Business description – setting the scene? 1 FINANCIAL ENVIRONMENTAL SOCIAL CULTURAL VOLUME Nedbank Financials South Africa 2010 Integrated Report NEDBANK GROUP LIMITED INTEGRATED REPORT 2010 4 NEDBANK GROUP LIMITED INTEGRATED REPORT 2010 OVERVIEW GROUP REPORTS OPERATIONAL OVERVIEW SUSTAINABLE DEVELOPMENT PERFORMANCE 5 RISK, GOVERNANCE AND COMPLIANCE INTRODUCTION THE NEDBANK GROUP INTEGRATED REPORT 2010 BUILDS ON THE COMPREHENSIVE FINANCIAL AND SUSTAINABILITY REPORTING UNDERTAKEN BY THE GROUP IN RECENT YEARS. NEDBANK GROUP’S ANNUAL AND SUSTAINABILITY REPORTS HAVE BEEN INTEGRATED TO REFLECT THE COMMITMENT OF THE GROUP TO INTEGRATE ECONOMIC, ENVIRONMENTAL, SOCIAL AND CULTURAL SUSTAINABILITY ACROSS ITS OPERATIONS. SUSTAINABILITY FOCUS AREA: SOCIAL Key material issue Build societal capacity in southern Africa via: • sustainable socioeconomic development; • access to finance, affordable housing, healthcare and education for lower income earners; • preferential procurement aimed at driving economic empowerment; and The motivation to produce an integrated report is based on a number of factors, including: • The requirement to deliver quality reporting that mirrors the group’s integrated approach to sustainability as a core element of the way it does business. • Nedbank Group’s recognition of the need to align its reporting as closely as possible with best-practice recommendations on integrated reporting. • A greater focus on sustainability reporting across all areas of the business. • Eliminating the duplication of information, thereby reducing the associated paper usage and costs. To this end some of the detail contained in previous reports has been excluded from the printed document and included in the electronic version, which can be accessed on the group’s website at www.nedbankgroup.co.za. These initiatives reduced the overall volume of printed pages. Nedbank acknowledges that integrated reporting, like integrated sustainability implementation, is a journey and that this report is a step in that journey and not an end in itself. Nedbank is committed to integrated reporting, which takes various formats throughout the year. media, regulators, trade unions and various management teams. The material issues identified through this engagement process were tabled to Nedbank Group Executive Committee for consideration and, following its approval, the material sustainability issues were tabled for ratification by the Board Transformation and Sustainability Committee. The endresult of this consultative process is a report that is aligned with the identified cornerstones of economic, environmental, social and cultural sustainability. In addressing these sustainability focus areas in an integrated manner, this report covers the key material issues set out below. • ongoing enterprise development and community upliftment. Reason for being a material issue Nedbank Group recognises the importance of creating a solid and sustainable social infrastructure to secure the future of its own business and that of the country as a whole. Social sustainability is therefore approached from a clear understanding of the group’s responsibility to do whatever it can to help create a better future for all stakeholders. Nedbank Group seeks to do this via social investment, staff volunteerism and empowering partnerships. The integrated report has also been prepared in line with best practice pursuant to the recommendations of the King III Code (principle 9.1). Ernst & Young has been engaged to provide assurance on the key performance indicators as outlined in their assurance report (‘specified KPIs’) on pages 208 to 211. The specified KPIs have been emphasised in our report in bold green for identification purposes. For an understanding of the levels of assurance expressed over the specified KPIs, the preparation of our report in accordance with the self-declared Global Reporting Initiative (GRI) G3 Guidelines A+ application level using the principles of materiality, completeness and sustainability context and in accordance with AccountAbility’s AA1000APS (2008) using the principles of inclusivity, materiality, and responsiveness, reference should be made to the detailed Ernst & Young statement on pages 208 to 211. The Nedbank Group has prepared the specified KPIs in accordance with the basis of measurement as published on our website, which can be 6 NEDBANK GROUP LIMITED INTEGRATED REPORT 2010 obtained at www.nedbankgroup.co.za SUSTAINABILITY FOCUS AREA: CULTURAL Key material issue Develop a resilient corporate culture by: • building a unique corporate culture that serves as a competitive advantage; • embedding talent management; and • constantly developing and growing the group’s people. Financial Sector Charter/black economic empowerment information has been assessed by appointed auditors SizweNtsaluba. Please see page 93 for the Department of Trade and Industry scorecard as signed off by SizweNtsaluba. OVERVIEW GROUP REPORTS OPERATIONAL OVERVIEW SUSTAINABLE DEVELOPMENT PERFORMANCE 7 RISK, GOVERNANCE AND COMPLIANCE SUSTAINABILITY FOCUS AREA: ECONOMIC Key material issue Deliver lasting stakeholder value through responsible business management and lending practices, governance, compliance and ethics, risk management, information technology system integrity and competitive products and pricing. Reason for being a material issue While optimising returns to shareholders remains a key objective of everything the group does, Nedbank Group recognises that there is more to economic sustainability than financial results. What is required is a holistic approach that contributes to, and helps ensure, the financial and economic sustainability of the group and all its stakeholders – including its staff, clients, shareholders, suppliers, communities, governments and countries in which it operates. ACCESSING THE INFORMATION YOU WANT Recognising that the majority of stakeholders prefer to select Reason for being a material issue only the information that is pertinent or of interest to them, Key to the sustainability of Nedbank Group is its ability to create this integrated report endeavours to make it easier to access the an attractive, rewarding and performance-driven corporate information you require. The following icons will assist readers in culture. People are theGROUP’S OBJECTIVE OF BUILDING AN ORGANISATION THAT OPTIMISES NEDBANK only truly sustainable competitive selecting information based on their