1. Strategic Analysis and Action

The company declares whether or not it pursues a sustainability strategy. It explains what concrete measures it is undertaking to operate in compliance with key recognised sector-specific, national and international standards.

The integration of sustainability into the core business is key for ensuring the long-term future and competitiveness of Deutsche Hypo, of its customers, and of its business partners. In order to analyse the opportunities and risks of the key activities in respect of sustainable development, Deutsche Hypo conducts a regular materiality analysis. In this materiality analysis the relevance of sustainability issues are assessed from the viewpoint of stakeholders and from the viewpoint of the company. Deutsche Hypo follows the principles of the UN Global Compact, the UNEP FI, the sustainability guidelines of the German Central Real Estate Commission entitled “Sustainability in the Real Estate Market – Code, Reporting and Compliance” (Nachhaltigkeit in der Immobilienwirtschaft - Kodex, Berichte und Compliance) and is a signatory to the principles of the initiative “Diversity as a Chance – Diversity Charter”. With a systematic approach to sustainability issues, Deutsche Hypo ensures that necessary sustainability considerations are taken into account in business activities: transactions that are noticeably in breach of the fundamental principles of sustainable development, for example transactions relating to controversial areas of business such as the arms industry or pornography, are identified and rejected on the basis of exclusion criteria. A reputation committee provides advice on issues relating to specific business transactions as and when required. Sustainability guidelines establish the relationship between individual transactions and the relevant, specific sustainability standards from the viewpoint of Deutsche Hypo. As a result sustainability considerations can be taken into account individually and in a targeted manner.

A working environment in which all employees are treated equally regardless of their gender, nationality, ethnic origin, religion or belief, disability, age, sexual orientation and identity is also an essential part of Deutsche Hypo’s values for its personnel work.

2. Materiality

The company discloses the aspects of its business operations that have a significant impact on sustainability issues and what material impact sustainability issues have on its operations. It analyses the positive and negative effects and provides information as to how these insights are integrated into the company’s processes.

Deutsche Hypo combines a long tradition and many decades of experience in the area of commercial real estate banking with responsible corporate governance and a future-oriented strategy. The concept of sustainable corporate governance is firmly established in the corporate policy. Accordingly, Deutsche Hypo developed an initial sustainability vision and strategy in 2013. At the end of 2015, an expanded sustainability strategy with a five-year horizon was launched (http://www.deutsche-hypo.de/en/investor-relations/sustainability/dokuments). This strategy is reviewed annually and contains various focus topics and targets in a range of areas. The targets defined here will be broken down every year into individual measures and measurable key figures. By achieving these targets in the coming years, Deutsche Hypo will improve its sustainability significantly.

3. Objectives

The company discloses what qualitative and/or quantitative as well as temporally defined sustainability goals have been set and operationalised and how their level of achievement is monitored.

Deutsche Hypo's current sustainability strategy was published at the end of 2015. It addresses the central aspects of global change for Deutsche Hypo and its customers, and illustrates how opportunities are realised efficiently and risks are managed responsibly. In addition, Deutsche Hypo's central goal is to further develop its sustainability on an annual basis and to achieve at least a "prime" rating. Based on this strategy, sustainability targets are set for each year. The current targets can be found in the 2016 sustainability programme (http://www.deutsche-hypo.de/en/investor-relations/sustainability/dokuments). All of the targets in the programme are currently weighted equally. The degree to which the targets have been met will be determined once a year and reported to the Board of Managing Directors. These results will also be communicated annually in the sustainability report. In 2015, the targets of the 2014/2015 sustainability programme were achieved almost in their entirety. Only the target “implementation of a policy as a framework for the alignment of stakeholder management” was postponed to the end of 2016. This is because the results of the parent company NORD/LB – which also works on stakeholder management matters – are still pending.

4. Depth of the Value Chain

The company states what significance aspects of sustainability have for added value and how deep in the value chain the sustainability criteria are verified.

Deutsche Hypo provides commercial real estate finance in its core markets of Germany, UK, France, Benelux and Poland. It is important to the Bank that its customers view their partnership as a partnership of equals. Deutsche Hypo is making an active contribution towards the real estate industry building a permanent and sustainable infrastructure. It is in keeping with how the Bank sees itself that it sets high quality standards in respect of financing and only enters into new business that promises to be successful. Sustainability considerations are taken into account in real estate risk assessments. If a property is planned in a sustainable manner, the risk of for example vacancy is reduced. So that its core business can remain sustainable, the Bank assesses exposures in its risk management taking into account economic, building law and environmental considerations. Together with the customer the best possible financing solution is then developed. Partly in order to quantify these sustainable considerations, the “Green Building” work group was set up in Deutsche Hypo. As at 31 December 2015, project developments planned for certification accounted for 36% of total commitments (previous year: 44%). This percentage is subject to a natural volatility because the number of project developments and affected property types can vary greatly from year to year.

Key Performance Indicators to criteria 1 to 4