UOB : Annual Report 2016 / Sustainability

Sustainability

In creating sustainable value for our stakeholders, we are committed to aligning our long-term business strategies with their interests. We take into consideration their expectations and concerns as we identify and assess the environmental, social and governance risks, as well as opportunities across our business. Our commitment is a natural extension of our values of honour, enterprise, unity and commitment.

Sustainability Governance Structure

Good governance is at the core of running our business responsibly.

The Strategy Committee (SC) assists the Board in providing advice to the Bank as it considers sustainability issues in formulating the strategic plan for the Group. Chaired by an independent director, the SC considers material environmental, social and governance (ESG) issues, reviews ESG goals and targets, and oversees the management and monitoring of material ESG factors. The SC makes its recommendations on our sustainability strategy and reporting for the Board’s review and approval.

The SC is supported by the Management Executive Committee (MEC), which consists of the Group Chief Executive Officer, Group Chief Financial Officer, Group Chief Risk Officer, Head of Group Technology and Operations, Head of Group Retail, Head of Group Wholesale Banking and Head of Global Markets. The MEC reviews and determines the material ESG issues and their scope, evaluates key performance indicators, reviews long-term goals and provides strategic direction for sustainability reporting.

The MEC is in turn assisted by a sustainability reporting project team, comprising senior managers from key functions within the organisation. With guidance from an external consultant, the project team collates and reviews ESG data in collaboration with internal stakeholders for sustainability reporting.

Our Material ESG Factors

Materiality Analysis

In 2016, senior and middle management executives from 13 functions and departments, including the sustainability reporting project team, attended a workshop facilitated by an external sustainability consultant.

The participants identified the ESG factors material to the Group based on their knowledge of their respective business areas, the challenges faced by the banking industry and the corresponding implications for UOB’s businesses and operations. They also considered the insights they gained from their day-to-day engagement with their stakeholders.

The workshop outcomes were followed by extensive consultation with internal stakeholders, including members of the senior management team, to establish the direction for sustainability reporting.

The sustainability reporting project team also examined the evaluation criteria applied by the relevant sustainability indices and rankings to understand the ESG matters of interest to our stakeholders.

In addition, the consultant conducted a global sustainability reporting benchmarking study, which included sustainability reporting practices of leading financial institutions.

Finally, we considered the guiding principles from the Singapore Exchange’s Sustainability Reporting Guidelines, The Association of Banks in Singapore’s Responsible Lending Guidelines, UN Principles for Responsible Investment and the Equator Principles.

Based on the above process, we categorised the identified ESG factors into three groups: Highly Material, Material and Important. A summary of these factors, how we create value, our goals and how they relate to the Global Reporting Initiative’s (GRI) aspects and boundaries is presented in the following table.