sustainability focus: advantage, and attracting and retaining the most talented INVESTMENT CASE RECOVERING ECONOMIC ENVIRONMENT POSITIVE FOR NEDBANK GDP+: QUARTER-ON-QUARTER % CHANGE (SEASONALLY ADJUSTED ANNUAL RATE) 8 6 4 2 0 -2 -4 -6 -8 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 FORECAST HISTORY SCOPE OF REPORTING This report covers the period from 1 January 2010 to 31 December 2010 and provides an overview of the operations, financial performance and integrated sustainability developments across all clusters, operational areas and majority-owned businesses of Nedbank Group. While organisations in which Nedbank Group may hold minority shares are not included in the sustainability scope of this report, the group works closely with these companies to provide guidance and assistance with all aspects of their economic, environmental, social and cultural sustainable development. SUSTAINABILITY FOCUS AREA: ENVIRONMENTAL Key material issue Minimise usage of, and impact on, natural resources through: • a reduction and neutralisation of carbon emissions; • waste management initiatives; and • collaboration with stakeholders to encourage sustainable behaviour changes. Reason for being a material issue As Africa’s first carbon-neutral bank, Nedbank Group is committed to conserving and preserving the environment. This includes an internal focus on limiting the impact of the group’s business on the resources of the country and planet, and an outward focus that involves partnering with its stakeholders to enhance its positive impact. RETURNS TO STAKEHOLDERS AND CREATES A SUSTAINABLEto economic sustainability. and capable people require a corporate culture that facilitates Information relating FUTURE IS ENABLED BY personal growth and career development, while offering ongoing AN INTEGRATED APPROACH TO ECONOMICS OF THE BUSINESS, ENVIRONMENTAL Information relating to environmental sustainability. talent management, a balanced environment, opportunities for PRESERVATION, for the efforts and achievements advancement, and recognitionINVOLVEMENT IN SOCIETY AND ORGANISATIONAL CULTURE. Information relating to social sustainability. of all employees. Information relating to cultural sustainability. It is important to note that these material issues relate back to Information relating to integrated sustainability. Nedbank Group’s long-term deep green aspirations and the 2011 strategic focus areas as outlined on page 19. A table outlining the sustainability governance structures and policy framework, linking these to strategic focus areas and key material issues, appears on page 95. Certain sections of the report are identified by means of more than one icon. This is due to the integrated nature of the reporting process and the fact that many of the initiatives and operations within Nedbank Group cut across a number of sustainability focus areas. MATERIAL SUSTAINABILITY ISSUES ADDRESSED IN THE NEDBANK GROUP INTEGRATED REPORT 2010 The process of determining material issues to be addressed in the 2010 integrated report was influenced by inputs from a broad spectrum of internal and external Nedbank Group stakeholders, including, but not limited to, shareholders, equity analysts, the INDEPENDENT ASSESSMENT AND GLOBAL REPORTING INITIATIVE INDICES REFINE YOUR READING ONLINE The same icons have been applied to the online version of the The Global Reporting Initiative (GRI) and, in particular, the GRI Nedbank Group Integrated Report 2010 allowing for specific Financial Services Sector Supplement (FSSS) form the basis for this information user’s discretion. report, and an analysis of the group’s compliance with the GRI FSSS ECONOMIC ENVIRONMENTAL SOCIAL to be selected and displayed at the INTEGRATED CULTURAL SUSTAINABILITY SUSTAINABILITY SUSTAINABILITY The online version of this report can be accessed at indices guidelines appear on pages 206 and 207. The full GRI content SUSTAINABILITY SUSTAINABILITY index is detailed at www.nedbankgroup.co.za. www.nedbankgroup.co.za. + Gross domestic product. LEVERS FOR GROWTH CREDIT YEAR-ON-YEAR % 36 PRIME % 25,0 • Recovering economic environment. • Experienced management team in place. • Continued improvement in impairments, particularly home loans, as the economy recovers. • Strong wholesale franchise and retail upside potential. • Primary client growth and non-interestrevenue (NIR) strategy gaining traction. • Growth opportunities in the Nedbank Wealth businesses. • Proven cost management culture. • Strong position in selected lending categories and liabilities/deposit-taking. • Endowment income upside when interest rates increase. • Potential from new innovative products. • Strategy for low-risk expansion into Africa. • Continuous improvement of client service and satisfaction metrics. • Continued high staff morale and unique corporate culture. • Leadership in transformation making Nedbank Group increasingly relevant to all South Africans. • Leadership in environmental issues and related business opportunities arising from the green economy. • Integrated approach ensuring sustainable short- and long-term growth. 32 28 24 20 16 12 8 4 0 -4 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 0,0 5,0 10,0 15,0 TOTAL CREDIT CREDIT FORECAST PRIME 20,0 AN INTEGRATED APPROACH TO SUSTAINABLE GROWTH Companies that have integrated sustainability have been proven to yield superior returns over the longer term. With this in mind, Nedbank Group’s activities over the past years were focused on entrenching its economic, environmental, social and cultural sustainability in order to enhance its appeal as a viable and attractive long-term investment opportunity. The group has been acknowledged as a leader in sustainability by qualifying for the JSE Socially Responsible Investment (SRI) and the Dow Jones World Sustainability indices since 2004. This has assisted the group in obtaining preferential funding over the past six years. pp 4-5 and 6-7 The introduction to Nedbank’s report discusses the content and scope of the report itself as well as providing a comprehensive overview of why the areas of economic, environmental, social and cultural sustainability are all material issues for the business. The following investment case then builds on the initial information presented and discusses how Nedbank take an integrated approach to economics of the business, environmental preservation, involvement in society and organisational culture. 8 Integrated thinking in reporting
