on Business and Human

A risk-based approach to sourcing Our responsible sourcing process ensures that suppliers comply with our sustainability standards. The process is based on dialogue, and we try to minimise burdening our suppliers with unnecessary and time-consuming questions. Our risk assessment process consists of three steps, but many suppliers need only go through the first.

Supplier Code Step 1: Step 2: Step 3: of Conduct Pre-qualification questions Self-assessment Corrective action plan The Supplier Code of We assess the risk profile questionnaire If we deem the result Conduct applies to all of suppliers for contracts Suppliers assessed as of the self-assessment suppliers that deliver exceeding DKK 1 million high-risk and suppliers of questionnaire to be goods or services to any on the basis of information contracts exceeding DKK unsatisfactory, we engage of our business units and about the type of products 10 million are asked to in dialogue with the supplier subsidiaries, and it is or services of the tender and complete an additional and agree on a corrective included in all contracts. The where these are produced. in-depth questionnaire action plan, if needed. Code of Conduct states that about their ESG policies and If this does not resolve the suppliers must set the same performance. We use Verisk issues to our satisfaction, or comparable standards for Maplecroft and Ecodesk as we may not select the their subcontractors. external partners to assess supplier or may stop using the country and category risk their services. and to evaluate the replies from the suppliers. Corporate Responsibility 2018 35

Throughout 2018, we continued the Supply chain. The suppliers are selected consolidation of the process for screen- on the basis of their risk profile and on ing and assessment of high-risk suppli- their impact on our business. Audits, ers. Engaging with external partners has which include both desk studies and an- provided us with an overview of social nounced on-site visits, evaluate whether Spending per category in 2018 and ethical risks in various countries, the supplier’s self-assessment (step 2) (% of total spend) and this has enabled us to zoom in on is sufficient and credible and whether 100 the specific risks that may affect our their ESG policy and performance live supply chain, including conflict minerals up to our Supplier Code of Conduct. 80 and modern slavery. Under no circum- We go through the audit report with stances will Danske Bank tolerate the supplier and agree on any areas in 60 human trafficking or any type of forced need of improvement. Our Responsible 40 labour, including work on a forced con- Sourcing Escalation Committee reviews tract, slavery and other forms of work all audit reports and decides upon the 20 that are done against an employee’s will appropriate follow-up action based on 0 or choice, as also stated in our annual the severity of the issues in question. Statement on Modern Slavery. Banking Professional Premises IT services and Facility In 2018, we conducted two audits of Management We are working closely with partners key suppliers of facility management on and suppliers to ensure an optimised their compliance to our Supplier Code screening and assessment process, and of Conduct. The first audit was in India In 2018, our largest spending was on our performance in 2019 will form the and covered the categories Social and Premises and Facility Management and baseline for setting new targets. Governance. The second audit was in on IT. Premises and Facility Management Denmark and covered Supply chain covers rental of buildings for offices Independent audits management because the supplier in and branches; IT procurement covers A new audit programme for suppliers question works with subcontractors hardware and software, as well as IT was implemented in 2017. We have on behalf of Danske Bank. None of the consultants, services and extra costs for the GDPR project. Professional services engaged an independent third-party conducted audits revealed any severe covers consultancy, HR, marketing and auditor to conduct yearly audits, each cases of non-compliance. communications services, as well as ser- covering one of the four categories in vices for travel, meetings and events. The our self-assessment questionnaire: largest share of the spending for Banking Social, Environment, Governance and was on the procurement of market data.