Our Focus	Our Value Creation	Our Goals	GRI G4 Aspect	GRI Boundary (Where the Impact Occurs – Within or Outside UOB)
Highly Material Factors
Customer experience	Treating customers fairly based on the principles of integrity, trust and respect. Creating relevant solutions across our businesses to meet our customers’ needs.	To keep the customers’ interests at the heart of all that we do.	Local communities Product and service labelling	Outside
Risk-focused organisational culture	Maintaining high standards of corporate governance and a robust risk management framework to protect the interests of our stakeholders. Remaining nimble to seize business opportunities amid a fast-changing environment.	To achieve stable and sustainable growth through informed risk-based decisions.	Employees Customer	Within and outside
Digital transformation	Making banking simpler and safer for our customers through innovation and technology.	To ensure that technology enhances our people and service capabilities as we deepen our culture of innovation and enterprise.	Customer privacy	Within and outside
Cyber security, fraud prevention and anti-money laundering	Protecting our customers from cyber security threats through robust risk management systems and processes. Assisting regulators in preventing cyber-crime, money laundering and funding of terrorism.	To uphold our role in maintaining a secure and trusted banking environment.	Customer privacy	Outside
Economic value of our contributions	Delivering consistent returns for our investors. Contributing to the local economies through taxes, job creation, facilitating trade and industries and building the financial resilience of our stakeholders.	To create direct and indirect economic value for our stakeholders.	Economic performance Indirect economic performance	Within and outside
Regulatory compliance	Maintaining sound risk management systems. Complying with applicable laws, rules, regulations and standards.	To maintain the highest standards of professional and ethical behaviour.	Anti-corruption Compliance (Product responsibility and Society)	Within and outside
Material Factors
Responsible lending	Addressing environment, social and governance issues when making lending decisions.	To be a responsible financial services provider.	Product responsibility Product portfolio Economic performance	Outside
Access to financial services	Making banking services and products accessible to all segments of society to meet their needs and expectations.	To ensure that banking services and products are available to all through our comprehensive and diverse network of touchpoints.	Local communities	Outside
Social impact	Supporting social development in the areas of art, children and education. Encouraging innovation and enterprise, and nurturing startups and small- and medium-sized enterprises (SMEs).	To strengthen our social fabric through community-building and helping individuals and organisations realise their potential.	Local communities Indirect performance	Outside
Attracting, developing and retaining talent	Treating our people with care and respect. Investing in training and career development for our people.	To develop valuable and meaningful careers for our people.	Employment Training and education	Within
Diversity and inclusion	Hiring from diverse cultural backgrounds, age groups, gender and abilities.	To champion a more inclusive society.	Employment Diversity and equal opportunity	Within
Important Factors
Environmental footprint	Managing our resources wisely by saving energy, reducing carbon emissions and resource consumption, and minimising waste.	To play our part in reducing climate change.	Energy Emissions Effluent and waste Water	Within and outside
Workplace safety, health and well-being	Providing our people with a conducive work environment.	To ensure the physical, mental and social welfare of our people.	Occupational health and safety	Within
Supply chain responsibility	Addressing sustainability risks in our supply chain.	To encourage social and environmental responsibility in our supply chain.	Supplier assessment Forced labour Child labour	Outside

Principles of Reporting

In line with regulatory developments towards broader corporate disclosure, we aim to meet GRI’s ‘in-accordance-core’ criteria by providing information on the material ESG factors relevant to our business.

In defining our reporting content, we have observed the GRI’s principles of stakeholder inclusiveness, sustainability context, materiality and completeness. For reporting quality, we have observed the principles of accuracy, balance, clarity, comparability, reliability and timeliness.

The ESG data and information provided have not been verified by an independent third party. We have relied on internal data monitoring and verification to ensure accuracy, while our external sustainability consultant reviewed the data and information, verified samples of data and conducted interviews to ascertain accuracy.

Stakeholder Engagement

At UOB, we believe that constructive stakeholder engagement enables us to serve the needs of our customers more effectively, to build meaningful careers for our people and to make a difference in the communities in which we operate.

By gathering stakeholder feedback through dialogue, collaboration and cooperation, we secure insights into the ESG factors that matter most to them and that are relevant to our business.

A summary of our stakeholder engagement efforts is presented in the following table.

