Stakeholder engagement and material concerns report #Prosper

Transcription

1 Stakeholder engagement and material concerns report 2017 #Prosper

2 Dialogue with stakeholders, key for value creation Introduction In a global context, as the current one, stakeholders demand even greater responsibilities from companies with which they interact. Stakeholders increasingly seek to influence decisions and have an impact in the results and the sustainability of companies direct or indirectly. In this context the importance of a continuous dialogue with stakeholders increases for any organization whose objective is to be responsible and sustainable. Maintain a dialogue process with the different interest groups provides various benefits for the companies, among which are: Better risk and opportunity management, which allows the stakeholders participate in the identification of relevant topics for the organization. relationship process established with each of the stakeholders, favoring, therefore, the innovation in the company. An increase in the level of understanding of current social, economic and environmental context and future, which allows the identification of new markets and business opportunities. Increase trust and acceptability of the company. Dialogue with stakeholders currently shows in good measure how sustainability is managed in companies. This engagement is generally acknowledged by numerous international reporting standards, associations and initiatives linked to sustainability as a key tool for understanding the concerns of those who are related to the company and for detecting risks and opportunities. The development of new processes, products and services from the information collected in the 1. Analysis of global trends and stakeholders' expectations 2. Identification of material matters Better risk and opportunity management Innovation: new processes, products and / or services 4. Value creation and objectives 3. Definition of strategic priorities Greater understanding of the context social, economic and environmental Increase trust and acceptability of the company 2 Stakeholder engagement and material concerns Report 2017

3 Dialogue and value creation at Banco Santander Stakeholders are at the core of Banco Santander's purpose and aim. The purpose is to help people and businesses prosper and the aim is to become the best retail and commercial bank. This provides the foundations for the Bank s relationships with its employees, customers, shareholders and communities, and help Banco Santander to understand and meet their expectations. The Bank's capacity to achieve these premises depends to a great extent on its ability to generate trust and value. This requires understanding the expectations of its stakeholders, and to evaluate and consider these in all of its plans and actions. The relationship with stakeholders is, therefore, essential to defining corporate strategy and culture. Santander helps satisfy the needs of societies by acting responsibly in its day-to-day business and aligning its activity with value creation in the long term. The Bank's strategy is aligned with generating financial and social prosperity in a sustainable manner to maintain and consolidate the trust placed in it by all of its stakeholders. Santander's strategic priorities in the area of sustainability and application of the same through plans, programmes and activities are aligned locally as well as in the international agenda. A good example is the Bank's commitment to the Sustainable Development Goals (SDG). To understand its real impact on society, the Bank continues to identify social and environmental (both negative and positive) externalities. This exercise helps Santander to detect possible risks for business and identify opportunities to create additional value for the society and the environment. Dialogue integrated into policies and processes The sustainability policy defines and identifies the key aspects of the Bank s relationships with its various stakeholders. The new committee for responsible and sustainable banking and culture is responsible for supervising and monitoring the corporate reputation and involvement with stakeholders and also for analysing and reporting to the board about social and ethical environmental aspects and about the expectations of stakeholders in this regard. The general code of conduct and corporate behaviours define and establish the basis for all actions to be applied by Bank personnel in their day-to-day activities, including those related to the Bank s stakeholders. In addition to the sustainability policy and the general code of conduct, Santander has other specific policies and frameworks that set out the guidelines to take into account engagement with specific stakeholders. The policy on financing political parties sets out the guidelines for these type of financing requiring these operations to be done under market conditions and with approval from the executive committee. The conflicts of interest policy establishes the rules with regard to potential conflicts of interest between Banco Santander or its companies and its employees, customers, directors, shareholders or any other third parties directly or indirectly related to the Bank. In 2017, Banco Santander approved and implemented a new corporate consumer protection policy to establish specific criteria for identifying, organising and exercising consumer protection principles in consumers' relationships with the Group. During the annual meeting of the World Economic Forum held in January 2017, the Group Executive Office Ana Botín, signed the Compact for Responsive and Responsible Leadership, a roadmap to guarantee sustainable growth in the long term. More information on The Compact for Responsive and Responsible Leadership 2017 Stakeholder engagement and material concerns Report

