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.

OLB follows the principle of pursuing long-term and sustainable activities, both in its banking business and in view of social and ecological aspects. The topic of sustainability is integrated as a strategic factor in the entire Bank. That is, first and foremost, an operational principle derived from economic aspects where the development of business activities is planned and performed by permanently ensuring the Bank’s corporate substance that is essentially necessary for its business operation. In addition, the Bank considers events and conditions arising in the fields of environment, social affairs and from corporate management which might have an actual or potential impact on the Bank’s asset and financial situation and the result of its operations as well as on its reputation. Therefore, and in line with its business strategy, the Bank aligns its business activity, inter alia, on the United Nations Principles for Responsible Banking. Moreover, OLB puts, in its business activity, special emphasis on promoting an adequate risk culture whose aim is to strengthen the risk awareness as part of the risk management on all levels of its organisation.
 
OLB discloses information on this topic in this separate report (Non-Financial Report), the contents of which is based on the standards of the German Sustainability Code (DNK) and contains, inter alia, a number of quantitative performance indicators of the Global Reporting Initiative (GRI) as specified by the DNK. In the context of its business strategy, the Bank committed itself to the sustainability aspects described in this Non-Financial Report spanning the five dimensions of environment, employee matters, social affairs, respect for human rights as well as the fight against corruption and bribery.
 
OLB thrives on the trust that its client, shareholders, employees and the public have in the performance and integrity of the company. This trust depends mainly on the conduct of employees, officers and management and how they use their abilities for the benefit of clients, stockholders and the company. The Bank introduced a Code of Conduct for all of its employees, officers and the management. The principles of conduct described in OLB’s Code of Conduct integrate in the company’s business activity any internationally recognised principles regarding human rights as well as sustainability and social responsibility, as those set out in the UN Global Compact Program. They provide our employees with guidelines for their daily thinking and actions. In addition to topics such as corruption, money-laundering and discrimination, the principles of conduct also deal with possible conflicts of interest and how to avoid them. OLB’s Code of Conduct is available on the internet [see: OLB Code of Conduct].
 

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.

OLB is a modern financial institution which mainly assumes important functions for the economy by granting loans and managing deposits. The Bank’s business activity has a solid, steady and long-term orientation and is based on a sustainably profitable business model. From a corporate point of view, OLB strives for commercial success and names, as essential pillars of its business strategy, a wide customer base, competent and committed employees as well as stable re-financing sources combined with a mature risk management. OLB considers the respect for the interests of clients, employees and shareholders as being important factors for a successful implementation of its strategy.
 
A trusting and successful cooperation with clients is mostly based on long years of business relations. It is important for the Bank that clients receive understandable and transparent products and consulting services at fair prices.

In addition to this economic aspect, OLB’s objective is to act sustainably also in the ecological and social sense. The Bank aligns its business activities, inter alia, on the UN Principles for Responsible Banking. Its OLB-Stiftung (Foundation) promotes projects and initiatives each year because the Bank not only wants to care for people as a competent financial partner, but also as a company which assumes social responsibility (see criterion 18: “Corporate Citizenship“).
 
The Company naturally respects the topics of environment, employee rights, social matters, human rights and the fight against corruption and bribery that are described herein. In its role as financing partner, in particular, for medium-sized companies and private clients, in case of need, the Bank relies on predictability and longevity. Cash deposits provided by clients form the most important and also solid source of refinancing for granting loans. Economic, ecological and social objectives interact in a manner that they should result in a sustainable increase of the goodwill.
 
In addition to ecological or social conditions and challenges which are considered, inter alia, in the Bank‘s corporate financing decisions and capital market offers, OLB is exposed to the influences of external factors coming from the market environment for Banks as described below. In general, OLB actively shapes the social and technological change, currently mainly in view of digitalisation.
 
The financial industry has been shaped not only by digitalisation but also by increasing regulations and by the continuing low interest rate phase. Both the legislator and supervisory bodies impose an increasing number of measures on financial institutions to strengthen their equity and liquidity and for consumer protection which OLB implements in its business operation. As a consequence of these standards, it is mainly the quantitative and qualitative requirements to the liable equity and the liquidity position of Banks that are raised. Digitalisation of business models and processes caused by increasingly changing client conduct and the fierce competition, including new companies from the FinTech sector entering the market, exert strong pressure on existing credit institutions to adapt. The low interest rate levels which have been prevailing for a long time now, mean that banks with a high number of services are no longer able to generate significant earnings. A rapid departure from this expansive monetary policy is not to be expected. So, in addition to the pressure on earnings, the costs arising for implementing the regulatory requirements which are becoming more stringent will rise even more.
 
In the 2020 reporting year, another essential external factor was added with the breakout of the Corona virus pandemic. Against this backdrop, both the need for consulting rose, in particular for companies and self-employed persons affected by the Corona crisis regarding the provision of public subsidies and government aid, and the number of bank employees working at mobile workstations from their home. In parallel, the Corona virus pandemic was a driver of digitalisation, mainly for payment transactions, since card payments rose, and cash payments declined in this connection in the entire industry.
 
But even regardless of the Corona pandemic, the needs and behaviour of clients are changing and increasingly adapt to the digital customs of their every-day life. Personal advice remains the most important element for OLB, even in the digital age and a core competency in client business. Simultaneously, however, the Bank will continuously increase the availability and service offer via digital channels such as phone, internet and video chat. Digitalisation offers the opportunity for providing numerous services, regardless of physical locations and opening hours and to increase the efficiency by automated business processes. One risk factor is, however, the willingness to accept these offers among clients still wishing to have access to a branch office of their bank, despite these alternative options being available. One positive aspect of the increasing use of digital media from the point of view of sustainability is the use of paper which has been declining over the past years, mainly since information and letters are provided in digital mailboxes (see criterion 10 “Innovation and Product Management” and 12 “Resource Management“).

