5. Responsibility

Accountability within the company’s management with regard to sustainability is disclosed.

The central responsibility for ensuring that business is conducted in a sustainable manner in Deutsche Hypo lies with the Board of Managing Directors. Operational responsibility lies with Sustainability Management, which is part of the Communication and Board Staff Division. Advice is also provided by the Sustainability Committee, which comprises members from departments with sustainability interests. The processes for managing the sustainability strategy are defined in the operational and organisational structure.

6. Rules and Processes

The company discloses how the sustainability strategy is implemented in the operational business by way of rules and processes.

All of the sustainability-related policies have been implemented in the process flows of the departments concerned and are established accordingly in the process descriptions. The use of the work steps and their results are documented to the extent required. The following sustainability principles and policies are currently implemented within Deutsche Hypo:
• Ethical principles
• Declaration of Conformity with the German Corporate Governance Code
• General Guideline for Prevention of Money Laundering
• Policy for controversial areas of business - weapons and armaments transactions
• Policy for controversial areas of business - pornography
• Policy for gifts and benefits
• Policy for sustainable real estate financing
• Policy for environmental impact of our business activities
• Policy for human rights and labour standards
• Policy for responsible marketing
• Policy for dealing with tax law requirements

7. Control

The company states how and what performance indicators related to sustainability are used in its regular internal planning and control processes. It discloses how suitable processes ensure reliability, comparability and consistency of the data used for internal management and external communication.

Deutsche Hypo currently provides NORD/LB with internal key performance indicators that can be used to measure the economic value added by the NORD/LB Group for its customers and society. Examples of these include volumes of financing in the fields of healthcare or social welfare. The values are collected Group-wide based on a defined reporting process and reported in NORD/LB’s Group sustainability report. The degree to which targets are being met is tracked continually and communicated regularly to the Erweiterter Konzernvorstand (Extended Group Board of Managing Directors) and the stakeholders. The results achieved and feedback form the basis for the planning for the coming years and therefore enable a continual improvement in the economic value added.

Key Performance Indicators to criteria 5 to 7

Key Performance Indicator G4-56
The organisation’s values, principles, standards and norms of behaviour such as codes of conduct and codes of ethics. Link

The following apply for all employees of Deutsche Hypo:
• the corporate principles:
    We are a long-term and reliable partner – quick and individual.
    We are friendly and also international.
    We unite tradition and modernity.
    We speak openly and treat each other respectfully.
    We use our scope to act to achieve common objectives.
    We work enthusiastically to achieve success for our customers and our Bank.
• the management principles:
    We, the managers of Deutsche Hypo…
          set a positive example and provide direction.
          accept responsibility and delegate.
          set reasonable targets and create sustainable success.
          take decisions and follow them through consistently.
          communicate openly and generate trust.
          support the advancement of our employees and acknowledge performance.
          resolve conflicts fairly and emphasise the value of constructive criticism.
• the ethical principles
• Declaration of Conformity with the German Corporate Governance Code
• the policy for gifts and benefits

8. Incentive Systems

The company discloses how target agreements and remuneration schemes for executives and employees are also geared towards the achievement of sustainability goals and how they are aligned with long-term value creation. It discloses the extent to which the achievement of these goals forms part of the evaluation of the top managerial level (board/managing directors) conducted by the monitoring body (supervisory board/advisory board).

Deutsche Hypo is classified as a significant bank in accordance with the Institute Remuneration Act (Institutsvergütungsverordnung) that came into force in 2010. It is therefore subject to the particular requirements of the Institute Remuneration Act. The remuneration-related policies of Deutsche Hypo follow and support the business and risk strategy of the Bank and aim to achieve sustainability and consistency in order to promote the responsible and risk-conscious behaviour of employees and secure the long-term success of the business. The whole management and customer advisors receive goals, of which the achievement is checked in an annual employee discussion with the Board of Managing Directors. The configuration of the remuneration systems should ensure that personnel level is adequate in terms of quality and quantity.

Key Performance Indicators to criteria 8

Key Performance Indicator G4-51a
Remuneration policies for the highest governance body and senior executives. Link

The remuneration of the Supervisory Board is determined by the Annual General Meeting. It is a fixed salary, the amount of which is partly dependent upon whether the member has assumed leadership functions on the Supervisory Board or serves on committees. The remuneration of members of the Board of Managing Directors comprises a fixed annual salary and variable remuneration. The Supervisory Board decides the level of the variable component based on the targets and the results achieved. This reflects the success of the Bank, the success of the division for which they are responsible and their individual success taking into account the risks taken. Part of the variable remuneration is paid over a period of five years in accordance with the Institute Remuneration Act.