4 Active listening and participation Banco Santander encourages active listening and has several channels that enable it to understand stakeholders' expectations. Through these channels, it maintains ongoing dialogue with them that is key to ensuring the success of the Bank's activities all along the value chain. Over recent years, the Bank has run numerous studies, taken measurements and performed other ad-hoc processes to discover the expectations and needs of stakeholders. In 2017, more than 250,000 interviews were held with the main stakeholders globally: general population (both customers and non-customers), employees, shareholders and university students. These surveys are carried out on a recurring basis to listen to the opinion of these groups and measure their perception of the Bank, including whether they consider Santander to be a simple, personal and fair bank with regard to other comparable banks. When identifying relevant matters to include on the Bank's agenda, the relationship with investors, analysts and ratings agencies is also essential. In 2017, numerous meetings and calls were held with investors and analysts, in some cases with the participation of the bank's senior management (including the Group executive chairman, chief executive officer, the lead independent board director and head of finance to mention a few). Likewise, the Sustainability area has maintained a direct relationship with investors specializing in environmental, social and good governance issues, in order to understand their expectations and inform them of the Bank's main lines of action in terms of sustainability and responsible banking. There is also continuous monitoring for the appearance of new standards and milestones on international agendas. Public Policy and Sustainability work closely together, under the framework of the Bank's purpose and policies, to actively participate in consultation processes led by both authorities and associations and other organisations with an impact on the development of policies or relevant positions on the sustainable development agenda. For example, this year, Santander actively participated in consultations referring to the agenda on the subject of sustainable finance with different organisations. In particular, it played a part regarding climate change to express its position and contribute to the debate of the development of a more sustainable financial system in the scope of the EU Action Plan. Some examples of organizations with which the Bank works in this regards are: Institute of International Finance, European Financial Services Round Table, Association for Financial Markets in Europe, European Banking Federation to mention a few. This dialogue work by Public Policy takes place before new regulations are approved. Once the regulation is approved, the Bank's internal regulations are adapted to new requirements and compliance with it the same is monitored and supervised by Compliance and Relations with Supervisors function. Listening to the opinion of our stakeholders, measuring the Bank s public image and understanding how Santander is assessed as an entity forms part of our daily work in fulfilling our commitment to being a simple, personal and fair bank. Simple because simple ideas and processes are easy to understand and implement. The simplicity reduces confusion and possibilities of making mistakes. Personal because by understanding the people we work with and the customers we serve, we can help our employees to meet their ambitions and provide our customers with the best service. Fair because if we want to earn the lasting loyalty of our people, customers, shareholders and communities, we must balance their interests with those of the bank, be profitable and act in a socially responsible and sustainable way. 4 Stakeholder engagement and material concerns Report 2017

5 KEY DIALOGUE CHANNELS FOR STAKEHOLDERS Stakeholders Main dialogue channels Frequency Global Engagement Survey Annual Employees Motivation and work-life balance Continuous Whistleblowing channels Continuous Commercial channels Continuous Customers Satisfaction surveys Continuous Complaints management Continuous General Shareholder Meeting Annual Shareholders Group Strategy Update Annual Shareholder services Continuous Forums and meetings with shareholders Continuous Collaborations with NGOs, universities and other institutions Continuous Communities Collaboration with sectoral organizations and working groups Continuous Social networks Continuous Group Strategy In October 2017, the Group held a meeting at the New York Stock Exchange that was attended by approximately 200 analysts and investors (Group Strategy Update), where updated information was provided on the Bank's strategic goals for the period. This type of meeting has been held annually since RESULTS DERIVED FROM THE MAIN CONSULTATION INITIATIVES 84% of participation in the global engagement survey 77% of employees are engaged People Customers 10,000 interviews about the perception of the bank as SPF 286 redesigned branches with customer experience criteria 77% of the employees know how to act to build a more SPF bank 1,298 complaints received through thw whistleblowing channels Employees who are more motivated and committed......make our customers more satisfiied and loyal... 88% of satisfied particular customers of commercial banking 57% of the complaints received resolved in less than 10 days 1,295 agreements with universities and academic institutions 195 profiles 13,994,185 followers in social networks 8,731 partnerships with social institutions and entities 2,1 M people helped 6,000 perception surveys to students about the nonfinancial servicies offer Communities...which results in more investment in communities....which drives profiitability and sustainable growth... Shareholders 5,800 interviews about the perception of the bank as SPF 178,353 consultations managed through remote channels +260 analysts and investors attending to the Group Strategy Update 241 meetings with shareholders 1,560 meetings and calls with investors and analysts Stakeholder engagement and material concerns Report

