Standard Bank Group Sustainability Report 2014 Contents A Part A: our business 4 About Standard Bank Group 12 Joint statement from the Group Chairman and Group Chief Executives 15 Ensuring our sustainability 19 Stakeholder engagement B Part B: our material issues 24 Overview 32 Managing the opportunities and risks of our Africa Our social compact strategy underpins our long-term sustainability 39 Pace, volume and scale of regulatory change 44 Establishing and maintaining cost-effective, Standard Bank will contribute to the socioeconomic efficient and relevant IT infrastructure development of the countries in which we operate in a 53 Knowing our customers and doing the right way that is consistent with the nature and size of our business with them in the right way operations. We will provide financial services and products responsibly, bearing in mind the needs of 78 Attracting, retaining and motivating our employees society, our customers, our staff, our shareholders, the 99 Delivering sustainable long-term financial environment and future generations. performance Part C: environmental and social risk Terms used C management Standard Bank Group (SBG or the group) 106 Our approach includes our banking operations, subsidiaries 116 Our contribution to socioeconomic and Liberty. development Standard Bank (the bank) 118 Our economic contribution 119 Helping to transform economies refers to our banking operations across all the regions in which we operate. 128 Financing infrastructure development 130 Inclusive financial services Standard Bank South Africa 135 Supporting small businesses refers to our banking operations in South Africa. 139 Agriculture financing Rest of Africa 144 Our environmental impact refers to our banking operations in Africa excluding 146 Environmental products and services South Africa. 150 Green buildings Liberty 150 Resource consumption and emissions includes life insurance, investment and wealth 158 Biodiversity management operations including STANLIB. STANLIB D Part D: annex includes investment and asset management operations 160 Assurance report in Africa including South Africa. 163 Codes and principles we endorse 163 Summaries of our policies Sustainability website 170 Global Reporting Initiative (GRI) G4 index Our sustainability website can be accessed at IBC Contact details www.standardbank.com/sustainability Note: part D is available online. Topic index Report publications We produce a full suite of reporting publications to meet the specific information needs of our diverse stakeholders. This report aims to present a balanced and comprehensive analysis of the group’s B Establishing and maintaining sustainability performance in relation to issues material to the group cost-effective, efficient and relevant and its stakeholders. Additional reports pertaining to the group’s IT infrastructure sustainability performance are listed below. 49 Our self-service channels Annual integrated report Knowing our customers and doing Our integrated annual report is our primary report to the right business with them in the stakeholders and provides an integrated assessment right way of the group’s ability to create value over time. 54 Attracting and retaining customers Frameworks applied 56 Innovation • International <IR> Framework. 57 Customer experience • South African Companies Act 71 of 2008. 62 Treating our customers fairly • Johannesburg Stock Exchange Listings Requirements. 66 Complaints management • King Report on Corporate Governance (King Code). 67 Indebtedness • South African Banks Act 94 of 1990. 71 Secure banking Assurance While the annual integrated report is not audited, it contains Attracting, retaining and motivating information extracted from the audited consolidated annual financial our employees statements. Certain externally assured information has been extracted from the sustainability report. www.standardbank.com/reporting 79 Employee engagement 80 Our workforce Risk and capital management report 86 Human capital development Provides a detailed discussion of the management 89 Remuneration and benefits of strategic risks related to the group’s banking and 90 Employee wellness insurance operations, including capital and liquidity 96 Employee relations management and regulatory developments. Frameworks applied Delivering sustainable long-term • Various regulations relating to financial services, including Basel III. financial performance • International Financial Reporting Standards. 103 The Standard Bank brand • King Code. Assurance C Our approach Selected information forms part of the audited annual financial 109 Environmental and social risk appraisal statements. www.standardbank.com/reporting 112 Responsible procurement Black economic empowerment (BEE) report Helping to transform economies This report sets out our efforts and performance in addressing socioeconomic imbalance in South Africa 119 Transformation in accordance with legislated targets and measures 121 Employment for broad-based BEE. 121 Supporting the public sector Framework applied 123 Procuring locally Financial Services Sector Codes for Broad-based Black Economic 125 Corporate social investment Empowerment (FS Codes). 128 Supporting arts and culture Assurance Independent external auditors, who are accredited to conduct BEE verification processes, conduct independent assessments Assurance and verification of our BEE performance against the FS Codes. ✓ Denotes numbers that have been assured. www.standardbank.com/sustainability ❖ Denotes numbers that have been verified. 1 About this report The 2014 SBG Sustainability Report (the report) presents a and social risk management section. Our supply chain is not comprehensive analysis of our sustainability performance for considered an area of material environmental risk, and this the year ended 31 December 2014. Any material events after aspect is not extensively covered in this report. Where we this date and up to board approval on 11 March 2015 are identify a downstream risk within the supply change we work included. with our suppliers to find mitigation measures. The intended readers of this report are the group’s broad base Frameworks applied of stakeholders, specifically those with whom we have direct Various surveys, benchmarks and international frameworks relationships and regularly communicate, including our inform our reporting. The issues raised by our internal and shareholders, customers and clients, employees, government external stakeholders in our day-to-day interactions are also and regulatory authorities, industry bodies and service taken into account. We report against the GRI G4 guidelines providers. More broadly, our stakeholders include those with and the GRI Financial Services Sector Supplement, supported by whom we engage from time-to-time on particular issues or our internally developed policies and procedures. This year we projects; who have an indirect impact on and who may be have improved our application of the G4 guidelines. Our report impacted by our business activities. These stakeholders include remains in accordance with the core GRI G4 level and goes the communities we operate in, business associations we some way towards accordance with the comprehensive level participate in, civil society groups, and environmental and on certain aspects. Our disclosure in relation to the full set of community development non-governmental organisations. GRI G4 indicators is available in the annex to this report. Scope and boundary Our ability to create value depends on our use and impact on This report covers SBG’s operations in South Africa, the rest of certain resources and relationships (capitals). We apply the Africa and outside Africa, the terms we use to describe the capitals model, adopted by the International Integrated geographic regions in which we operate. Given that Standard Reporting Council in the International <IR> Framework, in Bank South Africa remains our largest subsidiary and managing and assessing our ability to create value over time contributor to headline earnings (2014: 72%, 2013: 64%), and our sustainability performance. The following six capitals are and the relative maturity of our reporting in this operation, our fundamental to the long-term viability of our business: natural, sustainability reporting remains weighted towards our domestic social, human, intellectual, manufactured (or manmade) and activities. We continuously work to improve our reporting at a financial. The capitals are considered in commentary throughout groupwide level. Unless indicated otherwise, data in this report this report. refers to the group, which includes our banking operations, Assurance and oversight subsidiaries and Liberty but excludes associates and joint ventures. KPMG Services Proprietary Limited has assured certain processes and key performance indicators noted in this report. The report focuses on the most material aspects of our The assurance report can be found on page 160 in the online business in relation to our strategy. We consider an issue to version of this report. be material if it is likely to impact our ability to achieve our strategy, and to remain commercially sustainable and socially The Group Social and Ethics Committee and Group relevant. In particular, material issues are those that have a Management Committee are responsible for providing oversight strong bearing on our stakeholders’ assessments of the extent of the sustainability reporting process. The committees to which we fulfil their needs over the longterm. We also take recommended