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1、Sustainability Report 2019 SUSTAINABILITY REPORT 2019 2 Contents This report covers activities in Danske Bank Group for the finan- cial year 1 January 2019 to 31 December 2019. Our reporting approach is to provide an over- view of our Societal Impact interviews with large Corporate and a Groupwide e
2、mployee survey. A majority of our retail custo- mers in the Nordic countries confirm that sustainability is an important focus area for Danske Bank. Not surprisingly, they see governance- and compliance-related topics such as AML, anti-corruption, data privacy and protection against cybercrime as th
3、e most material topics for Danske Bank to focus on. Climate change and sustainable use of natural resources are the two most important environmental topics; however, these topics are given lower priority than governance and compliance. Similarly, inve- stors also consider governance- and compliance-
4、related topics to be of most importance, with climate change preparedness as an area of increasing focus. Our work on societal impact and sustainability is very important to the majority of our employees. Compliance-related topics are high on the agenda for our employees, but climate change is asses
5、sed as the most important topic. This is followed by employee health and working conditions, which naturally also retain a high priority. Assessing material sustainability issues Societal impact Employee health and well-being Training and development of employees Community support Governance Executi
6、ve remuneration* Diversity and inclusion Reducing own environmental footprint Sustainable workplace Climate change preparedness Sustainable use of natural resources Financial stability and growth Supporting SMEs, entrepreneurs and start-ups Financial confidence IT security and customer fraud prevent
7、ion Anti-corruption Responsible tax Responsible products and fair advice Data protection Access to financial services Anti-money laundering (AML) ESG in investments ESG in lending Responsible procurement ESG transparency Sustainable business Our commitment to international sustainability principles
8、In our Societal Impact (ii) not to make or accept facilitation payments; (iii) not to offer, promise or give a financial or other advantage; (iv) to only accept gifts given or received in specific situations; and (v) to avoid any conflict between our personal interests and the interests of the Group
9、. To avoid conflicts of interest or accusations of bribery and corruption, employees should consult their manager or Group Compliance if ever they are in doubt. Our register of gifts and hospitality provides further transparency to this end. Our stance on corruption and bribery is expressed in our C
10、ode of Conduct Policy. In 2020, this policy will be augmented by a separate set of criteria for sponsorship agreements. Read more For more details, please see our Annual Report 2019 and our Risk Management Report 2019. Relevant policies Group policies of specific relevance to sustainability include:
11、 Anti-money Laundering, Counter-Terrorist Financing and Sanctions Policy Code of Conduct Policy Compliance Policy Conflict of Interest Policy Credit Policy Diversity and Inclusion Policy Escalation Policy Market Abuse Policy Remuneration Policy Security Policy Societal Impact consequent- ly, fightin
12、g financial crime will remain at the top of our agenda. We are continuing our investi- gation of the matters related to the historical non-resident customers at the now-closed Estonian branch. Working in close cooperation with the authorities, we are deeply committed to getting to the bottom of the
13、case. The case is still a topic in many of our stakeholder dialogues, and transparency about how we contribute to fighting financial crime is of great importance to our stakeholders. Bolstering our defences and capabilities Our holistic anti-money laun- dering (AML) Operating Model extends across ou
14、r entire customer base. Throughout 2019, we invested heavily in optimising the processes and technology that underpin our financial crime prevention ef- forts. One such investment has been a new IT system to sup- port our ongoing due diligence (ODD) processing of customers, see p. 24. This is an imp
15、ortant milestone as ODD sits at the very centre of our AML activi- ties. In 2020, we will continue to focus on robotics and digital- isation to allow our employees to concentrate on investigative work, with robots handling the more repetitive activities. Significant investments in our transaction mo
16、nitoring and cus- tomer and transaction screen- ing systems were also made in 2019. Our work has included improving risk and transac- tional coverage and tightening alert thresholds, all of which are important steps towards protecting the banking system and keeping our customers safe. Monitoring and