6 The Bank gives a lot of consideration to the NGOs engaging in targeted conversations taking part in working groups or answering specific requests for information. To provide an appropriate response, Santander has an internal procedure for systematising how consultations are received, analysed and responded to. Global challenges in the area of sustainability mean that collaboration between companies and other public and private agents is essential. Therefore, Santander participates in working groups and think tanks at national and international level to work on this area. This participation is aligned at all times with the Bank's culture, strategy and policies to ensure coherence with its purpose and values. In 2017, the Bank played an active part in numerous conferences and working groups. Some examples are: United Nations Environment Programme Finance Initiative UNEP FI The Bank has adhered to the main initiative in the banking sector for implementing the recommendations of the Financial Stability Board (FSB) Task Force on Climate-related Financial Disclosures (TCFD). The Bank is collaborating with 15 other entities on this pilot project initiated in July 2017 to develop analytical tools and indicators to help assess and disseminate risks and opportunities related to climate change. World Business Council for Sustainability Development (WBCSD) Ana Botín, Group Executive Chairman of Banco Santander, is a member of the WBCSD executive committee. In addition, in 2017, Banco Santander helped organise the latest WBCSD AGM in Mexico and a breakfast for CEOs in London to analyse the 'Better Business, Better World' report published by the Business and Sustainable Development Commission. Santander took part at the WBCSD event in Montreux to share the progress made on measuring its social impact, as an example of best practices. Banking Environmental Initiative (BEI) In 2017, Banco Santander along with 12 other financial institutions and 4 innovation start-ups formed part of the Fintech Taskforce an initiative created to analyse how financial technology ('fintech') can tackle some of the most complex social and environmental challenges currently facing the world. The group finally came up with 11 recommendations, supported by three case studies. Equator Principles In 2017, Banco Santander joined the Designated Countries Working Group created by the Equator Principles Association Steering Committee. This group aims to review the distinction between 'designated' (high-income OECD) and 'nondesignated' countries within the scope of the Equator Principles (EP) and ensure that a robust environmental and social risk assessment framework is applied in all the countries where the different financial entities adhered to EP run operations. The Group also takes part in the Capacity Building & Training Working Group. INTERNATIONAL INITIATIVES TO WHICH BANCO SANTANDER IS PARTY World Business Council for Sustainable Development United National Global Compact Banking Environment Initiative UNEP Finance Initiative Principles for Responsible Investment The Wolfsberg Group CEO Partnership for Financial Inclusion Equator Principles Round table on responsible soy Working group on sustainable Livestock CDP (before Carbon Disclosure Project) Climate Leadership Council 6 Stakeholder engagement and material concerns Report 2017

7 BANCO SANTANDER AND ITS COMMITMENT TO THE SUSTAINABLE DEVELOPMENT GOALS All social agents, including companies, must contribute to the Sustainable Development Goals (SDG) of the United Nations. Banco Santander contributes directly to achieving the SDGs through its business activities and its community investment programmes. In addition, the Bank places great importance on promoting and understanding these goals both at an internal level and externally through all its stakeholders. MAIN SDGS WHERE BANCO SANTANDER S BUSINESS ACTIVITIES AND COMMUNITY INVESTMENTS HAVE THE MOST WEIGHT. Collaborates with many social institutions to improve the quality of life of people and meet their needs. Promotes university education to help the communities in which it is present to prosper. Has an open attitude towards diversity as a way of increasing its human capital. Endeavours to attract and retain the best talent, and wants its professionals to be motivated, committed and fairly paid. Promotes fnancial inclusion within communities and drives training, enterprise and job creation. Helps people and businesses prosper to support the sustainable growth of communities. Ensures ethical, social and environmental criteria are properly followed to develop responsible activities. Analyses the social and environmental risks in its transactions and promotes fnancing for renewable energies projects to support the fght against climate change. Stakeholder engagement and material concerns Report