Stakeholders	What They Expect	How We Meet Their Expectations	How We Engaged Them in 2016
Customers	Fair products and services Reasonable fees and charges Responsible financial advice Secure transactions Protection of data and privacy Convenient access to products and services Prompt service and resolution of complaints	Maintaining the highest professional and ethical standards in all our dealings with our customers. Focusing on both personal and business financial needs of our customers when developing our products and services. Ensuring that our people are equipped and committed to advise and to act in the best interests of our customers. Providing our customers with clear and transparent information so that they can make informed financial decisions. Ensuring access to our banking products and services through our extensive network of customer touchpoints. Managing customer feedback independently, effectively and promptly. Ensuring the robustness of our monitoring and risk systems to maintain a secure banking environment.	Interactions at branches Face-to-face meetings Customer surveys Call centre service Marketing and advertising campaigns Website and social media channels Events and seminars
Employees	Trust and respect Career development Job satisfaction and recognition Fair employment practices Competitive wage and benefits Work-life balance Workplace well-being Conducive work environment	Creating a values-based organisational culture. Providing opportunities for training and development. Empowering our people to take ownership of their own career paths. Enabling our colleagues Group-wide to be informed and engaged in order to contribute effectively. Promoting teamwork and supporting one another to achieve shared goals. Ensuring fair human resource policies. Ensuring transparent and objective performance appraisals, and performance- based rewards and recognition. Allowing flexible work arrangements. Enabling employees to give back to the community through volunteering initiatives. Providing health and wellness benefits. Maintaining workplace health and safety.	Regular townhall meetings One-on-one sessions Quarterly email messages from CEO Online employee portal with collaborative and social features HR policies and procedures Periodic performance reviews Training and workshops Open door policy by management Inter-departmental games Recreational activities Employee volunteerism programmes Job opportunities and support for people with disabilities
Investors and Analysts	Stable and sustainable growth and profitability Reasonable returns to shareholders Sound asset quality and healthy funding and capital positions through economic cycles Responsible lending and investment Strong corporate governance and transparency Timely disclosures	Ensuring strong oversight and accountability by an experienced and competent Board and Management team. Adopting a disciplined and measured approach towards business risks and opportunities. Ensuring robust risk governance and management. Implementing responsible lending guidelines. Maintaining a strong corporate governance culture. Ensuring timely disclosure and reporting.	Quarterly results briefings and conference calls Engagement meetings with rating agencies at least once a year General meetings with shareholders Quarterly financial reports Annual reports SGXNet announcements Presentations, conferences and roadshows Annual Corporate Day Participation in analyst surveys
Community	Employment opportunities Good corporate citizenry Responsible lending and investment	Encouraging strategic investments that drive economic growth and social development. Creating jobs in local economies. Giving back to society through programmes focused on art, children and education. Integrating ESG considerations into our risk assessment and credit decision processes.	Career and recruitment fairs and roadshows Donations Annual regional art competition Partnerships with National Gallery Singapore, art patrons and voluntary welfare organisations Art roadshows and outreach programmes Art education programmes University scholarships Interest-free student loans Financial literacy initiatives Annual charity run/walk Fundraising events
Government and Regulators	Upholding of the highest standards of corporate governance and ethical behaviour Prevention of financial fraud and money-laundering Countering the financing of terrorism Financial stability Taxes Support of the development of local economies and industry	Complying with applicable and current laws, regulations and policies. Maintaining sound risk management systems and processes. Preserving strong capital adequacy levels. Providing regular compliance training for our people. Conducting regular internal and external audits. Developing products and services tailored for startups and SMEs.	Regular meetings with local authorities Consultations with regulatory bodies Annual reports Audit reports
Suppliers	Fair vendor selection process Ethical conduct Timely payment	Ensuring integrity in all purchasing decisions. Adhering to agreement terms.	Requests for Quotations and/ or Proposals Vendor briefings Purchase agreements Annual reviews
Media	Timely and transparent information on topics of relevance to the Bank and industry, and the communities in which we operate Prompt and accurate reporting of corporate news such as financial results Access to senior executives with specific industry expertise for media interviews	Providing regular media releases and briefings to update the media and the public on our initiatives and progress. Ensuring prompt and relevant responses to media queries. Ensuring the availability of our spokespeople on topics of relevance to the Group and industry and the communities in which we operate. Sharing thought leadership to demonstrate UOB’s insight into the markets and industries that we serve.	News releases/statements Media conferences Media briefings Media interviews Ongoing engagement sessions with media in person and online
Other financial insitutions	Cooperation and collaboration in addressing the sustainability issues facing the financial services sector	Participating and contributing actively in industry-wide efforts to ensure the long-term sustainability of the sector.	Industry association meetings Conferences Roundtables

