Case study: How NORD/LB works with its clients and customers to encourage sustainable practices

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.

For the ESG (Environmental, Social, and Governance) topics relevant to the NORD/LB Group’s business activities, internal and external stakeholders were identified through a comprehensive assessment process:

1. Identification of relevant stakeholders: Analysis of all relevant stakeholders affected by NORD/LB Group’s operations.
2. Assessment of ESG aspects: Collection and evaluation of ESG aspects such as climate, corporate governance, economic impact, biodiversity, among others.
3. Weighting and prioritization: Determining the relative importance of identified ESG aspects for NORD/LB and its stakeholders from two perspectives:
   • The impact of NORD/LB on these topics (impact).
   • The impact of these topics on NORD/LB (risks and opportunities).

The following stakeholder groups have been identified for the NORD/LB Group and are continuously reviewed as part of ongoing development efforts (e.g., CSRD audit):

• Owners
• Employees and Staff Council
• Capital market participants (e.g., rating agencies, analysts, institutional investors)
• Investors
• Media (newspapers, business press, social media)
• Suppliers and service providers
• Clients
• Politics and authorities (EU, Germany, municipalities)
• Non-governmental organizations (NGOs)
• Science and research (institutes, universities, trend researchers)
• Society (local communities, trade unions, neighbours)
• Associations (banking and trade associations)
• Regulators

These stakeholders are relevant to all sustainability-related topics at NORD/LB. In 2023, a guideline for engaging with stakeholders was established, though no specific stakeholder survey was conducted as part of the impact analysis.

NORD/LB engages in dialogues with stakeholders about ESG management through various departments. Additionally, the ESG management team regularly informs the Managing Board about new insights, developments, and ESG trends. The Managing Board has implemented guidelines to ensure transparent and consistent communication with stakeholders on sustainability matters, reinforcing NORD/LB’s role as a responsible corporate citizen towards society and the environment.

NORD/LB has been monitoring the market for years and is actively involved in discussions with ESG rating agencies. Feedback from these engagements is used to evaluate sustainability activities and foster continuous improvement. In September 2023, the ESG rating agency Sustainalytics was commissioned for a solicited rating, from which NORD/LB expects more detailed feedback to enhance its ESG rating. The same applies to monitoring media and investor feedback.

NORD/LB also actively participates in various sustainability-related working groups within the German Savings Banks and Giro Association (DSGV), the German Global Compact Network (UN GCD), and the Association of Public Sector Banks (VÖB). It is a member of the Sustainable Finance Commission of the VÖB and has been part of the UNEP FI/VfU Round Table for many years to discuss the latest sustainability developments with other participants.

How did NORD/LB work with its clients and customers to encourage sustainable practices and enable sustainable economic activities?

In its 2023 Principles for Responsible Banking (PRB) Progress Report NORD/LB reports that it works with its clients and customers to encourage sustainable practices and enable sustainable economic activities as follows:

In alignment with the UN Global Compact, the NORD/LB Group excludes certain business relationships and transactions due to their adverse effects on the climate, people, and the environment as part of its operations. To ensure that credit assessments related to ESG (Environmental, Social, Governance) issues are as clear and intuitive as possible for staff, a comprehensive ESG strategy applicable to the entire NORD/LB Group was developed in 2023. This ESG strategy is a formal commitment by the NORD/LB Group, supplementing existing financing principles and approved by the Managing Board.

All credit department employees are required to follow the business exclusions outlined in the ESG strategy during their credit evaluations. A mandatory “ESG financing conditions checklist” has been integrated into the processes to guide employees on which aspects of the ESG strategy should be reviewed.

As part of its strategic focus as a bank supporting the energy transition, NORD/LB assists its clients in transitioning to a climate-neutral economy. Roundtable discussions are held with customers and experts in key sectors of this transition, such as energy, real estate, and agriculture, to explore sector-specific challenges and identify potential solutions. Additionally, individual solutions are discussed with customers during financing consultations.

For NORD/LB, incorporating sustainable principles is a fundamental aspect of its role as a financial services provider and a public-law institution serving society. The bank is committed to upholding human rights and avoiding any risks related to human rights violations. The NORD/LB Group conducts risk assessments for its own operations as well as for its service providers and suppliers to ensure compliance with its corporate due diligence obligations, as outlined by the German Supply Chain Due Diligence Act. Furthermore, the NORD/LB Group fully endorses the international UN Guiding Principles “Protect, Respect and Remedy.”

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.

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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 NORD/LB, 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.nordlb.com/fileadmin/redaktion/Nachhaltigkeit/pdf/NORDLB_Group_Sustainability_Report_2023.pdf

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