For “risk takers”, which include members of the senior levels of management, special rules regarding payment are in effect. Depending on the position, tasks, activities and the level of variable remuneration and the risks, up to 60% of the variable remuneration is paid over a period of up to five years. The payment is results, performance and risk based and also linked to the Bank’s long-term performance.

More information on this is published annually on the website in the remuneration report. The remuneration report is generally published in the autumn of the following year.

Key Performance Indicator G4-54
Ratio of the annual total compensation for the organisation’s highest-paid individual in each country of significant operations to the median annual total compensation for all employees (excluding the highest-paid individual) in the same country. Link

The ratio of the annual remuneration of the highest-paid employee relative to the average (median) level of the total annual remuneration of all employees of Deutsche Hypo (not including the highest-paid employee) is 3:1. The remuneration of members of the Board of Management is not included in this calculation. No breakdown according to country has been provided because there are only between one and three employees active in certain countries.

9. Stakeholder Engagement

The company discloses how the socially and economically relevant stakeholders are identified and integrated into the sustainability process. It states whether and how an ongoing dialogue takes place with them and how the results are integrated into the sustainability process.

Deutsche Hypo understands stakeholders to be all persons and organisations who are directly or indirectly influenced by the Bank’s business activities or who can influence the success of its business. Based on a materiality analysis, a stakeholder analysis is also regularly prepared by Sustainability Management at Deutsche Hypo. All stakeholders are assessed based on their importance, their expectations and the forms of stakeholder dialogue. The ongoing expansion of stakeholder communications from 2017 onwards is currently planned.

Key Performance Indicators to criteria 9

Key Performance Indicator G4-27
Key topics and concerns that have been raised through stakeholder engagement, and how the organisation has responded to those key topics and concerns, including through its reporting. Report the stakeholder groups that raised each of the key topics and concerns. Link

In 2015, the two most important stakeholder groups for Deutsche Hypo were the sustainability rating agencies and the parent company NORD/LB.

NORD/LB has expressed a desire to have all key sustainability policies also implemented in its subsidiaries, with adjustments made for specific institutions. The bulk of this was achieved in 2015 within Deutsche Hypo. The implementation of the final policies is planned to be completed by the end of the current year.

Intensive discussions were held with the sustainability agencies regarding the standards that they hold banks by, and various ideas from these discussions were taken on board. At the start of 2016, Deutsche Hypo received very good sustainability ratings from the rating agencies oekom research and imug, achieving a “Prime” rating for the first time.

10. Innovation and Product Management

The company discloses how innovations in products and services are enhanced through suitable processes which improve sustainability with respect to the company’s utilisation of resources and with regard to users. Likewise, a further statement is made with regard to if and how the current and future impact of the key products and services in the value chain and in the product life cycle are assessed.

At Deutsche Hypo the product range is updated continually. This is done among other things by monitoring the market intensively and taking into account customer needs. If new, innovative ideas or new target markets are identified, a comprehensive New Product Process (NPP) is started. Here sustainability considerations are also taken into account.

Generally, investment in and finance from real estate can be considered to be sustainable if the properties are in an attractive location, are of high quality and offer a stable rent cash flow. Such properties are easy to let and are therefore competitive in the long term. They will always find an occupier so that the resources are used optimally and permanently. This is helped by “green building” standards for property being established increasingly in the market. The “green building” work group was therefore set up in Deutsche Hypo. A corresponding policy on sustainable real estate financing was introduced at the end of 2015.

At the start of 2015 the Board of Managing Directors formed an Innovation Team that will focus on the Bank’s sustainability, whereby the sustainable development of the Bank, product range and customer relations plays an important part. Extensive measures have been identified to ensure that Deutsche Hypo consolidates and expands its good market position in the medium and long term. The implementation of numerous measures already got underway in 2015, with digitalisation serving as a particular focus at this time.

Key Performance Indicators to criteria 10

Key Performance Indicator G4-FS11
(report also in accordance with GRI SRS): Percentage of assets subject to positive and negative environmental or social screening. Link (Page 38)

None available.