8 Identification of material concerns Importance of the materiality analysis. Banco Santander runs a systematic analysis every year to identify the social, environmental and ethical behavioural aspects that are most relevant to its different stakeholders all along its value chain. This analysis, along with stakeholder-dialogue processes, are central to compliance with the Global Reporting Initiative (GRI) standard and allows the Bank to identify drivers in the area of sustainability that have an impact on business thus seeking to minimize risk, reduce costs and generate revenue. This materiality analysis has been run for more than 10 years and has been strengthened and improved year on year, incorporating new criteria, tools and methods of analysis to make results more robust and useful, both for the report and for decision-making. This continuous improvement has been made possible thanks to internal review processes, constant work on identifying areas of progress, research into new sources of information and the use of new technologies. HISTORIC EVOLUTION OF THE MATERIALITY STUDY - DETAIL OF INPUTS INCORPORATED INTO THE STUDY ON AN ANNUAL BASIS 2015 Benchmark of other banks targets, Sustainable Development Goals Global trends, WEF map of risks, roadshows, internal valuation session, and country surveys Broader updated analyst list 2014 SASB, valuation session of countries, intranet, Santander Today 2016 Big data and artificial intelligence. Other analysts, other banks materiality 2009 ESG analysts 2006 senchmark sector, press opinion makers on internet 2007 y 2008 Sectoral and social opinion makers 2011 Sustainability performance 2013 Sustainability Committee, internal valuation, <IR>, value chain, external opinion makers interviews 2012 Social networks (Twitter) 8 Stakeholder engagement and material concerns Report 2017

9 In 2017, Banco Santander continued to explore new and more sophisticated ways of analysing data to determine which subject areas are important to its business. In this regard, more use was made of new technologies, including artificial intelligence and big data, which enable the Bank to analyse large volumes of qualitative information regarding sustainability. This year, new analyses were also included with regard to studies carried out over previous years. Santander identified the correlation between global trends and different material issues, which provided the Bank a broader vision more aligned with the main challenges facing society and the sector in the short, medium and long term. In addition, internal analysis improved with representatives from different areas of the Bank taking part in an assessment session. Surveys were also taken by some of the corporate areas and the sustainability teams from the main geographies where the Bank runs operations to determine the relevance of each of the study's starting points depending on working area and geographical scope. The main upgrades of the 2017 methodology are described below. The full methodology is in the following page. MAIN NOVELTIES INCORPORATED INTO THE STUDY IN Cualitative analysis Internal valuation session Internal workshop carried out with the sustainability team and other areas (Human Resources, Compliance, Communication, Investors Relations, etc.) During the session, participants have voted and discussed on the most relevant issuesfor Santander with respect to their influence in risk management, revenue generation and improvement of efficiency. Surveys to relevant areas and sustainability teams in countries Simple surveys through have been sent to other areas of the Bank that are considered relevant for the identification of material matters for the Bank. In addition other survey has been sent to the sustainability teams of the main operating countries. Innovation Santander continued to use new technologies for analysing data to increase the scope and process large volumes of information. Cualitative analysis Megatrends analysis An analysis of the global trends that will affect the sector in the short, medium and long term, has been carried out in order to incorporate a future vision into the study. These trends are analyzed in the context of the Bank and are correlated with material issues. Interviews / surveys with experts A series of telephone interviews have been conducted to sectoral experts and representatives of relevant associations, in order to identify global trendsaffecting the sector and activitiesthat Santander should carry out. NGOs analysis Analysis of news (related to the financial sector) published in the last year by a series of NGOs relevant for the Bank. Santander interviewed 15 people identified as thought leaders with regard to sustainability management in the financial sector (including national and international bodies of a social and environmental nature, sector associations, investors, NGOs, academic organisations and syndicates). Stakeholder engagement and material concerns Report