17、 screening continues to be a priority for Danske Bank, and we are mak- ing further investments in our systems during 2020. We have invested heavily in our staff, ensuring we have the right expertise to effectively combat the rapidly evolving risks of financial crime. In 2019 we strengthened the Grou
18、p Fighting financial crime The implications of financial crime on society are significant and continue to challenge our industry. Taking responsibility for the integrity of our systems and the prevention of financial crime is fundamental to Danske Bank. Compliance leadership team with staff who have
19、 a high level of exper tise in these areas. Another area of focus has been to provide comprehensive training to raise employee skills and expertise within the areas of AML and combatting finan- cial crime. Our internal AML Training Academy will extend its training offers in 2020. Working with peers
20、and advocating industry change The threat of financial crime is not something Danske Bank faces alone. Excellence in compliance and crime preven- tion is central to all financial institutions, and we strongly believe that AML should not be a competitive parameter. AML is an area where the whole indu
21、stry should work together, share insights and expertise, and develop solutions that keep our collective systems safe and secure. The Nordic Know Your Custo- mer (KYC) Utility, which we initiated in 2018 together with five other large Nordic banks, serves as good example of this as it will make it ea
22、sier for corporate customers to effec- tively and efficiently provide all banks with high quality KYC information. The aim of this initiative has been to create a joint venture company, and in August 2019 this company received approval from the Eu- ropean Commission to proceed. The first commercial
23、launch is scheduled for early 2020, with all six banks investing an equal share in the company. Our commitment to the UN Prin- ciples for Responsible Banking will also be an important platform for sharing AML best practices with other banks, see p. 11. In 2019, we participated in the AML Task Force
24、of Finance Den- mark (the Danish business asso- ciation for the financial sector). In November 2019, the task force presented 25 recommendations on how the financial sector and the authorities can improve their efforts to combat financial crime. These recommendations include the development of joint
25、 IT solu- tions in the financial sector and a shared code of conduct. The task force also suggested the creation of a joint unit in which banks, supervisors and law enforcement agencies can share knowledge and exchange intelligence related to money laundering, the financ- ing of terrorism and specif
26、ic suspicious cases. “Our most important asset for fighting financial crime is not technology it is our employees. IT and artificial intelligence are great and important tools, and we strive to automate as many controls as possible. But well never achieve our goal unless each and every one of us is
27、engaged and alert to the task of identifying and bringing to light suspicious activities.” Philippe Vollot, Member of the Executive Leadership Team and Chief Compliance Officer SUSTAINABILITY REPORT 2019 27 Nordic KYC utility The aim is to define common KYC standards, simplify KYC processes and mana
28、ge KYC information for corporate customers, thereby strengthening financial crime prevention. SDG contribution We work to reduce illicit financial flows and combat all forms of organised crime in support of SDG 16.4. Prevent financial crime through effective AML governance. Ambition 2019 performance
29、 15,889 reports submitted to the authorities regarding suspicious matters. The Estonia case continues to be a major focus area for Danske Bank and all our stakeholders. The findings of the investigation into the non- resident portfolio at the Estonian branch, pub- lished in September 2018, revealed
30、a series of significant deficiencies in governance and con- trol systems at Danske Banks Estonian branch as well as deficiencies at Group level. Danske Bank remains in dialogue with various international authorities regarding the matters arising out of its Estonian branch. This includes criminal and
31、 regulatory investigations by authorities in Estonia, Denmark, France and the US. Danske Bank is reporting to, responding to inquiries from and cooperating with these authorities, including the U.S. Department of Justice (DOJ), the U.S. Securities and Ex- change Commission (SEC), the Estonian Office
32、 of the Prosecutor General and the Danish State Prosecutor for Serious Economic and Interna- tional Crime (SIK), relating to Danske Banks Estonian branch. We are cooperating with the authorities and continue to share material. The overall timing of completion and the out- come of the investigations
33、by, and subsequent discussions with, the authorities are uncertain. Danske Banks internal investigation into the terminated non-resident portfolio is currently expected to conclude by the fourth quarter of 2020. This timing is estimated and is sub- ject to change, including as a result of further re