RESPONSIBLE SUPPLIER RELATIONSHIPS

Policy commitment “We ensure responsible supplier relationships by integrating “The Code applies to all Danske Bank’s suppliers that deliver ESG considerations into our procurement processes. We goods and services to any of Danske Bank Group’s business maintain constructive relations with our suppliers based on units and subsidiaries, and the criteria will be taken into dialogue and improvement. We expect our suppliers to respect account when selecting and evaluating suppliers. The Code internationally recognised sustainability principles and to is a total supply chain initiative, and the Group’s suppliers are set similar standards in their supply chain. Furthermore, if a responsible for setting the same or comparable standards for product potentially has an adverse environmental impact, we their subcontractors. It is the responsibility of the supplier to integrate environmental requirements.” ensure that their subcontractors are informed of the Code and Societal Impact & Sustainability Policy, October 2018 uphold the requirements.“

“The supplier has a duty to proactively report to Group Procurement any deviation from this policy.” Supplier Code of Conduct, December 2018

Supplier target 2018 Performance 2018 80% of tenders involving Group Procurement to go 97% of tenders involving Group Procurement went through through the responsible sourcing process the responsible sourcing process

Key actions 2018 • Conducted two on-site supplier audits with ESG focus, and revised the audit process for future audits • Continued to assess and evaluate high-risk supplies through self-assessment questionnaires • Implemented GDPR fulfilment requirements in contracts for suppliers handling personal data on behalf of Danske Bank 36

Key performance indicators

As part of our annual reporting practic- The Key Performance Indicators (KPIs) Data performance related to employees es, we include an overview of assured listed in the table provides an overview and environment is elaborated on p. 30- performance data related to our busi- of our performance over the past four 33, and the data is prepared according ness operations, employees and the years for comparison. to our reporting principles, see p. 38-39. environment.

Assured KPIs 2018 2017 2016 2015

Business operations (DKK millions)* Total income 44,365 48,149 47,959 45,611 Operating expenses 25,011 22,722 22,642 23,237 Profit before tax 19,722 26,288 25,357 17,762 Financial services employer tax and social security costs 1,826 1,802 1,659 1,520 VAT 1,248 1,207 1,126 933 Tax 4,721 5,388 5,500 4,639 Net profit for the year 15,001 20,900 19,858 13,123 Net profit for the year before goodwill impairment charges 15,001 20,900 19,858 17,724 Return on avg. shareholders’ equity (%) 9,8 13.6 13.1 8.5 Return before goodwill impairment charges on avg. shareholders’ equity (%) 9,8 13.6 13.1 11.6 Employees Number of full-time employees (FTE), end of year* 20,683 19,768 19,303 19,049 Percentage of women in workforce (%) 50 49 50 51 Percentage of women in management (%) 37 35 35 35 Employee turnover (%) 13 12 11 11 Average years of service 12 12 13 14 Absence due to illness (avg. number of illness days per employee)** 5.4 5.4 5.3 6.0 Employee engagement (%)*** 84 85 66 - Environment † CO2 emissions (tonnes) 16,396 18,089 18,664 18,836

CO2 emissions per employee (tonnes/FTE) 0.82 0.93 0.97 1.0 Energy consumption (electricity and heat) (MWh)†† 111,046 113,416 113,441 111,708 Energy consumption per employee (MWh/FTE) 5.7 6.0 6.1 6.3 Electricity consumption (MWh)†† 59,135 57,203 60,311 57,166 Heat consumption (MWh) 51,912 56,213 53,130 54,542 Road transport (company vehicles and employees’ cars) (1,000 km)†† 11,660 12,485 13,883 13,969 Air transport (1,000 km) 73,013 72,003 67,570 61,392 Paper consumption (tonnes)†† 603 870 1,161 1,598

* Data are from Annual Report 2018 and Fact Book Q4 2018. For a definition of ratios, see Definition of alternative performance measures on p. 65 in Annual Report 2018. ** In 2018, as a result of the implementation of a new HR system, we changed our reporting principle for Absence due to illness, see p. 38. Due to missing data for Finland (FIN) in 2018, data only covers Denmark (DK), Sweden (SE) and Norway (NO). Data for 2015-2017 remains unchanged. *** In 2017, we replaced our annual Employee Opinion Survey with new tools to facilitate a constructive ongoing dialogue on employee engagement. This means that the Employee engagement Index has replaced two HR indicators on Employee satisfaction and motivation as well as perceived opportunities for professional and personal development. In Q3 2018, one of the PULSE survey questions included in the engagement index was changed. It is our assessment that this technical change has shifted engagement index levels positively.