10 Process of identifying relevant factors The materiality study includes quantitative and qualitatives analysis to allow the Bank to draw up a table of relevant factors and assess how important these flagged areas are. Each of these inputs are weighted according to their relevance as regards defining material matters for the Bank. Weights are not distributed statically but are reviewed every year to adapt the study as much as possible to the current context and reality. Process of identifying material concerns Quantitative analysis ESG Indexes & analysts and investor roadshows Materiality other banks Sector reporting analysis Press Analysis Regulatory framework Voluntary reporting frameworks External Analysis of aspects evaluated in DJSI and others analysts and ESG indexes as well as analysis of the comments received in the in the most recent roadshows with investors. Santander s goals Analysis of the matters that other banks consider in their materiality matrices considering the priority granted to each issue. Sustainability committee Identification of matters reported by the sector in annual and sustainability reports. President / CEO activity Identification of matters that have been treated in the media written communication using tools of Big Data analysis. Surveys with other areas and countries Issue frequency analysis regarding regulation applicable to sector in Spain and in the major countries of operation. Internal valuation session Issue frequency analysis from voluntary reporting frameworks as GRI, SASB and Integrated Reporting. Santander Today Internal Analysis of Santander non-financial targets, including those linked to the Board remuneration. Analysis of matters addresses in Sustainability Committees, both corporate and local, over the last 4 years. In addition, matters treated in the Climate Finance Task Force have also been considered. Analysis of the information provided in the speeches by the President and the CEO in different conferences and events held in the last year. Surveys to areas of the bank including local sustainability teams to identify material issues. Workshop with sustainability and other areas to identify and debate about the issues that most influence in risk management, income generation and improvement of efficiency. Identification of the issues addressed in the news that have appeared in the Santander Today platform, throughout the year. Qualitative analysis Interviews with external experts NGOs analysis Controversial events Megatrends analysis Value chain Social networks Telephone interviews to sector experts and representatives of relevant associations, to identify global trends of the sector and challenges for Santander. Analysis of news (related with the financial sector) published in the last year from NGOs active and relevant to the banking sector. Analysis of potentials disputes identified in the financial sector. An analysis of global trends that will affect the sector in the short, medium and long term to incorporate a vision of the future to the study. The valued chain has been defined and, taking as reference the main stakeholders, relationships between these and the issues identified materials have been established. Identification of the most mentioned issues during the last year considering total volume of mentions, trend global and variability throughout the year. 10 Stakeholder engagement and material concerns Report 2017

11 This materiality study is intended to comply with the principles to determine the content of the Santander Group's 2017 Sustainability Report based on the new GRI Standards, specifically GRI 102: General Disclosures In addition to the reporting standard applied by Santander (GRI Standards), other voluntary reporting frameworks such as the International Integrated Reporting Framework or the SASB (Sustainability Accounting Standards Board) framework have been taken into account in the analysis. In order to be aligned with 2014/95/EU Directive on disclosure on non-financial and diversity information, it has been taken into account the information requirements of this directive when defining the list issues for this study. Additionally, a gap analysis carried out by the Bank after the publication of the Sustainability and Annual Reports, has been taken into account. As in the previous materiality study, the results of the Reporting Matters (1) produced by WBCSD and Radley Yeldar were taken into account. In addition, recommendations provided by the auditor of 2016 Sustainability Report with regard to the materiality analysis, have been taking into account. In addition, this study has incorporated information obtained through the Datamaran tool, giving continuity to the use of new technologies including artificial intelligence and big data in the identification of issues relevant to the Bank, which was already used last year.. Main megatrends identified in the materiality study Global threats Fintech Digitalization Demographic changes Geopolitical conflicts, terrorisms and other threats like cyberattacks can have a major impact on companies, which must identify and tackle these risks properly. The irruption of Fintech is a new challenge for conventional financial institutions. Investment and partnerships creation are key for the successful of the traditional bank. Digitalization is a key tool for the financial inclusion for unbanked and underbanked populations. Also, it involves a challenge in terms of talent retention in companies. The population growth and the demographic differences between developed and developing countries involve challenges in terms of financial products and services offer. Individualization Confidence in the sector Global market Climate change The customers are no longer passive consumers and demand products and services that meet their need. In response, it will be essential to strengthen some abilities among the employees, as digital skills, data nalaysis and advisory profiles. The sector is still recovering from the trust loss after the financial crisis. for this reason, it is essential to listen to the needs and demands of the stakeholkders and strengthen the commitment with the transparency and ethics. Internationalization poses a challenge in terms of risk management, at the same time that involves an opportunity to access to unbanked populations or with limited access to financial products, where financial inclusion is essential. The role of the financial sector is crucial in the achievement of the Paris Agreement goals, through the finance of solutions towards a low carbon economy. Stakeholder engagement and material concerns Report

