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.

In order to offer suitable solutions for clients who wish to invest their money ecologically and ethically, OLB included relevant products in its portfolio. It currently offers sustainable investment funds that invest their fund assets in ecologically or ethically compliant investment universes. Sustainable funds must comply with on more stringent investment criteria in addition to undergoing an assessment of their profitability, liquidity and security. This includes, for example, investments in companies active in the fields of renewable energy, ethical or ecological products and services, green food, environmental refurbishment, regional economic cycles and human working conditions. These funds exclude any type of investment in child labour, the nuclear industry, chlorine chemistry, genetic engineering, overexploitation, animal testing or military technology.
OLB itself is actively committed to ecological responsibility and the careful use of resources: by introducing electronic mailboxes and a consequent increase of their usage rate among clients in the past years, the Bank has already reduced the number of printed documents by several million copies over the past years (see criterion 12 “Resource Management“). After the increase of active online banking users to almost 250,000 in 2020 (after the migration of Wüstenrot Bank Pfandbriefbank AG) and by combining it with a more intensified use of online services (e.g. electronic transfers, address changes, changes of tax exemption orders and permanent direct debit orders, etc.) many additional orders were handled electronically, without paper and by saving the natural resources.
The digital expansion is still a focus point to realise the communication and interaction with clients increasingly by electronic means and to achieve more positive effects in terms of resources consumed by clients and the OLB. For example, the OLB Banking App was established in 2018 completely without any use of paper. Since the introduction of this option to the end of the reporting period, approx. 47,000 accesses were created, and no hardcopy applications were needed for creating this digital access. The Bank introduced a fee for bank statements and receipts for payment transactions in hardcopy for some account versions, in order to motivate clients to use the available digital options and to reduce paper consumption.
In addition to the digitalisation of these important communication and information paths, OLB attaches increasingly value to reducing its product conclusion processes based on paper and the associated submission of physical receipts. For example, great progress was made in the field of digital document management and thus the avoidance of hardcopy receipts for core products in the unit of construction financing and instalment credits where the Bank created new application lines and partially combined them with digital platform providers. This not only saved paper but also made a positive impact on the Bank’s internal logistics, since physical application forms and receipts no longer need to be transported, which also reduces mileage.
OLB has also been supporting its clients from the industry for more than 20 years in the planning and construction of wind turbines. In addition to wind park financing, the Bank’s product range also comprises a so-called wind park time deposit since the year 2016, in case of need, which takes account of the conditions imposed by municipalities to grant a financial participation to affected residents – this product, has, however, not been requested in the year 2020. Agriculture is, besides renewable energy, generally an important economic factor in the region. The agricultural operations which have, in the meantime, become highly specialised and highly engineered businesses, and are subject to a strong structural change, are supported by corporate client managers and the Bank’s own specialist consultants for the fields of the agricultural sector and wind energy.
Another component of the Bank’s sustainable activities is its high expertise in the field of public subsidy programmes (in particular for energy efficiency) which accounts for a high degree of the credit business with approx. 9 % in the construction financing business, for about 53 % in investment financing and for about 27 % in all client groups. In 2020, OLB essentially supported its commercial and self-employed clients with liquidity loans made available by KfW, LRB and the development banks. Applications and grants are handled digitally by up to 95 %.
The Bank does not specifically measure the social and ecological effects of financial investments or credit products as a whole. Reason is, inter alia, that such a measurement would not be possible without greater efforts due to the manifold options for using such loan funds. OLB also grants very specific financial means, the ecological impact of which would need to be confirmed by energy efficiency experts. The financing share in such funds resulted in a reduction of greenhouse gases of about 1,996 tonnes of CO2 p.a. in 2017, according to a retrospective study conducted by the KfW.
Moreover, borrowers of OLB also use their loans for financing their own social or ecological activities. Investors acquire shares in special assets of the relevant fund vehicle, when they invest in an investment fund offered by OLB. This fund applies an investment policy set out in the sales prospectus and acquires securities / shares from / in companies which comply with the sustainable philosophy of the selected funds. Such an approach enables no direct measurement of social or ecological effects, but allows for an indirect conclusion of an improvement (e.g. when investors acquire shares in micro financial funds and the latter grant loans to MFI institutions which again grant micro-credits to small and very small entrepreneurs, it can be assumed that the social well-being of the target borrowers will increase).