Our Sustainability Scorecard

Performance Indicators	2016	2015	2014
Customers
Access to Financial Services
Number of branches - Group	470	484	505
Number of branches - Singapore	62	63	66
Total number of ATMs – Group	1,661	1,724	1,707
Total number of ATMs – Singapore	754	780	738
Number of contactless ATMs – Singapore	38	0	0
Number of Ability ATMs¹ – Singapore	20	0	0
Digital Transformation
Online penetration rate for retail customers – Group (%)	53	53	48
Online penetration rate for retail customers – Singapore (%)	88	88	81
Mobile banking users as a percentage of active online banking users (retail customers) – Group (%)	45	45	41
Online penetration rate for corporate/SME clients – Group (%)	52	44	36
Number of contactless point-of-sale terminals – Singapore	5,723	1,331	595
Customer Experience and Advocacy
Customer compliments – Singapore	15,486	12,775	12,309
Complaints relating to sales of investment and insurance products – Singapore (%)	0.52	0.45²	0.11
Lending Profile – Group ($ billion)
Loans to small businesses	9.4	8.8	8.6
Loans to medium businesses	40.1	39.6	36.9
Loans to large businesses	88.0	77.0	73.8
Loans to individuals	88.1	82.0	80.0
People³
Permanent employees	23,904	24,092	24,067
Permanent employees – Singapore	8,642	8,443	8,341
Local employees (%)	95.9	96.1	96.5
New hires	5,715	6,633	7,061
Female headcount⁴ (%)	61.5	61.1	60.9
Female senior management (%)	35.9	36.1	34.2
Female middle management (%)	52.1	51.9	51.5
Female department heads⁵ (%)	47.4	36.4	38.1
Female supervisors or managers⁵ (%)	53.5	54.4	54.1
Average training hours per headcount	36.6	39.0	36.9
Training expenditure per headcount ($)	774	836	789
Employee attrition rate (%)	20.6	19.8	23.1
Community
Monetary contributions ($ million)	4.5	4.3⁶	3.7
Environment⁷
Office paper consumption in offices – Singapore (tonne)	381	443	404
Office paper consumption per full-time employee – Singapore (kg)	44	52	48
Paper recycled – Singapore (tonne)	490	297	691
Electricity used (kWh)	84,519,035	85,517,090	86,887,745
Electricity use intensity (kWh/m²)	321	318	327
Carbon emissions (tCO₂)	48,382	49,005	49,829
Carbon emission intensity (tCO₂/m²)	0.184	0.182	0.187
Water consumption – Singapore, Malaysia, Indonesia, Thailand and China (m³)	410,769	423,311	425,019
General waste – Singapore office buildings only (tonne)	719	706	693
Economic Value of Contributions ($ million)
Total operating income	8,061	8,048	7,457
Profit after tax⁸	3,096	3,209	3,249
Dividends to shareholders	1,232	1,873	1,285
Employee compensation and benefits	2,050	2,064	1,825
Income tax to governments	669	649	561
Suppliers⁷
Total purchases ($ million)	1,324	1,181	1,057
Purchased from local suppliers (%)	93.1	93.8	94.0

Ability ATMs are designed to provide visually-impaired customers with audio assistance.

We introduced in 2015 a more stringent process for the recording of complaint cases.

All People data applies to UOB Group unless stated otherwise.

Headcount includes permanent and contract employees.

Data applies to Singapore, Thailand and Greater China.

Excludes UOB80 - related community contributions of $38.6 million.

All Environment and Suppliers data applies to UOB’s six key markets of Singapore, Malaysia, Indonesia, Thailand, China and Hong Kong unless indicated otherwise.

Relates to the amount attributable to equity holders of the Bank.

Notes:

The above data, extracted from internal systems and records, covers the period from 1 January 2014 to 31 December 2016, and includes UOB’s subsidiaries unless stated otherwise.

Internationally accepted measurement units have been used in presenting the information. The basis for data calculation is discussed in the relevant sections within this report.

Feedback

Your views are important to us. Please send your comments, questions or suggestions to:

Mr Stephen Lin

Head of Investor Relations
sustainability@UOBgroup.com