† Data covers DK, SE, NO, Ireland (IRL), Northern Ireland (NI), FIN and Lithuania (LIT) and include estimated figures for the remainder of the Group. We included exact figures from our operations in India (IN). †† Data covers DK, SE, NO, IRL, NI, FIN and LIT. In 2017, we included figures from our operations in IN. Corporate Responsibility 2018 37

Independent auditor’s assurance report

To the Management and the stakeholders of Danske Bank all information and explanations necessary to support our We have assessed Danske Bank’s 2018 Corporate Respon- conclusion. sibility Report (‘the Report’) to provide limited assurance on selected 2018 data on page 36 of the Report. The Report We performed our on-site reviews at Danske Bank’s Head covers Danske Bank’s international activities from 1 January Office in Copenhagen in November and December 2018. to 31 December 2018. Our work has included interviews with key functions in Danske Bank, inquiries regarding procedures and methods Our assessment was performed in order to assess whether: to ensure that selected CR data and information have been incorporated in accordance with the reporting principles. We • All environmental data and all employee data on page 36 have assessed processes, tools, systems and controls for in the Report have been stated in accordance with the gathering, consolidating and aggregating CR data at Group criteria defined by the reporting principles; level, and performed analytical review procedures and tested

• Danske Bank has offset its consolidated CO2 emissions CR data prepared at Group level against underlying docu- for 2018. mentation. Furthermore, we have received documentation

that the consolidated CO2 emissions have been offset by We express a conclusion providing limited assurance. purchase of offset certificates. Finally, we have evaluated the overall presentation of the report, including the consistency of Management’s responsibility information. The Management of Danske Bank is responsible for collecting, analysing, aggregating and presenting the information in We have not performed site visits or interviewed external the report, ensuring that data are free from material misstate- stakeholders, nor have we performed any assurance proce- ment, whether due to fraud or error. Danske Bank’s non-finan- dures on baseline data or forward-looking statements such as cial reporting principles contain Management’s defined re- targets and expectations. Consequently, we draw no conclu- porting scope for each data type. The criteria for the reporting sion on these statements. principles can be found on page 38-39 of the Report. Conclusion Auditor’s responsibility Based on our work, nothing has come to our attention caus- Our responsibility is to express a limited assurance conclu- ing us not to believe that: sion on all environmental data and all employee data on • the employee and environmental data subject to our page 36 in the Report. Furthermore, our responsibility is review have been stated in accordance with the criteria to provide limited assurance on whether Danske Bank has mentioned in the reporting principles; offset its consolidated CO2 emissions for 2018. We have • Danske Bank has offset its consolidated CO2 emissions conducted our work in accordance with ISAE 3000, Assur- for 2018. ance Engagements Other than Audits or Reviews of Historical Financial Information, and additional requirements under Danish audit regulation to obtain limited assurance about our conclusion. Copenhagen, 1 February 2019 Deloitte Statsautoriseret Revisionspartnerselskab is subject to International Standard on Quality Control (ISQC) 1 and, Deloitte accordingly, applies a comprehensive quality control system, Statsautoriseret Revisionspartnerselskab including documented policies and procedures regarding Business Registration No. 33 96 35 56 compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Account- ants issued by FSR - Danish Auditors (Code of Ethics for Pro- fessional Accountants), which are based on the fundamental Jens Ringbæk Helena Barton principles of integrity, objectivity, professional competence State-Authorised Lead Reviewer and due care, confidentiality and professional behaviour. Public Accountant