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.

OLB’s objectives are defined in its business strategy, both on the level of the entire bank and on the level of its business fields and are put in concrete terms and applied in the operation by the individual specialist departments. The Bank’s Private Client business unit, for instance, pursues the aim of modernisation with focus on the client and to adapt to the changed behaviour of clients. Core objective of the Corporates & SME business field and of the business field of Specialized Lending is to expand their earnings potentials based on existing, long-term business relations, and to achieve further profitability. 
 
The business strategy is reviewed regularly on the basis of a clearly defined review process and comprises, in particular, a control of the implementation and effectiveness of any objectives and measures defined in the previous year. Moreover, the degree of achievement and the status of implementation of all defined objectives and topics is monitored during the year by regular internal monitoring and reports and such are published externally according to the legal provisions (e.g. in the Financial Report, Disclosure Report or in the Non-Financial Report). In addition to the prescribed external audits performed by its auditor or the Financial Supervisory Authority, OLB also subjects itself regularly to several product, service and unit tests (e.g. TÜV quality seal).
 
Given the essential ecological aspects, OLB aims at continuously reducing both its consumption of energy and paper and its CO2 emissions. In December 2019, OLB specified target figures for the share of women in the Board of Directors and in the two management levels below the Board and set these percentage rates to 25 % in order to implement the German Act on an Equal Participation of Women and Men in Leadership Positions of the Private Economy and Public Service. The Bank wishes to achieve these targets by December 2023. It is aware that it will only be successful in the long term as an enterprise, if women will equally be promoted based on a sustainable concept and are deployed in leadership positions based on their performance.
 
OLB committed itself to promoting diversity in the company from an early stage. For this purpose, it created supportive conditions, aligned its human resources processes on this goal and took different measures. In addition to offers ensuring a better compatibility of family and profession, these range from personnel promotion programmes via targeted preparations for future tasks to mentoring of future officers during which participants may benefit particularly from female officers with long years of experience.
 
Another objective of OLB is to strengthen the health resources of employees and to create favourable conditions to that end. The implementation of a corporate health management at OLB supports employees and officers in their efforts to preserve and improve their health, by creating healthy conditions in the operation and offering options to promote health. By doing so, the company exceeds the objectives of merely complying with the existing legal regulations.
 
For OLB, the objectives mentioned above each have the same priority. Insofar as they overlap, these objectives contribute to achieving the United Nations Sustainable Development Goals (SDG) which were agreed by the UN member states on an international level as a political guideline to safeguard a sustainable development on an economic, social or ecological level. That relates, for example to SDG no. 3 “Good Health and Well-Being“ or no. 5 “Gender Equality“. In addition, OLB contributes to achieving other SDGs, such as e.g. no. 7 “Affordable and Clean Energy“ or goal no. 9 “Industry, Innovation and Infrastructure” when it grants loans, since such enable projects, in particular in the fields of renewable energy and agriculture.
 

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.

OLB is member of the Association of German Banks. The private banks organised in this association are committed to the guiding principle of a sustainable development. For these private banks, it means to be economically successful in the long term, and to act responsibly in terms of ecological and social matters. The Federal Association of German Banks cooperates with the Council for Sustainable Development in applying the German Sustainability Code. As a financial services provider, OLB generates the largest part of its added value within the company. In banking business, sustainability aspects are considered mainly in the context of the reputation risk management. For instance, any decision-making process for the grant of loans comprises a verification of the so-called ESG criteria (Environmental, Social, Governance) so that certain transactions are explicitly prohibited under environmental or social considerations or based on regulatory provisions or require an audit of individual cases.
 
The share of value added by the banking operation which does not arise from banking transactions comprises mainly the procurement of infrastructure for data processing (inter alia, network technology, computing centres, telecommunication), market data, service provision (such as consulting, external personnel services, mobility services) as well as buildings, logistics and insurances (e.g. construction services, building operation, bank technology). OLB exerts influence on such share on the basis of comprehensive regulations, in particular regarding purchasing processes, transaction monitoring, 
reputation risk management and compliance; all of which require the consideration of sustainability aspects. The Bank is not aware of any social or ecological problems along the value chain, and obtains voluntary written and oral information from its suppliers or conducts investigations to that end. Its Code of Conduct places special importance on the protection of natural resources. Employees should ensure that they protect natural resources during their work and keep their impact on the environment as low as possible, for example by saving material and energy, avoiding or reducing and recycling of waste or by making careful plans and by considering all of these aspects in the construction and operation of buildings. When it comes to the selection of and cooperation with suppliers and other service providers, or the selection and use of advertising materials and other services, this attitude means that employees should not only consider economic aspects but also ecological and social criteria.
 
OLB exerts influence on the environment and the society by observing sustainability criteria based on different positions. As a credit institution and when taking credit decisions, it observes financing directives and established principles regarding financing quotas and exclusions. When it engages service companies, requirement guidelines are considered, for example with a view of engaging regional providers with priority. As an employer, OLB considers health aspects at the workplace and provides training on such during seminars and advanced training measures. And as a company, OLB constantly verifies any available savings options under sustainability aspects by replacing, for example, paper-based processes by digital solutions or by avoiding business travels by holding web-based trainings and conference calls or video calls. Core brand values such as sustainability, trust, competency and regionality are anchored along the entire value chain and are emphasised and constantly verified both in its internal and external communication. For informing its business partners and all interested parties, OLB regularly publishes information and reports on sustainability aspects, for example special projects funded by the OLB-Stiftung on its website.

Key Performance Indicators to criteria 1 to 4