Case study: How BN Bank identifies and works on strategic business opportunities to increase positive and reduce negative impacts

Stakeholder identification and consultation

Please describe which stakeholders (or groups/ types of stakeholders) you have identified, consulted, engaged, collaborated or partnered with for the purpose of implementing the Principles and improving your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders, what issues were addressed/results achieved and how they fed into the action planning process.

An active dialogue with BN Bank’s key stakeholders is a vital tool for achieving the objectives outlined in its Sustainability Strategy. Through analyzing its interactions with these stakeholders, the bank has identified the SDGs where it believes it can make the greatest impact. Maintaining an open and ongoing conversation with customers and other stakeholders is therefore essential to BN Bank’s efforts to meet these goals.

BN Bank’s customers and their activities form the foundation of the bank’s business, and addressing their needs is crucial for BN Bank’s success in achieving its objectives. BN Bank engages with customers through various channels, including surveys, meetings, the bank’s website, and marketing materials.

Generally, BN Bank’s customers have provided very positive feedback, reflecting high levels of satisfaction. Continuous dialogue with customers is important for staying informed about market trends and developments. Property developers constitute a significant sub-group of BN Bank’s customers, as the bank actively serves the project and property development market. BN Bank possesses extensive expertise in this area and maintains strong knowledge of responsible actors who demonstrate good business ethics. The bank aims to offer products and services that comprehensively meet customers’ financial needs while helping to ensure they do not encounter difficulties in fulfilling their obligations. This includes establishing clear criteria for loan serviceability. BN Bank anticipates a future where increasing numbers of customers value the bank’s sustainability profile and rely on BN Bank to provide sound advice and financing solutions for environmental initiatives, such as upgrading residential and commercial buildings to meet future environmental standards. Customers also expect protection against fraud, safeguarding of their privacy, and accurate, reliable information about products and services.

Ongoing customer engagement is essential for monitoring market trends and evolving customer needs, enabling BN Bank to continue delivering relevant services over time. The bank conducts lending and deposit activities within two distinct business areas: the personal market (nationwide) and the business market (the central eastern region). In both areas, BN Bank seeks to provide efficient, predictable, and solution-oriented banking services that ensure excellent customer service. ESG considerations are integrated into customer and credit assessments.

Employees are a vital resource for BN Bank. The bank actively works to become an attractive employer to attract and retain skilled staff. Dialogue with employees takes place through regular department and general meetings, interactions with union representatives, structured meetings between employees and their immediate managers, and employee surveys.

The key topics concerning employees are as follows:

• The bank prohibits discrimination based on gender, sexual orientation, ethnicity, identity, or other factors.
• Employees should have opportunities to learn necessary skills and enjoy a rewarding and fulfilling workday.
• A safe and healthy physical and psychosocial work environment must be maintained.
• Employees are entitled to safe working conditions that promote a healthy balance between work and leisure.
• The bank fosters good collaboration with the workers’ union and ensures fair wages.
• BN Bank is committed to creating a positive, health-promoting working environment physically, mentally, and socially.
• All employees participate in staff meetings with their managers.

All employees are covered by a collective agreement, and approximately 75 percent of the bank’s workforce is unionized. BN Bank is a member of Finans Norway and adheres to the Main Agreement and the Central Agreement established with the Financial Association. Beyond these agreements, employee wages and working conditions are regulated by a company agreement, which was revised in 2022. In collaboration with the Financial Association of BN Bank, the bank has developed a personnel handbook, a management handbook, and an HSE (Health, Safety, and Environment) handbook.

Owners
BN Bank is owned by a consortium of banks within the Sparebank1 alliance. The bank’s owners are knowledgeable and professional entities with a thorough understanding of the market conditions in which the bank operates and the regulatory requirements it must meet. The owners have clear expectations and demands concerning growth, profitability, value creation, and sustainability efforts. The bank maintains ongoing dialogue with the owners through periodic reporting, board meetings, participation in joint forums, and other contact arrangements.