A limited assurance engagement is substantially less in Identification No scope than a reasonable assurance engagement. Conse- (MNE) mne27735 quently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had we performed a reasonable assurance engagement. Considering the risk of material misstatement, we planned and performed our work to obtain 38

Reporting principles

These reporting principles cover employ- Danske Bank’s GFS system and covers Data on the environment ee and environmental KPIs presented the entire Group. The employee turnover on p. 36. Reporting principles for Busi- rate is based on information registered Environmental data covers the Group’s ness Operation KPIs can be found in the from Q1 to Q4 2018. operations in Denmark, Finland, Ireland, Annual Report 2018. Northern Ireland, Norway, Sweden, Average years of service Lithuania and India. The reporting period The employee and environmental KPIs Data on average years of service was for the year 2018 runs from Q4 2017 covers Danske Bank Group’s (the retrieved from Danske Bank’s GFS sys- to Q3 2018. Data is retrieved from the Group’s) five main business units (Bank- tem at the end of Q4 2018. Credit 360 reporting system. ing DK, Banking Nordic, Corporates &

Institutions, Wealth Management and Absence due to illness CO2 emissions

Northern Ireland) as well as our activi- Absence due to illness is defined as CO2 emissions (tonnes) are calculat- ties in the Baltic countries and India. time lost due to the employee’s own ed on the basis of energy and paper illness, including pregnancy-related sick consumption as well as data on travel by

We believe that the reporting provides leave, and occupational accidents and car and air. The quality of CO2 emission a fair and balanced representation of diseases. factors may vary, depending on the avail- our financial, environmental and social ability of specific factors. We monitor performance. The rate of absence is calculated as emission factors to identify the most the total number of registered days of recent and specific ones available. To ensure data consistency, data has absence per employee divided by the For emissions from heat consumption, been defined and described in business total number of employees at the end of we use specific emission factors from procedures. Internal control procedures the year. The data may be underreported energy companies whenever possible. have been established to ensure that if employees do not register their illness. Otherwise, we use average emission fac- the data is reported according to the In 2015-2017, data covered Denmark, tors for heating for the country or region. definitions. Sweden, Norway and Finland. In accordance with the market-based In 2018 we implemented a new HR methodology from greenhouse gas system to improve data quality and to (GHG) Protocol Guidance, the emissions Data on employees streamline and automate our registra- from electricity consumption were omit- tion and data aggregation processes. ted owing to the purchase of renewable Full-time employees If an employee registers absence due electricity certified by Guarantees by The number of full-time employees to illness across a change of year, that Origin and International Renewable (FTEs), end of year, is based on infor- absence and period will now be counted Energy Certificates. For location-specific mation registered in Danske Bank’s in the year the absence ends. Due to reporting, which is necessary for Carbon accounting system at the end of Q4 missing data for Finland, 2018 data Disclosure Project (CDP) reporting, we 2018. only covers Denmark, Sweden and use region- or country-specific factors Norway. For this reason, data for 2018 from either electricity companies or the Women in workforce cannot be compared directly against International Energy Agency. The percentage of women in the work- data from previous years. force is based on information registered For transport by car – both employee in Danske Bank’s Group Financial Sys- Employee Engagement and company cars – we use emission tem (GFS) at the end of Q4 2018. Data on employee engagement is based factors from the Department of Environ- on survey results from the PULSE ment, Food and Rural Affairs. Women in management survey covering the entire Group. The The percentage of women in manage- employee engagement index is based Emissions from air travel are reported ment is based on information registered on replies to five questions in the PULSE directly by our travel agency, American in Danske Bank’s GFS system at the survey: three on Encouragement and Express, which provides data on the dis- end of Q4 2018. two on Enablement. The PULSE survey tance travelled and the number of trips. is conducted monthly, except for the Emissions from paper consumption are “Management” is defined as employees month of July. based on average emission factors from with staff responsibility. the Department of Environment, Food In Q3 2018, one of the PULSE survey and Rural Affairs. Employee turnover questions included in the engagement

