Case study: How NIB promotes business integrity and compliance

What are the material issues the company has identified?

In its 2018 Activity Report NIB identified a range of material issues, such as financial strength, reputation and reliability, estimating and monitoring the sustainability impact of all loan projects, climate change mitigation and adaptation. Among these, promoting business integrity and compliance stands out as a key material issue for NIB.

Stakeholder engagement in accordance with the GRI Standards                        

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups NIB engages with:

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics NIB carried out a stakeholder survey. The key respondent groups were lending customers, investors and public authorities. Altogether, 108 interviews were completed.

What actions were taken by NIB to promote business integrity and compliance?

In its 2018 Activity Report NIB reports that it took the following actions for promoting business integrity and compliance:

• Implementing an Integrity Due Diligence Policy
• In March 2018, NIB’s Board of Directors approved an updated Integrity Due Diligence (IDD) Policy. The new Policy provides a robust framework for identifying, mitigating and monitoring integrity risks. It is built around risk assessments and defines the necessary checks prior to engaging with different counterparties, as well as the frequency of counterparty monitoring. As a result, NIB can concentrate its IDD resources in proportion to the associated risk. The IDD Policy further describes how NIB manages compliance risks, and defines the internal roles when assessing them. It also provides guidance on when and how to escalate IDD issues to the Office of the Chief Compliance Officer (OCCO) and the decision-making bodies within NIB, including escalation to the Board of Directors. The new Policy covers all operations. The screening includes borrowers, treasury counterparties and entities providing goods and services to NIB. In addition to the IDD Policy, detailed procedures have been developed for all relevant activities to provide practical guidance for staff conducting the integrity checks. To assist NIB staff with the identification of integrity risks, a new unit has been established in the Lending department that provides support by collecting information and conducting the IDD screenings. The Policy also covers the assessment and mitigation of risks for money laundering and terrorist financing, the prevention of engagement with sanctioned entities and individuals, and the assessment of cross-border structures. The development of the new IDD Policy and procedures was carried out by OCCO in close cooperation with the Lending, Treasury and Legal departments.

• Applying an Investigations and Enforcement Policy
• In 2018, NIB’s Sanctions Panel debarred four companies and three individuals for prohibited practices. This was the first application of NIB’s Investigations and Enforcement Policy leading to a sanction (debarment). The subjects appealed the initial decision by the Sanctions Panel and NIB’s Appeals Committee upheld the decision by the Sanctions Panel. The Sanctions Panel is comprised of two external members appointed by the Board of Directors and one internal member from NIB appointed by the President on a case-by-case basis. The Appeals Committee handles appeals related to Sanctions Panel decisions to impose sanctions and comprises the Chairperson and Deputy Chairperson of the Board of Directors.

• Implementing an updated Code of Conduct for Staff
• In November 2018, NIB’s Board of Directors approved an updated Code of Conduct for Staff. The main changes related to trading in financial instruments and to declarations of financial and business interests. The trading rules were updated to minimise any real or perceived conflicts of interest in relation to staff’s actions taken at work and in their personal investments. The declaration of interests was, among other things, expanded to include sections on certifying that staff are acquainted with the changes in NIB’s legal framework made during the previous year. Staff members are not allowed to trade in financial instruments issued by borrowers while NIB is considering providing a loan to the borrower. In addition, the President and the members of the Executive Committee shall declare their financial interests in NIB’s borrowers. Another change relates to staff’s ability to report cases of harassment to OCCO, in addition to the previously available reporting channels. NIB’s Code of Conduct e-learning tool was also updated to align with the changes, and staff will be required to complete compulsory training as well as a test.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standards addressed in this case are:

1) Disclosure 205-1 Operations assessed for risks related to corruption

2) Disclosure 205-2 Communication and training about anti-corruption policies and procedures

3) Disclosure 205-3 Confirmed incidents of corruption and actions taken

Disclosure 205-1 Operations assessed for risks related to corruption corresponds to:

• Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
• Targets: 16.5

Disclosure 205-2 Communication and training about anti-corruption policies and procedures corresponds to:

• Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
• Targets: 16.5

Disclosure 205-3 Confirmed incidents of corruption and actions taken corresponds to:

• Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
• Targets: 16.5

78% of the world’s 250 largest companies report in accordance with the GRI Standards

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References:

1) This case study is based on published information by NIB, 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 original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:

http://database.globalreporting.org/

2) https://www.globalreporting.org/standards/gri-standards-download-center/

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