WHY PREPARE A SUSTAINABILITY REPORT The concept of long-term profitability together with social development and environmental protection is fast gaining ground across organisations worldwide. These expectations will only increase and intensify as more and more customers, financiers and other stakeholders realise the need to move towards a truly sustainable economy. Thus, a Sustainability Report acts as a critical tool in realising this goal. A Sustainability Report not only communicates an organisation’s economic, environmental, social and governance performance, it also acts as a document that helps the management identify priorities, develop strategies, set goals, measure performance and manage changes to make their operations truly sustainable. In this context, the GRI (Global Reporting Initiative) has been providing comprehensive Sustainability Reporting Frameworks since 1999 and offers a standardised approach to reporting. The GRI’s approach is multi-stakeholder engagement, thus maintaining a degree of transparency and consistency that makes information more relevant, credible and user-friendly. The guidelines are reviewed periodically to provide the best and most up-to-date guidance for effective reporting and have now emerged as the de facto standard for sustainability reporting worldwide. IDLC first published its Sustainability Report in 2012, following the GRI - G3.1 Guidelines. The 2014 Sustainability Report has been prepared in line with the latest G4 Guidelines issued by the GRI. G4 has a more focused approach to reporting by highlighting only the most material sustainability issues identified through stakeholder engagement. This emerging approach integrates strategic sustainability issues with other material financial information, allowing sustainability disclosure in different reporting formats thereby, enabling organisations to better inform markets and stakeholders on their sustainability performance. IDLC CSR HIGHLIGHTS 2014 underprivileged children supported through 22 healthcare and educational initiatives marginal women received training and youths received capacity development 47 facilitated with employment 40 orientation and training saplings planted under school children participated blankets distributed among the disadvantaged the tree plantation in the environmental 3,750 1,568 5,500 population suering from programme awareness campaign severe cold individuals donated blood under 50 the blood donation programme TABLE OF CONTENTS Reporting Parameters 1 Statement of the Chairman of the Board 2 Statement of the Chairman of the Executive Committee 2 Statement of the Chairman of the Audit Committee 3 Statement of the CEO and Managing Director 3 CHAPTER 1 | IDLC – A STORY OF GROWTH AND SUCCESS Vision, Mission, Core Values and Shareholding Structure 6 Continuous Improvement Embedded in Our Business Model 7 Business Overview 9 SME Division 9 Consumer Dvision 9 Corporate Division 9 Capital Markets 10 Our Services 11 Sectoral Services 12 Key Financial Performance 13 Value Added Statement 14 Memberships 14 CHAPTER 2 | CSR AND SUSTAINABLE BUSINESS Concept and Evolution 17 CSR at IDLC 17 Regulatory Bodies and Memberships 18 Key Focus Areas of CSR 18 CHAPTER 3 | CORPORATE GOVERNANCE Board of Directors 21 Board of Directors 22 Management Committee 22 Ethics and Compliance 22 Code of Conduct and Ethics 23 Anti-corruption Policies and Practices 23 Complaint Management 23 Management Committee (ManCom) 24 CHAPTER 4 | CREATING OPPORTUNITIES FOR UNDERPRIVILEGED COMMUNITIES Education for Underprivileged Children 28 Technical and Vocational Skills Development 28 IDLC FINANCE LIMITED Supporting the Cricket Team of the Physically-Challenged 30 Services Offered to Low-Income Groups 30 CHAPTER 5 | WOMEN EMPOWERMENT Employment Generation for Marginal Women 33 Healthcare Awareness for Marginal Women 35 Women Entrepreneur Loan 35 IDLC Ladies’ Forum 36 CHAPTER 6 | ENVIRONMENTAL SUSTAINABILITY Environmental Awareness Campaign for School Children 39 Green Banking 40 Environment and Social Management System 42 Tree Plantation 42 CHAPTER 7 | HUMAN RESOURCE MANAGEMENT Attracting Talent 45-46 Right People in the Right Place 46 Performance Management 46 Training and Development 46 Succession Planning 46 Employee Benefits 46 Grievance Management and Counselling 47 Health and Safety Issues 47 Employee Management 47 CHAPTER 8 | EXTENDED RESPONSIBILITIES Blanket Distribution 50 Blood Donation 50 Charities and Donations 50 CHAPTER 9 | STAKEHOLDER MANAGEMENT FOR REPORTING Engagement with Stakeholders for Reporting 53 Material Aspects Identified Through Stakeholder Engagement 54 Boundary Defined for Each Material Aspect 54 CHAPTER 10 | GRI – G4 REPORTING INDEX General Standard Disclosures 57 Specific Standard Disclosures 58 Awards