Over time, BN Bank must meet the owners’ expectations for growth and returns. Additionally, the owners are increasingly emphasizing the importance of sustainability, with a focus on sustainable finance. This includes ensuring strong control measures against money laundering and terrorist financing, as well as responsible environmentally-friendly investments. Transparency through effective reporting is vital to facilitate a steady flow of information between the bank and its owners. The bank prepares climate accounts to measure its carbon footprint and has implemented various measures to reach its targets for emission reductions in designated zones.

Investors
The Norwegian bond market serves as a significant source of the bank’s debt capital. BN Bank is committed to providing ongoing reports to the capital markets, offering relevant information and insights into the bank’s operations. The expectations and requirements from investors help to enhance the level of reporting, which in turn supports improved business management. BN Bank’s engagement with investors occurs through face-to-face meetings, meetings with brokers and analysts, and through official financial reports and investor presentations.

Bondholders are increasingly demanding that the bank adopts sustainable practices, with an emphasis on sustainable finance. This includes a focus on reducing greenhouse gas emissions within the bank’s lending portfolio. Transparent and comprehensive reporting is essential to maintain a good flow of information between the bank and its bondholders.

BN Bank prepares sustainability reports that align with what is expected for a bank of its size and complexity. These reports include a climate account to measure the carbon footprint generated by BN Bank’s direct and indirect activities, calculated according to international standards. Additionally, the bank has established a framework for issuing green bonds and completed its first issuance under this framework in 2022.

The Supervisory Authorities
The supervisory authorities oversee the regulations that establish key framework conditions for BN Bank’s operations. BN Bank’s communication with these authorities occurs through circulars, other written updates, regular reporting, meetings, and various ad hoc contacts.

Regulatory requirements are generally the same regardless of the bank’s size, meaning small banks must meet the same standards as larger institutions. BN Bank must operate in accordance with these regulations and maintain sound risk management practices, including compliance with AHV regulations and ensuring that credit assessments and credit risk management incorporate ESG considerations.

How did BN Bank identify and work on strategic business opportunities to increase positive and reduce negative impacts?

In its 2024 PRB Reporting and Self-Assessment Template BN Bank reports that it identified and worked on strategic business opportunities to increase positive and reduce negative impacts as follows:

The shift toward a low-emission society presents business opportunities for BN Bank. Developing and adapting existing buildings to meet future standards involves investments that often require financing through loans. BN Bank is well-positioned to provide such funding and can thus play a vital role in the transition alongside its mortgage and commercial loan customers. Engagement with its customers is a key component of BN Bank’s strategy and approach to the green transition. BN Bank aims to support projects with suitable financing solutions. It is clear that significant investments are needed in the existing building stock to help society achieve climate goals. The potential for the bank to contribute in this area will be an important aspect of its operations in the coming years. Additionally, there is growing awareness among customers regarding energy consumption and greenhouse gas emissions associated with their properties.

UN Principles for Responsible Banking: Accelerating a positive global transition for people and the planet

With over 300 signatory banks representing almost half of the global banking industry, the Principles for Responsible Banking are the world’s foremost sustainable banking framework. Through these Principles, the banking community takes action to align core strategies, decision-making, lending and investment with the UN Sustainable Development Goals and international agreements such as the Paris Climate Agreement.

FBRH Principles for Responsible Banking (PRB) Assurance:

First class PRB assurance services: The result of solid, hands-on ESG/ Sustainability experience

• • • FBRH is a GRI Certified Training Partner (Global), ISEP Training Centre and a member of CPD.
    • FBRH builds trust. Over 200 reviews from top professionals from around the world demonstrate our ability to build strong, trusting business relationships.
    • FBRH possesses a unique skill set that combines ESG/sustainability certified training, experience in advisory services and report preparation, and ESG/sustainability report assurance.

The combination of all the above empowers FBRH to provide first class Principles for Responsible Banking (PRB) assurance services.

References:

This case study is based on published information by BN Bank, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://www.bnbank.no/globalassets/02_om-oss/gronn-bank/barekraftsbibliotek/unep-fi-prb-rapport-2024.pdf

Note to BN Bank: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.