12 Matrix for identifying material concerns As a result of combining internal and external perspectives, a table of results was obtained to show the 14 most relevant subject areas for Banco Santander in These 14 subject areas identifed in the materiality study are the ones that have been seen to be most relevant and are, therefore, considered for drawing up the sustainability report. External relevance Diversity Incentives linked to ESG criteria Material Issues Corporate governance -Management transparency Cybersecurity Environmental footprint (internal) Indirect environmental impact Products and services with social/environmental added value Transparent & Fair products and services Ethical behaviour & risk management Talent attraction and retention Compliance and adaptation to regulatory changes Community investment Governance Products and services Ambiental Social Customer satisfaction measures Multichannel strategy and digitalization Internal relevance A cualitative analysis threw up some interesting conclusions that were combined with the results obtained in the matrix to help the Bank contextualise. Expert interviews provided very valuable information for understanding the trends and challenges facing the Bank. The experts consulted mostly coincided that the following aspects need to be reinforced in the banking sector: Transparent information on products and services as key to recovering confidence in the sector. Digitalisation, cybersecurity and fintech as new challenges where partnerships with other agents are key. Climate change management must go beyond measuring our internal carbon footprint and be included in risk analysis and business opportunities. New financial products and services with a social and environmental focus must be developed to meet new customer demands. It is important to strengthen diversity within the sector and to combat the gender pay gap. Twitter analysis shows that climate change, cybersecurity and human rights are the subject areas most discussed by users of this social media, representing 78% of the total. Analysis of controversies relating to transactions financed by the banking sector shows that the main sectors of activity impacted by controversial matters are mining and the energy sector. The group of qualitative and quantitative results can be used to identify subject areas to be taken into account for the sustainability agenda, so that the expectations of stakeholders can be covered by different policies, initiatives, plans and programmes. Nonetheless, if a chance to make progress in any of these areas is identified, Banco Santander works to strengthen the weakest points and ensure that they are properly managed. In this regard, it is worth mentioning the recent development of a sector policy on mining and metallurgy. This new policy is in addition to other existing sector policies (energy, soft commodities and defence) and establishes the criteria to take into account for financial activity relating to the mining sector. 12 Stakeholder engagement and material concerns Report 2017

13 Value chain: to identify what is important, for whom and where For reporting non-fnancial information Banco Santander Santander consider recognised international standards, such as the GRI, into account when drawing up sustainability reports. These standards state that company responsibility is broader and goes beyond the company's own activities to its relationships with other business agents. therefore, Santander performs an exercise of identifying material matters for the Bank, considering their impact along the value chain. Generated Value Generated Value Generated Value Employees more engaged and commited Regulators More loyal customers People Managing and attracting talent in an inclusive and diverse environment Responsibility, compliance and governance Added Value Responsible and sustainable business Customers Building loyal relationships Added Value Added Value Added Value Added Value Supporting people in local communities Helping people and businesses prosper Delivering sustainable returns a listening to their views and concerns Communities Economic and social development Generated Value Added Value Suppliers Extended responsibility Generated Value Shareholders Delivering sustainable returns a listening to their views and concerns Generated Value LEGEND Ethical behaviour and risk management Measures taken to customer satisfaction Compliance and adapting to regulatory changes Indirect environmental impact Multichannel approach and digitalisation Diversity Corporate governance-transparency Community investment Internal environmental footprint Cibersecurity Products and services offering social and environmental added value Products and services that are transparent and fair Incentives tied to ESG criteria Attracting and retaining talent CHALLENGES AND OPPORTUNITIES FOR BANCO SANTANDER ETHICS AND CONDUCT DIGITAL REVOLUTION INCLUSIVE GROWTH SUSTAINABLE GROWTH Stakeholder engagement and material concerns Report