Employee turnover is defined as the index was changed. It is our assess- We report GHG emissions in the CO2 number of employees (head count) ment that this technical change has equivalent amounts. However, since who retired or resigned divided by the shifted engagement index levels posi- the vast majority of greenhouse gases number of employees (head count) per tively. are CO2 emissions, we have generally month and converted to a percentage chosen to use the term CO2 emissions rate. The information was retrieved from without specifying equivalents. Corporate Responsibility 2018 39

For operations that do not have any and the number of full-time employees Paper consumption measured consumption, we estimate provided by Group Finance from Q4 Paper consumption is calculated on

CO2 emissions on the basis of the 2017 to Q3 2018. the basis of volumes purchased and average number of full-time employees registered in the Group’s Dynamics AX provided by Group Finance from Q4 Electricity consumption system or on the basis of statements 2017 to Q3 2018 and the average Electricity consumption is either based from external suppliers (only in Lithua- emissions per employee in the Group. on automatic data transfers from smart nia, India and to some extent Sweden These estimates represent 3% of the meters or quarterly meter readings or and Denmark). Paper consumption is defined as copying and printing paper, total CO2 emissions in 2018. calculated on the basis of statements from energy companies and lessors letterhead and envelopes with logos, printed matter (internal and external CO2 emissions per employee received regularly during the year. If publications) as well as miscellaneous CO2 emissions per employee (tonnes/ no reading or statement is available, FTE) are calculated on the basis of the we estimate the consumption on the (cards and books). total amount of CO2 emissions (tonnes) basis of the average electricity con- and the number of full-time employees sumption at the country unit and the provided by Group Finance from Q4 floor space. 2017 to Q3 2018. Heat consumption Energy consumption Heat consumption is either based on Energy consumption from electricity automatic data transfers from smart and heat is either based on automatic meters or quarterly meter readings or data transfers from smart meters or calculated on the basis of statements quarterly meter readings or calculated from energy companies and lessors on the basis of statements from energy received regularly during the year. If no companies and lessors received regular- reading or statement is available, we ly during the year. Electricity consump- estimate the consumption on the basis tion is calculated mainly on the basis of of the average heat consumption at the statements from energy companies, and country unit and the floor space. heat consumption figures for our head offices are similarly based on actual In Sweden, heat consumption is calcu- readings by the energy companies. If lated on the basis of information from no reading or statement is available, www.boverket.se (energy labelling of we estimate the consumption on the buildings). The consumption figure is basis of the average electricity or heat calculated on the basis of the Group’s consumption at the country unit and the share of floor space in the various floor space. Data on floor space covers buildings in Sweden. According to this all properties, including Danske Bank’s method, heat consumption at properties own premises and leased premises, without actual consumption in Finland that Danske Bank and its subsidiaries is calculated by using the key figures for use for their own operations in various Sweden because of similar consump- countries. tion patterns in the branches.

In Sweden, heat consumption is calcu- Road transport lated on the basis of information from Road transport includes transport in www.boverket.se (energy labelling of both company vehicles and employees’ buildings). The consumption figure is cars for business purposes. Trans- calculated on the basis of the Group’s port in company cars is measured on share of floor space in the various build- the basis of odometer readings from ings in Sweden. According to this meth- drivers. Transport in employees’ cars is od, the heat consumption at properties calculated in kilometres as paid mileage without actual consumption in Finland allowance divided by mileage allowance is calculated by using the key figures for payable according to current govern- Sweden because of similar consump- ment tariffs. tion patterns in the branches. Air transport Energy consumption per employee Air transport is calculated in kilometres Energy consumption per employee on the basis of quarterly statements (MWh/FTE) is calculated on the basis from our travel agency, American of the total energy consumption (MWh) Express. Danske Bank A/S Holmens Kanal 2-12 DK-1092 København K Tel +45 3344 0000 CVR No. 61 12 62 28 - København danskebank.com