34、quests from authorities. The investigation continues to focus on issues arising out of the non-resident portfolio at the Estonian branch and includes reviewing whether similar issues have been present historically at Danske Banks other Baltic branches. A further, and important, aspect of Danske Bank
35、s ongoing investigation into historical activities at the Estonian branch relates to sanctions screening. As set out in our interim report for the first nine months of 2019, Dan- ske Bank has enhanced its methodology since publishing the Report on the Non-Resident Portfolio in September 2018 and is
36、screening historical data on relevant historical customers of the Estonian branch, including the terminat- ed non-resident portfolio, as well as associ- ated persons and transaction information for possible sanctions violations. Danske Bank will inform the market if there are material develop- ments
37、 that require disclosure. In addition to the investigations by the authorities, a number of lawsuits have been filed against Danske Bank in the US and in Denmark. These cases relate to alleged violation at Danske Banks branch in Estonia of the rules on prevention of money laundering and the alleged
38、failure to timely inform the financial markets of such violation. Danske Bank is defending itself against these claims. The timing of completion of any lawsuits (pending or threatening) and their outcome are uncertain. In 2019, Danske Bank essentially exited its banking activities in Estonia followi
39、ng a precept from the Estonian Financial Supervisory Authority (FSA) to terminate our remaining banking activities in Estonia. For a full overview of events related to the case in 2019, please see Annual Report 2019. AML 2019 figures Resources: Approximately 2,400 full-time employees are working on
40、combating financial crime. Our Group Compliance (which includes Financial Crime) has doubled in size to 300 employees, and the number of employees who carry out ongoing due diligence grew from 600 in early 2019 to 1,200 by the end of the year. Training: Over 3,000 of our front-line staff in our pers
41、onal banking segment completed the full-day training course, Our AML, and over 1,400 employees completed onboarding and ongoing training programmes at our internal training organisation, AML Training Academy. Over 200 employees attended our AML EXPERT 2019 Conference in Vilnius, Lithuania, where our
42、 leading AML professionals and industry experts shared AML trends and insights. Estonia case CustomersBanks/ Financial Institutions The Nordic KYC Utility CustomersBanks/ Financial Institutions BeforeNow SUSTAINABILITY REPORT 2019 28 SUSTAINABLE BUSINESS The realisation of the European Commission ac
43、tion plan on sustainable finance will impose major regulatory changes on the financial sector, which will also impact the way we engage with our customers. In addition to enabling the transition to a sustainable economy, these changes will also ensure that a stable financial system is main- tained.
44、Danske Bank welcomes the plan, and we are engaging through various forums to Sustainable finance The provision of sustainable finance is key to addressing growing challenges such as climate change and social inequality. Strengthening integration of environment, social and governance (ESG) perspectiv
45、es into Danske Banks investment and lending practices is one of our highest priorities. stimulate the agenda. We also support clear European and national standards. To debate the future of sustain- able investments, we in 2019 hosted the CFA Society Den- mark conference Sustainability in Finance: ES
46、G products and integration. As a member of the Forum for Sustainable Finance under the auspices of Finance Denmark, we also contributed to the 20 recommendations launched in December 2019 that point to more green and sustainable finance solutions as an important lever for accelerat- ing the agenda.
47、Danske Bank already commits to supporting the transition to a net-zero carbon economy by providing green finance solutions and by working with the TCFD, see pp. 14-17. These efforts build on our foundation for integrating ESG into our financial services. We align our approach with the UN-support- ed
48、 Principles for Responsible Investment and the Danish Stewardship Code, and we will align with the Principles for Responsible Banking that we endorsed in September 2019, see pp. 12-13. In recent years, we have increased our transparency on how we work to accelerate sustainable finance, and we commun
49、icate our position clearly. Forming the basis for our investment, lending and sourcing processes alongside our Sustainable Investment Policy and our Credit Policy are our position statements. These position statements cover the areas of Climate Change, Hu- man Rights, Agriculture, Arms and Defence, Forestry, Fossil Fuels, and Mining and Metals. We have separate committees that oversee and decide on principal sustainable finance decisions. In 2019, a key focus was on improving the ESG data founda- tion to support better-informed decisions and