14 Challenges and oportunities for Banco Santander Thanks to the dialogue with the stakeholders and the materiality studies carried out annually, Banco Santander has been able to identify the main challenges that it faces, as well as to defne the main priority areas for action. These challenges are framed within global trends, are aligned with the material issues and are the starting point for strengthening the Bank's plans, programs and activities existing, or to promote new ones when necessary. HOW WE DO BUSINESS Everything we do should uphold the highest standards of ethics and conduct......while we innovate to embrace the digital revolution, making the best use of the latest technology... 1 ETHICS AND CONDUCT DIGITAL 2REVOLUTION The financial crash and globalization has increased the debate about the role of business in society. Employees, customers, shareholders and citizens expect companies to act responsibly in their day-to-day operations. By doing so, companies create long term value in their daily business. Ethical behaviour must underpin every company's culture and be enforced by its governance. Businesses must comply with both the letter and the spirit of the law and regulations. Risk must be managed prudently and effectively. Codes of conduct and policies should clearly state what behaviour is accepted and what is not. An individual s performance should be assessed on what is achieved, and how it is achieved. Successful businesses need motivated teams. A responsible business attracts the best talent - people who want to work for a company with a strong sense of purpose, and strong values, as this is a means of fulfilling their individual aspirations to help society prosper. The digital transformation poses new strategic challenges to companies, which must adapt their business model to take advantage of opportunities and minimize risks. Every business must ensure its organization and team are equipped for the digital era. This requires investment in technology, as well as training people to work in a more agile, collaborative way. The digital revolution is changing how customers behave, creating new channels and demanding new products and services. Innovation is critical. Customers expect more of businesses than ever before. Companies must respond by analysing big data, so they can offer a personal service to their customers. Cyber security poses a significant risk. Customers expect that their data is held securely and handled ethically. The growth of responsible investment means shareholders expect to know more about how companies operate. So a responsible business, protect its clients and is transparent in how it operates and in its relationship with stakeholders - informing and explaining decisions actions and performance of the company. 14 Stakeholder engagement and material concerns Report 2017

15 ETHICS AND CONDUCT Global Trends Material Issues Challenges DIGITAL REVOLUTION INCLUSIVE GROWTH Accions, Plans and Programs SUSTAINABLE GROWTH HOW WE FULFIL OUR PURPOSE...which enables us to serve customers in new ways, helping to generate inclusive growth......while supporting sustainable growth in local communities and economies. 3 INCLUSIVE GROWTH 4 SUSTAINABLE GROWTH Although many millions of people have been lifted out of poverty over recent decades, social and economic inequalities remain. We need inclusive growth so more people can share the benefits of prosperity. To achieve this, companies need to ensure that their business models help to address the economic and social challenges we face. Creation of good jobs for the entire working-age population, especially the most disadvantaged, contributes to reducing poverty and inequality. 600 million jobs need to be created by 2030 if the global workforce is to keep pace with population growth. Financial inclusion is also key to reducing poverty and increasing prosperity of low-income and hard-to-access communities Two billion people are unbanked in the world. Bringing them into the financial system, helps to strengthen the economic fabric, empowers women and can contribute to sustainable consumption. In a digital age, people of all ages need to learn new skills and expertise. So investing in education and improving mobility and connectivity are key to achieving inclusive growth. Sustainable growth meets the needs of the present without compromising the ability of future generations to meet their own, guaranteeing the balance between economic growth, social welfare and the environment. Climate change, combined with population growth, are two of the main challenges facing society. Technological changes, innovation and changes in consumption patterns are essential if we are to grow in a sustainable way. Stakeholders expect business to play its part. Many of the challenges we face today can only be resolved by promoting sustainable growth and establishing a global commitment where all social actors, including companies, are engaged. The financial sector must integrate the risks and opportunities of climate change in its activity to achieve the Paris Agreement objectives and achieve an orderly transition to a low carbon economy. Improvements in production capacities, sustainable consumption and responsible production guidelines contribute to human development and reduce poverty and inequality. Stakeholder engagement and material concerns Report

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