and Recognitions 60 Abbreviations ADB Asian Development Bank AML Anti Money Laundering BB Bangladesh Bank BGMEA Bangladesh Garments Manufacturers and Exporters Association BKMEA Bangladesh Knitwear Manufacturers & Exporters Association Bn Billion CAGR Compound Annual Growth Rate CDM Clean Development Mechanism CEO Chief Executive Officer CRMS Customer Relationship Management System CSE Chittagong Stock Exchange CSR Corporate Social Responsibility CP Cerebral Palsy DFID Department of International Development DFIM Department of Financial Institutions and Markets DO Development Organisation DSE Dhaka Stock Exchange DTE Directorate of Technical Education EEEF European Energy Efficient Fund EEK Energy-Efficient Brick Kiln EnvRR Environmental Risk Rating ESIA Environmental and Social Impact Assessment ESMS Environmental and Social Management System ETP Effluent Treatment Plant FCUBS Flexcube Universal Banking Solution FDI Foreign Direct Investment FGD Focus Group Discussion FI Financial Institutions GB & CSR Green Banking and Corporate Social Responsibility GCPF Global Climate Partnership Fund GDP Gross Domestic Product GHG Green House Gas GRI Global Reporting Initiative GTSC Gazipur Technical School and College ICC Internal Control & Compliance ICF International Climate Fund IDCOL Infrastructure Development Company Limited IDLC FINANCE LIMITED IDLC IL IDLC Investments Limited IDLC LF IDLC Ladies' Forum IDLC SL IDLC Securities Limited IFC International Finance Corporation IFG International Factoring Group IIDFC Industrial and Infrastructure Development Company Limited ILO International Labour Organisation IPFF Investment Promotion and Financing Facility IT Information Technology JICA Japan International Cooperation Agency LEADS Livelihood Education and Development Services LDC Least Developed Country ManCom Management Committee MIS Management Information System Mn Million MoU Memorandum of Understanding NBFI Non-Banking Financial Institution NGO Non-Governmental Organisation NPS Net Promoter Score NRB Non-Resident Bangladeshis OJT On-the-Job Training PBT Profit Before Tax PPP Public-Private Partnership REHAB Real Estate and Housing Association of Bangladesh RMG Ready-Made Garments RMF Risk Management Forum SBBN Small Business Banking Network SHS Solar Home System SME Small and Medium Enterprise SOP Standard Operating Procedure TAHN Training & Assistance for Health & Nutrition TVET Technical and Vocational Education and Training UNDP United Nations Development Programme VTS Vehicle Tracking Service WEL Women Entrepreneur Loan WIN Women In Business 8 SUSTAINABILITY REPORT 2014 IDLC FINANCE LIMITED Reporting Parameters Reporting period January 1 – December 31, 2014 Reporting cycle Annual Report edition 4th GRI-G4 level ‘In Accordance’ – Core Publication date of the most recent previous report April 2014 METHODOLOGY AND MATERIALITY BOUNDARY GRI-G4 Guidelines require stakeholder engagement to The report details how IDLC addresses the material issues identify the material CSR and sustainability aspects for stated above and how these significantly influence inclusion in the report. Accordingly, IDLC identified priority performance both within and outside the organisation. issues through one-on-one discussions with three key Besides detailing achievements and the challenges faced, stakeholder groups for CSR: the regulators, management the report also indicates the management’s approach in and employees (both business and support functions). addressing these issues and the future course of action. The stakeholders revealed the following major issues LIMITATION and concerns that significantly affect IDLC’s economic, environmental and social performance, and influence Sustainability reporting is still a very new and advanced stakeholder perception in the long run: concept in Bangladesh. IDLC is one of the very few organisations in the country to publish this report in- ■ Corporate governance, ethics and compliance house, following the GRI Guidelines. Hence it is not always ■ Social obligations through capacity development of possible to gain insights or receive guidance from similar the underprivileged and women empowerment publications locally. ■ Environmental obligations through in-house Moreover, the reporting methodology from G3.1 to G4 management, CSR and green banking initiatives has undergone a complete paradigm shift, the biggest ■ Superior customer experience through continuous challenge being engaging stakeholder groups to improvement understand their expectations from the organisation. For ■ Creating an enabling environment for all IDLC staff this report, IDLC has not applied advanced engagement techniques such as FGDs and surveys. Based on these issues, relevant material aspects were identified from the G4 guidelines